TU: 2Q16E core profit drop 8%YoY
Thai Union Group Underperform (16E TP Bt20.50)
Company Update
Close Bt21.60 Food & Beverage
Earning upgrade/Earnings downgrade/Overview unchanged
July 8, 2016
2Q16E core profit drop 8%YoY; share price fully valued Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.319
1.464
KT ZMICO vs. consensus Share data
‐3.0%
4.5%
Reuters / Bloomberg
TU.BK/TU TB
Paid‐up Shares (m)
4,771.82
Par (Bt)
0.25
Market cap (Bt bn / US$ m)
103.00/2,930.00
Foreign limit / actual (%)
45.00/39.17
52 week High / Low (Bt)
23.00/15.80
Avg. daily T/O (shares 000)
10,236.00
NVDR (%)
13.11
Estimated free float (%)
64.79
Beta
0.62
URL
www.thaiuniongroup.com
CGR
Anti‐corruption
Level 2 (Declared)
Phornsri Laysanitsaerekul Analyst , no 17621 [email protected] 66 (0) 2624‐6258
Strong business outlook but fully valued We expect 2Q16E core profit to increase by 44%QoQ but drop by 8%YoY and maintain a positive view toward TU’s management efficiency. We also maintain our 2016‐17E earnings growth projection of 19% CAGR. However, the share price has risen by 28%YTD and is already fully valued compared to our 2016E target price of Bt20.50/share (16x PER). In addition, there are risks concerning the fluctuation in FX rates as well as the UK and US economies. We thus maintain an “Underperform” rating. Expect 2Q16E core profit to drop by 8%YoY but grow 44%QoQ We expect TU to report 2Q16E core profit of Bt1.50bn (‐8%YoY, +14%QoQ). The firm’s sales for the quarter are estimated at Bt34.32bn, up 12%YoY thanks to expected sales growth in all existing businesses, driven by several factors: i) the tuna price has increased; ii) the shrimp price rose in late 2Q; iii) the performance of Rugen Fish was incorporated for the full quarter (with projected sales of EUR140mn p.a.); iv) the firm began to realize a contribution from its tuna business in the Middle East. On a QoQ basis, TU’s 2Q16E sales are expected to grow by 10%QoQ on seasonality. Meanwhile, the firm’s gross profit margin for the quarter is estimated at 15.8% (vs. 16.9% in 2Q15 and 15.5% in 1Q16). However, there may be some extra items (e.g., legal‐related expenses and FX gains) that push up the actual net profit beyond our core earnings projection. 2016E core profit growth projected at 19%YoY If the core profit in 2Q16 comes out in line with our projection, TU’s 1H16E core earnings are estimated at Bt2.55bn (+18%YoY), accounting for 42% of our projection of Bt6.1bn. TU’s sales and core profit are likely to accelerate and peak in 3Q16 during the peak season. We thus maintain our 2016E earnings projection. Acquisition deal in the lobster business in Canada to be completed in Aug‐16 TU plans to acquire a large part of the shares in Les Pecheries de Chez Nous, a Canadian‐based producer of processed lobsters in New Brunswick. The firm has sales of 50mn Canadian dollars (approximately Bt1.36bn, accounting for 1% of TU’s total sales). The deal is expected to be finalized by Aug‐16, with the price of not over Bt1.36bn (based on P/Sale of
Company Update
Close Bt21.60 Food & Beverage
Earning upgrade/Earnings downgrade/Overview unchanged
July 8, 2016
2Q16E core profit drop 8%YoY; share price fully valued Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.319
1.464
KT ZMICO vs. consensus Share data
‐3.0%
4.5%
Reuters / Bloomberg
TU.BK/TU TB
Paid‐up Shares (m)
4,771.82
Par (Bt)
0.25
Market cap (Bt bn / US$ m)
103.00/2,930.00
Foreign limit / actual (%)
45.00/39.17
52 week High / Low (Bt)
23.00/15.80
Avg. daily T/O (shares 000)
10,236.00
NVDR (%)
13.11
Estimated free float (%)
64.79
Beta
0.62
URL
www.thaiuniongroup.com
CGR
Anti‐corruption
Level 2 (Declared)
Phornsri Laysanitsaerekul Analyst , no 17621 [email protected] 66 (0) 2624‐6258
Strong business outlook but fully valued We expect 2Q16E core profit to increase by 44%QoQ but drop by 8%YoY and maintain a positive view toward TU’s management efficiency. We also maintain our 2016‐17E earnings growth projection of 19% CAGR. However, the share price has risen by 28%YTD and is already fully valued compared to our 2016E target price of Bt20.50/share (16x PER). In addition, there are risks concerning the fluctuation in FX rates as well as the UK and US economies. We thus maintain an “Underperform” rating. Expect 2Q16E core profit to drop by 8%YoY but grow 44%QoQ We expect TU to report 2Q16E core profit of Bt1.50bn (‐8%YoY, +14%QoQ). The firm’s sales for the quarter are estimated at Bt34.32bn, up 12%YoY thanks to expected sales growth in all existing businesses, driven by several factors: i) the tuna price has increased; ii) the shrimp price rose in late 2Q; iii) the performance of Rugen Fish was incorporated for the full quarter (with projected sales of EUR140mn p.a.); iv) the firm began to realize a contribution from its tuna business in the Middle East. On a QoQ basis, TU’s 2Q16E sales are expected to grow by 10%QoQ on seasonality. Meanwhile, the firm’s gross profit margin for the quarter is estimated at 15.8% (vs. 16.9% in 2Q15 and 15.5% in 1Q16). However, there may be some extra items (e.g., legal‐related expenses and FX gains) that push up the actual net profit beyond our core earnings projection. 2016E core profit growth projected at 19%YoY If the core profit in 2Q16 comes out in line with our projection, TU’s 1H16E core earnings are estimated at Bt2.55bn (+18%YoY), accounting for 42% of our projection of Bt6.1bn. TU’s sales and core profit are likely to accelerate and peak in 3Q16 during the peak season. We thus maintain our 2016E earnings projection. Acquisition deal in the lobster business in Canada to be completed in Aug‐16 TU plans to acquire a large part of the shares in Les Pecheries de Chez Nous, a Canadian‐based producer of processed lobsters in New Brunswick. The firm has sales of 50mn Canadian dollars (approximately Bt1.36bn, accounting for 1% of TU’s total sales). The deal is expected to be finalized by Aug‐16, with the price of not over Bt1.36bn (based on P/Sale of
