Tisco Sec Remains Positive on CPF’s 2023 Outlook as Listing of Chinese and Vietnamese Firms on Track for 2H23

The share price of Charoen Pokphand Foods Public Company Limited (SET: CPF) has been underperforming the market and its sector in the past year amid falling swine prices while facing rising costs.

Profit sharing from investment also declined during the Covid-19 pandemic, especially the operations of 7-Eleven by CP All Public Company Limited (SET: CPALL) and poor performance from its Hong Kong’s subsidiary.

The share price is currently trading below its 52-week low of THB22.50 per share, while underperforming SET Index by 3.43% and the food sector by 3.44%. Relative Strength Index 14 days was at 28%, indicating an oversold territory.


According to Tisco Securities who attended an analyst meeting with CPF after the report of its 4Q22 results, the securities company remained positive on CPF while maintaining a “BUY” rating with a target price at THB28.00 per share.


Tisco Securities’ note on key takeaways from the analyst meeting;

2023 Targets: CPF aims for revenue growth of 10-15% for 2023 and aims to at least match 2022’s gross profit margin of 13.3%. CPF achieved revenue growth of 20% for 2022, driven by strong livestock prices and volume gains. For 2023, amid greater pricing headwinds, CPF expects sales volume expansion to be the key driver of revenue growth. GPM should be supported by a combination of stable livestock prices and pullback in raw material prices.

Explanation of downtrend in Thai swine price: CPF says that the recent fall in swine price in Thailand is a short-term problem. Smaller farms in Thailand saw an opportunity at the end-2022 to make high profit via elevated swine price. Hoping to cash in on strong demand at year-end, the small farms sold-off their inventory and market supply thus rose in Jan-Feb causing swine price to drop rapidly. CPF expects swine prices to normalize in March. The impact of ASF can still be seen from the c30% fall in breeding population. Volume is expected to normalize in 2024.

Stable outlook for Chinese swine price: CPF expects to see Chinese swine price hover around RMB15-19/kg for the entire year. Demand increase from reopening should bolster swine prices in China. CPF thus expects to increase production by 37% for 2023. While market volume is expected to increase by only 4.3%, the top 5 operators in China should see an average increase of around 30%.

Vietnam swine biz hit by economic pain, even after reopening: CPF sees consumption decline impacting VN swine price. But management expects the weak demand to be temporary. After the overhangs of the economy and political tensions are removed, Vietnamese swine price should regain strength. CPF reports that the vaccine for ASF has been successful for fattening pigs but not so for the breeding population. Meanwhile, the broiler export factory is now online and prepared for export to Japan.

Costs to normalize sooner rather than later: CPF expects corn price to drop from the current all-time high of Bt13.75/kg. CPF says the high price is due to flooding during the harvest period. However, the combination of alternatives and corn imports should help with costs and CPF expects corn prices to come down from Feb onwards.

Other business: CPF expects to see a turnaround for Hylife (return to profit on integrated business improvement) and Bellisio (price increase and business reorganization).

Listing of the Chinese and Vietnamese businesses is on track for 2H2023.