Thai Beverage Public Company - DBS Research 2016-08-12: Earnings momentum continuing

Thai Beverage Public Company - DBS Vickers 2016-08-12: Earnings momentum continuing 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.


  • 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 | 2016-08-12
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 1.13 Up 0.920