CBG - 3Q24: Net profit up YoY and QoQ

CBG reported 3Q24 net profit of Bt741mn (+43.4% YoY and +10% QoQ) backed by growing sales and better efficiency. With domestic energy drink market share at an all-time high and a wider gross margin, we expect 2024 net profit to grow 44%. In 2025F, CBG aims to boost up market share pair with the startup of a new plant and we thus raise our revenue projection by 11% to Bt23bn (+13.5%), giving an adjusted net profit of Bt3.26bn (+17.8%). We maintain our call of Outperform with 2025 TP raised to Bt101/sh (from Bt91/sh) based on -0.5SD PE of 27x.

3Q24 net profit up 43.4% YoY and 10% QoQ. CBG reported 3Q24 net profit of Bt741mn (+43.4% YoY and +10% QoQ), in line with consensus, backed by revenue growth and solid gross margin. Revenue was Bt5.09bn (+5.3% YoY and +0.4% QoQ), with 59% from branded own products (value up 8% YoY and 4% QoQ) on a higher market share for its energy drinks. Revenue from distribution (beer) was Bt1.8bn (+26% YoY and +6% QoQ), contributing 26% to total revenue. In terms of location, 75% of revenue was domestic, with value up 9% YoY and 10% QoQ, and 25% from overseas, with value up 8% YoY but down 14% QoQ mostly from CLMV. Average gross margin was 28.1%, up both YoY and QoQ on greater efficiency and lower energy cost.

Energy drink market share at all-time high. CBG’s domestic energy drink market share as of September was 25.8%, rising from 23% at end-2023. We thus believe CBG will achieve its target market share of 26% by end-2024. In 2025, CBG aims at a gain of another 300bps in market share to 29%. It will remain as proactive as it was in 2024 via keeping its flagship product selling price at Bt10/bottle plus price promotions through the MT channel; it may add a new product priced at Bt12/bottle in 2025.

Aim for revenue growth with better gross margin in 2025. After its successful increase in domestic market share and growth in sales volume in 2024, we forecast 2024F revenue at Bt20bn (+7.5%) with net profit of Bt2.77bn (+44%). 4Q24 net profit is expected to grow YoY but be flat QoQ. In 2025, CBG aims for double-digit revenue growth, with prices for major raw materials (aluminum, sugar, broken glass) expected to go down further in 2025. This leads us to expect average gross margin to widen in 2025F as well and we thus upgrade our 2025F revenue assumption by 5% to Bt23bn (+13.5%) to reflect greater cost efficiency. We now assume an average gross margin of 28%, which raises adjusted net profit 11% to Bt3.26bn (+17.8%). In 2025, CBG expects a new plant in Myanmar to start commercial sales in 2Q25, delayed from early 2024. The new plant in Cambodia remains on schedule with commercial startup expected in early 3Q26.

ESG key risks. Operational risk: CLMV economies and policies must be monitored. Competition in the domestic energy drink market is expected to stay intense. Raw material prices and cost of goods sold (aluminum, sugar, natural gas and electricity) are by nature volatile. ESG Risk: CBG was listed in SET ESG ratings as A; the social factor on marketing and labeling may need to be raised.