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Returns to crow about

Many listed companies in the SET agribusiness sector are expected to show a poorer performance due to the weak economy, but companies in the sector remain attractive to investors.

Poultry producers gain as consumers worldwide seek out white meat.

Companies such as Surapon Foods and GFPT Plc see improved prospects resulting from outstanding export performance of frozen shrimp and chicken. Shipments of those two products helped the country's farm export revenues improve by 10% to US$5.9 billion in the first nine months of this year. Exports of frozen shrimp surged 48% to $1.6 billion and frozen poultry exports rose by 25% to $560 million.

Among the 21 listed firms in the sector ranked for Total Shareholder Return, Surapon Foods led with a one-year return of 317.3%, followed by GFPT at 239%. Only three firms were in negative territory, with Chumporn Palm Oil Industry last at -30.4%.

Anan Sirimongkolkasem, GFPT's managing director, said poultry prices in the world market had risen sharply on heavy demand for white meat, following health scares in many countries over red meat. Average prices of poultry rose in the third quarter by 12.2% to $2,750 a ton, from $2,450 in the second quarter.

Reflecting the improved outlook, GFPT reported a consolidated net profit of 154 million baht for second quarter against a net loss of 21 million in the same quarter last year.

Pimpan Invasa, an analyst from SCB Securities Co Ltd, said GFPT shares were among the top performers in the sector, with highly attractive returns to shareholders, in particular long-term investors.

Mr Anan said the company's other strong point was its focus on its core business and avoidance of risky new business investments. In addition, GFPT has a consistent policy to pay dividends based on at least 50% of net profit, an attractive factor for long-term investment. "As we are a public company so we have to pay attention to attractive dividend payments," he said.

For Surapon Foods Plc (SSF), Yuanta Securities is forecasting fatter profits next year despite the economic slowdown in the United States and Japan, its two biggest markets.

SSF's strategy is to enlarge its profit margins by increasing the proportion of value-added products rather than merely boosting overall sales.

SSF's nine-month net profit to Sept 30 was 153.8 million baht, an improvement of 25.2% from 122.8 million a year ago.

In general, most shares of agribusiness companies are attractive for investors, with the exception of companies heavily reliant for revenue on the domestic market.

Anan Jantaranuluk, a consultant to Thai-Denmark Swine Breeder Plc, which mainly serves the local market, said the outlook for the company would improve next year as it was working with Srithai Foods, an affiliate, to promote processed food made from chemical-free pork.

"If chemical-free pork sales increase significantly, sales volumes of chemical-free breeders, a new product from our company, to raisers will increase significantly too," Mr Anan said.

As well, he said, the company planned to improve the quality of breeding stock and farm management to bring down the piglet mortality rate.

He said the company purchased new breeding stock all the time and these become company assets.

- Woranuj Maneerungsee