“Happy Hour” is back
With a declining number of new daily Covid-19 cases in Thailand and Vietnam, coupled with Thai Beverage’s (ThaiBev) cheap valuation, CGS-CIMB Research’s Cezzane See is optimistic on the alcohol beverage manufacturer.
“We think near-term conditions have improved for longer-term investors who are looking to revisit recovery plays and ride out the political uncertainties in Thai- land,” says See, writing in her Sept 23 note with the headline “Back to Happy Hour”. While she has kept her target price of 70 cents, her new rating on the stock is an “add”.
On Sept 23, Thailand had three new daily Covid-19 cases, while Vietnam had none. Thailand is now at Phase 5 of its lockdown easing.
Vietnam, on the other hand, has resumed normal operations in most parts of the country except for the city of Da Nang.
She has raised her earnings per share forecast for ThaiBev for FY20 by 4.8%, on higher revenues and better margins, though she is keeping her FY2021-2022 EPS forecasts largely unchanged for now.
See says ThaiBev is down about 35% year-to-date and is trading at a forward 13.9 times earnings. This is below two standard deviations of its five-year average price earnings multiple of 15 times and below the 26 times FY2021 earnings of regional peers. “We think the risk-reward ratio is now skewed to the upside for longer-term investors,” she says.
ThaiBev should benefit from Thailand’s upcoming stimulus measures. The Thai government is drafting stim- ulus plans in order to boost domestic consumption. “This may lower cost of living and bode well for consumer purchasing power in FY2021,” says See. — Jeffrey Tan
Thai Beverage Public Co
Price target:
CGS-CIMB “add” 70 cents
