CBG Jumps 2%, Analyst Expects a Record High in 4Q20, Recomm. “BUY” at ฿181

CBG Jumps 2%, Analyst Expects a Record High in 4Q20, Recomm. “BUY” at ฿181

The share price of Carabao Group Public Company Limited (CBG) rose ฿2.50/share or 1.80% to ฿141.50/share with a trading value of 1,468 million baht.


KTBST Securities reiterated a “BUY” rating on CBG and a target price of ฿181.00, which is pegged to 2021E PER of 38.0x. This implies the mean of its 5-yr year level. KTBST expected 4Q20E net profit to grow +34% YoY, +11% QoQ to 1.07 billion baht, which will hit a record high for the fourth consecutive quarter. 


A growth YoY will be driven by 1) an increase in total revenue, which we estimate to rise +17% on higher overseas sales and strong performance in the distribution business, despite the weaker domestic energy drink market, and 2) a wider gross profit margin in light of higher capacity utilization and a lower cost of raw materials. A rise QoQ will be due primarily to seasonality.


KTBST maintained its 2020E net profit forecast at 3.72 billion, which indicates a strong growth of +49%. In 2021E, KTBST forecasted net profit to grow a further +28% to 4.76 billion baht.


CBG’s share price outperformed the SET Index by 19% in one month, which KTBST believes was due to optimism about the new hemp beverage. While the stock currently trades at an undemanding 2021E PER of 29.2x, which is -0.5 SD below its 5-yr average, KTBST forecasted a strong EPS growth at 32% CAGR in 2019-22E. 


Key catalysts are a lower cost following a change in sugar content, Woody C+Lock, of which overseas sales have grown faster than expected, and a new functional drink that CBG has a plan to introduce in the near to medium terms.