OSP: An Expedition to Find a Gold Mine Overseas

Osotspa Public Company Limited (OSP) is one of the Thai stock market’s high-profile stocks with a lot of expectations from investors.

 

Which is why the share had risen 79% from the IPO price at ฿25.00/share since entering the market due to its long history of producing energy drinks and currently holding more than 50% of market share in Thailand.

OSP usually focuses in the domestic market using various brands of energy drinks to match consumers’ tastes. The variety of products is very impressive, but the volume from sales is not much, resulting in slow but constant growth.

 

In 2015, the company recorded a net profit of 2,336 million baht from a revenue of 32,044 million baht. In 2016, OSP booked a net profit of 2,980 million baht from a revenue of 33,003 million baht. In 2017, the company had a net profit of 2,939 million baht from a revenue of 26,210 million baht.

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.

 

However, upon reaching a certain point, OSP may face very slow and limited growth in the domestic market, not to mention the tax on sugar since October 1, 2019.

When the domestic market is failing to meet OSP expectations, an expansion to foreign countries is the answer. The company had already invested in Myanmar by establishing a beverage factory to sell its products there.

The latest move from OSP was sending its subsidiary, Osotspa Enterprises Singapore Pte. Ltd., to purchase a 60% stake of Osotspa VTA Joint Stock Company (OSPVTA) to further its business in Vietnam.

The income from this investment is expected to be recognized from 2019 onwards and will mark the beginning of significant growth from overseas markets.

 

It is just a shame that OSP has a slow start when compared to Carabao Group Public Company Limited (CBG) or Red Bull Company Limited that are already a well-known brand across the globe.

Which is why investors are keeping an eye on OSP to see how well it will perform in the international market. Although the company put on a slow start, does not mean it will fall behind forever.