• Results were marginally below expectations. 2023 revenue and PATMI were at 97%/95% of our FY23e forecasts. Beer revenue and associate earnings were below our estimates.
• Spirits EBITDA grew 3% YoY in 4Q23 to THB5.9bn due to growth in volumes. Beer EBITDA fell 7% to THB3.6bn, as beer volumes declined by 11%, the third consecutive quarter of contraction.
• We lower our FY24e PATMI by 9%. Beer is facing soft consumer demand in Vietnam due to the weak economic conditions, and made worse by five cumulative rounds of price increases since 2021. In Thailand, the emergence of Carabao as a new beer competitor further raised the pricing and marketing intensity. We expect growth in spirits revenue from normalisation of white spirits volume, price increases and higher mix of brown spirits. More aggressive fiscal spending in Thailand next year will support consumption spending. Our BUY recommendation is maintained but target price is lowered from S$0.75 to S$0.67. We roll-over valuation to FY24e earning but PE ratio is lowered to the 3-year average of 16x (prev. 18x). The listed associates are valued at 20% discount to current market price.

The Positive

+ Resilient spirits volume. Spirit volume expanded 2.9% YoY to 114mn litres from higher demand of the more expensive brown spirits. The brown spirits share of volume is still below pre-pandemic levels. White spirits volume were softer due to front loading a year ago.

The Negative

– Beer still suffering. Both beer revenue and EBITDA declined around 7%. Volumes contracted a larger 11% as a cumulative round of price increases has hurt consumption that is already weak from the soft macro environment, particularly in Vietnam.