Thai Beverage PLC’s (ThaiBev) core 3Q18 results were within expectations. Revenue increased 34.1% YoY to THB 60.7b while core EBITDA was up 16.7% YoY to THB 10.8b. Core PATMI dropped 10.3% YoY to THB 6.0b or 24% of our estimate.

Spirits revenue dropped 3.3% YoY to THB 25.5b due to a decrease in sales volume, with EBITDA margins for the segment was down at 22.3% vs. 25.1% in 3Q17. Management notes that the overall domestic alcohol beverage market remained soft during the quarter, due to a slower than expected recovery in the Thai economy.

Meanwhile, Sabeco contributed positive net profit to the beer business, with the acquisition-related finance costs lower than their profit. The debt to equity ratio stands at 1.65x as at 30 Jun 2018.

Pending further details from the briefing later, we maintain BUY on ThaiBev, but place our fair value of S$0.95 under review.

Source: OCBC Research - 15 Aug 2018