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A Look At Thai Beverage Public Company Limited From The Perspective Of A Value Investor

Thai Beverage Public Company Limited (SGX: Y92) is listed in Singapore, but it does business mainly in Thailand and is in fact, one of the country’s largest beverage companies.

The company, which is also known as Thai Bev for short, has four main business segments: Spirits, Beer, Non-alcoholic beverages, and Food. Some of the company’s beverage brands include SangSom, Chang Beer, Oishi Green Tea, and est Cola.

The value lens

Value investors tend to look at four financial ratios, namely, the price-to-earnings (P/E) ratio, the price-to-book (P/B) ratio, the net-debt to equity ratio, and the dividend yield. Let’s see what these four ratios can tell us about Thai Bev.

It could be an interesting exercise, given that Thai Bev’s share price has climbed by 21% over the past year even while the Straits Times Index (SGX: ^STI) has fallen by 16%.

Thai Bev’s shares are currently trading at a price of S$0.905. Based on the company’s latest financials (for the 12 months ended 31 March 2016), it has trailing earnings of S$0.0434, which translates to a P/E ratio of 21.

For some context, this is much higher when compared to the SPDR STI ETF (SGX: ES3). The SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of the Straits Times Index and carries a P/E of just 11.6.

Moving on to the P/B ratio, at end-March 2016, Thai Bev’s net asset value (NAV) per share stood at THB5. If I work with an exchange rate of S$1 to THB25.9, this would give me a NAV per share of S$0.19 for Thai Bev. At the current stock price, the beverages outfit has a P/B ratio of 4.63.

What this means is that investors are paying S$4.63 for every dollar of net assets (total assets minus total liabilities) that the company owns. Again for some context, the SPDR STI ETF has a PB ratio of 1.1.

If we look up Thai Bev’s latest balance sheet, the company has total debt of THB36.2 billion, cash and equivalents of THB4.69 billion, and shareholder’s equity of THB125.5 billion. This thus implies a net-debt to equity ratio of 0.25.

Lastly, Thai Bev had paid out an annual dividend of THB0.61 per share for 2015.  Assuming the exchange rate mentioned above, this would translate to 2.0 Singapore cents. If the company pays out the same absolute sum in 2016, this would result in a forward dividend yield of 2.2%.

A Foolish Conclusion

From the four metrics above, it looks like Thai Bev may not look good to value investors. It has P/E and P/B ratios that are higher than the market average and has net-debt on its balance sheet.

But, it must be noted that all we’ve seen above should serve merely as a starting point for investors to dig deeper into Thai Bev.

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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 Esjay owns units in the SPDR STI ETF.