Thai Beverage

Thai Beverage | Buy

Oct 4 close: S$0.70

Target price: S$0.84

UOB Kay Hian, Oct 4

Latest data from the University of the Thai Chamber of Commerce showed a pick-up in consumer confidence levels to a five-year high. We deem this a positive sign that alcohol consumption may be gradually recovering.

Meanwhile, Thai Beverage (Thai Bev) has restructured its management positions to include designated roles to improve acquired businesses and gain synergies. With organisational restructuring in place to take advantage of synergies and value creation across Thai Bev business units, the group can look forward to cost savings from newly integrated business units such as Sabeco and Myanmar Spirits.

We remain positive on the group's ability to turn around under-performing business segments, as well as a renewed management focus into the beer business segment.

We reduce 2018 to 2020 earnings forecasts by up to 9.6 per cent, factoring in lower consumption volume from latest results with a view on moderate recovery, as well as slightly higher selling, general and administrative expenses and marginal interest increment.

Upgrade to "buy" with sum of the parts-based target price of S$0.84, from S$0.99 previously.

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