Thai Beverage - CGS-CIMB Research 2024-02-15: Beer Sales Disappointed

• Thai Beverage (SGX:Y92)’s 1QFY24 revenue declined 5.9% y-o-y while EBITDA rose 1.9% y-o-y. 1QFY24 topline disappointed at 26.5%/26.3% of our/Bloomberg consensus FY24F (note that 1Q is a seasonally stronger quarter, averaging 28.8% of FY19-23 revenues), with the beer segment being the key drag (-14.0% y-o-y).

Weak volumes, offset by cost savings

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• Due to its prudent cost management, Thai Beverage saw positive EBITDA growth across all segments during the quarter.

Beer sales saw a steeper decline in 1QFY24

• Beer segment’s revenue decline of 14% y-o-y in 1QFY24 was steeper than the 6-8% y-o-y drop in the previous three quarters – we think this suggests a deterioration in Thailand volumes, while Vietnam volumes also remained weak. Thai Beverage attributed the weaker beer volumes (-15% y-o-y) to a slower-than-expected economic recovery, but we think the weaker sales could also raise concerns over market share impact as this coincided with the launch of beer products by new entrant Tawandang 1999 (Unlisted) in Thailand.
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• cost efficiencies across production and A&P spend, and
• consolidation of associate breweries (expected in 2QCY24F by SABECO).

Downgrade to HOLD

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ONG Khang Chuen CFA CGS-CIMB Research | Kenneth TAN CGS-CIMB Research | https://www.cgs-cimb.com 2024-02-15 SGinvestors.io

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