Tisco and Krungsri Capital Give Positive Outlook on CPF’s Spinoff ‘Food Solution’ Business

The plan to spin off its food distribution arm of Charoen Pokphand Foods Public Company Limited (SET: CPF) receives positive feedback from analysts, seeing the move could help CPF reduce its debt and unlock more valuation for the business.

Last week, CPF announced that CPF Global Food Solution Public Company Limited (formerly, CPF Trading Company Limited) (CPFGS), a CPF’s subsidiary, filed an application for approval and the registration statement and draft prospectus in respect of the initial public offering of its newly issued ordinary shares (IPO) with the Office of the Securities and Exchange Commission.

The CPFGS’s issuance and initial public offering comprise of: (1) an offering of not exceeding 66,700,000 newly issued ordinary shares of CPFGS; (2) an offering of certain portions of ordinary shares of CPFGS held by CPF of not exceeding 316,655,000 shares; and (3) an offering of certain portions of ordinary shares of CPFGS held by CPM of not exceeding 116,655,000 shares, totaling up to 500,010,000 shares of CPFGS with a par value of THB 0.50 per share. The total number of newly issued ordinary shares and ordinary shares to be offered by CPF and CPM will equal to not exceeding 30% of the total issued and paid-up ordinary shares of CPFGS after completion of the Initial Public Offering.


Tisco Securities stated that the key takeaway from this spinoff is CPF’s plan to reduce debt. CPF’s net debt to equity stands at 1.98x as of end-2022, close to the covenant of 2.1x. CPF’s rise in leverage stems from the Lotus acquisition.

Tisco Securities expected CPF to face unfavorable commodity prices in 2023, which would negatively impact earnings YoY. Due to this reason, the use of the IPO funds to pay off debt is positive to CPF.

Moreover, The key selling point of CPF on this plan is CPFGS’s global relationship with customers and raw material sources that could expand its product line and points of sale.

Tisco Securities gave a “BUY” recommendation on CPF with a target price at THB 25.00 per share.


Krungsri Capital Securities stated that the listing could be done by late 2023. The spinoff will unlock value for CPF as CPFGS should have had a higher valuation than CPF. The use of IPO funds could be used for debt repayment and investment. Meanwhile, the business will consolidate in CPF’s financial statement.