Farm-goods firms in profit bonanza

This follows the sharp upward trend in world prices for agricultural products, including rice and soybeans, said a Sicco Securities analyst.

Soybean-related companies will be among the main beneficiaries of the spiralling prices. The US Agriculture Department says stocks of soya oil will decline this year and next, signalling increased demand and rising prices, the analyst said.

Sicco Securities plans to revise upwards its net profit forecast for Thai Vegetable Oil (TVO) following the company's higher-than-expected first-quarter earnings, the analyst said. TVO is a manufacturer and distributor of soybean meal used in the production of animal feed; and of A-ngoon-brand soybean oil. It recorded a 267-per-cent year-on-year rise in its first-quarter net profit, to Bt584.54 million.

The broker's present estimate for TVO's net profit this year is Bt1.6 billion. It's fair value for TVO shares is Bt28.16 apiece.

Other listed producers of agricultural goods have also reported dazzling first-quarter earnings. Thai Ha has been the best performer in terms of growth. Its quarterly net profit soared 1,217 per cent year on year to Bt27.92 million.

GFPT recorded a first-quarter net profit of Bt109.04 million, growing at an annualised rate of 378 per cent. Lam Soon (Thailand) reported a 284-per-cent increase in its quarterly net profit, to Bt108.94 million. United Palm Oil Industry's first-quarter net profit shot up almost 196 per cent year on year to Bt108.94 million. And Charoen Pokphand Foods' first-quarter net profit jumped almost 140 per cent year on year to Bt451.24 million.

But TVO's performance makes it a favourite. A DBS Vickers Securities analyst recommends investors snap up TVO shares with a fair value of Bt28.50 apiece.

The company's first-quarter figures result from a 15-per-cent increase in soybean-oil prices and a 33-per-cent rise in soybean-meal prices.

The baht appreciation and efficient inventory management led TVO's gross profit margin from 12.5 per cent in last year's first quarter to 15.9 per cent in the fourth quarter and 16.9 per cent in this year's first quarter.

The broker forecast that TVO's earnings for this year and next would grow 42 per cent and 13 per cent year on year to Bt1.8 billion and Bt2 billion, respectively, buoyed by the stronger baht and rising world prices for agricultural goods.

A Phillip Securities analyst recommended "buy" on GFPT shares, with a fair value of Bt26 apiece, given the company's low price-to-equity ratio of 7.5, based on an earnings estimate for this year.

The broker raised its earnings forecast for GFPT this year 29 per cent to Bt364 million on the back of the higher prices, capacity expansion and the robust first-quarter net profit.