Daiwa downgraded Thai Beverage to Hold from Outperform, pointing to the Bank of Thailand’s forecast last week for the country’s economic growth to slow, mainly on export weakness.
The BOT cut its economic growth forecast for 2019 to 3.3 percent, from the previous forecast of 3.8 percent, while Thailand’s consumer confidence data has also shown declines, Daiwa said in a note Tuesday.
“The slowing Thai economy coupled with weak consumer confidence will likely limit discretionary consumer spending such as on alcohol, in our view,” Daiwa said.
“A delay in the formation of the new government will also see consumer confidence take a further hit and correspondingly consumers’ propensity and willingness to spend, in our view,” the note added. “We believe that Thaibev’s domestic alcohol recovery theme could be prematurely derailed by Thailand’s current economic slowdown.”
Daiwa lowered its fiscal 2019 to 2021 earnings per share forecasts by 1-4 percent after lowering margin forecasts on higher costs and cutting its revenue forecasts on its assumption of lower domestic demand for spirits.
But it tweaked its target price for Thai Beverage upward to S$0.88 from S$0.87 on higher market values for listed entities and a stronger Thai baht against the Singapore dollar.
The stock was down 0.60 percent at S$0.83 at 1:40 P.M. SGT.
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