Charoen Pokphand Foods: Lack of short-term catalyst
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- 4Q25 core earnings contracted both y/y and q/q due to softer meat prices, which pressured margins and associate income
- Current meat prices across key markets show mixed trends, while raw material costs remain favourable
- Earnings are projected to decline by 20% following the normalisation of meat prices from their 2025 peak
- Cut our earnings forecasts and TP to THB 22.00; and maintain HOLD
Earnings review
Disappointed 4Q25 results. CPF reported a 4Q25 core profit of THB 135mn (-98% y/y, -98% q/q), significantly below our estimate of THB 2.8bn and consensus expectations of THB 2.4bn. The key deviation from our forecast was mainly due to lower-than-expected sales and gross margin.
Overall, the weak y/y performance was dragged down by softer meat prices in key markets. In 4Q25, CPF recorded a one-time gain of THB 950mn and posted a net profit of THB 1.1bn (-74% y/y, -79% q/q). Net-net, the core profit margin came in at 0.1% in 4Q25, compared with 4.1% in 4Q24 and 4.4% in 3Q25.
Key performance highlights:
(-) Revenue: Total revenue contracted 5% y/y to THB 140.8bn, mainly attributable to lower meat prices and foreign exchange translation impacts.
CPF: 2025 revenue breakdown by country
Source of all data: Company, DBS
CPF: 2025 revenue breakdown by segment
Source of all data: Company, DBS
(-) Blended GPM: In 4Q25, blended gross profit margin declined to 12.7%, from 15.7% in 4Q24 and 16.5% in 3Q25. The drop was largely due to lower swine prices in Thailand (-13% y/y) and Vietnam (-12% y/y), despite support from more favourable raw material costs and improved production efficiency across both livestock and aquaculture operations.
CPF: Quarterly gross margin trend
Source of all data: Company, DBS
(-) SG&A-to-sales: SG&A-to-sales increased by 1ppt y/y due to weaker sales leverage. As a result, EBIT margin registered at 3.0% in 4Q25 (-4.0ppt y/y and -4.3ppt q/q).
(-) Income from associates: Associate income plunged 58% y/y, mainly dragged down by softer Chinese swine prices and weaker performance from other associates.
(+) Interest expenses: Interest expenses edged down y/y, benefiting from a lower interest rate environment, despite additional borrowings for the acquisition of a minority stake in CPP in April 2025.
Update on meat prices in key markets
Domestic swine prices weakened in 4Q25. Domestic swine prices averaged THB 61.2/kg in 4Q25 (-13% y/y and -4% q/q), pressured by seasonality, increased market supply, flooding in Northern and Northeastern Thailand, and a shortage of Cambodian labour affecting other operators, which likely led to higher market liquidation.
Currently, prices have softened further to THB 58/kg following weaker-than-expected demand during Chinese New Year. For the full year, CPF expects domestic swine prices to be slightly lower than 2025 levels (THB 72.7/kg). Nonetheless, overall sales should improve on higher domestic swine volumes.
We note that current prices remain above CPF’s production cost of approximately THB 53–55/kg and are significantly below the broader industry’s average production cost (estimated to be 10–15% higher than CPF’s).
CPF: Thai swine price (THB/kg)
Source of all data: Company, Ministry of Commerce, DBS
Thai broiler prices also declined. In 4Q25, domestic broiler prices averaged THB 37.2/kg (-2% y/y and -5% q/q), following lower swine prices and increased supply. The downward trend was consistent with declining raw material costs.
Currently, broiler prices have improved to THB 40/kg, supported by recovering swine prices and export demand. For 2026, management expects broiler prices to remain healthy at around THB 40/kg, which remains profitable compared with production costs of approximately THB 36–37/kg.
CPF: Thai broiler price (THB/kg)
Source of all data: Company, Ministry of Commerce, DBS
Softer swine prices in Vietnam. In 4Q25, Vietnam swine prices averaged VND 53.3k/kg (-12% y/y, -9% q/q), following a resurgence of ASF in certain areas and flooding in others. Recently, prices have rebounded to VND 69k/kg, mainly due to supply shortages linked to ASF.
For 2026, CPF expects prices to remain healthy at no less than VND 60k/kg, broadly in line with the 2025 average (VND 59–61k/kg). Given production costs of approximately VND 45–47k/kg, we believe Vietnam operations should remain profitable throughout 2026.
CPF: Vietnamese swine price (VND/kg)
Source of all data: Company, DBS
Chinese swine price still under recovery. In 4Q25, Chinese swine prices averaged RMB 12.0/kg (-31% y/y, -17% q/q), pressured by increased supply from capacity expansion by large players and high import volumes. Currently, prices have marginally improved to RMB 12.7/kg, still slightly below the market’s average production cost of RMB 13.5–14/kg. Management expects a gradual recovery through 2026 (around RMB 12/kg in 1H26, improving to RMB 13–14/kg in 2H26), supported by government initiatives and slower capacity expansion.
CPF: Chinese swine price (RMB/kg)
Source of all data: Company, Bloomberg, DBS
Key raw material costs remained favourable
Favourable trend persists for both corn and soybean meal. In 4Q25, domestic corn prices declined 2% y/y and 5% q/q, while soybean meal prices fell 23% y/y and 1% q/q. The decline in soybean meal prices was supported by easing geopolitical tensions, favourable weather conditions in 2025, and US–China trade dynamics.
Month-to-date, corn prices have edged up slightly due to seasonality, while soybean meal prices have also risen modestly. For 2026, management expects key raw material prices to remain favourable for both corn and soybean meal.
CPF: Corn price in Thailand (THB/kg)
Source of all data: Company, DBS
CPF: Soybean meal price in Thailand (THB/kg)
Source of all data: Company, DBS
Outlook
2026 earnings projected to decline y/y. IWe forecast CPF’s earnings to contract by 20.3% in FY26F, mainly due to less favourable meat prices across key markets compared with FY25, partially offset by higher volumes. We do not expect a significant further decline in key raw material costs from last year’s levels. In 1Q26F, earnings may improve q/q, although a substantial y/y contraction is likely to persist.
Potential benefits from US corn imports. The cabinet has approved an increase in US corn imports, raising the previous 54,700-tonne quota to up to 1mn tonnes of duty-free imports through mid-2026. This move is part of broader trade negotiations and aims to ease feed cost pressures in the domestic livestock sector.
However, management indicated during analyst meetings that imports are currently on hold, pending the formation of a new government. According to CPF, imported US corn could cost around THB 8.5/kg, compared with the current Thai corn price of THB 10.0/kg. Based on our estimates, CPF could potentially reduce corn costs by approximately THB 430–550mn if the imports proceed.
Recommendation
Maintain HOLD with a lower TP of THB22.00. We trim our FY26–27F earnings forecasts by 10% and 3%, respectively, mainly to reflect a lower-than-expected FY25 base. We remain conservative on GPM, which we forecast to decline from 16.9% in FY25 to 15.6% in FY26F.
Our TP is reduced from THB 24.50 to THB 22.00, pegged to 0.77x FY26F P/BV, in line with its five-year historical average, reflecting a normalised meat price cycle. Given the softer growth outlook for FY26F and the lack of near-term catalysts, we maintain our HOLD rating.
Historical PB band
| PB band (x) |
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| Source: Bloomberg, DBSVTH estimates |
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