Thai Beverage - DBS Research 2023-11-20: Investing To Strengthen Spirits Brand

• Thai Beverage (SGX:Y92) reported its FY23 results with revenue of THB279bn and earnings of THB27.4bn.
• Spirits segment saw resilient revenue and earnings growth on better product mix, as per our expectations. Whereas Beer segment continues to face challenging market condition in particular Vietnam with estimated 9% decline in volume and higher A&P spend on heightened competition, which was largely expected with the read through from Saigon Beer Alcohol Corporation’s (Sabeco) results.

Gross margin expanded 0.2ppt y-o-y while EBIT margin declined by 1.2 ppts.

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• However, EBIT margin declined largely on higher A&P spend in both Spirits and Beer segments. We believe this was on the back of brand investment on expectations of higher consumption along with the expected tourism arrivals.

Gearing up marginally on acquisition of Oishi Group and lower earnings.

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• Overall gearing ticked up slightly from 0.63x in FY22 to 0.65x in FY23. Net debt remains roughly similar to last year, but due to lower EBITDA, net debt to EBITDA ticked up from 2.90x in FY22 to 3.08x in FY23.

Proposed THB0.45 final dividend at 55% payout ratio.

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Andy SIM CFA DBS Group Research | Zheng Feng CHEE DBS Research | https://www.dbs.com/insightsdirect/ 2023-11-20 SGinvestors.io

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