SINGAPORE (Nov 12): In the last two years, Thai Beverage (ThaiBev) has had to operate in a challenging environment. Following the death of revered Thai King Bhumibol Adulyadej in late 2016, domestic sales of its Chang beer and spirits had deteriorated. The drop in demand was a result of the restriction of entertainment activities during the one-year mourning period, which was subsequently extended. Then, a new excise tax was imposed last year. As a result, shares of the company closed at 65.5 cents on Nov 8, down 36.7% from their all-time high of $1.035 in mid-2016.

Yet, now may be the time for investors to consider ThaiBev again. The company is seen to be “cheap” for a “branded and dominant” consumer play, according to Exotix Capital, which specialises in providing investment research in emerging markets. This is because at 17 times forward earnings for FY2019 ending Sept 30, the company is trading at a 35% discount to its Asian liquor peers, it notes.

Exotix Capital says ThaiBev’s fundamentals are also on the verge of improving because the mourning period has ended; thus, alcohol consumption is expected to increase. The company’s stakes in other F&B companies are also expected to enhance its performance.

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