THAI BEVERAGE PUBLIC CO LTD
Y92.SI
Thai Beverage - Blowout quarter!
- We had expected beer to be the single bright spark covering up for some slippages in spirits and non-al. Beer certainly did well, but so did all the other divisions!
- 1Q net profit (Thb8.6bn) made up 34%/35% of ours/consensus full-year forecasts. Despite being seasonally stronger, this was a huge beat.
- Spirits had unexpected volume growth. Beer chalked up further market share gains and a margin pickup. All other divisions did well on specific division factors.
- Our hiked EPS (14-17%) raises our SOP target price to S$0.92. Maintain Add.
Big earnings beat
- 1Q16 profit beat expectations handsomely on:
- unexpected pick-up in spirits volume;
- better-than-expected beer volumes, as market share momentum continued;
- record margins for beer as operating leverage kicked in; and
- cost control in non-al and food, to ensure that all four divisions were EBITDA-positive in 1Q.
- Other than the spirits positive that had some temporary effects, the rest all look like positives that could stay.
Spirits had some effects of pre-excise tax buying
- Spirits sales rose 5%, as volume unexpectedly gained 4% yoy.
- Management guided this was partly due to the anticipation of an impending tax hike, after cigarette taxes had been raised in 1Q.
- Inventory levels in the channel have risen to 4-5 weeks, vs. a norm of three weeks.
- Pre-excise duty effects notwithstanding, spirits have been taking market share from both international brands and smaller provincial spirits.
Beer kept market share gain momentum, operating leverage show
- Beer sales (+71% yoy), as volumes (+61% yoy), show the effect of the re-positioning since 3Q15.
- More importantly, beer market share continues to rise (4Q: 38%, 1Q: 40%). As sales grow, the effect of operating leverage is also kicking in nicely.
- Qoq, gross profit rose 38% and EBITDA +10%. Part of the reason for the improved margins is that the proportion of returnable bottles used has returned to normal.
- Thai Bev sees no effective countermeasure so far by competitor, Leo.
Non-alcohol beverages (non-al) did well on Jub Jai and water
- Non-al’s EBITDA swung back to positive, on continued growth in JubJai (volumes +30% yoy) and water (volumes +20% yoy).
- Only carbonated soft drinks volume declined 6% yoy, as continued growth in est cola was offset by a large base of 100Plus sales in 1Q15 during its launch phase.
- Food saw sluggish sales growth, in line with the weak economy, but some operational re-org has thrown up cost efficiencies.
Maintain Add; blowout quarter will give legs to a short-term rally
- We raise our estimates by 14-17% mostly on beer and spirits. The two main surprises in 1Q were beer profitability (as sales trend up) and spirits volume (which is a more temporary effect).
- With our hiked estimates, the current FY16 P/E of 16.6x does not look so steep once again.
- Our SOP-based target price is raised to S$0.92 after EPS increase.
- We believe the blowout 1Q performance will be a catalyst for the share price to rally post-results.
Kenneth NG CFA
CIMB Securities
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Jonathan SEOW
CIMB Securities
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http://research.itradecimb.com/
2016-05-13
CIMB Securities
SGX Stock
Analyst Report
0.92
Up
0.83
