Thai Beverage - CGS-CIMB Research 2019-12-09: Drink On!

THAI BEVERAGE PUBLIC CO LTD (SGX:Y92) | SGinvestors.io THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)

Thai Beverage - Drink On!

  • Continuing government stimulus plans could help sustain Thailand alcohol consumption in FY20F.
  • The ongoing transformation at Saigon Alcohol Beer and Beverages Corporation (SABECO) is a compelling medium-term earnings driver.
  • The stock trades at FY9/21F P/E of 17.6x (below its 5-year average and peers).
  • Potential M&As could unlock value of businesses in the near term.



A recovery year

  • THAI BEVERAGE (SGX:Y92)'s FY9/19 revenue rose 16% y-o-y to THB267.4bn led by
    1. the recovery in Thailand’s alcohol consumption, which boosted domestic spirits/beer volumes (+7.9%/7.4% y-o-y);
    2. the inclusion of SABECO’s volumes in FY9/19 (c.1.9bn litres), and
    3. sustained growth (+15.0% y-o-y) in the Myanmar spirits volume.
  • Overall, Thai Beverage’s core net profit grew c.14.0% y-o-y to THB23.3bn.


2020 outlook: Sustained domestic growth, revitalised Vietnam

  • Management hopes to see continued Thai government stimulus in CY20F, which could sustain domestic Thai alcohol volume growth.
  • SABECO unveiled new packaging for most of its products in FY19, barring Bia 333, which it looks to relaunch by early-20F. It also underwent a slew of operational transformations (i.e. increase in ownership of an associate brewery, restructuring transportation providers, rationalising packaging costs) to improve operational efficiency.
  • We pencil in revenue growth of 5.7%, and coupled with operating leverage and lower finance costs, this should lead to an FY20F net profit growth of c.10% y-o-y.


Potential IPO of beer business? Vision 2020 beckons



Maintain ADD

  • We like that the underlying businesses have stabilised, while market gains in SABECO are medium-term drivers. Our CY21F SOP-based Target Price is S$1.02.
  • Catalysts are higher revenue/margins and M&As involving SABECO/ FRASER AND NEAVE (SGX:F99)/ FRASERS PROPERTY (SGX:TQ5).
  • Risks are weaker revenue and margins for the domestic business and SABECO.





Cezzane SEE CGS-CIMB Research | https://www.cgs-cimb.com 2019-12-09
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