The share price of CPF rose nearly 3% in the morning session on Thursday as the company expects to see a recovery in selling prices and exports.
Finansia Syrus Securities (FSS) wrote in a note stating that according to an analyst meeting with Charoen Pokphand Foods Public Company Limited (SET: CPF), chicken business is expected to see a recovery in terms of both prices and exports while Vietnam’s pork prices have risen sharply, making it possible for CPF to turn profitable in 2Q24.
In the short term, the quarterly results may still be negative due to pressure from average domestic pork prices of 62-63 baht, which are lower than the cost of raising pigs at 68-70 baht, and Chinese pork prices averaging 14.5 yuan, which are also below the production costs of 16.5 yuan.
However, losses should decrease compared to the previous quarter as there are several positive aspects such as 1) Chicken recovery, with an average price of 41.7 baht per kilogram in 1Q24, higher than the cost of raising one at 38-39 baht, thanks to export demand due to lower inventories of its peers and 2) Vietnam’s strong pork prices, with a price of VND 53.4 billion per kilogram in 1Q24, which was higher than the cost of raising at VND 45 billion per kilogram.
As of early 2Q24, the average price of pork in the country rose by 5.6% QoQ and could approach the cost range of 68-70 baht. Meanwhile, other businesses look promising except China, which is recovering slowly. Therefore, there is hope that CPF will see profits in 2Q24.
In addition, prices of livestock in the second half of the year are expected to be better than in the first quarter, especially Thai pork (due to improved demand and the benefit of cutting pig cycles, which could lower the supply of Thai pork by 2.7%. Meanwhile, China’s pork markets are waiting for supply and demand to balance.
FSS stated that it is seeing catalysts from rising meat prices and operations that have bottomed out, raising its recommendation from “Hold” to “Buy” but maintaining target price at THB20.00 per share.
The share price of CPF closed the morning session on April 18, 2024 at 18.10 per share, increased THB0.50 or 2.84%.
