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The Investing Pros and Cons With Thai Beverage Public Company Limited

Credit: Simon Cunningham

When we’re looking at a company as a potential investment choice, it is important to take note of both the positives and negatives with the business.

Being aware of the opportunities as well as the risks associated with a company help ensure that we’re not missing out on anything important that could impact said company either positively or negatively.

With the above in mind, I want to run through the positives and negatives with Thai Beverage Public Company Limited’s (SGX: Y92) business so that investors can have a useful investing overview. Thai Beverage is a company that investors may be curious about, since it has been such a strong performer over the last five years – its stock price has risen 266%.

The positives

Thai Beverage’s share price gains over the past five years did not appear in a vacuum – the company’s business has grown too. And, that’s actually the positive thing with Thai Beverage. You can see a snapshot of the company’s business performance from 2011 to 2015 in the table below:

thai-beverage-business-results-2-lawrence
Source: S&P Global Market Intelligence

As you can see, the company’s revenue, earnings per share, and returns on equity have all been growing over the time frame we’re looking at.

The negatives

We now turn to the negative with Thai Beverage, which is its valuation.

At Thai Beverage’s current share price, it has a price-to-book ratio of 5.2 and price-to-earnings ratio of 22. These are higher than the SPDR STI ETF’s (SGX: ES3) PB and PE ratios of 1.2 and 12, respectively. The SPDR STI ETF is an exchange-traded fund that tracks Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

The PB ratios we’ve seen mean that investors are paying $1.17 for every dollar of shareholders’ assets for the average of the 30 companies that make up the Straits Times Index, but $5.20 to buy Thai Beverage’s shareholders’ assets.

For this price to be worthwhile, Thai Beverage must be 4.4 times as profitable as the average Straits Times Index constituent in using its assets to generate a profit for shareholders.

A Foolish conclusion

So there you have it – an investing overview of the pros and cons with Thai Beverage. I may have missed out on other pertinent aspects of the company’s business, but I still hope the information presented here can be useful for any of you who are either investors in Thai Beverage or potential investors in the company.

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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.