Berli Jucker (BJC TB) was hit quite hard in 2Q2020 in both its core retail and packaging businesses after a reasonable performance in 1Q2020 before the lockdown in Thailand and Vietnam took hold and during a period when consumers began stocking up.
The real impact on the company’s packaging business came in mid-April when the Thai government put an alcohol ban in place, which was lifted in mid-May but led breweries to close operations for 4-6 weeks.
The ban was gradually lifted for retail stores initially followed by restaurants and bars and as a result, June saw recovery and July beer sales almost back to pre-COVID-19 levels.
Berli Jucker (BJC TB) non-alcohol bottling saw positive momentum from strong growth in sales of Vitamin C drinks. It also saw a strong response to its new 500ml cans, which are popular for home beer consumption.
The aluminium can division has also seen the benefits of new customers coming on stream and replacing the gap left by reduced demand from Carabao. It is also seeing some scale benefits as a result of this for its slim cans.
Berli Jucker (BJC TB)’s core retail business under Big C saw a serious impact from COVID-19 in 2Q2020 with total sales down by -11.4%, with SSSG -17% but excluding its B-to-B business, SSSG fell an even greater -21.1% in 2Q2020.
Berli Jucker (BJC TB) remains a well-rounded South East Asia recovery story through its packaging, with exposure to Thailand, Vietnam and Malaysia, as well as retail, with its number two position in Thailand in the hypermarket and supermarket space.
Valuations look attractive versus history and with the prospect of a rapid recovery next year with the company trading in 22.0x FY21E PER versus its 5-year average forward PER of 29x, especially given a strong forecast recovery in earnings over the next two years. It also trades at a discount to Thai retail peers, despite a more positive earnings outlook.