Thai Beverage PLC (ThaiBev) is Thailand’s largest and leading beverage producer and distributor. Its four key product segments are Spirits, Beer, Non-Alcoholic Beverage and Food. Its current stronghold in Thailand will serve as a relatively steady income pillar as it expands beyond Thailand and into other product segments. ThaiBev, together with F&N, will have access to distribution networks in Singapore, Malaysia, Thailand and Myanmar. We think ThaiBev is well-positioned to penetrate the regional F&B markets with: 1) an enlarged distribution network waiting to be tapped upon, 2) more diversified products to capture different tastes and income level, and 3) a large war chest for marketing and capacity expansion as one of the biggest regional F&B companies. Using sum-of-the-parts, we initiate with a BUY at S$0.73 TP.
Existing stronghold in Thailand as steady income pillar
Thai Beverage PLC (ThaiBev) is Thailand’s largest and leading beverage producer and distributor. Its four key product segments are Spirits, Beer, Non-Alcoholic Beverage and Food. ThaiBev has substantial market shares in beverage segments in Thailand, accompanied by pricing power and branding. In addition, ThaiBev has 93 sales offices covering every province of Thailand. This enables faster delivery to the market. Its current stronghold in Thailand will serve as a relatively steady income pillar as it expands beyond Thailand and into other product segments.
Unfazed by political turmoil in Thailand
We note that ThaiBev’s revenue grew by 2.4% and 12.4% in 2009 and 2010 respectively despite bouts of prolonged political unrests. Hence, we think the current political unrest’s impact on ThaiBev will not be significant as long as it is contained in terms of area and number of people involved. Meanwhile, we expect ThaiBev to be able to continue executing its long-term strategy.
Exploiting synergies with F&N to become a regional F&B force
ThaiBev, together with F&N, will have access to distribution networks in Singapore, Malaysia, Thailand and Myanmar. F&N has begun distribution of Oishi green tea products in Malaysia, and plans are in place for distribution of F&N’s 100plus in Thailand. We think the cross-distribution opportunities are not exhausted yet as we examine each company’s product portfolio. Furthermore, F&N Dairies and ThaiBev can also leverage on each other’s Thailand network. We think ThaiBev is well-positioned to penetrate the regional F&B markets with: 1) an enlarged distribution network waiting to be tapped upon, 2) more diversified products to capture different tastes and income level, and 3) a large war chest for marketing, capacity expansion etc. by being one of the biggest regional F&B companies.
Initiate with BUY; TP S$0.73
Using sum-of-the-parts, we initiate with a BUY at S$0.73 TP. Our TP implies a 23.0x FY14F PER, which is in line with peers’ average in ThaiBev’s operating segments. We believe the counter is also attractive due to the diversification and liquidity provided to investor.
Thai Beverage PLC (ThaiBev) is Thailand’s largest and leading beverage producer and distributor. Its four key product segments are Spirits, Beer, Non-Alcoholic Beverage and Food. ThaiBev has substantial market shares in beverage segments in Thailand, accompanied by pricing power and branding. In addition, ThaiBev has 93 sales offices covering every province of Thailand. This enables faster delivery to the market. Its current stronghold in Thailand will serve as a relatively steady income pillar as it expands beyond Thailand and into other product segments.
Unfazed by political turmoil in Thailand
We note that ThaiBev’s revenue grew by 2.4% and 12.4% in 2009 and 2010 respectively despite bouts of prolonged political unrests. Hence, we think the current political unrest’s impact on ThaiBev will not be significant as long as it is contained in terms of area and number of people involved. Meanwhile, we expect ThaiBev to be able to continue executing its long-term strategy.
Exploiting synergies with F&N to become a regional F&B force
ThaiBev, together with F&N, will have access to distribution networks in Singapore, Malaysia, Thailand and Myanmar. F&N has begun distribution of Oishi green tea products in Malaysia, and plans are in place for distribution of F&N’s 100plus in Thailand. We think the cross-distribution opportunities are not exhausted yet as we examine each company’s product portfolio. Furthermore, F&N Dairies and ThaiBev can also leverage on each other’s Thailand network. We think ThaiBev is well-positioned to penetrate the regional F&B markets with: 1) an enlarged distribution network waiting to be tapped upon, 2) more diversified products to capture different tastes and income level, and 3) a large war chest for marketing, capacity expansion etc. by being one of the biggest regional F&B companies.
Initiate with BUY; TP S$0.73
Using sum-of-the-parts, we initiate with a BUY at S$0.73 TP. Our TP implies a 23.0x FY14F PER, which is in line with peers’ average in ThaiBev’s operating segments. We believe the counter is also attractive due to the diversification and liquidity provided to investor.
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