MAYBANK Kim Eng has reiterated its "buy" call on Thai Beverage (ThaiBev) while raising its target price to S$0.99 from S$0.95 previously to reflect a price-to-earnings (P/E) ratio of 20 times FY2021.

The research house has also raised its FY2021-2023 estimates by 4 per cent after incorporating ThaiBev's latest H1 set of earnings, which exceeded expectations due to a lower-than-expected effective tax rate owing to the restructuring of the group's beer business.

Noting that the group's spirits segment was "undisturbed" by Covid-19 as sales volumes remained stable in H1, Maybank analyst Kareen Chan highlighted the stock for the continued expansion of its beer business.

"Despite lower sales volume of 1,145 million litres amid temporary closure of bars and entertainment venues, ThaiBev is ahead of its peers as the industry saw a 10 per cent year-on-year decline in volumes," she wrote in a report on Monday.

"We believe subsequent net margin expansion from its beer division and the post-Covid consumption recovery could help narrow the P/E gap (as the stock continued to trade at 15 times FY2021 P/E, which is -1 standard deviation below its historical average). Its portfolio of top mass-market brands is also well-positioned to capture post-Covid recovery, driven by easing restrictions of on-premise consumption," Ms Chan added.

In a separate note on Monday, UOB Kay Hian (UOBKH) reiterated its "buy" call on the stock with an unchanged target price of S$0.92.

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It values ThaiBev's spirits business lower than its global peers at 17 times EV/Ebitda (enterprise value/earnings before interest, taxes, depreciation and amortisation), and the beer business at 18 times EV/Ebitda, which is in line with Asean peers.

Overall, the research house deems ThaiBev "attractively priced" on valuation grounds at 15.9 times FY2021 P/E, at -1.5 standard deviation to its mean P/E.

CGS-CIMB however lowered its target price on ThaiBev to S$0.84 from 87.2 Singapore cents, after adopting more conservative estimates on the stock's near-term prospects.

"We think there is potential that revenue growth could slow down with tightening measures being implemented from April 21 onwards due to Covid-19. We also think the lower revenues will lead to operating deleverage which could also put pressure on our forward Ebit (earnings before interest and tax) margins," wrote CGS-CIMB's Cezzane See in a report last Friday.

Ms See nonetheless continues to like the counter for its spirits business, which she thinks could still be the main beneficiary of the potential downtrading behaviour in Thailand as well as its "continued drive to gain market share" over the long term in Vietnam.

As at 1.37pm on Monday, shares of ThaiBev were trading S$0.02 or 3 per cent higher at S$0.69.