How Profitable Are Thai Beverage Public Company Limited’s Different Businesses?

Thai Beverage Public Company Limited (SGX: Y92) is a food & beverage manufacturer with four main business segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages.

It is also one of the best performing stocks in the Singapore market over the last five years, with its share price climbing a total of 284%.

Each of Thai Beverage’s four business segments may have their own economics. Thus, it could be interesting and useful to understand the profitability of each segment.

More specifically, I want to understand how well each segment is doing when it comes to making a profit on each dollar of Thai Beverage’s equity that they employ. In other words, I want to calculate the return on equity for each segment. (The return on equity is found by diving each segment’s profit with its net assets, or equity.)

Source: Thai Beverage 2015 annual report

We can see that Spirits was the largest segment for Thai Beverage, profit-wise, in 2015. It is also the most profitable segment for the company, given that its return on equity of 51% is the highest among the four.

Beer is in second place both in terms of profit contribution and profitability.

The Non-Alcoholic Beverages segment made a loss in 2015 due partly to tough competition.

From the exercise above, we can see where Thai Beverage needs to work on – its Beer, Non-Alcoholic Beverages, and Food segments have a lot of catching up to do in terms of profitability when compared to the Spirits segment. We can also see that the Spirits segment is very important for Thai Beverage, given its high profit contribution and fat return on equity.

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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.