November 15, 2010

CPF posts Q3 2010 result 7% higher on-quarter

CFP booked a Q3 2010 net profit of THB4.28 billion (US$0.14 billion), a rise of 7% on-quarter, 4% on-year, and 7% above the Bloomberg consensus.

EPS rose 5.5% on-year and on-quarter to THB0.64 (US$0.02) aided by growth in its shrimp exports and overseas operations.

Sales climbed 5% on-quarter and 14% on-year to THB50.3 billion (US$1.68 billion), driven by overseas business growth and higher shrimp exports. CPF's gross margin dipped on-quarter and on-year due to lower pork and chicken meat prices. However, its net profit margin held up well as interest expenses and income tax declined.

Management expects its shrimp and overseas businesses to be key drivers of growth in 2011. Improved operations in India, Indonesia and Turkey and new contributions from Taiwan resulted in revenue from its overseas businesses surging 81% on-year in 9M10. With other shrimp exporting countries facing difficulties due to natural disasters and disease, CPF expects shrimp exports to grow by 30-40% per year over the next several years.

Meanwhile, CPALL should continue to be an important earnings contributor, aided by the recovery in consumer spending and expansion of its nationwide store network.

Management expects to achieve sales of THB185 billion- THB190 billion (US$6.17-$6.34 billion) in 2010, which is in line with forecast. CPF's positive outlook is already reflected in its share price although it still offers a decent dividend yield of 4%. Hold rating is maintained for now and target price of THB26.25 (US$0.88).