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Hot stock: ThaiBev shares tumble 11% in early trading after posting Q2 earnings

SHARES in Thai Beverage Public Company Limited (ThaiBev) faced a heavy sell-off in the early session after posting second quarter results, where its bottom line fell 12 per cent to 5.79 billion baht (S$249.9 million).

At the midday break, shares in the food and beverage player were trading at 73.5 Singapore cents, down nine cents or 10.9 per cent on a volume of 49.7 million shares - the most heavily traded counter on the Singapore bourse.

ThaBev attributed the fall in net profit to a poorer showing in the spirits business, food business and its mainboard-listed units, Fraser and Neave (F&N) and Frasers Property.

While Thaibev's results for Q2 were within expectations, OCBC Investment Research on Monday downgraded its call on the stock to "hold" and lowered its fair value from S$0.91 to S$0.88. 

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OCBC analyst Deborah Ong said ThaiBev's shares have outperformed the benchmark index since the start of the year. As at May 10, ThaiBev shares gained 37.2 per cent this year compared to the Straits Times Index's 8.6 per cent.

Ms Ong also noted that ThaiBev is undertaking cost saving/efficiency initiatives at its Sabeco business.

"While we continue to expect these positive synergies from the Sabeco acquisition to flow through to ThaiBev’s bottom line, we note that this will require time to bear fruit," she said.

OCBC Investment Research expects muted performance from ThaiBev's domestic spirits segment other than in May, where consumption is likely to be boosted by the festival held for the Coronation of the King in May.

Other research houses have maintained their calls on ThaiBev after it posted earnings for the second quarter on Friday.

CGS-CIMB analyst Cezzane See has kept an "add" call and increased the stock's target price to S$0.94.

"We continue to be comforted by the year-on-year improvement in the domestic consumption environment, as well as improvement in Sabeco’s operational matrices," Ms See said.

RHB Research Institute has a "buy" call with a target price of S$0.92, noting that a lower profit for Q2 was expected as in the year-ago period, agents and retailers loaded up on spirits inventories before price increases in April 2018.

RHB analyst Juliana Cai said: "Mid-year economic stimulus measures approved by the Thai government should help to boost domestic consumption over Q3 2019."

UOB Kay Hian has a "buy" call with a target price of S$0.85.