ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> has received a no-objection notice from <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">SGX (SGX SP)</a> for its plan to revive its intention to spin-off its brewery assets, predominantly in Thailand and Vietnam, raising US$2.0- US$2.5bn and potentially valuing the company at over US$10.0bn. We see the IPO of its BeerCo as a major catalyst for <a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> share price.
The spin-off will help the company realize the value of its brewery assets, where the implied valuation current sits at only US$5.5bn. This should be a positive trigger for the <a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> share price.  
A beer-drinking recovery is underway with anecdotal evidence and channel checks suggesting that there is a pick up in beer demand in both Thailand and in Vietnam. This evidence comes from conversations with <a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB),</a> which is a leader in both glass bottling and aluminum cans.
Thailand is by nature a more resilient market given the fact that Thai people are not shy of drinking at home, whereas Vietnamese tend to enjoy a drink outside the home. Vietnam has seen very little impact from COVID-19, after strict lockdowns last year, which suggest a strong rebound in 2021. A pick-up in tourism is a further potential major catalyst for Thailand.
We have updated our sum of the parts analysis on <a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> and find that there is at least a 10% upside from our current target price should the IPO of the BeerCo go ahead as planned. Even under our most conservative assumptions, we see more than +30% upside.

Thai Beverage (THBEV SP) has received a no-objection notice from SGX (SGX SP) for its plan to revive its intention to spin-off its brewery assets, predominantly in Thailand and Vietnam, raising US$2.0- US$2.5bn and potentially valuing the company at over US$10.0bn. We see the IPO of its BeerCo as a major catalyst for Thai Beverage (THBEV SP) share price.
The spin-off will help the company realize the value of its brewery assets, where the implied valuation current sits at only US$5.5bn. This should be a positive trigger for the Thai Beverage (THBEV SP) share price.  
A beer-drinking recovery is underway with anecdotal evidence and channel checks suggesting that there is a pick up in beer demand in both Thailand and in Vietnam. This evidence comes from conversations with Berli Jucker (BJC TB), which is a leader in both glass bottling and aluminum cans.
Thailand is by nature a more resilient market given the fact that Thai people are not shy of drinking at home, whereas Vietnamese tend to enjoy a drink outside the home. Vietnam has seen very little impact from COVID-19, after strict lockdowns last year, which suggest a strong rebound in 2021. A pick-up in tourism is a further potential major catalyst for Thailand.
We have updated our sum of the parts analysis on Thai Beverage (THBEV SP) and find that there is at least a 10% upside from our current target price should the IPO of the BeerCo go ahead as planned. Even under our most conservative assumptions, we see more than +30% upside. 

Thai Beverage (THBEV SP) - Beer Aids Recovery

Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

We came out with a positive tone after yesterday analyst meeting driven by MK’SSSG recovery rapidly after lockdown easing.<ul>
<li>We expect COVID-19 vaccine’s progression in 1H21 to limit downside risk to earnings.</li>
<li>We expect rapid SSSG recovery in 2H20 after lockdown easing. We assume MK’SSSG in 2H20 at roughly -10% to -15% from its bottom at -56% in 2Q20.</li>
<li>We still like M for its long-term prospect on the backs of; (1) established position in chain restaurant in Thailand with 737 branches coverage nationwide, (2) franchise expansion plan to oversea under Laem Charoen Seafood brand, (3) upside from new product launch.</li>
</ul>We maintain HOLD rating with a target price of Bt50 based on 25xPE’21E, closed to the Asia ex-Japan consumer staple sector. We expect the company’s earnings to turn profit in 3Q20 onwards.

We came out with a positive tone after yesterday analyst meeting driven by MK’SSSG recovery rapidly after lockdown easing.
We expect COVID-19 vaccine’s progression in 1H21 to limit downside risk to earnings.
We expect rapid SSSG recovery in 2H20 after lockdown easing. We assume MK’SSSG in 2H20 at roughly -10% to -15% from its bottom at -56% in 2Q20.
We still like M for its long-term prospect on the backs of; (1) established position in chain restaurant in Thailand with 737 branches coverage nationwide, (2) franchise expansion plan to oversea under Laem Charoen Seafood brand, (3) upside from new product launch.
We maintain HOLD rating with a target price of Bt50 based on 25xPE’21E, closed to the Asia ex-Japan consumer staple sector. We expect the company’s earnings to turn profit in 3Q20 onwards.

M: Rapid SSSG Recovery with Potential Growth from Seafood Restaurant

<a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> has seen some impact from COVID-19 this year both as a result of lockdowns and the closure of entertainment establishments. Thai's have demonstrated their healthy appetite for alcohol and have shifted to consumption at home, with some heavy stocking up ahead of the country's temporary alcohol ban. 
The fact that off-trade makes up 95% of sales of beer and 80% of spirits sales in Thailand has helped the company weather the COVID-19 storm in Thailand, as customers stocked up. 
Vietnamese customers of SABECO have been less resilient, given the cultural preference to consume beer outside the home but given the success of the country's lockdown measures, normality is returning relatively quickly. 
The company's spirits business has also remained relatively resilient with the launch of a number of new variants with a reining back on promotions helping to save on costs. 
The spin-off of the company's beer operations remains a longer-term strategy although may be delayed depending on how quickly demand picks up. An early resumption of foreign tourist arrivals would also provide a welcome boost to demand at the margin.  
This year will likely see flat performance but we would expect a strong recovery to take shape over the next few months. The company is trading at a discount to regional peers on an EV/EBITDA basis on 16.0x FY20 and 14.3x FY21E.

Thai Beverage (THBEV SP) has seen some impact from COVID-19 this year both as a result of lockdowns and the closure of entertainment establishments. Thai's have demonstrated their healthy appetite for alcohol and have shifted to consumption at home, with some heavy stocking up ahead of the country's temporary alcohol ban. 
The fact that off-trade makes up 95% of sales of beer and 80% of spirits sales in Thailand has helped the company weather the COVID-19 storm in Thailand, as customers stocked up. 
Vietnamese customers of SABECO have been less resilient, given the cultural preference to consume beer outside the home but given the success of the country's lockdown measures, normality is returning relatively quickly. 
The company's spirits business has also remained relatively resilient with the launch of a number of new variants with a reining back on promotions helping to save on costs. 
The spin-off of the company's beer operations remains a longer-term strategy although may be delayed depending on how quickly demand picks up. An early resumption of foreign tourist arrivals would also provide a welcome boost to demand at the margin.  
This year will likely see flat performance but we would expect a strong recovery to take shape over the next few months. The company is trading at a discount to regional peers on an EV/EBITDA basis on 16.0x FY20 and 14.3x FY21E.

Thai Beverage (THBEV SP) - It's Time to Bring Out the Beer Please

We maintain HOLD rating but cut our target price by 9% to Bt50 (25xPE’21E, a 20% premium to the Asia ex-Japan consumer staple sector). We expect the company’s earnings to turn loss in 2Q20 and then could gradually recover from 3Q20 onwards.<ul>
<li>M reported 1Q20 net profit of Bt340m (-52%YoY, -48%QoQ), the record low level. Both YoY and QoQ drop in earnings were caused by weak sales (-13%YoY, -15%QoQ) after a temporarily closed down stores since the end of March in response to COVID-19 impact.</li>
<li>Expect the company to reopen all of stores by June 2020 and to incur loss in 2Q20 but will be the bottom quarter.</li>
<li>Cut our earnings forecast by 73% and 38% in 2020-21E to factor in weak sales due to impact from closure of its stores.</li>
</ul>

We maintain HOLD rating but cut our target price by 9% to Bt50 (25xPE’21E, a 20% premium to the Asia ex-Japan consumer staple sector). We expect the company’s earnings to turn loss in 2Q20 and then could gradually recover from 3Q20 onwards.
M reported 1Q20 net profit of Bt340m (-52%YoY, -48%QoQ), the record low level. Both YoY and QoQ drop in earnings were caused by weak sales (-13%YoY, -15%QoQ) after a temporarily closed down stores since the end of March in response to COVID-19 impact.
Expect the company to reopen all of stores by June 2020 and to incur loss in 2Q20 but will be the bottom quarter.
Cut our earnings forecast by 73% and 38% in 2020-21E to factor in weak sales due to impact from closure of its stores.


We initiate coverage of CBG with a HOLD rating, based on a target price of Bt89, which is derived from 33xPE’20E, close to the average of the Thailand Beverage group.
The story:
<ul>
<li>Expanding customer base through new energy drink product</li>
<li>Potential growth from overseas markets</li>
<li>Ample room to improve gross profit margin</li>
<li>ICUK group turnaround</li>
<li>Benefit from growth of global energy drinks market</li>
</ul>
Risks:
<ul>
<li>Raw material price fluctuation</li>
<li>Exchange rate fluctuation</li>
<li>Highly competitive industry</li>
</ul>
Background: Carabao Group Public Company Limited (CBG) was established and incorporated on Aug. 22, 2001. CBG engages in manufacturing, marketing, selling and distributing energy drinks and other beverages in a vertically integrated manner starting with upstream production of key packaging materials, i.e. glass bottles and aluminum cans, down the chain to the bottling and canning of finished products as well as distribution-channel management both domestically and internationally. Moreover, the company has expanded its operation into Europe, most notably the UK.

We initiate coverage of CBG with a HOLD rating, based on a target price of Bt89, which is derived from 33xPE’20E, close to the average of the Thailand Beverage group.
The story:

Expanding customer base through new energy drink product
Potential growth from overseas markets
Ample room to improve gross profit margin
ICUK group turnaround
Benefit from growth of global energy drinks market

Risks:

Raw material price fluctuation
Exchange rate fluctuation
Highly competitive industry

Background: Carabao Group Public Company Limited (CBG) was established and incorporated on Aug. 22, 2001. CBG engages in manufacturing, marketing, selling and distributing energy drinks and other beverages in a vertically integrated manner starting with upstream production of key packaging materials, i.e. glass bottles and aluminum cans, down the chain to the bottling and canning of finished products as well as distribution-channel management both domestically and internationally. Moreover, the company has expanded its operation into Europe, most notably the UK.

CBG: Valuation Running Ahead of Fundamentals

Thailand

Oishi Group Public Company Limited is a Thailand-based food and beverage company specializing in Japanese-style restaurants and packaged products. It operates chains of Japanese restaurants and produces a range of non-alcoholic beverages, including green tea, fruit juices, and herbal drinks under the OISHI brand. The company was founded in 1999 and is headquartered in Bangkok, Thailand.

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Oishi Group (OISHI TB)

Thai Beverage (THBEV SP) - Beer Aids Recovery

Thai Beverage (THBEV SP) has revived its intention to spin-off its brewery assets, predominantly in Thailand and Vietnam, potentially valuing the...

Angus Mackintosh

M: Rapid SSSG Recovery with Potential Growth from Seafood Restaurant

We came out with a positive tone after yesterday analyst meeting driven by MK’SSSG recovery rapidly after lockdown easing. We expect COVID-19...

Pi Securities PCL, Thailand

Thai Beverage (THBEV SP) - It's Time to Bring Out the Beer Please

Thai Beverage (THBEV SP) has seen some impact from COVID-19 this year both as a result of lockdowns and the closure of entertainment...

Angus Mackintosh

M: Expect 2Q20 Performance to Bottom Out

We maintain HOLD rating but cut our target price by 9% to Bt50 (25xPE’21E, a 20% premium to the Asia ex-Japan consumer staple sector). We expect...

Pi Securities PCL, Thailand

CBG: Valuation Running Ahead of Fundamentals

We initiate coverage of CBG with a HOLD rating, based on a target price of Bt89, which is derived from 33xPE’20E, close to the average of the...

Pi Securities PCL, Thailand

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