Thai Union Frozen Products, (TUF 21.5)
- trailing p/e of 3.4, dropping to around 3 for 1997. (Last 4 quarters sum of EPS is 6.23) Here is a true global sea-food export company; producing e frozen see food products includ-ing tuna loin, frozen shrimp in various forms, fish fillet and pet-food. Diversification of products has been TUF’s policy ever since its incorporation.
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TUF is probably the biggest canned tuna producer in the world. It has board of investment promotional privileges, including a 6 year income tax, import tax and trade tariff exemptions. TUF has huge cold storage capacity and aggressive expansion plans into 1997, namely: a large capacity increase by building new facilities in Petchaburi Province. This facility will enjoy 8 years of 100% tax exemption. TUF, in early 1996 acquired a 20% stake in Songkla Canning (SC). Among other holding it established Thai Union International Inc. USA. This company has entered a 50% joint venture with the world’s largest fish supplier, Tri-Marine International so to operate a tuna cannery in Long Beach California. A US presence has many benefits.
TUF produced and exported 2,100 tones of frozen shrimp in 1996 and expects the figure to increase to 2,500 tones this year. When combined with 1,200 tones from Thai Union Seafood, the TUF group will export about 3,700 tones of shrimp in 1997, about 37 per cent of total exports of 10,000 tones.
TUF will not be affected by a loss of GSP privileges in the European Union market since the company exports less than 3 per cent of its frozen shrimp products there.
Canned Tuna and Frozen Shrimp make up 67% of total revenues. Pet-food (16%), Tuna loin (12%). TUF exports nearly 97% of all its products and so is an almost exclusively non-Baht revenue company. Revenue structure is: 30% from Japan, 33% from USA, 6% from Asia (non-Japan), 13% from Europe, from the Middle East, 4% from Australia and 5% from Canada. The rest is under "other" category.
Consider:
| Thailand is a major global sea food exporter:22% of all Japan’s see food comes form Thailand. 19 % of all USA’s see food comes from Thailand. Thailand is Japan’s number 2 importer of Seafood,behind Indonesia. Thailand is USA’s number 4 importer of Seafood. Seafood exports out of Thailand are growing an average of 7% per year. Some 60% of these are Shrimps,whose consumption has shown to be non-cyclical.(Goldman Sachs Asia, 1994) |
| Source: The Thai Financial Newspaper, Nov. 13, 1996. |
TUF is well managed and has an excellent record of paying out high divi-dends; those amounted to 20% of then current stock price, in 1995. But expansion preparations in 1996 and the slowing of shrimp exports that year reduced net earnings in 1996. ('95 E.P.S. was 9.03).
50 Mill. shares outstanding. Market capitalization is 42 million. US $It trades sporadic with occasional good volume.
