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 has turned optimistic on the alcohol beverage manufacturer.
The brokerage has upgraded the stock to an “add” rating with an unchanged target price of 70 cents.
It has also raised its FY20 earnings per share (EPS) forecast by 4.8% on higher revenues and better margins, though it has kept its FY21-22 EPS forecasts largely unchanged.
“Back to Happy Hour,” CGS-CIMB analyst Cezzane See writes in a note dated Sept 23.
“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 Thailand,” she adds.
On Sept 23, Thailand had three new daily Covid-19 cases, while Vietnam had none, notes CGS-CIMB.
Thailand is now at Phase 5 of tis lockdown easing, it adds.
Vietnam, on the other hand, has resumed normal operations in most parts of the country except for Da Nang city, it points out.
According to the brokerage, 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 FY21 earnings of regional peers, it says.
“We think the risk-reward ratio is now skewed to the upside for longer-term investors,” says See.
CGS-CIMB highlights that ThaiBev should benefit from Thailand’s upcoming stimulus measures.
It says that the Thai government is drafting stimulus plans in order to boost domestic consumption.
“This may lower cost of living and bodes well for consumer purchasing power in FY21,” says See.
As at 11.49 am, ThaiBev was down 0.5 cent or 0.9% at 58.5 cents with 6.4 million shares changed hands.
