UOB Kay Hian Report: Regional Morning Notes – November 13, 2024

Broker: UOB Kay Hian

Date: November 13, 2024

Company Analysis: GFPT Public Co. Ltd.

BUY Recommendation Maintained

Share Price: Bt10.80

Target Price: Bt13.00

Upside: +20.4%

Previous Target Price: Bt15.60

Company Overview

GFPT produces and distributes frozen and cooked chicken products. Its subsidiaries are engaged in broiler farms, and the production and distribution of feed mill.

Stock Data

GICS Sector: Consumer Staples

Bloomberg Ticker: GFPT TB

Shares Issued: 1,253.8 million

Market Cap: Bt13,541.0 million

Market Cap (US\$): 393.5 million

3-Month Avg Daily Turnover (US\$): 1.1 million

Price Performance

52-Week High/Low: Bt13.40/Bt10.1

1mth: -7.8% | 3mth: -14.4% | 6mth: -17.7% | 1yr: 1.9% | YTD: -7.0%

Major Shareholders

Sirimongkolsasem Family: 50.83%
Nichirei Food: 4.52%
Mr. Anucha Kittanamongkolchai: 4.02%

Financial Overview

FY24 NAV/Share: Bt15.56
FY24 Net Debt/Share: Bt1.60

3Q24 Earnings

GFPT reported a net profit of Bt542 million for 3Q24, up 70% year-on-year (yoy) but down 7% quarter-on-quarter (qoq), in line with market estimates. The strong 3Q24 results were driven by higher export volume and gross margin.

Key Financials

Year to 31 Dec (Btm): 2022 | 2023 | 2024F | 2025F | 2026F

• Net Turnover: 18,222 | 18,963 | 19,264 | 19,989 | 20,957
• EBITDA: 2,631 | 2,229 | 2,753 | 2,486 | 2,554
• Operating Profit: 1,309 | 718 | 1,167 | 799 | 779
• Net Profit (rep./act.): 2,044 | 1,377 | 2,090 | 1,723 | 1,744
• Net Profit (adj.): 2,044 | 1,377 | 2,090 | 1,723 | 1,744
• EPS (Bt): 1.6 | 1.1 | 1.7 | 1.4 | 1.4
• PE (x): 6.6 | 9.7 | 6.4 | 7.8 | 7.7
• P/B (x): 0.8 | 0.8 | 0.7 | 0.6 | 0.6
• EV/EBITDA (x): 5.9 | 7.0 | 5.7 | 6.3 | 6.1
• Dividend Yield (%): 1.9 | 1.4 | 2.1 | 1.8 | 1.8

Stock Impact

GFPT’s 4Q24 earnings momentum is expected to be stronger than anticipated, driven by robust export demand from both the EU-UK and Asia markets, leading to a better gross margin outlook. However, 2025 earnings are projected to decline by 17.5% yoy due to lower gross margins and share of profit.

Earnings Revision/Risk

UOB Kay Hian fine-tuned the 2024-25 earnings forecast to reflect better-than-expected 4Q24 momentum, assuming a lower share of profit for 2025 but offset by a higher gross margin assumption.

Valuation/Recommendation

Maintaining a BUY recommendation with a lower target price of Bt13.00. The target price is pegged to -1SD at 9x 2025F PE to its five-year mean to reflect slower 2025 earnings momentum, excluding the atypical performance period of 4Q20-1Q21.

Share Price Catalyst

Potential catalysts include lower commodity costs, stronger-than-expected chicken export volume, and a recovery in domestic chicken prices throughout 2024.

Environmental, Social, Governance (ESG)

Environmental: GFPT aims to achieve carbon neutrality by 2030 and net zero carbon emissions by 2050.

Social: GFPT complies with sustainability targets on the Sustainable Development Goals (SDGs) including gender equality, quality education, and decent work and economic growth.

Governance: GFPT practices good governance, conducting business with honesty, transparency, responsibility, and ethics. The company is a member of the Anti-Corruption Certified and was rated “Excellent” by the Corporate Governance Report of Thai Listed Companies.

Sales Breakdown by Segment

GFPT’s sales are diversified across various segments, contributing to its robust financial performance.

Earnings Growth Momentum

GFPT has shown significant earnings growth momentum over the years, with net profit increasing by 51.8% in 2024 but expected to decline by 17.5% in 2025.

Profit & Loss

• Net Turnover: 18,963 | 19,264 | 19,989 | 20,957
• EBITDA: 2,229 | 2,753 | 2,486 | 2,554
• Depreciation & Amortization: 1,511 | 1,586 | 1,687 | 1,774
• EBIT: 718 | 1,167 | 799 | 779
• Total Other Non-Operating Income: 433 | 374 | 400 | 419
• Associate Contributions: 535 | 922 | 871 | 892
• Net Interest Income/(Expense): (110) | (122) | (121) | (121)
• Pre-Tax Profit: 1,575 | 2,341 | 1,948 | 1,969
• Tax: (192) | (240) | (216) | (215)
• Minorities: (6) | (12) | (10) | (10)
• Net Profit: 1,377 | 2,090 | 1,723 | 1,744
• Net Profit (Adj.): 1,377 | 2,090 | 1,723 | 1,744

Balance Sheet

• Fixed Assets: 12,214 | 12,779 | 13,144 | 13,321
• Other LT Assets: 6,021 | 6,153 | 6,289 | 6,430
• Cash/ST Investment: 1,610 | 2,450 | 2,676 | 3,000
• Other Current Assets: 5,488 | 5,229 | 5,207 | 5,459
• Total Assets: 25,333 | 26,612 | 27,316 | 28,209
• ST Debt: 1,778 | 1,994 | 1,671 | 1,372
• Other Current Liabilities: 1,758 | 1,524 | 1,597 | 1,665
• LT Debt: 3,080 | 2,464 | 1,971 | 1,577
• Other LT Liabilities: 978 | 978 | 978 | 978
• Shareholders’ Equity: 17,605 | 19,507 | 20,945 | 22,453
• Minority Interest: 133 | 144 | 154 | 164
• Total Liabilities & Equity: 25,333 | 26,612 | 27,316 | 28,209

Cash Flow

• Operating: 2,106 | 2,649 | 2,454 | 2,283
• Pre-Tax Profit: 1,575 | 2,341 | 1,948 | 1,969
• Tax: (192) | (240) | (216) | (215)
• Depreciation & Amortization: 1,511 | 1,586 | 1,687 | 1,774
• Associates: (535) | (922) | (871) | (892)
• Working Capital Changes: (374) | 25 | 96 | (185)
• Non-Cash Items: (145) | (1,051) | (1,051) | (1,051)
• Other Operating Cashflows: 266 | 911 | 861 | 882

Key Metrics

• EBITDA Margin: 11.8% | 14.3% | 12.4% | 12.2%
• Pre-Tax Margin: 8.3% | 12.2% | 9.7% | 9.4%
• Net Margin: 7.3% | 10.8% | 8.6% | 8.3%
• ROA: 5.6% | 8.0% | 6.4% | 6.3%
• ROE: 8.1% | 11.3% | 8.5% | 8.0%
• Turnover Growth: 4.1% | 1.6% | 3.8% | 4.8%
• EBITDA Growth: (15.3%) | 23.5% | (9.7%) | 2.7%
• Pre-Tax Profit Growth: (30.2%) | 48.6% | (16.8%) | 1.1%
• Net Profit Growth: (32.7%) | 51.8% | (17.5%) | 1.2%
• Net Profit (Adj.) Growth: (32.7%) | 51.8% | (17.5%) | 1.2%
• EPS Growth: (32.7%) | 51.8% | (17.5%) | 1.2%
• Debt to Total Capital: 21.5% | 18.5% | 14.7% | 11.5%
• Debt to Equity: 27.6% | 22.9% | 17.4% | 13.1%
• Net Debt/(Cash) to Equity: 18.4% | 10.3% | 4.6% | (0.2%)
• Interest Cover (x): 20.2 | 22.6 | 20.5 | 21.1

Disclosures/Disclaimers

This report is prepared by UOB Kay Hian Private Limited (“UOBKH”), a holder of a capital markets services licence and an exempt financial adviser in Singapore. It is provided for information only and is not an offer or a solicitation to deal in securities or to enter into any legal relations, nor an advice or a recommendation with respect to such securities.

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