THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)
Thai Beverage - Recovery Except For Spirits
- Thai Beverage (SGX:Y92)'s results are in line, with 9M22 revenue and EBITDA at 77%/76% of our FY22e forecasts.
- Spirits volumes contracted 14% y-o-y and margins were weaker. Beer recovered on both volume and price increases.
- We upgrade Thai Beverage to a BUY with an unchanged target price of S$0.80 due to recent share price weakness. Our target is pegged at 18x FY22e earnings, its 5-year average. No change to our FY22e forecast.
- The re-opening of entertainment venues in Thailand on 1 Jun22 and softer commodity prices should support earnings in 4Q22. Separately, Thai Beverage announced the deferment of the BeerCo spin-off due to challenging market conditions.
The Positive
Volume and price bounce for beer.
- Beer sales rebounded strongly with a 16% y-o-y growth. The volume recovery is from lockdowns a year ago, namely in Vietnam. Price increases, product mix and lower sales and marketing costs supported the expansion in EBITDA margins to a record 16.1%. Pre-pandemic EBITDA margins were around 10%.
The Negative
Spirits down after strength a year ago.
- Volumes were down 14% y-o-y to 138mil litres. Seasonally, third-quarter volumes are the weakest. The 138mil litres is a tad above 3Q21’s 136mil litres, which included a 1-month alcohol ban in Thailand. We believe the weak volumes stem from poor sales and currency in Myanmar and lower consumption of on-premises brown spirits.
Outlook
- We expect the overall recovery from lockdowns and weaker economic conditions to continue. Price increases implemented over the past few quarters together with the rolling over of commodity prices should support a gross margin recovery. Operating margins may suffer if Thai Beverage resumes marketing activities that were significantly cut over the past two years.
Upgrade to BUY from ACCUMULATE with an unchanged target price of S$0.80
- Our target price forThai Beverage is maintained at S$0.80, based on 18x FY22e earnings, its 5-year average.
- See
Paul Chew
Phillip Securities Research
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https://www.stocksbnb.com/
2022-08-15
SGX Stock
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