January 29, 2014

Charoen Pokphand Foods' shrimp operation may break even by mid-2014




Greater productivity from the shrimp operations of Thailand's Charoen Pokphand Foods (CPF) may result to break even in mid-2014, as expected by Thai analysis firm Bualuang Securities.


Unusually cool weather has delayed this to late in the second quarter, with improving numbers expected throughout the 2014 financial year.


Bualang's estimates put CPF's shrimp unit at a loss of THB1 billion (US$30.4 million) for the fourth quarter of 2013, an improvement on the THB1.6 billion (US$48.7 million) loss in third quarter. The analyst wrote that operations in India, Malaysia, Turkey, Russia and Philippines should report losses in third quarter.

Vietnam is expected to post a quarter-on-quarter profit rise, led by a livestock price recovery.


Overall Bualuang estimated a THB700 million (US$21.3 million) net profit and THB200 million (US$6.1 million) core loss for the fourth quarter of 2013, improvements on-year but a reversal from third quarter′s core profit.


The expected on-year jump in the core number is due to shallower losses for the shrimp, Turkish and Indian units, and fatter domestic livestock meat margins, it said. The assumed quarter-on-quarter drop is because of the low season for exports and aquaculture, a slimmer domestic livestock margin and a decline in equity income from CPALL.


Based on new information on corn and pork prices, and much better shrimp numbers - from THB1 billion (US$30.4 million) loss to breaking even - Bualuang has revised its net profit forecast up by 28% for 2014, and its target share price to THB39 (US$1.20) from THB32.7 (US$1). The firm is "fully confident" in CP Foods' shrimp turnaround.