Agri-Food

Agri-Food
Investigation completed. Frozen shrimp CVD ineffective for all country
The US announced final determination in CVD investigation on frozen shrimp
import from trading partners. International Trade Commission had decided that
subsidy on shrimp export from five trading partners (Malaysia, China, Ecuador,
India and Vietnam) did not cause harm in U.S. industry, so these countries
don't have to pay CVD (previously, US determined countervailable subsidy for
Malaysia, China, Ecuador, India and Vietnam at 10.8%-54.5%, 18.16%,
10.13%-13.51%, 10.54%-11.14% and 1.15%-7.88%, respectively). U.S.
Department of Commerce had decided to set Thailand and Indonesia, which
were previously accused of subsidizing, free from guilt on 19 August 2013, as
their subsidy were below 2%, not affecting US shrimp industry. Thus, Thai
shrimp exporters can demand return for tariff guarantee at the pre-rate of
2.09% as from May 2013 preliminary determination.
- CVD to be ineffective, benefiting TUF, CPF
As Thailand did not suffer US CVD for frozen shrimp (U.S. additional measure
aside from current anti-dumping tax on shrimp import), Thailand is successful
for proving that Thailand did not use dumping method as accused. However,
from the final determination in CVD investigation, Thailand and other trading
partners did not have to pay for CDV, so Thailand does not gain much
advantage. This issue would decrease the risk of US trade blocking method,
likely to benefit shrimp exporters to US. CFRESH would fully benefit, as its
income is from shrimp exporting, and export to US makes up 10% of its total
income. TUF's 6% of total revenue is from shrimp export to the US (including
PPC subsidiary), which means lower benefit from the tax. CPF would not benefit
much, as it mostly exports cooked shrimp. CPF's profit from importing frozen
shrimp to the US is not likely to make over 1% of total income.
- "NEUTRAL". Share prices have responded in short term. Top
pick is CPF
We reiterate "NEUTRAL" for agricultural-food sector. We maintain
FY2013-2014 net profit forecast and recommendation. We project that
share prices of shrimp exporters (CPF, TUF and CFRESH) have already
responded to the supporting factor. Top pick is CPF([email protected]), as
benefit from livestock business would be blissful until 2014, and
shrimp business is recovering, as shrimp disease is relieved.