RHB: Thai Beverage set to outperform other Singapore consumer plays

Chang Beer, made by Thai BeverageChang Beer, made by Thai Beverage

RHB tipped Thai Beverage as one of its top picks among Singapore’s listed consumer plays amid an upbeat outlook for Thailand’s beer consumption.

“Thailand’s April statistics suggest that domestic beer consumption has continued to improve, which should bode well for the group,” RHB said in a note Thursday.

It cited statistics from Thailand’s Office of Industrial Economics showing domestic beer consumption rose 21 percent on-year in April, while for the October-to-April period, beer consumption was up 9 percent on-year.

“We believe ThaiBev will grow in tandem, given that it is the second-largest beer player in the market with a c.40 percent market share,” RHB said.

In addition, RHB noted that around 85 percent of Thai Beverage’s profit after tax and minority interests was from Thailand, where the curency has appreciated 4 percent against the U.S. dollar year-to-date.

“Amidst market uncertainties revolving around U.S.-China trade tensions, we favor ThaiBev over other Singapore-listed consumer companies,
given the strength of the Thai baht compared to regional currencies,” RHB said.

The stock’s valuation at 21 times fiscal 2019 price-to-earnings is also “compelling,” compared with other alcohol players, which are trading around 32 times, and Thailand-listed consumer stocks, which are trading at an average of 26 times, RHB said.

“We believe share price should continue to outperform as results deliver,” the note added.

RHB rates the stock at Buy with a S$0.92 target price.

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