Accumulate:
- Attractive valuation - PE 21.7 for stable and growing consumer staple business
- Established brands and market share
- Attractive dividend yield 3.44% and growing consistently
- Clear vision growth strategy - growing and ample cash for acquisitions
- Market cap S$23.6bil, Float 28.8%
- Last done (as of 8/4/2017): S$0.94
- PE 21.7, PB 4.7, EV/EBITDA 16.6
- Revenue CAGR ~5%, Earnings CAGR ~10%
- Total Debt to Equity ~31%
- Dividend yield 3.44%, Dividend CAGR ~17%
- ROE 16%, ROA 10%
Operations
- Business segments: Spirits (55%), beer (32%), non-alcoholic beverage (9%), and food (4%)
- Core products: “Ruangkhao”, “Hongthong”, “Blend 285”, “Chang” beer, “est” soft drinks, “Oishi” green tea, and “100PLUS”
- Oishi food: Japanese restaurant and ready-to-cook and ready-to-eat food
- Revenue: 96% Thailand, Rest international
- Thailand market share: Beer >40%, Spirits >90%
Investment thesis
- Established and strong market share in Thailand - Spirits and beer
- Vision: The company's target is to have more than 50% revenue contribution from non-alcohol beverages by 2020 and more than 50% of sales from overseas. Therefore we could see many more M&A deals
- Resilient demand for Spirits, even in poor economic conditions
- Chang beer re-branding might gain more market share
- Bottle change from brown to green - more premium look
- Keep only Chang Classic
- Alcohol level drop from 6 to 5.5% - easier to drink
- "Brew the friendship" slogan
- Selling price increased to same level as competitor
Risks
- Hikes in excise tax and production costs
- Competition
- Beers main competitor - Boonrawd: Leo Brand
- Strong competition in non-alcoholic beverage segment
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