• Thai Beverage’s 3QFY9/18 net profit of THB6.0bn was below expectations on higher SG&A. 9MFY18 formed 65.7%/70.1% of our/consensus FY18F expectations (S$26.8m/S$25.1m).
• Domestic spirit and beer volumes were still low as the rural economy is still cautious on spending in Thailand; but the drop in spirits volume in 3Q18 was a surprise.
• The SABECO optimisation will take place in earnest now that ThaiBev has four of the seven board seats. Management is looking for ways to improve business productivity.
• We think the sluggish domestic environment will persist until FY19F, hence we lower our FY18-20F earnings in the interim.
• We lower our SOP-based Target Price but maintain our ADD call.

Source: CGS-CIMB Research - 16 Aug 2018