THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)
Thai Beverage - Cheap, Cheap… Just Drink; Upgrade To BUY
- Last Friday, Thai Beverage (SGX:Y92) provided an update for its 9MFY20 (Sep) which showed a lower revenue by 7% y-o-y to THB190bn and a higher EBITDA by 2% y-o-y to THB32.9bn. See Thai Beverage Announcements. This implied 3QFY20 revenue declined 15% and EBITDA declined 7% y-o-y, which were above our expectations given the alcohol ban in Thailand during the Songkran period.
- We upgrade Thai Beverage to BUY as Thai Beverage's share price has corrected to an attractive valuation of 15x FY21F P/E.
Spirits segment outperformed our expectation.
- Despite an alcohol ban in Thailand from early April to early May, sales of spirits only declined c.8% y-o-y in 3QFY20 while EBITDA dipped c.3% y-o-y. Myanmar maintained its performance in the whisky segment.
- Overall for 9MFY20, the spirits segment delivered a 5% y-o-y growth in EBITDA driven by a reduction in selling expenses.
Beer and food segments were more impacted by the alcohol ban and lockdowns.
- Revenue for the beer segment fell c.20% y-o-y in 3QFY20. We estimate Thai Beverage’s 3Q sales volume of beer fell y-o-y c.17% and c.21% for Thailand and Vietnam respectively. Nevertheless management highlighted that market share for both Thailand and Vietnam continued to grow despite lower sales.
- 3QFY20 EBITDA declined to a lesser extent by 14% y-o-y as not much advertising & promotion was required with the cancellation of the Songkran festival in Thailand. SG&A however continued to increase in Vietnam due to intense competition and the introduction of new products.
- The food segment was also severely affected during the period due to prohibition on dining out from April to mid-May. 3QFY20 sales declined 39% y-o-y as they were limited to takeaways and deliveries and EBITDA plunged 88% y-o-y for the quarter.
Non-alcohol beverage (NAB) segment’s EBITDA surged > 200% y-o-y
- Non-alcohol beverage (NAB) segment’s EBITDA surged > 200% y-o-y in 3QFY20 albeit from a low base while sales for the segment fell c.11% y-o-y. The segment continued to work towards margin improvement and profitability, in line with previous quarters’ strategy.
Upgrade to BUY
- Upgrade Thai Beverage to BUY with unchanged Target Price of SGD0.72.
- While the beer and food segments were more severely impacted by COVID-19 and the resulted movement restrictions, we note that their contributions to bottom line were not as significant as the spirits segment which contributed c.80% of FY19 PATMI.
- See Thai Beverage Share Price; Thai Beverage Target Price; Thai Beverage Analyst Reports; Thai Beverage Dividend History; Thai Beverage Announcements; Thai Beverage Latest News.
- We expect Thai Beverage's earnings to remain fairly resilient with the spirits segment holding up.
- As Thai Beverage's share price has recently corrected to 15x FY21F E/E, we think the valuation is now compelling and upgrade to BUY.
Juliana Cai
RHB Securities Research
|
https://www.rhbinvest.com.sg/
2020-08-17
SGX Stock
Analyst Report
0.720
SAME
0.720
