Thai Beverage started at 'sell' with 55 cents target price by Religare

Stock Name: ThaiBev
Company Name: THAI BEVERAGE PUBLIC CO LTD

Research House: Religare Capital

Price Call: SELL

Target Price: 0.55

SINGAPORE (Mar 11): Thai Beverage's exceptional return on equity (ROE) could be threatened by competition, cautions Religare Institutional Research in a report entitled "Running out of fizz" released on Mar 5.

Analyst Nirgunan Tiruchelvam highlighted that weaker margins, falling leverage and faltering asset turnover could drive down return ratios.

Religare expects ROE to decline to an average of 18.7% over 2015-2017 from a five-year historical average of 22%.

There are also doubts about the synergy gains from Thai Bev's investment in Fraser and Neave (F&N).