Periodic/Sector reports
Food: The Worst Has Passed; Reiterate Positive View On Farm Players
OVERWEIGHT (Upgraded)
Analyst
Highlights
We foresee a strong recovery in the food sector’s earnings in 2H26 vs the sluggish performance in 2Q26, on the back of a recovery in ASPs amid improving demand and supply conditions, and easing cost pressures.
We prefer BTG as it is a pure beneficiary of the domestic livestock recovery, while CPF should benefit from the turnaround in China’s swine industry. • Strong pet food export growth should support ITC’s earnings improvement.
Upgrade the sector to OVERWEIGHT. Our top picks are CPF, BTG and ITC.
Analysis
Expect a strong earnings rebound in 2H26. Farm players reported sluggish earnings in 2Q26, down qoq and yoy, mainly due to weaker swine prices across most major markets and lower chicken prices following disease outbreaks. The outbreaks reduced export volume and led to an oversupply of chicken in the domestic market, putting further pressure on prices. Looking ahead, we expect a stronger sector momentum in 2H26, driven by improving profitability among farm players, including CPF, TFG, BTG and GFPT. Key supporting factors include: a) a strong rebound in livestock prices, particularly in Thailand, due to domestic demand stimulus measures and tighter supply as smaller retail farmers exit the market, b) easing feed cost concerns during the harvest season, and c) the seasonal peak for exports, which should support both chicken and pet food exports.
Sharp rebound in Thailand swine prices. We remain positive on domestic livestock players, as the continued upward trend in domestic swine prices is in line with our previous expectations. Domestic swine prices are currently at their highest level ytd and could rise despite the seasonally weak period. Prices increased sharply to Bt74-75/kg in Sep 26 (+4% mom and +14% vs the 2Q26 average). We expect domestic swine prices to remain elevated throughout 4Q26 at Bt75-76/kg, supported by: a) tighter supply following losses incurred by small-scale farmers in 1H26; b) sustained domestic demand, supported by the Thai Chuay Thai Plus stimulus programme; and c) supply discipline since the beginning of 2026.
Reiterate our view on sector earnings improvement. We upgrade the food sector to OVERWEIGHT, particularly upstream names. We expect sector earnings to rebound strongly in 2H26, improving both yoy and hoh from the sluggish performance in 2Q26. Livestock stocks are trading at 8-9x forward PE, below their five-year mean of 10-12x. We believe current valuations have yet to fully reflect the uptrend in livestock prices, offering an attractive accumulation opportunity. Our top picks are CPF, BTG and ITC.
Highlights
We foresee a strong recovery in the food sector’s earnings in 2H26 vs the sluggish performance in 2Q26, on the back of a recovery in ASPs amid improving demand and supply conditions, and easing cost pressures.
We prefer BTG as it is a pure beneficiary of the domestic livestock recovery, while CPF should benefit from the turnaround in China’s swine industry. • Strong pet food export growth should support ITC’s earnings improvement.
Upgrade the sector to OVERWEIGHT. Our top picks are CPF, BTG and ITC.
Analysis
Expect a strong earnings rebound in 2H26. Farm players reported sluggish earnings in 2Q26, down qoq and yoy, mainly due to weaker swine prices across most major markets and lower chicken prices following disease outbreaks. The outbreaks reduced export volume and led to an oversupply of chicken in the domestic market, putting further pressure on prices. Looking ahead, we expect a stronger sector momentum in 2H26, driven by improving profitability among farm players, including CPF, TFG, BTG and GFPT. Key supporting factors include: a) a strong rebound in livestock prices, particularly in Thailand, due to domestic demand stimulus measures and tighter supply as smaller retail farmers exit the market, b) easing feed cost concerns during the harvest season, and c) the seasonal peak for exports, which should support both chicken and pet food exports.
Sharp rebound in Thailand swine prices. We remain positive on domestic livestock players, as the continued upward trend in domestic swine prices is in line with our previous expectations. Domestic swine prices are currently at their highest level ytd and could rise despite the seasonally weak period. Prices increased sharply to Bt74-75/kg in Sep 26 (+4% mom and +14% vs the 2Q26 average). We expect domestic swine prices to remain elevated throughout 4Q26 at Bt75-76/kg, supported by: a) tighter supply following losses incurred by small-scale farmers in 1H26; b) sustained domestic demand, supported by the Thai Chuay Thai Plus stimulus programme; and c) supply discipline since the beginning of 2026.
Reiterate our view on sector earnings improvement. We upgrade the food sector to OVERWEIGHT, particularly upstream names. We expect sector earnings to rebound strongly in 2H26, improving both yoy and hoh from the sluggish performance in 2Q26. Livestock stocks are trading at 8-9x forward PE, below their five-year mean of 10-12x. We believe current valuations have yet to fully reflect the uptrend in livestock prices, offering an attractive accumulation opportunity. Our top picks are CPF, BTG and ITC.
OVERWEIGHT (Upgraded)
Analyst
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