With a market capitalisation of more than S$17 billion, Thai Beverage Public Company Limited (SGX: Y92) is one of the most valuable beverage companies in Asia. But that has not stopped its shares from tumbling more than 30% year-to-date. Investors who are bargain hunting might view this as an attractive entry point. Here are three things to know about the company.
How it earns its revenue
Thai Beverage owns several significant alcoholic and non-alcoholic brands in Thailand. Through is signature beer, Chang, it has grown to become the largest beer player in South East Asia. It also sells non-alcoholic beverages such as OISHI Green Tea and est Cola. In 2012, it acquired Fraser and Neave Limited (SGX: F99), which has enabled it to expand overseas and increase its product offering. It now owns brands that Singaporeans are familiar with, such as F&N Magnolia, and F&N Seasons.
Besides beverages, the group also operates Japanese restaurants and franchise outlets under KFC, which has become the most popular fast food restaurant in Thailand. The chart below shows the group’s revenue breakdown in 2017:
Source: Thai Beverage 2017 annual report
Historical track record
Thai Beverage has had a remarkable track record of growth over the past few years. The group has benefitted from the rising affluence of people in the region. It also benefited from the timely acquisition of Fraser and Neave, which has facilitated business expansion outside of Thailand.
The table below illustrates revenue and earnings trends over the past five years for Thai Beverage:
Revenue has increased by 4% per year over the time frame while operating income and earnings per share have increased by 4.9% and 12.5% respectively. There has been a clear and consistent increase in earnings per share each year, barring 2016, when the group changed its fiscal year end from December 31 to September 30.
As of now, Thai Beverage’s share price is S$0.64, which gives the company a price-to-earnings (PE) multiple of 18.4 and a price-to-book (PB) ratio of 3.2. The valuation numbers are both above the Straits Times Index‘s (SGX:^STI) PE and PB ratios of 14.5 and 2.2, respectively, but are at a slight discount to the company’s own five-year-averages of 20.9 and 4.3.
Worried about the overall state of the market? Do you know the 1 thing you should never do in the stock market? The Motley Fool Singapore’s new e-book lays out a plan to handle market crashes, details the greatest advantage you have as an investor, and looks at decades worth of market data to bring you the smartest insights on investing. You can download the full e-book FREE of charge—Simply click here now to claim your copy
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Jeremy Chia doesn’t own shares in any companies mentioned.