Thai Beverage (THBEV) Stock Analysis: Demand Volatility, Dividend Yield, and Updated Target Price (May 2025)

CGS International

May 13, 2025

Thai Beverage: Steady Progress Amid Demand Volatility

Thai Beverage (THBEV) is navigating a landscape of fluctuating demand, demonstrating resilience in certain segments while facing headwinds in others. This analysis delves into the company’s recent performance, strategic adjustments, and future outlook, providing investors with a comprehensive overview.

1HFY9/25 Performance: Beer and NAB Growth Offset by Spirits Decline

• Thai Beverage reported 1HFY9/25 PATMI of THB14.7bn, a 3.2% year-over-year decrease, aligning with expectations at 55% of the FY25F estimate but falling short of Bloomberg consensus at 49%. [[1]]
• Revenue for 1HFY25 reached THB177.6bn, a 1.0% year-over-year increase, but trailed expectations. [[1]]
• 2QFY25 EBITDA experienced a 7.6% year-over-year decline to THB14.7bn, attributed to escalating input and marketing costs for spirits. [[1]]
• However, beer and non-alcoholic beverage (NAB) sales exhibited robust growth of approximately 3.0% year-over-year, fueled by stocking for an earlier Tet season largely captured in 1QFY25. [[1]]
• The decline in spirits revenue narrowed to 1.5% year-over-year in 1HFY25, a notable improvement from the 4.8% decrease in 1QFY25, driven by increased volumes in 2QFY25. [[1]]

Beer Sales: Thailand Strength Tempered by Vietnam Weakness

• Group beer revenue decreased by 2.4% year-over-year in 2QFY25, as strong ex-SABECO beer volumes (+14.3% year-over-year) were offset by lower ASPs and weak Vietnam sales. [[1]]
• THBEV noted market share recovery in Vietnam in March, following a weak January-February period impacted by early Tet stocking. [[1]]
• SABECO projected a 1% revenue decline in FY25F at its AGM in April 2025. [[1]]
• FY25F beer volume growth forecast adjusted to approximately 5% year-over-year (previously +c.7%) to account for subdued customer sentiment in Thailand and Vietnam. [[1]]

Spirits Sales: Economic Headwinds Pose Challenges

• Spirits sales increased by 2.1% year-over-year in 2QFY25, propelled by a 2.6% rise in volumes (compared to a 6.3% year-over-year decline in 1QFY25). [[1]]
• Given the close correlation between THBEV’s spirits business and the local economy, which is expected to remain sluggish in FY25F, roughly flat FY25F spirits revenues are projected. [[1]]

Cost Management: A Critical Factor

• Beer EBITDA margin remained broadly stable year-over-year at 12.4% in 2QFY25, aided by securing malt inventory at approximately 20% year-over-year lower prices for FY25F. [[2]] This offset a one-off fair value loss from SABECO’s investment in an associate. [[2]]
• Spirits EBITDA margin contracted by 1.8% points year-over-year to 23.9%, due to marketing for new products and elevated input costs as THBEV continued to utilize higher-priced molasses inventory. [[2]]
• EBITDA margins forecast adjusted to 17.5-18% for FY25F-27F (previously: 18-19%). [[2]]

Investment Recommendation

• Reiterate Add rating, expecting THBEV to return to earnings growth in FY26F. [[2]]
• SOP-based TP lowered to S\$0.56, reflecting a trim of FY25F/26F EPS by 0.7-3.3% to reflect slow recovery amid macroeconomic headwinds. [[2]]
• The stock is trading at 10.4x fwd P/E, approximately 1.5 standard deviations below its 5-year mean. [[2]]
• Potential catalysts include stronger margins from tighter cost controls and volume uplift from downtrading in Vietnam. [[2]]
• Downside risks include prolonged macroeconomic weakness impacting sales volumes and lower margins from higher SG&A. [[2]]

Key Changes in This Note

• FY25F-27F EPS reduced by 0.7-4.9%. [[2]]

Financial Summary

Sep-23A   Sep-24A   Sep-25F   Sep-26F   Sep-27F
Revenue (THBm)          332,931   340,289   350,970   365,663   377,725
Operating EBITDA (THBm) 58,969    61,650    61,288    65,817    67,514
Net Profit (THBm)       27,434    27,216    26,476    29,875    30,920
Core EPS (THB)          1.09      1.08      1.05      1.19      1.23
Core EPS Growth         (8.9%)    (0.8%)    (2.7%)    12.8%     3.5%
FD Core P/E (x)         12.08     12.18     12.52     11.10     10.72
DPS (THB)               0.60      0.62      0.65      0.65      0.65
Dividend Yield          4.55%     4.70%     4.93%     4.93%     4.93%
EV/EBITDA (x)           8.12      8.41      8.25      7.46      7.00
P/FCFE (x)              9.27      8.02      12.30     11.80     9.57
Net Gearing             56.0%     78.6%     73.6%     67.8%     59.9%
P/BV (x)                1.65      2.22      2.08      1.92      1.77
ROE                     13.5%     15.5%     17.2%     18.0%     17.2%

Thailand’s Liquor Sales Volumes

• Thailand’s monthly domestic white liquor sales volumes [[2]]
• Thailand’s monthly domestic mixed liquor sales volumes [[2]]

Thailand’s Beer Sales

• Thailand’s monthly domestic beer sales volumes [[3]]
• Thailand’s monthly domestic beer production volumes [[3]]

Vietnam’s Beer Production

• Vietnam’s monthly domestic beer production volumes [[3]]

Earnings Revision

FYE Sep (THB bn)     FY25F   FY26F   FY27F   FY25F   FY26F   FY27F   FY25F    FY26F   FY27F
Revenue              351.0   365.7   377.7   359.9   372.1   381.2   -2.5%    -1.7%   -0.9%
Gross profit         107.2   112.3   115.5   108.1   114.8   117.9   -0.8%    -2.2%   -2.0%
EBITDA               61.3    65.8    67.5    64.7    70.3    72.6    -5.2%    -6.4%   -7.0%
Operating profit       44.1    47.8    49.3    44.9    50.2    52.3    -1.8%    -4.8%   -5.7%
Net profit             26.5    29.9    30.9    26.7    30.9    32.5    -0.7%    -3.3%   -4.9%
Core net profit        26.5    29.9    30.9    26.7    30.9    32.5    -0.7%    -3.3%   -4.9%
Core EPS (THB)         1.1     1.2     1.2     1.1     1.2     1.3     -0.7%    -3.3%   -4.9%

Peer Comparison

Company                      Ticker    Recom.   Price   Target Price   Market Cap   CY25F   CY26F   CY25F    CY26F    CY25F    CY26F    CY25F    CY26F    CY25F    CY26F
Thai Beverage                THBEV SP  Add      0.52    0.56           9,908        12.1    11.0    8.6%     2.04     1.88     17.5%    17.8%    7.9      7.2      4.9%     4.9%
Jiangsu King's Luck Brewery 603369 CH  Add      48.34   56             8,364        15.1    13.4    11.0%    3.3      2.9      23.7%    22.8%    10.0     8.5      2.6%     2.9%
Jiangsu Yanghe Brewery       002304 CH  Hold     68.99   84             14,423       13.2    12.8    -1.9%    1.9      1.8      14.5%    14.4%    6.8      6.4      5.3%     5.4%
Kweichow Moutai              600519 CH  Add      1604.5  1862           279,715      21.2    19.4    8.9%     7.7      6.8      38.3%    37.2%    14.4     12.9     3.5%     3.9%
Luzhou Laojiao               000568 CH  Hold     126.59  151            25,859       12.7    11.6    6.8%     3.5      3.1      29.5%    28.7%    7.9      6.9      4.7%     5.2%
Shanxi Xinghuacun Fen Wine   600809 CH  Add      206.06  252            34,887       17.6    15.3    14.9%    5.9      4.8      36.7%    34.7%    12.2     10.1     2.9%     3.3%
Wuliangye Yibin              000858 CH  Hold     132.97  141.5          71,628       14.9    13.8    7.0%     3.4      3.2      23.9%    24.1%    8.1      7.2      4.7%     5.0%

ESG Initiatives

• THBEV is committed to continuous innovation in energy and water management, as well as packaging and waste, to reduce its impact on natural resources and the environment. [[6]]
• As of FY9/24, it reduced its water intensity by 5.33% year-over-year and greenhouse gas (GHG) Scope 1 and 2 emissions by 5.12% (with FY9/23 as the base year). [[6]]
• THBEV reused and recycled 97% of glass packaging sold in Thailand in FY9/24. [[6]]
• THBEV intends to reduce water intensity by 7% by 2030 and GHG Scope 1 and 2 emissions by 42% by FY9/30F (with FY9/23 as the base year) and committed to using at least 50% renewable energy by FY9/30F. [[6]]
• THBEV reused/recycled 97% of its glass packaging products sold in Thailand in FY9/24 and aims to have 100% of the glass packaging for its products sold in Thailand retrieved for reuse or recycling by FY9/25 (FY9/30 for PET bottles and aluminium cans). [[6]]
• In 2023, THBEV was selected for the DSJI Emerging Markets and DJSI World Indices for eight and seven consecutive years, respectively. [[6]]
• According to S&P Global’s ESG scores based on its Corporate Sustainability Assessment (CSA) released in Sep 2023, ThaiBev achieved a full score (100/100) for 6 of 27 criteria within the Environmental, Social and Governance sections. [[6]]

Financial Highlights

• Total Net Revenues: [[7]]
  • Sep-23A: 332,931 THBm
  • Sep-24A: 340,289 THBm
  • Sep-25F: 350,970 THBm
  • Sep-26F: 365,663 THBm
  • Sep-27F: 377,725 THBm
• Gross Profit: [[7]]
  • Sep-23A: 98,687 THBm
  • Sep-24A: 103,208 THBm
  • Sep-25F: 107,244 THBm
  • Sep-26F: 112,282 THBm
  • Sep-27F: 115,546 THBm
• Operating EBITDA: [[7]]
  • Sep-23A: 58,969 THBm
  • Sep-24A: 61,650 THBm
  • Sep-25F: 61,288 THBm
  • Sep-26F: 65,817 THBm
  • Sep-27F: 67,514 THBm
• Net Profit: [[7]]
  • Sep-23A: 27,434 THBm
  • Sep-24A: 27,216 THBm
  • Sep-25F: 26,476 THBm
  • Sep-26F: 29,875 THBm
  • Sep-27F: 30,920 THBm

Key Balance Sheet Items

• Total Cash and Equivalents: [[8]]
  • Sep-23A: 57,310 THBm
  • Sep-24A: 54,123 THBm
  • Sep-25F: 51,256 THBm
  • Sep-26F: 49,628 THBm
  • Sep-27F: 54,635 THBm
• Total Debtors: [[8]]
  • Sep-23A: 18,023 THBm
  • Sep-24A: 19,290 THBm
  • Sep-25F: 19,649 THBm
  • Sep-26F: 20,233 THBm
  • Sep-27F: 20,712 THBm
• Inventories: [[8]]
  • Sep-23A: 61,021 THBm
  • Sep-24A: 63,003 THBm
  • Sep-25F: 63,436 THBm
  • Sep-26F: 65,949 THBm
  • Sep-27F: 68,239 THBm
• Total Liabilities: [[8]]
  • Sep-23A: 299,358 THBm
  • Sep-24A: 298,538 THBm
  • Sep-25F: 294,166 THBm
  • Sep-26F: 290,026 THBm
  • Sep-27F: 285,785 THBm
• Shareholders’ Equity: [[8]]
  • Sep-23A: 201,099 THBm
  • Sep-24A: 149,208 THBm
  • Sep-25F: 159,351 THBm
  • Sep-26F: 172,894 THBm
  • Sep-27F: 187,482 THBm

Key Ratios

• Revenue Growth: [[8]]
  • Sep-23A: 22.2%
  • Sep-24A: 2.2%
  • Sep-25F: 3.1%
  • Sep-26F: 4.2%
  • Sep-27F: 3.3%
• Operating EBITDA Growth: [[8]]
  • Sep-23A: 18.9%
  • Sep-24A: 4.5%
  • Sep-25F: (0.6%)
  • Sep-26F: 7.4%
  • Sep-27F: 2.6%
• Operating EBITDA Margin: [[8]]
  • Sep-23A: 17.7%
  • Sep-24A: 18.1%
  • Sep-25F: 17.5%
  • Sep-26F: 18.0%
  • Sep-27F: 17.9%

Volume Growth

• Spirit volume (m litres): [[8]]
  • Sep-23A: 642.8
  • Sep-24A: 637.8
  • Sep-25F: 637.8
  • Sep-26F: 647.4
  • Sep-27F: 653.8
• Beer volume (m litres): [[8]]
  • Sep-23A: 2,240.4
  • Sep-24A: 2,314.1
  • Sep-25F: 2,418.3
  • Sep-26F: 2,519.4
  • Sep-27F: 2,584.8
• Non-alcoholic beverage volume (m litres): [[8]]
  • Sep-23A: 3,073.0
  • Sep-24A: 3,218.9
  • Sep-25F: 3,380.1
  • Sep-26F: 3,534.7
  • Sep-27F: 3,650.1