NSL Foods Public Company Limited

Yuanta Securities stated that NSL Foods Public Company Limited, or NSL, reported second-quarter 2026 normalized profit of 150 million baht, down 8.0% quarter-on-quarter and 8.7% year-on-year, close to expectations. First-half normalized profit accounted for 48.3% of the full-year profit estimate. Total revenue was 1.822 billion baht, close to expectations, down quarter-on-quarter due to weak consumer purchasing power, but up slightly year-on-year thanks to the 7-Eleven business and export business. Gross margin was 19.7%, down from 20.0% in the first quarter and 20.2% in the second quarter of last year, due to higher raw material and packaging costs from the Middle East war and a high base last year when there were no labor transition expenses from Cambodia to Myanmar. Selling and administrative expenses were 173 million baht, up 1.1% quarter-on-quarter and 10.5% year-on-year, representing 9.5% of revenue, slightly above expectations due to higher marketing and transportation expenses. The company announced an interim dividend for the first half of 0.50 baht per share, representing a yield of 2.2%, with the XD date on 28 August 2026 and dividend payment on 11 September 2026. The analyst expects results to have passed their trough in the second quarter and forecasts third-quarter normalized profit to return to growth both quarter-on-quarter and year-on-year, driven by recovering purchasing power, the opening of a new plant in August 2026 to support more production for 7-Eleven, price increases on some items, and a low base last year from labor transition expenses. Gross margin is expected to return to 20.5%, and fourth-quarter normalized profit is expected to reach the year's high due to the high season and a full quarter of contribution from the new plant. Risk from a customer facing liquidity issues has decreased because the customer has been able to obtain loans from an Islamic bank, limiting default risk to NSL, although the company may reduce order acceptance, which is already included in estimates. The analyst maintains 2026-2027 normalized profit estimates at 648 million baht, up 7.3% year-on-year, and 700 million baht, up 8.0%, respectively. The target price is maintained at 30.00 baht. The current share price trades at 2026-2027 PER of only 10.4 times and 9.6 times. The recommendation remains Buy.