Monday, October 17, 2016


(Bloomberg Gadfly) -- Here's an anomaly: The third-largest company in the world's biggest Buddhist-majority country is ThaiBev, which makes its money selling rum and beer to a population whose religious texts exhort them to abstain from alcohol.Fully 63% of working-age Thais are teetotallers, according to a 2007 study, and yet trailing 12-month revenues at the maker of Chang beer and Mekhong rum have risen 53% over the past five years.You might expect the death of Thailand's King Bhumibol Adulyadej last Thu to have interrupted this revelry. Public drinking will be frowned on during the 12-month period of mourning and ThaiBev's own website was switched into sombre black and white to mark the event. Alcohol sales will be more strictly limited to particular times of the day, according to the Guardian, and hypermarket giant Tesco Lotus suspended all sales of alcoholic drinks, according to AEC News Today.If that's bad news for ThaiBev, someone omitted to tell the shareholders. After falling last week as the king's health worsened, the Singapore-traded stock rebounded with a 1.7% gain ahead of the official announcement of his death. In a classic example of sell-the-rumor, buy-the-fact, it rose as much as 3.8% on Fri - the sharpest gain since July.By the close of trade it had only modestly underperformed the benchmark SET index over the period since the King was hospitalized.Part of this may represent doubts that the mourning period will turn out to be quite as stringent as everyone expects, though the wailing crowds thronging Thai streets since news of the king's death broke argue against such a conclusion.ThaiBev's very success is a testament to the country's relaxed interpretation of some of its moral codes. Indeed, one 2002 paper found that Thai men who'd spent periods in their youth living in Buddhist temples were more likely to be heavy drinkers in adulthood than those who had not - the opposite of what would be expected if the sanction on alcohol was unbreakable.It's certainly not based on an expectation that ThaiBev's other businesses will help the company ride out a decline in drinking: Just 4.1% of its 2015 revenues came from overseas, and 13% from food and non-alcoholic drinks.Shareholders at present give ThaiBev a forward P/E of 21x - bang on the median for brewers and distillers globally with more than $1b in trailing 12-month sales, and ahead of the likes of Diageo, Heineken, Carlsberg and Kweichow Moutai. If more Thais respond to theirmonarch's death by abstaining from alcohol than choose to drown their sorrows, that valuation could start looking tipsy.

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