Relative valuation of Thai president foods

Abstract

The average multiple from an industry peer group is commonly used to appraise companies in relative valuation. The multiple is required to clarify the present price using historical data to determine if it is less or more costly than the average value (5 years in this research). Historically, Thai President Foods's stock, TFMAMA, has a higher current price than the average and median value when utilizing the P/E and EV/EBITDA bands, while the P/BV multiple band reveals a cheaper current price. From the comparison with peers (NRF, NSL, TWPA, SSF and TMILLm), TFMAMA’s Trailing P/E ratio is higher than the peers’ median and average (TFMAMA = 24.14x, Peers’ median = 21.88x.) Price to book value also indicates overvaluation (TDMAMA = 2.26, Peers’ median = 1.47x). EV/EBITDA also exceeds peers (TFMAMA = 12.83, Peers’ median = 9.65). The findings are plotted on the Football field chart, where TFMAMA’s targeted price is finally selected with the median P/E multiple from peers to find the target price since the P/E multiple covers the closest ranges of price for all multiples, thus, the concluded target price of TFMAMA is THB 184.89, which is about 8.47% higher than the current price. TFMAMA is suitable for "HOLD" for the long-term value investor, but not for day traders because it has little liquidity. TFMAMA, on the other hand, has managed to stand out among its rivals by demonstrating a strong structure within the operational framework whereby value investors may enjoy TFMAMA's dividend , which is considerably higher than its peers. But because the current price is considered overvalued at the moment, new investors are not recommended to buy at the time. TFMAMA's risks are moderate, owing to increased raw material costs from the pandemic epidemic, as well as the impact of higher expenses absorbed due to a lack of shipping containers for its worldwide sales. However, as the COVID situation improves and the international market recovers in the coming years, the future of TFMAMA is regarded as medium to low risk.