• PATMI grew 30% YoY
• Beer market share ~40%
• Keeping a positive view

Good set of 1Q16 results

Thai Beverage PLC (ThaiBev) released a good set of 1Q16 results. Overall revenue grew 20.7% YoY to THB55.2b, driven by growth in sales of Spirits (+5.3%), Beer (+71.3%), and NonAlcoholic Beverages (NAB) (+13.3%), although Food sales declined 6.5%. PATMI gained 30% to THB8.6b on the back of profitability growth in Spirits (+8.5%), Beer (+174.6%), Food (+245.5%), F&N/FCL (+65.3%), and net loss narrowed for NAB by 41.7%.

Alcoholic segment driving growth

Revenue growth from Spirits was driven by a 4% gain in volume, mainly due to agents stocking up in anticipation for an upcoming excise tax hike. While details on the tax hike are not available yet, the group has historically been able to pass on the cost increase to consumers and sustain earnings.

Testament to the success of the new Chang Classic, Beer segment‟s volume had increased by 61.1%, and management stated that their market share has “slightly increased” to the ~40% level, according to third party research data. Recall that in 4Q, their market share had increased from 30% to 38%.

NAB losses narrowed

We previously mentioned that NAB losses may narrow for the year, as FY15 included the launch of 100+, Jubjai, and Oishi in Malaysia. Besides the expected lower SG&A expenses, growth in volume was driven by products including Jubjai, drinking water, and Est.

Due to lower oil prices, they were also able to enjoy favourable packaging costs. With regards to the proposed sugar tax on soft drinks in Thailand, management is “well-prepared”, citing potential options such as product innovation and possible reductions in sugar content.

Maintain BUY

Separately, ThaiBev‟s financial year end has changed from 31 Dec to 30 Sep, such that FY16 will comprise of three quarters (1 Jan to 30 Sep), thus we have adjusted our estimates accordingly. We are keeping our BUY rating, with our DCF-derived fair value estimate unchanged at S$0.83. The corporate restructuring is still in progress.

Source: OCBC Research - 16 May 2016