Thai Beverage - CGS-CIMB Research 2020-08-15: Helped By Cost Controls & Other Income

THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)

Thai Beverage - Helped By Cost Controls & Other Income

Thai Beverage's 9MFY20 revenue of THB190.1bn fell 7.4% y-o-y, broadly in line, at 80.1%/78.3% of our/market FY20F estimates (THB237.2bn/THB242.9bn). 9MFY20 EBITDA (ex-F&N and Frasers Property) grew c.2% y-o-y, on stringent cost controls and insurance claims for the non-alcoholic beverage (NAB) segment.
Lower associate earnings could have led to net profit shrinking in line with our expectations.

Thai Beverage (SGX:Y92)’s 9MFY20 (Oct 2019 to June 2020) revenue fell 7.4% y-o-y to THB190.1bn, largely on declines in the beer segment revenue (-14.2% y-o-y).
The spirit segment saw minimal revenue shrinkage of 0.5%, while the NAB revenue grew 0.5% y-o-y (despite volume decrease). The food segment saw revenue shrink (-14.7% y-o-y) due to a nationwide prohibition on dining-in at restaurants and other food outlets in Thailand from Apr to mid-May.
9MFY9/20 EBITDA, excluding F&N (SGX:F99) and Frasers Property (SGX:TQ5), rose c.2.2%, spurred by the:
- spirits segment, which saw 9M EBITDA growth of 4.9% y-o-y (due to product mix and selling expense reduction), and
- NAB segment, which saw 9M EBITDA rising more than 300% y-o-y on cost-saving initiatives and recognition of insurance claims.
The beer segment saw 9M EBITDA shrinking 9.3% y-o-y (a product of weak 9M revenues), while the food segment saw 9M EBITDA shrinking 46.9% y-o-y.
F&N and Frasers Property’s 9MFY9/20 EBITDA fell 44% y-o-y, which leads us to believe that 9MFY9/20 associate earnings could be weaker y-o-y, potentially having a negative impact on Thai Beverage’s 9M20F net profit, in our view.

Thai Beverage guided that 9M20 sales volume of spirits decreased 2.5%; total beer sales volume decreased 15.5% y-o-y — namely on a significant decrease in Sabeco’s sales volume. NAB segment sales volume declined by 3.8%.

We like Thai Beverage’s ability to control its costs, but we think lower associate earnings could have led to 9MFY20 shrinking y-o-y, in line with our expectations.
We reiterate our HOLD call. Our SOP-based Target Price is unchanged at S$0.70.
See Thai Beverage Share Price; Thai Beverage Target Price; Thai Beverage Analyst Reports; Thai Beverage Dividend History; Thai Beverage Announcements; Thai Beverage Latest News.
Upside risks are a swifter recovery in consumption volumes and quicker-than-expected M&As, involving Sabeco/F&N/Frasers Property.
Downside risks include a longer-than-expected slowdown in volumes and lower dividends.

Cezzane SEE CGS-CIMB Research | https://www.cgs-cimb.com 2020-08-15

SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.700 SAME 0.700