Analyst Puts Thai Union Stock On “HOLD†Despite Dip In Tuna Salesff
25 October 2013
Thailand
Thai Union’s third quarter tuna sales are expected to reveal a steady decline this year. Delayed purchase from customers concerned about a potential decrease in global tuna price, and lower per unit values, has hit sales figures for this product that accounts for 50 percent of its revenue. TUF shareholders are still being advised to “HOLD†onto shares, with a slight recovery predicted in value by the end of the year.
Stock market analysts Asia Plus Securities expects Thai Union Frozen Products’ (TUF) net profit in the third quarter of 2013 to rise a strong 139 percent from second quarter figures. The projected net profit of just over USD 27.6 million over this period would conversely still show a disappointing 47 percent fall for profit year on year.
The significant predicted drop in net profit from third quarter 2012 to third quarter 2013 is expected to be the result of only a 3 percent projected growth in sales from this year’s second quarter. Quarter on quarter sales for this period commonly increase a more substantial 5 to 10 percent. While tuna sales are projected to show a steady drop, a recovery of shrimp sale volume, usually accounting for around 19 percent of total revenue is likely to occur.
Asia Plus said that both tuna and shrimp sales have recovered more sluggishly than expected. It predicts that in the remainder of 2013 and in 2014, TUF is likely to still be at risk due to many factors, mainly Early Mortality Syndrome that has seriously damaged shrimp production in Thailand.
Raw tuna prices have been fluctuating and customers buying from Thai Union under their own brands, within the financial world referred to as: Original Equipment Manufacturer (OEM) customers, have been delaying their purchase orders, affecting tuna sales for the world’s leading seafood processor and exporter.
TUF shareholders are being advised by Asia Plus to “HOLD†onto their shares, as a “fair value†of discounted cash flow (DCF), 7.34 percent weighted average cost of capital (WACC) at USD 1.99 is expected for the close of 2013.
