Is ThaiBev Ready for a Toast After a Bitter Year or Facing Hangover?

November 29, 2023

Thai Beverage Public Company Limited (SGX: Y92), commonly known as ThaiBev, has experienced a significant 26.1% drop in its share price this year, reflecting its underwhelming financial performance. The company reported a 9% year-on-year decline in earnings, totalling THB27.43 billion, which has investors and market analysts closely watching.

Key Financial Highlights:

  • Gross profit increased by 3% year-on-year to THB82.80 billion.
  • Net operating profit saw a 6% decrease to THB32.94 billion.
  • Earnings per share on a diluted basis were THB1.09.
  • A final dividend of THB0.45 per share was declared, contributing to a full-year dividend of THB0.60 per share, payable on February 28, 2024.
  • Cash and cash equivalents stood at THB14.83 billion as of September 30.

Despite these setbacks, there is an undercurrent of optimism about ThaiBev’s future. The company, a powerhouse in Southeast Asia, is approaching what could be described as an ‘investment happy hour.’

Why ThaiBev Could Be Raising Glasses Soon?

1. Diversified portfolio

ThaiBev’s portfolio diversity across spirits, beer, and non-alcoholic beverages is a double-edged sword. While the spirits segment excelled, other sectors faced downturns. Nonetheless, this diversification is key to a potential rebound as markets stabilise.

2. Financial Resilience and Growth

Despite the tough year, ThaiBev’s total revenue climbed by 2% to THB279.09 billion, reflecting Thailand’s economic recovery. However, a 9% drop in operating profit to THB29.44 billion due to increased costs highlights the challenges ahead. However, the company’s strong financial balance sheet positions it well for future growth.

3. Reopening Benefits

The easing of pandemic restrictions has boosted ThaiBev’s revenue, correlating with increased social alcohol consumption. This trend could accelerate as the global situation normalises.

4. Market Leadership

ThaiBev dominates the Thai beer and spirits market and maintains a significant presence in other Southeast Asian countries. This market dominance is a critical asset.

5. Strategic Expansion and Innovation

The company is not just weathering the storm but actively seeking new markets and adapting to changing consumer preferences, an approach vital for future growth.

A Cautious Toast to the Future?

While ThaiBev’s diverse portfolio, market leadership, and strategic agility paint a picture of potential growth and recovery, it is important to temper optimism cautiously. The beverage industry, particularly in emerging markets, faces unpredictable challenges, including regulatory changes, market volatility, and shifting consumer trends. Investors should be mindful of these risks when considering ThaiBev as a sustainable and promising investment for the future.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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