THAI BEVERAGE PUBLIC CO LTD
Y92.SI
Thai Beverage Public Company - Earnings momentum continuing
- 2Q16 performance showing strong momentum – within expectations.
- Interim DPS of THB0.20/share declared.
- Re-rating to continue on earnings, transformation.
- Maintain long-term BUY, TP raised to S$1.13.
Long term BUY, TP raised to S$1.13.
- Despite the stock price rising by c.50% year to date, we retain our long-term BUY recommendation on Thai Beverage Public Company (ThaiBev) with a higher TP of S$1.13.
- While investors may be deterred given the recent outperformance, we believe its earnings momentum coupled with its ongoing transformation into a regional beverage player will aid in further re-rating of the counter. We would advocate accumulating on pullbacks.
2Q16 –strong operating performance.
- Headline net profit was THB5.8bn (-1% y-o-y), due to a dip in contribution from F&N and Frasers Centrepoint Limited (FCL). Excluding F&N/FCL’s contribution, net profit would have increased by 19.1% to THB5.4bn. Revenue grew by a robust 17% y-o-y to THB45.5bn contributed by all business segments, with Beer rising by 69%.
- Operating profit improved by 25% y-o-y while there was a 1ppt lift in margins to 14%, largely led by an improvement in Beer, coupled with lower losses from Non-Alcoholic Beverage (NAB) segment. An interim dividend of THB0.20 was declared, up from THB0.15 in 1H15.
Raised FY16/17F earnings by 2-4%.
- We raised our earnings estimates by 2%- 4% factoring in recent ASP increases and higher volume growth for its beer. Excluding the disposal gain in FY15 from its associate F&N, we project core profit growth of c.24% in FY16, driven by Beer, Spirits and smaller losses from its NAB segment.
- With a solid performance in 1H16 and the strong momentum in Beer, we believe the market will gain confidence in the group’s potential to deliver which will drive a further re-rating for the counter.
- Other catalysts are potential corporate restructuring with the eventual consolidation of F&N as a subsidiary, and monetisation of its stake in FCL.
Valuation
- Our target price is raised to S$1.13 on higher earnings estimates, and rolling over our valuation base to FY17F (from FY16F). Our TP is based on sum-of-parts valuation, derived via discounted cashflows of its core operations, and imputing fair values for its stakes in F&N and FCL.
Key Risks to Our View
- Further excise tax hikes. Further increase in excise duties without a commensurate increase in ASP.
Andy Sim CFA
DBS Vickers
|
http://www.dbsvickers.com/
2016-08-12
DBS Vickers
SGX Stock
Analyst Report
1.13
Up
0.920
