Thai Beverage

[winston]

vested

ThaiBev could fizzle out amid coronavirus outbreak, stiffer drunk driving penalties, but analysts unfazed

by Jeffrey Tan

SINGAPORE (Feb 17): Following a positive set of results in 1QFY20 ended Dec 31, the outbreak of the novel coronavirus (Covid-19) could very well take the fizz out of Thai Beverage’s (ThaiBev) performance ahead.

This is on top of stiffer penalties imposed on drivers under the influence of alcohol in Vietnam recently.

However, that is not stopping analysts from upgrading their respective recommendations for the stock.

Phillip Securities has shifted to a “buy” call for the stock with a higher target price of 95 cents from 80 cents previously.

RHB Securities has upgraded to a “buy” rating for the stock from “neutral” previously, albeit with a lower target price of 92 cents from 95 cents previously.

Meanwhile, CGS-CIMB Research has maintained its “add” recommendation, but lowered its target price for the stock to 90 cents from $1.02 previously.

According to Phillip Securities, Thai farm income has been resilient especially with the support from the government.

This is despite its initial concerns over consumer spending in Thailand, especially farm incomes.
Not only that, ThaiBev’s spirit volumes have been “healthy” as customers are purchasing the more premium and higher margin brown spirits, it adds.

“We are more positive on the outlook,” Phillips Securities’ head of research Paul Chew writes in a note dated Feb 17.

CGS-CIMB points out that ThaiBev’s 2QFY20’s domestic demand should stay resilient.
Its notes the company is confident that the Thai government spending will continue at least until March and April this year.

Moreover, the brokerage notes that the company does not believe agents are sitting on excessive inventory levels.

“We still like [ThaiBev] for its longer-term prospects,” CGS-CIMB analyst Cezzane See writes in Feb 15 report.

Still, the outbreak of Covid-19 will dampen sales of ThaiBev’s Chang beer as it is most exposed to on-trade consumption, warns Phillip Securities.

This will be compounded by volumes lost from fewer tourist arrivals, it adds.

If the Thai government spending does not continue, CGS-CIMB reckons the company could face repercussions from the Covid-19 epidemic in 2HFY20.

In Vietnam, RHB Securities notes that fines have doubled and could result in the suspension of driving licenses.

“The tough stance on drunk driving has led to a significant drop in alcohol sales volume since the start of this year,” RHB Securities analyst Juliana Cai writes in a note dated Feb 17.
Furthermore, appetite for a potential IPO of ThaiBev’s business could wane, which many lead to potential delays, warns CBS-CIMB.

Given these headwinds, analysts have cut their respective earnings forecasts for ThaiBev.
RHB Securities trimmed its FY20, FY21 and FY22 earnings estimates by about 2% as some of the on-trade alcohol and food consumption could be affected by the Covid-19 outbreak.

CGS-CIMB also slashed its FY20, FY21 and FY22 revenue estimates by 4%, 2.9% and 2.6%, respectively, and earnings estimates by 5.7%, 5.1% and 4.7%.

However, Phillip Securities has raised its FY20 earnings estimate by 6%.

As at 12.36 pm, ThaiBev was up 5 cents or 6.4% at 83.5 cents, with some 24.4 million shares changed hands.

Source: The Edge

https://www.theedgesingapore.com/capita ... 401b309bc7

[winston]

not vested

Results Update

- 1Q20 PATMI rose 14% YoY to THB 8.4bn. Growth in the quarter was contributed mainly from the strong performance of THBEV’s spirit business. Spirit sales rose 9% YoY while net PATMI surged 26% YoY on higher margins due to favourable product mix. THBEV’s other business (beer, non-alcoholic and food segments) reported uninspiring results as sales stagnated YoY.

- Short-term headwinds due to COVID-19. Our Thailand economist expects a 11% YoY drop in international tourists to Thailand in 2020 and forecasts the economic impact to far outweigh that of SARS in 2003.

While THBEV’s spirits business, which is its key earnings driver, largely caters to domestic consumption, demand will nevertheless be impacted due to slower overall economic growth in the country. On a positive note, the impact will be concentrated in the early to mid cycle of the outbreak, before recovering by the middle of the year.

- Upgrade to Outperform; opportunity to accumulate. THBEV’s shares declined by as much as 17% over the past month, which quickly recovered following the strong set of 1Q20 earnings.

Shares are still down 12% from the 1-year peak of S$0.96 and we believe the current weakness presents an attractive opportunity to accumulate, especially as concerns over the coronavirus starts to wear off.

Source: KGI

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Pouring Water On Songkran; Maintain BUY
Buy (Maintained)
Target Price (Return): SGD0.79 (+16%)
Price: SGD0.68
Market Cap: USD11,977m

Maintain BUY with new SOP-derived TP of SGD0.79, from SGD0.92, 16% upside and 3% yield.

The COVID-19 pandemic has resulted in a partial lockdown in Thailand. In the latest measure to contain the spread of the virus, the Government has postponed the Songkran holidays (13-15
Apr) to deter gatherings.

All provinces have also banned the sale of alcohol during this period.

We lower our TP as we expect Thai Beverage to experience some negative impact from this development.

Source: RHB

https://research.rhbtradesmart.com/atta ... 11909c.pdf

[winston]

not vested

Thai Beverage
Dry in 2020; be back for drinks later

THBEV’s main markets have effected various levels of movement controls since Mar 20, with Thailand even imposing periodic alcohol bans in Apr.

Hence, we think more of THBEV’s divisions will likely be affected. We now expect FY9/20F core EPS to fall by 11.7% yoy.

YTD share price dip likely priced in some Covid-19 impact, but lack of nearterm catalysts leads us to downgrade it to a Hold, with a lower TP of S$0.70.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 0D40A9D9EC

[winston]

not vested

What’s New

2QFY20 net profit down 14.5% due to one-off tax; 1HFY20 eked out gain of 1.3%, thanks to strong 1Q20

Interim DPS of Bt0.10 declared, down from Bt0.15; commits to at least 50% payout ratio at full year

Lockdown measures easing in key markets bodes well; staple plays resilient in uncertain times

Maintain BUY, TP: S$0.90

Source: DBS

https://researchwise.dbsvresearch.com/R ... =feafdkhfj

[behappyalways]

ThaiBev posts 14.5% drop in 2Q earnings to $221 mil
https://www.theedgesingapore.com/capita ... gs-221-mil

[winston]

not vested

2QFY20: Broadly in line

We deem 1HFY9/20 core net profit of THB14.5bn broadly in line at 70.4%/62.1% of our/market FY20F, as 2H20F could be weak, in our view.

Better spirit margins helped hold 1HFY9/20 net margins up, despite weaker sales growth and volumes. An interim dividend of THB0.10 was declared.

We reiterate our Hold call and SOP-based TP of S$0.70 as we think the true test will be 2H volumes and performance.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... B0E83DA5BE

[winston]

not vested

Thai Beverage (THBEV SP)
2QFY20: Laying The Path To Recovery, Upgrade To BUY

THBEV reported 2QFY20 net profit of Bt6.0b, up 5% yoy, marking a positive surprise.

While spirits sales volume was down 6% yoy, margins held up well given the segment’s earnings 10% growth yoy.

Looking forward, COVID-19 will have an impact on 3QFY20 given the alcohol ban, but we opine that THBEV is well placed to recover given its larger proportion of off-trade sales as well as the easing of measures at its key markets of Vietnam and Thailand.

Upgrade to BUY with a target price of S$0.78.

Source: UOBKH

https://research.uobkayhian.com/content ... 2e80b6cfe7

[winston]

not vested

Key takeaways from post results call

Comforted with management’s focus on cost control in the face of uncertain and challenging times

Post lifting of alcohol sales ban in Thailand, May 2020 sales expected to be similar, if not better, vs May 2019

Steps taken to face COVID-19 impact with strength in off-trade and wide brand repertoire

Maintain BUY and S$0.90 TP

Source: DBS

https://researchwise.dbsvresearch.com/R ... =febaakhab

[behappyalways]

ThaiBev posts 2.2% growth in EBITDA in 9M20 business update
https://www.theedgesingapore.com/news/r ... ess-update