Krungsri Securities (KSS) maintains a positive view for Osotspa Public Company Limited (SET: OSP) following a recent meeting with management. OSP has demonstrated considerable progress in cost structure adjustments over the past four years, boosting expected gross margin in 2026 to not be lower than 40.5%. This surpasses Krungsri’s projection of 39.7% and improves from 40.2% in 2025.
This improvement is attributed to several structural changes, including the consolidation of production facilities—resulting in a 47% reduction in glass production capacity from 521,000 to 276,000 tons per year—and enhanced efficiency in procurement and manufacturing.
On the operating expenses side, OSP has increased the efficiency of its marketing spend by reducing investments in traditional channels such as celebrity endorsements and shifting focus to creative, cost-effective online platforms.
Management remains optimistic about further margin improvements through continued cost control, particularly within marketing, while there is still some room for optimization on the production side. The company also retains latent manufacturing capacity, with the ability to increase production by an additional 15-30% over the long term if demand warrants.
Industry-wide, the THB 12 energy drink segment has now passed its initial market introduction phase, and overall market growth in energy drinks continues at 2-3% year-on-year. While there is still some price competition in the THB 10 versus THB 12 segments, OSP has solidified its market presence with both its THB 12 bottle and premium offerings such as the Lipo 15 THB variant and canned products.
The THB 12 bottle now accounts for roughly 70% of OSP’s energy drink revenue, and the company maintains its market share. The next challenge in the short term could emerge if competitors launch their own products in the THB 12 price range as market acceptance for this price point grows, but in the long run, sector prospects look positive due to a shift toward higher-priced products.
For 2Q26, OSP’s outlook remains robust, supported by persistently high gross margins, projected at 42%, compared with 41.9% in 2Q25 and 42.5% in 1Q26. Despite the onset of cost pressures from increased gas prices due to impacts from the Middle East conflicts, cost management remains effective.
SG&A is expected to decline as marketing efficiency improves. Revenue for 2Q26 is expected to decrease by 6% year-on-year, in line with 1Q26, with sales growth driven by premium energy drink and personal care segments. Revenue from Myanmar is expected to soften due to foreign exchange translation, but underlying conditions are improving, and product imports have gradually resumed.
Krungsri remains positive on OSP’s operational discipline, improved product mix, and cost controls. The brokerage has revised up its 2026-27 profit forecasts by an average of 4%, estimating net profits of THB 3.6 billion (+4%) for 2026 and THB 3.7 billion (+3%) for 2027. For the short term, 2Q26 net profit is expected to be around THB 1.08 billion, up 6% year-on-year but down 7% quarter-on-quarter. The outlook for 2H26 anticipates a slowdown in profit compared to the first half, due to seasonal effects.
As a result, Krungsri maintains a ‘Neutral’ rating on OSP, with a new 2026 target price of THB 18.40 per share, based on a 15x PER. The stock’s advantages include an expected dividend yield of 4.9% and a trading PER of 14x (1.4 standard deviations below the average).
