Thai Beverage FY22 Results Preview - UOB Kay Hian 2022-11-25: Expect Strong Performance With Revival Of Economic Activity

• Thai Beverage will announce its FY22 results soon (see Earnings Calendar of SGX Listed Companies) − we expect robust y-o-y growth from all of its business segments.
  • - Read this at SGinvestors.io -
  • Despite rising operating costs, SABECO’s robust 9M22 performance bodes well for Thai Beverage’s beer segment.
  • The non-alcoholic beverages and food segments are expected to outperform on the removal of social distancing measures.
• Maintain BUY on Thai Beverage with an unchanged target price of S$0.87.

SABECO’s 3Q22 update.

• - Read this at SGinvestors.io -
• Softening margins. However, on a q-o-q basis, SABECO underperformed as higher input costs from inflationary pressures ate into 3Q22 profitability. 3Q22 revenue and operating profit fell 4% q-o-q and 22% q-o-q respectively, largely driven by higher operating and raw material costs. We reckon this might be due to:
  1. higher prices of malt, which is an ingredient that SABECO utilises for its beer products, and
  2. increased inflationary pressures such as utilities and manpower costs.
• 3Q22 operating margin compressed 4.5ppt q-o-q while PATMI margin also softened 3.0ppt q-o-q.
• Mixed read-through for Thai Beverage. SABECO’s robust post-COVID-19 lockdown recovery is a strong positive for Thai Beverage, given that SABECO historically contributes around 20% and 8% of Thai Beverage’s overall revenue and net profit respectively. As Vietnam’s economic activity continues to ramp up, higher beer consumption volumes would help support Thai Beverage’s beer segment moving forward.
• However, as SABECO’s leftover malt stock starts to deplete, rising raw material costs coupled with increasing operating costs would soften margins further, potentially dragging down Thai Beverage’s overall profitability and its expected recovery.

Spirits: Favourable tailwinds.

• Read more at SGinvestors.io.

Llelleythan Tan UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-11-25 SGinvestors.io

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