ICHI and SAPPE Are Top Picks as F&B Sees Growth in Exports for March

CGS International Securities (Thailand) wrote in a note that in March 2024, Thailand’s F&B sector saw growth in exports measured in Thai Baht. The data reveals the following trends:

Non-alcoholic beverages: There was a 10% year-on-year (YoY) increase in March and a 15% month-on-month (MoM) growth. In the first quarter of 2024 (1Q24), there was a 15% YoY growth. Notable changes in exports to key markets include a 45% YoY drop to Indonesia, a 29% YoY rise to the Philippines, a 48% YoY increase to South Korea, a 32% decrease to France, and a 39% YoY surge to the US. For Ichitan Group Public Company Limited (SET: ICHI), exports to key markets like Cambodia, Vietnam, and Laos experienced YoY growth of 9%, 13%, and 13% respectively.

Chicken: March saw a 6% YoY increase and a 7% MoM rise, with growth in most key destinations. In 1Q24, there was a 7% YoY increase.

Processed/canned seafood: March recorded a 6% YoY growth and a 2% MoM increase, particularly strong in the US market. In 1Q24, there was a 9% YoY increase.

Shrimp: March witnessed a 4% YoY increase and a significant 17% MoM rise, contributing to a 22% YoY growth in 1Q24.

Pet food: March saw a remarkable 36% YoY increase and a 14% MoM rise, especially strong in the US market. Overall 1Q24 saw a 25% YoY growth.

The overall trend indicates robust demand for various food products compared to the previous year, especially in broiler and pet food categories. Non-alcoholic beverage exports continued to rise in March. While Sappe Public Company Limited (SET: SAPPE) experienced mixed results in exports to key markets, they remain optimistic about meeting their FY24F target of +20% growth in 1Q24F, primarily driven by the US and Middle East markets.

Among the recommended food companies, GFPT Public Company Limited (SET: GFPT) stands out due to export numbers indicating strong demand recovery, aligning with Charoen Pokphand Foods Public Company Limited (SET: CPF) and GFPT guidance. Thai Union Group Public Company Limited (SET: TU) is expected to see a recovery in 1Q24F core operations, particularly in ambient seafood and pet food sales.

ICHI and SAPPE are still favored for their beverage offerings, with expectations of strong 1Q24F results fueled by increased exports and support from domestic sales amid the hot weather.