KSS Remains ‘Neutral’ on CBG, Foreseeing Limited Upside from Beer Business

Krungsri Securities (KSS) stated in its report that CBG’s market share rose by 1.8 percentage point YoY to 23.9%, pushing its domestic energy drinks sales in 1Q24 by 9.8% to THB 1.3 billion, while sales in CLMV also jumped by 14% YoY to THB 1.4 billion.

The firm upgraded FY24F/25F core profit of CBG by 22.5% and 16.3% to THB 2.71 billion and THB 2.85 billion, respectively, reflecting a better outlook for the energy drink segment.

Meanwhile, CBG’s beer distribution business, starting in 4Q23, could see limited upside this year, as (i) distribution income had dropped by about 50% QoQ to THB 250 million in 1Q24, suggesting it could take longer for consumers to accept Carabao beer, and (ii) CBG has dropped its initial business model and will no longer distribute to modern-trade retailers which accounted for about 75% of its beer distribution income in 1Q24. Thus, the firm maintains THB 1 billion beer income and THB 50 million profit for FY24F.

KSS gave a ‘NEUTRAL’ recommendation for CBG with a target price of THB 74 per share.