Charoen Pokphand Foods Plc (CPF) is performing well on the shares market with more than a 50 per cent increase in profit estimate as a result of the rising pork price in the market.
Asia Wealth Securities estimates that 2020 will be the golden year for CPF as the pork price will continue to increase in all regions. As a result, the company will earn higher profits.
Brokers recommend buying CPF firms, while also adjusting the target price for 2021 from 33 baht to 43 baht, based on 15 times the average price-to-earnings ratio (PER).
During the recent outbreak of COVID-19, the price of meat dropped due to slow demand.
The spread of African Swine Fever (ASF) in Vietnam also caused a decrease in pork supply. Thailand has exported pork to Vietnam due to the lower price which has led to a drop in pork supply in the Thai market.
According to the Office of Agricultural Economics (OAE), the average Thai pork price in July is 78 baht per kilogram, increasing 11 per cent from June.
Meanwhile, the average Vietnamese pork price is 90,000 dong per kilogram or around 126 baht per kilogram, rising up 13 per cent from the previous month.
However, ollowing the easing of lockdown measures and restaurants reopening, meat prices have begun to rise again.
CPF’s subsidiary company, C.P. Pokphand (CPP) predicted that the first half of 2020 will have a net profit of US$310-330 million, a 278 per cent surge compared to the same period in 2019 which was $82 million.
It is estimated that CPF will gain a net profit in 2Q20 of 6,395 million baht, up by 56 per cent from the same period in 2019 and 5 per cent from the previous quarter. They also predicted that the 2020 profit would go up by 32 per cent from 21 per cent in the previous estimate.
However, Maybank Kim Eng Securities estimates that CPF’s profits in the second quarter of 2020 would be around 4,410 million baht which is below their prediction due to the profit from CPALL company.
They recommend investors buy CPF firms at the target price of 39.20 baht as the CPF performance in the next quarter will stay positive.
On Thursday morning, the CPF share price stood at 33.75 baht per share at 11:50 a.m. local time in Thailand (GMT +7), -1.46 per cent from the opening price at 34.25 baht per share.
