Charoen Pokphand Foods: Maintain a neutral view
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Meat prices softened across key markets in 4Q25 due to higher supply and slowdown in demand
Weaker earnings expected for 4Q25F, both y/y and q/q, as a result of softer meat prices impacting both margins and associate income
Expect more normalised trend in meat prices compared to 2025, alongside a forecasted 19% earnings contraction
Maintain HOLD with unchanged TP of THB24.50
Update on meat prices in key markets
Domestic swine prices weakened in 4Q25. Domestic swine prices eased further to THB61.2/kg on average in 4Q25 (-13% y/y and -4% q/q), negatively impacted by seasonality, increased market supply, the effects of flooding in the Northern and Northeastern parts of Thailand, and an ongoing shortage of Cambodian labour affecting other operators, which likely compelled farmers to liquidate their swine in the market.
We note that this price level is approximately equivalent to CPF’s production cost of c.THB60-62/kg, but it s significantly lower than the broader market’s average production cost of c.THB74/kg.
Currently, the price has recovered to THB70/kg, driven by improving demand and the absence flooding impact. For the full year, CPF believes the domestic swine price should range between c.THB70-75/kg (vs. THB73/kg in 2024).
Thai broiler prices also declined. In 4Q25, domestic broiler prices experienced a further decline, reaching an average of THB37.2/kg (-2% y/y and -5% q/q) following a drop in swine prices in Thailand and increased supply within the market. This downward trend in prices is also consistent with decreasing key raw material costs.
Currently, the broiler price has improved to THB40.5/kg, attributable to the recovery in domestic swine prices along with export demand. For 2026, the company anticipates that the broiler price will remain at a similar level to that of 2025 (c.THB39).
Despite this modest price fluctuation, the market’s average broiler production cost is c.THB36-37/kg. Consequently, CPF’s Thailand broiler operations are expected to remain profitable.
Softer swine prices in Vietnam. In 4Q25, the swine price in Vietnam reached VND53.3k/kg (-12% y/y, -9% q/q) after an early resurgence of ASF in certain areas, coupled with flooding in other parts of Vietnam. Nonetheless, the price has recently spiked to VND69k, primarily due to supply shortages resulting from ASF.
For the full year, CPF expects prices to remain at a healthy level, largely aligning with the average prices recorded in 2025 (c.VND59-61k). We note that production costs are estimated at VND45-47k/kg. Thus, we believe that Vietnam operations should remain positive throughout 4Q25 and 2026.
Chinese swine price still under recovery. In 4Q25, the Chinese swine price was RMB12.0/kg (-31% y/y, -17% q/q). The price decline was further exacerbated by the negative impact of increased supply stemming from capacity expansion by large players in the region, coupled with high import volumes.
Currently, the price has marginally improved to RMB12.7/kg, which remains slightly below the market’s average production cost of RMB13.5-14/kg. Nonetheless, management expects price to gradually improve throughout 2026, driven by government initiatives to support prices and a less aggressive pace of capacity expansion.
Key raw material costs remained favourable
Favourable trend persists for both corn and soybean meal. In 4Q25, domestic corn prices decreased by 2% y/y and 5% q/q, while soybean meal prices declined 23% y/y and 1% q/q. The downtrend in soybean meal prices was supported by the de-escalation of the Russia-Ukraine war, more favourable weather conditions in 2025, and escalating trade tensions between the US and China. As of now, we observe that corn prices have been largely stable MTD, whereas soybean meal prices have experienced a slight increase. For 2026, management expects key raw material prices to remain favourable.
Earnings preview
Weak 4Q25F profit. We forecast CPF to report 4Q25F core profit of THB2.7bn (-54% y/y, -55% q/q). Overall, the y/y contraction was due to softer meat prices in key markets. Nonetheless, with improving prices across key markets towards end-2025, we believe the company should record extraordinary gains of THB250mn, mainly from a biological loss, and register net profit of THB3.0bn (-28% y/y, -42% q/q). Net-net, the core profit margin is projected to come in at 1.9% in 4Q25F, vs. 4.1% in 4Q24 and 4.4% in 4Q25.
Key performance highlights:
(-) Revenue: Total revenue is expected to decline by 2% y/y to THB145.5bn. This 2% y/y decrease is mainly attributable to a drop in meat prices and the impact of THB translation, which were partially offset by higher sales volume.
(-) Blended GPM: In 4Q25F, we believe the blended gross profit margin (GPM) will decrease to 13.6%, from 15.7% in 4Q24 and 16.5% in 3Q25, mostly due to lower meat prices in Thailand and Vietnam, notwithstanding the support derived from more favourable raw material costs and enhanced production efficiency across both the livestock and aquaculture businesses.
(-) SG&A-to-sales: We anticipate the SG&A-to-sales in 4Q25F to remain flat y/y, despite improvements in efficiency, given the prevailing lower meat prices. Net-net, the EBIT margin is projected to be dragged by the lower gross margin, registering at 4.9% in 4Q25F (-2.1ppt y/y and -3.2ppt q/q).
(-) Income from associates: Associate income is expected to plunge by 54% y/y, as it was dragged by softer Chinese swine prices as well as weaker performance of other associates.
(-) Interest expenses: Interest expenses are expected to remain flat y/y, as the benefits from a lower interest rate environment are largely offset by the additional loan the company secured for its acquisition of a minority stake in CPP in April 2025.
Outlook
2026 earnings projected to decline y/y. In our forecast, we believe CPF will experience an earnings contraction of 19% in FY26F, attributable to less favourable meat prices in key markets compared to FY25F, even as we do not foresee a substantial drop in key raw material costs from the last year. Conversely, in 1Q26F, we may observe a quarterly improvement in earnings, although a significant y/y contraction is expected to persist.
Potential benefits from US corn imports. The cabinet has approved a major increase in US corn imports, raising the previous 54,700-tonne quota to up to 1mn tonnes of duty-free US corn through mid-2026. This decision forms part of broader trade negotiations with the US and is strategically aimed at alleviating the high feed-cost pressures within the domestic livestock sector.
To safeguard local farmers, importers are mandated to adhere to a 3:1 rule, which necessitates the purchase of three parts of domestic corn for every part of US corn. Additionally, the government is implementing measures for price support and production incentives. While this move aims to ensure feed supply security and bolster industry competitiveness, it has, nonetheless, raised concerns among some policymakers about potential pressures on Thai corn growers, even with the existing safeguards in place.
According to CPF, the imported corn is projected to cost THB8.5/kg, compared to current Thai corn prices of THB9.8/kg. The price differential is anticipated to positively impact the company’s margin. Per our calculation, CPF could potentially reduce corn costs by up to THB430-550mn.
Recommendation
Maintain HOLD with an unchanged TP of THB24.50. We slightly trim our earnings forecast for FY25-27F, mostly due to lower associate income stemming from the softer-than-expected outlook for the Chinese swine business. Nonetheless, we maintain our TP of THB24.50, pegged to 0.77 FY26F P/BV, at its historical five-year average P/BV, reflecting normalised meat price cycles. Given a softer growth outlook for FY26F and ongoing uncertainties regarding the import of agricultural products from the US, we maintain our HOLD rating for now.
Quarterly / Interim Income Statement (THBmn)
FY Dec (Btm) | 1Q24 | 2Q24 | 3Q24 | 4Q24 | 1Q25 | 2Q25 | 3Q25 | 4Q25F | Chg. | Chg. |
yoy | qoq | |||||||||
Sales | 140,037 | 149,498 | 142,703 | 148,509 | 144,175 | 147,595 | 138,565 | 145,539 | -2% | 5% |
Cost of Goods Sold | -123,228 | -126,484 | -120,756 | -125,236 | -117,508 | -118,385 | -115,656 | -125,746 | 0% | 9% |
Gross Profit | 16,809 | 23,013 | 21,947 | 23,274 | 26,667 | 29,210 | 22,910 | 19,793 | -15% | -14% |
SG&A exp. | -12,178 | -12,760 | -12,624 | -12,873 | -12,241 | -13,042 | -11,690 | -12,662 | -2% | 8% |
EBIT | 4,632 | 10,254 | 9,323 | 10,401 | 14,426 | 16,168 | 11,220 | 7,131 | -31% | -36% |
Other inc./exp. | 665 | 687 | 1,087 | 14 | 792 | 671 | 569 | 430 | 2877% | -24% |
Interest income | 400 | 506 | 552 | 409 | 339 | 440 | 493 | 350 | -15% | -29% |
Associate inc. | 1,792 | 3,352 | 3,655 | 3,900 | 3,443 | 3,452 | 2,463 | 1,802 | -54% | -27% |
Interest exp. | -6,182 | -6,276 | -6,031 | -6,086 | -6,092 | -6,015 | -6,107 | -6,095 | 0% | 0% |
Pretax Profit | 1,307 | 8,523 | 8,585 | 8,638 | 12,909 | 14,716 | 8,638 | 3,618 | -58% | -58% |
Tax | -550 | -2,046 | -1,052 | -1,992 | -3,255 | -2,847 | -1,599 | -645 | -68% | -60% |
Minority Int. | -266 | -664 | -886 | -615 | -1,108 | -1,002 | -940 | -201 | -67% | -79% |
Core Profit | 491 | 5,813 | 6,648 | 6,030 | 8,546 | 10,867 | 6,099 | 2,772 | -54% | -55% |
Extra | 661 | 1,111 | 661 | -1,858 | 3 | -490 | -913 | 250 | -113% | -127% |
Net Profit | 1,152 | 6,925 | 7,309 | 4,173 | 8,549 | 10,377 | 5,186 | 3,022 | -28% | -42% |
Margins (%) |
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Gross Margin | 12.0% | 15.4% | 15.4% | 15.7% | 18.5% | 19.8% | 16.5% | 13.6% | (2.1) | (2.9) |
SGA % Sales | 8.7% | 8.5% | 8.8% | 8.7% | 8.5% | 8.8% | 8.4% | 8.7% | 0.0 | 0.3 |
EBIT Margin | 3.3% | 6.9% | 6.5% | 7.0% | 10.0% | 11.0% | 8.1% | 4.9% | (2.1) | (3.2) |
Core Net Margin | 0.4% | 3.9% | 4.7% | 4.1% | 5.9% | 7.4% | 4.4% | 1.9% | (2.2) | (2.5) |
Source: DBSVT, Company
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