For instance, both DBS Group Research and Phillip Securities have maintained their “buy” ratings, albeit with lower target prices of 90 cents and 80 cents, respectively.
DBS reckons that ThaiBev’s sales in April would be its worst, despite the ongoing alcohol ban in Thailand.
Hence, sales should witness a progressive, albeit gradual recovery as life reverts to normalcy, it says.
“With ThaiBev’s sales skewed towards the off-trade segments and its wide repertoire of brands across different price points (particularly for Spirits), it should be better positioned to withstand headwinds,” DBS analysts Andy Sim and Alfie Yeo write in a note dated May 18.
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Phillip Securities says it favours ThaiBev for its dominant market share in spirits of around 90%.
It points out that the spirits segment’s profit after tax and minority interest was up 9.5% y-o-y to TBH5.35 billion and now accounts for 88% of the company’s earnings.
“Margin stable for spirits business despite weaker volumes,” Phillip Securities’ head of research Paul Chew writes in a May 18 report.
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The brokerage also notes that the company has an “unassailable” distribution network in Thailand with 280,000 direct point of sales presence and another 150,000 covered indirectly via agents.
Moreover, the lack of on-trade consumption will allow the company to offset it with reduced advertisement and promotion expenditure.
Nevertheless, RHB Securities, which has downgraded the stock to “neutral” from “buy” rating previously with a lower target price of 72 cents, believes the outlook is “less rosy” for the company.
This is premised on the extension of the alcohol ban in April and a downgrade of the economic forecast of Thailand.
“Moving into the second half of 2020, the negative impact of Covid-19 on the economy and weaker farm income as a result of the drought could continue to slow alcohol demand in Thailand,” RHB analyst Juliana Cai writes in a May 18 report.
As a result, RHB has lowered its FY20-22 earnings forecasts for the company by 8-10%.
Interestingly, DBS expects the company’s earnings to slip 6% in FY20, before rebounding 16% in FY21.
Phillip Securities, too, expects the company’s earnings to decline 10%.
As at 10.57 am, ThaiBev was flat at 67 cents, with 8.9 million shares changed hands.
