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Carabao Group PCL (SET:CBG), 25.01% stake owned by Sathienthum Holdings Limited and 21% stake owned by Miss Nutchamai Thanombooncharoen, Managing Director of Carabao Group, is a Thailand-based holding company primarily engaged in the manufacture and distribution of bottled beverages through its subsidiaries.
The company's subsidiaries include Carabao Tawandang Co Ltd, which manufactures and distributes beverages, Asia Pacific Glass Co Ltd, which manufactures and distributes glass bottles and products, and Tawandang DCM Co Ltd, which distributes beverages.
Some of its major energy drink brands are Carabao Dang and Start Plus. The company distributes its products internationally through trading partners which are importers, distributors, and/or local distributors in countries around the world.
In their August 15 financial statement, Carabao Group said its revenues for the second-quarter 2016, ending June 30, was 2.32 billion baht, up 15.2% on a year-on-year basis. The company reported earnings of 393 million baht, or 0.39 baht per share, for the second-quarter 2016, compared to 355 million baht in the same quarter last year, up 8.3% year-on-year.
Domestic sales accounted for about 67% of the total revenues, jumping 11.0% during the quarter, while international sales surged 25.45% due to continuous growth in Cambodia and in part to the initial rollout in the UK. Carabao Group said it sold 198 million bottles of Carabao Dang, up 5% year-on-year, and 7 million bottles of Star Plus, up 179.2% year-on-year.
The consensus estimate for full-year 2016 earnings, based on 8 analysts polled by the Financial Times, is 1.51 baht per share, representing 19.84% year-on-year growth, on revenues of 9.28 billion baht, a 19.7% increase on a year-on-year basis.
In late May, London-based Intercarabao Ltd., which holds a sales, marketing and distribution agreement with Carabao Group, launched the Carabao brand in the UK. The UK version of the product contains less sugar and more carbonation than its Thai counterpart, according to Intercarabao Ltd. CEO Peter Gutierrez. The product is priced the same as the market leader, Red Bull, but contains 30% more liquid.
As part of its UK marketing, Carabao will be a top-tier sponsor of the Chelsea and Reading clubs for the next season. Beyond the UK, Gutierrez is eyeing "larger Western European markets" as well as the Middle East, according to UK-based online market intelligence Just Drinks.
From our technical viewpoint, CBG shares have been trading in an ascending channel since their IPO in late 2014. The stock began to take off after the company started selling its products in the UK in late May this year, and broke out the ascending channel in June. The stock has gained quite a lot of momentum since then. Investors may want be aware that the stock has a P/E of 52 and a low free-float, about 300 million shares, compared to 1 billion shares outstanding, meaning prices can move up or down quickly.
According to the Financial Times, the consensus amongst 9 polled investment analysts covering CBG gave the company an Outperform rating, with the median 12-month price target of 39.75 baht per share, as of August 26.
Disclosure: Long position and no recommendation. |
