Thai Beverage (ThaiBev) posted better-than-expected results for FY2022 ended September, with revenue and patmi at 101% and 109% of forecasts, says PhillipCapital’s head of research Paul Chew.
“We expect FY2023 to be a year of growth as the reopening of borders and entertainment outlets resume, increased selling prices and demand further spurred by multiple events including the World Cup and upcoming elections. Gross margins are expected to improve as commodity prices taper down but higher marketing spend will dampen the margin improvements,” writes Chew.
In a Dec 5 note, Chew maintained his “buy” call on ThaiBev with an unchanged target price of 80 cents. The target price represents an upside of 28.7% against a traded price of 64 cents.
ThaiBev reported earnings of 30.1 billion baht ($1.16 billion) for FY2022, up 22% over FY2021. Revenue, in the same period, was up 13% to 272.4 billion baht.
The company, whose flagship product is the Chang brand beer, plans to pay a total dividend of 0.6 baht per share for the whole of FY2022, up from 0.5 baht paid last year. Both dividend amounts translate into a payout ratio of around 50%.
Beer sales revenue rebounded with a 54% y-o-y jump in volumes following the lockdown in Vietnam. 4QFY2021 ended September beer volumes were down almost 40% y-o-y.
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There were price increases in October 2022 for beer in Thailand and Vietnam; and longer drinking hours for the World Cup and 80% of on-trade premises reopened will support sales in 1QFY2023, says Chew.
In addition, distribution expenses will climb from increased marketing activities due to the return of more events, he adds.
Besides selling beer, the company sells a range of whiskeys and other hard liquor. Thai Beverage’s spirits business reported revenue of 116.2 billion baht, up 1% y-o-y. Earnings, however, dipped by 1.1% y-o-y to 21.9 billion baht on higher raw material and packaging costs.
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Spirits volumes remain sluggish, notes Chew. “Volumes in 4QFY2022 were flat at 139.9 million litres. Revenue improved from higher selling prices in white spirits. Brown spirit volumes are recovering from the reopening of entertainment outlets and on-trade sales.”
ThaiBev says flooding in some parts of Thailand reduced agricultural productivity, tourism activity and consumer spending. Inflation, rising energy costs and commodity prices have similarly caused a slowdown in domestic private consumption.
Beer Co, an entity that ThaiBev has planned to spin off in a separate listing in Singapore, reported earnings of $256 million, up 24.2% over FY2021. Revenue in the same period was 15.2% to $4.8 billion.
The decision to delay the IPO, citing “challenging market conditions”, was announced on Aug 11.
“The company will continue to monitor market conditions, evaluate, and explore opportunities to maximise shareholders’ value, including where appropriate, reviewing the proposed spin-off listing at an appropriate time,” says ThaiBev on Nov 25.
As at 3.21pm, shares in ThaiBev are trading 2.5 cents higher, or 3.91% up, at 66.5 cents.
