GFPT Q3 Earnings Beat Expectations: Strong Export Growth and Margin Expansion Drive Positive Outlook

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

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