Equity Analysis /

Osotspa PCL: Profit set to dive YoY and QoQ

  • Earnings forecasts cut for 2022 and 2023

  • OSP’s 3Q22 profit looks set to dive by 60% YoY and 62% QoQ

  • Management believes in its mitigation plans

Bualuang Securities
18 October 2022

We expect weak 3Q22 earnings, due to margin squeeze brought about by a diminished market share and higher production and marketing costs. OSP has announced mitigation plans, but we believe the plans will take time to effect change, so prefer CBG.

Earnings forecasts cut for 2022 and 2023

In our Oct 3 Beverage sector report, No earnings drivers in sight, we had projected weak 3Q22 earnings for OSP. The 3Q22 numbers now look set to be even worse than we had anticipated, based on the takeaways from the company’s analyst meeting yesterday. Although management said that 3Q22 will prove bottom and the 4Q22 result will improve, the recovery path remains unclear. Hence, we have cut our earnings forecasts by 17% for 2022 to Bt1.99bn (down 39% YoY) and 15% for 2023 to Bt2.33bn (up 17% YoY) and downsized our YE22 DCF-derived target price from Bt31 to Bt29. We expect the street to follow suit.