Equity Analysis /
Thailand

Osotspa PCL: Attractive valuation

  • The stock is cheap

  • Thailand energy drinks market is a red ocean

  • Overseas business expansion continued in 2Q22

Bualuang Securities
20 July 2022

We like OSP for its cheap valuation—its PER is currently 1SD below its four-year mean (near its IPO level). Although we assume that OSP’s Thailand energy drinks market share will slip 6% in 2022, causing 8% profit slippage this year, we believe its fundamentals remain strong. Our model points to 14% earnings growth for 2023, driven by the ex-Thailand energy drink sales and higher functional drink sales in Thailand. BUY!

The stock is cheap

OSP’s 2023 PER is 29x, versus a 2018 IPO price of 25x and a four-year mean of 32x. We assume that the firm’s Thailand energy drinks market share will slip 6% this year, causing an 8% YoY profit decline for 2022. But earnings growth of 14% is projected for 2023, driven by rising overseas sales (which typically carry fatter margins than domestic sales), a rebound in the consumer products business, and functional drink sales growth in Thailand.