CPF
Charoen Pokphand Foods
Charoen Pokphand Foods Public Company Limited (CPF), is Thailand's largest agribusiness firm. It is a publicly traded subsidiary of the Charoen Pokphand Group.
The Company’s core business lines are livestock and aquaculture. The livestock operations include chicken broiler, chicken layer, duck and swine. For aquaculture business, the two main marine animals are shrimp and fish.
Issue info Shares in Issue (mn) | 7,742.94 | Market Cap. (Bt mn) | 188927.8 | Last Price (Bt) (as of 01/11/13) | 24.40 | 52-week High/Low (Bt) | 37.00 / 21.60 | Avg. Daily Turnover (Bt mn) | 415.69 | Foreign Limit/Actual (%) | 40.00 / 30.17 | Beta vs. SET | 1.08 |

Financial Summary YE Dec (Bt mn) | 2011 | 2012 | 2013E | 2014E | Net profit | 16,117 | 18,790 | 4,686 | 13,268 | Net profit growth (%) | 19 | 17 | (75) | 183 | EPS (Bt) | 2.42 | 2.59 | 0.61 | 1.71 | EPS growth (%) | 19 | 7 | (77) | 183 | BV (Bt) | 10.1 | 16.6 | 15.6 | 16.4 | DPS (Bt) | 1.2 | 1.1 | 0.6 | 0.9 | P/E (x) | 10.2 | 9.6 | 41.0 | 14.5 | P/BV (x) | 2.5 | 1.5 | 1.6 | 1.5 | Yield (%) | 4.8 | 4.4 | 2.4 | 3.6 | ROE (%) | 24.0 | 15.6 | 3.9 | 10.4 | Category: | Rating | 1. Understandability | A | 2. (Value 1) Prospective Growth | B | 3. (Value 2) Capital Scarcity | A | 4. (Value 3) Volatility | B | 5. (Risk 1) Strategic Position | A | 6. (Risk 2) Leadership | A | 7. (Risk 3) Financial Strength | C | 8. (Risk 4) External Influences | A | 9. (Acid Test) Informed Buyers | |

Category: | Rating | Rationale: | 1. Understandability- Do we understand the company well?- Familiarity w. management and industry- Results readily adjustable for 1x items- Visibility to market or operating changes- Understandable derivatives risks | | * In processing and manufacturing of cooked food products, livestock, aquaculture, livestock feed, and agricultural products. | 2. (Value 1) Prospective Growth- Will cash generation grow organically?- Expected rate of growth- Type of growth ( penetration, GDP, etc)- Rebound potential from one-off situation- Potential to shed unprofitable operations- Note offsetting areas of decline | | * Rebound from EMS * Current P/BV is at 1.7, was around 4 before the end of March 2012, 3 year average is at 2.8. * The regional food industry average P/BV is at 1.8 * | 3. (Value 2) Capital Scarcity - Is the firm’s industry experiencing a scarcity of capital?- Industry returns vs. history- Industry investment levels vs. average - Sector multiples vs history- Company out of favour/taboo | | * | 4. (Value 3) Volatility - How volatile is our estimate of worth?- Likelihood of swings in operating business- Degree of financial leverage- Concentration on a single customer, supplier or distributor | | * | 5. (Risk 1) Strategic Position- Is the firm in a strong strategic position?- Relative market share- Relative cost position vs .competitors - Power of Suppliers- Power of Customers- Threat of Substitutes- Barriers to Entry -Degree of Rivalry between competitors | | * Strong strategic position * Largest firm in the industry * Holding company controls whole supply chain * | I6. (Risk 2) Leadership- Is Mgmt & board with us or against us? - Active, honest, intelligent leadership- Independent board- Following reasonable strategy- Appropriate performance measures- Conservative accounting /disclosure - Skin in the game- Minority-friendly options program- Absence of poison pill | | * | 7. (Risk 3) Financial Strength- Is the firm financially strong?- Debt factors and debt structure- Fixed charge coverage- Off-balance sheet liabilities & assets- Pension commitments- Free cash flow/ Dividend payment | | * | 8. (Risk 4) External Influences – Are the risk factors in the external environment improving?- government, taxation- regulatory system- legal claims | | * Thailand is facing political instability | 9. (Acid Test) Informed Buyers - Are informed insiders buying?- Buybacks- Management/Director Activity- Large Holders Activity | | * |