OCBC Securities 2015-08-17: Thai Beverage - 2Q15; No surprises. Maintain BUY.


Thai Beverage PLC: No surprises 

 2Q15 PATMI grew 6.2% YoY 
 Lower volume growth for alcohol post-tax implementation 
 Estimates unchanged as results inline 

2Q15 results within expectations 

  • Thai Beverage PLC’s (ThaiBev) 2Q15 results were in line with our expectations amid uncertainties over economic growth in Thailand. 
  • Revenue was down 2.6% YoY to THB39.0b, which met 23% of our FY15F, as sales from all segments grew except for Spirits. 
  • There were also improvements in overall margins, as EBITDA margin gained 1.5ppt to 21.5% and net profit margin was 1.6ppt up to 15.3%. PATMI rose 6.2% to THB5.9b, meeting 25% of our full-year estimates. 

Beer continues to grow 

  • Recall that there was increased stockpiling by agents prior to the tax implementation, which drove volume growth for the alcoholic segments seen in 1Q. In 2Q, Spirits’ revenue fell 4.7% to THB24.1b, due to agents de-stocking post implementation of the new tax from 27 Mar-15. This segment did maintain its gross profit margin (“GPM”) at 33.8%, but with higher staff costs and A&P expenses, net profit was down 6% to THB4.6b. 
  • Beer’s revenue was steady at THB8.8b albeit volume was 4% lower. GPM was also maintained at 1Q15 level of ~20% vs. FY14 of ~18% due to lower material costs, and net profit was up 95% to THB158b. 

A&P remains high with non-al beverages 

  • The NAB business continued to incur high A&P expenses due to new products launches. There was a one-time gain on sales of THB446m as Sermsuk sold and transferred ownership on the plot of land and building to a related company, without which, the NAB business would have recorded a 63% higher net loss of THB608m. 

Maintain BUY 

  • On the broader economy, Thailand’s finance ministry is now expecting a slower growth rate of 3.0%, mainly due to a drag in export growth. The familiar household debt level issue also keeps its weight on private consumption. 
  • Nonetheless, ThaiBev sees support from higher tourism levels this year as well as strong government spending and investment. 
  • We are keeping our estimates unchanged for now. Maintain BUY with fair value estimate of S$0.83.

Jodie Foo | http://www.ocbcresearch.com/ OCBC Investment Research 2015-08-14
BUY Maintain BUY 0.83 Same 0.83