Khonburi Sugar

Khonburi Sugar (KBS, Not Rated), one of the two SET-listed sugar companies,  estimated sugar price to remain high due to a drop in stocks to consumption ratio and lower Brazil sugar output. Global warming has also reduced sugarcane harvests. The company forecasts sugar price at 22-30 US cents/pound through 2014. KBS estimates its production at 2.8m tons and its revenue to grow 10-15% next year with improved processing efficiency. KBS has contracted 85% of sugar sales next year.

Comments

This is in line with our forecasts. Industry experts estimated 2011/12 global sugar surplus at c.4m tons due to higher production in Asian and European countries. We forecast global sugar price to remain high, supported by tight demand-supply, falling stocks to consumption ratio and lower production from Brazil, the world’s largest producer and exporter. We expect stocks to consumption ratio to drop to 34% next year, the lowest level in 20 years. The rising trend in global sugar prices has directly benefited Thailand’s sugar producers.