Key Takeaways TAOKAENOI FOOD & MARKETING PCL (TKN) 1 June 2020

In 2020, sales are expected to be weak, but improved N.R. profitability . IAA Consensus: Bt8.32 ► Thai market is still slowing down. While Chinese market is seeing Closing price: Bt9.35 signs of recovery in 2Q20, the US market is expected to make a new Upside/downside: -11.0% high profit in 2Q20.

► Plans to consolidate all production lines to Rojana factory to reduce costs and increase production efficiency. Sector Food & Beverage Paid-up shares (shares mn) 1,380 ► The price of cost is reduced by 10% from the original price, Market capitalization (Bt mn) 12,903 which is a supporting factor for better profitability. Free float (%) 38.59 ► 1Q20 net profit stood at Bt85.7mn, up 5.3%YoY due to cost control

12-mth daily avg. turnover (%) 155.54 in terms of production and distribution. 12-mth trading range (Bt) 12.70 / 4.56 ► 1Q20 sales revenue was at Bt1.11bn, decreased by 13.3%YoY and decreased by 21.7%QoQ due to the COVID-19 pandemic.

Major shareholders (%) In 2020, earnings are expected to be weak due to affected by COVID-19. Peeradechapan Holding Co., Ltd. 26.09 Although the domestic market has been affected by COVID-19, the company is Mr. Itthipat Peeradechapan 23.03 still trying to push new products, both seaweed and non-seaweed, as well as THAI NVDR Co., Ltd. 6.37 joining international brands such as milk tea, which is expected to start

selling products in convenient stores at branches in and the metropolitan during 3 Q20 period. The Chinese market has seen signs of Rating CGR 2019 Thai CAC recovery in 2Q20 and is expected to return to grow in 2H20, while the US market has growth potential. Therefore, we expect to see a new high profit in 2 Q20. TKN N/A During 1Q20, the company has domestic and overseas revenue accounting for

36% and 63%, respectively. Revenue from China accounts for 58% of overseas revenue. While Taokaenoi Land is most affected by COVID-19 because the Research Department main customers are tourists. Therefore, it is affected by the country lockdown Benjaphol Suthwanish measures and the closure of the airspace. Even during May, there is the License No. 018575 Tel: 02 680 5056 r elaxation of the domestic lockdown measures, but sales are still slow. Meanwhile, the company has a plan to reduce Taokaenoi Land branch that is Waralee Phichairatanaphong not profitable and adjust the strategy to omni channel. In addition, the company

Assistant Analyst is still looking for new partners in foreign countries to strengthen the brand.

Focus on effective cost control to compensate for the reduced income The company plans to integrate production lines by relocating production bases from Noppawong factory to Rojana factory to reduce costs and increase production efficiency by using more automated machinery, including the reduction of production support officers according to the reduced production base, resulting in reduced labor costs. While the company adjusted the area of

Noppawong factory supporting supply chain management. It is expected to save costs approximately Bt10.0mn per month. In addition, the cost of seaweed , which has been reduced by about 10% from the original price, is a contributing factor to improving profitability.

1 Q20 net profit increased 5.3%YoY to Bt85.7mn. TKN reported 1Q20 net profit of Bt85.7mn, up 5.3%YoY due to production and

distribution cost controls, including growth sales in the U.S. which clearly reduce d losses. However, 1 Q20 sales revenue stood at Bt1 .11bn, down 13.3% YoY and 21.7%QoQ due to the spread of COVID-19, affecting sales, with domestic sales down 2 4 . 2 % YoY due to the disappearance of Chinese tourists, including shop closing and reducing travelling. While international market sales fell 5 . 5 % YoY as a result of sales in China which accounted for 36% of total revenue, down 14.8%YoY due to the impact on international and Please see disclaimer on last page intercity transportations during the city lockdown. 1

Corporate Governance Report (CGR)

Corporate Governance Report disclaimer Score Range Number of Logo Description The disclosure of the survey result of the Thai Institute of Directors Association 90 – 100 Excellent (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the 80 – 89 Very Good information of a company listed on the Stock Exchange of Thailand and the Market 70 – 79 Good for Alternative Investment disclosed to the public and able to be accessed by a 60 – 69 Satisfactory general public investor. The result, therefore, is from the perspective of a third party. 50 – 59 Pass It is not an evaluation of operation and is not based on inside information. Below 50 - N/A The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date, Asia wealth Securities Company Limited does not conform nor certify the accuracy of such survey result.

Anti-Corruption Progress Indicator

The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission. Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company. The assessment result is therefore made from the perspective of Thaipat Institute that is a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, AWS does not confirm, verify, or certify the accuracy and completeness of the assessment result.

Definition of Ratings

Equity: BUY "BUY" because the current price is lower than intrinsic value with 10% return expected TRADING "TRADING" because the current price is lower than intrinsic value with an expected return of 0% - 10% TRADING BUY "Buy for speculation" because there are issues that have a positive effect on the share price in the short-term or it is likely to revise earnings estimate although the current price is higher than intrinsic value SELL "SELL" because the current price is higher than intrinsic value

Sector: OVERWEIGHT "OVERWEIGHT" due to expecting higher returns than the market NEUTRAL "NEUTRAL" due to the expected return that is equal to the market UNDERWEIGHT "UNDERWEIGHT" due to expecting lower returns than the market

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