Ichitan jumps nearly 10 percent on strong earnings and high hopes for hemp product

Ichitan Group (ICHI), a maker of green tea and other beverages, rose 9.76 per cent to 13.50 baht per share on Monday’s morning, with a transaction value over 1.23 billion baht, as the market was bullish on its strong full-year earnings and a hemp-infused product in the pipeline.

The company reported a fourth-quarter net profit of 84 million baht, contributing to the full-year profit of 515.5 million baht, 26.5 per cent higher than 2019, led by stronger sales of vitamin drinks and small-size green-tea products.

Ichitan’s Indonesian joint venture booked 10.3 million baht profit in the fourth quarter versus 19.8 million baht loss the year earlier, pushing up its joint-venture profit to 28 million baht for the full 2020, up 194 per cent. It announced a dividend of 0.5 baht per share to be paid on May 21.

Following the news of hemp legalization from the Food and Drug Administration (FDA), the company chief executive Tan Passakornnatee said that Ichitan already applied for a license to produce hemp-related products, and expected to start production immediately after approval.

The FDA committee last month approved a draft from the public health minister that places cannabis and hemp on the National List of Essential Medicines and for use in food products.

The beverage maker plans to launch a hemp-extract beverage for stress reduction in April, once they receive regulatory approval. “This should lift sales as they will be the first to tap this virgin market,” said an analyst at Krungsri Securities.

Analysts at Yuanta Securities rates ‘Buy’ on ICHI at the target price of 16.20 baht as the business outlook has high potential to grow further from sales recovery after the Covid-19 pandemic eases, and on the strength of its joint venture business in Indonesia.

Yuanta forecasts Ichitan’s earnings in 2021 at 726 million baht, surging 31.8 per cent, with upsides from the hemp-infused beverage and other new product launches.

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