Thai Beverage - DBS Research 2016-02-29: Showing its resilience

Thai Beverage - DBS Research 2016-02-29: Showing its resilience THAI BEVERAGE PUBLIC CO LTD Y92.SI 
Thai Beverage - Showing its resilience 
  • 4Q15/ FY15 results within expectations 
  • Final DPS of THB0.45 proposed; equates to 68% payout ratio on core profits 
  • Beer turnaround continues; sales volume surged 
  • Reiterate BUY; TP: S$0.82 


 Maintain BUY, TP at S$0.82. 

  • We maintain our BUY recommendation with a TP of S$0.82. 
  • We believe ThaiBev is taking steps to transform into a regional beverage player. 
  • In our view, we believe ThaiBev should have an advantage over its peers given its dominant position as the leading spirits player in Thailand, providing it with ample firepower and serving as a bastion for the company while it invests in new avenues of growth. 

 4Q/FY15 results within expectations. 

  • ThaiBev’s 4Q15/ FY15 showed its resilience by registering growth, which were within our expectations. FY15 headline profit grew by 22% to THB26.5bn, helped by a disposal gain (FNN’s disposal of Myanmar Brewery Limited). Excluding this, ThaiBev would still have recorded a net profit growth of 5.5% y-o-y to THB22.6bn. 
  • Beer segment surprised us with a strong volume growth (+22%/ 50% for FY15/ 4Q15), demonstrating its sustained turnaround and success of its packaging change. 
  • A final DPS of THB0.45 was proposed. 

 Growth is projected to continue. 

  • While headline FY16F shows a decline in profits, this was due to the disposal gain in FY15. Excluding that, we expect core profit growth of 10% for FY16, aided by growth in Spirits, Beer and smaller losses from its Non-Alcoholic Beverage segments. 
  • We are also looking forward to potential corporate restructuring with the eventual consolidation of FNN as a subsidiary, and monetisation of its stake in Frasers Centrepoint Limited, thus, tying in with its announced “Vision 2020” Strategic Roadmap. 

Valuation: 

  • Our target price remains at S$0.82. 
  • Our TP is based on sum-of-parts valuation, derived via discounted cashflows of its core operations, coupled with fair values of its stakes in F&N and Frasers Centrepoint Limited. 

Key Risks to Our View: 

  • Further excise tax hikes. Further increases in excise duties without a commensurate increase in ASP.



Andy Sim CFA DBS Vickers | http://www.dbsvickers.com/ 2016-02-29
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 0.82 Same 0.82


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