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ThaiBev
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Joelton
Supreme |
29-Nov-2024 10:57
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Prospects of better FY2025 earnings inspire new ideas for ThaiBev
On Nov 21, Thai Beverage Y92 reported relatively flat FY2024 results ended Sept 30, but analysts have found reasons for cheer, buoyed by an optimistic outlook and improving margins.
For FY2024, Thai Bev reported earnings of THB27.21 billion ($1.05 billion), 0.8% lower y-o-y. Revenue, on the other hand, was up 2.2% y-o-y to THB340.29 billion, led by growth across both its beverages and food businesses.
Citing expectations of better margins across the major businesses of spirits, beer and non-alcoholic beverages, DBS Group Research analysts Chee Zheng Feng and Andy Sim believe &ldquo the best is yet to come&rdquo .
Highlighting sequential improvement in 2HFY2024, the research team at OCBC Investment Research (OIR) is betting on a better FY2025 as well. Besides further tourism growth in Thailand, the government&rsquo s efforts to boost its economy will support both foreign and domestic consumption, says OCBC. Major events, including the Olympics and UEFA European Football Championship, where beer is the popular beverage of choice while watching the action unfold, will also provide a boost.
Similarly, UOB Kay Hian&rsquo s Llelleythan Tan and Heidi Mo expect FY2025 to be &ldquo positive&rdquo with better sales volumes amid an improving domestic economic outlook and more tourists in the country. The beer segment, for one, is likely to enjoy further &ldquo upward momentum&rdquo for its segment earnings, thanks to cost efficiencies as well. ThaiBev was able not just to grow but also gain market share over the competition as it maintained its number one market share in Vietnam while increasing its domestic market share in Thailand. &ldquo Management also noted that raw material costs are expected to fall in 1HFY2025,&rdquo say Tan and Mo.
In FY2024, ThaiBev&rsquo s spirits business, no thanks to higher costs and a high base effect of FY2023, suffered a 5.8% y-o-y drop in earnings of THB20.77 billion. This stood in spite of a 0.8% y-o-y increase in sales revenue of THB120.73 billion.
The company expects brown spirit volumes to extend the growth resumed in October and November and wrap up 1QFY2025 with a single-digit percentage growth. Lower ingredient costs, as ThaiBev flagged, will help the bottom line. Specifically, the company was able to buy molasses for 10% to 20% cheaper than the previous year.
Following the FY2024 earnings, DBS, OIR and RHB Bank Singapore have kept their target prices at 77 cents, 69 cents and 71 cents, respectively. PhillipCapital has raised its target price to 64 cents from 63 cents previously. DBS increased its target price estimate on Nov 12 from 69 cents previously. All the brokerages here have kept their &ldquo buy&rdquo calls.
As of Nov 26, ThaiBev remains one of the most heavily traded counters on the Singapore Exchange S68 (SGX), with 55.66 million shares changed hands. The company&rsquo s shares closed at 54 cents on the same day, 2.5 cents higher or 4.85% up since its results were announced on Nov 21. ThaiBev&rsquo s shares remain unchanged year-to-date.
IPO from spin-offs?
What has kept investors&rsquo attention on ThaiBev is the much-anticipated Singapore IPO of its beer business, BeerCo, first flagged in early 2021 but has yet to materialise. During the results call, ThaiBev acknowledged that market conditions have become more favourable, with lower interest rates. However, while talks with its partners are ongoing, the company has yet to set a concrete timeline for the IPO.
Michael Chye, chief of ThaiBev&rsquo s beer product group, told reporters on Oct 1 that BeerCo&rsquo s IPO could take place in 3Q2025 if the group decides on the share sale by December. Thapana Sirivadhanabhakdi, CEO of ThaiBev, also told Bloomberg in October that the group &ldquo received good interest&rdquo from potential partners for the beer unit.
DBS&rsquo s Chee and Sim say the likelihood of a BeerCo IPO is &ldquo much higher than before&rdquo with the recovery in ThaiBev&rsquo s Vietnam beer business.
Ahead of ThaiBev&rsquo s results announcement on Nov 21, analysts from DBS Group Research floated the idea of yet another spin-off besides BeerCo in their Nov 12 report: ThaiBev&rsquo s relatively smaller and lower-profile food business, F& B Co, which is still a multi-market, multi-product entity estimated by Sim and Chee to be worth more than $3.4 billion, or more than 15 cents per ThaiBev share.
The stage for this move was set when the Sirivadhanabhakdi family, who is the common controlling shareholder of TCC Assets, ThaiBev, Frasers and Neave (F& N) and Frasers Property TQ5 (FPL), reorganised their stakes in these entities.
On Sept 20, ThaiBev announced that its indirect wholly-owned subsidiary, InterBev (Singapore) (IBIL), had completed a share swap transaction with TCC Assets. Under the swap, IBIL will transfer its shares in FPL to TCC Assets, which, in turn, will transfer shares in F& N to IBIL. The transaction brought IBIL&rsquo s stake in F& N to 69.64% from 28.31% previously, while IBIL has fully divested its stake in FPL.
The transaction is accounted for as a business combination under common control as IBIL and TCC Assets share the same ultimate controlling shareholders, the Sirivadhanabhakdis.
According to Sim and Chee, following the reorganisation of stakes, ThaiBev can now consolidate F& N accounts and replace the associate line item related to FPL and F& N with Vinamilk&rsquo s pro-rated earnings contribution.
With the share swap, ThaiBev can now avoid swings in its bottom line from its stake in FPL, which, as a sprawling property firm, is obliged to account for fair value changes and also book lumpy earnings from multi-year development projects, notes PhillipCapital&rsquo s Paul Chew.
In return, the beverage group will see &ldquo more stable&rdquo profits, including Vinamilk from its stake in F& N. With F& N&rsquo s stake, NAB will account for 15% of ThaiBev&rsquo s patmi, larger than the 10% contribution from its beer segment, he adds.
At the call, ThaiBev flagged growth opportunities for F& N in Thailand and the rest of its Southeast Asia markets by tapping on its &ldquo current route-to-market,&rdquo say DBS&rsquo s Sim and Chee. &ldquo In addition, there could be margin expansion opportunities with combined raw material procurement and research and development (R& D) efforts.&rdquo
In their Nov 12 note, the DBS analysts suggest that ThaiBev&rsquo s persistently low valuation is due to investors assigning scant growth prospects as a spirits company. They thereby neglect the &ldquo attractive&rdquo better and F& B assets that can fetch a valuation premium on a standalone basis and hopefully improve shareholders&rsquo value.
For now, despite the flat earnings, ThaiBev plans to pay a slightly higher final dividend of THB0.47, 4% higher y-o-y. This will bring its total FY2024 dividends to THB0.62 per share, equivalent to a payout ratio of 53.9%.
Chee and Sim say they are seeing &ldquo multiple positive signs&rdquo of the business turning around in FY2025. &ldquo With improved fundamentals in place, we are hopeful of potential value-unlocking corporate actions being finalised in the coming year.&rdquo
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SDEXXXXD
Veteran |
29-Nov-2024 10:57
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KGI Research Singapore
2024年 11月 29日 : 泰 国 酿 酒 (THBEV SP)泰 国 酿 酒 (THBEV SP)： 消 费 复 苏
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beetlejuice
Master |
29-Nov-2024 10:47
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Zzz below 60 cts for 1 year plus alr. Waky waky time. 3 or 4 attempts to IPO BEERCO. With improving macro conditions & its internal restructuring, will be embarrassing if still can't IPO next year. Vested 51.5 to 59 cts since Nov 2022. | ||||
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vivacious
Supreme |
29-Nov-2024 09:48
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6 series coming | ||||
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Luckygal
Member |
29-Nov-2024 09:46
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Buying interest is very strong now. Hope Beerco IPO becomes a reality this time round. | ||||
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Speediman
Veteran |
27-Nov-2024 16:07
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Hopefully Thai Bev Big Boss is not going to be wishy washy think here thnk there to launch Beerco IPO. Come out and make a statement that 2025 IPO is confirmed! Just sell it! Thai Bev needs a bold statement to pull back the shortist! Once shortist needs to buy back...even 80 cents is cheap! |
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headsets
Member |
27-Nov-2024 10:33
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ThaiBev is now " CD" ... | ||||
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SDEXXXXD
Veteran |
27-Nov-2024 10:20
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55 cts met:)
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vivacious
Supreme |
26-Nov-2024 15:03
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look to breach 55 followed by 6 series very soon | ||||
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Joelton
Supreme |
23-Nov-2024 13:47
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ThaiBev shares see high trading volumes after results analysts keep &lsquo buy&rsquo calls and TPs
Thai Beverage (ThaiBev) was the most heavily traded counter on Nov 22 with some 31.36 million shares changed hands as at 11.31am.
This is after ThaiBev announced its FY2024 ended Sept 30 results on Nov 21. The group reported full-year earnings of THB27.21 billion ($1.05 billion), 0.8% lower y-o-y. Revenue, however, rose by 2.2% y-o-y to THB340.29 billion. The group restated their results for the FY2023 following the completion of the share swap.
ThaiBev&rsquo s indirect wholly-owned subsidiary, InterBev (Singapore) Limited, completed a share swap transaction with TCC Assets. Under the swap, InterBev (Singapore) &ndash or IBIL &ndash will transfer its shares in Frasers Property TQ5 Limited (FPL) to TCC Assets and TCC, in turn, will transfer shares in Fraser and Neave (F& N) to IBIL. The transaction brought IBIL&rsquo s stake in F& N to 69.64% from 28.31% previously, while IBIL has fully divested its stake in FPL.
Analysts from DBS Group Research and UOB Kay Hian have kept their &ldquo buy&rdquo calls and respective target prices of 77 cents and 56 cents respectively as ThaiBev&rsquo s earnings came roughly in line with their expectations. DBS analysts Chee Zheng Feng and Andy Sim increased their target price estimate on Nov 12 from 69 cents previously.
Spirits segment
&ldquo Management&rsquo s margin expansion outlook was largely consistent with our expectations, as prices of key raw materials like barley and sugar have normalised over the last few months,&rdquo Chee and Sim write in their Nov 22 report.
&ldquo The strong performance in Thailand Beer, optimism in Vietnam and early signs of recovery in brown spirit volumes further strengthen our confidence in projecting earnings growth of 13% [and] 9% for FY2025 [and] FY2026,&rdquo they add.
UOB Kay Hian analysts Llelleythan Tan and Heidi Mo also note that ThaiBev may see better margins in 1QFY2025 as they expect sales volumes for both white and brown spirits to improve amid an improving domestic economic outlook and more tourists in the country.
&ldquo We understand that brown spirit volumes in October 2024 and November 2024 have improved y-o-y and are set to post single-digit % growth for 1QFY2025,&rdquo say Tan and Mo in their Nov 22 report.
&ldquo Furthermore, management noted that raw material costs for the upcoming molasses crop are around 10% - 20% lower than the current crop,&rdquo they add. &ldquo Given that the molasses crop is usually harvested in December, we expect these lower raw material costs to come through starting 2QFY2025/3QFY2025, leading to overall better margins for FY2025.&rdquo
DBS&rsquo s Chee and Sim also notes that volumes for brown spirits, which have declined y-o-y from a high base effect last year, have seen a pick up in recent months with low-single digit growth. Management has stated that it is upbeat that it will see a better performance in FY2025.
Spirits margin is also likely to improve, the DBS analysts add.
Beer segment
ThaiBev&rsquo s beer segment posted a &ldquo stable performance&rdquo with revenue up by 2.4% y-o-y and ebitda up by 6.6% y-o-y.
&ldquo Despite stiff competition across key markets, 4QFY2024 beer sales volumes surged 8.2% y-o-y, driven by improving tourist arrivals coupled with better economic activity in both Thailand and Vietnam,&rdquo say UOB Kay Hian&rsquo s Tan and Mo. &ldquo This led to higher 4QFY2024 segmental revenue (+8.0% y-o-y). However, 4QFY2024 ebitda (-3.6% y-o-y) was lower than expected, which we reckon was dragged by higher raw material costs in Vietnam.&rdquo
ThaiBev&rsquo s management is also expecting to see an expansion in margins from 2QFY2025.
For more stories about where money flows, click here for Capital Section
&ldquo Based on Sabeco&rsquo s latest earnings call, management sounded more optimistic on the overall Vietnam market compared to previous quarters, likely on the back of market stabilisation. In addition, management expects its higher priced raw material inventory to be depleted by January 2025. Accordingly, we believe Vietnam Beer could see decent gross margin expansion in 2QFY2025,&rdquo say DBS&rsquo s Sim and Chee.
Tan and Mo see earnings for the beer segment to continue to grow in 1QFY2025 following ongoing cost efficiencies and higher sales volumes from improving market conditions.
&ldquo We understand that the group maintained its number one market share in Vietnam while increasing its domestic market share in Thailand. Management also noted that raw material costs are expected to fall in 1HFY2025,&rdquo they write.
&ldquo Despite stiff competition, the group expects SG& A (or selling, general and administrative expenses) spending to stay muted given better efficient spending,&rdquo they add. &ldquo With better capital market conditions coupled with expected additional interest rate cuts, the group is currently evaluating options for the BeerCo IPO (initial public offering).&rdquo
BeerCo IPO
During its results call, ThaiBev said that it is continuing to have discussions with its partners and is still exploring an IPO of BeerCo. It added that it does not have a concrete timeline yet, noting, however, that current market conditions have turned favourable with the falling interest rates.
&ldquo Coupled with the recovery in its Vietnam beer business, we believe the likelihood of BeerCo IPO is much higher than before,&rdquo say Chee and Sim.
Non-alcoholic beverages and food
ThaiBev&rsquo s non-alcoholic beverages (NAB) and food segments, which saw growths in revenue and ebitda on a y-o-y basis, were in line with Tan and Mo&rsquo s expectations.
Management highlighted that it sees growth opportunities for F& N in Thailand and other Southeast Asian (SEA) markets by leveraging ThaiBev&rsquo s current route-to-market, note Chee and Sim. The consolidation of F& N is expected to register margin expansion and sales growth synergies including combined raw material procurement and research and development (R& D) efforts.
In a previous report dated Nov 12, DBS noted that the series of corporate actions in ThaiBev&rsquo s food and beverage (F& B) business could lead to a potential IPO of an &ldquo F& B Co&rdquo to unlock value, deleverage at the parent company level as well as improve strategic focus.
To this end, Chee and Sim believe that the company is seeing multiple positive signs for FY2025.
&ldquo With improved fundamentals in place, we are hopeful of potential value-unlocking corporate actions being finalised in the coming year,&rdquo they say.
Meanwhile, Tan and Mo have reduced their patmi estimates for FY2025 to FY2026 by 3% to 5% from lower margin assumptions.
The UOB Kay Hian analysts&rsquo new FY2025 to FY2027 patmi estimates are THB29.25 billion (from THB30.17 billion), THB31.56 billion (from THB33.16 billion) and THB33.44 billion (newly introduced) respectively.
&ldquo In our view, we still reckon that ThaiBev remains attractively priced at -1.5 standard deviations (s.d.) to its long-term average mean P/E, backed by a decent 5.1% FY2025 dividend yield,&rdquo they write. &ldquo However, we recommend investors to take profit on any run-up in share price performance close to our target price. The potential BeerCo IPO remains a strong catalyst for the stock.&rdquo
DBS&rsquo s target price is pegged to 16 times its FY2025 P/E or -0.5 s.d. of its 10-year average.
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n3wbie
Elite |
23-Nov-2024 10:31
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Indeed but doesnt hurt to get additional points of view to inform our decision making :)
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beetlejuice
Master |
22-Nov-2024 12:27
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Never depends on the kindness of strangers.
We should do our own due diligence.
Pleasant experience with thaibev since 2013.
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n3wbie
Elite |
22-Nov-2024 11:51
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Also saw that CGSI upgraded from neutral to buy and TP to 58c.
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beetlejuice
Master |
22-Nov-2024 11:49
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Yeah, normal price around 60cts+.
Should revert to normal with so many positive recent developments.
Vested 51.5 to 59 cts with a few round of dividends collected.
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Joelton
Supreme |
22-Nov-2024 11:46
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ThaiBev&rsquo s FY2024 net profit dips 1% to 27.2 billion baht
Full-year revenue rises 2.2% to 340.3 billion baht, from 332.9 billion baht in FY2023
THAI Beverage : Y92 -0.96% (ThaiBev) posted a net profit of 27.2 billion baht (S$1.1 billion) for its full year ended Sep 30, a marginal 1 per cent drop from 27.4 billion baht a year ago.
The beverage manufacturer on Thursday (Nov 21) said that its net profit was weighed down by a decrease in earnings from the spirits and food businesses.
Earnings per share stood at 1.15 baht for FY2024, up from 1.09 baht the previous year.
Full-year revenue rose 2.2 per cent to 340.3 billion baht, from 332.9 billion baht in FY2023. It attributed the revenue growth to increased sales in its spirits, beer, non-alcoholic beverages, and food businesses.
However, this was partially offset by a decrease in sales from its publishing and print business.
By segment, the spirits business&rsquo net profit attributable to shareholders fell 5.8 per cent to 20.8 billion baht, due to higher finance costs and income tax expenses.
The net profit of the beer business rose 10.1 per cent to 2.7 billion baht on the back of an increase in earnings before interest, tax, depreciation and amortisation (Ebitda). The Ebitda was buoyed by a rise in gross profit and a decrease in distribution costs.
The non-alcoholic beverages business reported a net profit of 1.5 billion baht, up 21.7 per cent. The segment&rsquo s overall gross profit also rose on higher sales revenue and production efficiency, as well as reduced packaging costs.
Net profit for ThaiBev&rsquo s food business fell 72.5 per cent to 64 million baht, due to a decline in the segment&rsquo s Ebitda.
The lower Ebitda was the result of increased operating expenses to support sales growth, and a decrease in a one-time fair value gain on the remeasurement of the group&rsquo s Cocoaland investment in the prior year.
ThaiBev said that Thailand&rsquo s alcoholic and non-alcoholic beverage industry continued to show signs of improvement in 2024, supported by the recovery of the tourism sector.
Additionally, hotter weather conditions also contributed to the growth of the beverage industry.
However, high costs of living and household debt levels have dented the purchasing power of consumers. The limited consumer spending influenced the domestic consumption of alcoholic and non-alcoholic beverages.
A final dividend of 0.47 baht per share was declared for FY2024, up from 0.45 baht per share the year before. The dividend will be paid out on Feb 28, 2025, after the book closure on Feb 10.
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vivacious
Supreme |
22-Nov-2024 10:22
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decent results. Increased div | ||||
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JessTrang
Veteran |
22-Nov-2024 09:39
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Yeap, should have gone above 0.6x when thai baht was at 2yrs high recently but alas. And they could dump the shares and touched 0.425 is freaking ridiculous, that' s really a killer blow.
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n3wbie
Elite |
22-Nov-2024 09:20
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Morning bro - yes, agreed thats why ultimately, it depends on what people are willing to pay for the stock. Fundamentals are clearly improving and valuations are cheap. Lets see if the price discovery takes place. Recall the stock being mostly a 60+c stock.
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JessTrang
Veteran |
22-Nov-2024 09:02
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Morning bro, actually we are aware of all the good news and also anticipated results wont be bad. Just that market(big money) over here revalued the company from PE18 to PE12+, unlike it' s peers over at other bourses. Noticed how they were not willing to breakout 0.545 last run up?
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n3wbie
Elite |
22-Nov-2024 08:32
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Update note just out by DBS
Recovery signals re-rating
FY24 revenue increased 2.2% y/y while earnings declined a marginal 0.8% y/y vs restated FY23 results. With the completion of the FNN-FPL swap, the company restated its FY23 financials. Thai Beverage (THBEV) reported FY24 revenue of THB340bn, a 2% y/y increase while net earnings came in at THB27.2bn, -0.8% y/y. Declared final dividend of THB0.47. While earnings fell slightly by 0.8% y/y, the final dividend of THB0.47 was slightly above our expectations of THB0.46 and represents a 4% y/y increase. We believe this is a positive signal of management&rsquo s commitment to improve shareholder returns. Spirits Brown spirits performance disappointed but showing early signs of recovery. Management stated that volumes for brown spirits declined y/y on a higher base effect last year, and have been picking up in recent months with low single digit growth and is optimistic of a better performance in FY25. Spirits margin to improve on lower price for molasses. One of the key reasons of margin compression in FY24 was the high price of molasses. Management stated that it has started purchasing of molasses at prices 10-20% lower than previous year&rsquo s harvest. Beer Optimistic outlook in Vietnam, expect margin expansion from 2Q25. Based on SABECO&rsquo s latest earnings call, management sounded more optimistic on the overall Vietnam market compared to previous quarters, likely on the back of market stablisation. In addition, management expects its higher priced raw material inventory to be depleted by Jan-25. Accordingly, we believe Vietnam Beer could see decent gross margin expansion in 2Q25. Strong performance in Thailand on hot weather, sporting events and return of tourists. Thailand Beer saw volume improvement on the back of higher demand. We believe with sequential recovery of tourist arrivals, demand for beer should continue to trend upwards. In addition, management highlighted that it was able to grow ahead of the market and gained share from its competitor, a testimony of its continued strong execution in Thailand. Exploring BeerCo IPO. The company updated that it continues to have discussions with partners and is exploring an IPO of BeerCo. While it does not have any concrete timeline yet, it highlighted that current market conditions have turned favourable with falling interest rates. Coupled with the recovery in its Vietnam beer business, we believe the likelihood of BeerCo IPO is much higher than before. Non-alcoholic Beverages FNN consolidation to see margin expansion and sales growth synergies. With FNN considered a subsidiary of the group, management highlighted that it sees growth opportunities for FNN in both Thailand and other Southeast Asia markets by leveraging THBEV&rsquo s current route-to-market. In addition, there could be margin expansion opportunities with combined raw material procurement and R& D efforts. Overall, we are seeing multiple positive signs of the business turning around in FY25F. With improved fundamentals in place, we are hopeful of potential value-unlocking corporate actions being finalised in the coming year. We maintain BUY with TP of SGD0.77. |
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