SINGAPORE (Oct 3): As investors toast to the successful listing of Budweiser Brewing Co APAC – the Asian operations of the world’s largest brewer, <a href="https://quotes.wsj.com/BUD"><span><span>Anheuser-Busch InBev</span></span></a> – 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.”

<hr/><a href="https://www.theedgesingapore.com/news/ipo/ab-inbevs-asia-unit-opens-higher-despite-gloomy-ipo-market" target="_blank">See: AB InBev's Asia unit opens higher despite gloomy IPO market</a><hr/>

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.

Cheer from Budweiser Asia's listing could extend to ThaiBev via Sabeco: CGS-CIMB

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Cheer from Budweiser Asia's listing could extend to ThaiBev via Sabeco: CGS-CIMB

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