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3 Things That Investors Should Know About Thai Beverage Public Company Limited

Thai Beverage Public Company Limited (SGX: Y92) is one of the best-performing companies in Singapore’s stock market over the last five years with its stock price climbing by nearly 280% in total.

The company sources most of its revenue from Thailand and depends on spirits and beer products for the bulk of its profits.

Here are three important things about the company’s business fundamentals that investors may be interested to know:

1. Five years of growth with little leverage

In the last five years from 2011 to 2015, Thai Beverage’s revenue grew by 6.8% annually from 132.5 billion baht to 172.4 billion baht. Over the same period, its earnings per share expanded from 0.479 baht to 1.054 baht, translating to a compound annual growth rate of 21.8%.

Thai Beverage has not achieved those results through sheer leverage – the company’s total debt to equity ratio has stepped by from 28.8% in 2011 to just 37.1% in 2015.

2. A history of high returns on equity

The return on equity (ROE) metric measures a company’s ability to generate a profit with the shareholder’s capital it has. In general, a high ROE (without the presence of high levels of debt) comes together with a quality business.

From 2011 to 2015, Thai Beverage’s ROE has come in at 19.9% or more. Over the last 12 months, the company’s ROE stands at 25%.

For perspective, data from S&P Global Market Intelligence show that the median ROE for the 30 constituents of Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI), is just 9.4%.

3. A historically high valuation

Given Thai Beverage’s history of growth, it may be no surprise to find that the market has grown more optimistic about the company.

thai-beverages-pe-ratio-since-27-september-2011
Source: S&P Global Market Intelligence

At its current share price of S$0.965, Thai Beverage is valued at 22.3 times trailing earnings. As you can observe from the chart above, the alcoholic beverage maker’s valuation is near a five-year high at the moment.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.