Thai Beverage shares rise after announcement of debenture issues

Thai baht notesThai baht notes

Thai Beverage shares were up 2.31 percent at S$0.665 at 13:53 SGT after the company said it would issue debentures, which may allay fears about exposure to interest rate increases.

“This refinancing move and fixing of coupon rates should allay investors’ concerns on the group’s exposure in light of the rising interest rate environment,” DBS said in note on Thursday. “We estimate that the group will be able to deleverage its balance sheet progressively over time given its strong operating cashflows.”

Thai Beverage said on Wednesday that it issued debentures with an aggregate principal amount of 77.0 billion Thai baht, with fixed coupon rates ranging from 2.60 percent to 4.16 percent and seven tenors ranging from two years to 10 years.

The debentures have been assigned a AA(tha) rating, which is considered investment grade by Fitch Ratings (Thailand), it said in the filing to SGX after the market close on Wednesday.

DBS said the group has now issued debentures totaling 127 billion baht with an average fixed coupon of 3.19 percent, with the proceeds used to refinance loans taken in December to acquire Sabeco.

“Looking ahead, we maintain our view that we are near or at the bottom of its operational performance, which should pick up in fiscal 2019. This is on the back of the expected Thailand elections and King’s coronation,” DBS said.

DBS rates the stock at Buy with a S$0.94 target price.

Thai Beverage had reported its fiscal third quarter net profit fell 56.5 percent on-year to 8.646 billion Thai baht amid a lower contribution from the spirits business, a wider net loss from the non-alcoholic beverage business, a sharp decrease in contribution from F&N/FPL and the lack of year-earlier fair valuation gains.

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