CGS-CIMB Research estimates that Sabeco’s sales volume could surge 50% y-o-y in FY19.
“We reiterate our view that the successful listing of Budweiser, and its bid to grow in Asia, places Vietnam as one of the key markets for brewery mergers and acquisitions,” CGS-CIMB analyst Cezzane See writes in a note dated Oct 2. “This, in turn, is positive for Sabeco, which currently trades below ThaiBev acquisition price of VND320,000 per share.”
At the same time, ThaiBev’s home market of Thailand could also provide a boost to the company’s performance.
According to CGS-CIMG, a recovery in upcountry consumer spending is brewing on the back of higher prices for major crops.
Farmers and workers, who are among the low-income households, could spend more on alcohol. “This is a positive precursor to farm incomes, in our view,” says See.
So far this year, Thai beer volumes have risen 9% y-o-y, while select Thai spirit volumes – both white and mixed – have risen 8.5% y-o-y. This was according to Thailand’s Office of Industrial Economics data cited by CGS-CIMB.
The research house has maintained its “add” call for ThaiBev with an unchanged sum-of-the-parts target price of $1.00.
It says higher revenue and margins, as well as M&As involving Sabeco, could be potential re-rating catalyst.
It notes that ThaiBev is still trading below its five-year historical mean of about 20 times and peer average of 26 times.
As at 12.46 pm, shares of ThaiBev are trading down 1.7%, or 1.5 cents lower, at 86.5 cents.
