• 1Q15 PATMI grew 10.2% YoY
• Boost from pre tax implementation
• Stable market share

Decent 1Q15 results

Thailand, which contributes about 96% of Thai Beverage’s (Thai Bev) revenue, saw declines in private consumption and investment as well as consumer confidence during the first quarter. Despite the poor economic environment, Thai Bev reported a decent set of 1Q15 results. Revenue was up 11.4% YoY to THB45.7b, underpinned by growth across all product segments (Spirits, Beer, Non-alcoholic Beverages, Food). PATMI also grew 10.2% to THB6.6b, meeting 28.7% of our full-year estimates.

Helped by situational factors

Sales for Spirits rose 9.9% YoY to THB29.6b and Beer sales grew 17.6% to THB10.5b. We think certain drivers in this quarter were situational. The additional 2% of excise tax for the National Sports Development fund led to the increased stockpiling by agents prior to its implementation from 27 Mar-15. As such, the Spirits business had a 10.2% volume growth. Volume for the Beer segment also increased by 17.7%, but the jump was partly due to the low base in 1Q14 when the stock level in the supply chain was lower.

Market share maintained

Nevertheless, market share for Spirits increased by one ppt to 95% while it was stable for the beer segment, testament to Thai Bev’s pricing power and branding strength. Following the additional excise tax, ASPs for the group’s products have been raised to cover this charge. As 2Q and 3Q are usually weaker on a quarterly basis, 1Q15 performance is set to taper off to some extent but profitability should still improve YoY. For Non-alcoholic Beverages, we think there is still a long way before losses narrow due to ongoing expansion with new products. 100PLUS was launched in Thailand in Mar-15 as well as Jubjai, a herbal drink.

Maintain BUY with new FV of S$0.83

With regards to a 0.92x current ratio as at end Mar-15, management stated that they would restructure THB25b of short-term loans within June-15 with repayment scheduled during 2016-2018. As we update our SOTP model coupled with slightly higher PATMI projections, our FV increases from S$0.80 to S$0.83. Maintain BUY.

Source: OCBC Research - 18 May 2015