First Read: Thai Beverage "H1FY26 briefing: Favorable raw material costs..."

Research evidence excerpt

First Read: Thai Beverage "H1FY26 briefing: Favorable raw material costs..."

Forecast returns

Forecast price appreciation 11.6%

Forecast dividend yield 5.5%

Forecast stock return 17.2%

Market return assumption 7.1%

Forecast excess return 10.1%

Company Description

Thai Beverage, the largest beverage company in ASEAN by sales, was listed on the Singapore

Exchange in 2006. It has four business segments: spirits (36% of FY25 sales); beer (37%);

non-alcoholic beverages (19%); and food (7%). It held 78.5% of the Thai spirits market and

36.3% of the beer market in 2024 (Euromonitor). It has historically been active in M&A: it

owns 100% of green tea business Oishi and soft-drink maker Sermsuk; 69.68% of Fraser and

Neave; and 53.26% of Sabeco, one of the largest Vietnam beer companies by sales.

Valuation Method and Risk Statement

Thai Beverage: We use sum-of-the-parts methodology to derive our price target by valuing

Thai spirits and beer businesses as well as non-alcoholic beverages using DCF methodology

and the associates' businesses using their market prices. The downside risks to our investment

thesis include: 1) regulatory risk, particularly a change in the excise tax structure, which could

dampen demand and reduce the company's ability to raise prices; 2) stronger competition in

the beer business; 3) synergy between FNN and Thai Beverage failing to materialise; 4) if the

corporate structuring deal is made in a way that does not favour minority shareholders (ie, the

price does not reflect the market price or if there is a cash payment that does not reflect the

interest of shareholders, but only the interest of the parent company, TCC Holding); 5)

overpaying for an acquisition that may not be accretive over the long term; 6) failed efforts to