ThaiBev's spirit sales poised for a comeback

The new excise tax hike is an opportunity to raise prices.

ThaiBev is anchoring its recovery following the Songkran festival in Thailand, with spirit sales about to make a comeback.

According to RHB, ThaiBev would use the new excise tax hike as an opportunity to raise prices, which in turn would increase gross margins.

"As spirits form ThaiBev’s largest segment (55% to its topline and 93% of EBIT), we believe the price hike would help spirits to stage a strong recovery, with a full-year impact in FY18," noted RHB.

Meanwhile, the brokerage firm also said that ThaiBev's non-alcohol beverage business is expected to turn EBIT-positive in 2018.

"We think this would be led by the pipeline of expansion in water production lines since bottled water is the fastest growing sub-segment amongst the non-alcohol beverages portfolio," it said.

In addition, the pending asset swap of Frasers Centrepoint (FCL) with Fraser and Neave (F&N) may result in greater cross-selling between ThaiBev and F&N, allowing ThaiBev to leverage on the F&N product range and distribution network in Malaysia and Singapore.

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