GFPT - 3Q24: In line with estimates

3Q24 core profit was in line at Bt564mn, +77% YoY from better sales and margin and higher equity income but flat QoQ. We raise our 2024F by 5% to reflect strong export sales volume (led by Europe) and a wider margin from more high-margin export sales amid low feed costs in 4Q24F. We expect 4Q24F to grow YoY from better sales and margin but slip QoQ on seasonality. GFPT is now trading at 6.7x 2024PE (-2S.D. vs its 10-year PE). We maintain Outperform with a mid-2025 SOTP TP of Bt16, based on PE of 8.5-10.5x for feed, farm and food units.

3Q24 net profit in line at Bt542mn, +70% YoY but -7% QoQ. Excluding Bt22mn FX loss, 3Q24 core profit was B564mn, +77% YoY on better sales and margin and higher equity income (McKey & GFN) but flat QoQ as higher sales and margin offset lower equity income from GFN.

3Q24 highlights. Sales grew 6% YoY with better food sales (+12% YoY, led by stronger direct exports) and farm sales (+2% YoY, higher sales volume to GFN) outpacing weaker feed sales (-2% YoY on lower fish feed sales). At the food unit, direct export sales rose to 9,500 tons, +44% YoY off last year’s low base and higher exports into Europe, Malaysia and Singapore and +6% QoQ on better exports to Europe, Japan and China. Prices to Europe and Japan for the industry averaged US$4,000/ton (-5% YoY, flat QoQ) and US$4,800/ton (+4% YoY, +4% QoQ). Local chicken rib byproduct price was Bt14.5/kg, +26% YoY but -9% QoQ. Gross margin widened to 15.5%, +340bps YoY and +130bps QoQ, on a rise in high-margin export sales and low feedstock costs. Equity income rose to Bt206mn (+86% YoY, -26% QoQ), on a rise in contribution from McKey (Bt150mn, +159% YoY, +6% QoQ) from more exports and GFN (Bt57mn, +6% YoY from more exports but -58% QoQ from lower local byproduct prices).

Takeaway from meeting. Local prices. In 4Q24TD, local live chicken and chicken rib byproduct prices have fallen QoQ to Bt38.5/kg (+2% YoY, -10% QoQ) and Bt11/kg (-24% YoY and QoQ) from the rainy season and floods and the vegetarian festival in October. GFPT expects prices to improve seasonally in late Nov-Dec on more demand. As a substitute protein, local broiler prices tend to be supported when local swine prices rise, now up 3% MoM to Bt73/kg in Nov to date. Feed costs. GFPT has no cost side concerns from late 2024 to 2025. In 3Q24, local corn spot price was Bt12/kg (+3% YoY, +10% QoQ) and imported soybean meal price was Bt20.2/kg (-5% YoY and QoQ). In 4Q24TD, local corn spot price is down to Bt10/kg (-5% YoY, -17% QoQ) and imported soybean meal price is at Bt19.1/kg (-13% YoY, -5% QoQ) from more supply. Broiler exports. GFPT raised its 4Q24F forecast for broiler export sales volume to 9,000-9,500 tons (+20% YoY; flat/-5% QoQ) from 8,000-8,500 tons earlier based on robust advance orders from Europe and China amid stable export prices. Looking into 2025F, GFPT expects export demand from Europe, Singapore and Malaysia, all of which grew well in 2024TD, to grow moderately (some advance orders seen into 2Q25), amid more demand from Japan and China off a low base versus the record level seen over the past few years. Equity income. Equity income from McKey will stay healthy, boosted by solid exports. While contribution from GFN might soften from lower local byproduct prices, solid exports tend to keep GFN profitable.

Key risks are changes in feed costs and government policies, higher swine supply (substitute protein). Key ESG risks are energy, waste & water management, sustainable products (E), health & safety policies for customers and labor (S).