A year of recovery
? 2QFY9/22 net profit +20% yoy to THB8.1bn, above expectations. All four
segments showed yoy revenue growth, with Vietnam outperforming Thailand.
? We are confident of further recovery as economies reopen. Price hikes and
prudent cost management should help THBEV uphold its margins.
? Reiterate Add and TP of S$0.91. THBEV remains our sector top pick.
Solid set of 1HFY9/22 results
THBEV’s 2QFY9/22 net profit of THB8.1bn (+20% yoy) was above expectations, with
1H22 net profit forming 59% of both our and Bloomberg consensus FY22F numbers. 2Q
revenue rose to THB65.8bn (+11% yoy) – all four segments recorded positive yoy
growth, with Vietnam operations showing stronger recovery compared to Thai operations
given the former’s relatively faster pace of reopening. EBITDA rose to THB12.9bn (+14%
yoy), led by margin expansion in the beer and food segments, while spirits and nonalcoholic beverages (NAB) segments saw margins contract slightly on a yoy basis.
Expect further volume recovery as economies reopen
We remain confident on more volume recovery in 2H22F with the further reopening of the
Thai and Vietnam economies. Thailand has seen progressive easing of Covid-restrictions
YTD with more provinces redesignated from “orange zones” (where alcohol consumption
at eateries is disallowed) to “yellow” or “blue” zones (which do not have such restrictions).
Allowed hours for alcohol consumption at eateries have also been extended through
midnight nationwide from 1 May onwards, and news media reported that the government
is exploring reopening of entertainment venues in three major tourist hotspots soon.
Vietnam is also poised for a strong recovery, with SABECO (THBEV’s beer subsidiary in
Vietnam) guiding for 32% yoy topline growth for CY22F in its AGM.
Cost pressures well managed for now
Despite continued cost pressures, we believe THBEV can still achieve EBITDA margin
expansion for FY22F. THBEV has been actively raising product pricing over the past 2
quarters – white spirits in Nov 21/Feb 22 depending on SKUs, Thai beer in Mar 22,
Vietnam beer twice in Dec 21 and Apr 22. We think the beer segment (32% EBITDA
contribution in 1H22) is likely to see higher cost pressures due to a surge in international
barley prices amid the Russia-Ukraine conflict, though this will only become more visible
in FY23F with forward buying contracts in place. Meanwhile, the spirits segment (60%
EBITDA contribution) could see less pressure with 1) molasses prices trending lower,
and 2) likely product mix shift towards brown spirits as entertainment venues reopen.
Reiterate Add and TP of S$0.91
Reiterate Add and SOP-based TP of S$0.91; THBEV remains our sector top pick as we
believe it is a laggard recovery play – it trades at an undemanding valuation of 14.4x
CY23F P/E (1.1 s.d. below its 10-year historical mean), below regional peers’ 22.9x.
Potential re-rating catalysts include stronger volume recovery and successful BeerCo
listing. Downside risks include higher-than-expected input costs pressuring margins.