CP soars on B131bn China swine buy

Charoen Pokphand Foods Plc, the meat producer owned by billionaire Dhanin Chearavanont, posted its biggest gain in three months after announcing a 131 billion baht plan to buy its parent’s Chinese swine business.

Young pigs are seen at a farm in Xianju county, Taizhou, Zhejiang province, China November 21, 2019. (Reuters file photo)
Young pigs are seen at a farm in Xianju county, Taizhou, Zhejiang province, China November 21, 2019. (Reuters file photo)

Thailand’s biggest meat producer rose as much as 6.9%, its biggest gain since May 27, to 31 baht before trading up 2.6% at 12.05pm in Bangkok.

CP Foods will acquire its parent Chareon Pokphand Group’s swine business in China, the company announced in a filing to the Bangkok Stock Exchange late Monday. It will pay for the acquisition by issuing its parent with a 65% stake in an unlisted unit, Chia Tai Investment Co. After the deal, CP Foods’s stake in the unit will fall to 35%.

The swine business acquisition will give CP Foods, which makes animal feed but has seafood and swine production in countries from China to Russia, increased exposure to a market where supply is short and prices are rising, analysts said. CP Foods could also eke out cost-savings from the deal.

“Combining the animal feed business in China with the swine business would improve operational efficiency,” Suttatip Peerasub, an analyst at Maybank Kim Eng Securities (Thailand) Plc, wrote in a note Tuesday.

The acquisition will raise CP Foods’ profit in 2021 by 12% from Maybank Kim Eng’s previous estimate, Ms Suttatip said. The analyst raised her price target on CP Foods to 37.50 baht from 33.50 baht because of the acquisition plan.

CP Foods’ acquisition proposal must receive approval from the shareholders’ meeting on Oct 27 to be completed, the company said.

BLOOMBERG NEWS

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s