Thai Beverage Public Company Limited’s Stock Has Climbed 159% In 5 Years: Is It Still A Cheap Stock?
Thai Beverage Public Company Limited (SGX: Y92) is a Thailand based-company that distills spirits and brews beer, and also produces a wide variety of non-alcoholic beverages. In addition, it runs restaurants and distributes food products (such as sandwiches and frozen foods).
The alcohol-related businesses are by far the most important for Thai Beverage. They collectively make up 88.2% of the company’s total revenue for the six months ended 31 March 2017.
Over the past five years, Thai Beverage has been a great performer in the stock market with its stock price up by 159%. The company’s strong return raises the question: Is Thai Beverage still a cheap stock?
There’s no easy answer since there are many ways to look at a company’s valuation. But, we can still get some insight by comparing Thai Beverage’s current valuations with the market’s.
The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio and dividend yield. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).
At Thai Beverage’s current stock price of S$0.88, it has a PB ratio of 4.4, which is nearly four times higher than the SPDR STI ETF’s PB ratio of 1.2.
Meanwhile, the alcoholic beverages company has a PE ratio of 22, which also represents a significant premium to the SPDR STI ETF’s earnings multiple of 13.
Lastly, for the dividend yield, Thai Beverage has a trailing yield of 3.7%. Unlike the PB and PE ratios, Thai Beverage actually has a more attractive yield than the market’s 2.9%.
To sum things up, Thai Beverage can be said to be more expensive than the market given its significantly higher PB and PE ratios. But it’s worth noting that a deeper look at Thai Beverage’s business is needed before any firm investing conclusion can be reached. Valuations are only one piece of the puzzle – and like I mentioned earlier, there are many other approaches to value a company beyond what I’ve shared above.