Charoen Pokphand Foods (CPF) is expected to deliver strong results in the first quarter of 2010 with a normalised profit growth of 278% on-year to THB2,815 million (US$87.03 million).
This improving performance is attributed to rising meat prices, while raw material had been stocked at relatively low prices last year. Overseas operations should show healthy growth especially in the chicken business in Turkey as it has turned from a loss to a profit. CPF has realised additional income from a new subsidiary in Taiwan and it also benefits from supply shortages in China, Ecuador and Indonesia.
The results from the second quarter of 2010 should be even better due to the high season for exports and shrimp sales. The political turmoil has had no impact on company performance. Domestic meat prices remain at very favourable levels. Swine and broiler prices stand at THB62 (US$1.91) per kilogramme and THB40 (US$1.23) per kilogramme, respectively.
The outstanding CPF product this year is shrimp. Shrimp will benefit from good production efficiency, resulting in lower costs, while we see bright prospects for exports. With a smaller national chicken supply, Turkey should post favourable results. We will see a full-year contribution from Taiwan, while Russia is forecast to break even late this year.
If Japan resumes importing frozen chicken from Thailand (after the bird flu epidemic ban), CPF will benefit from that in terms of higher exports and more favourable domestic broiler prices. Moreover, Russia, a large chicken importer, may import more chicken from other countries after some problems with US chicken imports.
CPF earnings are predicted to grow 6% to THB10,756 million (US$331.98 million) at THB1.53 per share this year following the historic high for 2009. The key catalyst will include shrimp, overseas, domestic meat, more efficient operations and higher value-added product sales.