20170915-辉立证券-Earnings_outlook_still_rosy_12页_418kb

GFPT Summary

Core Content

GFPT is a leading Thai agribusiness company engaged in livestock operations, feed production, and processed meat for both domestic and export markets. The company has a strong presence in the chicken export industry, which is expected to continue growing due to the resumption of imports from key markets and the decline in grain prices, which reduces production costs.

Main Points

• Earnings Outlook: GFPT's earnings are projected to grow in both the second half of FY17 and into FY18, driven by increased export volumes and lower grain prices.
• Export Growth: The chicken export industry in Thailand is expected to grow by 8% y-y to 800,000 tons in FY17, with much of the growth coming from Japan and the EU.
• Capacity Expansion: GFPT's affiliates, McKey Food Services and GFN, are expanding their production capacities, which is expected to further boost earnings.
• Financial Forecast: Full-year sales are forecasted to rise 5% y-y to Bt18,493mn in FY18, with net profit growing to Bt2,047mn, up 6% y-y.
• Rating Upgrade: GFPT's stock rating was upgraded to 'ACCUMULATE' from 'NEUTRAL' with a new target price of Bt21.20/share, reflecting the positive outlook and valuation adjustments.

Key Information

• Company Data:

  • Outstanding Shares: 1,254 million
  • Market Cap. (Bt): 24,951 million
  • Market Cap. (USD): 754 million
  • 52-Week High/Low (Bt): 22.1/13.3
  • 3M Average Daily Turnover (mn): 3.58
  • Par Value (Bt): 1.00

• Major Shareholders (as of 10 March 2017):

  1. Thai NVDR - 6.3%
  2. Mr. Pitsanu Sirimongkolkasem - 5.4%
  3. Mrs. Chollada Sirimongkolkasem - 5.1%

• Price Performance (vs. SET Index):

  • 1MTH: -2%
  • 3MTH: -9%
  • 1YR: 22%

• Valuation Ratios (as of FY18E):

  • P/E: 12.2x
  • P/B: 1.8x
  • Dividend Yield: 1.9%

• Financials (FY17E vs FY18E):

  • Sales: Bt17,567mn → Bt18,493mn (+5.27%)
  • Net Profit: Bt1,938mn → Bt2,047mn (+6%)
  • EPS: 1.55 → 1.63
  • BVPS: 9.84 → 11.11

• Capacity Addition:

  • McKey Food Services: Increase cooked chicken products capacity by 100% starting from 1QFY18
  • GFN: Boost production capacity by ~20% in late 4QFY17
  • GFPT: Plan to increase slaughter capacity by 10,000-20,000 birds per day

• Risk Factors:

  • Disease outbreaks
  • Volatility in raw material prices
  • Product price swings

• Dividend Policy:

  • DPS: Bt0.36 (FY17E) → Bt0.38 (FY18E)
  • Dividend Yield: 1.8% (FY17E) → 1.9% (FY18E)

• Valuation Method:

  • P/E'18: 13x
  • Target Price: Bt21.20/share (+8.42% from current price)

Key Developments

• In 2012, GFPT Nichirei doubled its registered capital to Bt3,014mn to fund capacity expansion.
• Expansion of broiler farms and slaughter capacity in 2012 and 2009.
• Par value split from Bt10/share to Bt1/share in 2010.
• GFPT has participated in the Thai CAC program under the Thai Institute of Directors.

Peer Comparison (as of 13 September 2017)

• GFPT TB: Market Cap. 24,951mn, P/E 13.1x, P/BV 2.3x, Div Yield 1.5%
• CPF TB: Market Cap. 230,351mn, P/E 13.4x, P/BV 1.5x, Div Yield 3.6%
• TFG TB: Market Cap. 31,167mn, P/E 21.8x, P/BV 5.1x, Div Yield n.a.

Corporate Governance

• GFPT participates in the Thai Private Sector Collective Action Coalition Against Corruption programme.

Summary Table

Conclusion

GFPT is positioned for continued earnings growth in FY18, supported by favorable industry conditions, cost reductions, and capacity expansion. The company's stock has been upgraded to 'ACCUMULATE' with a higher target price, indicating positive sentiment among analysts. Despite the risks, GFPT remains a strong player in the Thai agribusiness sector with a solid financial foundation.