High world food prices give windfall to GFPT

Executive-committee chairman Anan Sirimongkolkasem yesterday said GFPT expected this year's sales to grow 15-20 per cent, due mainly to increased export prices resulting from higher feed costs. World demand for processed chicken products had also increased, he said.

GFPT's sales were up 12.2 per cent from 2006, reaching Bt8.24 billion, while its net income rose 152 per cent to Bt283 million.

Anan said GFPT Group companies faced feed-cost increases averaging 20 per cent year on year, especially from higher costs for soybeans and corn. However, prices for processed chicken products were now US$4,000 to $4,500 (Bt134,000 to Bt151,000) per tonne, up 30 per cent from last year's fourth quarter, which should cover the higher feed costs.

"Processed chicken products are expected to trade at $4,500 to $5,000 a tonne in Japan and $5,000 to $6,000 a tonne in EU markets in the third quarter," he said.

GFPT recorded sales of Bt2.27 billion (up 29 per cent) for a net profit of Bt109 million (up 374 per cent) in the first quarter.

Anan said the increased sales resulted from several positive factors: room for growth in the EU market, continuous growth in the Japan market and less intensity in competitive pressure from China, where food-safety problems had hampered some exports.

The present high EU quota for Thai cooked-chicken products and a reduction in the EU's tariff rate for in-quota cooked chicken meat, from 10.9 per cent to 8 per cent, have favoured GFPT.

Anan said Japan had lifted a limitation on the number of chicken-meat processing plants it would inspect and approve in Thailand and that this would allow more plants to contribute exports to Japan. Under the Japan-Thailand Economic Partnership Agreement, Japan's tariff rate on chicken meat will also be reduced from 6 per cent to 3 per cent in five years.

Phillip Securities' is recommending "buy" on GFPT shares. It says the company's prospective income remains good despite the stock being heavily sold by major investors around the beginning of this month.

The broker says GFPT stocks are still trading on a price-to-earnings (P/E) ratio of 5. However, the stock's performance remains good, thanks to raised prices for exports of processed chicken meat, and GFPT shares should be trading on a P/E ratio of 9.

GFPT's second-quarter revenue is performing well compared with the first quarter, due mainly to expanding broiler-chicken production. The company is expected to export more broiler-chicken products to EU markets this year, the broker says.

Asia Plus Securities expects steady growth in GFPT's second-quarter results. Although domestic prices for broiler-chicken products have weakened from a peak of Bt43 a kilogram to Bt39, GFPT's exports of chicken products should compensate for the lower domestic prices, it says.