Charoen Pokphand Foods Public Company Limited (SET: CPF) recently shared important updates on its Vietnam and China operations during a conference call with analysts. Here are the key takeaways from CGS International Securities (Thailand):
Strength in Vietnam Operations
CPF is moving forward with the initial public offering (IPO) of CP Vietnam, planning to offer approximately 10% of the unit to public investors. Approval is currently pending with Vietnam’s State Securities Commission (SSC), while CPF will retain majority ownership. The company’s Vietnam operations remain robust, mainly supported by both swine and poultry segments.
The swine business continues to be the core driver of earnings. CPF will persist with a contract farming model for expansion, given foreign land ownership restrictions in Vietnam. The prevalence of African Swine Fever (ASF) continues to limit industry supply, supporting elevated pig prices and strong profitability. CPF is confident of maintaining its market leadership in the Vietnamese swine industry.
On the poultry front, CP Vietnam’s broiler business is expanding, with chicken exports to Japan and South Korea showing significant growth. This expansion is underpinned by CPF’s high food safety and sanitary standards. The management also revealed that discussions are ongoing to gain export access to the European Union (EU) market. Poultry farm capacity is being increased, with new capacity slated to come online within the next one to two years.
Vietnam continues to offer operational advantages due to a 0% import tariff on major feed ingredients like corn and soybeans, resulting in lower feed costs compared to Thailand and supporting margin expansion. Rising local consumption of sausages, processed foods, and fast-food items is expected to drive long-term demand growth, reflecting a trajectory similar to Thailand’s market development. CPF’s global grain procurement network ensures cost advantages and the efficient sharing of operational expertise across countries.
Challenging Conditions in China
In China, where CPF maintains a 35% stake through its subsidiary CTI, the swine market remains under significant pressure. Sources from the call noted that weakness is primarily demand-driven due to sluggish economic conditions. In the second quarter of 2026, CTI contributed a share of loss to CPF, amounting to approximately THB 2 billion. An industry-wide oversupply, a result of herd expansion ahead of an anticipated demand recovery, has pushed production costs to around RMB 12-13 per kilogram.
CPF has already reduced its pig farming capacity in China by about 5% year-on-year, as part of industry-wide supply rationalization efforts. The company’s management expects it will take another one to two years for supply and demand to rebalance and for profitability to improve meaningfully.
Three-Year Strategic Roadmap
CPF remains committed to strengthening its integrated “Feed-Farm-Food” business model, targeting approximately 10% annual volume growth in its food business. Feed business growth will align with the expansion of farming operations. The company continues to invest in modern, closed-system, temperature-controlled farms, mitigates weather risks, and raises productivity. Maintaining strong food safety standards and robust traceability remains a key competitive advantage over smaller operators.
CPF’s long-term customer relationships, especially in the EU and Japan, are expected to sustain steady demand for meat exports. The company is focusing on tailored, processed, and value-added products to enhance margins and customer loyalty.
Additional Insights
Exports of chicken meat from Thailand to China are expected to remain restrained until economic conditions in China improve. CPF also emphasized the increased use of renewable energy, with pig farms now powered 100% by biogas and solar energy, while poultry farms utilize biogas for roughly 50% of their energy needs. As energy costs represent only a low single-digit percentage of the cost of goods sold (COGS), such investments help reduce cost volatility and bolster CPF’s long-term competitiveness.
