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Red Bull's Thai rivals top global peers on overseas ambition

Bangkok

RED Bull GmbH's two Thai major rivals have outperformed most global beverage stocks as they extend their domestic success against the world's biggest energy drink maker to overseas markets.

Shares of Osotspa pcl, the nation's biggest energy drink maker by market share, have delivered a total return of 45 per cent in the past six months, the second most among about 100 global beverage makers with market value of at least US$1 billion, according to Bloomberg data. Carabao Group pcl, Thailand's No 2, has generated a 39 per cent total return, the fifth best.

"A recovery in domestic sales and aggressive expansion in neighbouring countries has really bolstered their earnings and outlook," said Theethanat Jindarat, an analyst at Yuanta Securities (Thailand) Co in Bangkok. "Still, their stocks may be exposed to a possible correction in the short term as valuations are probably too stretched on overly excessive earnings optimism."

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Thailand arguably sparked the modern day energy-drink industry, with the Red Bull brand created by the late Thai tycoon Chaleo Yoovidhya and Austrian billionaire Dietrich Mateschitz. The drinks are popular among labourers.

Shares of Osotspa and Carabao have rallied as rising local and international sales of their energy drinks boosted earnings. The two companies held about 80 per cent of energy drink sales in Thailand in 2018. That compared with a 17 per cent share for Red Bull's local version, produced by the Yoovidhya family's TC Pharmaceutical Industries Co, according to Euromonitor International's latest data.

Red Bull originated in Thailand before becoming the global icon for energy drinks.

Shares of Osotspa and Carabao traded at more than 33 times their 12-month earnings estimates, according to Bloomberg data. That compared with a multiple average of about 19 times for Thai food and beverage companies, whose sectoral index has gained 2.5 per cent in the past six months. Ostotspa's relative strength index is also higher than a threshold of 70 that indicates to some investors that the shares may be overbought, while Carabao is close to that level.

Osotspa was established in 1891 by the Osathanugrah family as a small pharmacy store in downtown Bangkok. It now sells energy drinks under its M-150 brand domestically and as Shark in international markets.

Billionaire Sathien Setthasit founded Bangkok-based Carabao with Yuenyong Opakul, lead singer of a popular Thai rock band that inspired the company's name. Carabao has expanded its sales in the United Kingdom and China. BLOOMBERG