Better farm income could buoy ThaiBev
The Thai government is pushing initiatives to support prices of agricultural goods.
Thai Beverage could bolster its domestic alcohol consumption as farm income sustains improvement, RHB said.
“Whilst some of the agricultural sub-sectors are still underperforming, we note that the Thai government is putting in measures to support the prices,” the firm explained. “Rubber is one of the major crops dragging down the farm price index.”
RHB noted that the Thai government is on the process of paying natural rubber growers to cut trees to support prices. This is against the background of the looming US-China trade wars which could dampen demand.
Also read: ThaiBev's board injections to boost Sabeco
“The government has also set minimum price mechanism for shrimps farmers, link pineapple producers to modern trades and export chickens to China to help the other affected sub-sectors,” the firm added.
With Thailand’s GDP growth sustaining its strong performance, RHB believes that alcohol consumption will bottom out soon. Moreover, the upcoming election could also boost overall consumer sentiment.
ThaiBev's Q3 profits plunged 61% YoY to $247.72m (THB5.99b) in Q3. Earnings in the spirit business fell 15.6% to $166.09m (THB4,016m) on the back of lower sales revenue.