September 3, 2010

Charoen Pokphand Foods' aquaculture sales remain bright

CPF's aquaculture division, for local and overseas- in 2H10 and FY11, remains optimistic strengthened by a persisting global shrimp supply shortage.

The BP oil spill in the Mexican Gulf and the Infectious Myonecrosis (IMN) outbreaks in Indonesia have resulted in an ongoing global shrimp supply shortage.

Being a fully-integrated shrimp producer, CPF stands to benefit from rising value-added shrimp exports and shrimp feed sales. The aquaculture and food businesses will together more than offset the effect of lower farm product margins in the first half of 2010 and FY11. FY11 earnings forecast have been upgraded by 4% to reflect expanded expectations for FY11 aquaculture sales. Buy rating is premised on solid 2H10 and FY11 earnings growth and a good dividend yield.

The domestic Thai shrimp price, 40 pieces/kg, has increased from Bt130 (US$4.19) at the start of October 2009 to Bt155 (US$4.99)/kg currently.