Thai Beverage appears set to report on Thursday solid earnings growth for its fiscal first quarter amid rising beer sales in Thailand, CGS-CIMB said in a note on Tuesday.
“The first quarter is typically a seasonally strong quarter for THBEV on account of higher alcohol consumption during the year-end celebrations,” CGS-CIMB said.
The brokerage forecast fiscal first quarter revenue, including from SABECO, would come in at 68.3 billion Thai baht, up 50 percent on-year, but with finance costs likely higher at 1.5 billion baht on borrowing for previous acquisitions, core net profit likely was around 5.9 billion baht, up 11 percent from the year-ago quarter.
CGS-CIMB pointed to domestic beer sales in Thailand, which rose 9.6 percent on-year to 224 million liters in December, a fourth straight month of increases, according to data from Thailand’s Office of Industrial Economics.
“We believe sales growth will continue to be stimulated by the upcoming Thai elections, which are expected to be held in March 2019. And with c.40 percent of the Thai beer market, as guided by the company, this bodes well for THBEV’s beer volume growth,” the note said.
Another positive for ThaiBev’s results was set to come from the turnaround at SABECO, which is seeing rising market share and management efforts on advertising and marketing, CGS CIMB said.
The brokerage kept an Add call on the shares, saying the valuation was attractive at a 2020 price-to-earnings ratio of 17 times, below its five-year average of around 20 times.
It raised its target price to S$0.83 from S$0.73.
The stock was at S$0.73, up 0.69 percent, at 5:04 P.M. SGT.