CPF-GFPT shares rose on news that Saudi Arabia gave the green light to import chicken meat from Thailand for the first time in 17 years. At 9.59 am CPF increased 3.35% or increased 0.80 baht to 24.70 baht, trading value 153.81 million. baht
GFPT increased 3.91% or increased 0.50 baht to 13.30 baht, trading value 86.10 million baht.
KGI Securities (Thailand) said in its analysis that from the news from the Ministry of Agriculture and Cooperatives revealed on Monday that the Saudi government has changed the status of chicken imports from Thailand from “prohibited” to “permitted”. to be imported, which the said announcement is effective immediately This will enable 11 Thai chicken production plants to export to Saudi Arabia. The appraisal will receive limited direct positives in the short term.
Although this news represents a good opportunity for the Thai chicken industry. But we think the short-term positives are likely to be limited. Due to the competitive situation in the market, Charoen Pokphand Foods Plc. (CPF) said that this case would help open a new market for Thai chicken producers. But the main competitor (Brazil) still has a competitive advantage in terms of lower feed costs. Because Brazil is a major producer of soybeans and corn.
Meanwhile, GFPT Public Company Limited (GFPT) said the company was unlikely to receive any significant direct positives. Because Saudi Arabia mainly imports raw chicken meat. While GFPT’s exports are mainly processed chicken, there may be an indirect positive if chicken exports increase. will reduce the supply for the domestic market In this case, the price of chicken in the country will go up.
However, this news is a good opportunity for the Thai chicken industry in the long run. because saudi arabia It is the world’s fifth largest chicken importer. with 600,000 tons of chicken imported in 2021. At present, the main countries exporting chicken to Saudi Arabia are Brazil (70%) and Ukraine and France (30% combined), while Thailand exported a total of 913,000 tons of chicken products in 2017. 2021. Among the 11 factories permitted to export chicken meat to Saudi Arabia has 6 plants from CPF Group and one factory from GFPT.
We maintain our BUY rating on CPF as we expect higher domestic meat prices to boost the company’s earnings in 2022F. Meanwhile, CPF is likely to recover from the impact of COVID-19. in terms of costs related to COVID-19, which should be reduced and the problem of labor shortage has been easing
At the same time, we maintain our HOLD rating on GFPT as we remain concerned about the company’s GPM, while GFPT appears to be limited in passing on the increased costs to customers. Higher than expected animals as a result of the Russia-Ukraine dispute over meat prices and meat producers’ margins