With stronger tourist numbers for both Thai Bev's key markets of Thailand and Vietnam, the analysts believe that the company can enjoy 7% growth in beer sales volume in this current FY2025 ending September.
To target a 13% growth in tourism this year, Thailand is moving forward with eased restrictions limiting the timing of the sale of alcohol, plus promotional activities.
"Thailand is also exploring the possibility of relaxing the current ban on alcohol sales during Buddhist holidays by allowing limited sales in specific tourist hotspots," add Kande and Lim.
They expect Thai Bev, whose Chang beer holds the second-largest market share in Thailand, to continue with aggressive promotions through this current financial year.
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"Thai Bev has a strong distribution network, supported by its close relationships with mom-and-pop shops and targeted marketing campaigns to drive sales growth.
"We think aggressive promotional spend to gain market share ahead of easing alcohol restrictions could keep THBEV’s ebitda margins broadly flat in FY2025 at 18%," state Kande and Lim, whose target price of 58 cents is based on sum-of-the-parts valuation.
Possible re-rating catalysts include stronger margins on lower-than-expected input costs and cost controls, as well as higher volume growth from less restrictions on alcohol sales. On the other hand, downside risks include macroeconomic weakness impacting sales volumes, and lower margins amid higher costs.
Thai Bev shares changed hands at 52 cents as at 11.25 am, down 0.96%.
