Thai Beverage

Thai Beverage Plc
Investor Presentation
By Richard Jones
Head of Investor Relations
The Initial Public Offering of shares of Thai Beverage Plc was sponsored by
Deutsche Bank AG, Singapore Branch,
J.P. Morgan (S.E.A) Limited
Merrill Lynch (Singapore) Pte. Ltd.
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Note on Forward Looking Statements
The following presentation may contain forward looking statements by the
management of Thai Beverage Public Company Limited (“ThaiBev"), relating to
financial or other trends for future periods, compared to the results for previous
periods.
Some of the statements contained in this presentation that are not historical
facts are statements of future expectations with respect to the financial conditions,
results of operations and businesses, and related plans and objectives. Forward
looking information is based on management's current views and assumptions
including, but not limited to, prevailing economic and market conditions. These
statements involve known and unknown risks and uncertainties that could cause
actual results, performance or events to differ materially from those in the statements
as originally made. Such statements are not, and should not be construed as a
representation as to future performance of ThaiBev. In particular, such targets should
not be regarded as a forecast or projection of future performance of ThaiBev. It
should be noted that the actual performance of ThaiBev may vary significantly from
such targets.
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Dividend Policy:
not less than 50% of net profit after deducting all appropriated reserves
Shares outstanding
Free float % (approx.)
•
•
•
25,110 million
21.4%
Based on
Major shareholders
•
Sirivadhanabhakdi family
•
Others
63.4%
15.2%
Market cap S$
Market cap US$
Market cap THB
6.8 bn*
4.4 bn
158.0 bn
IPO data (billions of shares)
–
New shares issued
–
Total shares offered
•
•
–
Shares for institutions
Shares for Sing retail
Shares for over allotment
(new shares)
Dividend Payment
THB : SGD 1
Net Profit (M)
Unapprop. RE (M)
Number of Shares (M)
Dividend (M)
Portion of Net Profit
Annual
Report
2006
Baht
Baht
Baht
Per share
Per share
2.44445
4.8889
10%
20%
4.64446
0.24444
19%
1%
0.66558
3%
SGD
Share close*
SGD
Dividend Yield
* Average closing price from Jun - Dec'06
2006
23.5
10,055
19,102
25,110
5,524
55%
22%
0.009
0.278
3.4%
Price
Volume (3 months)
70,000,000
0.34
60,000,000
0.32
50,000,000
0.30
40,000,000
0.28
30,000,000
0.26
20,000,000
0.24
10,000,000
0.22
3,400
3,200
3,000
2,800
2,600
1/4/07
2,400
2,200
2,000
1/24/07
2/14/07
3/8/07
3/28/07
0
1/4/07
1/24/07
2/14/07
3/8/07
3/28/07
THBEV
STI
Jan – Mar’07, Avr. volume = 21.2 million shares, Avr. Price = S$0.27
Source: www.shareinvestor.com , Reuters
*early December
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Highlights
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Company Strategies
Maintain market leadership
Expand into new profitable segments
Continue brand investment
Manage the marketing mix and
control the pricing of individual
brands
Launch higher margin products
(premiumization)
Continue investing in our existing
brands through integrated
marketing communications and
ongoing premiumization
Leverage infrastructure & distribution network
Establish platform for international expansion
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The Keys to Our Growth
ThaiBev
>2,600 Agents
>900 Direct Sales
Modern trade/hospitality
>400,000 points of sales
• Extensive distribution network to 400,000 points of sale
• The extensive range of our distribution channels gives us the opportunity
to deliver newer products faster to the market
• 17 distilleries nationwide are a threat to new entrants
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Financials
Financial Highlight
Source: Company’s Consolidated Financial Statements (Thai GAAP)
2005
2006
(Btmn)
Revenues from sales **
- Beer
- Spirits
94,903
42,277
52,811
97,798
46,641
51,428
COGS **
% of sales
SG&A **
% of sales
65,188
69%
13,180
14%
69,325
71%
12,685
13%
Gross Profits **
EBIT
EBITDA
Net profit
29,716
16,822
21,254
10,337
28,473
15,946
20,598
10,055
Margin
- Gross Profits
- EBIT
- EBITDA
- Net Profit
Total Assets
Equity and Minority
Net debt
Net debt/Equity
31%
18%
22%
11%
29%
16%
21%
10%
87,137
31,715
37,847
1.19
85,580
52,554
17,589
0.33
* EBIT = Earning before Interest Expense and Tax
* EBITDA = Earning before Interest Expense, Tax, Depreciation and Amortization
•The financial statements for 2005 has been restated to include PSUK and Best Spirits to be the same as 2006
** The figure after inter-segment transaction eliminations
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Cash Flow
Cash Flow
Cash Flow from Operating Activities
- CAPEX
Free Cash Flow
2005
28,567
(7,302)
21,265
2006
14,171
(4,039)
10,132
Cash Flow from Investing Activities
Cash Flow from Financing Activities
(14,812)
(11,441)
(5,383)
(10,244)
3,398
1,920
Ending cash
* Free Cash Flow = CF from Operating Activities - CAPEX
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Contribution per Business Segment for FY 2006
Net Profit
2.1%
-0.2%
-0.2%
Sales
7.3%
-8.8%
1.2%
19.6%
47.7%
Beer & Water
Spirits
Industrial Alcohol
Others
Intersegment Elimination
78.7%
52.6%
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Beer
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10
Major Beer Brands on Sale in Thailand
Beer Brands 2005 Share (by volume)
Premium
Standard
Brands
Producer
Heineken
Thai Asia Pacific
Asahi
Kloster
Corona
Others
Boonrawd
Boonrawd
CVS Syndicate
Sector Volume ('000 HL)
Sector Volume as % of total market
% Share
Economy
Brands
Producer
Brands
Producer
69.6
Singha
Boonrawd
95.1
Chang
ThaiBev
63.9
1.4
1.3
0.2
27.5
Tiger
Blue Ice
Thai Asia Pacific
San Miguel
3.6
1.3
Leo
Cheers
Archa
Boonrawd
Thai Asia Pacific
ThaiBev
34.9
0.4
0.4
Red Horse
Thai Beer
San Miguel
Boonrawd
0.3
0.2
1,311
8%
% Share
1,727
10%
% Share
14,252
82%
Market Share 2005
ThaiBev
Boonrawd
Thai Asia Pacific
53%
39%
6%
Source: Canadean, The Beer Service Annual Report - 2006 Cycle, Thailand
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11
ThaiBev’s Beers
Chang
Chang Light
Chang Draught
Archa
6.40%
4.20%
5.00%
5.40%
Positioning
Economy (Rural)
Standard (Urban)
Light Economy (Urban)
Light Economy (Urban)
Price / Bottle
Bt 33-35 / 640ml
Bt 39 / 640ml
Bt 36 / 640ml
Bt 35-37 / 640ml
Leo
Singha / Singha Light
Leo / Singha
Leo
Alcohol Content
Key Competitors
/ Heineken
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12
Beer Results
Beer-water-soda Results
Source: IPO Prospectus and Company’s Consolidated Financial Statements (Thai GAAP)
(in million Baht)
2003
2004
2005
2006
Revenue from sales
Interest income
Other income
Total Beer revenues
52,085
28
214
52,327
47,749
11
307
48,067
42,277
34
141
42,452
46,641
24
44
46,709
Cost of sales
Selling and administrative expenses
39,641
4,970
7,716
9,559
36,847
4,580
6,640
8,587
32,549
6,984
2,919
4,838
35,609
6,932
4,168
6,195
295
1,938
5,483
285
1,704
4,651
387
1,330
1,203
303
1,897
1,968
EBIT
EBITDA
Interest expense
Income tax expense
Net profit
CoS as % of rev
S&A as % of rev
Net profit margin
Gross profit margin
EBIT Margin
EBITDA Margin
76%
10%
11%
24%
15%
18%
77%
10%
10%
23%
14%
18%
77%
17%
3%
23%
7%
11%
76%
15%
4%
24%
9%
13%
* EBIT = Earning before Interest Expense and Tax
* EBITDA = Earning before Interest Expense, Tax, Depreciation and Amortization
* The financial statements for 2005 has been restated to include PSUK and Best Spirits to be the same as 2006
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13
Cost Structure and Beer Volume
(% of total revenue)
Excise Tax, 52.7%
SG&A, 14.9%
Int. + Inc. Tax, 4.7%
Net profit, 4.2%
Other, 1.8%
Labor, 0.6%
Depreciation, 3.1%
Raw Material, 5.7%
Packaging, 12.3%
Source: 2006 Financial Statements
Beer Sales Volumes
(m liters)
1,041
944
824
2003
2004
2005
923
2006
* Sales volumes for domestic and export
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14
Spirits
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15
Major Spirit Brands on Sale in Thailand
Spirits Brands 2005 Share (by volume)
Local white spirits
Brands
Ruang Khao
Pai Thong
Chinese Herbal
Community Producers
Producer
Thaibev
Thaibev
Thaibev
Sector Volume ('000 9 Litre Cases)
Sector Volume as % of total market
Local brown spirits, admixes
% Share
Brands
74%
Sangsom
5% Mungkorn Thong
2%
Mekhong
18%
Crown 99
Master Blend
Singha Haraj
Other
Scotch whisky
Premium imported spirits
Producer
% Share Brands
Producer
% Share
Brands
Producer
% Share
Thaibev
48% 100 Pipers Pernod Ricard
77%
JW Black
Diageo
24%
Thaibev
15% JW Red
Diageo
5% Chivas Regal Pernod Ricard
9%
Thaibev
8% Spey Royal
Diageo
6%
Other
67%
Thaibev
3%
Other
12%
Pernod Ricard
5%
The United Products
2%
20%
51,000
69%
18,211
25%
3,490
5%
838
1%
Market Share 2005
ThaiBev
74%
Others
21%
Pernod Ricard
5%
Source: Canadean, The Spirits Service Annual Report - 2006 Cycle, Thailand
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16
ThaiBev’s Spirits
Brown Spirits
Mungkorn Thong
Mekhong
•
•
Bt 115/ 750 ml
•
Bt 135/750 ml •
Hong Thong
Blend 285
Repackaged, •
revamped and
relaunched Hong
Thong
Quality blended
spirits
•
Sangsom to be
introduced in
gift boxes
Bt 150/700ml
Bt 170/700ml
•
Bt 190/700ml
•
Sangsom
Crown 99
Blue
•
Admix whisky
made from
quality
imported malt
from Scotland
•
New choice to admix
to tap low end scotch
segment
•
Bt 200/700ml
•
Bt 260/700ml
White Spirits
Ruang Khao
Pai-Thong
Chiang-Chun
Sua Dum
30°
Many white spirit products with no established branding
•
Regional based
•
Limited brand recognition
35°
40°
Niyomthai
•
Launching Niyomthai to Establish a National brand
•
Utilization improvement opportunity
•
Higher margins
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17
Hong Thong’s Success
Hong Thong Sales Volume
Million Liters
12.0
The lost volume of
Sangsom went to
Hong Thong
9.9
10.0
8.0
6.0
3.2
4.0
1.4
2.0
0.1
Q1
Q2
Q3
Q4
2006 (Hong Thong)
Million Liters
Sangsom& Hong Tong Sales Volume
25.0
20.0
22.2
19.3
21.6
15.0
17.7
14.4
10.0
16.3
11.2
10.3
In Q4’06, Sales volume
of Sangsom + Hong
Thong was higher than
sales volume of
Sangsom in Q4’05
5.0
Q1
Q2
2006 (Sangsom+Hong Tong)
Q3
Q4
2005 (Sangsom)
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18
Spirits Results
Spirits Results
Source: IPO Prospectus and Company’s Consolidated Financial Statements (Thai GAAP)
(in million Baht)
2003
2004
2005
2006
Revenue from Spirits sales
Interest income
Other income
Total Spirits Revenues
38,713
447
495
39,655
42,189
6
172
42,367
52,811
34
94
52,939
51,428
26
98
51,552
Cost of sales
Selling and administrative expenses
26,339
6,420
26,090
7,031
EBIT
EBITDA
6,897
8,964
9,246
11,391
32,062
7,344
13,534
15,822
33,002
7,170
11,380
13,663
Interest expense
Income tax expense
Net profit
2,488
1,203
3,205
1,401
2,609
5,236
1,264
3,282
8,988
1,187
2,277
7,916
CoS as % of rev
S&A as % of rev
Net profit margin
Gross profit margin
EBIT Margin
EBITDA Margin
68%
17%
8%
32%
18%
23%
62%
17%
12%
38%
22%
27%
61%
14%
17%
39%
26%
30%
64%
14%
15%
36%
22%
27%
* EBIT = Earning before Interest Expense and Tax
* EBITDA = Earning before Interest Expense, Tax, Depreciation and Amortization
* The financial statements for 2005 has been restated to include PSUK and Best Spirits to be the same as 2006
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19
Cost Structure and Spirit Volume
(% of total revenue)
Excise Tax, 46.6%
SG&A, 13.9%
Int. + Inc. Tax, 6.7%
Net profit, 15.4%
Other, 2.1%
Packaging, 6.5%
Labor, 1.2%
Depreciation, 2.3%
Spirits Sales Volumes
9,204
11,469
12,547
Raw Material, 5.3%
(‘000 cases)
9,958
Sales volume
38,617
39,188
41,387
40,831
2003
2004
2005
2006
White spirits
Source: 2006 Financial Statements
White spirits
Brown spirits
2003
80.8%
19.2%
2004
77.4%
22.6%
2005
76.7%
23.3%
2006
80.4%
19.6%
Brown spirits
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20
Industrial Alcohol & Others
(million litres)
Ethyl alcohol of 95 degrees
Ethanol of 99.5 degrees
Acetic acid
Ethyl acetate
Total
2003
55.95
55.95
2004
57.56
4.16
61.72
2005
32.18
20.78
0.19
0.05
53.20
2006
1.48
46.56
0.08
0.13
48.26
Ind. Alcohol Sales as % Total Rev.
1.2%
0.7%
2003
0.8%
2004
0.9%
2005
Source: IPO Prospectus and Company’s Consolidated Financial Statements (Thai GAAP)
2006
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21
Taxes are the Company’s Largest Cost
Excise Taxes
Source: IPO Prospectus
Product
Ad Valorem Rate
(Ex-factory)
Fermented Liquor:
Beer
Wine & Sparkling wine from grapes
Local fermented liquor
Other
Distilled Liquor
White spirits
Compounded spirits (Hong Thong, Mungkorn Thong, Chinese Herb)
Blended spirits (Mekhong)
Special spirits
Brandy
Whisky
Other (Sangsom, Crown99, Blue)
Ethyl Alcohol:
used in industry
used in medicine, pharmaceuticals, science
other
Specific Rate
Unit
Bt/Unit
55%
60%
25%
25%
Liter of pure alcohol
Liter of pure alcohol
Liter of pure alcohol
Liter of pure alcohol
100
100
70
70
25%
50%
50%
Liter of pure alcohol
Liter of pure alcohol
Liter of pure alcohol
70
240
400
40%
50%
50%
Liter of pure alcohol
Liter of pure alcohol
Liter of pure alcohol
400
400
400
2%
0.10%
10%
Liter
Liter
Liter of pure alcohol
1
0.05
6
+ Municipal Taxes: 10% of Excise
+ Health Promotion Fund Contribution: 2% of Excise
The Company will be charged at whichever rate is higher.
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22
CAPEX
Capital Expenditure
2006
Beer/water
(in million Baht)
- Fixed assets
- Intangible assets
Depreciation
Amortisation
Spirits
Alcohol
Related
Total
1,350.5
5.0
2,025.3
2.2
2,606.1
7.7
2,238.0
44.8
67.8
0.2
126.3
0.1
14.2
0.2
91.2
124.2
4,038.5
13.1
4,480.8
171.3
Beer/water
6,395.4
4.8
1,902.6
16.4
Spirits
481.5
5.3
2,228.6
59.9
Alcohol
254.3
0.2
120.5
0.0
Related
170.8
63.3
85.5
18.7
Total
7,302.0
73.6
4,337.2
95.0
Capital Expenditure
2005
(in million Baht)
- Fixed assets
- Intangible assets
Depreciation
Amortisation
Source: 2005-06 Financial Statements
Production Capacity
(million Liters)
Beer
Bang Ban
Kamphaengphet
Wang Noi
Soda&Water
Spirits
Source: IPO Prospectus
1,550
530
900
120
700
790
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23
Seasonal Sales:
Look at Long Term Growth as Quarters can be Misleading
Spirit Domestic Sales 2006
Beer Domestic Sales 2006
Spirits Sales Volume
Beer Sales Volume
Million Liters
Million Liters
200.0
300.0
250.0
235.9
209.9
273.5
197.0
200.0
205.3
208.1
150.0
150.0
120.5
100.0
119.9
118.0
231.5
2006
172.6
2005
116.9
129.1
128.1
110.8
2005
97.6
100.0
2006
50.0
50.0
-
Q1
•
•
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q3 is the slowest period -> rainy season and the Buddhist Lent period
Q4 is the best period -> kind weather (cold and dry), many holidays (Loy Kratong,
King’s birthday, New Year), and end of the Buddhist Lent period
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24
Looking Ahead
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25
Outlook – Thai Alcohol Beverage
Beer
Spirits
- Continued revenue growth
- Urbanization makes consumers shift from white spirits to beer/brown spirits
- Continued growth in low alcohol beer
- White spirits: revenue growth flat
- Brown spirits: consumer acceptance of the new prices
: can expect some growth
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26
2007 Objectives
Strategy
- Maintain dominant position in Thai market
- Extend portfolio -> higher margin products
- Future leveraging of network to distribute diverse products
- More focus on international market
Value
Drivers
- International market
- Brand investment
- Cost control
Major
Initiatives
- Capital efficiency and strong cash flow
- Kamphaengphaet Brewery expansion for future beer growth
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27
New Generation of Management
Director and Senior Vice President ThaiBev - Mr. Ueychai Tantha-Obhas
Former Chief Executive Officer and the Managing Director of Riche Monde (Bangkok) Ltd.
Former Managing Director of Sarin Property Co., Ltd.,
Former Group Product Manager of Colgate Palmolive Co., Ltd.
President and CEO InterBev Group - Barrie Jackson
25 years in the international beverage business.
Former Group Director with The Edrington Group, responsible for global sales, marketing and group strategy,
building The Famous Grouse, Macallan and Cutty Sark brands.
Five years as Director of Maxxium Worldwide BV (international distribution arm of Remy Cointreau, V & S);
brands included Absolut, Jim Beam and TEG.
Two years as Maxxium Group Chairman.
Chief Financial Officer InterBev Group - Michael Chye
More than 20 years experience in accounting, finance and investments in Asia.
Worked for the Singapore Government and multi-national companies before joining the TCC Group.
Former independent director and Audit Committee Chairman of public listed companies in Singapore.
President InterBev USA Inc - John Lennon
22 years in the international beverage industry.
Former President and CEO of Pyramid Breweries, a U.S. craft beer producer.
Former President and CEO of Beck’s North America.
Former VP and General Manager of Guinness Caribbean and Latin America.
Senior marketing and sales roles with Mexico’s FEMSA Cerveza, Grand Metropolitan (now Diageo) and with
Guinness in both the USA and Ireland.
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28
The End
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29