ThaiBev shares extend recent declines after earnings, but turnaround tipped

Thai baht notesThai baht notes

Shares of Thai Beverage fell on Wednesday after the beer maker reported its fiscal first-half net profit dropped, but analysts tipped a turnaround in sight.

The stock was down 0.62 percent at S$0.795 at 9:12 A.M. SGT on Wednesday, extending its decline since the start of the year, when it was trading around S$0.92. Buy orders were clustered at S$0.795 and S$0.79, with sell orders at S$0.80, suggesting the stock could trade flat.

For its fiscal first half, the company reported net profit fell 27.0 percent on-year to 10.451 billion baht, while excluding a non-recurring expense for acquisitions and finance costs, net profit would have fallen 9.9 percent to 12.91 billion baht. The first-half profit decline was due to the net loss in the non-alcoholic beverage business increasing by 25 percent, as well as declines in net profit from the spirits, beer and F&N/FPL businesses, it said.

That was less than half the full-year forecast of 27.794 billion baht from RHB.

But while Nomura noted the earnings missed expectations, it was still positive on the stock.

“We think the share price correction after the [fiscal] first quarter of 2018 results has priced in the earnings weakness caused by the company’s existing main business i.e. spirits and beer, and the surge in finance costs,” it said in a note on Tuesday.

“Meanwhile, we think the major acquisitions last year have proven to be good investments as they support to revenue growth amid sluggish
domestic growth of spirits and sales,” it added, saying it was putting its earnings estimates under review.

Nomura currently rates the stock at Buy, with a target price of S$1.13.

In a note last week, before the release, RHB had said it expected a fiscal third-quarter earnings recovery as the World Cup was set to boost demand. It rated the stock at Buy with a target price of S$1.06, saying the shares were oversold.