Thai Beverage

tfwee · Veteran

RE: Thai Beverage

KK · Guru

Thai Beverage IPO raises S$1.37b, priced at 28 cents a share

SINGAPORE : Thai Beverage, Singapore's largest listing in 13 years has raised S$1.37 billion. Thailand's top beer and spirits-maker priced its IPO at 28 cents each for its issue of 4.89 billion shares, at the lower end of its projected range. The firm's IPO was fully subscribed and will begin trading on the SGX on May 30. The long-delayed IPO has also prompted the head of Thailand's stock exchange to quit his job.

The main owners of Thai Beverage, the Sirivadhanabhakdi family, look set to finally achieve their dream of getting their company listed after years of failed attempts. Despite the pricing, which came in at the low end of expectaions, the producer of Chang beer and Mekhong whisky says it is happy with the result.

Analysts have blamed weak regional market sentiment for the IPO's lukewarm response. Said Kevin Scully, managing director, NRA Capital, "If you look at the sharp correction in the market this week, I think there are three factors. One the Fed signalled that interest rates are probably going to continue increasing and are nowhere near peaking, and that is making people nervous. Two, there was an expectation there would be an extraction of liquidity by the Bank of Japan because they were actually reducing their money supply. And the third is actually a drain on liquidity from large IPOs like Bank of China." Bank of China has launched a US$9.7 billion share offering, the world's largest in six years.

Still, Thai Beverage is now armed with funds to pay down its debt of roughly US$966 million. But the listing didn't come without problems. First, it was opposed by conservative groups in Thailand, who said the listing would encourage alcohol consumption. Then, it led to the resignation of the president of Thailand's stock exchange, Kittiratt Na Ranong, who had said he would quit if he failed to get the brewery listed in Bangkok. In an e-mail reply to Channel NewsAsia, a senior Thai Beverage executive said Mr Kittiratt's decision to resign was a personal one.

Thai Beverage controls 60 percent of the Thai beer market and 75 percent of the spirits sector. It had earlier this month announced its decision to list in Singapore after failing to get permission to go public in its home market. - CNA /ct

tfwee · Veteran

The prospectus can be found here

-- Edited by tfwee at 16:12, 2006-05-22

KK · Guru

Thai Beverage launches S$1.76b Singapore IPO

SINGAPORE - Thai Beverage has launched an initial public offering in Singapore that aims to raise up to S$1.76 billion. Thai Beverage, the leading producer of beer and spirits in Thailand and one of the largest brewers and distillers in Southeast Asia, is known for its Chang Beer and Mekhong whisky.

The IPO would be Singapore's biggest in more than a decade, second only to Singapore Telecommunications whose October 1993 IPO was worth S$4.2 billion. The brewery is offering a total of 4.89 billion shares, of which 4.64 billion shares are for international investors and 244.45 million shares for the local market. It confirmed an indicative price range of 26 Singapore cents to 36 Singapore cents per share, with the final price for the 4.89 billion shares to be fixed by a bookbuilding process.

The company sought a Singapore listing after failed attempts to go public in Thailand, where it faced wrangling over whether alcohol firms are allowed to list in Thailand.

The public offer opens on 19 May at 12.00 noon and closes on 23 May at 12.00 noon. The shares are expected to be listed on the main board of the Singapore Exchange on 30 May.

- CNA/ir

KK · Guru

BT, Published May 13, 2006

How much fizz is there to Thai Beverage?

Investors will have to watch Thai consumption trends and the firm's ability to build a significant position. With World Cup soccer fever in the air and football fans stocking up the ice boxes in anticipation, Thailand's largest brewery could not have timed its Singapore listing better.

Thai Beverage, Thailand's leading producer of beer and spirits, is set to see its shares start trading on the Singapore Exchange (SGX) on May 30.

By most measures, Thai Beverage is big. Assuming the over-allotment option is exercised and using the mid price of the offer of 31 cents per share, Thai Beverage's market capitalisation will weigh in at $7.8 billion or some 2.7 times that of Asia Pacific Breweries (APB). Thai Beverage's initial public offering (IPO) will be among the largest ever in Singapore. The company has a 22-member board which is roughly double the board size of many large listed companies here and probably the largest board on the SGX. Some observers are puzzled why such a large board is required. That is one of several questions in the minds of market observers. For instance, why does the company have an employment agreement with the man who developed the formula for the company's Chang Beer and Archa Beer that runs till he 'reaches 72 years of age or as long as he is physically able to work'? Thai Beverage also has 40-year long-term employment agreements that expire at end July 2044 with two co-heads of the spirit concentrate production department.

But interesting or perturbing as such features may be, the foremost focus of this IPO boils down to how much fizz there is in the business of Thai Beverage.

Over the past three years, there has been virtually no revenue growth. Revenue from beer and water has declined while revenue from spirits has risen. Net profit has seen an upward trend over the period 2003 to 2005. For the latest financial year, Thai Beverage enjoyed gross profit margin of 31.4 per cent versus APB's 40.5 per cent. In terms of net profit, Thai Beverage and APB achieved margins of 11.4 per cent and 8.1 per cent respectively.

Thai Beverage is a dominant player in Thailand where its Chang Beer and Archa Beer brands had an aggregate market share of 60.4 per cent based on sales volumes in 2004 and where its spirits brands had a 74.4 per cent market share based on sales volumes in 2004. But the company notes in its preliminary prospectus that in Thailand, 'a trend adversely affecting growth in beer and spirits consumption is an increasing consumer focus on wine and ready-to-drink alcoholic beverages'. It adds that as such, 'consumption of these alternative alcoholic beverages has grown and may continue to grow at the expense of consumption of beer and spirits'. Currently, Thai Beverage has little presence in the higher-priced market segments in Thailand. Going forward, a key initiative of the company is to broaden its portfolio of brands by launching new beer and spirit brands to penetrate higher-priced segments of the market. The company says higher-priced market segments in Thailand for both beers and spirits offer significant growth potential as consumers trade up from economy segment beers and spirits.

Clearly, nabbing a sizeable foreign business to the Singapore market is a feather in the cap for SGX. For investors though, they will have to keep a sharp eye on consumption trends in beer and spirits in Thailand and the ability of Thai Beverage to build a significant position in the premium beer and spirits segment there. The challenge for any mass market player to become a major force in the premium end of the market can be formidable. Much time and energy, coupled with substantial investments in marketing, branding and advertising, may need to be incurred in the process. In terms of after-market performance, it has not been all smooth sailing for listings of large foreign entities on the Singapore market.

But the market likes consumer stocks and Thailand's growth prospects look good. Also, Thai Beverage does not look to be on the acquisition path to grow geographically, which has its ensuing risks and rewards. The onus clearly lies with Thai Beverage's management to deliver on a successful and quick entry into the premium end of the beer and spirits segment.