The Revival of Thai Bullish Bull!

On August 5, 2019, amid the global stock plummet, Carabao Group Public Company Limited (CBG) surged as much as ฿3.25/share or 4.26% making the highest of the day at ฿79.50/share before slowed down to close at ฿77.50/share, gained ฿1.25 or 1.64% with a trading value of THB 566 million. The share continued its gain on the next day by adding ฿0.75/share or 0.97% to close at ฿78.25/share.

The escalation of share price might be due to the anticipation from investors, hoping for a soaring 2Q19 financial statement which needed to wait and see how it will turn out.

 

CBG once got investors’ hopes up with stories of advancing to Chinese and England markets in late 2017, buoyed its share price to reach ฿110.0/share at the time.

When the marketing for international markets did not work out as it had been expected, the share price started to slowly decline to somewhere around ฿40.00/share for quite some time until the share price was able to finally see some light again after a rumor at the beginning of 2019 that major shareholders were considering to sell their shares to a big company in England.

 

The financial statement of CBG in the first quarter of 2019 was also better than expected. The company reported a net profit of THB 419 million, increased THB 239 million or 132.4% when compared to a net profit of THB 180 million in the first quarter of 2018.

Even though the domestic sales decreased by THB 85 million to record at THB 1,702 million, international sales increased by THB 113 million to THB 1,654 million.

Upon looking at the bottom line, its sales really did increase. However, an amount of THB 1,444 million of “international sales” was from CLMV countries which consist of Cambodia, Laos, Myanmar and Vietnam while the sales in China and England only made THB 52 million and THB 15 million, respectively.

It is clear that China and England were not the profitable markets for CBG, and how much impact would those markets have on the company in the second quarter of 2019.

 

Analysts expected CBG to book a net profit in the second quarter of 2019 at THB 533 million, increased 154% from the same period of last year due to higher sales from both domestic and international at THB 3,736 million, increased 3% from the same period of last year.

The sales in China was expected to increase from the previously low season while the business in England would recognize a loss of THB 110 million from ICUK, but the branding would continue to penetrate the market.

Thus, the highest target price among analysts was as high as ฿87.50/share, a revision from the previous target price of ฿70.75/share.

The share price would continue its rally if the company reported a better performance in the second quarter of 2019. However, if things turn out the opposite, then that will be the end of the party.