Kiatnakin Phatra Securities (KKPS) has maintained its “Underperform” rating on Osotspa Public Company Limited (SET: OSP), signaling continued concerns over rising competition in the Thai and Myanmar energy drink markets. The securities firm also reaffirmed its target price at THB 18 per share.
Following a fine-tuning of assumptions, KKPS reports that its 2026 and 2027 earnings estimates have changed by less than 1%. This minimal adjustment comes despite a reduction in the Weighted Average Cost of Capital (WACC) to 7% from 8%—a move reflecting the firm’s revised view that Thailand’s risk-free rate should be closer to 2% rather than 3%. Furthermore, the perpetual growth rate assumption for OSP has been lowered to 0% from 2%, taking into account what KKPS sees as a slower-than-anticipated growth path for the energy drink producer.
The analyst’s unchanged ‘Underperform’ rating stems from a weak 2026 earnings outlook, primarily attributed to intensifying competition in both Thailand and Myanmar—Osotspa’s core markets.
OSP’s management emphasized expectations for mid-single-digit revenue growth in 2026. While competitor Krating Daeng (Red Bull) (the third largest player and not listed on the SET) has recently reduced the price of its main drink from THB 12 to THB 10, OSP views the effect on the overall market as limited, given Red Bull’s relatively small 3% market share.
On the cost side, OSP has hedged its raw material expenses for the first half of 2026, although rising energy prices could drive costs up in the latter half of the year. The company’s lower-than-expected dividend payout ratio of 66% in 2025 was attributed to complexities in repatriating capital from Myanmar. Nevertheless, management anticipates that ongoing political stabilization in Myanmar could pave the way for the resolution of these issues—and potentially a special dividend payment in 2026.
Looking ahead to the first quarter of 2026, the analyst firm expects OSP’s year-on-year revenue growth to turn positive, given a low base effect from heavy destocking in the same period last year. Raw material costs are also projected to decrease year-on-year.
While acknowledging management’s outlook that Red Bull’s price cut may not substantially disrupt market share, KKPS analysts remain concerned by mounting pressure from another significant player, CBG, in both Thailand and Myanmar. This is likely to weigh on OSP’s revenue growth and margins through 2026.
Due to ongoing risks related to capital transfers from Myanmar, KKPS has lowered its forecasted dividend payout ratio for 2026 and 2027 from 100% to a more conservative 70%.
