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Hot stock: ThaiBev hits 2.5-year intraday low after disappointing Q3 results

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SHARES of Thai Beverage Public Co hit a 2.5-year intraday low of 66 Singapore cents on Wednesday a day after the drinks maker reported a 61 per cent drop for its third-quarter profit.

ThaiBev opened flat at 70 Singapore cents on Wednesday, then quickly slipped to as low as 66 Singapore cents before recovering to 68 Singapore cents as at 10.55am. The last time the stock touched 66 Singapore cents was in January 2016. About 49.2 million shares changed hands in almost two hours of trading, making ThaiBev the most heavily traded stock on the Singapore Exchange on Wednesday morning.

On Tuesday evening, ThaiBev reported net profit of 5.99 billion baht (S$247.3 million), or 0.24 baht per share, for the third quarter ended June 30, a 61 per cent year-on-year decline, partly due to the absence of year-ago fair-value gains. A Bloomberg poll of three analysts had an average estimate of 0.257 baht per share.

Profit decrease in the spirits business and an increase in net loss from the non-alcoholic beverages business were among reasons cited for the slowdown. Profit attributable to shareholders from the spirits business shrank 17.5 per cent as sales revenue for the business segment slipped 3.3 per cent to 24.6 billion baht, ThaiBev said. From the beer business, profit attributable to shareholders declined 23.3 per cent to 465 million baht.

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But year-ago numbers also benefited from an 8.5 billion baht fair value gain from associate Fraser and Neave's investment in Vietnam dairy company Vinamilk.

On Monday, DBS retained its "buy" recommendation on the stock and its target price of 94 Singapore cents, saying that the weak quarter was expected.

In a note, analysts Andy Sim and Alfie Yeo pointed out that domestic consumption remained weak, and that the drop in spirits revenue was a surprise. The longer-term outlook nevertheless remained compelling.

"We retain our longer-term view of the potential of the group as it evolves into a regional beverage player," the analysts wrote. "However, we believe share price could remain volatile given the weak domestic consumption. Though we believe the recent uptick in farm income could lead to sequential recovery, we are cognisant of the market’s scepticism and await firmer confirmation from tangible results."

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