THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)
Thai Beverage - Beer Leading The Recovery
- Thai Beverage (SGX:Y92)'s 1H22 revenue and PATMI beat our expectations, at 55%/62% of our FY22e forecasts. 2Q22 PATMI rose 20% y-o-y to THB7.1bn. Interim dividend was unchanged at THB0.15.
- Driving earnings growth was a 3-fold recovery in beer and associates PATMI. Spirits earnings were down 3% y-o-y to THB5.4bn due to a higher mix of white spirits. Spirits accounted for 75% of group PATMI.
- We maintain our ACCUMULATE recommendation. Our FY22e earnings forecast for Thai Beverage is raised 5% to THB27.6bn. The target price for Thai Beverage is raised from S$0.765 to S$0.80. Valuation is based on 18x earnings, its 5-year average. FY22e will be a recovery from pandemic lockdowns last year. The pace of the recovery will depend on entertainment outlets reopening in Thailand.
The Positives
Beer bounces back.
- Beer earnings surged as volumes jumped 11% y-o-y to 553mil litres. Volumes remain 24% below pre-pandemic levels in 2Q19. Another driver of revenue growth was the low (Thailand) to high (Vietnam) single-digit price increases on beer during the quarter. Sabeco raised prices in December 2021 and April 2022.
Margins stable despite cost pressure.
- Thai Beverage continues to keep a lid on operating expenses. 2Q22 administration expenses declined 2.6% y-o-y to THB3.8bn or 5.8% revenue (2Q21: 6.5%). This is below the pre-pandemic run-rate of around 11%. Despite the raw material cost pressures, gross margins were stable at around 29.7%. The price increase and higher volumes supported margins.
The Negative
Weaker spirits revenue.
- 2Q22 spirit volumes expanded for the second consecutive quarter, rising 4% y-o-y to 172mil litres (1Q22: +8.6% y-o-y). Volume this quarter jumped from forward loading by distributors ahead of a price increase of white spirits in February. Consequently, revenue was flat y-o-y due to a higher mix of white spirit sales.
Outlook
- The re-opening of entertainment outlets in Thailand will determine the pace of recovery for Thai Beverage. A complete re-opening will boost beer and brown spirits consumption for the company. Sabeco beer volumes will rebound from the lockdowns a year ago.
- We expect spirits earnings to grow modestly in 2H22, supported by price increases in November 2021 and February 2022 of 4-6%. Margins could creep up from lower molasses cost. The sugar cane crop in Thailand is up around 40% from a year ago, helping to lower prices.
Maintain ACCUMULATE with higher target price of S$0.80 (previously S$0.765)
- We maintain our ACCUMULATE recommendation for Thai Beverage. Our FY22e earnings is raised 5% to THB27.6bn. The target price for Thai Beverage is raised from S$0.765 to S$0.80. Valuation is based on 18x earnings, its 5-year average. FY22e will be a recovery from pandemic lockdowns last year. The pace of the recovery will depend on entertainment outlets reopening in Thailand.
- See
Paul Chew
Phillip Securities Research
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https://www.stocksbnb.com/
2022-05-17
SGX Stock
Analyst Report
0.80
UP
0.765
