Thai Beverage - CGS-CIMB Research 2021-02-05: Refreshing Its Beer IPO Dreams

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

Thai Beverage - Refreshing Its Beer IPO Dreams

  • Thai Beverage proposes to list its beer business (under BeerCo Limited) on the Main Board of the SGX, with a public offering of up to ~20% shares.
  • Purported valuation of US$10bn could re-rate Thai Beverage. Looking back at 2019, when news first emerged, Thai Beverage's share price traded up to S$0.935.
  • Reiterate ADD.



Listing of BeerCo not new, but refreshed

  • Thai Beverage (SGX:Y92) proposes to list subsidiary BeerCo (restructured to hold the Thai beer and 53.58% stake in SABECO) on the Main Board of Singapore Exchange, via a vendor sale of up to ~20% of BeerCo’ issued shares (“proposed vendor sale"). See Thai Beverage's announcement dated 5-Feb.
  • Thai Beverage is aiming to list BeerCo to:
    1. dedicate heightened managerial focus on its beer business;
    2. improve the group’s gearing (assuming part of the proceeds from the proposed vendor sale are used to repay interest-bearing debts); and
    3. unlock shareholder value (transparent valuation benchmark for BeerCo).
  • Thai Beverage intends to retain a significant majority shareholding in BeerCo post listing.
  • The IPO plan for Thai Beverage’s beer segment is not new. It was first brought up at end-2019. Looking back to 2019, Thai Beverage's share price traded up to a maximum of S$0.935.


Potential US$10bn BeerCo valuation could lift Thai Beverage's target price to S$1.17

  • According to recent news articles, Thai Beverage could seek up to ~US$10bn valuation for BeerCo, and raise ~US$2bn (we think to be utilised to pare down debts).
  • The US$10bn valuation implies a FY20 P/E of > 60x on BeerCo’s FY20 PATMI of S$199m. For reference, SABECO and Budweiser Brewing Company are trading at a CY21F P/E of ~22-39x.
  • Refer to Figure 1 in report attached below for details on Thai Beverage's target price calculation. We currently value Thai Beverage’s beer business at an enterprise value (EV) of THB144.5bn (~US$4.4bn). Assuming a US$10bn valuation for BeerCo, Thai Beverage keeps an 80% stake, and that the US$2bn proposed vendor sale proceeds would go to pare down Thai Beverage’s group debt; our sum-of-parts target price for Thai Beverage could go up to S$1.17.

Maintain ADD






Cezzane SEE CGS-CIMB Research | https://www.cgs-cimb.com 2021-02-05
SGX Stock Analyst Report ADD MAINTAIN ADD 0.870 SAME 0.870



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