Kiatnakin Phatra Securities (KKPS) has increased its 2025 earnings estimate for Thai Union Group Public Company Limited (SET: TU), projecting results for the third quarter of 2025 to surpass initial expectations.
The securities firm has lifted its 2025 profit forecast by 5%, while leaving projections for 2026 unchanged. KKPS has also rolled forward its price objective to 2026, revising it upward to THB 13.4 from THB 11.3, based on the average of target P/E and EV/EBITDA fair values.
KKPS maintains a Neutral stance on the stock, noting current valuations adequately reflect the business outlook, but has upgraded its income rating outlook from same/lower to same/higher in anticipation of higher dividends in the coming year.
For 3Q25, KKPS expects TU’s pre-exceptional profit to reach THB 1,210 million, marking a 14% year-on-year and 5% quarter-on-quarter decrease, citing weaker gross margins and increased SG&A-to-sales ratio. Nine-month pre-exceptional profit is expected to comprise 74% of KKPS’s revised full-year projection and 72% of consensus forecast.
Revenue in baht terms is projected to rise by 3% year-on-year, supported by growth in all segments except Value-added, even amid an unfavorable exchange rate movement—USD-to-THB at 32.3 compared to 34.8 a year prior.
Gross margin is forecast to shrink to 18.9% from 19.5% in 3Q24, primarily due to a lower proportion of premium PetCare products. The SG&A-to-sales ratio is set to climb to 13.9% from 13.5% in the previous year, reflecting higher costs tied to transformation initiatives. The effective tax rate is estimated at 12.1%, slightly lower than the prior year’s 12.6%.
During a recent investor call, TU’s management offered a cautious outlook regarding the possible full-quarter repercussions of increased U.S. tariffs. Given the broad-based extent of the tariff hike, KKPS evaluates the sensitivity of each segment’s gross profit to raw material costs as an indicator of potential impact.
Historical analysis shows that for every 1% change in raw material prices, gross profit adjusts by 0.1% in PetCare, 0.3% in Ambient, and 1.1% in Frozen segments. This is consistent with management’s view that PetCare will be the least impacted while Frozen will be the most.
According to KKPS, PetCare’s greater resilience stems from less commoditization—which enables stronger pricing—and its higher gross margins, providing a buffer against rising costs.
