Yuanta Securities issued an analysis stating that Carabao Group Public Company Limited, or CBG, is likely to return to year-on-year profit growth from the third quarter of 2569 onward. The research team expects preliminary normal profit in the third quarter of 2569 in the range of 700 to 740 million baht, flat to slightly lower quarter-on-quarter, because it is the low season for the business in Myanmar, and gross margin is pressured in the short term by energy and packaging prices, both aluminium coil and plastic, which have risen from the impact of war in the Middle East. But normal profit still grows year-on-year from a low base last year that was hit by the Thai-Cambodian conflict. For 2569, the research team expects normal profit of 2.712 billion baht, down 4.4% year-on-year, and expects that in 2570 normal profit will return to its highest level in six years since 2564 at 3.124 billion baht, up 15.2% year-on-year, driven by revenue expected to grow to 26.726 billion baht, or 13.9% year-on-year. This is supported by the distribution service business, expected to grow 20.0% on the expansion of channels for hom mali rice liquor, the company's branded goods business, expected to grow 8.7% while holding the price of Carabao Dang at 10 baht and launching new products in the 12 baht group to tap the premium market, and the contract manufacturing business, expected to grow 20.0% from full-year recognition of Loveza revenue. Gross margin may slip slightly to 25.3% from 25.7% in 2569 because of the higher share of revenue from the distribution service business, which has a lower margin. The research team maintains a buy recommendation, selecting it as a top pick stock in the beverage group for the fourth quarter of 2569, and gives a fair value at the end of 2570 of 81.00 baht, based on a PER of 25.5 times, equivalent to -0.5 SD of the five-year historical PE band, while the current share price trades at a PER for 2569 and 2570 of 19.6 times and 17.0 times respectively, or -1.0 SD of the five-year historical PE band. The company's factory and distribution centre are located in Chachoengsao province, which is currently flooded, but the company states that production capacity has not been affected, only that transport may be delayed, and if the flooding drags on until mid-October 2569 it could cause normal profit in the fourth quarter of 2569 not to grow quarter-on-quarter, a downside risk to the 2569 forecast of about 2.0%. The share price has already fallen about 10.3% from before the floods, hitting a low of 50.00 baht, which is seen as having already reflected these negative factors.
Carabao Group Public Company LimitedYuanta maintains buy and sets 81 baht fair value, forecasting record six-year profit of 3.124bn baht in 2570.
