July 23, 2010

 

Thai's CPF to hit new record earnings with 30% boost

Charoen Pokphand Foods is set to reach another record high at THB4,151 million (US$128.69 million) on-year for Q2 2010.

 

The forecasted earnings have been revised to reflect resilient food and feed business growth, while shrimp and shrimp feed will benefit from the Gulf of Mexico oil crisis.

 

The company's strong growth should be attributable to high exports and the shrimp business. With a lower supply, the average domestic broiler prices have risen 17% on-year, while swine prices have stayed at favourable levels of THB61 (US$1.89) per kg. Feed prices (corn and soy meal) have increased at a lower pace as low-priced feed has been stocked. The overseas business in Turkey and India should grow significantly due to higher volume sales. The gross margin is projected to rise from 19.4% in Q2 2009 to 20% and equity gains from affiliates should surge 40% on-year due to strong results in Vietnam and by CPALL. CPF is expected to pay 1H10 dividends of THB0.50 (US$0.02) per share or a 2.1% yield.

 

Although meat prices are expected to soften in 2H10 and 2011, the CPF performance is forecasted to remain healthy from ongoing growth in food and feed. Shrimp feed and shrimp exports will benefit from oil crisis in the US. Chicken business in Turkey is positive from rising exports to the Middle East and Russia. Feed operations in India should improve strongly due partly to a capacity expansion. The company has targeted the increase in food business from 20% to 33% of sales over five years as food has higher margins and is less volatile compared with farming. The 2010 and 2011 earnings forecast have been revised up by 8% and 9%, respectively. The profit is now projected to surge 36% to THB13,029 million (US$403.76 million) (THB1.85 (US$0.057) per share) this year and rise further 6% to THB13,865 million (US$429.71 million) next year.