Thai Vegetable Oil (TVO.BK/TVO TB): Margin to improve as price spread widens

We maintain a rating of Outperform on TVO with a new 2012 target price of Bt21.60 (from Bt21.00). We believe the company’s earnings already hit bottom and should improve in 4Q11 as the current price spread between soybean and soybean meal is widening. Despite this, we revised down our forecasts for 2011 and 2012 due to worse than expected 3Q11 earnings and concerns about a weak global economy next year. However, we believe the share price already reflects the negative factors and should increase following the current rebound in the cyclical spread.