Thai Beverage PLC’s (ThaiBev) core 2QFY18 results met our expectations as earnings was lifted by contributions from the recently acquired companies in Myanmar and Vietnam, despite lower sales volume of existing beer business.

2QFY18 revenue jumped 34.3% YoY to THB67.6b mainly attributable to Beer (+74%) and Spirits (+14%) businesses.

By segment: 1) Spirits’ PATMI grew 2.8% YoY to THB5.7b with contributions from MSC and MDC (Myanmar acquisitions), 2) Beer’s PATMI plunged 66.7% to THB307m due to finance costs related to the acquisition of Sabeco in Vietnam, and 3) Nonalcoholic Beverages recorded a 22.7% increase in net loss on lower revenue due to product mix despite higher sales volume.

Consequently, excluding non-recurring expenses, ThaiBev’s 2QFY18 core PATMI fell 3.1% YoY to THB6.3b, forming 25% of our FY18 estimate.

For 1HFY18, core PATMI fell 18.6% YoY to THB11.6b, on weak consumption of both spirits and beers for existing business despite being lifted by contributions from MSC, MDC and Sabeco.

Pending more details from management, maintain BUY but put our FV of S$0.95 under review for now.

Source: OCBC Research - 16 May 2018