Despite the earnings drop, ThaiBev is keeping its interim dividend at THB0.15 per share, which, from the perspective of Chee Zheng Feng and Andy Sim of DBS Group Research, is a signal of the company’s confidence.
However, they have cut their earnings estimates for FY2025 by 17% and FY2026 by 20% to account for continued soft consumer sentiment, which will impact its spirits segment and Vietnam operations.
In addition, there are delays in ThaiBev’s “value-unlocking corporate actions”. As the DBS analysts have suggested in their earlier reports, ThaiBev can restructure its food business into a standalone entity to command a higher valuation.
In addition, it was seen to be revisiting the much-talked-about separate listing of its beer business for the same logic.
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“We now expect any major developments to be pushed to FY2026 or FY2027 due to a less supportive macroeconomic backdrop,” say Chee and Sim.
By applying the same 16 times P/E valuation multiple, Chee and Sim derived their new target price of 63 cents, down from 77 cents.
“Despite near-term headwinds, we believe ThaiBev remains well-positioned for a valuation re-rating once its underappreciated beer and F&B segments are monetised, albeit on a delayed timeline,” the analysts add, as they keep their “buy” call on this counter.
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For UOB Kay Hian’s Llelleythan Tan Yi Rong and Heidi Mo, the 1HFY2025 numbers were below their expectations given how this was supposed to be the seasonally stronger period.
Tan and Mo warn that they have become more bearish with ThaiBev’s core beer business, especially in Vietnam, due to the recent macroeconomic uncertainty, which has hurt sales.
By applying a sum-of-the-parts valuation, they have derived a new target price of 51 cents from 56 cents, considering lower valuations for both the spirits and beer segments.
They have downgraded their call to “hold” along with the lower target price.
Paul Chew of PhillipCapital similarly expects the weak consumer sentiment in Thailand and Vietnam to persist into 2HFY2025. “Uncertainty over tariffs, lack of government spending, and weakness in export markets will further dampen the fragile consumer sentiment,” he says.
However, Chew is optimistic that margins are expected to recover as commodity prices slide lower and the company takes more aggressive steps to lower marketing spend, thus keeping his “accumulate” call and 56 cents target price, based on 12 times P/E FY2025 or four-year average forward earnings.
Nirgunan Tiruchelvam of Aletheia Capital has a markedly different view. In his May 12 report, he initiated coverage on the stock with a “buy” call and 72-cent target price. “The market is underestimating ThaiBev’s ebitda growth, as Thailand is on the cusp of a consumer boom,” he reasons.
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As described by Tiruchelvam, ThaiBev has a “tight grip” on Asean’s liquor boom. It is the leading spirits operator in Thailand, with a 90% market share. It is also one of the largest brewers in Asean, with a 35%–40% share in Thailand and Vietnam.
Tiruchelvam notes that Thailand’s Prime Minister Paetongtarn Shinawatra has initiated a US$14 billion ($18.3 billion) handout scheme to boost domestic consumption, putting 10,000 baht into the hands of every 45 million Thai aged 16 and above. He points out that in 2011 and 2013, when Thailand had a rice subsidy scheme, spirits sales improved by 12%. “The recent measures could have a similar impact,” says Tiruchelvam.
All in, he estimates ThaiBev’s total revenue to grow at a CAGR of 7.5% for FY2025 to FY2028, with the beer segment growing at 7.4% and spirits segment growing at 6.2%, leading to relatively bullish ebitda estimates that are 7% and 10% above market in FY2025 and FY2026, respectively.
Also, Tiruchelvam expects the possible revival of the spin-off listing of ThaiBev’s beer business, raising some US$1 billion, to help unlock value. Other Asian brewers trade at around 11 times EV/Ebitda, but the implied valuation for ThaiBev’s beer division is just 5 times.
He is also optimistic about ThaiBev following a share swap within the group of entities controlled by the Sirivadhanabhakdi family. As such, ThaiBev’s interest in F&N increased to 70%. With FPL off its books, ThaiBev is now a pure-play food and beverage business, with steadier earnings and no need to help shoulder relatively volatile fair value changes required by property firms.
“We view ThaiBev as a stable income yield play that would be insulated from the tariff war. The market is underestimating the prospect of ThaiBev’s increasing its dividend payout rate by 10%–15% due to the Beer IPO and operational strength,” says Tiruchelvam.
