Pi Securities wrote that Exotic Food Public Company Limited (mai: XO) is anticipated to see clear growth in its operational performance starting from the second half of 2026, as inventory overstock issues are expected to subside.
In the fourth quarter of 2025, XO posted a net profit of THB 92 million, declining by 24% year-over-year and 30% quarter-over-quarter. This marked the sixth consecutive quarter of declining profits, primarily due to a significant decrease in gross margin following marketing campaigns conducted with business partners.
Revenue for the quarter was THB 550 million, up 8% both year-over-year and quarter-over-quarter, with particularly strong growth in the chili sauce segment. Total sales volume reached 6,416 tons, increasing 14% year-over-year and 20% quarter-over-quarter.
The average selling price was approximately THB 85.8/kg, down by 5% year-over-year and 10% quarter-over-quarter, partly due to the appreciation of the Thai baht. Sales in foreign currencies accounted for about 32% of total revenue.
Gross margin dropped to 38% from 43% in 4Q24 and 46% in 3Q25. Selling and administrative expenses rose to THB 110 million, up 13% year-over-year and 21% quarter-over-quarter. The increase was attributed to promotional spending and an accounting adjustment that included fixed costs from the new production line, which is still running below optimal capacity.
Tax expenses were recorded at THB 8 million, down 23% year-over-year and 43% quarter-over-quarter, resulting in a tax rate of 8%, similar to the previous year but lower than the 9.6% of 3Q25, as the new line began receiving Board of Investment (BOI) privileges. For the full year 2025, XO reported a net profit of THB 507 million, a drop of 36% year-over-year.
The outlook for the first half of 2026 remains tepid, with expectations for recovery beginning in the second half. Management has indicated that sales in the first half of 2026 are likely to remain flat compared to the second half of 2025 due to leftover customer inventory. Notably, the U.S. market has begun to see sales through Costco since the beginning of 2026, while the company’s revenue growth target remains at 10% year-over-year.
Key input costs, such as chili, have been secured under contract, and sugar needs have been hedged through the second quarter. The new factory, expected to start construction in 2Q26 and operations in 2028, will boost total production capacity to 43,905 tons from the current 34,572 tons, potentially supporting revenue of up to THB 4.27 billion.
Pi Securities estimated net profit for 2026 at THB 556 million, representing a 10% growth year-on-year. In the short term, 1Q26 performance is expected to improve from 4Q25, as joint promotional campaigns with partners have ended, and gross margins should recover.
XO’s share price currently offers more than 40% upside to the target price of THB 19.5 per share (based on 15x 2026E PER). The brokerage gives a ‘Speculative Buy’ rating on the stock.
