Charoen Pokphand Foods: Wait and see
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- 3Q25 core profit came in at THB6.1bn (-8% y/y), 24% ahead of market expectations but in line with our estimates
- Y/y earnings contraction in 3Q25 due to fx impact and lower associate income, despite stronger GPM
- 4Q25F core profit might drop y/y and q/q following softer meat prices in Thailand and Vietnam
- Maintain HOLD with unchanged TP of THB24.50
3Q25 results positively surprised market
Earnings review
3Q25 core profit beat consensus. CPF reported 3Q25 core profit of THB6.1bn (-8% y/y, -42% q/q). The earnings beat the street’s estimates by 24% due to a higher-than-expected gross margin. Nonetheless, the results were in line with our estimates.
Overall, the y/y contraction was due to softer meat prices in key markets. In 3Q25, the company recorded extraordinary items of THB913mn, mainly from a biological loss, and registered net profit of THB5.2bn (-29% y/y, -50% q/q). Net-net, core profit margin came in at 4.4% in 3Q25, vs. 4.7% in 3Q24 and 7.4% in 2Q25.
Key performance highlights:
(-) Revenue: Total revenue was registered at THB138.6bn, inching down 3% y/y after a drop in domestic (-11%) and Vietnamese (-6%) swine prices y/y, along with a THB translation impact.
(+) Blended GPM: GPM continued to improve y/y, from 15.4% in 3Q24 to 16.5% in 3Q25, mostly due to more favourable raw material costs and higher production efficiency in both the livestock and aquaculture businesses. In 3Q25, domestic corn prices decreased by 14% y/y and 6% q/q, while soybean meal prices declined by 28% y/y and 11% q/q.
(+) SG&A-to-sales: SG&A-to-sales decreased by 40bps y/y to 8.4% this quarter. Net-net, the EBIT margin jumped 1.6ppt y/y to 8.1% in 3Q25.
(-) Income from associates: Associate income dropped 33% y/y, as it was dragged by softer Chinese swine prices as well as weaker performance of other associates.
(-) Interest expenses: Interest expenses inched up by 1% y/y and 2% q/q following the additional loan the company secured for its acquisition of a minority stake in CPP in April 2025.
Update on meat prices in key markets
Domestic swine prices are softer compared to 3Q25. Domestic swine prices eased further to THB54.0 during October but are now improving to THB62.0, compared to THB64/kg in 3Q25. The plunge in prices was negatively impacted by seasonality, the effect of flooding in the Northern and Northeastern parts of Thailand, and an ongoing shortage of Cambodian labour affecting other operators, which likely prompted farmers to dispose of swine in the market.
We note that this price level is around than CPF’s production cost of c.THB60/kg but significantly lower than the broader market’s production cost of c.THB70-75/kg.
Management believes prices have already bottomed and anticipates prices to pick up from late October, supported by the government’s attempts to support meat prices.
Thai broiler price also declined. Currently, domestic broiler prices have further declined to THB36.5/kg (vs. THB39.3/kg in 3Q25) following a drop in swine prices in Thailand and higher supply in the market. The downward trend in prices also aligns with the decreasing key raw material costs.
Management believes broiler prices should improve in upcoming periods, driven by export demand. Despite the small price fluctuation, the market’s broiler production cost is THB35-36/kg; thus, CPF’s Thailand broiler operations are expected to remain profitable.
Softer swine prices in Vietnam. In 3Q25, the swine price in Vietnam was VND59k/kg (-6% y/y, -13% q/q). The price has recently inched down to VND55k after an early resurgence of ASF in certain areas along with flooding in other parts of Vietnam. We note that the production costs are VND43-45k/kg. Thus, we believe Vietnam operations should continue to be a key performance supporter in 4Q25.
Chinese swine price still under recovery. Chinese swine price in 3Q25 was RMB13.8/kg (-30% y/y, -6% q/q). The price fell further to RMB11/kg in October, due to the negative impact from higher supply stemming from capacity expansion by large players in the region. The current price is slightly below the market production cost of RMB14-15/kg. Nonetheless, management expects the price should gradually improve to RMB13-13.5/kg early next year, following government attempts to support prices.
Key raw material costs remained favourable
Favourable trend persists for both corn and soybean meal. In 3Q25, domestic corn prices decreased 14% y/y and 6% q/q, while soybean meal prices declined 28% y/y and 11% q/q. The downtrend in soybean meal prices was supported by the easing Russia-Ukraine war, more favourable weather in 2025, and escalating trade tensions between the US and China. As of now, we observe that corn prices have been trending down MTD, while soybean meal prices remained stable.
Outlook
Earnings to drop both q/q and y/y in 4Q25F. For 2025, we believe 4Q25F performance would reflect the weakest quarterly profit, as we expect meat prices in key markets to trend lower. That said, easing raw material costs should help support GPM and maintain the company’s profitability.
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 is part of broader trade negotiations with the US and aims to ease high feed-cost pressures on the livestock sector.
To protect local farmers, importers must adhere to a 3:1 rule, requiring the purchase of three parts of domestic corn for every part of US corn. Additionally, the government is implementing price support and production incentive measures. While this move aims to secure feed supply and support industry competitiveness, it has raised concerns among some policymakers about potential pressure on Thai corn growers, despite the safeguards.
According to CPF, the imported corn is expected to cost THB8.5/kg, vs. 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 maintain our FY25F/26F earnings as well as 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. With a softer growth outlook in FY26F and uncertainties regarding the import of agricultural products from the US, we maintain our HOLD rating for now.
FY Dec | 3Q2024 | 2Q2025 | 3Q2025 | % chg y/y | % chg q/q |
Revenue | 142,703 | 147,595 | 138,565 | (2.9) | (6.1) |
Cost of Goods Sold | (120,756) | (118,385) | (115,656) | (4.2) | (2.3) |
Gross Profit | 21,947 | 29,210 | 22,910 | 4.4 | (21.6) |
Other Oper. (Exp)/Inc | (12,624) | (13,042) | (11,690) | (7.4) | (10.4) |
Operating Profit | 9,323 | 16,168 | 11,220 | 20.3 | (30.6) |
Other Non Opg (Exp)/Inc | 552 | 440 | 493 | (10.5) | 12.1 |
Associates & JV Inc | 3,655 | 3,452 | 2,463 | (32.6) | (28.6) |
Net Interest (Exp)/Inc | (6,031) | (6,015) | (6,107) | (1.3) | (1.5) |
Exceptional Gain/(Loss) | 661 | (490) | (913) | nm | 86.2 |
Pre-tax Profit | 9,246 | 14,226 | 7,725 | (16.5) | (45.7) |
Tax | (1,052) | (2,847) | (1,599) | 52.0 | (43.8) |
Minority Interest | (886) | (1,002) | (940) | (6.1) | (6.2) |
Net Profit | 7,309 | 10,377 | 5,186 | (29.0) | (50.0) |
Net profit bef Except. | 6,648 | 10,867 | 6,099 | (8.2) | (43.9) |
EBITDA | 20,717 | 26,832 | 20,846 | 0.6 | (22.3) |
Margins (%) |
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Gross Margins | 15.4 | 19.8 | 16.5 |
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Opg Profit Margins | 6.5 | 11.0 | 8.1 |
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Net Profit Margins | 5.1 | 7.0 | 3.7 |
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