<Results Analysis> A stellar quarter to mark the new year
- 1Q22 revenue and EBITDA rose to THB77.1bn (+7.4% y-o-y) and THB14.7bn (+1.6% y-o-y) driven by the Beer, Non-Alcoholic Beverages and Food segments
- Some COVID-19 uncertainty exists but FY22 expected to be better year
- BeerCo IPO may potentially be back as higher interest rates loom
- Maintain BUY with TP of S$0.92
| Qtr ending December | 1Q22 | 1Q21 | y-o-y | 1Q20 (pre-COVID) | Comments |
| Revenue | 77,116.0 | 71,789.0 | 7.4% | 75,680.0 | |
| Spirits | 36,015.0 | 34,771.0 | 3.6% | 34,420.0 | Improvement came on the back of 8.6% rise in sales volume underpinned by off-premise consumption |
| Beer | 33,359.0 | 30,221.0 | 10.4% | 33,222.0 | Recovery mainly driven by SABECO’s sales volume rise and price increase |
| Non-Alcoholic Beverages | 3,988.0 | 3,707.0 | 7.6% | 4,214.0 | Sales volume up by 2.3% y-o-y |
| Food | 3,785.0 | 3,128.0 | 21.0% | 3,874.0 | Better performance due to recovery of dine-in traffic |
| Elimination | (31.0) | (38.0) | -18.4% | (50.0) | |
| EBITDA | 14,659.0 | 14,431.0 | 1.6% | 12,946.0 | |
| Spirits | 9,011.0 | 9,219.0 | -2.3% | 8,782.0 | Higher raw material costs (especially molasses) ate into margins |
| Beer | 4,507.0 | 4,314.0 | 4.5% | 3,255.0 | |
| Non-Alcoholic Beverages | 596.0 | 496.0 | 20.2% | 447.0 | Cost control measures behind bounce in EBITDA |
| Food | 545.0 | 402.0 | 35.6% | 462.0 | Better revenue along with improved operation efficiency of restaurants drove Food performance |
What’s New
Starting the fiscal year with a bang. ThaiBev’s 1Q22 revenue grew 7.4% y-o-y to THB77.1bn as Beer, Food and Non-alcoholic Beverages segment revenue rebounded. 1Q22 EBITDA was higher by 1.6% y-o-y at THB14.7bn, boosted by the same 3 segments but offset by a 2.3% decline in Spirits segment EBITDA on higher raw material costs. Still, the Group expects raw material costs in the current season to be lower y-o-y. Notably, 1Q22 revenue and EBITDA represented c.30% and c.34% of our full year forecasts although the first quarter is seasonally ThaiBev’s better quarter with 1Q20 and 1Q21 numbers also reflecting c.30 – 34% of full year numbers.
Deleveraging efforts progressing well. Net interest bearing debt as of 31 Dec 2021 stood at THB161.2bn, representing a net interest bearing debt to equity ratio of 0.75x. This was an improvement from the previous quarter’s 0.86x.
Our View
Some COVID-19 uncertainty remains but FY22 expected to be a better year. As of today, COVID-19 cases in Thailand and Vietnam have surged with the latter reporting a record number of cases this past week. However, we observe that government tolerance for COVID-19 has increased in both countries, with both actively seeking to relax international restrictions even as COVID-19 cases continue to rise. Overall, FY22 is likely to be a better year with only light COVID-19 restrictions imposed. In other words, we believe it is unlikely for widespread curbs to be imposed in the following quarters of the year barring the emergence of a more deadly COVID-19 variant or an overwhelmed healthcare system. This should translate to better y-o-y revenue performance in the coming quarters for the Beer, Food and Non-alcoholic Beverage segments.
BeerCo IPO could return this year. ThaiBev’s Beer segment posted a good showing in the first quarter which could set the stage for a BeerCo IPO this year. We believe one reason for the IPO is for the Group to deleverage. In the face of a looming rise in interest rates, BeerCo’s IPO may be set to return in the coming quarters.
Maintain our BUY call on ThaiBev with a TP of S$0.92.