2 things that can spice up ThaiBev's performance next year

Spirits sales are about to make a comeback.

Whilst its overall performance for the year has already been badgered by an underwhelming Q1 numbers, all hope is not lost for ThaiBev as its spirits segment is poised to make a strong comeback.

According to RHB, ThaiBev expects alcohol consumption to recover following Thailand's Songkran festival.

"We believe that management would use the new excise tax hike as an opportunity to raise prices, which in turn would increase gross margins," RHB said.

Spirits segment forms ThaiBev's largest segment, contributing 55% to its revenues. RHB said a price hike would help spirits to stage a strong recovery, with a full-year impact in FY18.

Meanwhile, ThaiBev is pinning its hopes up with its non-alcohol beverage business, which is expected to turn earnings 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," RHB explained.

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.