- BUY Entry 0.660 – Target – 0.715 Stop Loss – 0.640
- Thai Beverage is Thailand’s largest beverage producer and distributor and is among the leading distillers and brewers in Southeast Asia. ThaiBev’s leading products include a variety of well-established spirits brands, including its famous brew Chang Beer. In the non-alcoholic beverage category, key products include water, tonic soda, and RTD green tea. ThaiBev owns and operates 18 well-equipped and modernised distilleries in Thailand with a total production capacity of approximately 819m litres per year. It also operates 3 state-of-the-art breweries with a total installed capacity of approximately 1,550m litres per year.
- Share price lagging regional peer even as Thailand removes pandemic curbs. As Thailand’s leading beer brewer, we believe that THBEV’s share price has not benefited from the recent lifting of pandemic curbs in Thailand. Recall, Thailand rolled back its remaining pandemic curbs by allowing bars and pubs to remain open for longer hours. In addition, we believe that the Thais’ love for the beautiful game and the World Cup 2022 in December could be strong potential tailwinds for the stock. We believe that THBEV, which is currently trading flat YTD, could ultimately play catch up with its peer, Budweiser (1376 HK), which has already surged 13.1% YTD.
- Potential spin-off and listing of BeerCo proceeding as planned. As at last update, THBEV said that SGX has since given its conditional eligibility-to-list letter for the proposed spin-off listing of BeerCo. This was after it put the proposed listing on hold due to the pandemic. It intends to conduct an IPO of up to 20% of BeerCo’s shares. BeerCo has 3 breweries in Thailand and a network of 26 breweries in Vietnam, and includes the production, distribution, and sales of beer including the Chang and Bia Saigon brands. The successful listing would help unlock value for current THBEV shareholders and potentially provide for special payouts.
- Growing dividends even as FY22F EPS is projected to return to normalcy. The Street is overwhelmingly positive on THBEV’s prospects with 15 BUYS, only 1 HOLD, and a 12M TP of S$0.89. The street is expecting FY22F/23F EPS to grow 15.3%/5.5% YoY, with DPS growing in tandem at 13.2%/8.3% to S$0.566/S$0.613 per share. At these projected levels, THBEV would trade at 17.8x and 15.8x FY22/23 P/E and 3.4%/3.6% FY22/23 yield respectively.
(Source: Bloomberg)