Thai Beverage: A Close Look at FY9/25 Performance and Key Drivers

Thai Beverage (THBEV) reported a modest revenue growth of 2.4% year-on-year (yoy) in Q1 FY9/25, reaching THB92.3 billion. Beer and non-alcoholic beverages (NAB) segments witnessed robust volume growth of 11.8% and 7.5% respectively, while spirits volumes declined by 6.2% yoy. EBITDA remained flat yoy and slightly missed expectations, forming 24% of the FY25F forecast.

The company’s spirits segment faced margin compression of 200 basis points due to higher input costs and increased marketing expenses linked to the launch of its premium whisky, PRAKAAN, in September 2024. On the brighter side, the NAB segment saw margin expansion of 140 basis points, attributed to efficiency gains and favorable cost conditions. However, this was partially offset by cost pressures in the spirits segment and increased SG&A for its beer business.

The beer business grew despite unfavorable foreign exchange (FX) movements in Vietnam, where the dong depreciated 8% against the Thai baht. Excluding FX impacts, the Vietnam subsidiary SABECO reported a 5% yoy revenue growth during the quarter. With Thailand’s tourism now back to 2019 levels, Thai Beverage’s beer segment shows promise for sustained growth.

Recommendation: Thai Beverage is rated as “Add” with a target price of S\$0.58, reflecting a 16% upside. Key risks include macroeconomic weakness impacting sales and higher SG&A costs.

Jiangsu King’s Luck Brewery: Steady Growth in Spirits

Jiangsu King’s Luck Brewery, a key player in the spirits industry, is projected to deliver recurring ROE of 23.7% in FY25F and 22.8% in FY26F. With an attractive core P/E ratio of 14.4x for FY25F and 12.9x for FY26F, the company demonstrates strong profitability. Dividend yields are expected at 2.8% and 3.1% for FY25F and FY26F respectively, offering moderate returns for investors.

Recommendation: Rated as “Add,” Jiangsu King’s Luck Brewery has a promising growth trajectory supported by robust fundamentals.

Jiangsu Yanghe Brewery: Sluggish Growth Amid Challenges

Jiangsu Yanghe Brewery faces challenges with a projected decline in recurring ROE to 14.5% in FY25F and 14.4% in FY26F. Despite this, its core P/E remains relatively stable at 15.1x for FY25F and 14.6x for FY26F. The dividend yield forecast is 4.6% in FY25F and 4.8% in FY26F, providing steady income for investors.

Recommendation: Rated as “Hold,” reflecting caution due to sluggish growth prospects.

Kweichow Moutai: A Premium Player in Spirits

Kweichow Moutai, a leader in the spirits market, is expected to deliver recurring ROE of 37.5% and 36.6% in FY25F and FY26F respectively. With a core P/E ratio of 19.4x in FY25F and 17.6x in FY26F, the company commands a premium valuation. Dividend yields are forecasted at 3.9% and 4.3% for FY25F and FY26F, reflecting a solid return for investors.

Recommendation: Rated as “Add,” Kweichow Moutai showcases strong profitability and market leadership.

Luzhou Laojiao: Consistent Performance in Spirits

Luzhou Laojiao is forecasted to maintain recurring ROE of 29.5% for FY25F and 28.7% for FY26F. The company’s core P/E ratios are expected to be 12.1x and 11.0x for FY25F and FY26F respectively, positioning it attractively in comparison to peers. Dividend yields are projected at 5.0% in FY25F and 5.4% in FY26F.

Recommendation: Rated as “Hold,” Luzhou Laojiao offers steady performance amid competitive pressures.

Shanxi Xinghuacun Fen Wine: A Growth Story in Spirits

Shanxi Xinghuacun Fen Wine is expected to grow its recurring ROE to 36.7% for FY25F and 34.7% for FY26F. With a core P/E ratio of 16.5x in FY25F and 14.3x in FY26F, the company stands out as a growth candidate. Dividend yields are forecasted to reach 3.1% and 3.6% for FY25F and FY26F respectively.

Recommendation: Rated as “Add,” Shanxi Xinghuacun Fen Wine is a compelling growth story within the spirits sector.

Wuliangye Yibin: Strong Fundamentals in Spirits

Wuliangye Yibin is set to maintain recurring ROE at 23.9% in FY25F and 24.1% in FY26F. Core P/E ratios stand at 14.8x for FY25F and 13.7x for FY26F, highlighting its valuation appeal. Dividend yields are expected at 4.7% and 5.1% for FY25F and FY26F respectively.

Recommendation: Rated as “Hold,” Wuliangye Yibin offers a balance between growth and stability.

Carlsberg Brewery Malaysia: Leading in Beer

Carlsberg Brewery Malaysia is forecasted to deliver a recurring ROE of 117.1% in FY25F and 105.4% in FY26F. With core P/E ratios at 16.5x for FY25F and 15.9x for FY26F, the company remains a strong contender in the beer market. Dividend yields are forecasted at 5.7% and 6.3% for FY25F and FY26F respectively.

Recommendation: Rated as “Add,” Carlsberg Brewery Malaysia demonstrates strong growth and profitability.

Fraser & Neave Holdings: NAB Segment Leader

Fraser & Neave Holdings boasts a recurring ROE of 15.6% in FY25F and 15.1% in FY26F. Core P/E ratios are projected at 16.8x for FY25F and 15.7x for FY26F. Dividend yields stand at 3.2% for FY25F and 3.4% for FY26F, reflecting steady income potential.

Recommendation: Rated as “Add,” Fraser & Neave Holdings is a leader in the NAB segment.

Osotspa: Stable Growth in NAB

Osotspa is forecasted to maintain recurring ROE of 17.3% for both FY25F and FY26F. Core P/E ratios of 15.3x and 14.9x for FY25F and FY26F respectively highlight its stability. Dividend yields are projected at 6.6% and 6.4% for FY25F and FY26F respectively.

Recommendation: Rated as “Hold,” Osotspa delivers consistent returns for investors.