Thai Beverage - OCBC Investment 2021-08-18: Helped By Effective Cost-Control Measures

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THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)

Thai Beverage - Helped By Effective Cost-Control Measures

• Thai Beverage's 9MFY21 EBITDA rose 11.5% y-o-y.
• Margin improved due to effective cost-control measures.
• Spirits remained resilient.

Thai Beverage's 9MFY21 business update

• Thai Beverage (SGX:Y92)’s 9MFY21 revenue increased by 1.1% y-o-y to THB192.1b due to higher sales from Beer and Spirits, but partially offset by lower sales revenue from Non-alcoholic and Food segments. Despite a marginal revenue growth in 9MFY21, EBITDA rose 11.5% to THB36.6b due to prudent cost control measures which saw EBITDA margin improving to 19.1% (+1.8 ppt).

Spirits remained resilient with a 4.2% YoY increase in sales volume

• Despite the impact of COVID-19, Spirits remained resilient due to its off-premise consumption nature, strong product portfolio and distribution network. Its 9MFY21 revenue grew 3.6% y-o-y to THB91.6b while EBITDA was up 9.5% y-o-y to THB23.6b, driven by higher sales volume (+4.2%) and lower selling expenses.
• For Beer, 9MFY21 revenue and EBITDA grew 1.2% and 20.4% y-o-y on effective cost control measures. Total sales volume for Beer, however, fell 1.1% y-o-y due to weaker performance from SABECO. Stripping off the impact of SABECO, sales volume would have increased.
• For the non-alcoholic beverage segment (NAB), revenue and EBITDA fell 6.4% and 4.6% y-o-y due to lower sales volume (-8.6% y-o-y).
• Separately, the Food business was impacted by the Thai government’s restrictions on dining-in at restaurants and other food outlets. As a result, revenue declined 12.9% y-o-y while EBITDA rose 2.9% y-o-y.

Valuations undemanding

• Thai Beverage is currently trading at a blended forward P/E of 14.8x which is near 1 standard deviation below its 5-year average of 17.2x. We think valuations are undemanding given the recovery of the economy and rollout of vaccines, together with Thai Beverage’s strong brand name and product portfolio, its strong market share in Thailand and Vietnam, and effective cost controls. After adjustments, our fair value estimate for Thai Beverage remains at S$0.91.
• See
  • Thai Beverage's Share Price,
  • Thai Beverage's Target Price,
  • Thai Beverage's Analyst Reports,
  • Thai Beverage's Dividend History,
  • Thai Beverage's Announcements,
  • Thai Beverage's Latest News.

Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2021-08-18

SGX Stock Analyst Report BUY MAINTAIN BUY 0.910 SAME 0.910