Religare Institutional Research has upgraded its recommendation on beer and beverage maker Thai Beverage to a "buy" from a "sell" on the back of the company’s potential acquisition of European beer brands Peroni and Grolsch.
“Peroni and Grolsch would vastly expand ThaiBev’s footprint and earnings profile,” writes Religare analyst Nirgunan Tiruchelvam in his note released Tuesday.
Peroni and Grolsch beers are brewed by English beer maker SABMiller, which is in the process of being acquired by the American brewer Anheuser-Busch InBev for a total of US$107 billion.
The latter is planning to put Peroni and Grolsch up for sale to comply with European regulations. It has so far not put a price tag on the beers, but reports indicate that the two brands could be worth as much as US$3.4 billion.
Asahi Group Holdings, Japan’s biggest brewer, has surfaced as a potential buyer of Peroni and Grolsch, while San Miguel Corp of the Philippines and Dutch brewer Heineken are also reported to be mulling an offer for the two brands.
But Tiruchelvam believes that ThaiBev is in “pole position to acquire the Peroni and Grolsch brands.” Based on his estimates, an acquisition of the two beer brands would generate a return on invested capital of 8% for ThaiBev.
Consumers in Thailand, ThaiBev’s largest market, are also expected to be supportive of the new brands, given that consumer sentiment in the country is now at its highest level in the seven months to December as a result of lower oil prices. “The sharp drop in oil prices will expand consumer spending in Thailand,” writes Tiruchelvam.
The analyst has raised his 12-month target price for ThaiBev to 76 cents from 50 cents before. The brewer closed Tuesday at 69.5 cents, or 16.5 times earnings. In comparison, Asahi is trading at around 19 times earnings.
As at 9.37am, Thaibev is down 0.72% to 69 cents, giving an indicative yield of 3.56%.
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“Peroni and Grolsch would vastly expand ThaiBev’s footprint and earnings profile,” writes Religare analyst Nirgunan Tiruchelvam in his note released Tuesday.
Peroni and Grolsch beers are brewed by English beer maker SABMiller, which is in the process of being acquired by the American brewer Anheuser-Busch InBev for a total of US$107 billion.
The latter is planning to put Peroni and Grolsch up for sale to comply with European regulations. It has so far not put a price tag on the beers, but reports indicate that the two brands could be worth as much as US$3.4 billion.
Asahi Group Holdings, Japan’s biggest brewer, has surfaced as a potential buyer of Peroni and Grolsch, while San Miguel Corp of the Philippines and Dutch brewer Heineken are also reported to be mulling an offer for the two brands.
But Tiruchelvam believes that ThaiBev is in “pole position to acquire the Peroni and Grolsch brands.” Based on his estimates, an acquisition of the two beer brands would generate a return on invested capital of 8% for ThaiBev.
Consumers in Thailand, ThaiBev’s largest market, are also expected to be supportive of the new brands, given that consumer sentiment in the country is now at its highest level in the seven months to December as a result of lower oil prices. “The sharp drop in oil prices will expand consumer spending in Thailand,” writes Tiruchelvam.
The analyst has raised his 12-month target price for ThaiBev to 76 cents from 50 cents before. The brewer closed Tuesday at 69.5 cents, or 16.5 times earnings. In comparison, Asahi is trading at around 19 times earnings.
As at 9.37am, Thaibev is down 0.72% to 69 cents, giving an indicative yield of 3.56%.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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