Falling pork price in Vietnam eats into CPF share price
The share price of Charoen Pokphand Foods (CPF) fell by as much as 11 per cent in five working days after rising to a new high in more than seven years due to uncertainty over the falling pork price in Vietnam, experts said.
CPF’s stock price at close yesterday (September 8) was Bt29.75 per share, down 11 per cent from Bt33.75 on August 28. The price previously rose by a whopping 88.5 per cent from the lowest point at Bt18.70 per share in March to the highest in seven years at Bt35.25 per share.
Trinity Securities’ director of securities analyses Tanapat Chatsatien said CPF’s stock price fell due to uncertainty among investors over the falling pork price in Vietnam, which dropped from its highest of around 90,000 dong per kilogramme to around 80,000 dong [Bt108] per kg.
“However, the pork price is still at a high level. The production cost per kg in Vietnam was 50,000 dong and around Bt80 per kg in Thailand,” he said.
“CPF’s third-quarter performance will actually improve from a high pork price both domestically and overseas. The company was affected by the Covid-19 fallout in the second quarter.”
He expected the pork price to remain at a high level until the middle of 2021 because raising pigs takes about a year.
“Therefore, this is an opportunity to buy CPF shares as its price is lower than the target of Bt41 per share, while the current price of around Bt30 per share accounts for a price-to-earnings [P/E] ratio of 11 times, because the company’s profit in the first six months this year rose by 44.8 per cent,” he explained.
“So far, CPF shares have been traded at a P/E ratio of 14-15 times,” he added.
Meanwhile, a Bualuang Securities analyst said Vietnam’s pork price the previous month fell by approximately 12 per cent due to African swine fever, causing small entrepreneurs to sell increased pork, while large entrepreneurs imported more pork to increase supply in the market.
“We believe that lack of pork in the region will remain until the first half of next year,” the analyst said.
“The price of pork in Laos and Cambodia has already reached the highest level, while the price in China and Thailand will reach the maximum point soon,” he predicted.
