THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)
Thai Beverage - Nightlife Entertainment Makes A Comeback In Thailand
- Thailand has removed the quarantine and RT-PCR test requirements for vaccinated individuals. The kingdom has also announced the reopening of entertainment venues, with additional easing of domestic COVID-19 alcohol restrictions. Higher consumption volumes driven by international tourism and domestic consumption are expected to boost earnings moving forward, although record-high inflation and higher raw material costs may dampen the recovery.
- Maintain BUY on Thai Beverage (SGX:Y92) with a lower target price.
Tourism is back.
- Since 1 May 22, fully-vaccinated travellers have been able to enter Thailand without the need for any RT-PCR tests while the minimum insurance coverage required is US$10,000, down from US$20,000. From 1 Jun 22, approval for the Thailand Pass has become instantaneous, easing the application process for international tourists. Unvaccinated tourists are now also able to enter Thailand quarantine-free, given a negative RT-PCR test 72 hours pre-departure.
- Thailand’s Centre for COVID-19 Situational Administration (CCSA) is proposing to scrap the Thailand Pass from 1 Jul 22 onwards, essentially removing the need for travel insurance. Vietnam has dropped testing requirements for all travellers since 15 May 22.
Nightlife back to life.
- Thailand’s authorities increased the number of blue zones (12 to 29) and green zones (14 newly-introduced zones) from 1 Jun 22, with nightlife entertainment venues in these zones such as bars and pubs allowed to serve alcohol up to 12am midnight (previously 11pm). The authorities are also facing pressure from the nightlife industry to extend operating hours to 2am, which would further boost consumption levels. However, CCSA remains firm on the 12am curfew for now.
- Under strict control guidelines, full capacity large-scale events are allowed in green and blue zones but only at 75% capacity for yellow zones.
Tourist arrivals to accelerate.
- Thailand’s tourist arrivals experienced a strong recovery in Apr 22, reaching a pandemic high of 293,350, impressive given that the whole of 2021 only saw 427,869 arrivals. As restrictions ease and global air travel recovers, we expect around 6-7 million tourist arrivals in 2022. However, this is still a fraction of the 40m arrivals pre-pandemic.
Russian tourism loss mitigated by overall growth.
- As mentioned in our previous report, Russian tourist arrivals fell sharply, from 23,760 in Jan 22 (18% of total arrivals) to 5,223 (1.8% of total arrivals) in Apr 22, dragging down overall tourism growth. However, as Thailand has been aggressive in relaxing travel restrictions, the influx of non-Russian international arrivals has mitigated the drop in Russian arrivals.
- For Apr 22, ASEAN arrivals doubled from Mar 22, growing 27,531 m-o-m, largely led by Singaporean (+9,989 m-o-m) and Malaysian tourists (+6,245 m-o-m). European arrivals also climbed (+15,779 arrivals, +15.9% m-o-m) in Apr 22 as restrictions eased. We maintain our earlier expectations that Thai Beverage would experience a recovery in consumption volumes as international arrivals start to recover further, backed by the reopening of entertainment venues and easing of COVID-19 measures.
Rising raw material costs and record-high inflation.
- Thailand is facing its highest forward, this segment may face future margin pressure once the leftover stock depletes.
We lower our FY22-FY24F PATMI earnings forecast for Thai Beverage by 2-4%
- We lower our FY22-FY24F PATMI earnings forecast for Thai Beverage by 2-4%, on the favourable tailwinds that are already underway.
- See
- Catalyst: Potential spinoff listing, full reopening of bars in Vietnam and Thailand.
Llelleythan Tan
UOB Kay Hian Research
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https://research.uobkayhian.com/
2022-06-16
SGX Stock
Analyst Report
0.94
DOWN
1.05
