Last updated December 4th, 2018.

 

The past several years were rough for Thailand’s economy. With tourist arrivals and export numbers falling, Thailand suffered through a disappointing first half during 2018.

Nonetheless, Thailand looks to achieve its highest growth though several years of political turmoil. Elections currently scheduled for early 2019 should also greatly approve investor sentiment.

Our analysis shows Southeast Asia’s agricultural sector performs well even through harsh economic times. For Thailand, agriculture is the core essence of the nation’s economy and has been for centuries.

InvestAsian believes that the time is ripe to pick Thai Vegetable Oil PCL (BKK:TVO) as a new year addition to your portfolio.

 

Thai Vegetable Oil Stock

Established back in 1985, Thai Vegetable Oil is among the industry’s oldest companies.

With a focus on manufacturing and distributing soy meal and soybean oil, Thai Vegetable Oil boasts massive production capacity totaling over 6,000 tons worth of soybean products.

A trade war between China and the United States is now heating up. Meanwhile, soybeans are one of the top US imports targeted by Chinese tariffs. Southeast Asian exporters are in a great position to pick up some of the slack.

Thai Vegetable Oil has many product lines. Its flagship product is “A-Ngoon” soybean oil used for general household cooking purposes along with several types of animal feed with names starting with “TVO” – an acronym of the company’s name.

 

Soybeans have many uses from industrial applications to food. They’re also widely considered the best form of livestock feed.

 

Strong Rooted Fundamentals

Just like a plant needs strong roots, a business requires strong fundamentals to stay alive and perform well during rough times.

TVO’s fundamentals are very solid. Their current ratio of more than 2.5 combined with barely any long term debt means the firm is well-placed for aggressive future expansion.

With an experience that comes with being the third biggest company on the market, TVO is well-managed and fully understands their sector.

Likewise, and despite ranking third in terms of market capitalization, TVO stock features an ROE which is second to none.

The firm’s ROE of 26.74% vastly outshines bigger competitors. Furthermore, TVO is one of few businesses which has consistently performed better every year. That’s highly significant considering recent problems in the Thai economy.

In addition, their P/E ratio stands at just barely above 10. TVO also enjoys an extremely high dividend yield of over 7% – one of the Thai stock exchange’s most impressive figures.

Net profit margin will exceed 10% this year which is a steep upgrade from the latest reported figures. We believe all these factors combined mean a bright future for Thai Vegetable Oil stock.

Finally, shares of Thai Vegetable Oil are now selling at below THB28 per share. That’s notably down from its 2016 highs above THB40 per share.

Are you looking to buy stocks in Thailand? If so, consider reading our analysis of Group Lease stock – Southeast Asia’s largest vehicle leasing business.

 

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About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an accomplished stock trader and property investor in Thailand, Cambodia, and many other places. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

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