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Curious About The Quality of Thai Beverage Public Company Limited’s Business? Here’s 1 Investing Number To Help

Thai Beverage Public Company Limited (SGX: Y92) is one of the largest beverage manufacturers and distributors in Thailand. It has four business segments (Spirits, Beer, Food, and Non-Alcoholic Beverages), but derives the bulk of its revenue and profits from just two (Spirits, and Beer).

Thai Beverage has also been a solid long-term winner in Singapore’s stock market over the past five years – its stock price has gained 246%.

In here, I want to observe Thai Beverage’s return on invested capital (ROIC).

A brief recap of ROIC

In a previous article of mine, I had explained how the ROIC can be used to gauge the quality of a business.

The simple idea behind the ROIC is that a business with a higher ROIC requires less capital to generate a profit, and it thus gives investors a higher return per dollar that is invested in the business. High-quality businesses tend to have high ROICs while the reverse is true – a low ROIC is often associated with a low-quality business.

ROIC table

You can see how math works for the ROIC in the formula above.

Thai Beverage’s ROIC

The following table shows how Thai Beverage’s ROIC looks like (I had used numbers from the company’s last 12 months):

thai-beverage-roic
Source: S&P Global Market Intelligence

We can see that the ROIC for Thai Beverage is 41.3%. For every dollar of capital invested in the business, the company earns 41.3 cents. Thai Beverage’s ROIC of 41.3% appears to be much higher than average based on the many companies I have studied in the past.

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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.