Highlights

• BTG reported a 2Q26 core profit of Bt708m (-73% yoy and -26% qoq). The results are in line with our and the market’s forecasts.
   

• We remain optimistic on BTG's 3Q26 earnings outlook and expect a strong qoq and yoy recovery, driven by higher profitability from the upward trend in domestic livestock prices. Maintain BUY with a target price of Bt24.80.
   

Analysis

• Earnings in line. Betagro (BTG) reported a 2Q26 net profit of Bt598m (-77% yoy and -40% qoq). Excluding one-off items and written-off tax credit in Cambodia of Bt128m, core profit for 2Q26 would have been Bt708m (-73% yoy and -26% qoq). The results are in line with our and the market’s forecasts.

  Gross profit declines on lower domestic livestock prices. BTG’s reported 2Q26 gross profit margin of 14.1% (vs 19.6% in 2Q25 and 14.9% in 1Q26) The decline in gross profit margin was mainly due to a weaker margin of the food business at 10.8% (vs 21.9% in 2Q25 and 14.0% in 1Q26) due to: a) lower domestic livestock prices, and b) higher average raw material costs. SG&A in 2Q26 reported at 10.8% (up yoy, flat qoq).

  Revenue down yoy, pressured by food business. BTG’s 2Q26 revenue came in at Bt29b (-7% y, +4% qoq). The yoy decline was driven by lower food business sales, which came in at Bt14.5b (-14% yoy, flat qoq), due to weaker livestock prices yoy. However, we saw the improvement in international sales (+7% yoy, +13% qoq) and pet business (+29% yoy, +7% qoq).

   

• Positive tone from analyst meeting.

  • a) The company expects livestock prices (swine, chicken, and eggs) to recover in 2H26, supported by: a) stronger domestic consumption demand in 2H26, and b) a slight decline in supply following herd reductions implemented since the beginning of the year and disease outbreaks during 2Q26. Domestic swine supply in 2H26 is expected to decline to below 20m heads, compared with 20m–21m heads at the beginning of 2026. As a result, it should provide further support to livestock prices and sustain the upward pricing trend into 2H26.

  • b) Feed costs update: Corn prices are projected to decline qoq following the harvest season, while soybean meal and wheat prices are expected to increase qoq. Overall, BTG expects raw material costs to increase by 1.0–1.5% qoq in 3Q26.

  • c) US corn import update: Thailand has an import quota of 1m tonnes for 2026, with imports expected to begin in 4Q26. In the initial phase, BTG expects to import 40,000–60,000 tonnes of US corn in 2026. US corn prices are around Bt9.80/kg, (compared with Bt11.90/kg for domestic corn). Although domestic corn prices are trending downward, there remains a benefit price gap between US and domestic corn.

  • d) Export momentum remains positive, due to strong demand from EU, the UK, and Japan markets. The company expects export volumes to rise hoh in 2H26.

• Brighter outlook for 3Q26. We are more positive on the 3Q26 earnings outlook, supported by the upward trend in livestock prices, in line with our assumption that domestic livestock prices will be higher in 2H26 than in 1H26. We expect earnings to show a stronger recovery in 3Q26, both yoy and qoq. While feed costs are expected to increase slightly qoq in 3Q26, we believe the higher livestock prices should more than offset the cost pressure. In addition, the resumption of US corn imports should help reduce feed costs going forward.

• Update on livestock prices. In Aug 26, livestock prices are rising due to higher demand brought about by the government’s stimulus programmes. Domestic swine prices increased to Bt70–72/kg (+9% mom and +9% vs the 2Q26 average). Chicken prices remained at Bt43–44/kg (flat mom and +10% vs the 2Q26 average).