HTC – 1H27 outlook points to stronger recovery

HTC’s 1H26 sales outpaced national trends (+8.1% vs. 5.1%), driven by strong southern NARTD gains; however, net profit fell 7.5% YoY as geopolitical tensions inflated input and transport costs. 2026’s revenue growth strategy includes price hikes and cost mitigation to protect gross margins above 40%. We maintain the 2026 revenue forecast at Bt8.4bn (+2% YoY) but raise the SG&A-to-sales ratio to 34.4% on persistent freight headwinds. Consequently, our 2026 earnings forecast expects net profit to land flat YoY with 2H26 weakening HoH. Maintain our Outperform call, backed by a solid dividend yield, with a mid-2027 TP of Bt18.00/share based on an average 12x PE.

1H26 sales growth backed by consumer confidence and tourism. Southern Thailand's NARTD market grew 8.1% in 6M'26 (vs -2.0% last year), outpacing the national 5.1%, led by drinking water +12.0%, energy drinks +8.2% and a sparkling recovery to +7.3%. HTC lifted its NARTD share to 23.8% (+0.6pp), holding No.1 in southern sparkling at 77.5% with packaged water up to 8.6%, driven by affordability packs, tourist-destination expansion, water distribution and FIFA World Cup campaigns. However, 1H26’s profit moved the other way — gross profit margin slipped to 41.9% and net profit fell 7.5% to Bt300mn as Middle East tensions pushed up energy, transport and packaging costs alongside heavier marketing spend.

Mitigated by pricing strategy. HTC maintains it 2026’s targets for 3–5% revenue growth, 2–4% volume growth, GP margin above 40%, with cost volatility managed through active mitigation plans. Strategy rests on four pillars: expanding product lines via better glass-line utilization, larger RGB packs, pricing increasing and entry into energy drinks; operational leverage through higher plant utilization, mix improvement and renewable energy; and NARTD share gains from wider outlet.

We downgrade our 2026 earnings forecast due to higher expenses. We maintain HTC's 2026 revenue forecast at Bt8.4bn (+2% YoY), slightly weaker than HTC's target. Part of HTC's policy in 2H26 includes price increases to protect its gross margin at 42%. However, elevated costs stemming from the Middle East conflict have pushed up freight expenses, an impact visible since 2Q26 and expected to persist into 3Q26. Consequently, we revised our SG&A-to-sales ratio forecast to 34.4% from 33.1%. As a result, we expect 2026 net profit to reach Bt568mn, flat YoY, with 2H26 net profit weakening HoH but growing YoY. We foresee a sales growth cycle in 1H27, driven by hotter weather conditions and robust tourism activity in southern Thailand, alongside a production cost base that is expected to remain stable without escalating beyond current levels.

Key risks. Operation key risk: Input cost inflation, margin squeeze from spending, and weak consumer purchasing power. ESG key risk: renewable energy in manufacturing (E) , returnable glass & circular packaging (E), Healthier portfolio (S).