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Thai Union Frozen

Tisco Securities has maintained its "buy" recommendation on Thai Union Frozen Products (TUF) shares, with a 12-month target of Bt29.

Published on August 30, 2007

TUF surprised the market by announcing the purchase of a fishing fleet that is currently operating in the Indian Ocean at a cost of US$41.5 million (Bt1.43 billion). This is intended partly to secure its supply of tuna and reduce tariffs on its exports of tuna products. However, the broker expects most of the gains to be offset by the risks inherent in this business and sees no need to adjust its target price, although its "buy" call still stands.

The fleet consists of four boats plus a search vessel, and the company says it can catch up to 25,000 tonnes of fish annually, generating close to Bt1 billion in revenues. Besides helping secure its own supply of fresh tuna, TUF intends to use the fish caught to qualify for the EU Generalised System of Preferences and Japan-Thailand Economic Partnership Agreement tariff exemptions.

The broker expects this investment to have a neutral effect on TUF.

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Thai Union Frozen

Tisco Securities has maintained its "buy" recommendation on Thai Union Frozen Products (TUF) shares, with a 12-month target of Bt29.

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