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Falling Knife of the Week: Thai Beverage

Problems in Thailand have sent ripples to some Thai stocks listed in Singapore Exchange. One such stock that felt the tremor was Thai Beverage Public Company Limited (SGX: Y92). The stock is down 4% so far this week, closing at $0.48 on Thursday.

Earlier this week, more than 100,000 anti-government protestors congregated near Bangkok’s administrative district to protest against the Puea Thai-led government. Prime Minister Yingluck Shinawatra, who leads the country, is Thaksin Shinawatra’s sibling. Thaksin was the Prime Minister of Thailand till 2006, when he was overthrown in a military coup. The anti-government protesters claim that the current party in power acts as a proxy for Thaksin.

The political remonstration has caused the Thai baht to sink to a 12-year low against the Singapore dollar as well.

Investors should discern if such political protests have any long-term impact on the profitability of the company. Will beer lovers drink lesser Chang Beer due to the demonstrations? Will lesser Japanese-food lovers patronise the Oishi Japanese Buffet restaurants for the next 10 years? Will the business of Fraser and Neave (SGX: F99) suffer a great deal due to the protests? If the initial reasons for buying the stock remain intact, then selling the business out of fear will only hurt one’s portfolio.

Meanwhile, according to The Straits Times, listed-companies such as Tee International Limited (SGX: M1Z) and Qian Hu Corporation Limited (SGX: 552), which have operations in Thailand, are not really affected by the protests as they are located far away from the location of the protests.

Thai Beverage is currently trading at a historical PE ratio of 10.8 and has a dividend yield of 3.5%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.