Is This Share Primed for Growth with Thailand’s Resurgence?

Map of Thailand

On 22 May this year, Thailand’s military organised a coup and took over the reins of leadership of the country. That was a move which had been criticized by much of the Western world.

But what’s interesting here is that, if you ask some locals about the coup, such as Thai rice farmers, they might be glad that it happened. Former Prime Minister Yingluck Shinawatra had started paying subsidies to rice farmers when she came into power in 2011 but had stopped those handouts in February this year – the new leaders of Thailand, the military generals, have pledged to restart those payments.

In any case, it turns out, for now at least, that the military has done the right thing. Order has been restored, the outlook for tourism in the country is brightening, and the country’s share market has rebounded (the Stock Exchange of Thailand Index (SET Index) has appreciated by about 8% since the beginning of the coup less than three months ago).

How have Thailand-related shares in Singapore been performing?

Thailand’s icon in Singapore’s share market

In Singapore, it’s almost impossible to not mention Thai Beverage Public Company Limited (SGX: Y92) if you’re talking about investing in Thailand.

As one of the largest breweries in the country, Thai Beverage is the producer of the famous Chang Beer. Besides the fizzy alcoholic beverage, the company also produces and distributes spirits, non-alcoholic beverages, and frozen foods. Even Japanese restaurants are also part of Thai Beverage’s repertoire.

After the much publicized takeover of Fraser and Neave Limited (SGX: F99) by Thai billionaire Mr. Charoen Sirivadhanabhakdi, the company is now an associate of Thai Beverage (Sirivadhanabhakdi is the controlling shareholder of Thai Beverage and had used it as a vehicle to acquire Fraser and Neave). The presence of Fraser & Neave has helped to expand Thai Beverage’s portfolio of products to include dairy products, a publishing business, and even more beverages.

Thai Beverage is going to release its earnings for the first half of 2014 at the end of this week. The company had faced a 34% decrease in its net profit in 2013. However, it seems that 2014 has been a much better year for Thai Beverage, with its net profit for the first quarter of the year increasing by 73% year-on-year to THB5.94 billion.

Correlation with the coup

There’s something interesting to note about the company’s results in the face of the political uncertainty in Thailand. Thai Beverage’s first quarter lay right smack in the middle of the country’s political turmoil; the crisis had started brewing in November 2013 and sort of ended with the military coup in May 2014. Yet, the company managed to grow its profit by 73%, as mentioned earlier.

Foolish Summary

Franklin Roosevelt once said that “The only thing we have to fear is fear itself.” It’s a quote that has a remarkably wide applicability – it can be applied to life, to war, and even the financial markets.

Although Thailand had just suffered an uprising and a coup, it seems that life and business both went on as usual. With seemingly brighter days ahead for Thailand, does that mean that Thai Beverage might see even faster growth ahead?

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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 Stanley Lim doesn't own any shares of companies mention above