The equity analysts of Bualuang Securities’ research team have issued last week their latest report on the outlooks Thai Union Frozen Products Plc (TUF).
In their report they forecast that high tuna prices will prevail, due to tight supplies and temporary closures of important fishing grounds.
They say the average price of West Pacific Ocean (WPO) skipjack tuna stood at USD 2,075/ton in Jan 2013, up by 2% Year on Year and 9% Month on Month (against USD 1,900/ton in Dec 2012). The record was USD 2,350/ton in Sept 2012. The mean price in Jan declined by 12 percent from the record.
The securities firm says in their investment thesis that raw tuna prices softened in 4Q12, which is high-catch season, but the Jan 2013 mean price reaffirms in their view that high tuna prices will prevail through 2013. Supplies are tight as a result of unfavorable weather conditions and the temporary closures of several Pacific Ocean fishing grounds. Price retreats during high-catch periods will be modest and of short duration. Bualuang estimates a USD 2,000-2,500/ton mean raw tuna price range this year, and feels confident that Thai Union will be able to pass through these higher raw tuna prices to clients, just as they did during the last year, and so will secure its tuna margin in the 18-20% range for FY13 (assuming an improved COSI operation).
On TUF’s other business, which is shrimp, Bualuang says they expect the high shrimp prices to prevail at least through 1Q13 and we expect volatility through 1H13. The rising shrimp price environment is due to outbreaks of Early Mortality Syndrome (EMS) disease among shrimp farms in late 3Q12; the situation worsened in 4Q12. The analysts don't expect production or shrimp prices to resume normal levels till about mid-year. Shrimp and feed sales volumes might diminish during 4Q12-1H13. They assume a recovery in 2H13.