To The Moon

$THAI BEVERAGE PUBLIC CO LTD(Y92.SI)$  is one of the most valuable ASEAN large-cap F&B counters.

Three reasons to buy Thai Beverage

First, improving financial performance. Adjusted EBITDA grew by 1.1% y-o-y in ThaiBev FY22. Sales and Net Income up 13.2% and 22.2% y-o-y; beating expectations by 5.6%/11.8%.

Second, Beer, Food and Non-Alcoholic Beverage post robust growth on easing restrictions in Thailand and Vietnam. The growth momentum expected to continue into FY23F on the reopening momentum, aiding in sales growth, though this will be partially negated by the effects of rising costs.

Third, Gearing continued to ease with paying down of THB11bn in debt, higher EBITDA, and is mitigated by strong operating cash flow (OCF). It is able to repay/refinance its obligations with its strong operating cash flows.

Valuation

Valuations attractive at -1SD below average. Trading at just 14.0x FY23F PE, at -1SD of its five-year average, the prospects of Thai Beverage are overlooked and clouded by misplaced concerns about gearing, growth, and margin pressures.

Thai Beverage Profile

Thai Beverage Public Company Limited is a leading beverage company in Southeast Asia and the largest in Thailand. ThaiBev's business consists of four segments – spirits, beer, non-alcoholic beverages, and food.

The Group was listed on the mainboard of the Singapore Exchange in 2006. In 2012, ThaiBev expanded its business overseas through the acquisition of $FRASER AND NEAVE, LIMITED(F99.SI)$   Fraser and Neave, Limited (F&N), a highly-recognized company in Singapore with a portfolio that boasts many renowned brands. With the acquisition of F&N, the Group further cemented its position as the leading beverage producer and distributor in the region. In 2017, ThaiBev further broadened its presence in the region with the acquisition of a 75% stake in the Grand Royal Group (GRG), the largest player in Myanmar's whisky market, as well as an acquisition of a 53.59% stake in Saigon Beer-Alcohol-Beverage Corporation (SABECO), a leading beer producer in Vietnam, which made the Group the largest beer player by volume in Southeast Asia.

As of 30 September 2020, ThaiBev has 218 subsidiaries and associates, including 19 distilleries, three breweries, and 21 non-alcoholic beverage production facilities. The Group also has an extensive distribution network covering 400,000 points of sale in Thailand. In addition, ThaiBev has an international presence in over 90 countries. The Group has five production facilities in Scotland which are known for producing single malt scotch whiskies such as Balblair, Old Pulteney, as well as Speyburn; has interests in two production facilities in Myanmar which produce the top-selling whisky in the country; and owns one distillery in China which produces the famous Yulinquan Chinese spirit.

ThaiBev's most recognized spirits brands include Ruang Khao, SangSom, Mekhong, Hong Thong, and Blend 285, as well as GRG's iconic Grand Royal whisky; and the Group's signature beer, Chang, is very popular among Thai beer drinkers, while SABECO's Bia Saigon and 333 are the top-selling beer brands in Vietnam. In the non-alcoholic beverage space, ThaiBev's leading brands include Oishi green tea, est cola, and Crystal drinking water, as well as F&N's sparkling drinks and 100PLUS isotonic drink. In addition, the Group operates Japanese restaurants, as well as ready-to-cook and ready-to-eat food businesses through its subsidiary Oishi Group Public Company Limited. ThaiBev has also started branching out from these well-established Japanese restaurants and food products, and is accelerating the expansion of its food business by leveraging its subsidiary Food of Asia and its franchise outlets under KFC, the most popular quick service restaurant brand in Thailand.