Introduction

In the latest comprehensive report by UOB Kay Hian, Thai Beverage Public Company Limited (THBEV), Thailand’s largest beverage producer, is meticulously analyzed. The report sheds light on the company’s fiscal year 2024 (FY24) performance and offers insights into its future prospects. With a maintained “BUY” recommendation, the report highlights a target price of S\$0.56, indicating a potential upside of 8.7% from its current share price of S\$0.515.

Company Overview

Thai Beverage Public Company Limited dominates the spirits market in Thailand, producing a wide array of beverages including spirits, beer, non-alcoholic beverages (NAB), and food. As of the report, the company has a market cap of S\$12,940.8 million, equivalent to US\$9,625.7 million, with its major shareholder, Charoen Sirivadhanabhakdi, holding a 65.9% stake.

FY24 Financial Performance

The fiscal year 2024 saw Thai Beverage delivering stable results amidst challenging economic conditions. The company reported a 2.2% year-on-year (yoy) increase in revenue, totaling Btm340,289, driven by growth across all beverage and food segments. However, the Profit After Tax and Minority Interests (PATMI) slightly declined by 0.8% yoy, largely due to elevated interest costs and income taxes.

Segmental Performance

Spirits Segment

The spirits segment experienced a modest revenue growth of 0.8% yoy, reaching Btm120,728. Nonetheless, the segment’s EBITDA saw a slight decline of 1.1% yoy, attributed to higher raw material costs and a lower-margin product mix. The report anticipates improved sales volumes and better margins in FY25, supported by an improved domestic economic outlook and increased tourist arrivals.

Beer Segment

The beer segment performed robustly with a 2.4% yoy increase in revenue and a 6.6% yoy rise in EBITDA. This growth was bolstered by rising tourist numbers and enhanced economic activity in Thailand and Vietnam. Looking forward, the segment is expected to maintain its positive momentum into FY25, with potential cost efficiencies and increased market share in Vietnam and Thailand.

NAB and Food Segments

The NAB segment saw a 4.2% yoy revenue increase, primarily due to higher sales volumes and improved cost efficiencies. Meanwhile, the food segment posted a 5.5% yoy increase in revenue, despite a 21.5% yoy decline in EBITDA caused by increased SG&A and rising raw material costs. The report also notes the introduction of a new “Others” segment, which experienced a 6% yoy drop in revenue but a significant 78.7% surge in EBITDA.

Future Outlook

The report remains optimistic about Thai Beverage’s future, projecting higher earnings driven by improved margins across all segments. The potential for an IPO of its BeerCo subsidiary is highlighted as a significant catalyst for future growth. Additionally, the company expects to benefit from falling raw material costs in the coming fiscal year.

Valuation and Recommendation

UOB Kay Hian maintains a “BUY” recommendation for Thai Beverage, with a target price of S\$0.56, reflecting a 13x FY25F PE multiple. The stock is considered attractively priced at -1.5 standard deviations from its long-term average mean PE, supported by a projected FY25 dividend yield of 5.1%.