Analysts Agree on “BUY” Rating for TU at TP of ฿19, Expecting 2020 Earnings to Reach ฿6Bn
Analysts Agree on “BUY” Rating for TU at TP of ฿19, Expecting 2020 Earnings to Reach ฿6Bn
Analysts Agree on “BUY” Rating for TU at TP of ฿19, Expecting 2020 Earnings to Reach ฿6Bn
26 ม.ค. 2564

Analysts agree on TU’s outstanding earnings in 4Q20 of 1,230-1,420 million baht, a growth of 16-18%, fostering the 2020 net profit to 6,000-6,200 million baht, an increase of 52-60% YoY, thanked to the Covid-19 outbreak that has boosted the demand for frozen and canned foods. Analysts recommend “BUY” with a target price at ฿19.00/share.
 
Asia Wealth Securities (AWS) recommended “BUY” on Thai Union Group Public Company Limited (TU) with a target price at ฿19.00/share, expecting a 4Q20 earnings of 1,304 million baht (+23% YoY) driven by a total revenue of 33,897 million baht (+3% YoY, -37% QoQ). 
 
AWS expected the performance outlook in 2020 of TU to book a net profit of 6,093 million baht (+60%YoY), with a total income of 132,835 million baht (+5% YoY). 
 
Krungsri Securities (KS) also maintained a “BUY” rating on TU, but revised down a target price to ฿18.00/share (from ฿19.00/share), forecasting a net profit to back to normal at 1,272 million baht (+20% YoY, -38% QoQ) due to slower demand for ambient seafood products than in 2Q and 3Q. Gross profit margin (GPM) should drop to 17.1%, from 18.2% in 3Q. 
 
Revenue from Red Lobster, a food service business in the US, should also be seasonally weaker. Hence, expected 167 million baht equity losses (mostly from Red Lobster).
 
KS is neutral to outlook for 2021. There would be strong demand for ambient seafood (canned tuna and other seafood) at least up to the middle of this year. But demand could soften in 2H if Covid-19 cases start to slow following accelerating vaccination programs. Meanwhile, economies in Thailand, the US, and EU are expected to recover this year, and demand for frozen seafood could recover in 2H and offset weaker demand for ambient seafood.
 
Expected 2021’s earnings to rise by only 1-2% after surging 52% in FY20, along with  revised down 2020 and 2021 earnings by 8% to 6,000 million baht and 6,100 billion baht, respectively, after trimming sales volumes for ambient seafood, and gross margins to 17.5% and 17.0%, from 17.6% and 17.5%, respectively. 
 
Maybank Kim Eng (Maybank) saw a growth in TU’s 4Q20 earnings, supported by an increasing ambient seafood product sales volume despite a higher share of loss due to a reclosure of Red Lobster in the US during the Covid-19 lockdowns. Overall, a net profit in 4Q20 would stand at 1,420 million baht (+18% YoY, -35% QoQ).
 
For the 2020 performance, Maybank targeted TU’s net profit at 6,200 million baht (+62.47% YoY) and expected to offer a 2H20 dividend payment at ฿0.30/share (yield at 2.10%). However, projected a 5% drop in 2021 earnings due to a lower GPM and an impact of Thai baht appreciation, thus downgraded a recommendation from BUY to “Trading Buy” with a target price at ฿16.50/share based on a risk on tuna prices fluctuate and a baht appreciation, along with higher raw material costs.