ThaiBev is Thailand’s largest and one of Southeast Asia’s largest beverage companies. THBEV has a 28.5% stake in SGX-listed Fraser & Neave Ltd (FNN SP) and a 28.3% stake in Frasers Property Limited (FPL SP). It also has a 53.6% stake in Saigon Beer-Alcohol-Beverage Corporation (SABECO), Vietnam’s largest beer company. ThaiBev has a 90% market share of Thailand’s spirit market.
Resilient. Despite the impact from Covid-19, ThaiBev still managed to eke out earnings growth of 9% YoY in 1H FY2021. This was mainly due to a combination of resilient spirits/beer sales and tight cost control measures. The company even raised 1H2021 interim dividend to 0.15 Bhat from 0.10 Bhat in the prior-year period, indicating management’s positive outlook.
Thailand reopening. As ThaiBev derives 75% of FY2020 revenue from Thailand, the recently announced plans to open up the country to travellers should be taken as a positive sign. It is estimated that Thailand lost about US$50bn in tourism revenue in 2020, with the economy suffering its deepest contraction in more than 20 years. There were only 70,000 visitors in the first 8 months of 2021, compared to 40mn visitors for the full year 2019.
Positive consensus estimates. Consensus has 19 BUYS and 1 HOLD on ThaiBev, with an average TP of S$0.82, implying a 30% upside potential from the last close price. Earnings are expected to recover 7-8% per annum over the next two years, which would bring its forward P/E down to 17x/15x/14x FY2021/22/23F. The resumption to list its BeerCo could provide a short-term upside catalyst.