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Charoen Pokphand Foods PCL. SET: CPF

12/11/2010 Symbol Exchange

CPF SET (Bangkok)

Current Price 52 Week High/ Low Shares Outstanding Market Cap (in $ mn) P/E Ratio

฿22.1 ฿26.75 -฿9.95 7,519M 178B 11.58

Recommendation: Global Expansion and Investment will see CPF trade over B50 in 2011. Low P/E Ration makes CPF a strong buy at these levels.

Key Developments: •

Strong Revenue and profit growth. Sector will outperform in 2011. Demand my rise by 30-40% in 2011

Expects shrimp prices to remain high due to falling supply from Indonesia and Brazil; natural disasters in Malaysia, Vietnam and China should boost demand and prices by 30-40 percent Charoen Pokphand Foods Plc (CPF) has set aside more investment budget for overseas operations next year as part of its plans to reap the benefits from the strong baht. Every subsidies company have much room for growth for the animal farming business due to their large populations and low per-capita meat consumption


About the Company

Charoen Pokphand Foods Public Company Limited is a Thailand-based company engaged in operating in agro-industrial and integrated food businesses. The businesses are divided into two segments: the livestock business, which comprises chicken, duck and pigs and the aquaculture business, which consists of shrimp and fish. The two main businesses are vertically integrated, sourcing raw materials for animal feed production, manufacturing animal feed, breeding animals, farming animals for commercial purposes, processing meat, producing ready-to-eat food products, and selling products to both domestic and overseas markets. The Company’s products include animal feed, animal farm products, such as animal breeder, live animal and meat, and processed foods and ready meals. Its subsidiaries include Bangkok Produce Merchandising Public Company Limited, Bangkok Agro-Industrial Products Public Company Limited, Bangkok Food Products Co., Ltd. and Charoen Pokphand Northeastern, among others.

Company’s Website: http://www.cpfworldwide.com


Business Overview


Outlook Charoen Pokphand Foods Plc (CPF) has set aside more investment budget for overseas operations next year as part of its plans to reap the benefits from the strong baht. The SET-listed flagship of the agribusiness and food conglomerate CP Group has set its 2011 investment budget at 6 billion baht, of which 4 billion would finance its farms and farmrelated businesses in several developing markets, especially India, Russia, and Turkey, where demand for meat remains strong and market potential is high. The budget represents a 20% increase from the 5 billion baht earmarked for 2010, of which domestic and overseas operations shared an equal amount. “Every country that CPF has invested in still has much room for growth for the animal farming business due to their large populations and low per-capita meat consumption,” said CPF president and chief executive Adirek Sripratak. “The offshore investments have contributed substantial revenue to the company this year and it would continue to play a significant role in our next year’s performance.” CPF said its total sales in the first nine months of the year were 141.76 billion baht, an increase of 19% from a year earlier. Net profit rose 42% year-on-year to 11.51 billion baht. Sales from overseas operations increased to 27% of total sales, while revenue from exports accounted for 13%. The remaining 60% came from domestic sales. Mr Adirek expects sales revenue will be 185 billion to 190 billion baht by the end of this year, up from 165 billion in 2009 thanks to not only strong results of its overseas operations but also high meat prices, especially of shrimp products. Shrimp prices have increased 30% this year and are expected to remain high over the last quarter due to falling supply from Indonesia, Mexico and Brazil following a viral outbreak. Natural disasters in Vietnam and China should also lift the demand and prices of shrimp by 1015% in the first quarter of next year, said Pisit Ohmpornnuwat, executive vice-president. CPF has benefited from these circumstances as shrimp exports this year are expected to reach 52,000 tonnes, up from 34,000 tonnes last year. Its main markets are the European Union (35%), Japan (30%), and the United States (15-20%), with the rest in Asia.


Daily Chart – CPF:SET


Financial Statement Highlight


CONTACT: Mr. Woraphop Viriyaroj Corporate Account Executive Heffernan Capital Management Email: woraphop@heffernan-inc.com Mr Woraphop Viriyaroj passed Level 1 of the Chartered Financial Analyst (CFA) in the year 2010 and Certified Investment and Securities Analyst (CISA) Level 2 in 2010 and holds a degree in Industrial Engineering. Price Estimate by Shayne Heffernan PhD Shayne Heffernan of Ebeling Heffernan holds a PhD in Economics serves as CEO of Heffernan Holdings Inc and Co Founder of Ebeling Heffernan www.ebeling-heffernan.com

Bangkok Suite 53 Athenee Tower 63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 THAILAND Tel: +66 2 126 8000 Fax: +66 2 126 8080 New York 347 5th Avenue, Suite 1402-508 Ny, NY 10016

Tel: +1 646-403-9881 Fax: +1 646-403-8014 Singapore 3 Raffles Place #07-01 Bharat Building Singapore 048617 Tel: +65 6329 6408Fax: +65 6329 9699


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Charoen Pokphand Foods PCL. SET: CPF