Thai Bev

Thai Bev: FY12 post record bottom line, blows past consensus Revenue was THB 161.0b, +22%. Net profit more than doubled to THB 28.5b, +137%, boosted by a one-off gain from APB’s sale under associate earnings. Core net profit rose 33%, driven by the prized spirits business, which saw modest volume growth and rising gross margins from lower raw material costs. This was in spite of the excise tax hike that kicked in in 2H12. Non-alcoholic business performed well posting strong sales growth of 167%, partially boosted by the well-received launch of its new range of cola drink products. The beer division however disappointed as it failed to breakeven in EBITDA. Final div declared was THB 0.28. Full year dividends of THB 0.42 (S 1.75 cts), which translates to a yield of 3.2%, was stronger than expected. This payout represents 59% of Thai Bev’s earnings excl FNN. The stock trades at 11.8x P/E, vs peer Yeo Hiap Seng at 24.1x. CIMB reiterates Outperform, raises TP to $0.74 from $0.70. We reiterate Thai Bev has two key catalysts that could see the shares re-rated. i) Potential asset swap involving F&N's F&B unit in exchange for the 29% stake in FNN that Thai Bev holds, allowing Thai Bev to emerge as an Asean F&B mammoth. Expect synergies and cost savings, given the deeper and extended geographical penetration and broader product portfolio. ii) Thai Bev has a possibility of replacing FNN as an STI component stock, as early as Sep '13. Given that Thai Bev currently has no meaningful institutional shareholder representation, it bodes positively for stock demand if there is a subsequent rush by "benchmark-focused" funds to acquire exposure