OSP or CBG, Which Brand is More Refreshing for Investors?

Osotspa Public Company Limited (OSP) and Carabao Group Public Company Limited (CBG) are both in the food & beverage sector with similar products as their core businesses, which led to the question of whose beverage are more “refreshing”.

 

OSP made a seven-day run between 11 October – 22 October to rise from ฿36.25/share to ฿44.50/share (+฿8.25/share or 22.75%) while CBG made a six-day run between 16 October – 24 October to rise from ฿78.25/share to ฿87.50/share (+฿9.25/share or 11.8%).

OSP has the advantage over CBG when compared in the perspective of business structure with its market share over 50% and 128 years of experience in energy drinks. Although CBG entered the market later than OSP, it is a very interesting new wave while holding a market share around 22-23%.

 

As for business growth, OSP may not be outstanding but tends to have a steady growth while CBG’s revenue and profit may not be as steady as OSP, but when compared with only a net profit in the first half of 2019, CBG outperformed OSP, showed an increase of 13.55% while OSP posted a growth of 12.30%.

OSP is at a disadvantage on the cost as it is a bigger company than CBG, led to a higher cost. Meanwhile, OSP has a total of 4,931 million baht of debt and a total asset worth 22,739 million baht. As for CBG, the company has 6,821 million baht of debt and 14,516 million baht of asset. OSP has 0.28x of D/E while CBG has 0.90x.

 

In terms of marketing, OSP is a bigger company, thus, could be slower, but its own brand is well known in the domestic market and currently looking for international market penetration. On the other hand, CBG could proceed faster due to being a smaller company with good marketing strategies, especially Carabao’s beautiful models and the joining with Carabao Band that stimulated its sales even more.

Even though CBG had penetrated the market in the UK and China, in the end, everything comes to whoever has higher profit than the other.

 

In 2018, OSP had 3,005 million baht of profit from 25,163 million of revenue while recorded a profit of 1,598 million baht in 1Q19 from 12,995 million baht of revenue, considering that OSP had just started the trade in October 2018.

On the other hand, CBG recorded a profit of 1,255 million baht in 2016 from a revenue of 7,874 million baht. In 2017, CBG posted 1,245 million baht of profit from 13,067 million baht of revenue. In 2018, CBG reported 1,158 million baht of net profit from 14,597 million baht of revenue. As for 1H19, CBG showed a profit of 971 million baht from 7,170 million baht of revenue.

 

When looking in the long term, OSP has 1.55% dividend yield while CBG has 0.92% dividend yield. Meanwhile, OSP is traded at 42.30x P/E and CBG is traded at 50.15x P/E.

So, choose wisely….