Tisco Eyes ‘Thai Union’ at THB22, Expecting Sales to Lead in Earnings Improvement

Thai Union Public Company Limited (SET: TU) came out the first quarter with a positive sentiment as its Red Lobster business turned to record a net profit for the first time in four quarters.

The Group recorded a first-quarter net profit of THB 1 billion, a 41.5 percent decrease from THB 1.7 billion in 1Q22 which included two non-comparable items:

– In the first quarter of 2022, Thai Union booked preferred interest of THB 239 million (after tax) from Red Lobster (vs. no preferred interest in the first quarter of 2023 due to interest rate hike).

– THB 200 million net profit dilution effect from Thai Union’s shares reduction in i-Tail from 99.5 percent to 77.8 percent following i-Tail’s listing on the Stock Exchange of Thailand last December 2022.

“However, we remain optimistic about 2023 growth as we have already seen signs of improvement in the second quarter and expect normalization in the latter half of the year as the trend towards the consumption of seafood and healthier proteins continues to rise globally,” said Thiraphong Chansiri, CEO of Thai Union Group.


Tisco Securities stated that TU’s 1Q23 earnings beat its estimate by 45%, but still lower than Bloomberg Consensus. The beat came from higher-than-expected tax credit and lower-than-expected SG&A, which combined to more than offset the lower-than-expected GPM and profit share. The quarter’s earnings represent 15.2% of its 2023e estimate. Tisco stated that it expected 1Q23 to mark the earnings bottom for 2023 as the remaining quarters enjoy normalized earnings.

Tisco noted that it expected earnings to improve QoQ, led by the normalization of sales. Tisco maintained a Buy with a TP of Bt22.0 based on 2023e. Key risks include volatility in tuna and shrimp prices, THB appreciation/depreciation against the USD and/or EUR, and worse-than-expected operations at Red Lobster.