Here's why Thai Beverage is literally getting a high from alcohol

Sales volume of spirits, beer look 'sustainable'.

According to CIMB, Thai Beverage closed out a difficult FY13 on a surprisingly high note.

After the unexpected 4 Sep alcohol excise tax hike caused a two week pause in sales, 4Q EBITDA came roaring back on 1) the implementation of price hikes that more than absorbed the excise duties hike; 2) pent-up demand as channel inventory
remains thin; and 3) sale of remnant lower-cost inventory.

Here's more from CIMB:

4Q sales volume of spirits and beer looked sustainable into 2014, and this could be a catalyst for share price outperformance.

FY13 net profit of Thb19.1bn was 14% ahead of our expectations and 7% higher than consensus.

4Q was all about getting a high from alcohol, both beer and spirits. Post excise duties hike in Sep, beer prices were raised 15-20%, white spirits 2-3% and brown spirits 10-12%.

A two week hiatus in beer sales in Sep, when clarity on the tax hike rules was sought, meant some pent-up demand for beer existed in 4Q; it showed.

For spirits, a lack of warning for this tax hike meant wholesalers could not stock up like they did in the past, so spirit volumes still rebounded 34% qoq. Channel inventory remains thin, so 4Q volumes look sustainable.

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