Thai Beverage - OCBC Investment 2020-05-19: A Less Rosy Outlook

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

Thai Beverage - A Less Rosy Outlook

  • Thai Beverage's 2QFY20 core PATMI was broadly in-line.
  • COVID-19 containment measures weighed on sales volume.
  • Lower Fair Value estimate of S$0.71.



Thai Beverage's 2QFY20 PATMI down 14.5% y-o-y

  • Thai Beverage (SGX:Y92)’s 2QFY20 revenue fell 12.3% y-o-y to THB 61.4b while PATMI was down 14.5% y-o-y to THB 5.0b due to weaker sales from spirits (-3.9% y-o-y), beer (- 23.5% y-o-y) and food business (-8.0% y-o-y), partially offset by higher sales from non-alcoholic beverages business (+5.1% y-o-y); as well as THB 1.1b of income tax expense related to its beer business restructuring.
  • Thai Beverage announced an internal restructuring in beer operations by transferring its shareholding stakes in each of the 15 companies in Thailand to Chang Beer Co. Ltd, Thai Beverage’s indirect subsidiary to improve efficiency in operations and reporting. Excluding the impact of income tax of THB 1.1b on beer restructuring, PATMI would have increased by 4% to THB6.0b, which is broadly in-line with our expectations.
  • An interim dividend of THB 0.10 per share was declared as compared to THB 0.15 last quarter.


Beer and Food business PATMI turned into losses

  • In terms of segment performances, spirits’ sales revenue fell 3.9% y-o-y to THB 29.8b on the back of weaker sales volume (-6.1% y-o-y) while PATMI grew 9.5% y-o-y to THB5.3b in 2QFY20 due to lower advertising, promotion expenses and staff costs. The Beer segment remained challenging.
  • 2QFY20 revenue fell 23.5% y-o-y to THB23.7b on the back of weak Sabeco sales volume (-28% y-o-y) due to
    1. drunk driving laws in Vietnam effective 1 Jan 2020,
    2. impact of COVID-19 and
    3. fake news regarding the ownership of its company.
  • As such, PATMI turned into a loss of THB 171m from a profit of THB 481m in 2QFY19.
  • Moreover, the food business posted a 8.0% y-o-y decrease in revenue to THB 3.5b, largely attributable to a decline in on-trade consumption of food due to COVID-19 and the sale of Oishi Food while PATMI swung into a loss of THB 20m.
  • Separately, the non-alcoholic beverage segment (NAB)’s revenue was up 5.1% y-o-y while PATMI turned from a loss of THB 143m to a profit of THB 243m this quarter.


Expecting weaker 2H






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2020-05-19
SGX Stock Analyst Report BUY MAINTAIN BUY 0.71 DOWN 0.900



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