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Analysts more bullish on ThaiBev despite weak FY2020 results

Jeffrey Tan
Jeffrey Tan • 3 min read
Analysts more bullish on ThaiBev despite weak FY2020 results
DBS Group Research, CGS-CIMB Research and RHB Research have raised their respective target price for Thai Beverage.
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Despite a weaker set of results announced by Thai Beverage (ThaiBev) for FY2020, analysts are more bullish on the prospects of the beverage manufacturer ahead.

CGS-CIMB Research, which has kept its “add” rating for the stock, has raised its target price to 87 cents from 70 cents previously.

DBS Group Research, which has retained its “buy” call for the stock, has also raised its target price to 93 cents from 90 cents previously.

Even RHB Research, which has maintained its “buy” recommendation for the stock, has raised its target price to 82 cents from 72 cents previously.

During the year, ThaiBev’s revenue fell 5% y-o-y to THB253.48 billion from THB267.36 billion, on lower beer sales amid the Covid-19 pandemic.

As a result, the company’s earnings slipped 2% y-o-y to THB22.75 billion from THB23.27 billion.

SEE:UOBKH sees 'minimal' impact on ThaiBev from Thai political unrest

Nevertheless, DBS says the “stable” spirits consumption in Thailand should provide recurring cashflow for ThaiBev.

Moreover, improved contributions from its Vietnamese subsidiary Saigon Beer-Alcohol-Beverage Corp (Sabeco) should bolster the company’s performance in the future, it says.

“Despite appreciating by [about] 24% since our last note on Oct 20, we believe there is still upside,” DBS analysts Andy Sim and Alfie Yeo write in a note dated Nov 26.

RHB points out that given the low base in 1HFY20, it expects to see continued positive beer sales momentum moving into 1H21.

The brokerage also expects advertising and promotional (A&P) efforts for the segment to increase as economic activities and on-trade consumption gradually resume in FY21.

“We expect the strong earnings to continue in FY21, as A&P expenditure and competition normalise, but are mitigated by higher demand from on-trade consumption,” RHB analyst Juliana Cai writes in a Nov 27 report.

Meanwhile, CGS-CIMB says ThaiBev could benefit from a potential down-trading.

The brokerage notes that selected Thai white spirits volumes grew 2.2% y-o-y in 9M20, compared to a y-o-y 18.3% decline in selected mixed spirits that are more expensive, according to official statistics.

“We think ThaiBev could be one of the beneficiaries of such trends as it has 90% market share in the Thai spirits space, and is a mass player for beers in Thailand and Vietnam,” CGS-CIMB analyst Cezzane See writes in a note dated Nov 26.

CGS-CIMB has raised its FY20-21 earnings per share forecasts for ThaiBev given its outperformance this year.

It has also forecast an earnings growth of 2.2% for the company in FY23.

DBS, too, has raised its FY21-22 forecasts by 2% and 1%, respectively, for the company on the back of improvement in the global economy.

RHB has also raised its FY21-23 earnings forecasts for the company by 11-12%.

As at 12.32 pm, ThaiBev was up 0.5 cent or 0.7% at 75 cents with 25 million shares changed hands.

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