Pie Securities has upgraded its recommendation on Thai Coconut Public Company Limited, or COCOCO, from hold to buy, and raised its fair value to 7.20 baht from 5.80 baht, citing expectations that profitability will gradually recover year on year through the second half of 2026 and remain high in 2027. The broker expects a new factory in the Philippines, scheduled to begin production in December 2026, to lower raw material costs and reduce cost volatility, supporting more stable gross margins over the long term and strengthening competitive advantages if El Nino returns in 2027. COCOCO reported second quarter 2026 net profit of 122 million baht, up 58 percent year on year, the highest in seven quarters. Excluding extraordinary items, core profit was 130 million baht, up 82 percent year on year and 51 percent quarter on quarter, with year on year growth supported by a 700 basis point expansion in gross margin. The coconut water business remained soft, with second quarter 2026 sales falling 30 percent year on year to 697 million baht, marking a fourth consecutive quarter of year on year decline. Gross margin for coconut water was 21.3 percent, slightly down from 21.6 percent in the second quarter of 2025 but improved from 20.8 percent in the first quarter of 2026. The coconut milk business began to recover, with sales rising 13 percent year on year to 663 million baht, while gross margin increased to 25.3 percent from 7.7 percent in the second quarter of 2025 and a low of 6.4 percent in the first quarter of 2026, helped by lower raw material costs. The pet food business posted record sales of 333 million baht, up 79 percent year on year, driven by both OEM sales and products under the Moochie, VETMOO+ and MunnChie brands. However, selling and administrative expenses as a percentage of sales rose to 14.4 percent in the second quarter of 2026 from 11.8 percent in the second quarter of 2025, mainly due to pre-operating administrative expenses for the Philippines plant. For its growth plan, the company targets net profit of 800 million to 1 billion baht in 2028, up from 244 million baht in 2025. The coconut water business plans to expand further in the United States, increase market share with existing customers in the US, Europe and Asia, and launch new products in Thailand and overseas, while the China market will focus on large, high quality customers. The coconut milk business is supported by the new Philippines factory, which is now 99 percent complete and expected to begin production in December 2026, helping improve competitiveness in the European market through import tax advantages. The pet food business continues to expand both its own brands and OEM operations, with new product launches and market expansion from 35 countries in 2025 to 40 countries in 2026. Pie Securities values COCOCO at 7.20 baht using a price to earnings multiple of 16 times its 2027 earnings estimate, close to the beverage sector average, after shifting its valuation base to 2027 earnings, and maintains a positive view on the margin recovery trend, prompting the upgrade from hold to buy.
Thai Coconut Public Company LimitedUpgraded to buy with raised target price, citing profitability recovery and new factory benefits.
