Thai Beverage PLC – A slow start to FY23 February 13, 2023 333

PSR Recommendation: ACCUMULATE Status: Downgraded
Last Close Price: 0.5 Target Price: 0.800
  • 1Q23 revenue/EBITDA was below expectations at 27%/and 25% of our FY23e forecasts, respectively. 1Q is a seasonally stronger quarter.
  • 1Q23 spirits volume contracted 15% YoY to 175mn litres after record volumes a year eariler, which enjoyed trade-inventory loading ahead of price increases.
  • Our FY23e earnings are maintained. We expect earnings to recover with the re-opening of borders in Thailand, event-driven spending from the election and improvement in economic conditions. Our BUY recommendation is downgraded to ACCUMULATE following the recent share price performance. The target price of S$0.80 is unchanged at 18x FY23e core earnings, its 5-year average.



The Positive

+ Rebound in beer revenue. Beer continued to enjoy revenue growth of 13.7% YoY driven primarily by higher prices. The uptick in volumes was a more modest 4.5% YoY to 684mn litres. Sales growth in Vietnam is expected to weaken near-term due to the weakening economy, especially in manufacturing. Sabeco could pick up some volumes if consumers trade down from mass premium to mainstream brands.  


The Negative

– Weak spirit volumes. Revenue declined 6.4% YoY, dragged down by a contraction of volumes by 15.4% YoY. Offsetting the weak volumes were higher prices and a better sales mix of brown spirits (vis-à-vis white spirits). A year ago volumes benefitted from front-loading of volumes ahead of price increases.



1Q23 faced tough comparables due to the heavy front-loading of volumes a year ago. Even excluding the base effect, volumes declined 8% against 1Q21. We worry higher prices may have negatively impacted volumes. Margins are also weaker from higher marketing spend to boost brand-building after cut-backs during the pandemic.


Downgrade from BUY to ACCUMULATE with unchanged TP of S$0.80

Our target price stays at S$0.80, based on 18xFY23e earnings, its 5-year average, plus associate market cap.

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About the author

Profile photo of Paul Chew

Paul Chew
Head of Research
Phillip Securities Research Pte Ltd

Paul has 20 years of experience as a fund manager and sell-side analyst. During his time as fund manager, he has managed multiple funds and mandates including capital guaranteed, dividend income, renewable energy, single country and regionally focused funds.

He graduated from Monash University and had completed both his Chartered Financial Analyst and Australian CPA programme.

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