Nomura: Starbucks Thailand acquisition a positive for Thai Beverage

Thai baht notesThai baht notes

Fraser and Neave’s deal to acquire Starbucks Coffee (Thailand) via a joint venture is a positive for Thai Beverage, Nomura said in a note Friday.

On Thursday, F&N said it tied up with Maxim’s Caterers to acquire all of Starbucks Coffee (Thailand) in a move to enter the retail coffee market in Thailand. Nomura pointed to a Bloomberg estimate that Starbucks Thailand’s valuation was around US$500 million, or 16 billion baht.

“Starbucks is a strong on-trade beverage player in Thailand,” Nomura said.

“We think the move is positive to THBEV, as the acquisition should be earnings-accretive to F&N and we note that the on-trade beverage market has grown more strongly than the off-trade market in the past three years,” it added.

Due to cross-shareholdings, Nomura estimated Thai Beverage would be exposed to around 17 percent of Starbucks Thailand once the deal is completed.

It noted Starbucks (Thailand) posted revenue of 7.7 billion baht and net profit of 1.1 billion baht in 2018, as well as a compound annual growth rate (CAGR) of 15 percent over the past three years, faster than the cafe market growth rate of 5 percent a year.

Nomura kept a Buy call with S$0.98 target price for Thai Beverage; it doesn’t cover F&N.

Thai Beverage shares were up 0.63 percent at S$0.80 at 2:17 P.M. SGT.

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