Thailand & Singapore: Analysts divided on recommendations following ThaiBev’s mixed results for Q1

Analysts are divided on their recommendation for Thai Beverage (ThaiBev) following the beverage manufacturer’s mixed set of results for 1QFY2021 ended Dec 31 and the IPO plan of its beer business, The Edge Singapore reported on February 15.

On February 11, ThaiBev reported y-o-y earnings growth of 1% to THB8.47 billion.

This, however, came on the back of lower revenue of THB71.79 billion, down 5% y-o-y.
ThaiBev had earlier announced the proposed listing of BeerCo, which will hold its Thai beer business and Saigon Alcohol Beer and Beverage Joint Stock Corp (Sabeco).

In a February 11 note, RHB Securities has maintained its “buy” call for the stock with a higher target price of 94 cents from 82 cents previously.

The brokerage says ThaiBev is well placed to capture the anticipated cyclical recovery, leveraging on its established Thailand and Vietnam presence.

It expects the company to recover gradually across all business divisions after Covid-19 is contained, as inoculations take place globally.

“Plans to spin off BeerCo could potentially unlock more value, hence catalysing the share price,” says RHB Securities.

CGS-CIMB Research, too, has reiterated its “add” rating for the stock with an unchanged target price of 87.2 cents.

The brokerage says it continues to like ThaiBev for its spirits business, which it believes could be a main beneficiary of the potential down-trading behaviour in Thailand.

“We think a successful beer segment listing could unlock valuations and act as re-rating catalyst,” CGS-CIMB analyst Cezzane See writes in a note dated February 11.

However, Phillip Securities has downgraded the stock to an “accumulate” call from “buy” previously, with an unchanged target price of 86 cents.

The brokerage says the downgrade was the result of the recent share price appreciation.

Moreover, it believes the BeerCo listing impact on ThaiBev earnings is “immaterial”.

“Any rally due to the BeerCo listing is unwarranted, in our opinion. ThaiBev will benefit from a rebound in consumption post pandemic,” Phillip Securities’ head of research Paul Chew writes in a Feb 15 report.

As at 2.19 pm, ThaiBev was flat at 78.5 cents with 22.1 million shares changed hands.

14 February, 2021