Analysts have continued to be optimistic on Thai Beverage (ThaiBev) despite the challenges faced in several markets, such as Thailand, Vietnam and Myanmar.
This comes after the alcohol manufacturer posted a mixed set of results for 2QFY2021 ended March 31.
See: ThaiBev sees 19.7% growth in earnings to 5.93 bil baht in 2Q21
The Singapore research team at RHB Group Research believes ThaiBev is in a “good position” to capitalise on a cyclical recovery after a mass inoculation.
The company can do so thanks to its well-established branding and market presence, the brokerage says.
“Looking beyond the near term, we foresee a recovery in on-premises consumption post-Covid-19 should help raise demand for ThaiBev’s beer, non-alcohol beverages and restaurant segments,” writes the RHB team in a report dated May 17.
RHB has maintained its “buy” rating for the stock with an unchanged target price of 94 cents.
OCBC Investment Research analyst Chu Peng is equally sanguine.
Chu says with the recovery of the economy and rollout of vaccines, ThaiBev could benefit from the recovery of consumption, especially from on-premises consumptions.
"We continue to like ThaiBev for its resilient alcoholic beverage business, strong product portfolio, distribution network and cheap valuation," she writes in a note dated May 17.
Chu has kept her "buy" rating with an unchanged fair value of 91 cents.
Maybank Kim Eng analyst Kareen Chan shares a similar view, but with more confidence for ThaiBev.
The brokerage says the company’s portfolio of top mass-market brands is “well-positioned” to capture post-Covid recovery opportunities, driven by easing restrictions of on-premises consumption.
The company’s current undervaluation could be a plus point too.
Maybank's Chan notes that ThaiBev trades at about 15 times its FY2021 earnings forecast.
“We believe subsequent net margin expansion from its beer division and the post-Covid consumption recovery could help narrow the price earnings gap,” she writes in a May 17 report.
Chan has raised her FY2021-FY2023 earnings per share forecasts for the company by 4%.
She has retained its “buy” recommendation for the stock with a higher target price of 99 cents from 95 cents previously.
UOB KayHian analyst Lucas Teng, on the other hand, points out that ThaiBev’s beer business has gained market share in Thailand despite weaker sales volume.
The brokerage notes that the company’s efforts to strengthen distribution channels have been successful in ensuring that beer products are well stocked.
Like Maybank Kim Eng, ThaiBev’s current undervaluation is attractive, Teng writes in a May 17 report.
Teng has kept his “buy” call for the stock with an unchanged target price of 92 cents.
Although CGS-CIMB Research analyst Cezzane See continues to be sanguine on ThaiBev’s for the long term, See worries for its near-term prospects.
In her report dated May 14, See believes the company’s revenue growth could slow down with tightening measures being implemented from April 21 onwards due to Covid-19.
“We also think the lower revenues will lead to operating deleverage which could also put pressure on our forward earnings before interest and tax margins,” she writes.
As such, See has trimmed her FY2021-FY2023 earnings per share (EPS) forecasts for ThaiBev by 2.7%-3.2%.
She has maintained her “add” rating for the stock with a lower target price of 84 cents from 87.2 cents previously.
As at 3.32 pm, ThaiBev was up 2.5 cents or 3.7% at 69.5 cents, or 2.54 times P/B according to CGS-CIMB's estimates, with 37.5 million shares changed hands.
