Thai Beverage - CGS-CIMB Research 2022-10-20: Positive Read-Through From SABECO

Thai Beverage - Positive Read-Through From SABECO

  • Thai Beverage (SGX:Y92)’s 53.6%-owned subsidiary, Vietnam-listed SABECO announced a solid set of 3Q22 results. See Thai Beverage's announcement dated 2022-10-20.
    • SABECO's 3Q22 net revenue grew to VND8,635bn (-4% q-o-q, +102% y-o-y) from a low base, as Vietnam was under strict social distancing measures with Ho Chi Minh city in total lockdown from late Jul to Oct 2021.
    • While gross profit margin contracted 3.1% points q-o-q to 31.2% due to higher input costs during the quarter, it remains higher vs 3Q21’s 26.7%. As SABECO typically has 6-12 month forward contracts for its raw material procurement, the higher barley prices in early-2022 are now being reflected. SABECO raised ASPs in Dec 2021 and Apr 2022 to pass on cost pressures; it does not rule out further price hikes.
    • Overall, 3Q22 PATMI came in at VND1,342bn (- 20% q-o-q, +202% y-o-y), helped by stronger operating leverage. 9M22 PATMI of VND4,181bn (+77% y-o-y) appears to track ahead of expectations at 84%/91% of Refinitiv consensus/company guidance for FY22F.
  • We think SABECO’s 3Q22 results could be a slight positive read-through to Thai Beverage’s upcoming FY22 (Oct 2021 to Sep 2022) results. See earnings calendar of SGX listed companies. SABECO typically makes up ~10-15% of Thai Beverage’s net profit. With Thailand’s further economic reopening and improving consumer sentiment in Jul-Sep quarter, we forecast Thai Beverage’s 4QFY22F revenue/EBITDA to grow 34%/56% y-o-y, respectively.
  • Reiterate ADD as we expect Thai Beverage to see earnings growth in FY22F, riding on easing COVID-19 restrictions in Thailand and Vietnam, while valuations remain attractive with forward P/E at ~1 standard deviation below historical mean.
  • Thai Beverage also offers defensiveness in view of potential economic slowdown in CY23F, given its strong positioning in the mass segment (potential beneficiary of downtrading), in our view.
  • Potential re-rating catalysts include stronger volume recovery; key risks include higher-than-expected input costs pressuring margins and further depreciation of Thai baht.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

ONG Khang Chuen CFA CGS-CIMB Research | 2022-10-20
SGX Stock Analyst Report ADD MAINTAIN ADD 0.880 SAME 0.880

Read also CGS-CIMB's most recent report:
2022-11-26 Thai Beverage - Cheers To A Good Close

Check out the most recent target prices at Thai Beverage Target Prices. Listing of analyst research reports at Thai Beverage Analyst Report.

Relevant links:
Thai Beverage Share Price History,
Thai Beverage Announcements,
Thai Beverage Dividends & Corp Actions,
Thai Beverage News Articles


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