SINGAPORE (Oct 3): As investors toast to the successful listing of Budweiser Brewing Co APAC – the Asian operations of the world’s largest brewer, Anheuser-Busch InBev – the cheer could extend to locally-listed Thai Beverage too.
Given that Budweiser Asia derives most of its sales revenue from markets such as Vietnam, ThaiBev-controlled Saigon Alcohol Beer and Beverages Corp (Sabeco) could be in good company.
CGS-CIMB Research estimates that Sabeco’s sales volume could surge 50% y-o-y in FY19.
“We reiterate our view that the successful listing of Budweiser, and its bid to grow in Asia, places Vietnam as one of the key markets for brewery mergers and acquisitions,” CGS-CIMB analyst Cezzane See writes in a note dated Oct 2. “This, in turn, is positive for Sabeco, which currently trades below ThaiBev acquisition price of VND320,000 per share.”
See: AB InBev's Asia unit opens higher despite gloomy IPO market
At the same time, ThaiBev’s home market of Thailand could also provide a boost to the company’s performance.
According to CGS-CIMG, a recovery in upcountry consumer spending is brewing on the back of higher prices for major crops.
Farmers and workers, who are among the low-income households, could spend more on alcohol. “This is a positive precursor to farm incomes, in our view,” says See.
So far this year, Thai beer volumes have risen 9% y-o-y, while select Thai spirit volumes – both white and mixed – have risen 8.5% y-o-y. This was according to Thailand’s Office of Industrial Economics data cited by CGS-CIMB.
The research house has maintained its “add” call for ThaiBev with an unchanged sum-of-the-parts target price of $1.00.
It says higher revenue and margins, as well as M&As involving Sabeco, could be potential re-rating catalyst.
It notes that ThaiBev is still trading below its five-year historical mean of about 20 times and peer average of 26 times.
As at 12.46 pm, shares of ThaiBev are trading down 1.7%, or 1.5 cents lower, at 86.5 cents.
