Krungsri Securities forecasts TFG's normalized profit in the second quarter of 2023 at 1.392 billion baht, down 47% year-on-year and 28% quarter-on-quarter. The main drag is a lower gross margin of 18%, pressured by higher animal feed costs, while chicken and pork selling prices weakened sharply, especially in May 2023. Selling and administrative expenses to sales rose to 9% after the company accelerated new retail branch openings by 58 stores this quarter, bringing the total to 748 branches at the end of June 2023. Revenue is expected at 18.292 billion baht, down 3% year-on-year but up 4% quarter-on-quarter. The chicken business saw declines in both volume and price, while the swine business posted higher volume but was dragged down by lower prices. The retail business continued to perform well at approximately 8.6 billion baht, up 27% year-on-year and 6% quarter-on-quarter, driven by new branch expansion, which helped offset a roughly 5% decline in same-store sales. Normalized profit in the first half is estimated at 41% of the full-year 2023 forecast of 8.048 billion baht. Normalized profit in the third quarter of 2023 is expected to return to growth both year-on-year and quarter-on-quarter, as chicken and pork prices gradually recover. The average Thai swine price in July 2023 was 64.50 baht, up 4% quarter-on-quarter, and the chicken price was 40 baht, up 6% quarter-on-quarter. Corn prices are expected to start declining as harvest season begins. Krungsri Securities maintains a buy recommendation and a target price of 11.50 baht, viewing that operating performance has passed its trough in the second quarter of 2023 and will return to growth in the second half as meat prices recover.
Thaifoods Group Public Company LimitedHigh animal feed costs (corn) and weak chicken/pork prices pressure gross margin.