The Nation




Japan lifts import ban on Thai frozen chicken, benefiting GFPT and CPF OVERWEIGHT


- Unlock chicken meat export to Japan, effective since 25 Dec

The Japanese Ministry of Agriculture, Forestry, and Fisheries announced officially to lift a ban on imports of Thai frozen chicken since 25 December 2013 on ward. Prior to the ban that had resulted from the bird flu pandemic in 2004, Japan used to import 200,000 tons/year of frozen chicken from Thailand without import quota. As Japan resumes its imports, Thailand will be able to expand its frozen chicken export to Japan by 100,000 tons (because during the ban Japan has partially imported cooked chicken products instead). Moreover, comparing with its major rival in exporting frozen chicken to Japan like Brazil, Thailand has an advantage in terms of a closer location to Japan, so it will not be difficult for Thailand to capture market share from Brazil. Therefore, we project overall chicken export overseas in 2014 to grow 26%yoy to 670,000 tons; 240,000 tons for frozen chicken and 430,000 tons for cooked chicken .

- Benefiting GFPT and CPF; during forecast up revision

GFPT and CPF will benefit the most from this situation, so we are revising up earnings forecasts for both companies. According to our study, GFPT will get the largest benefit from the ban lifting as the slaughtering house and processing chicken businesses comprise 65% of its total income and it possesses 12percent share in the Thai chicken export market. Consequently, GFPT's total income and net profit in 2014 are projected to increase 5.7% and 6.5%, respectively. For CPF, of which 32% of its income comes from livestock business and the market share is 20%, the total income and net profit in 2014 would shift 0.4% and 1.2%, respectively. In addition, a projected significant increase in chicken export volume in 2014 against relatively lower production capacity might help to boost domestic live chicken sale price .


We maintain OVERWEIGHT, believing that the aforementioned positive factor would help boost the sector's net profit growth in 2014. The continuously weakening Baht at present is also another to benefit net profits of food exporters as they have US$ income but Baht cost. We estimate the average Fx rate in 2014 at B31.5/US$, but might revise it up in the future if the Baht is still standing above B31.5/US$. Overall, we recommend buying both GFPT(FV@B15.57) and CPF(FV@B33.69).

Comments conditions

Users are solely responsible for their comments.We reserve the right to remove any comment and revoke posting rights for any reason withou prior notice.