Rising Plant-Based Competition Will Choke Traditional Seafood Lines

Key Takeaways

• Shift toward alternative proteins and rapid advances in lab-grown seafood threaten traditional revenue streams and demand costly innovation to maintain competitiveness.
  
• Exposure to tightening environmental regulations, unresolved supply chain risks, and mature Western markets creates margin pressures and restricts growth opportunities.
  
• Strengthened strategic partnerships, robust profit margins, operational improvements, production flexibility, and focus on high-value segments position Thai Union Group for sustained growth and earnings stability.

Catalysts

Manufactures and sells frozen, chilled, and canned seafood in Thailand and internationally.

• The ongoing global pivot toward plant-based and alternative proteins is set to cannibalize demand for traditional seafood products, directly undermining Thai Union Group's core revenue streams and capping potential for top-line growth in the coming years.
  
• Incoming and intensifying environmental regulations regarding overfishing and ecosystem impact are likely to constrain access to key seafood raw materials, raising sourcing costs and threatening profit margins as additional compliance expenditures mount.
  
• Legal and reputational risks related to labor practices and human rights violations within the supply chain remain unresolved, leaving Thai Union exposed to potential fines, import restrictions or boycotts that could erode net margins and future earnings.
  
• Thai Union's heavy exposure to mature Western markets, where seafood consumption is largely flat, severely limits organic sales growth opportunities and makes the company's long-term revenue trajectory increasingly reliant on acquisitions or portfolio expansion, both of which may pressure margins if integration fails or synergies disappoint.
  
• Advances in synthetic and lab-grown seafood technologies are accelerating, creating a structural threat where new entrants could seize market share and disrupt existing demand, forcing Thai Union either into costly innovation investments or risking brand and revenue decline over the long term.

Thai Union Group Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Thai Union Group compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Thai Union Group's revenue will decrease by 0.2% annually over the next 3 years.
• The bearish analysts assume that profit margins will shrink from 3.6% today to 3.3% in 3 years time.
• The bearish analysts expect earnings to reach THB 4.4 billion (and earnings per share of THB 0.99) by about August 2028, down from THB 4.8 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 7.7x on those 2028 earnings, down from 10.1x today. This future PE is lower than the current PE for the TH Food industry at 11.8x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.4%, as per the Simply Wall St company report.

Thai Union Group Future Earnings Per Share Growth

Risks

• The planned increase in Mitsubishi's stake from 6% to 20% demonstrates significant long-term confidence from a major global partner, which could enhance Thai Union Group's strategic collaborations, open up new growth opportunities, and potentially result in greater earnings stability and revenue streams from joint ventures and expanded market access.
  
• Sustained and record-high gross profit margins, with the company reaching a 19.7% margin in Q2 and expectations to remain at the upper end of guidance for the year, signal strengthened profitability and improved operational resilience, which could support stronger net margins and consistent earnings growth over the long term.
  
• Ongoing transformation programs such as SONAR and tailwind are already yielding cost savings and operational improvements, with management indicating these initiatives are on track to deliver significant operational uplift, thereby protecting and potentially enhancing earnings and margin growth in future years.
  
• Thai Union's flexibility in production bases across multiple countries (Thailand, Ghana, Vietnam) and effective navigation of U.S. tariff changes have maintained and even strengthened the company's global competitiveness, reducing risks of supply disruptions and supporting sustained revenue and market share in key export destinations.
  
• Continued focus on high-value, high-margin segments-such as branded ambient, value-added products, and the ingredients business-combined with investments in automation and innovation, can drive further margin expansion, diversify revenue streams, and underpin more stable long-term earnings even as traditional commodity segments face headwinds.

Valuation

• The assumed bearish price target for Thai Union Group is THB8.7, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Thai Union Group's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of THB20.0, and the most bearish reporting a price target of just THB8.7.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be THB133.7 billion, earnings will come to THB4.4 billion, and it would be trading on a PE ratio of 7.7x, assuming you use a discount rate of 8.4%.
  
• Given the current share price of THB12.5, the bearish analyst price target of THB8.7 is 43.7% lower.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.