For the three months ended Dec 31, 2022, ThaiBev recorded higher sales of THB 81 billion ($3.18 billion) and ebtida of THB 13.5 billion, up 4.9% and down 7.7% y-o-y respectively.
Operating margins in the same period was down to 16.7% from 19% the same period, with higher marketing spending in Vietnam the key reason. DBS, which has kept its “buy” call and 87 cents target price, sees “multiple tailwinds” from the upcoming festive season and return of tourism.
“Recent Tet in Vietnam was the first major Tet celebration in three years without major Covid-19 restrictions.
“Similarly, with the celebration of the first Songkran in Thailand without Covid-19 restrictions in three years, we expect to see massive celebration and higher consumption of beer and spirits.
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“We also expect to see uplift in Chinese tourist arrivals in 2H2023, giving additional boost to both beer demand and Thailand’s economy,” adds DBS in its Feb 13 note.
While the 1QFY2023 numbers were lower than expected, DBS remains optimistic that ThaiBev will post better earnings in the ensuing quarters.
DBS acknowledges that ThaiBev’s share price might “take a slight step back” but longer-term prospects remain bright. The 87 cents target price is tied to 14.5x forward earnings, which is below -1SD.
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In their Feb 13 note, CGS-CIMB’s Ong Khang Chuen and Kenneth Tan, who have maintained their “add” call and 88 cents target price, point out that the higher input costs born by ThaiBev will be manageable.
“Despite a slower start to the year, we continue to like ThaiBev as a proxy to Thailand’s economic recovery and improving consumer sentiment,” write the analysts.
As at 3.54 pm, ThaiBev traded at 69 cents, down 1.43% for the day.
