Thailand: Thai Beverage plans to market S$1.8 Bln of stock in Singapore

Thai Beverage Pcl, Thailand's largest brewer, is planning to sell as much as S$1.8 billion ($1.1 billion) of shares in an initial offering in Singapore, the biggest stock sale in the city-state in more than a decade, Bloomberg reported on May 05.

Thai Beverage will sell 4.88 billion shares, half of which is new stock, at between 26 Singapore cents and 36 Singapore cents a share, according to a preliminary prospectus filed to the Monetary Authority of Singapore. Thai Beverage is owned by Charoen Sirivadhanabhakdi, Thailand's richest man.

The brewer of Chang Beer and Mekhong whiskey is selling shares in Singapore after anti-alcohol protesters blocked a sale in its home market. The sale helps boost Singapore's efforts in drawing more foreign share sales, crucial to its effort to remain a major financial center in Asia as competition increases from Shanghai to Mumbai.

“In terms of proximity to its home market, Singapore would feature quite prominently,'' said Steven Lim, who helps to manage $300 million of assets at Daiwa SB Investments in Singapore. “The Singapore market would probably give them more visibility than, say, Hong Kong, which is a prominent market for Chinese stocks.''

Bangkok-based Thai Beverage's offering may be the biggest IPO in the city-state since Singapore Telecommunications Ltd.'s initial sale in 1993, which raised more than S$4 billion, the largest for the country. Company owner Charoen, 60, has a wealth estimated at $3 billion by Forbes magazine.

“We do look forward to that listing because it does look like it's going to be a decent-sized one,'' Gan Seow Ann, Singapore Exchange's executive vice president and head of markets, told reporters.

The share sale will help Thai Beverage expand production at its three breweries and 16 distilleries to keep its lead back home, as well as broaden its revenue stream in the international market. The company said it expects to expand the capacity of its breweries by 30 percent.

“Our strategy is to maintain and build on our leading position in the Thai alcoholic beverage market and expand our business internationally by investing in a portfolio of existing and new brands to cater to each segment of the market,'' the company said.

Still, the company said the alcoholic beverage industry in Thailand is “highly competitive'' and it competes with both local and international brewers. Thai Beverage's share of the beer market had fallen to 60.4 percent in 2004 from 68.2 percent the previous year. Thai Beverage's sales from beer and water, the second-largest revenue contributor, fell 11 percent to 42.3 billion baht ($1.1 billion) in 2005 from the previous year.

The company started selling March 8 a “light'' beer version of its Chang brand, with a lower alcohol and calorie content, the first of as many as three brands it plans to introduce this year to defend its market share, it said then.

Similar light beers were also introduced in the first quarter in Thailand by local rival Boonrawd Brewery, Thailand's privately held and oldest brewery, and by the local unit of San Miguel Corp., the largest Philippine food and drink company, which started beer production in Thailand almost two years ago.

The shares are expected to start trading May 30.

Thai Beverage said it expects net proceeds of S$724 million from the sale of the new shares, which may increase to S$951.6 million if it sells more shares to meet increased demand. About 22.6 billion baht ($597 million) of the proceeds will be used to repay debt.

The company said 2005 profit rose 10 percent to 10.5 billion baht ($277 million), or 0.48 baht a share, from 9.54 billion baht, or 0.47 baht a share, a year earlier. Sales rose 2.2 percent to 92.1 billion baht. Spirits revenue, the biggest sales contributor, gained 18 percent to 49.9 billion baht.

Thai Beverage reported a 15 percent drop in first-quarter profit to 2.49 billion baht, or 0.11 baht a share, from 2.93 billion baht, or 9.13 baht a share, a year earlier. Sales rose 2 percent to 10.8 billion baht in the three months ended March.

Thai Beverage said it plans to distribute more than half of its profit, after deducting an unspecified amount for reserves or investments, as a dividend to shareholders.

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