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THAILAND EQUITY RESEARCH
Page | 1 | PHILLIP SECURITIES (THAILAND)
Charoen Pokphand Foods 3QFY15 norm profit above forecasts
THAILAND | SET | FOOD | COMPANY RESULTS BLOOMBERG CPF TB l REUTERS CPF.BK
3QFY15 net profit down 14% y‐y but up 20% q‐q CPF reported 3QFY15 net profit of Bt3,571mn, down 14% y‐y but its profit from normal business coperations however beat our forecast on the back of (i) a recovery in both domestic and overseas livestock businesses, (ii) a steady improvement in shrimp business, albeit still in the red, and (iii) a retreat in SG&A expenses to sales ratio. In this period, quarterly sales slipped 1% y‐y to Bt111,877mn. Much of the sales decline stemmed largely from Thai operations and CPP of which sales plunged 4% and 35% y‐y respectively as a result of eroding purchasing power while sales in Vietnam and other countries grew 7% and 17% y‐y. On a q‐q basis, sales across all markets showed signs of picking up heading into the peak sales season and due to a selling price upswing in livestock business. Thanks largely to improved margins at both domestic and overseas livestock businesses as a consequence of lower raw material prices and narrowing losses from aquaculture business, overall margins for the quarter expanded to 15% from 13.5% and 14.3% in 2QFY15 and 3QFY14 respectively. SG&A expenses as a percentage of sales edged up 9% y‐y and a marginal 1% q‐q. As expenses grew slower than sales, profit from normal business operations surged as much as 123% q‐q but the y‐y comparison still showed a drop of 3%. Interest expenses shot up 21% y‐y and 20% q‐q on increased debt load. CPF also felt the impact of a FX loss from its operations in Turkey as a result of currency weakness. The results in this period also included net exceptional gains of Bt2,297mn, comprising (i) a Bt1,244mn divestment gain, (ii) a FX gain of Bt857mn and (iii) a Bt196mn gain from change in fair value of biological assets. For 9MFY15, net profit slipped 3% y‐y to Bt9,510mn from Bt9,754mn in the same period last year as sales dropped 1% y‐y to Bt311,779mn amid sagging sales from Thai operations and CPP. Sales in Vietnam and other countries however kept growing. Margins narrowed to a mere 13.8% in 9MFY15 from 13.9% in the same year‐ago period. SG&A expenses edged up 9% y‐y. Profit before ex‐items came in at Bt1,998mn. The 9MFY15 results also included net exceptional gains of up to Bt7,512mn, comprising (i) a FX gain of Bt1,344mn, (ii) a Bt236mn gain from change in fair value of investments in affiliates, (iii) a Bt5,999mn divestment gain, and (iv) a Bt66mn loss from change in fair value of biological assets. ‘BUY’ rating with Bt24/share target price To reflect its forecast‐topping 9MFY15 results, we will place our FY15 earnings estimate for CPF under review for a possible upgrade after the upcoming post‐results analyst meeting which would also provide a glimpse of what FY16 would look like. At current prices, we maintain a ‘BUY’ call on CPF shares with a Bt24/share target price. The ‘BUY’ rating reflects our bullish view on its earnings recovery story.
Ref. No.: CO2015_0826
Closing Price(Bt) 19.50
Target Price(Bt) 24.00 (+23.08%)
COMPANY DATA
O/S Shares (mn) : 7,743
Market Cap. (Btmn) :
Market Cap. (USDmn) :
52‐WK Hi/Lo (Bt) : 30/16.9
3M Average Daily T/O (mn) : 29.50
Par Value (Bt) : 1.00
MAJOR SHAREHOLDERS (%)
1. CP Group Co., Ltd. 25.0
2. Charoen Pokphand Holding Co., Ltd. 11.5
3. Thai NVDR Co., Ltd 5.8
PRICE PERFORMANCE (%)
1MTH 3MTH 1YR
ABS ‐11% ‐2% ‐31%
REL TO SET INDEX ‐9% ‐1% ‐22%
PRICE VS SET INDEX
Source: Bloomberg, PSR
KEY FINANCIALS
FYE Dec FY13 FY14 FY15E FY16E
Sales(Btmn) 389,251 426,039 435,390 479,652
Net Profit(Btmn) 7,065 10,562 10,517 11,432
EPS (Bt) 0.96 1.43 1.42 1.55
P/E (X) 20.4 13.6 13.7 12.6
BVPS (Bt) 16.73 21.18 21.78 22.46
P/B (X) 1.2 0.9 0.9 0.9
DPS (Bt) 0.50 0.75 0.70 0.80
Dividend Yield (%) 2.6 3.8 3.6 4.1
ROE (%) 6.59 9.29 8.88 9.31
Debt/Equity (X) 2.14 2.15 2.11 2.07
Source: Company, PSR Est.
**Multiples and yields are based on latest closing price
VALUATION METHOD
PE'15 (17x)
Naree Apisawaittakan
Securities Investment Analyst # 17971
Tel: 66 2 635 1700 # 484
150,987
4,206
28 August 2015
Buy (Maintain)
13 November 2015
0
10
20
30
40
50
Nov‐12 Nov‐13 Nov‐14 Nov‐15
CPF TB EQUITY SETI (rebased)
THAILAND EQUITY RESEARCH
PHILLIP SECURITIESS (THAILAND) | 2 | P a g e
Charoen Pokphand Foods COMPANY RESULTS
Income Statement
Btmn 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐
Sa le s and s e rvi ces 111,877 103,677 112,389 8% 0% 311,779 316,346 ‐1%
Cos ts of s a l e s 95,050 89,696 96,314 6% ‐1% 268,814 272,394 ‐1%
Gross profit 16,828 13,981 16,076 20% 5% 42,965 43,951 ‐2%
Se l l i ng expenses 5,123 4,856 5,090 6% 1% 14,288 14,331 0%
Admini s tra ti ve expenses 6,826 6,941 5,905 ‐2% 16% 19,652 16,918 16%
Operating profit 4,879 2,185 5,081 123% ‐4% 9,025 12,702 ‐29%
Other i ncome 578 798 583 ‐28% ‐1% 2,728 2,053 33%
Ga in/los s from a ffi l i a te s 1,238 1,230 1,209 1% 2% 3,735 3,844 ‐3%
Other expense 0 0 0 n.m. n.m. 0 0 n.m.
EBIT 6,695 4,212 6,874 59% ‐3% 15,488 18,599 ‐17%
Inte re s t expens e 2,837 2,364 2,346 20% 21% 7,375 6,481 14%
EBT 3,858 1,848 4,528 109% ‐15% 8,113 12,118 ‐33%
Ta xa tion 1,216 757 1,219 61% 0% 2,585 3,185 ‐19%
EAT 2,642 1,091 3,309 142% ‐20% 5,528 8,933 ‐38%
Minori ty ‐1,367 ‐1,144 ‐995 ‐20% ‐37% ‐3,530 ‐2,552 ‐38%
Net profit before extra 1,275 ‐53 2,314 n.m. ‐45% 1,998 6,381 ‐69%
Extraordina ry i tems 2,297 3,036 1,844 ‐24% 25% 7,512 3,373 123%
Net profit 3,571 2,983 4,158 20% ‐14% 9,510 9,754 ‐2%
EPS (Bt) 0.48 0.40 0.56 20% ‐14% 1.29 1.32 ‐2%
Key Financial Ratio
% 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐
Cos t of s a l e s /s a l e s 84.96% 86.51% 85.70% ‐2% ‐1% 86.22% 86.11% 0%
SG&A exp/s a le s 10.68% 11.38% 9.78% ‐6% 9% 10.89% 9.88% 10%
Gros s margin 15.04% 13.49% 14.30% 12% 5% 13.78% 13.89% ‐1%
Opera ting profi t margin 4.36% 2.11% 4.52% 107% ‐4% 2.89% 4.02% ‐28%
Net profi t margin 3.19% 2.88% 3.70% 11% ‐14% 3.05% 3.08% ‐1%
Balance Sheet
Btmn 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐
As se ts 448,270 432,582 409,146 4% 10% 448,270 409,146 10%
Liabi l i ti e s 275,105 265,254 245,934 4% 12% 275,105 245,934 12%
Pa id ‐up (mn s hrs ) ‐ Pa r Bt1 7,743 7,743 7,743 0% 0% 7,743 7,743 0%
Equi ti e s 173,165 167,328 163,212 3% 6% 173,165 163,212 6%
BVPS (Bt) 22.36 21.61 21.08 3% 6% 22.36 21.08 6%
Debt/equi ty (x) 1.6 1.6 1.5 0% 5% 1.6 1.5 5%
THAILAND EQUITY RESEARCH
PHILLIP SECURITIESS (THAILAND) | 3 | P a g e
Corporate Governance ‐2014
BAFS BCP BTS CPN EGCO GRAMMY HANA INTUCH IRPC TOP
KBANK KKP KTB MINT PSL PTT PTTEP PTTGC SAMART IVL
SAT SC SCB SE‐ED SIM SPALI TISCO TMB THCOM SAMTEL
AAV ACAP ADVANC ANAN AOT ASIMAR ASK ASP BANPU BAY
BBL BECL BIGC BKI BLA BMCL BROOK CENTEL CFRESH CIMBT
CK CNT CPF CSL DELTA DRT DTAC DTC EASTW EE
ERW GBX GC GFPT GUNKUL HEMRAJ HMPRO ICC KCE KSL
LANNA LH LHBANK LOXLEY LPN MACO MC MCOT NBC NCH
NINE NKI NMG NSI OCC OFM PAP PE PG PHOL
PJW PM PPS PR PRANDA PS PT QH RATCH ROBINS
RS S & J SAMCO SCC SINGER SIS SITHAI SNC SNP SPI
SSF SSI SSSC STA SVI TCAP TF THAI THANI TSTE
TIP TIPCO TK TKT TNITY TNL TOG TRC TRUE
TSTH TTA TTW TVO UAC VGI VNT WACOAL
2S AF AH AHC AIT AJ AKP AKR AMANAH AMARIN
AMATA AP APCO APCS AQUA ARIP AS ASIA AYUD BEAUTY
BEC BFIT BH BJC BJCHI BOL BTNC BWG CCET CGD
CGS CHOW CI CKP CM CMR CSC CSP CSS DCC
DEMCO DNA EA ESSO FE FORTH FPI GENCO GL GLOBAL
GLOW GOLD HOTPOT HTC HTECH HYDRO IFS IHL INET IRC
IRCP ITD KBS KGI KKC KTC L&E LRH LST MAJOR
MAKRO MATCH MBK MBKET MEGA MFC MFEC MJD MODERN MONO
MOONG MPG MTI NC NTV NUSA NWR NYT OGC OISHI
PACE PATO PB PDI PICO PPM PPP PREB PRG PRIN
PTG QLT QTC RCL SABINA SALEE SCBLIF SCCC SCG SEAFCO
SEAOIL SFP SIAM SIRI SKR SMG SMK SMPC SMT SOLAR
SPC SPCG SPPT SST STANLY STEC STPI SUC SWC SYMC
SYNEX SYNTEC TASCO TBSP TEAM TFD TFI THANA THIP THREL
TIC TICON TIW TKS TLUXE TMI TMT TNDT TPC TPCORP
TRT TRU TSC TTCL TUF TVD TWFP UMI UP UPF
UPOIC UT UV UWC VIH WAVE WHA WIN WINNER YUASA
ZMICO
Score Range
< 50%
50‐59%
60‐60%
70‐79%
80‐89%
90‐100%
The disclosure of the survey result of the Thai Institute of Directors Association (IOD)
regarding corporate governance is made pursuant to the Office of the Securities and
Exchange Commission. The survey of the IOD is based on the information of a company
l isted on the Stock Exchange of Thai land and the Market for Alternative disclosure to the
public and able to be accessed by a general public investor. The results, therefore, is from
the perspective of a third party. It is not an evaluation of operation and is not based on
inside information.
The survey result is as of the date appearing in the Corporate Governance Report of Thai
Listed Companies. As a result, the survey result may be changed after that data. Phil l ip
Securities (Thai land) of securities company does not confirm nor certify the accuracy of
such survey result.
No logo given
Number of Logo
Results Presentation
THAILAND EQUITY RESEARCH
PHILLIP SECURITIESS (THAILAND) | 4 | P a g e
Industry Group Name Sector Name Sector Index
Agro & Food Industry[AGRO] Agribusiness AGRI
Food & Beverage FOOD
Consumer Products[CONSUMP] Fashion FASHION
Home & Office Products HOME
Personal Products & Pharmaceuticals PERSON
Financials [FINCIAL] Banking BANK
Finance & Securities FIN
Insurance INSUR
Industrials [INDUS] Automotive AUTO
Industrial Materials & Machinery IMM
Packaging PKG
Paper & Printing Materials PAPER
Petrochemicals & Chemicals PETRO
Steel STEEL
Property & Construction[PROPCON] Construction Materials CONMAT
Construction Services CONS
Property Development PROP
Property Fund & REITs PF&REIT
Resources [RESOURC] Energy & Utilities ENERG
Mining MINE
Services [SERVICE] Commerce COMM
Media & Publishing MEDIA
Health Care Services HELTH
Tourism & Leisure TOURISM
Professional Services PROF
Transportation & Logistics TRANS
Technology [TECH] Electronic Components ETRON
Information & Communication Technology ICT
PSR Rating SystemCapital Gain Recommendation
> +10% Buy
0% to + 10% Neutral
< 0% Sell
Remarks
We do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors like (but not limited to) a
stock's risk reward profile, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative
undertones surrounding the stock, before making our final recommendation
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