SINGAPORE (Aug 12): OCBC Research is sticking to its “hold” call on Thai Beverage PLC (ThaiBev), cheered by continuing growth of its beer business which has maintained market share at 40% level.

“We understand that its key competitor engaged in price discounting since May, while Chang has been pricing up slightly such that price parity between their products has been reached near the end of Jun onwards,” says lead analyst Jodie Foo in a Friday report.

Foo says ThaiBev’s key competitor have been engaged in price discounting since May, while Chang has been pricing up slightly such that price parity between their products has been reached near the end of June onwards.

“Looking ahead, while there could be further impending moves from competitors, we expect Beer’s market share and performance to sustain for the year,” adds Foo.

Meanwhile, ThaiBev’s Non-Alcoholic Beverages (NAB) segment continued to narrow its losses by 64.3% to THB217 million in 2Q.

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“The on-going efforts to leverage on ThaiBev’s strong distribution network to extend presence in Thailand as well as production capacity expansion plans bode well for this segment’s long term growth,” says Foo.

To recap, ThaiBev reported a 16.6% rise in 2Q16 revenue to THB45.5 billion ($1.8 billion), driven by growth in sales of Spirits (+0.7%), Beer (+69.4%), Non-Alcoholic Beverages (NAB) (+3.3%) and Food (+4.8%).

PATMI was down 1% to THB5.8 billion due to lower contribution from F&N/FCL during the quarter. Nonetheless, net profit excluding F&N/FCL improved by 19.1%. 1H16 revenue was up 18.8% to THB100.6 billion and PATMI rose 16% to THB14.4 billion, which OCBC deems to be within its expectations.

Separately, the group has announced a higher interim dividend of 0.20 THB/share vs. 0.15 THB/share.

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OCBC has a fair value of $1.01 for the stock.

As at 11.33am, shares of ThaiBev are up 1% to $1.04.

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