Singapore Company Update Thai Beverage Public Company
Bloomberg: THBEV SP | Reuters: TBEV.SI Refer to important disclosures at the end of this report
DBS Group Research . Equity 20 Oct 2020
B rain Box BUY (O ur NEW Pilot Research Platform) is available to Institutional Investors Last Traded Price (19 Oct 2020): S$0.575 (STI : 2,543.57) on Demand. Please contact your DBSV Institutional Sales contact for a Price Target 12-mth: S$0.90 (55% upside) demonstration.
Analyst Toast for higher returns! Andy SIM, CFA +65 6682 3718 [email protected] Alfie YEO +65 6682 3717 [email protected] Investment Thesis: Region's leading player at -1SD of 10-year average. Transforming
What’s New into the region's leading beverage player while valuation is attractive at c.13x FY21F PE, -1SD of its 10-year historical average. • At -1SD below 10-year historical average, market has not sobered up to alcohol consumption’s resiliency COVID resilient. Stable Thai domestic spirits consumption provides recurring cashflow, while improved contributions from Sabeco, • Industry data points to healthy alcohol consumption potential market share gains in Thai beer market and faster despite weak consumer confidence; Bangkok protests/ turnaround from Non-Alcoholic Beverages (NAB) provides a unrest historically has limited impact on sales platform for stronger earnings growth. • No compelling reason to raise its stake in Sabeco Strong cashflow to deleverage. Continued deleveraging from its • At c.13x FY21F PE, ThaiBev is one of the great value- strong and stable cashflow, as well as potential monetisation of for-money alcohol plays regionally; BUY, TP: S$0.90 assets are key re-rating catalysts for ThaiBev. Signals that shows no significant take up of leverage for huge acquisition activities Price Relative may also remove share price overhang. S$ Relative Index 1.1 210 1.0 190
0.9 170 Valuation: 150 0.8 130 Our TP is based on sum-of-parts, with core operations based on 0.7 110 90 0.6 DCF (WACC=7.1%, t=3%) and market value/ target value of 70 0.5 50 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 associate stakes. ThaiBev is trading at c.13x FY21F, PE which is Thai Beverage Public Company (LHS) Relative STI (RHS) around -1SD below its 10-year historical average; and, we believe Forecasts and Valuation is not pricing its potential as South-East Asia’s largest food and FY Sep (Btm) 2019A 2020F 2021F 2022F beverage player. Revenue 267,357 243,584 272,139 286,244 EBITDA 42,162 41,187 47,690 51,646 Where we differ: Pre-tax Profit 31,312 29,653 35,579 40,231 Net Profit 23,272 21,698 25,428 28,550 High gearing mitigated by strong OCF. Market is concerned of its Net Pft (Pre Ex.) 23,272 21,698 25,428 28,550 high gearing, but this should not be an issue as management has Net Pft Gth (Pre-ex) (%) 14.1 (6.8) 17.2 12.3 termed out its borrowings and is able to repay/ refinance its EPS (S cts) 4.04 3.76 4.41 4.95 obligations with its strong cashflows. EPS Pre Ex. (S cts) 4.04 3.76 4.41 4.95 EPS Gth Pre Ex (%) 14 (7) 17 12 Diluted EPS (S cts) 4.04 3.76 4.41 4.95 Key Risks to Our View: Net DPS (S cts) 2.09 1.87 2.48 2.66 Expectations of resiliency in demand misplaced. Our thesis is BV Per Share (S cts) 20.1 22.0 23.9 26.2 PE (X) 14.4 15.4 13.2 11.7 premised on resilient and eventual demand recovery; and if this is PE Pre Ex. (X) 14.4 15.4 13.2 11.7 not sustained or misplaced, it could present downside risks. P/Cash Flow (X) 8.7 10.3 12.5 10.4 EV/EBITDA (X) 13.4 13.3 11.4 10.4 At A Glance Gross Div Yield (%) 3.6 3.2 4.3 4.6 Issued Capital (m shrs) 25,116 P/Book Value (X) 2.9 2.6 2.4 2.2 Mkt. Cap (S$m/US$m) 14,567 / 10,725 Net Debt/Equity (X) 1.3 1.1 1.0 0.8 Major Shareholders (%) ROAE (%) 19.7 17.9 19.2 19.8 Siriwana Co Ltd 45.3 Earnings Rev (%): 0 0 0 20.6 Consensus EPS (S cts): 3.90 4.40 4.80 Maxtop Management Corp Other Broker Recs: B: 15 S: 0 H: 3 Capital Group Cos inc/The 5.00 Source of all data on this page: Company, DBS Bank, Free Float (%) 29.1 Bloomberg Finance L.P. 3m Avg. Daily Val (US$m) 19.3 GIC Industry : Consumer Staples / Food, Beverage & Tobacco
ed: JS/ sa: JC, PY, CS Company Update
Thai Beverage Public Company
WHAT’S NEW
Down but not out
Not accorded its weight in (alcohol) content. We reiterate during April/ May in Thailand. As it closed its financial year in BUY on ThaiBev and TP of S$0.90. We believe the market has September, with results to be announced in the later part of not attributed the resiliency of the Group’s operations, based November, we retain our forecasts and project ThaiBev to on its valuations which are among the lowest for global and post net profit of Bt21.7bn in FY20 (-6.8% y-o-y from FY19). regional beverage players. As seen in its latest 3Q20 and YTD This is despite a challenging year brought about by COVID- operational performance, we believe the stock does not 19, and demonstrates the resiliency of the Group’s warrant trading below -1SD of its 10-year historical average. operations. We believe this is a catalyst for share price to re- rate from the current low valuations. Even if net profit should FY20F down, but not out. Tracking monthly data for spirits come in below our forecasts, we expect this should arise from and beer in Thailand, we adopt the stance that the worst is weaker contribution from its property associates, rather than possibly behind us with lockdowns and alcohol sales ban back core operations.
Opportunity to accumulate as current low share price is due to COVID-19 induced impact
Source: Refinitiv, DBS Bank
ThaiBev at -1SD of 10-year historical 12-month forward PE …and -1.3 SD below PB average
Source: Bloomberg Finance L.P., DBS Bank estimates Source: Bloomberg Finance L.P., DBS Bank estimates
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Company Update
Thai Beverage Public Company
Operations resilient, consumer confidence off from lows. Consumption of spirits and beer picked up after April. Thailand’s consumer confidence has weakened substantially Spirits domestic data +17%/+13% for July/ August. this year arising from the impact of COVID-19, lockdowns Thailand’s monthly domestic liquor sales data shows that and absence of tourists, coupled with headwinds faced within sales are rebounding after a dismal period earlier in the year. the global macroeconomic environment. Its Consumer Tracking domestic liquor sales in Thailand based on data from Confidence Index (CCI) plunged to a record low of 47.2 in the Office of Industrial Economics, July and August sales are April at the height of lockdown. That said, confidence has tracking well and posting y-o-y growth of 17%/ 13%, steadily picked up on a monthly basis to 51 in Aug. CCI was respectively, from earlier months from March till June, which steady at 50.2 in Sept. saw high volatility. The volatility was caused by a ban on alcohol sales during the lockdown period from late March to Has the weak consumer sentiment impacted alcohol April. Recall that from late March to May, a ban on alcohol consumption in Thailand? sales was implemented across a majority of the 76 provinces There have been concerns on alcohol consumption arising in Thailand. from the weak consumer confidence, and the recovery trajectory post the alcohol sales ban earlier in April/ May in Likewise, beer data points to the same trend. The same trend Thailand. Tracking both liquor and beer domestic sales can be seen in Thailand’s domestic beer sales. There was a figures, July and August data seems to suggest that sales are steep y-o-y decline in the months of March to June but sales stabilising and on the cusp of recovery, providing have since seen a strong 27% y-o-y rebound in July followed confirmation of the resiliency of alcohol consumption. The by 4% y-o-y increase in August. The rebound trend is less impact earlier in the year arose from a ban on sales, rather pronounced for beer, possibly due to higher reliance on than sentiment, in our view. tourist consumption, while the consumer base for liquor is largely domestic.
Liquor Domestic sales showing signs of stabilisation in Jul/ Thai Domestic beer sales has also rebounded from trough in Aug April
Source: Thailand Office of Industrial Economics, DBS Bank Source: Thailand Office of Industrial Economics, DBS Bank
Would protest hurt alcohol consumption? 2010 and 2014. In fact, our observation was that excise duty Past historical data shows demonstrations, political changes have a greater bearing on spirits volume movements, uncertainty has limited impact on alcohol sales. The recent which is the main profit driver for the Group. demonstrations in Bangkok once again raised concerns if these could have an impact on share price. While these are valid concerns, we looked at past instances of political unrest and demonstrations in Thailand as well as alcohol excise duty changes. Our observation was that ThaiBev’s spirits sales volume fluctuations seem to be unaffected by political unrest, as seen in the various instances in the past decade, in 2009,
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Company Update
Thai Beverage Public Company
Excise duties, and not political unrest/ demonstrations, have greater bearing on spirits sales volume
Source: Media reports, Company data, DBS Bank
Vietnam statistics are also showing stabilisation, and a volumes dipped once again. As of Sep, production volumes, reversion to normality while registering 9% y-o-y declines, have recovered slightly from Aug. This possibly indicates a reversion to normality Vietnam beer production recovering after dip in Aug soon.
ThaiBev frontrunner for additional stake in Sabeco? Maybe not. Sale of additional 36% stake by Vietnam’s State Capital Investment Corp (SCIC). With the transfer of the 36% stake by Vietnam’s Ministry of Trade & Industry to SCIC, there are media reports suggesting that the sale may happen soon. ThaiBev has been named as a frontrunner. This has accordingly raised questions on its ability to further add leverage to its seemingly stretched balance sheet.
No compelling reasons for ThaiBev to increase its stake in Sabeco. The details of the said sale by SCIC, timing, form, quantum, pricing, and so on, are not known at this juncture. Contrary to mainstream market speculation, we believe there Source: CEIC, DBS Bank are no real compelling reasons for ThaiBev to take on the additional 36% stake. Our take is that: Vietnam beer industrial production in Sep dropped by a 1) ThaiBev already owns majority stake at 53.59% in smaller amount, indicating gradual reversion to normality. Sabeco, which we believe is a position of strength from a Again, similar trends are seen in Vietnam. Earlier in the year, shareholding perspective. Unless the valuation and/or beer sales was initially impacted by the imposition of drink- pricing is compelling, it may not warrant topping up. driving laws, and thereafter lockdowns due to COVID-19. 2) Existence of major strategic shareholder could put off Beer production fell by 30-40% y-o-y in the months of March other strategic bidders. Further to the first point, with and April. Having been one of the first countries in Southeast ThaiBev already holding a majority stake, this could put Asia to come out of a lockdown, beer production stabilised in off other strategic investors, unless the potential strategic May to July with only marginal y-o-y declines. However, with suitors are willing to hold second fiddle in terms of the second outbreak in Danang in August, production shareholding.
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Company Update
Thai Beverage Public Company
3) Gearing high. ThaiBev’s gearing is already high, and the Our TP of S$0.90 implies 19.8x FY21F PE. Our sum-of-parts stake increase may financially not be a prudent step. TP remains S$0.90, implying 19.8x FY21F PE, which is still 4) Timing not optimal and could be much later than below its 4-year historical average PE. We believe valuations expected. With operating results being impacted by for ThaiBev are attractive vis-à-vis regional and global drink driving laws as well as COVID-19, the timing may alcoholic beverage peers, and the market may have not be optimal. Looking at past records, we understand overlooked the resiliency of alcohol consumption in Thailand. that the intention to bring down Vietnam’s MTI stake to In addition, we also see gradual deleveraging of its debt below 36% was mooted much earlier (in 2015), but the position as a positive step, given its stable operating sale (in which ThaiBev eventually emerged as the buyer), cashflow, and no compelling reasons to take up an had only materialised in Dec 2017. No doubt the initial additional stake in Sabeco, from our perspective. The stake sale may pave the way for a subsequent sale, if at upcoming FY20E results may give us comfort that operations all, we believe the timing could be better. are recovering and stable. Reiterate our positive stance and BUY recommendation. Forecasts and valuation Forecasts largely unchanged, projecting revenue/ net profit to contract by 9%/ 7% for FY20F. This compares to 1H20 Company Background which saw 3.9% topline contraction (vs 1H19) and 1.3% ThaiBev is a leading beverage producer in Thailand, with growth in net profit to Bt13.38bn. As of 9M20, revenue has business segments spanning spirits, beer, non-alcoholic contracted by 7.4% y-o-y. ThaiBev has adopted interim beverages, and food. Its key brands are Sangsom, Hong reporting, and hence its 9M20 net profit figure was not Thong, and Chang. It has 28.5%/ 28.3% associate stakes in available. We expect 2H20 to be impacted in part by weaker both Singapore-listed Fraser & Neave Ltd (FNN) and Frasers contribution from its property associates given the resultant Property Limited (FPL). It also holds a controlling 53.59% stake knock-on effects from COVID-19. But, on its core operations, in Sabeco, Vietnam’s largest beer player by market volume we continue to expect steady contribution from its Spirits with brands such as Saigon Beer, Lager, Export and 333. segment, while its Non-Alcoholic segment moves towards breakeven in FY20F.
Historical PE and PB band – 5-year
Forward PE band (x) PB band (x) (x) (x) 30.8 5.5 +2sd: 29.3x 5.0 +2sd: 5.12x
25.8 +1sd: 25.3x 4.5 +1sd: 4.52x
4.0 Avg: 3.92x 20.8 Avg: 21.2x 3.5 -1sd: 3.32x -1sd: 17.2x 3.0 15.8 -2sd: 2.72x -2sd: 13.2x 2.5 10.8 2.0 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20
Source: Bloomberg Finance L.P., DBS Bank estimates Source: Bloomberg Finance L.P., DBS Bank estimates
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Thai Beverage Public Company
Peer comparison table
Opg Net Market Cap Px Last PE PE PE P/BV P/Sales ROE Margin Margin Div. Yield Company (USD m) (LCY) (Act) (Yr 1) (Yr 2) (x) (x) (%) (%) (%) (%) Company Thai Beverage PCL 10,714 0.58 14.1x 14.9x 13.3x 2.6x 1.3x 20% 11.9% 8.7% 2.9%
Global Liquor Diageo PLC 80,171 2654.50 44.8x 24.2x 21.2x 9.2x 5.3x 19% 18.0% 12.0% 2.6% Pernod Ricard SA 43,377 141.50 116.3x 26.5x 22.8x 2.6x 4.4x 2% 11.6% 3.9% 1.9% Remy Cointreau SA 9,441 159.70 83.3x 70.6x 52.7x 3.5x 7.9x 8% 19.1% 10.4% 0.6% Davide Campari Milano SpA 12,848 9.45 43.3x 51.0x 39.0x 3.8x 6.2x 14% 21.0% 16.7% 0.6% Constellation Brands Inc 35,110 181.48 33.9x 19.8x 18.1x 3.0x 4.3x 0% 25.8% -0.1% 1.7% 64.3x 38.4x 30.8x 4.5x 5.6x Regional Beverage Kirin Holdings Co Ltd 16,739 1931.00 16.7x 21.7x 14.4x 2.3x 0.9x 7% 4.5% 3.1% 3.4% Asahi Group Holdings Ltd 17,282 3594.00 14.9x 18.0x 12.0x 1.5x 0.9x 12% 9.5% 6.8% 2.8% Suntory Beverage & Food Ltd 11,312 3860.00 20.6x 20.9x 17.7x 1.7x 1.0x 9% 8.8% 5.3% 2.0% Sapporo Holdings Ltd 1,368 1830.00 89.0x 46.1x 1.0x 0.3x 5% 2.5% 1.6% 2.3% Coca-Cola Amatil Ltd 5,268 10.26 40.5x 24.4x 20.6x 4.7x 1.5x 24% 11.7% 7.2% 3.4% HiteJinro Co Ltd 2,346 37950.00 38.3x 24.0x 20.8x 2.8x 1.2x -4% 3.6% -2.0% 1.8% China Foods Ltd 985 2.73 14.5x 14.5x 12.4x 1.6x 0.4x 10% 6.0% 2.4% 1.8% 33.5x 19.9x 20.6x 2.2x 0.9x Global/Regional Brewers Anheuser Busch Inbev NV 94,002 47.43 26.5x 17.5x 1.6x 2.0x 12% 30.8% 16.7% 0.7% Heineken NV 53,254 78.98 48.8x 34.0x 22.3x 3.5x 2.1x 14% 15.1% 9.0% 1.1% Carlsberg A/S 20,577 867.80 20.4x 22.9x 19.7x 3.3x 2.1x 15% 16.6% 10.0% 2.4% Molson Coors Beverage Co 7,586 35.40 9.9x 9.2x 0.6x 0.8x 2% 7.2% 2.3% 4.8% Tsingtao Brewery Co Ltd 13,307 75.40 49.1x 48.1x 40.6x 5.1x 3.8x 10% 9.6% 6.6% 0.7% China Resources Beer Holdings Co Ltd 19,423 46.40 85.9x 48.9x 34.4x 5.9x 4.1x 7% 6.8% 4.0% 0.4% Saigon Beer Alcohol Beverage Corp 5,217 188500.00 29.7x 30.1x 24.9x 5.5x 3.8x 30% 17.6% 12.7% 1.8% Heineken Malaysia Bhd 1,379 18.96 24.6x 29.5x 19.8x 15.7x 2.8x 82% 17.9% 13.5% 3.5% Carlsberg Brewery Malaysia Bhd 1,400 19.02 26.2x 28.9x 21.8x 41.7x 2.9x 183% 16.6% 12.9% 3.0% Multi Bintang Indonesia Tbk PT 1,322 9200.00 24.7x 34.2x 22.7x 17.5x 6.6x 104% 44.3% 32.5% 0.0% Budweiser Brewing Company APAC Ltd 40,328 23.60 79.5x 60.7x 35.5x 4.1x 7.2x 9% 20.8% 13.7% 0.9% 43.2x 34.0x 24.4x 9.5x 3.5x
Source: Refinitiv (prices as of 18 Oct 2020), DBS Bank
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Thai Beverage Public Company
Key Assumptions FY Sep 2018A 2019A 2020F 2021F 2022F Sprits vol gwth (%) (9.3) 7.90 (2.0) 3.00 1.00 Spirits ASP gwth (%) (0.1) 0.10 0.0 1.00 2.00 Beer vol gwth (%) (11.4) 7.40 (7.0) 7.00 1.00 Beer ASP gwth (%) 2.00 1.00 0.0 1.00 3.00 Non-Alc Bev rev gwth (%) (3.5) 7.50 (8.0) 3.00 3.00
Segmental Breakdown FY Sep 2018A 2019A 2020F 2021F 2022F Revenues (Btm) Spirits 105,900 115,036 112,492 118,049 122,444 Beer 94,486 119,598 102,853 120,416 129,119 Impacted by lockdowns, alcohol Non-Alcoholic Bev. 16,184 17,390 15,999 16,479 16,973 ban in Thailand in April, and Food 13,265 15,561 12,449 17,428 17,951 drink-drive laws in Vietnam. Others (140) (228) (208) (232) (244) Total 229,695 267,357 243,584 272,139 286,244 Operating profit (Btm) Spirits 21,888 24,200 24,861 25,498 27,060 Beer 4,909 7,876 7,004 10,449 12,272 Non-Alcoholic Bev. (2,971) (1,324) 240 330 339 Helped by cost control, lower Food 853 833 0.0 1,046 1,257 marketing spend and expected Others 126 124 124 124 124 turnaround in Non-Alcoholic Total 24,805 31,709 32,229 37,447 41,052 Beverages. Operating profit Margins (%) Spirits 20.7 21.0 22.1 21.6 22.1 Beer 5.2 6.6 6.8 8.7 9.5 Non-Alcoholic Bev. (18.4) (7.6) 1.5 2.0 2.0 Food 6.4 5.4 0.0 6.0 7.0 Others (90.0) (54.4) (59.7) (53.4) (50.8) Total 10.8 11.9 13.2 13.8 14.3
Income Statement (Btm) FY Sep 2018A 2019A 2020F 2021F 2022F Revenue 229,695 267,357 243,584 272,139 286,244 Cost of Goods Sold (162,893) (189,966) (168,728) (187,068) (196,530) Gross Profit 66,802 77,391 74,856 85,071 89,714 Other Opng (Exp)/Inc (41,913) (45,672) (42,627) (47,624) (48,661) Operating Profit 24,889 31,719 32,229 37,447 41,052 Other Non Opg (Exp)/Inc 2,115 753 920 500 400 Associates & JV Inc 3,818 4,845 3,027 4,565 4,850 Net Interest (Exp)/Inc (4,264) (6,006) (6,523) (6,933) (6,071) Exceptional Gain/(Loss) (2,458) 0.0 0.0 0.0 0.0 Pre-tax Profit 24,100 31,312 29,653 35,579 40,231 Tax (4,494) (5,229) (5,325) (6,513) (7,430) Minority Interest (1,666) (2,810) (2,630) (3,639) (4,251) Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Profit 17,943 23,272 21,698 25,428 28,550 Net Profit before Except. 20,401 23,272 21,698 25,428 28,550 EBITDA 35,501 42,162 41,187 47,690 51,646 Growth Revenue Gth (%) 20.9 16.4 (8.9) 11.7 5.2 EBITDA Gth (%) (3.4) 18.8 (2.3) 15.8 8.3 Opg Profit Gth (%) (9.7) 27.4 1.6 16.2 9.6 Net Profit Gth (Pre-ex) (%) (21.6) 14.1 (6.8) 17.2 12.3 Margins & Ratio Gross Margins (%) 29.1 28.9 30.7 31.3 31.3 Opg Profit Margin (%) 10.8 11.9 13.2 13.8 14.3 Net Profit Margin (%) 7.8 8.7 8.9 9.3 10.0 ROAE (%) 14.4 19.7 17.9 19.2 19.8 ROA (%) 5.9 5.6 5.3 6.2 6.9 ROCE (%) 7.1 6.8 6.9 8.0 8.7 Div Payout Ratio (%) 54.6 51.8 49.8 56.3 53.7 Net Interest Cover (x) 5.8 5.3 4.9 5.4 6.8 Source: Company, DBS Bank
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Company Update
Thai Beverage Public Company
Quarterly Income Statement (Btm) FY Sep 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020
Revenue 69,992 62,658 62,080 75,680 61,411 Cost of Goods Sold (49,569) (43,781) (44,332) (54,045) (42,787) Gross Profit 20,423 18,877 17,748 21,635 18,624 Other Oper. (Exp)/Inc (11,392) (10,987) (11,200) (11,231) (10,685) Operating Profit 9,030 7,890 6,548 10,404 7,939 Other Non Opg (Exp)/Inc 164 166 157 295 483 Associates & JV Inc 675 2,232 223 1,319 860 Net Interest (Exp)/Inc (1,600) (1,478) (1,435) (1,401) (1,391) Exceptional Gain/(Loss) 5.48 0.0 (132) 0.0 (44.7) Pre-tax Profit 8,275 8,810 5,360 10,618 7,846 Tax (1,518) (1,154) (1,172) (1,405) (2,270) Minority Interest (967) (1,005) (775) (790) (624) Half-yearly reporting Net Profit 5,790 6,651 3,414 8,423 4,952 adopted. 3Q20 business Net profit bef Except. 5,785 6,651 3,546 8,423 4,997 update provided, but full EBITDA 9,869 10,288 6,927 12,019 9,282 results not made available.
Growth Commentary on 3Q [link to Revenue Gth (%) (3.6) (10.5) (0.9) 21.9 (18.9) report] EBITDA Gth (%) (3.6) 4.3 (32.7) 73.5 (22.8) Opg Profit Gth (%) 9.4 (12.6) (17.0) 58.9 (23.7) Net Profit Gth (Pre-ex) (%) (20.7) 15.0 (46.7) 137.5 (40.7) Margins Gross Margins (%) 29.2 30.1 28.6 28.6 30.3 Opg Profit Margins (%) 12.9 12.6 10.5 13.7 12.9 Net Profit Margins (%) 8.3 10.6 5.5 11.1 8.1
Balance Sheet (Btm) FY Sep 2018A 2019A 2020F 2021F 2022F
Net Fixed Assets 60,458 59,737 61,283 63,162 65,224 Invts in Associates & JVs 82,118 79,345 80,172 82,537 85,187 Other LT Assets 200,118 190,840 190,783 190,726 190,670 Cash & ST Invts 22,530 24,362 31,718 25,295 21,912 Inventory 42,185 42,846 37,677 41,860 43,999 Debtors 4,294 5,094 4,605 5,145 5,411 Other Current Assets 6,219 5,015 5,015 5,015 5,015 Total Assets 417,922 407,240 411,253 413,740 417,419
ST Debt 14,483 21,608 21,608 21,608 21,608 Creditor 7,903 7,706 4,934 5,482 5,762 Other Current Liab 15,073 19,236 22,492 23,680 24,597 LT Debt 216,804 197,975 187,975 173,975 158,975 Other LT Liabilities 8,186 10,391 10,391 10,391 10,391 Shareholder’s Equity 120,952 115,859 126,758 137,871 151,101 Minority Interests 34,521 34,466 37,095 40,734 44,985 Total Cap. & Liab. 417,922 407,240 411,253 413,740 417,419 Gradual deleveraging with Non-Cash Wkg. Capital 29,722 26,014 19,871 22,858 24,067 internal cashflow generated, Net Cash/(Debt) (208,757) (195,220) (177,865) (170,287) (158,671) partial pay down of debentures Debtors Turn (avg days) 5.5 6.4 7.3 6.5 6.7 due, with expectations of Creditors Turn (avg days) 14.7 15.4 14.1 10.5 10.7 remaining rolled over to further Inventory Turn (avg days) 92.2 83.8 89.8 79.8 82.0 maturities. Asset Turnover (x) 0.8 0.6 0.6 0.7 0.7 Current Ratio (x) 2.0 1.6 1.6 1.5 1.5 Quick Ratio (x) 0.7 0.6 0.7 0.6 0.5 Net Debt/Equity (X) 1.3 1.3 1.1 1.0 0.8 Net Debt/Equity ex MI (X) 1.7 1.7 1.4 1.2 1.1 Capex to Debt (%) 2.3 2.5 3.1 3.6 4.1 Z-Score (X) 2.0 2.2 2.2 2.4 2.5
Source: Company, DBS Bank
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Company Update
Thai Beverage Public Company
Cash Flow Statement (Btm) FY Sep 2018A 2019A 2020F 2021F 2022F
Pre-Tax Profit 24,103 31,312 29,653 35,579 40,231 Dep. & Amort. 6,088 6,637 5,013 5,180 5,346 Tax Paid (6,965) (2,268) (2,069) (5,325) (6,513) Assoc. & JV Inc/(loss) (3,818) (4,845) (3,027) (4,565) (4,850) Chg in Wkg.Cap. 438 3,907 2,886 (4,175) (2,126) Other Operating CF 2,436 3,736 0.0 0.0 0.0 Net Operating CF 22,282 38,478 32,456 26,694 32,088 Capital Exp.(net) (5,267) (5,493) (6,500) (7,000) (7,350) Other Invts.(net) (186,938) (4,750) 0.0 0.0 0.0 Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Partial pay down of debentures Div from Assoc & JV 2,661 2,529 2,200 2,200 2,200 due. Other Investing CF (2,554) (731) 0.0 0.0 0.0 Net Investing CF (192,098) (8,445) (4,300) (4,800) (5,150) Div Paid (16,134) (12,416) (10,799) (14,315) (15,319) Chg in Gross Debt 192,347 (11,619) (10,000) (14,000) (15,000) Capital Issues 0.0 0.0 0.0 0.0 0.0 Other Financing CF (5,143) (7,141) 0.0 0.0 0.0 Net Financing CF 171,070 (31,176) (20,799) (28,315) (30,319) Currency Adjustments 335 (740) 0.0 0.0 0.0 Chg in Cash 1,589 (1,884) 7,357 (6,421) (3,381) Opg CFPS (S cts) 3.79 6.00 5.13 5.35 5.93 Free CFPS (S cts) 2.95 5.72 4.50 3.42 4.29
Source: Company, DBS Bank
Target Price & Ratings History
0.97 S$ 12-mth Date of Closing S.No. Target Rating Report Price Price 0.87 2 1 1: 25 Nov 19 0.89 1.04 BUY 2: 17 Feb 20 0.83 1.04 BUY 0.77 3: 15 May 20 0.67 0.90 BUY 4: 18 May 20 0.67 0.90 BUY 4 5: 17 Aug 20 0.64 0.90 BUY 0.67 3 5 0.57
0.47 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20
Note : Share price and Target price are adjusted for corporate actions.
Source: DBS Bank Analyst: Andy SIM, CFA Alfie YEO
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Company Update
Thai Beverage Public Company
DBS Bank recommendations are based on an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return, i.e., > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable share price catalysts within this time frame) *Share price appreciation + dividends
Completed Date: 20 Oct 2020 18:25:48 (SGT) Dissemination Date: 20 Oct 2020 18:41:37 (SGT)
Sources for all charts and tables are DBS Bank unless otherwise specified.
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The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.
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The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.
Page 10 Company Update
Thai Beverage Public Company
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report.
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COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS'') or their subsidiaries and/or other affiliates have a proprietary position in Thai Beverage Public Company, China Resources Beer, recommended in this report as of 30 Sep 2020.
2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.
Compensation for investment banking services: 3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
Disclosure of previous investment recommendation produced: 4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.
1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.
2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.
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Company Update
Thai Beverage Public Company
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For any query regarding the materials herein, please contact Carol Wu (Reg No. AH8283) at [email protected]
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Wong Ming Tek, Executive Director, ADBSR
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Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.
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Company Update
Thai Beverage Public Company
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In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication.
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Company Update
Thai Beverage Public Company
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HONG KONG MALAYSIA SINGAPORE DBS (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua 13th Floor One Island East, 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 18 Westlands Road, Capital Square, Marina Bay Financial Centre Tower 3 Quarry Bay, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 3668 4181 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2521 1812 Tel.: 603 2604 3333 e-mail: [email protected] e-mail: [email protected] Fax: 603 2604 3921 Company Regn. No. 196800306E e-mail: [email protected]
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