ThaiBev's foreign debt predicted to drop to $3b in 3Q

F&N REIT to boost expansion plans.

According to OSK, Thai Bev’s regional expansion will be executed with the additional reach of F&N’s regional network.

For mismatched asset-liability and currency risk, the company revealed that its SGD4.4bn foreign debt (for buying F&N) will decline to around SGD3.0bn after THBEV pays down debt by THB1.4bn in 3Q13. With plans for F&N to issue a REIT, its foreign debt will likely be further reduced going forward.

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THBEV is the largest beverage producer in Thailand, with an established portfolio of products in spirits, beer and RTD green tea, for which it commands market shares of more than 80%, 30% and 50% respectively.

Its key brands include RuangKhao (spirits), Chang (beer) and Oishi (RTD green tea). Its non-alcoholic division, which contributes 13% of total revenue, slipped into a THB750m loss in 1H13 vs a THB885m profit a year ago.

This was due to the expiry of its Pepsi contract in Nov 2012 and intense competition in the RTD green tea segment.

In terms of outlook, the spirits business will see some normalisation this year after last year’s high base effect, which resulted from raising prices to offset Aug 2012’s increase in excise taxes.

Similarly, efforts to grow and turnaround its beer business is ongoing, with price increases and marketing activities.