Analysts remain upbeat on the share price of the SGX-listed Thai Beverage Public Company Limited (SG:Y92) after it reported its Q3 earnings last week. Despite some weakness in the results, analysts hold optimism regarding the consumption rebound anticipated in FY 2024, coupled with diminishing costs. This outlook signals potential growth in the medium term within the beer segment.
Based on analysts’ assessments, ThaiBev has received a Strong Buy rating, with an upside potential of over 40% in the share price.
Thai Beverage is the largest beverage company in Thailand, with a prominent position in Southeast Asia. The company specializes in a wide range of both alcoholic and non-alcoholic beverages.
Let’s take a look at the details.
Q3 Earnings 2023
The company’s Q3 earnings report painted a mixed picture for investors. The revenue for the nine months increased by 3.8% to THB 215.9 billion, driven by the revival of the tourism industry in Thailand. The earnings (EBITDA) were down by 3.4% to THB37.7 billion, mainly hit by its beer segment and the underperformance of its subsidiary in Vietnam, SABECO. The beer segment’s earnings saw a decline of 19.8% due to higher raw material costs and increased competition in the market.
In stark contrast to Vietnam, the company’s performance in Thailand has demonstrated impressive resilience. In the spirits segment, revenue witnessed a 12% year-on-year increase, propelled by a 10% growth in volume, price hikes, and a sales mix favoring higher-priced spirits.
The non-alcoholic and food segments also reported impressive growth of 15.6% and 19.2%, respectively, in their sales.
Analysts’ Opinion
Post-results, the stock has received Buy rating confirmation from two analysts. They believe the company’s dominant presence in Thailand, the potential for revival in Vietnam, and its appealing valuation collectively make a compelling argument for investment. Analysts also see the rising costs as a near-term challenge for the company, impacting its margins.
Eight days ago, UOB Kay Hian’s analyst Llelleythan Tan recommended buying the stock, forecasting a growth of 46.9% in the share price.
More recently, five days ago, analyst Paul Chew from Phillip Securities also reiterated his Buy rating on the stock.
What is the Forecast for Thai Beverage?
ThaiBev’s commendable performance during the first three quarters of this year has garnered significant attention from investors worldwide, which was reflected in high trading volumes. The average volume for the last three months has been 26.7 million shares. Analysts expect the above-mentioned factors to lead to a recovery for the shares.
In the last 12 months, the stock has experienced a decline of 11.16% in its trading.
Overall, Y92 stock has received a Strong Buy rating, backed by all four Buy recommendations. The average price forecast is S$0.80, which is 41.84% higher than the current trading levels.
Conclusion
Analysts are bullish on the company’s recovery and its share price growth in the future. The compelling long-term potential of the stock points towards a promising trajectory for investors.
