Charoen Pokphand Foods

Charoen Pokphand Foods Plc (CPF)
 

No meaningful impact from potential downturn in the West. We do not expect the potential economic meltdown in the US and EU to have a significant impact on CPF as the two regions represent only 8-9% of its sales. The slack, if any, should be offset by rising contributions from Asian countries, where food demand is spurred by population growth and an expanding middle class. At CPF's current share price of THB27.5, investors can buy into its agro-business, which we value at THB28, and receive exposure to its 30% stake in CPALL, a consistent earnings contributor. Potential catalysts are record 3Q11 earnings, rising contributions from its overseas business and unforeseen supply disruptions. We maintain our OUTPERFORM call and SOP-based target price of THB41.