A better quarter
• Reopening drove volume recovery
• 1QFY22 revenue/EBITDA rose 7.4%/1.6% YoY
• EBITDA margin contracted by 1.1 ppt YoY
1QFY22 business update – Thai Beverage PLC’s (ThaiBev) 1QFY22 revenue increased by 7.4% YoY to THB 77.1b, supported by recovery of economic activities in Thailand and Vietnam, which drove sales growth across all business segments. EBITDA rose 1.6% YoY to THB 14.7b for 1QFY22, driven by better performances from the Beer, Non-alcoholic beverage (NAB) and Food segments due to higher sales volume and effective cost controls. EBITDA margin, however, was down slightly by 1.1ppt YoY to 19.0%, weighed down by Spirits and Beer businesses while NAB and Food segments saw improvement in margins.
Spirits remained resilient but margins contracted due to higher raw material costs – Despite the temporary closure of entertainment venues in Thailand in 1QFY22, Spirits business remained resilient due to its off-premise consumption nature and strong product portfolio and distribution network. Its 1QFY22 revenue rose 3.6% YoY, driven by an 8.6% increase in sales volume. EBITDA, on the other hand, fell 2.3% YoY to THB 9.0b, pulled down by higher raw material costs in 1QFY22, particularly molasses. To manage higher material costs, ThaiBev raised the price of white spirits in Oct 2021 and management shared that the cost of molasses in current season is likely to be lower YoY due to better harvesting season.
Reopening of economic activities drove broad recovery – For Beer, its sales revenue grew 10.4% YoY to THB 33.4b in 1QFY22, thanks to reopening efforts in Vietnam which saw sales volume increasing 1.1% YoY, together with an increase in price in the country. As such, EBTIDA rose 4.5% YoY to THB 4.5b during the quarter. For the NAB segment, 1QFY22 revenue was up 7.6% YoY on higher sales volume (+2.3% YoY), while EBITDA improved 20.2% YoY to THB 596m on prudent cost controls. Separately, Food business’ revenue grew 21.0% YoY while EBITDA jumped 35.6% YoY to THB 545m due to the recovery in dine-in traffic at restaurants. ThaiBev is currently trading at a blended forward P/E of 14.9x which is near 1 s.d. below its 5-year average of 16.8x. We think the valuation is undemanding given the ongoing recovery of the economy and higher vaccination rates, together with ThaiBev’s strong brand name and product portfolio in Thailand and Vietnam, and effective cost controls. BUY. (Chu Peng)