35
THAI VEGETABLE OIL IR NEWSLETTER Q1/2020
THAI VEGETABLE OILIR NEWSLETTER
Q1/2020
1
Topics
1 TVO Business outlook
2 Financial performance
3 Industrial Situation
2
TVO Business
Main Business Line Production and Distribution of Soybean Oil and Soybean Meal
Production Capacity 3 Factories in Thailand, with total production capacity of 6,500 MT/Day
ProductsSoybean Oil, Soybean Meal, Full Fat Soy, Lecithin
Sunflower Oil, Corn Oil, Canola Oil
Recognized Brands Angoon, Healthy Chef, Queen, TVO Hi Pro Meal
3
Soybean Oil
24%
Soybean Meal61%
Others5%
Packaging2%
Export8%
Revenue Structure(2019)
25,07723,510
27,349 25,762 25,667 26,302
23,588
0
5,000
10,000
15,000
20,000
25,000
30,000
2011 2012 2013 2014 2015 2016 2017 2018 2019
Mill
ion
TH
BSales Revenue (include Packaging Sales)
Export
Packaging (Prodigy)
Others
Soybean Meal
Soybean Oil
24,568
Sales Revenue
28,243
4
15% - 20%
80% - 85%
Domestic
1% - 5%
59 5858 48
58
US
6376 75 84 83
Brazil
7 29 8 7
Argentina
5 6 6 6 6
Paraguay
Soybean Supply
World Soybean Export
(MMT)2016/17 2017/18 2018/19 2019/20 2020/21
162147 153 148 154
TVO buy domestic soybeans as first priority but there are the inadequate supply of domestic soybean
in Thailand (only about 40,000 – 50,000 MT/Year.)
5
Palm Oil
65%
Soybean Oil
31%
Rice Bran Oil
2%
Others
2% Source: Kantar World Panel
A-ngoon
67%
No.2
21% Others
12%
Vegetable Cooking Oil in Thailand
(2019)
Thailand Consume Soybean Oil
(2019)
Thailand’s Consumer Soybean Oil Market Share
Thailand’s soybean oil consumption expect to grow by 5 percent in MY2020/21
6
43%
Retail Consumers
23%
Export
Food Industry
Canned Tuna
Salad Oil
Non - Food Industry
Resin (paint)
Lubricant (food grade)
Feed Ingredient Chilly Paste
FurtherDomestic Sales
Local trade
Modern trade Bottled Oil
Japan
Nigeria
Laos
Myanmar
Cambodia
Australia
34%
Industrial Consumers
Soybean Oil Market Q1/2020
7
Soybean Oil Export – International Brand
Thailand is becoming a regular supplier of soybean oil
to other ASEAN and Asian economies.
9
Soybean Meal Market
50%
Feed Mill
50%
Farms
Compound
Feed
8
9
Financial Performance
& Key Financial Ratios
10
Gross Profit Margin Net Profit Margin
16.0%
10.8%
13.1%
10.0% 10.1%10.9%
11.9%
0%
3%
6%
9%
12%
15%
18%
2016 2017 2018 2019 Q1/19 Q4/19 Q1/20
Million THB 2016 2017 2018 2019 Q1/19 Q4/19 Q1/20
Net Sales 28,243 24,568 24,869 23,587 5,992 5,882 6,576
Net Profit 2,755 1,327 1,867 1,411 358 396 494
9.8%
5.4%
7.4%
5.9% 6.0%
6.7%7.4%
0%
2%
4%
6%
8%
10%
12%
2016 2017 2018 2019 Q1/19Q4/19Q1/20
Gross Profit Margin & Net Profit Margin
11
34%
16%
22%
16%
19%
16% 17%
0%
10%
20%
30%
40%
2016 2017 2018 2019 Q1/19Q4/19Q1/20
THB/Share 2016 2017 2018 2019 Q1/19 Q4/19 Q1/20
Earnings per Share 3.41 1.64 2.31 1.74 0.44 0.49 0.61
2,755
1,327
1,867
1,411
358 396494
0
500
1000
1500
2000
2500
3000
2016 2017 2018 2019 Q1/19Q4/19Q1/20
Net Profit (million THB) Return on Equity (ROE)
Net Profit & Return on Equity
12
Current Ratio & Capital Structure Ratio
4.10
2.99
3.91
3.35 3.33 3.35
4.25
0.0
1.0
2.0
3.0
4.0
5.0
2016 2017 2018 2019 Q1/19 Q4/19 Q1/20
0.24
0.36
0.25
0.30 0.31 0.30
0.21
0.0
0.1
0.2
0.3
0.4
2016 2017 2018 2019 Q1/19Q4/19Q1/20
Current Ratio Capital Structure Ratio (D/E)
TVO managed to maintain D/E ratio below 1
Days 2016 2017 2018 2019 Q1/19 Q4/19 Q1/20
A/R Days 19.0 21.1 18.7 18.1 19.2 18.3 18.4
A/P Days 24.3 29.8 30.9 27.7 26.4 28.3 22.6
13
THB/Share 2015 2016 2017 2018 2019
Earnings Per Share 2.35 3.41 1.64 2.31 1.74
Dividend per share 1.90 2.75 1.43 1.90 1.45
15%
5.3%4.3%
8.7%
4.6%
7.0% 7.5%8.3%
5.3%
7.0% 7.1%
5.3%
0%
3%
6%
9%
12%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
15%
Avg. Dividend Payout Ratio 82%
Avg. Dividend Yield 6.40%
70% 74%
97%
80% 84% 84% 81% 81%87% 82% 83%
0%
30%
60%
90%
120%
Dividend Payout Ratio & Dividend Yield
14
Industrial Situation
Soybean Market
Soybean Meal Market
Soybean Oil Market
15
Industrial Situation
Soybean Market
16
Soybean Production Cycle
U S A B R Z A R G
Soybean
Crop Cycle
17
BRAZIL, 84.0 mT
US, 46.0 mT
ARGENTINA, 8.2 mT
PARAGUAY, 5.6 mT
OTHER, 10.0 mT
World Soybean Expor t2019/20 153.98 mT
CHINA, 92.0
mT
EU, 15.1 mT
MEXICO, 6.0 mT
JAPAN, 3.4 mT
THAILAND, 3.1 mT
INDONESIA, 2.6 mT
OTHER, 31.0 mT
World Soybean Impor t2019/20 153.31 mT
BRAZIL, 16.3 mT
ARGENTINA, 29.0 mT
US, 12.2 mT
PARAGUAY, 2.6 mT
OTHER, 7.0 mT
World Soy Meal Expor t2019/20 67.09 mT
EU, 18.5 mT
VIETNAM, 4.9 mT
INDONESIA, 4.7 mT
THAILAND, 2.8 mT
OTHER, 31.0 mT
World Soy Meal Impor t2019/20 63.36 mT
Source: USDA, FAS Oilseeds World Market and Trade Report (May-2020)
World Soybean & Soy Meal Trade
A R G
B R Z
U S A
CN
96.50 114.60 122.00 117.00 123.00 125.00 126.00 124.50 124.00
58.80
55.00 37.80 55.30 53.00 53.00 54.00 52.00 51.00
40
80
120
160
200
15/16 16/17 17/18 18/19 Jan
19/20
Feb
19/20
Mar
19/20
Apr
19/20
May
19/20
MT
Lowered South America Soybean Production
The lasted USDA report lowered Argentina and Brazil soybean production
forecast for 2019/20 to 51 MT and to 124 MT respectively due to dry weather
at the end of season.
Source: USDA, FAS Oilseeds World Market and Trade Report (May-2020)
South America soybean production
18
19
US Soybean Planting Progress (%)
US soybean planting for 2020/21 (black line) were 53% planted which was faster
than normal pace. However, there are uncertain weather in planting season.
U.S. soybeans plantings off to a record start
83.23
93.50 94.10
82.50
85.00
88.00 88.00 89.00
92.00
70
75
80
85
90
95
100
15/16 16/17 17/18 18/19 Jan 19/20 Feb 19/20 Mar 19/20 Apr 19/20 May 19/20
MT
20
20/21
The lasted USDA report increased China’s soybean import are forecasted to
reach 96 MT in 2019/20 and to 92 MT in 2020/21 based on the recovery
from the impacts of ASF that will push up protein meal feed use, soybean
crush volume and total oilseed demand in the MY 2020/21
96.0
China Soybean import
China soybean import forecast rise
Source: USDA, FAS Oilseeds World Market and Trade Report (May-2020)
21
China continue to buy soybean from US & Brazil
Weekly CFD-SBSTK-NATN 8/29/2010 - 11/29/2020 (UTC)
Line, CFD-SBSTK-NATN, Total Market Volume(Last)
5/24/2020, 529.930, +0, N/A
Volume
Auto
300
350
400
450
500
550
600
650
700
750
800
850
900
529.930
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
China’s reserve soybean inventory fell to 10 years record lows at 3.5 MT
China urges food companies to boost supplies on fears of further COVID-19
disruption.
22
Soybean price may rise in 2H2020
In 2019, Trade war and ASF were the main issues that pressured soybean price.
However, the soybean price increased due to flood in US that damaged soybean
production while soybean inventory still high.
In 2020, China's soybean demand that remain strong despite COVID-19 will
continue to provide support in the market.
Covid19 Outbreak
CBOT Soybean 1st nearby contract
23
Industrial Situation
Soybean Meal Market
24
Soymeal price rose due to Covid-19 and low river levels in Argentina
Below normal rains in the Parana-
Paraguay water basin is hampering grain
transport through waterways in Argentina
as the water level of the river has dropped
significantly.
Forcing exporters to load less goods on
ships so ships is likely to be delayed to
avoid stranding in the river
Decade-low river levels in Parana River
Source: reuters
Soybean deliveries to crushing plants
had been severely cut in Argentina,
as the country was in a nationwide
lockdown though April 27 to prevent
the spread of the Covid-19
Argentina intensifies COVID-19 lockdown
Source: Fitchsolutions
25
3/4 of total soybean supply goes to crusher, yet soy meal from local crusher can serve only
1/3 of total country’s soy meal demand
Soybean import in Jan-Apr 2019 remained stable while soybean meal import decreased by
16% YoY.
Domestic soy crushers managed to sell more soymeal to replace lower DDGS import
1.90
2.56
2.962.75 2.72
3.21
1.20
2.892.70
2.58
2.95 2.95
3.20
0.78
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2014 2015 2016 2017 2018 2019 Jan-Apr 2020
Thailand’s Soybean VS Soy Meal ImportSoybean Soy Meal
mT
1.20
Less soy meal import by feed millers and brokers
Source: Office of Agricultural Economics, Msy 2020
0.93
-16%
26
841 kT
906 kT
0
100
200
300
400
500
600
700
800
900
1,000 Thailand’s Chicken Meat Export (Thousand Tons)
Frozen Cooked Total Export
955 kT
Outbreak of Avian Flu in 2004 caused a significant drop in Thai uncooked chicken meat
export numbers
In 2019 Thailand’s chicken meat export grew by 8% YoY and project to grow by 5% in 2020
In 2020, The General Administration of Customs in China (GACC) has approved 8 more
processing plants in Thailand for export of chicken products. Totaling, the GACC approved 22
plants in Thailand.
In Jan-Apr 2020, Thailand’s chicken meat export already grew by 4% YoY amid Covid19
lockdown in many countries.
Source: Thai Broiler Processing Exporters Association, Office of Agricultural Economics
Thailand’s Chicken Meat Export
(kT) Jan-Apr19 Jan-Apr20
Frozen 100 115
Cooked 192 190
27
Cofeed Soybean National Total Weekly Stock
China’s soybean meal demand started to rebound
China reported first case of ASF in 2018, more than 1 million pigs have been
culled or more than 40% which caused the constantly decreasing of total pig
population. (right graph) It started to rebound on Oct 2019 and remained in
upward trend. As the ASF situation in China is manageable and pork prices
remained surged thus farmers had incentives to produce more pork.
As you can see from the left graph which show soybean meal consumption
increased in Q1/2020 for the first time since ASF outbreak
DCE SOY MEAL vs CBOT SOY MEAL
CBOT SOY MEAL
DCE SOY MEAL
Line, 284, +0.5, (+0.18%), Line, 338 Price
USD
STn
0
300
320
340
360
380
400
420
440
460
284
338
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
28
Soymeal Prices
Due to the increased demand of soybean meal in China and Argentina (the world
large soybean meal exporter) delayed soybean meal export, TVO expected to see
future improve of soybean meal price
29
Industrial Situation
Soybean Oil Market
30
58.88
65.25
70.58
73.8972.27
74.60
59.661.6
67.0
73.171.5
74.1
8.80
9.60
11.03 10.6910.48
9.83
6.00
7.00
8.00
9.00
10.00
11.00
12.00
50.00
55.00
60.00
65.00
70.00
75.00
80.00
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21f
MMTMMTWorld Palm Oil Balance Sheet
Production Domestic Consumption Ending stocks (RHS)
In 2020, world palm oil were expected tightening of balance sheet, mainly due to
the implementation of new Biodiesel mandate in the major producer countries. (Indonesia B20B30, Malaysia B10B20, Thailand B7B10)
Due to the increasing use of biodiesel in diesel fuel production, biodiesel will
account for 63 percent of the domestic consumption of palm oil in 2020, cooking
oil 30 percent, and other food processing and consumer products 7 percent.
Domestic consumption of palm oil is forecast to grow another 4 percent in 2021.
Malaysia palm oil production seem to lower yield due to the lower price and
reduced fertilization.
World Palm oil could tighten further in 2020
Source: USDA, FAS Oilseeds World Market and Trade Report (May-20)
31
Malaysian palm oil stocks rose reflected
slowing export to India in lockdown
period but still remain at low level.
5-Yr Average
2018/19471
411
319
228
180 189
2017/18
2016/17
2015/16
150
250
350
450
550
650
OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
Tho
usa
nd
Me
tric
To
ns
THAILAND MONTHLY CLOSING STOCK OF TOTAL PALM OIL
Thailand palm oil stocks in March
increased as less biodiesel use amid
Covid-19 lockdown.
5-Yr Average
2018/19
2.352.26
2.01
1.76 1.70 1.73
2.05
2017/18
2016/17
2015/16
1.0
1.5
2.0
2.5
3.0
3.5
OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
mM
T
MALAYSIA MONTHLY CLOSING STOCK OF
TOTAL PALM OIL
week
China’s palm oil inventories at low
level while current price didn't reflects
low inventory of producing and
exporting countries.
TVO believed that palm oil and
soybean oil will recover after loosened
lockdown as encourage consumption
in both food and energy sectors.
PALM OIL STOCK IN CHINA
Palm oil price may rise after loose lockdown
32
Soybean Oil Price Follow Palm Oil Price and Petroleum Oil Price
644
Soybean oil price, Palm oil price and petroleum price decreased in Q1/2020
due to the spread of Covid 19 by reducing all oil consumption. Combined with
Saudi Arabia initiated a price war with Russia, facilitating oil prices collapse.
However, the oil producers agreed to cut global petroleum output in order to
boost crude prices and loosening lockdown measure in many countries showed
signs of a recovery in oil demand and a rising trend of oil price in the future.
33Risk Management
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Disclaimer: This presentation material has been prepared solely for informational purposes. Thai Vegetable Public Company Limited makes no guaranty on accuracy or completeness of the information provide. By accepting this material, recipient agrees that the company shall not have any liability for any information contained in or for any omission from this presentation.
