He is of the view that the stock is priced at an attractive 10x FY2026 P/E, or around -1.5SD from its c.16x historical mean, with a dividend yield of c.5-6%.
For the year ended Sept, the company reported revenue of 333 billion baht, down 2% and within expectations. However, earnings for the year was 25 billion baht, down 7% y-o-y, which the company attributes to higher advertising and promotion spending.
A final dividend of 0.47 baht was declared, which brings the total FY2025 dividend to 0.62 baht, equivalent to a payout ratio of 61%.
According to Yeo, Thai Bev's business was affected by weak consumption, with the exception of its Thailand beer business.
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"However, we see FY2026’s consumption strengthening ahead of Thailand’s general elections," he says.
He has raised his FY2026 and FY2027 revenue and gross margin projections, due to a faster-growing economy and also better raw material prices.
However, Yeo has also factored in more conservative operating margins and higher net interest costs at the current effective interest rates, thereby leading to him trimming his FY2026 earnings by 7% and FY2027's by 3%.
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A potential catalyst for the stock is the revival of the spin-off listing of the beer business, says Yeo.
DBS, separately, has kept its "buy" call and 62 cents target price, which is pegged to 14x earnings.
"We are cautiously optimistic of a strong earnings recovery supported by low base effect and significant input cost declines across the board," says DBS.
Thai Beverage shares dropped 1.08% at the lunch break to trade at 47 cents. It is down 16.96% year to date.
