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3 Reasons Why Investors Might Consider Investing In Thai Beverage Public Company Limited Now

Thai Beverage Public Company Limited (SGX: Y92) is a food and beverage company operating in four different segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages.

The company recently appeared on my radar as it’s trading close to its 52 weeks low (regular readers will know that I’m a big fan of looking for ideas from 52-week low list).

After spending time digging a little further, I found a number of good reasons why Thai Beverage might be a good investment candidate for consideration. Let’s look at three of those reasons here

1. Diversified Business Activities

Thai Beverage’s business activities are broken down into four main groups as described above, with Spirits, Beer, Food, and Non-Alcoholic Beverages accounting for 57%, 30%, 9% and 4%, respectively, of its revenue in FY2017. Through these four segments, Thai Beverage has products for customers from all walks of life. Examples of popular brands supplied by Thai Beverage are Chang Beer, F&N, Oishi, 100 Plus, KFC and more.

The diversified income streams is highly beneficial to the group since no one business can bring down the whole company. More importantly, it allows the group to re-allocate capital from its mature and profitable business (Spirit segment) into growing businesses within its Beer, Food and Non-Alcoholic Beverages segments.

Equally important, Thai Beverage is actively investing beyond Thailand into various regions across ASEAN. For example, it acquired a majority stake in Sabeco (the largest beer company in Vietnam). Together with its continuous effort to expand its export businesses, Thai Beverage could further diversify its income base in the future.

2. Good Historical Growth Rates

Investors are interested in companies that possess good historical track record of high growth rate and potential to continue that growth rate into the foreseeable future.

Here, the idea is simple. A company that has a proven track record of growing its business in the past have better chances of continuing that performance in the future. Yet, we all know that past performance is no guarantee of future results.

Thus, a more balanced approach is to use a company’s past growth to serve as a filter.

In the case of Thai Beverage, it has demonstrated a positive growth track record. First of all, revenue has grown from THB 156.5 billion in 2013 to THB 190.0 billion in 2017, up by a compounded annual growth rate (CAGR) of 5.0% during the period. Next, net profit has grown from THB 19.1 billion in 2013 to THB 34.5 billion in 2017, up by a CAGR of 15.9% during the period.

Putting both factors together, we can see that Thai Beverage track record of growth has been positive in the last five years.

3. Dividend Track Record

Another criteria that investors look for when investing in a company is the track record of dividend payment. Here, the key is to look for stable, or even better, increasing dividend payment over the years.

Again, the idea is straight-forward. A company that is growing its business should be able to grow its dividend over the long term.

In the case of Thai Beverage, it has grown its dividend per share from THB 0.44 in 2013 to THB 0.67 in 2017, or a CAGR of 11.1% during the period.

Foolish Takeaway

Investor’s sentiment towards Thai Beverage is rather negative at the moment. Yet, those who are willing to invest for the longer term might consider putting Thai Beverage onto the watchlist due to the reasons mentioned above.

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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.