Thai Beverage (Y92:SGX)




1Q20 PATMI rose 14% YoY to THB 8.4bn. Growth in the quarter was contributed mainly from the strong performance of THBEV’s spirit business. Spirit sales rose 9% YoY while net PATMI surged 26% YoY on higher margins due to favourable product mix.


THBEV’s other business (beer, non-alcoholic and food segments) reported uninspiring results as sales stagnated YoY.

• Short-term headwinds due to COVID-19. Our Thailand economist expects a 11% YoY drop in international tourists to Thailand in 2020 and forecasts the economic impact to far outweigh that of SARS in 2003.



While THBEV’s spirits business, which is its key earnings driver, largely caters to domestic consumption, demand will nevertheless be impacted due to slower overall economic growth in the country. On a positive note, the impact will be concentrated in the early to mid cycle of the outbreak, before recovering by the middle of the year.



• Upgrade to Outperform; opportunity to accumulate. THBEV’s shares declined by as much as 17% over the past month, which quickly recovered following the strong set of 1Q20 earnings.


Shares are still down 12% from the 1-year peak of S$0.96 and we believe the current weakness presents an attractive opportunity to accumulate, especially as concerns over the coronavirus starts to wear off. 1Q FY20 review.



THBEV’s spirits business contributed the bulk of earnings growth in 1Q20, making up 87% of net profit. Spirit volume sales rose 4.2% YoY to 189mn liters, driven by growth in domestic volumes.


The strong performance was attributed to the government stimulus measures, as well as the longer year-end holiday season.



Meanwhile, beer sales was flat YoY but reported a decline in profits due to weaker earnings from Sabeco.


There were some initial concerns on Sabeco following the imposition of drink driving laws in Vietnam, but Sabeco’s management has since addressed the issue. Although there has indeed been a knee-jerk reaction in terms of alcohol consumption in Vietnam,


this should normalise over time based on trends in other countries, and result in a return to consumption growth in the medium term. Figure 1: Quarterly PATMI comparison YoY Source: Company Data,



KGI Research Thailand outlook: Challenging 1H 2020 but look beyond. Our Thailand economist is forecasting a 11% drop in international tourists to 35mn in 2020, and for the country’s economic growth to likely fall to 2.0% this year in the worst-case scenario (from 2.4% in our base case scenario), based on preliminary calculations. The study of SARS in 2003 showed the biggest drop of tourist arrivals in the first three months following the outbreak, before significantly recovering thereafter.


Still, we could possibly see a 0.5% drop in Thailand’s full-year consumption spending even with the recovery in the second half of this year.



Valuation & Action: Upgrade to OUTPERFORM with a higher TP of US$0.96. While we acknowledge the short-term impact from the coronavirus and Vietnam’s drink driving laws, we remain positive on THBEV’s long-term fundamentals and dominant market share in both Thailand and Vietnam.



THBEV is well-positioned given that its key markets are ranked among the top alcohol consuming countries in Asia. The listing of its beer business remains a possibility and a key re-rating catalyst, although management has reiterated that it is only exploratory at this point. Risks: Larger-than-expected impact from the slowdown in Thailand’s economy due to the coronavirus.


Surge in raw material prices. Thai Beverage (THBEV SP/TBEV.SI) February 20, 2020 KGI Securities (Singapore) Pte. Ltd. • 1Q20 PATMI rose 14% YoY to THB 8.4bn. Growth in the quarter was contributed mainly from the strong performance of THBEV’s spirit business. Spirit sales rose 9% YoY while net PATMI surged 26% YoY on higher margins due to favourable product mix.


THBEV’s other business (beer, non-alcoholic and food segments) reported uninspiring results as sales stagnated YoY.



• Short-term headwinds due to COVID-19. Our Thailand economist expects a 11% YoY drop in international tourists to Thailand in 2020 and forecasts the economic impact to far outweigh that of SARS in 2003.



While THBEV’s spirits business, which is its key earnings driver, largely caters to domestic consumption, demand will nevertheless be impacted due to slower overall economic growth in the country. On a positive note, the impact will be concentrated in the early to mid cycle of the outbreak, before recovering by the middle of the year.



• Upgrade to Outperform; opportunity to accumulate. THBEV’s shares declined by as much as 17% over the past month, which quickly recovered following the strong set of 1Q20 earnings.



Shares are still down 12% from the 1-year peak of S$0.96 and we believe the current weakness presents an attractive opportunity to accumulate, especially as concerns over the coronavirus starts to wear off. 1Q FY20 review. THBEV’s spirits business contributed the bulk of earnings growth in 1Q20, making up 87% of net profit. Spirit volume sales rose 4.2% YoY to 189mn liters, driven by growth in domestic volumes. The strong performance was attributed to the government stimulus measures, as well as the longer year-end holiday season. Meanwhile, beer sales was flat YoY but reported a decline in profits due to weaker earnings from Sabeco.



There were some initial concerns on Sabeco following the imposition of drink driving laws in Vietnam, but Sabeco’s management has since addressed the issue. Although there has indeed been a knee-jerk reaction in terms of alcohol consumption in Vietnam, this should normalise over time based on trends in other countries, and result in a return to consumption growth in the medium term. Figure 1: Quarterly PATMI comparison YoY Source: Company Data, KGI Research Thailand outlook:



Challenging 1H 2020 but look beyond. Our Thailand economist is forecasting a 11% drop in international tourists to 35mn in 2020, and for the country’s economic growth to likely fall to 2.0% this year in the worst-case scenario (from 2.4% in our base case scenario), based on preliminary calculations. The study of SARS in 2003 showed the biggest drop of tourist arrivals in the first three months following the outbreak, before significantly recovering thereafter. Still, we could possibly see a 0.5% drop in Thailand’s full-year consumption spending even with the recovery in the second half of this year. Valuation & Action: Upgrade to OUTPERFORM with a higher TP of US$0.96.



While we acknowledge the short-term impact from the coronavirus and Vietnam’s drink driving laws, we remain positive on THBEV’s long-term fundamentals and dominant market share in both Thailand and Vietnam. THBEV is well-positioned given that its key markets are ranked among the top alcohol consuming countries in Asia.



The listing of its beer business remains a possibility and a key re-rating catalyst, although management has reiterated that it is only exploratory at this point. Risks: Larger-than-expected impact from the slowdown in Thailand’s economy due to the coronavirus. Surge in raw material prices.

This post has been edited by plouffle0789: Mar 5 2021, 08:01 AM

WED JUL 18, 2012


Singapore's OCBC sells F&N, APB stakes for $2.55 bln

(Reuters) - OCBC, Singapore's second-biggest bank, and its insurance unit have agreed to sell their combined 18.1 stake in Fraser and Neave and an 8 percent stake in brewer Asia Pacific Breweries for a total of S$3.22 billion ($2.55 billion) to companies linked to Thai billionaire Charoen Sirivadhanabhakdi.

OCBC Group would make a post-tax gain of about S$1.15 billion from the deal, it said.

In a separate announcement, Thai Beverage, which Charoen controls, said it has bought a


22 percent stake in beverage-to-property firm F&N for around S$2.8 billion or S$8.88 a share.



The purchase included shares bought from the OCBC Group and other shareholders.

The deal is expected to complicate relations between F&N and Dutch brewer Heineken, which jointly own about 65 percent of Asia Pacific Breweries, one of Asia's biggest brewer. ($1 = 1.2648 Singapore dollars) (Reporting by Saeed Azhar; Editing by Elaine Hardcastle)

Jacqueline Woo
PUBLISHED


JUL 7, 2017, 11:40 AM


SINGAPORE - Mainboard-listed Thai Beverage Public Company (ThaiBev) is set to use Singapore-based Fraser & Neave (F&N) to expand its business outside of Thailand, according to a CIMB report.

It said that a key takeaway from a recent meeting with F&N management was the confirmation that ThaiBev will use F&N to grow its non-Thai business.

ThaiBev had earlier announced its plans to complete by September this year the corporate restructuring of both


F&N and Frasers Centrepoint,


in which it holds a


combined 28 per cent stake.


"We retain our view that, most likely, ThaiBev will first divest


Frasers Centrepoint


and use the proceeds to enlarge its stake in F&N," said CIMB analyst Jonathan Seow in the report.

On F&N, Mr Seow said that he likes its regional expansion story and expects the firm to be among the bidders for Sabeco, and to also gradually increase its Vinamilk stake, now at 18.74 per cent.

Sabeco is the top beer producer in Vietnam, while Vinamilk is the country's largest dairy company.


Mr Seow noted that F&N, which has openly declared its intentions to increase its stake in Vinamilk, is unlikely to overpay for the company's shares in the open market.


"The ideal scenario would be to buy a bigger stake from SCIC (the state government which still holds a 36 per cent stake). The timing of such a share sale remains unknown."

He said F&N has also expressed its ambitions and interest in Vietnamese beer assets, primarily Sabeco,



although the management shared nothing on the potential valuation multiples it is willing to pay.

"F&N's latest net gearing stands at 3 per cent and it is comfortable to raise this further should there be merger and acquisition opportunities.



Between Sabeco and Vinamilk, we understand F&N can comfortably acquire either one of the assets, but would likely have to tap equity markets if both targets were to become available at the same time," said Mr Seow.

"We read F&N's plans to acquire assets in Vietnam as confirming our base case assumption that ThaiBev will use F&N to acquire assets outside of Thailand."

CIMB reiterated its "add" call on ThaiBev stock, with an unchanged target price of $1.07.

9 Stocks of Frasers Property & Thai Beverage (醉翁之意不在酒)
Posted on MAY 5, 2020 Written by DR TEE (EIN55)
FCT Frasers Centrepoint Trust Thai Beverage Frasers Property Stock Market
Behind each giant stock, there is usually a giant businessman. In this article, you will learn the business empire of the third richest person in Thailand, Charoen Sirivadhanabhakdi with not 1 but 9 F&B and property stocks (6 Singapore stocks & 3 Thailand stocks):

1) Thai Beverage (SGX: Y92) – Singapore Giant F&B Stock

2) F&N (SGX: F99) – Singapore F&B Stock

3) Frasers Property (SGX: TQ5) – Singapore Property Stock

4) Frasers Centrepoint Trust, FCT (SGX: J69U) – Singapore Giant Retail REIT

5) Frasers Logistics & Commercial Trust (SGX: BUOU) – Singapore Commercial REIT

6) Frasers Hospitality Trust (SGX: ACV) – Singapore Hospitality REIT

7) Frasers Property Thailand (SET: FPT) – Thailand Property Stock

8) Frasers Property Thailand Industrial REIT (SET: FTREIT) – Thailand Industrial REIT

9) Golden Ventures REIT (SET: GVREIT) – Thailand Commercial / Hospitality REIT

These 9 stocks are in common as they all owned by Charoen Sirivadhanabhakdi (苏旭明), a Chinese Thai whose Thai surname is granted by King of Thailand, showing strong reputation in Thailand. He started business originally in F&B sector (the largest alcoholic drinks producer in Thailand, eg. whiskey, beer, etc), then diversifying into property (the largest landlord in Thailand, owning with the most areas of land), becoming 2 main business pillars of his business.

Charoen took a major action in Year 2012 to acquire F&N, which is later reorganized into “new” F&N (mainly non-alcoholic drinks business in Singapore, familiar brands such as 100plus, Fruit Tree, Seasons, NutriSoy, etc) and Frasers Property (property segment). The new F&N after the reorganization, is no longer a giant stock, just a normal F&B company (non-alcoholic drinks usually have lower profit margin with more competition).

Frasers Property is the parent stock of property segment, including other 6 subsidiary property stocks / REITs, 3 in Singapore and 3 in Thailand. All 7 Frasers group of property stocks have reasonably good business due to stable property business but there is only 1 giant stock, Frasers Centrepoint Trust (FCT).

In this article, out of 9 stocks of Charoen, we will focus only in his 2 giant stocks, ThaiBev and FCT.

1) Thai Beverage (SGX: Y92) – Singapore Giant F&B Stock

Charoen expanded his empire further over the past decades with aggressive Merging & Acquisitions, into F&B of regional countries (Vietnam, Myanmar, Singapore, etc).

Initially, he planned to list ThaiBev in Thailand Stock Exchange (SET) but encountering opposing voices (alcoholic drinks) as Thailand is a Buddhism country. Eventually, ThaiBev is listed in Singapore Stock Exchange, so Singapore investors has a local giant F&B stock to consider, leveraging on growing alcoholic drinks business in Thailand and regional countries. ThaiBev is 1 of the 30 STI component stocks, proving its strength in stock and business.

FCT Frasers Centrepoint Trust Thai Beverage Frasers Property Stock Market
ThaiBev is a growth stock, strong in business fundamental with growing business and solid cash flow. However, debt level is high, especially in acquisition of Sabeco beer business in Vietnam. The share prices over the past decade has gone up 5 times, facing 2 times of major price corrections of nearly 50% during high debt period and again over the past few months of global stock crisis. Currently, the stock price has gradually recovered together with global stock markets. Unlike other sectors of business which may be affected by black swan such as Coronavirus pandemic, ThaiBev is defensive in F&B business (during the last Global Financial Crisis of 2008-2009, business was stable). Perhaps during crisis, people may consume more alcoholic drinks to forget the pains? Besides 5 times capital gains in stocks, ThaiBev gives consistent dividend with about 3% yield currently. It is a good midfielder stock for both capital gains and passive income.

There are 30 STI index component stocks including Thai Beverage (investor has to focus only on giant stocks for investing): DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

2) Frasers Centrepoint Trust, FCT (SGX: J69U) – Singapore Giant Retail REIT

Besides Capitamall Trust, CMT (SGX: C38U), Frasers Centrepoint Trust is another giant retail REIT, both control most of the shopping malls in Singapore. FCT has 7 shopping malls (Causeway Point, Waterway Point, Northpoint City, Bedok Point, Changi City Point, Anchorpoint, YewTee Point) but about half of rental revenue is from Causeway Point, having portfolio concentration risk but tenants distribution are diversified with over 99% occupancy rate for Causeway Point.

FCT Frasers Centrepoint Trust Thai Beverage Frasers Property Stock Market
Besides consistent growing dividend payout record (average 5% dividend yield, it was over 7% dividend yield when share prices dropped nearly to half over the past few months of global stock crisis), FCT has attracted long term investors to support the share prices by about 5 times with growing business. FCT is a cyclic REIT, following economic cycles in stock performance, therefore more suitable to Buy Low Sell High with mega economic cycle, buying low during low optimism in global financial crisis, holding for 5 to 10+ years until high optimism, selling for capital gains.

Despite Coronavirus would affect the income distribute for the next 1-2 quarters due to possible cash reserve and also delay in rental payment by tenants, it won’t affect longer term investor with a few years of holding power, collecting over 5% dividend yield (even if DPU may be cut by 50%, still more than bank interest rate of 1%) during crisis, enjoying capital gains when crisis is over one day.

There are 52 REITs and Business Trusts Stocks in Singapore including Frasers Centerpoint Trust (investor has to focus only on giant stocks for investing):
AIMS APAC Reit (SGX: O5RU), ARA Hospitality Trust USD (SGX: XZL), ARA LOGOS Logistics Trust (SGX: K2LU), Ascendas Reit (SGX: A17U), Ascendas India Trust (SGX: CY6U), Ascott Trust (SGX: HMN), Asian Pay Tv Trust (SGX: S7OU), BHG Retail Reit (SGX: BMGU), CapitaLand Commercial Trust (SGX: C61U), CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Tr (SGX: AU8U), CDL Hospitality Trust (SGX: J85), Cromwell Reit EUR (SGX: CNNU), Cromwell Reit SGD (SGX: CSFU), Dasin Retail Trust (SGX: CEDU), Eagle Hospitality Trust USD (SGX: LIW), EC World Reit (SGX: BWCU), Elite Commercial Reit (SGX: MXNU), ESR-REIT (SGX: J91U), Far East Hospitality Trust (SGX: Q5T), First Reit (SGX: AW9U), Frasers Centrepoint Trust (SGX: J69U), Frasers Hospitality Trust (SGX: ACV), Frasers Logistics & Commercial Trust (SGX: BUOU), FSL Trust (SGX: D8DU), HPH Trust SGD (SGX: P7VU), HPH Trust USD (SGX: NS8U), IREIT Global (SGX: UD1U), Keppel Infrastructure Trust (SGX: A7RU), Keppel Pacific Oak US REIT (SGX: CMOU), Keppel DC Reit (SGX: AJBU), Keppel Reit (SGX: K71U), Lendlease Reit (SGX: JYEU), Lippo Malls Trust (SGX: D5IU), Manulife Reit (SGX: BTOU), Mapletree Commmercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), Mapletree North Asia Commercial Trust (SGX: RW0U), NetLink NBN Trust (SGX: CJLU), OUE Commercial Reit (SGX: TS0U), ParkwayLife Reit (SGX: C2PU), Prime US Reit (SGX: OXMU), RHT HealthTrust (SGX: RF1U), Sabana Reit (SGX: M1GU), Sasseur Reit (SGX: CRPU), Soilbuild Business Space Reit (SGX: SV3U), SPH Reit (SGX: SK6U), Starhill Global Reit (SGX: P40U), Suntec Reit (SGX: T82U), United Hampshire US Reit (SGX: ODBU).

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宋·欧阳修《醉翁亭记》：“醉翁之意不在酒，在乎山水之间也”。

A stock investor may not need to be an alcoholic to invest in F&B giant stock such as ThaiBev. Similarly, Charoen is smart to hide his fortune in property (a way of diversification), one could outsmart him by investing in his best giant REIT, FCT. The higher level of investing is to leverage on Top 10 richest persons in each country or even in the world as your defender, investing in their best giant stocks at lousy prices during low optimism period, eg Global Financial Crisis when others are fearful.