February 2008 Thai Beverage Plc Thai Beverage Plc Investor Presentation Aug 2010 By By Investor Relations Investor Relations Department Department SIAS Corporate Profile Seminar, SIAS Corporate Profile Seminar, 4 4 September September 2010 2010, Singapore , Singapore By By Investor Relations Investor Relations Department Department SIAS Corporate Profile Seminar, SIAS Corporate Profile Seminar, 4 4 September September 2010 2010, Singapore , Singapore
SIAS Corporate Profile Seminar, SIAS Corporate Profile Seminar, 4 4 September September 20102010, Singapore, Singapore
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The following presentation may contain forward looking statements by themanagement of Thai Beverage Public Company Limited (“ThaiBev"), relating to financial
or other trends for future periods, compared to the results for previous periods.
Some of the statements contained in this presentation that are not historical factsare statements of future expectations with respect to the financial conditions, results of
operations and businesses, and related plans and objectives. Forward lookinginformation is based on management's current views and assumptions including, but notlimited to, prevailing economic and market conditions. These statements involve known
and unknown risks and uncertainties that could cause actual results, performance orevents to differ materially from those in the statements as originally made. Suchstatements are not, and should not be construed as a representation as to futureperformance of ThaiBev. In particular, such targets should not be regarded as a forecast
or projection of future performance of ThaiBev. It should be noted that the actualperformance of ThaiBev may vary significantly from such targets.
- Former Executive Vice President of Sangsom Group, 2000-2003, and Vice President of the Office of Controller, Surathip Group 1983-1999. Bachelor of Accounting.
Mr. Sithichai Chaikriangkrai - Director and Executive Vice President Finance
- Over 23 years’ finance and accounting experience including Asia Voyages & Pansea Hotel; Goodyear ( Thailand); Coopers & Lybrand.
Mr. Ueychai Tantha-Obhas - Director and Executive Vice President Sales Planning and Support
- Former Chief Executive Officer and the Managing Director of Riche Monde (Bangkok) Ltd.
- Former Managing Director of Sarin Property Co., Ltd.,
- Former Group Product Manager of Colgate Palmolive Co., Ltd.
Dr. Pisanu Vichiensanth - Director and Senior Vice President Beer Production
- Former Assistant Plant Executive, Carlsberg Brewery (Thailand); - Head of Food Science and Technology at Thammasat - University;Head of Food Technology at Khon Kaen University;
- Lecturer in food technology at Khon Kaen University.
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Experienced team (cont.)
Mr. Chukiet Tangpongprush – 6th
- Head of the General Affairs Department of Sura Maharas Plc.
- Head of the Human Administration and General Affairs, Sura Bangyikhan Company.
Mr. Sawat Sopa - Executive Vice President Spirit Production
- Former Managing Director of Beer Thai (1991) Co Ltd - Executive Vice Chairman of Red Bull Distillery (1988) Co Ltd.
- Former Executive Director of the 43 Group of companies - Former Chief Engineer of Siam Chem Co. , Ltd
- Former Engineer, Bangchak Oil Refinery.
Mr. Somchai Suthikulpanich - Senior Vice President Non-Alcohol Production
- Appointed the SVP ThaiBev and EVP of Thai Beverage Marketing in 2008
Mr. Jean Lebreton - Senior Vice President Strategy
- Former partner of Boston Consulting Group (BCG)
- 16 years of experience in consulting in Europe and Asia
- Experience in sectors such as consumer goods, banking and energy
Mr. Vichai Chaiyavaranurak - Senior Vice President Business Development
- Appointed the SVP of Thai Beverage in 2008
- He is also an executive director and director of some of ThaiBev’s subsidiaries
Mr. Matthew Kichodhan - Senior Vice President International Business
- Chief Operating Officer, Minor Corp. Pcl (2006-2009)
- Vice President, Business Management, Gillette Asia Pacific Group, Singapore (2004-2006)
- Regional Marketing Director, Asia Pacific, PepsiCo Inc. (1995-2004)
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Social Contributions and Sponsorship
� Help in Health care needs of general public
� Help preserve heritage of Thai arts & cultures
� Various donations & social contribution projects i.e. ThaiBev Blanket Donation program
� Contribution to the improvement of Thai sport competitiveness
� Sponsor Everton Football Club in the UK
� Send talented players to train as part of Chang Beer’s sponsorship of the Everton FC
� Support cultivation of sugarcane, cassava, rice
� Biogas projects at breweries and distilleries
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Our Vision & Mission
Vision:
To become a leading global beverage company focusing on commercial excellence, continued premiumisation of our products, and professionalism.
Mission:
To seek “partnerships” among our key stakeholders through six guiding values:
• offer quality products for every customers segment
• satisfy distributors’ needs by offering professional services
• provide first-quartile returns to our shareholders with consistently high revenue growth and profitability
• become a role model for professionalism, transparency, and good corporate
governance
• trust, empowerment, and reward our staff to make them accountable, and
• contribution to local communities
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Key Strengths
� Largest Alcobev Player in Thailand
� State-of-the-art production facilities
� Strong brand recognition and a very diversified product portfolio
� Extensive distribution network and logistics
� Strong balance sheets
� Experienced and Proven Management Team
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Company Strategies
Leverage infrastructure & distribution network
Develop the international business
Expand in new profitable segments
Reshape HR management systems
The company plans to move steadily upmarket to encroach in segments traditionally dominated by foreign imports.
The company has also diversified into non-alcoholic drinks to seek further growth and mitigate risks in the alcoholic beverage market.
While doing this, the Company will maintain its current market leadership and continue brand investment.
The key to ThaiBev’s success domestically remains with its infrastructure and distribution network. By diversifying and increasing its portfolio, the
company will face very low incremental cost of distribution.
The company’s strategy of developing the international business will offer the potential for more rapid growth.
The company has reshaped its HR management system to increase staff competency.
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� Blend 285 (launched in 2006)
Blended spirit, 35% ABV
� Federbräu (launched in April 2008)
Premium Lager beer, 4.7% ABV brewed under Reinheitsgebot,The German Purity Law 1516
� Drummer (launched in 2008)
5 year Scotch whisky, 40% ABV
� Meridian (launched in 2009)
V.S.O.P brandy, 38% ABV
Premiumize our product offer
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Refreshing Brands
� Sangsom(Brown Spirits)
� Hong Thong(Brown Spirits)
� Mekhong
(Brown Spirits)
� Chang Beer(Lager)
Repackaged, Revamped and Relaunched in April 2006
Introduced in gift boxes in 2007
Repackaged, Repositioning and Relaunched in 2009 in Thailand after successful leads in
international markets
Repackaged, Clearer positioning, and Relaunched in Q409
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Expand into profitable new segments
Acquisition of Wrangyer & Black Up
� On 28 Jan 08, ThaiBev acquired all the energy drink and ready-to-drink coffee assets from Wrangyer Beverage Ltd. at 420 million baht
Acquisition of Oishi Group
� Acquired 43.9% on 30 Sept 2008; 89.9% following a tender offer 14 Nov 2008, for a total cost of 6.24 billion Baht
� Production capacity of soft drinks 324 million liters
� 128 restaurants and kiosks at 69 locations (Dec 09)
Water
� Total production capacity of 450 million liters
� In October 2007, ThaiBev approved the investment of 194 million Baht to increase production of PET drinking water bottle from 7 million liters per year to 700 million liter per year
� Began home delivery service for both water and club soda in 2009
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International business
International Beverage Holding Limited is the international arm of ThaiBev
� Headquarters in Hong Kong
� Global operations managed by offices in Hong Kong, Singapore, USA, UK and China
� Inver House Group in Scotland
Thai products - Focus on key Thai brands with potential to become “Global Thai Brand”
� Mekhong has been revamped and sold through high-end restaurants and cocktail bars in Europe and North America
� Chang Beer has been repackaged and recently launched in the major Western markets as premium imported beer
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Distribution Network
93 branch offices
Hypermarts, Supermarkets,
Convenience Stores, Hotels, Golf courses
Modern trade/ Hospitality Team
ThaiBev
International
Modern trade, Thai & Fusion
restaurants, bars, pubs
>80 countries
400,000 Retail shops/ Restaurants
4,500 Sub Agents
~1,050 Direct Sales Employee
930 Agents
680 Direct Sub Agents
� 93 sales offices covering every province of Thailand
� Apart from selling directly to retail shops and restaurants, ThaiBev’s direct sales team also fosters good relationship
with retailers and shops as well as recommend and assist them in product display arrangement and pricing
� Extensive distribution network to approx. 400,000 points of sales enabling us to deliver newer products faster to
Dividend Policy: not less than 50% of net profit after deducting all appropriated reserves and investments
Dividend
Source: ThaiBev’s Financial Statement
Dividend Payment 2008 2009
Net Profit belonging to the Company (M Baht) 10,342 10,566
Number of Shares (M) 25,110 25,110
Dividend (M Baht) 7,533 8,286
Less Interm dividend already paid (M Baht) 3,013 3,767
Final dividend (M Baht) 4,520 4,520
Portion of Net Profit 73% 78%
Total Dividend per share (Baht) 0.30 0.33
Less Interm dividend already paid (Baht) 0.12 0.15
Final dividend (Baht) 0.18 0.18
THB: SGD 1* 23.79 23.82
Total Dividend per share (SGD) 0.013 0.014
Share close** (SGD) 0.24 0.22
Dividend Yield 5.3% 6.4%
* Annual Selling Rate from Bank of Thailand
** Average closing price from Jan - Dec'08, for year 2008
** Average closing price from Jan - Dec'09, for year 2009
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Excise Taxes Structure
For alcohol industry, excise tax levy is based on the higher of the two rates - Ad Valorem vs. Specific. For example, a 640ml Chang beer with 6.4% ABV when applied Specific Rate calculation (Bt*Liter of pure alcohol* volume – 100x 6.4%x.640) is Bt4.10 vs. Ad Valorem of Bt18.97 appeared above. Thus, Ad Valorem rate is levied plus additional taxes such as Municipal, health, and TPBS.
Used in medicine, pharmaceuticals, science 0.10% 0.05/ liter
Other 10% 6
+ Municipal Taxes: 10% of Excise + Health Promotion Fund Contribution: 2% of Excise
+ Thai Public Broadcasting Service Fund Contribution: 1.5% of Excise *
* TPBS Funds Applied from 14 Jan 2008
Source: IPO Prospectus, Ministry of Finance Announcement no. 78/2550
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The Thai Economy
� Population 67.0 Million (Dec’09)
� GDP growth 5.8% (Q4’10)
� Core Inflation 0.6% (Jan’10)
� Exchange Rate 33.04 Baht/US$ (Jan’10)
� Minimum wage 151-206 baht/day (announced on 24 December 2009)
Source: Bank of Thailand, Office of the National Economic and Social Development Board, Ministry of Labour
Economic Conditions Jan’10By Bank of Thailand
– The economic conditions in January 2010 continued to expand, and its expansion remained broad-based. External demand and tourism were the main factors contributing to an economic expansion.
– Private consumption grew satisfactorily due to continued expansions in farm income and employment.
– Manufacturing production slightly decelerated due to oil refinery’s annual maintenance shutdown and inventory build-up in the previous month in some industries.
– External stability remained sound as reflected in high level of international reserves and low level of external debts, while internal stability showed signs of tightened labor market in some industries and rising inflation rate.
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SpiritsSpirits
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Key Demand Drivers/Trends
� Growing preference for brown spirits and beer
� Growing recognition and
acceptance of Western brands among local consumers
� Aspiration to perceived higher quality
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Launching ThaiBev’s First Brandy
� Debut of ThaiBev’s new brandy under the brand of “Meridian”
� Meridian:
� V.S.O.P (Very Special Old Pale) brandy distilled from fermented
grapes and other fruits, and aged in wooden casks for four years
� 38% ABV
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* The price shown above is for full bottle. The volume for white spirits full bottle is 625 ml
* The volume for brown spirits full bottle is 700 ml, except Mungkorn Thong, Mekhong which is 750 ml
(in million Baht) 2008 2009Revenue from sales 3,953 4,916
Interest income 3 2
Other income 14 30
Total revenues 3,970 4,948
Cost of sales 2,938 3,130
Selling and administrative expenses 838 1,210
EBIT 194 608
EBITDA 599 965
Interest expense 66 32
Income tax expense (36) 88
Net profit 164 488
CoS as % of rev 74% 64%
S&A as % of rev 21% 25%
Gross profit margin 26% 36%
EBIT Margin 5% 12%
EBITDA Margin 15% 20%
Net profit margin 4% 10%
* EBIT = Earning before Interest Expense and Tax
* EBITDA = Earning before Interest Expense, Tax, Depreciation and Amortization
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Water and Soda
� Chang Water and Soda are produced at three breweries in Ayutthaya (2), Kamphaengphet
Energy drink, Ready-to-drink coffee
� On 28 Jan 08, ThaiBev acquired energy drink and ready-to-drink coffee assets at 420 million baht
Energy drink: Wrangyer
Market size (approx.) 16,000 – 17,000 M Bt
2006 Market share 4-5%
Production capacity 2.64 million case/ year
Plant location Nakhon Pathom
Ready-to-drink coffee: Black Up
Market size (approx.) 8,500 M Bt
2006 Market share 4%
Production capacity outsource
Non-alcohol Beverages
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Non-alcohol Beverages
Oishi
ThaiBev acquired 43.9% of Oishi’s shares from Yodkij Co. Ltd. on September 30, 2008; 89.9% following a tender offer 14 Nov 2008, for a total cost of 6.24 billion Baht. Oishi’s businesses are beverage and food.
Oishi Beverages:
Green tea (71% market share), Amino OK (functional drink) and Seiki (Fruit drink)
– Oishi got high Japanese image which is reinforced by its restaurant business. Several competitors have tried to do this but to no avail.
– During 2006-2007 several minor green tea brands have quitted the market due to the market downturn.
– Oishi not only focus its promotion with consumers but also trades and retailers to ensure maximum support and distribution.
For more information on Oishi group, please go to www.oishigroup.com
(in million Baht) 2008 2009Revenue from sales 2,636 3,298
Interest income 12 5
Other income 12 14
Total revenues 2,660 3,317
Cost of sales 1,540 2,054
Selling and administrative expenses 968 1,093
EBIT 152 170
EBITDA 282 325
Interest expense 10 10
Income tax expense 6 9
Net profit 136 151
CoS as % of rev 58% 62%
S&A as % of rev 37% 33%
Gross profit margin 42% 38%
EBIT Margin 6% 5%
EBITDA Margin 11% 10%
Net profit margin 5% 5%
* EBIT = Earning before Interest Expense and Tax
* EBITDA = Earning before Interest Expense, Tax, Depreciation and Amortization
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Food
Oishi Food Business:
Japanese buffet, A la carte food outlets and bakery
– Business format of Oishi restaurant is mainly different from others because few companies offer Japanese buffet format.
– Estimate number of Japanese restaurants in 2008 = 880
– Major promotion activities are TVC, credit card campaign, rotation of menu, gift-with-purchase, membership and lucky draw.
– 133 restaurants and kiosks at 72 locations (May 10)
For more information on Oishi group, please go to www.oishigroup.com
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International MarketInternational Market
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International Market
• US– Products: Chang Beer, Mekhong – Target:
Phase 1 Asian restaurants (Thai, SE Asian, Fusion). Phase 2 move to pubs, bars (mainstream)
• UK– Sponsor Everton Football Club to promote Chang Beer
– Target: Thai restaurants, pubs, bars/cocktail bars, and Goodison Park
– Move on to: Modern trade ex. Tesco Lotus
• Hong Kong– Center for Asian market– Gateway to Chinese market
• Australia– Woolworth distributes nationwide through over 3,000 outlets
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Progress in Overseas Business
• USA
– USA performance was driven by Chang Beer sales increasing by 40% when compared to 2008 as per our goal despite the total Import Beer category declining by 9.2%
– Stronger than expected sales of Inver House Scotch whisky products in the USA. InterBevUSA now has regulatory approval to sell Inver House Malts in almost all states in the US.
• UK & North Asia (including Hong Kong)
– Sales continued to grow at moderate rate, with the UK being impacted by competitive price promotions during the peak holiday period in the fourth quarter.
– Inver House completed the installation of its new bottling line, and its new semi automated dumping, and filling facilities with great success, and this has allowed the operations to run more efficiently and handle greater volumes.
– Yunnan Yulinquan Liquor Co. Ltd. , our most recent acquisition is now integrated as part of international operations in the fourth quarter, and will play a bigger role in our growth in 2010.
• ASEAN
– Sales revenue grew by 71% led by Chang Beer, and Thai spirits sales volume led by Crown99 brand along with continuing positive growth in Inver House products and the introduction of non-alcohol products (Wrangyer and Power Plus) during the SEA Games in Laos.
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• Inver House, part of Pacific Spirit UK, was acquire by ThaiBev in Oct 2006.
• 5 Distilleries under Inver House:
– Balmenach
– Pulteney
– Balblair
– Knockdhu
– Speyburn
• Key markets
– European Union
– USA
– Australia
• Inver House exports to over 80 countries, using 3rd party distributors
• ThaiBev can export Chang beer and other products to UK market, using the experience and distribution contacts of Inver House
Inver House
www.inverhouse.com
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Latest Acquisition
• Acquisition of Yunnan Yulinquan Liquor Co., Ltd. (YLQ) in China– Dated: May 15, 2009– Acquire: all the equity interest– Total RMB 69 million -> one time payment by cash by Aug 31, 2009
• Valuation– Valuation by: Deloitte & Touche Financial Advisory Services Limited– Based on: income approach & market approach– Value: RMB 70.5 million
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Latest Acquisition
About Yunnan Yulinquan Liquor Co., Ltd.• Location
– Eshan district, Yuxi town, the South of Kunming (the capital of Yunnan province)
• Products– Chinese white spirits (economy to premium segments)– Yulinquan is the leading brand– Key markets: Yuxi, Kunming and several cities in
Yunnan province
• Production capacity– 5,000 tons/year (at 50°) (base spirits) or
6,500 tons/year (finished products)
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Latest Acquisition: Key Benefits
• Gateway into alcoholic beverage business in China– China market has been growing continuously
• Opportune business location– Yunnan population: ~45 million– Yunnan spirits market: ~200 million liters, RMB 20 billion in value– Yunnan province is one of the top alcohol beverage markets in China, with high growth
potential
• An ownership in one of the oldest & widely recognized spirits brand– Yulinquan is one of the oldest brands, in market for >250 years
• Platform for expansion into other businesses– Having white spirits business in China makes it is easier to enter into the beer business– Having business in Yunnan province, which is near Thailand, may elevate the possibility of
exporting ThaiBev products into Yunnan
• Management and teams– The management of YLQ can continue working, reducing the risk of business disruption– Opportunity for ThaiBev to tap into more capable Chinese staff from other sources in order to
expand the business in China
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Financial ReviewFinancial Review
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Financial Highlights
EBITDA = Earning before Interest Expense, Tax, Depreciation and Amortization
Source: Company’s Consolidated Financial Statement s 2009 (Thai GAAP)
Group 2008 2009 ChangeSales Revenue 105,452 107,969 2.4%COGS (75,326) (76,609)
% of Sales Revenue 71.4% 71.0%
SG&A & Other Expenses (15,314) (16,095) % of Sales Revenue 14.5% 14.9%
EBITDA from Normal Operation 20,081 19,910 -0.9%Net Profit from Normal Operation 10,238 10,643 4.0%Capital gain from Thai Alcohol Divestment 526 -
Less: Minority interests (264) (77) Net Profit belonging to the Company 10,342 10,566 2.2%
Margin*EBITDA from Normal Operation 19.0% 18.4%Net Profit from Normal Operation 9.7% 9.9% * margins are % of sales revenue
Group 2008 2009Total Assets 80,059 77,150 Total Equity Attributable to Equity Holders of the Company 53,763 56,211 Interest-bearing Liabilities 17,291 11,983
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Financial Highlights
Ratios 31-Dec-08 31-Dec-09Current Ratio 1.54 1.85Total Debt to Equity 0.48 0.37Net Asset Value per Share (Baht) 2.14 2.24Net Asset Value per Share (SGD)* 0.09 0.09 * exchange rate at THB 24: SGD 1
Source: Company’s Consolidated Financial Statement s 2009 (Thai GAAP)
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Peer Comparison
Source: ThaiBev’s Consolidated Financial Statements 2008 (Thai GAAP), Peers’ Annual Report 2008Remark: Peers include Asahi Breweries, APB, Carlsberg, Diageo, Heineken, A-B InBev, Kirin, Molson Coors, Pernod Ricard, SABMiller, San Miguel Genebra, Tsingtao
D/E = Total Debts/Total EquityMargin of “Net Sales” (Sales after Excise Tax)
Margin of “Net Sales” (Sales after Excise Tax)
EBITDA Margin
Net Profit Margin
D/E
ROE 25.40
10.60
Avr.
ThaiBev
P/E
Source: Reuters Knowledge Remark: Peers include APB, Carlsberg, Diageo, Heineken, Anheuser Bush InBev, Pernod Ricard, SABMiller, Tsingtao P/E is current P/E, last fiscal year, as of 14 May 09
1.59
0.48
Avr.
ThaiBev
19%
36%
Avr.
ThaiBev
10%
19%
Avr.
ThaiBev
14%
19%
Avr.
ThaiBev
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Seasonal Sales:
• Q3 (the slowest) -> rainy season and the Buddhist Lent period• Q4 (the best) -> kind weather, many holidays, and end of the Buddhist Lent period
Look at Long Term Growth as Quarters can be Misleading
Dividend Payment Interim'09 Interim'10Net Profit belonging to the Company (M) 5,773 5,054 Number of Shares (M) 25,110 25,110 Interim Dividend (M) 3,767 3,767 Earnings per share (Baht) 0.23 0.20
Dividend Payout Ratio 65% 75%
Dividend per share (Baht) 0.15 0.15
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Consolidated: H1’10 Highlights
Group H1'09 H1'10 ChangeSales Revenue 54,347 59,407 9.3%COGS (38,109) (42,760)
% of Sales Revenue 70.1% 72.0%
SG&A (7,483) (9,352) % of Sales Revenue 13.8% 15.7%
CurrentBank overdrafts 655 362 Short-term loans from financial institutions 5,063 7,631 Current portion of long-term loans 3,765 4,090
9,483 12,083 Non-currentLong-term loans from financial institutions 2,500 -
2,500 - Total 11,983 12,083
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Current ratio DOWN increase in current liabilities
Financial Ratios
Note: use 365 days to calculate turnover
Ratios 31-Dec-09 30-Jun-10Current Ratio 1.85 1.65Total Debt to Equity 0.37 0.37Net Asset Value per Share (Baht) 2.24 2.25Net Asset Value per Share (SGD)* 0.09 0.09 * exchange rate at THB 24: SGD 1
Chinese Herb Spirit(White Spirit + Water +Chinese Herb + Caramel)
Brown Spirit(Alcohol +Water +
Concentrate +Caramel)
By-productSlops -> Fertilizer (Bionic Humus Co.)
Fermentation(7 days)
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Quality System
Many ThaiBev’s factories have received quality certificates, e.g.
• ISO 9001
• ISO 14001
• GMP (Good Manufacturing Practice)
• HACCP (Hazard Analysis and Critical Control Point)
Waste Management
We operate a highly efficient waste water treatment facility to minimize adverse environmental impact on the river. We use many types of water treatment, for example
� Aerobic System - Activated Sludge
� Anaerobic system - receive bio-gas as a by-product
