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Page 1: Editor: Frankie Wong Tel: (852) 2277 6765 Email ...research.cyberquote.com.hk/page/htm/kc/share... · review for a possible upgrade after the upcoming post‐results analyst meeting
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Editor: Frankie Wong Tel: (852) 2277 6765 Email: [email protected]
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Page 2: Editor: Frankie Wong Tel: (852) 2277 6765 Email ...research.cyberquote.com.hk/page/htm/kc/share... · review for a possible upgrade after the upcoming post‐results analyst meeting

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)

Page 3: Editor: Frankie Wong Tel: (852) 2277 6765 Email ...research.cyberquote.com.hk/page/htm/kc/share... · review for a possible upgrade after the upcoming post‐results analyst meeting

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%

Page 4: Editor: Frankie Wong Tel: (852) 2277 6765 Email ...research.cyberquote.com.hk/page/htm/kc/share... · review for a possible upgrade after the upcoming post‐results analyst meeting

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

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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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22776846

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