Thai Beverage

Thai Beverage: SCB Maintains O/p with TP $0.74, noting of the grp’s defensive qualities and the high likelihood of a value enhancing restructuring. Expect spirits sales should be resilient in the wake of the coup, noting that the share price of Thai Beverage has rallied 9% since the coup on 21 Mar’14. Also noteworthy that the core spirits business has performed solidly during previous instances of political instability, and the coefficient of correlation between Thai Bev’s top line and Thailand’s consumer confidence index has been -13% over the past seven years, suggesting the defensive characteristics of Thai Bev. Thai Bev’s beer business has recorded two successive quarters of profitability for the first time since 1Q09, with last year’s excise price hike paving the way for the company to pass on ASP increases. The company has also introduced premium brands, and there are growing expectations that Thai Bev could gain market share from its current 31%. Thai Bev’s current valuations do not capture the benefits of a potential restructuring, and there is a high chance of an injection of F&N’s F&B business into Thai Bev, in exchange for its 29% stake in F&N and Frasers Centrepoint. The sector’s average PE multiple has doubled in the past five years, while that of Thai Bev has risen only 40%.