Thai Beverage Public Company

[AlphaQuant]

UBS has initiated a sell call on ThaiBev, as below - perhaps that is the catalyst for the selldown.

not sure what rice subsidy has to do with spirits though....personally i wonder what they will do to pare down their debt, esp when it is all short term

**********************
UBS initiates Coverage with Sell Call and $0.51 TP. House think valuations are rich and that there are specific risks ahead. Rollback of rice subsidy and recent excise tax hike could hurt spirit sales Spirit sales (ThaiBev’s key profit driver) are likely to weaken in tandem with the slowdown in broader consumer spending in Thailand. The government’s plan to lower the minimum guaranteed price of rice and the excise hike in 2012 could dampen sentiment and lower the disposable income of farmers/low-income workers who may either cut consumption or switch to cheaper home-made spirits. F&N restructuring scenarios and potential risks for ThaiBev: The underlying value at which the individual businesses are transacted during the potential restructuring of F&N could be a near-term risk for ThaiBev’s shareholders. House discuss two possible scenarios in this report. In summary, the lower the transacted value of F&N’s property business, the more ThaiBev will have to pay TCC Assets (owned by ThaiBev’s chairman) as part of the proposed restructuring of F&N. House value the spirits and beer business using DCF (terminal growth of 3% and a WACC of 7.7%) and listed subsidiaries and associates (Oishi, Sermsuk and F&N– ex S$3.28 capital reduction) at market prices. Launch ThaiBev as a UBS Key Call Sell.

[investingsgx]

UBS has initiated a sell call on ThaiBev, as below - perhaps that is the catalyst for the selldown.

not sure what rice subsidy has to do with spirits though....personally i wonder what they will do to pare down their debt, esp when it is all short term

**********************
UBS initiates Coverage with Sell Call and $0.51 TP. House think valuations are rich and that there are specific risks ahead. Rollback of rice subsidy and recent excise tax hike could hurt spirit sales Spirit sales (ThaiBev’s key profit driver) are likely to weaken in tandem with the slowdown in broader consumer spending in Thailand. The government’s plan to lower the minimum guaranteed price of rice and the excise hike in 2012 could dampen sentiment and lower the disposable income of farmers/low-income workers who may either cut consumption or switch to cheaper home-made spirits. F&N restructuring scenarios and potential risks for ThaiBev: The underlying value at which the individual businesses are transacted during the potential restructuring of F&N could be a near-term risk for ThaiBev’s shareholders. House discuss two possible scenarios in this report. In summary, the lower the transacted value of F&N’s property business, the more ThaiBev will have to pay TCC Assets (owned by ThaiBev’s chairman) as part of the proposed restructuring of F&N. House value the spirits and beer business using DCF (terminal growth of 3% and a WACC of 7.7%) and listed subsidiaries and associates (Oishi, Sermsuk and F&N– ex S$3.28 capital reduction) at market prices. Launch ThaiBev as a UBS Key Call Sell.

could be their rice wine product

[KopiKat]

UBS has initiated a sell call on ThaiBev, as below - perhaps that is the catalyst for the selldown.

not sure what rice subsidy has to do with spirits though....personally i wonder what they will do to pare down their debt, esp when it is all short term

**********************
UBS initiates Coverage with Sell Call and $0.51 TP. House think valuations are rich and that there are specific risks ahead. Rollback of rice subsidy and recent excise tax hike could hurt spirit sales Spirit sales (ThaiBev’s key profit driver) are likely to weaken in tandem with the slowdown in broader consumer spending in Thailand. The government’s plan to lower the minimum guaranteed price of rice and the excise hike in 2012 could dampen sentiment and lower the disposable income of farmers/low-income workers who may either cut consumption or switch to cheaper home-made spirits. F&N restructuring scenarios and potential risks for ThaiBev: The underlying value at which the individual businesses are transacted during the potential restructuring of F&N could be a near-term risk for ThaiBev’s shareholders. House discuss two possible scenarios in this report. In summary, the lower the transacted value of F&N’s property business, the more ThaiBev will have to pay TCC Assets (owned by ThaiBev’s chairman) as part of the proposed restructuring of F&N. House value the spirits and beer business using DCF (terminal growth of 3% and a WACC of 7.7%) and listed subsidiaries and associates (Oishi, Sermsuk and F&N– ex S$3.28 capital reduction) at market prices. Launch ThaiBev as a UBS Key Call Sell.

UBS appears to be saying that the key consumers of ThaiBev Spirits (their key profit driver) are Rice Farmers / Low Income Workers. A cut in rice subsidy means lower income for Rice Farmers. An Excise Hike means Low Income Workers will be motivated to switch to cheaper alternatives.

That's an interesting point, if true....

[felixleong]

down 5% on weak results
seems overvalued and overgeared

[investingsgx]

definitely overvalued + cash to debt above 80 times.

The took a lot of loans and right now trying to canabalise f&N to repay debts

[felixleong]

I think their overleverage might kill the company
considering yields are spiking up (http://www.marketwatch.com/story/treasur...2013-08-15)
if rates go to 3-5% and they can't get rid of those assets for a good price
insolvency may be a possibility

example if a stock has $1 asset and 80 cents of debt
if the asset falls to 80 cents or less, the stock is worthless?

[AlphaQuant]

probably see some REIT from the F&N properties coming soon to monetise the assets.

[KopiKat]

Interesting SGX Annc... The biz world moves so fast or so slow... If my understanding is correct, it'd seem that even before the appraisers could assess the fair value, they'd already made good returns... Extracts,

“Without qualifying my conclusion, I draw attention to note 4 to the interim financial information. The Group has hired independent appraisers to determine the fair value of assets and liabilities acquired for one overseas investment. However, the fair value assessment has not been completed. Therefore, goodwill is yet to be finally determined and is subject to potential amendment depending on the finalisation of the appraisal by independent appraisers.

Following the Group’s purchase of this overseas investment, a significant part of the Investee’s business (“the Business”) was eventually sold to another party. The Investee realized a gain of Baht 119,214 million from the sale of the Business in the financial statement for the year ended 31 December 2012 and the Group should ordinarily have recognised its proportionate share of profit according to equity accounting principles of Baht 35,191 million. However, pending finalisation of the fair value assessment referred to in the preceding paragraph, the Group has recognised its share of profit only for an amount not exceeding the fair value of the Investee, amounting to Baht 13,437 million in the consolidated statement of income for the year ended 31 December 2012, as determined by the available valuation report from another independent appraiser, dated 20 December 2012.”

[freedom]

after the initial hype, where is the sale of est?

to build a brand like Pepsi, is not easy.

[nitenite]

after the initial hype, where is the sale of est?

to build a brand like Pepsi, is not easy.

fyi from CIMB report (15 aug)

".......Est Cola doing well 1H’s sales of Thb 3.7bn is on course to meeting Thai Bev’s Thb 8bn target. est Cola now commands an estimated 15% market share. This are encouraging signs that est Cola could replace loss profits from expired Pepsi contract once the transitory phase is over......."