Charoen Pokphand Foods: Stronger catalyst required
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- 1Q26F earnings rebound q/q, but y/y still weak on soft domestic and China swine prices
Thai meat prices surged in late March on tighter supply and strong exports; Vietnam normalising
2Q26F to improve further q/q, but y/y drag persists from high base; cost pressures to rise in 2H26
Maintain HOLD with unchanged TP of THB22.00
Update on meat prices in key markets
Domestic swine prices remained weak in 1Q26 but showed signs of improvement in March 2026. Domestic swine prices declined from THB51.2/kg on average in 4Q25 to THB59.6/kg (-25% y/y and -3% q/q), negatively impacted by increased market supply and soft consumption demand. We note that this price level is approximately equivalent to CPF’s production cost or slightly lower than THB60/kg, but it is significantly lower than the broader market’s average production cost of THB70/kg.
Currently, prices have recovered to THB70/kg since late March 2026, mainly driven by lower market supply due to reduced productivity amid hot weather (which also led to pandemic-related disruptions), along with government policies to ease supply. Looking ahead, the company believes this price level should be sustainable, while increasing costs may push prices higher, though this will largely depend on demand recovery.
CPF: Thai swine price (THB/kg)
Source of all data: Company, Ministry of Commerce, DBS
Thai broiler prices showed improvement. In 1Q26, domestic broiler prices reached an average of THB40.6/kg (+0.7% y/y and +9.1% q/q), supported by improving export demand, more favorable FX rates, and lower productivity amid hot weather.
Currently, broiler prices have further improved to THB44/kg, attributable to firm export demand alongside the recovery in domestic swine prices. Despite modest price fluctuations, the market’s average broiler production cost remains at THB36–37/kg. Consequently, CPF’s Thailand broiler operations are expected to remain profitable.
CPF: Thai broiler price (THB/kg)
Source of all data: Company, Ministry of Commerce, DBS
Spike in Vietnamese swine prices. In 1Q26, swine prices in Vietnam increased to VND71.1/kg (+96% y/y, -33% q/q) following a supply shortage caused by earlier supply dumping during a resurgence of ASF in certain areas, as well as strong demand during the Tet holiday. Currently, prices have normalised to VND65/kg, primarily due to a more balanced supply-demand dynamic. We note that production costs are estimated at VND45–46/kg.
CPF: Vietnamese swine price (VND/kg)
Source of all data: Company, DBS
Chinese swine price is still under recovery. In 1Q26, Chinese swine prices averaged RMB10.0/kg (-38% y/y, -15% q/q). The price decline was further exacerbated by increased supply stemming from capacity expansion by large players in the region, coupled with high import volumes. Currently, prices remain soft and below the market’s average production cost of RMB13.5–14/kg. Nonetheless, management expects prices to gradually improve in 2H26, driven by government initiatives to support prices and a less aggressive pace of capacity expansion.
CPF: Chinese swine price (RMB/kg)
Source of all data: Company, Bloomberg, DBS
Key raw material costs remained favourable
A favourable trend persists for both corn and soybean meal. In 1Q26, domestic corn prices decreased by 9% y/y, while soybean meal prices declined by 8% y/y. Nonetheless, we note that prices may have bottomed, and we expect an uptrend following seasonal factors and potential impacts from Middle East conflicts. CPF typically stocks raw material inventory for 2–3 months; thus, we may see a gradual uptick in costs during 2H26.
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
Earnings preview
Earnings are expected to show a strong q/q recovery but remain weak y/y in 1Q26F. We expect CPF to report 1Q26F core profit of THB2.1bn (-76% q/q, +1540% y/y). The strong sequential recovery is mainly driven by a sharp rebound in Vietnamese swine prices and stronger domestic broiler prices. However, the y/y contraction is primarily due to weaker domestic swine prices and lower margins.
With improving prices in domestic markets and Vietnam toward end-1Q26, we believe the company should record revenue of around THB550mn, mainly driven by a biological gain, and register net profit of THB2.6bn (-69% y/y, +142% q/q). Net profit margin is projected to come in at 1.5% in 1Q26F, compared with 5.9% in 1Q25.
Key performance highlights:
(-) Revenue: Total revenue is expected to decline by 3% y/y to THB140.1bn. The decrease is mainly attributable to a drop in domestic swine prices and the negative impact from THB translation, which is partially offset by higher sales volumes.
CPF: Revenue breakdown by country
Source of all data: Company, DBS
CPF: Revenue breakdown by segment
Source of all data: Company, DBS
(-) Blended GPM: In 1Q26F, we believe the blended gross profit margin (GPM) will decrease from 18.5% in 1Q25 to 13.5% in 1Q26 due to a plunge in domestic swine prices while the benefits from favourable raw material costs are currently limited.
CPF: Quarterly gross margin trend
Source of all data: Company, DBS
(+) SG&A-to-sales: We anticipate SG&A-to-sales in 1Q26F to increase y/y, given the prevailing lower meat prices. However, it is expected to improve q/q, supported by upbeat price momentum and seasonality. Net-net, the EBIT margin is projected to be dragged down by a lower gross margin, coming in at 4.5% in 1Q26F (-4.0ppt y/y).
(-) Income from associates: Associate income is expected to plunge by 54% y/y, dragged by softer Chinese swine prices as well as weaker performance from other associates.
(-) Interest expenses: from a lower interest rate environment are largely offset by additional loans secured for the acquisition of a minority stake in CPP in April 2025.
Outlook
2Q26F earnings to further improve q/q but remain soft y/y. We forecast CPF’s earnings in 2Q26F to continue improving q/q, driven by stronger domestic meat prices. Nonetheless, on a y/y basis, we expect a significant contraction to persist due to the high base in 2Q25.
Regarding the Middle East impact, the company expects higher raw material costs to affect CPF in 2H26, though this will likely be largely offset by efforts to enhance efficiency. According to management, in a rising cost environment, the company may be able to pass through costs to customers; however, given the commodity nature of its products, this will largely depend on demand conditions.
Recommendation
Maintain HOLD with an unchanged TP of THB22.00. We maintain our earnings forecasts for FY26–27F. Thus, our TP of THB22.00, pegged to 0.77x FY26F P/BV (in line with its five-year historical average), remains unchanged. Given the softer growth outlook for FY26F and limited upside to our TP, we maintain our HOLD rating.
Quarterly / Interim Income Statement (THBmn)
| FY Dec (Btm) | 1Q25 | 2Q25 | 3Q25 | 4Q25 | 1Q26F | Chg. | Chg. | |
yoy | qoq | |||||||
| Sales | 144,175 | 147,595 | 138,565 | 140,799 | 140,095 | -3% | -1% | |
| Cost of Goods Sold | -117,508 | -118,385 | -115,656 | -122,921 | -121,182 | 3% | -1% | |
| Gross Profit | 26,667 | 29,210 | 22,910 | 17,879 | 18,913 | -29% | 6% | |
| SG&A exp. | -12,241 | -13,042 | -11,690 | -13,614 | -12,609 | 3% | -7% | |
| EBIT | 14,426 | 16,168 | 11,220 | 4,265 | 6,304 | -56% | 48% | |
| Other inc./exp. | 792 | 671 | 569 | 1,039 | 871 | 10% | -16% | |
| Interest income | 339 | 440 | 493 | 400 | 403 | 19% | 1% | |
| Associate inc. | 3,443 | 3,587 | 2,463 | 1,627 | 1,599 | -54% | -2% | |
| Interest exp. | -6,092 | -6,015 | -6,107 | -5,874 | -5,900 | -3% | 0% | |
| Pretax Profit | 12,909 | 14,851 | 8,638 | 1,457 | 3,278 | -75% | 125% | |
| Tax | -3,255 | -2,847 | -1,599 | -934 | -750 | -77% | -20% | |
| Minority Int. | -1,108 | -1,002 | -940 | -397 | -450 | -59% | 13% | |
| Core Profit | 8,546 | 11,002 | 6,099 | 127 | 2,078 | -76% | 1540% | |
| Extra | 3 | -625 | -913 | 959 | 550 | 16024% | -43% | |
| Net Profit | 8,549 | 10,377 | 5,186 | 1,085 | 2,628 | -69% | 142% | |
| Margins (%) |
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|
|
|
| |||
| Gross Margin | 18.5% | 19.8% | 16.5% | 12.7% | 13.5% | - 3.0 | - 3.8 | |
| SGA % Sales | 8.5% | 8.8% | 8.4% | 9.7% | 9.0% | 1.0 | 1.2 | |
| EBIT Margin | 10.0% | 11.0% | 8.1% | 3.0% | 4.5% | - 4.0 | - 5.1 | |
| Core Net Margin | 5.9% | 7.5% | 4.4% | 0.1% | 1.5% | - 4.0 | - 4.3 |
Historical PB band
| PB band (x) |
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| Source: Bloomberg, DBSVTH estimates |
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