Thai Beverage Public Company Limited (SGX: Y92), or Thai Bev for short, is Thailand’s largest and one of Southeast Asia’s biggest beverage companies, with distilleries in Thailand, Scotland, China, and Myanmar.
It is listed on the Singapore market and sports a market capitalisation of S$18.2 billion. It has four core segments – spirits, beer, non-alcoholic beverage, and food.
Between 1 Jan to 31 Dec 2018, Thai Bev’s total return, which includes reinvested dividends, has underperformed the Straits Timnes Index (SGX: ^STI). The former dropped a staggering 31.7% compared to the latter’s drop of 6.5%.
Has the lacklustre performance by Thai Bev’ made it a bargain at current prices?
To find out we will be using four metrics, namely, its price-to-earnings (P/E) ratio, its price-to-book (P/B) ratio, its dividend yield and its net-debt-to-equity ratio.
The F&B conglomerate’s fiscal year ended on September 2018, for FY18. It recorded earnings per share (EPS) of THB$ 0.74 which converts to S$0.03 (S$1 = THB$23.4). With Thai Bev’s current share price at S$0.72, this implies a P/E ratio of 24 at current prices.
Over the past four years (2015-2018), the F&B conglomerate’s EPS has been beteween THB$ 1.37 to THB$0.74. So, Thai Bev’s latest EPS was the lowest in the past four years.
At the end of the of FY2018, Thai Bev reported a Net Asset Value of THB$4.82 (S$0.21). This results in a P/B ratio of 3.4 at current prices. Being a services company, it is not unusual to see a high P/B ratio for Thai Bev.
A better comparison could its P/B ratio against the industry average or the company’s historical P/B for a better idea of its current valuation.
At end September 2018, Thai Bev had a net debt position of THB$208.6 billion, while total equity stood at THB$121.2 billion. This indicates that it has a net debt to equity position of 172%. Thai Bev is highly leveraged and any hiccups in its operations could be uncomfortable.
Lastly, Thai Bev’s dividend has decreased over the last four years, moving from THB$0.61 in 2015 to THB$0.39 in 2018. This means that at current prices, Thai Bev is offering investors a dividend yield of 2.4%.
Thai Bev might not be a bargain, despite its underwhelming performance last year. The four metrics don’t paint a glowing picture for the company. But it could be worth a closer look.
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The Motley Fool Singapore writer Esjay contributed towards this article. Esjay owns shares in Thai Bev.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.