Thai Beverage - OCBC Investment 2022-05-19: Beneficiary Of Reopening

THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)

Thai Beverage - Beneficiary Of Reopening

Thai Beverage's EBITDA and PATMI improved 7.5% and 13.3% y-o-y in 1HFY22 (financial half-year to end-Mar 2022)
Performance boosted by easing COVID-19 restrictions
An interim dividend of 0.15 Thai Baht was declared

Thai Beverage (SGX:Y92)’s 1HFY22 revenue rose 8.9% y-o-y to THB 142.9b, driven by stronger performances across its business segments, thanks to relaxation of COVID-19 restrictions.
Total sales volume grew 6.4% y-o-y in 1HFY22. EBITDA and PATMI improved 7.5% y-o-y and 13.3% y-o-y to THB 28.2b and THB 16.3b, respectively. However, ETITDA margin was marginally lower by 0.2 percentage points to 19.8%.
An interim dividend of 0.15 Thai Baht per share was declared, same as last year.

Costs such as raw material and packaging increased in 1HFY22 but Thai Beverage managed to mitigate some of the costs through improvement in operation efficiency and price adjustments. EBITDA increased y-o-y for all Thai Beverage’s business segments, with the exception of the spirits business (-2.6% y-o-y in 1HFY22).
We note that Thai Beverage increased the price of white spirits in Nov 2021 and Feb 2022 by 4~6% to mitigate the impact of cost inflation. Due to price adjustment in 1HFY22, the product mix had shifted to white spirits than brown spirits due to front loading and stock-up. Management expects the price of molasses which is a key raw material for spirits to trend lower due to higher sugarcane crop.

Performance of the beer business in 1HFY22 benefited from earlier reopening in Vietnam. Total sales volume increased 5.5% y-o-y including Sabeco’s sales. Excluding Sabeco’s sales, total sales volume for beer would have increased 2.8% y-o-y.
For the non-alcoholic beverage segment (NAB), 1HFY22 revenue and EBITDA rose 8.1% y-o-y due to higher sales volume and prudent cost management.
Separately, performance of the food business improved significantly after the resumption of dine-in channel in Thailand.
As domestic and international borders reopen, we see Thai Beverage as a beneficiary of reopening and the gradual return of tourists. After adjustments, we keep our fair value estimate for Thai Beverage at S$0.88.
See

Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2022-05-19

SGX Stock Analyst Report BUY MAINTAIN BUY 0.88 SAME 0.88