THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)
Thai Beverage - Spirits Business Remained Relatively Resilient
- 9MFY20 business update.
- Recovery in sales volume as countries exit from lockdowns.
- Sabeco weighed on beer performance.
Thai Beverage's 9MFY20 revenue fell 7.4% y-o-y while EBITDA rose 2.2% y-o-y
- Thai Beverage (SGX:Y92)’s 9MFY20 revenue fell 7.4% y-o-y to THB 190.1b while EBITDA rose 2.2% y-o-y to THB 32.9b, driven by improvements in the Spirits and Non-alcoholic beverage’s EBITDA. Sales volume was impacted by the temporary ban on alcoholic beverage sales in Thailand and lockdowns in Thailand and Vietnam in Apr and May but has recovered gradually since the lockdown and ban were lifted in May/June.
Sales volume was impacted by lockdowns
- In terms of segment performances, Spirits’ sales revenue fell 0.5% y-o-y to THB 88.5b on the back of weaker sales volume (-2.5% y-o-y) while EBITDA grew 4.9% y-o-y to THB21.6b in 9MFY20 due to lower selling expenses in Thailand and Myanmar.
- For Beer, 9MFY20 revenue fell 14.2% y-o-y to THB79.3b due to weak sales volume (-15.5% y-o-y) while EBITDA was down 9.3% y-o-y to THB 8.8b. The decline in sales volume was largely attributable to lower Sabeco sales. Excluding the impact of Sabeco, total sales volume for Beer would have declined marginally y-o-y despite the temporary ban on alcoholic beverage sales in Thailand.
- The non-alcoholic beverage segment’s (NAB) 9MFY20 revenue was up 0.5% y-o-y to THB 12.5b while EBITDA surged 301.6% y-o-y to THB1.7b due to continued cost management initiatives.
- Separately, the Food business posted a 14.7% y-o-y decline in revenue to THB 9.9b while EBITDA declined 46.9% y-o-y to THB 751m, due to bans on dine-in at restaurants and other food outlets in Thailand in Apr and May.
Valuations undemanding
- Thai Beverage’s Food segment saw the biggest impact from COVID-19 while the performance of Spirits (88% by FY19 net profit) was more resilient than our initial expectations. As lockdowns and bans on alcoholic sales were lifted in May, we could see slow recovery in sales volume in 2H 2020.
- Thai Beverage is currently trading at a blended forward P/E of 14.4x which is near 2 s.d. below its 5- year average of 17.8x.
- See Thai Beverage Share Price; Thai Beverage Target Price; Thai Beverage Analyst Reports; Thai Beverage Dividend History; Thai Beverage Announcements; Thai Beverage Latest News.
- While valuations are undemanding, we note that Thailand’s soft economic growth outlook remains an important variable for Thai Beverage’s outlook given its discretionary consumer product portfolio.
- After adjustment on sales volume and cost assumptions, our fair value estimate increases from S$0.71 to S$0.75.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2020-08-18
SGX Stock
Analyst Report
0.75
UP
0.710
