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8 Feb 2021 By Jennifer Hughes

Anything Anheuser Busch InBev can do, Thai Beverage can try to do too. Tycoon Charoen Sirivadhanabhakdi plans to spin off and float a 20% stake in his Thai and Vietnamese brewing operations in Singapore. The deal has strong echoes of the Hong Kong listing of the Budweiser maker’s Asia unit in 2019. If he can match the fizzy valuation of his rival, he’ll be doing fine.

Best known for 25-year-old brand Chang, ThaiBev also controls Vietnam’s Saigon Beer Alcohol Beverage Corporation (Sabeco), producer of Saigon Beer and 333 among others in the fast-growing country. While the Thai market, where Chang leads, is considered mature, Vietnam’s population is younger and larger even though new tough drink-drive laws dented sales last year. In total the spin-out, unexcitingly dubbed BeerCo in filings, generated $260 million net profit in the 12 months to September 2020.

Since the success of floating $42 billion Budweiser APAC, trading in Hong Kong at almost 40 times forecast net profit, ThaiBev has been expected to follow suit or consider a sale. Assume revenue for the unit to be listed grows a conservative 15% and margins stay the same in its financial year to September, BeerCo would be worth $8.1 billion on 27 times earnings. That’s based on an average multiple of Budweiser APAC with the more sober valuations of big regional players Heineken and Kirin.

To reach the $10 billion equity value target reported by various media, BeerCo needs to grow faster than emerging market rivals or secure a Budweiser-like multiple. Yet BeerCo is less profitable. Operating margins, for example, are under half those of its bigger peer. And although the deal would mark Singapore’s biggest initial public offering in about six years, the city-state isn’t known for frothy valuations.

Either way, a deal will help ThaiBev reduce its leverage and it will also make it easier to value its high margin but lower growth spirit business. A straight sale would have been cleaner still and would have reduced Charoen’s tangled empire; listed units in Singapore, Bangkok and Ho Chi Minh also house property, publishing and consumer packaging. But Asian tycoons tend towards hoarding, not tidiness. There will be cheers all round if this goes well.


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