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 @ https://www.itradecimb.com.sg/.
ONG Khang Chuen CFA CGS-CIMB Research | https://www.cgs-cimb.com 2022-10-20 2022-10-20
Read also CGS-CIMB's most recent report:
2022-11-26 Thai Beverage - Cheers To A Good Close
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