ThaiBev eyes listing of brewery unit on SGX, potentially biggest IPO in years

BEER and liquor giant Thai Beverage Public Co (ThaiBev)'s brewery unit is heading for a listing on the Singapore Exchange (SGX), Bloomberg reported.

The report cited sources with knowledge of the matter that the company is seeking a valuation of about US$10 billion for the unit, with the listing possibly taking place as soon as the second quarter.

An earlier Reuters report stated that the deal could raise up to US$2 billion, lower than a December 2019 report which estimated a US$3 billion issue and a US$10 billion valuation for the assets.

Still, this could potentially be the largest listing here in recent years.

Reports say that this could be biggest initial public offering (IPO) since the listing of P7VU, which raised US$5.5 billion in 2011.

In a recent report, UOB Kay Hian (UOBKH) said it is reasonable to expect a lower valuation for Thai Beverage Company's beer assets, given that Sabeco - its Vietnam brand - had been impacted by drink-driving regulations and Covid-19 restrictions.

This comes with the potential long-lasting impact of drink-driving regulations on alcohol consumption, which could dent valuations and put it on a lower range compared with in 2019.

But UOBKH analyst Lucas Teng is still upbeat about the prospects of recovery, estimating beer volumes in Vietnam to be around 15-20 per cent below pre-Covid-19 levels as at end-FY2020.

UOBKH maintained its "buy" call on the stock with a sum-of-the-parts-based target price of S$0.85. It values the spirits business at 17 times the enterprise value to the earnings before interest, taxes, depreciation, and amortisation (EV/Ebitda). It also values ThaiBev's beer business at 15 times EV/Ebitda, in line with Asean peers' average.

ThaiBev had in 2019 floated the idea of a potential listing of its beer business as it evaluated strategic proposals and opportunities when queried by SGX following unusual volume movements in its shares.

That was following media reports stating that it was considering a public listing of its brewery business on SGX.

ThaiBev has declined to comment.

The ThaiBev group along with two of its units - Fraser and Neave (F&N) and Frasers Property (FPL) - are listed on the SGX mainboard.

In a clarification announcement late Thursday evening, ThaiBev said it has been exploring “avenues to optimise its asset portfolio and enhance value for its shareholders”, including the potential listing of its beer business.

While the company said it is working towards a possible listing of its beer business on SGX with its appointed advisers, it warned that there is no assurance that any listing will finally occur. It added that details relating to the potential listing remain subject to finalisation.

Shares of ThaiBev were among the most heavily traded stock on Thursday, with over 49 million shares changing hands. The counter ended the day at S$0.82, up S$0.02 or 2.5 per cent.