THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)
Thai Beverage FY21 - Resilient Results Despite COVID-19 Lockdown Restrictions
- Thai Beverage announced reported FY21 core net profit of Bt27.3b, down 3.2% y-o-y but well within expectations. Total full-year dividend was at Bt0.50/share (FY20: Bt0.46). FY21 spirits and beer volumes softened by 1.8% and 11.2% y-o-y respectively, dragged down by COVID-19 lockdown restrictions in 4QFY21.
- Thai Beverage continued to benefit from well-managed SG&A costs. Maintain BUY.
Thai Beverage reported underwhelming FY21 results but within expectations.
- Thai Beverage (SGX:Y92) reported FY21 core net profit of Bt27.3b, lower by 3.2% y-o-y and forming 99% of our full-year forecasts. The y-o-y decline was largely due to an underperforming 4QFY21 plagued by COVID-19 lockdown restrictions and depressing consumption volumes in core markets. Also, 4QFY20 had trade promotions on white spirits, which kept volumes elevated compared to 4QFY21. The group declared a final dividend of Bt0.35/share, which brings full-year dividend to Bt0.50/share (FY20: Bt0.46) at a total payout ratio at 51%, similar to FY20.
- Continued cost control bearing fruit. Continuing from FY20, Thai Beverage has managed to maintain effective cost control for FY21 with SG&A costs dropping 0.2ppt y-o-y. Even with lesser Advertising and Promotion (A&P) spending, the group managed to increase its market share for its Thailand beer business by 2%.
- ASP hike to tackle rising costs. To mitigate higher material costs, management has noted that the group is planning to increase ASPs for its white spirits and certain key products. With the influx of foreign tourists and the planned reopening of entertainment venues on 16 Jan 22, management expects that there would be enough demand to absorb the ASP hike and not impact consumption volumes going forward.
Spirits: Resilient as always.
- For FY21, in spite of a poor segment would outperform as consumption volumes improve.
Beer: Most affected by lockdowns.
- Due to the on-trade nature of moving forward. FY21 EBIT margins improved by 3.1ppt to 10.4%, on the back of lower SG&A expenses.
NAB: Prudent cost management; Food: Lockdown affected sales.
- For the non-alcoholic lockdown restrictions are being gradually lifted.
Delays in lifting alcohol restrictions and emergence of new COVID-19 variant.
- As Thailand’s authorities assess the kingdom’s COVID-19 situation from the 1 Nov 21 reopening of international borders and the removal of the nationwide curfew, the 1 Dec 21 reopening of bars, nightclubs and entertainment venues has been delayed till 16 Jan 22. Currently, only four provinces in Thailand are allowed to serve alcohol in restaurants till 9pm without curfew. Also, bars and restaurants remain closed in Vietnam as COVID-19 cases spike.
- The emergence of a new Omicron variant has ignited a wave of travel restrictions against certain countries. If the new variant is found in Thailand, this may lead to renewed travel restrictions and derail tourism recovery.
Maintain BUY call on Thai Beverage
- We made insignificant changes to our FY22-23 revenue and net profit forecasts on unexpected delays, we opine that the expected IPO date would happen in 3Q/4QFY22.
- See
- Catalyst: Potential spinoff listing, reopening of bars in Vietnam, vaccine for the Omicron variant.
Llelleythan Tan
UOB Kay Hian Research
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https://research.uobkayhian.com/
2021-11-29
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