Last year was rough for the Thai economy. With (what many people would call) a junta lacking the competence to run a country now in power, Thailand went through a disappointing first half of 2015. It was not until the release of the third quarter’s GDP figures in late November that people started feeling differently about the people in charge.
Tourism and state investment led the way for a higher GDP growth than expected last year, and in 2016, Thailand looks to achieve the highest growth it has had in its three years of political turmoil. Analysis shows that the agricultural sector does well in most countries, even through harsh economic times. For Thailand, agriculture has been the core essence of the country for hundreds of years..
And in Thailand’s agri-sector, InvestAsian believes that the time is ripe to pick Thai Vegetable Oil PCL (BKK:TVO) as the new year addition to your portfolio.
Thai Vegetable Oil Stock
One of the oldest companies in the industry, Thai Vegetable Oil was established back in 1985 and had its IPO 5 years later. The company engages in the manufacturing and distribution of soy meal and soybean oil with a production capacity of over 6000 tons of soybean per day.
The company has many product lines but its flagship products are A-Ngoon soybean oil for the general household cooking purposes, along with several different types of animal feed with names starting with “TVO” – an acronym of the company’s name.
Strong Rooted Fundamentals
Just as a plant would need strong roots, a company needs strong fundamentals to stay alive and do well during the rough times.
TVO proudly boasts some strong fundamentals. With a current ratio of more than 2.5 and barely any long term debt, the company is safe and well positioned if there needs to be any move for aggressive expansion.
With experience that comes with age and stability that comes with being the third biggest company in the market, TVO is in a great place for further growth.
Low P/E, High Dividends
Despite being third in terms of market capitalization, TVO stock features an ROI that is second to none.
With an ROI and ROE of 24%, it outshines its bigger competitors in terms of making the most of what it has. Even though its margins are only above average, it is one of the few companies that has done consistently better every year. This is highly significant considering the state of the Thai economy the past few years.
In addition, the stock’s P/E ratio stands at only around 8.5 – just a bit more than its extremely high dividend yield of over 8%, which is one of the most impressive on the Thai stock exchange.
With expected net profit margins of 10.62% this year, a steep upgrade from the latest reported figure of 6.80%, the future is bright for Thai Vegetable Oil stock.
Looking to buy stocks in Thailand? You might want to see our analysis on VGI Global Media stock – one of Thailand’s largest advertising companies.
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