• Continued effects from mourning period
• Mixed bottomline picture across segments
• Awaiting corporate restructuring

1HFY17 PATMI Marginally Down

Thai Beverage PLC’s (ThaiBev) 2QFY17 revenue was down 8.8% YoY to THB50.3b, as sales declined across the core segments – Spirits (- 7.5%), Beer (-13.9%), Non-alcoholic Beverages (NAB) (-3.2%) albeit Food increased by 7.3%. PATMI was down 23.5% to THB6.6b. We note that Spirits and Beer segments came down from a high base last year. In addition, in our previous report for 1QFY17, we expected 2Q to reflect some weakness as the alcoholic segment resumed trade activities only 100 days after 13 Oct 2016.

Although there were savings of ~THB600-700m from advertising and promotion (A&P) across all segments in 1QFY17, promotions went on as initially planned, hence the decline in sales and higher A&P in 2Q resulted in the lower PATMI. 1HFY17 revenue was down 8.4% to THB97.2b and PATMI was marginally down 1.8% to THB14.3b, forming 51% and 55% of our full year estimates respectively, thus we deem this set of results to be within our expectations.

Alcoholic Segment Came Down From a High Base

Spirits and Beer sales were down in 2Q due to lower volume sales from continued effects of the mourning period and on-trade consumption at pub and bar did not fully recover. Furthermore, there was a higher base of sales in the same period last year, as the speculation that the government might raise alcohol excise tax caused agents to stock up inventory. While 1HFY17 net profit for Spirits was down 9.7%, Beer was up 3% mainly due to better gross profit, helped by lower bottle and raw material costs. For NAB segment, 1H net loss of THB511m was better by 37.5% from last year, on better product mix and favourable packaging costs.

Keeping Our Call

Looking ahead, the new excise tax law was announced in Mar, while we keep in mind that the group has historically been able to pass on higher excise taxes to consumers. We also wait for progress on the upcoming corporate restructuring. Pending more information from an analyst briefing after market close, we maintain our BUY and fair value estimate of S$1.01. An interim dividend of THB0.2/share has been declared, similar to last year.

Source: OCBC Research - 12 May 2017