Brokers’ take: Analysts mixed on ThaiBev’s prospects after 9M23 results
Daphne Yow
ANALYSTS are mixed on Thai Beverage ’s (ThaiBev) prospects, but remain positive on the beer and liquor giant’s valuations.
This came after the company on Wednesday (Aug 9) posted a 3.4 per cent fall in earnings before interest, taxes, depreciation, and amortisation (Ebitda) for the nine months ended Jun 30.
ThaiBev’s revenue was in line with UOB Kay Hian’s (UOBKH) estimates, while Ebitda for the period was above its expectations, the brokerage said in a report on Thursday.
It raised its FY2023-2025 forecasts by around 10 per cent after taking higher margins for ThaiBev’s beer and non-alcoholic beverage segments into account.
The research team expects margins to stabilise and FY2023 profit after tax and minority interests to grow by 6.2 per cent on the year, instead of falling 3.1 per cent as estimated previously.
It also raised its target price to S$0.83 from S$0.75 on higher valuations for both segments, implying a potential upside of 45.6 per cent from the counter’s closing price of S$0.57 on Thursday.
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UOBKH also maintained its “buy” call on the stock and believes the recent share price weakness represents an “attractive entry level” for investors. The stock is currently trading at two standard deviations below its five-year mean price-to-earnings ratio.
In contrast, CGS-CIMB found the results slightly below its expectations. The research house lowered its target price on ThaiBev to S$0.75 from S$0.88, implying a potential upside of 31.6 per cent.
This came after the research team lowered its enterprise value-to-Ebitda multiples for the beer unit on a weaker near-term outlook on the counter and weaker Thai baht.
Despite the target price cut, CGS-CIMB maintained “add” on the stock as it considers ThaiBev’s valuation to be attractive. The stock is currently trading at 11.4 times the research house’s earnings estimate for calendar year 2024, which is two standard deviations below its five-year mean.
CGS-CIMB attributed the weakness in the beer segment to ThaiBev’s Vietnam subsidiary, Sabeco. It added that Sabeco will likely recover in early FY2024 as consumption rises and cost pressures soften.
Analysts Ong Khang Chuen and Kenneth Tan were also “positively surprised” by the group’s revenue growth from its spirits segment. They expect volume to grow 10 per cent year on year in the third quarter.
Similarly, UOBKH analysts Llelleythan Tan and Heidi Mo believe the spirits segment will continue its upward trajectory on predicted average selling price increases for brown spirits and a better product sales mix.
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