The share price of Sappe Public Company Limited (SET: SAPPE) rose as much as THB2.50 or 6.67% per share to THB40.00 per share in the morning session on August 18, 2022 after gaining 3.45% in the previous session.
After the analyst meeting, CGS-CIMB Securities (Thailand) stated that it has a positive outlook on the company, given promising sales growth outlook and its superior cost management. The securities company gave a “BUY” recommendation on SAPPE with a target price of THB47.00 per share.
CBG-CIMB noted that the management raised FY22F sales growth target to 30-35% (previously 15-20%) given stronger than expected export sales, which is in line with its forecast of 33%. Meanwhile, the company targets FY23F sales growth of 15-20%, which is higher than the securities company estimates of 8%.
In the meantime, higher packaging cost should pressure SAPPE’s gross profit margin to 39%, compared to 40.8% in 1H22, but still in the healthy level and in-line with CGS-CIMB’s
3Q22F sales should reach another record amid its export high season and new product launch in the domestic market. Domestic sales are expected to improve HoH, thanks to improving domestic consumption and its new product launch. Hemp-related products will be launched in 3Q22.
In the fourth quarter of this year, SAPPE plans to increase its export product price to maintain its GPM at 40% in FY23F.
Currently, there is no sales target from its new JV with WORK but it sees synergy from WORK’s extensive media platforms and content creation, according to the management.
In addition, CGS-CIMB maintained its FY22F EPS growth of 40%, adding that SAPPE is still trading at undemanding level at 20x FY22 P/E, -1 SD of regional peers and Thai F&B’s 5-year mean.
SAPPE closed the morning session on Thursday at THB39.25 per share, increased THB1.75 or 4.67% per share.