KGI: ThaiBev (THBEV SP) – Reopening and laggard play
alanyeo
BUY Entry – 0.68 Target – 0.80 Stop Loss – 0.62
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 1QFY2022 performance. ThaiBev yesterday provided a 1QFY2022 (YE Sep) business update. Revenue in the quarter increased 7.4% YoY while EBITDA rose 1.6% YoY. The stronger growth was driven by the recovery in the beer (+10% YoY sales) and food (+21% YoY sales) segments. Balance sheet also improved with net gearing dropping to 0.75x as at end Dec-2021 vs 0.86x as at end Sep-2021.
Lagging its peers in the STI. Despite the resilient financial performance, shares of ThaiBev have underperformed its fellow peers in the STI over the past one year. ThaiBev was the third worst performing component, declining 13% over the past one year and only outperforming Keppel DC REIT (-26%) and DairyFarm (-34%). In comparison, the STI increased 16% over the past one year.
Positive consensus estimates. Consensus has 17 BUYS and 1 HOLD on ThaiBev, with an average TP of S$0.87, implying a 26% upside potential from the last close price. Earnings are expected to recover 7-11% per annum over the three two years, which would bring its forward P/E down to 15x/14x/13x FY2022/23/24F (YE Sep).
