Thai Beverage - CGS-CIMB Research 2021-09-21: Looking For Happier Hours

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THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)

Thai Beverage - Looking For Happier Hours

• Consumption recovery in sight with easing lockdown measures in operating geographies and potential stimulus measures in Thailand.
• Lockdown impact may be limited as Thai alcohol sales remained resilient in Jul 21. Thai Beverage is also adopting cost control measures to protect margins.
• Thai Beverage's valuation undemanding at 14.6x CY22F P/E, 1.1 standard deviation below historical mean and at a 47% discount vs regional peers.

Reiterate ADD on attractive valuation and improving risk-reward

• Reiterate ADD. We believe Thai Beverage (SGX:Y92)’s risk-reward profile is improving with easing lockdown measures in Thailand and Vietnam, which could aid consumption recovery in 1QFY22F (Oct 2021 to Dec 2021).
• Thai Beverage trades at an undemanding valuation of 14.6x CY22F P/E (1.1 standard deviation below its 10-year historical mean), below regional peers’ 27.8x. We believe the current valuation has more than priced in near-term headwinds. Our SOP target price of S$0.84 implies 19.0x CY22F P/E (0.5 standard deviation above 10-year historical mean).
• Potential catalysts include new stimulus measures to support consumer purchasing power in Thailand and better cost control. Resumption of BeerCo IPO plans could also be a medium-term catalyst, in our view.
• Downside risks include prolonged lockdowns in Vietnam and Thailand.

Thai volumes resilient in Jul 21; Vietnam volumes slowed

• Industry data suggests resiliency in Thai Thai Beverage should be relatively resilient vs peers, given:
  1. its strong presence in off-trade channels, and
  2. it being a potential beneficiary of down-trading, with its positioning as a mass player for beers in Thailand and Vietnam.

Prudent cost controls to tide through near-term headwinds

• We forecast Thai Beverage achieving an EBITDA core net profit growth in 2HFY21F.

Consumption recovery in sight

• Both Thailand and Vietnam have the Thai government also raised the public debt-to-GDP ratio ceiling to 70% (from 60%); we think more stimulus measures could be announced to boost domestic consumption and help the economy.
• 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.
• Continue to read the 17-page report attached below for detailed analysis and valuations of Thai Beverage.

ONG Khang Chuen CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-09-21

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