Thai Beverage FY17 Financial Results FY Ended 30 September 2017

Thai Beverage reported Financial Results ended 30 September 2017. The last stock price closed at $0.97 with highest $0.98.

It was highlighted in the presentation from 1st October 2016, soda water business was transferred to non-alcoholic beverages business to the spirits business. The changes recognise that majority of consumers drink spirits mixed with soda water. 

The new Excise Tax Act is effective from 16 September 2017. The key change to alcoholic beverage is the tax collection method based on a suggested retail price instead of the last wholesale price. However, the excise tax calculation is based on both ad valorem rates and specific rates. 

On 20th September 2017, Moody's upgraded rating for ThaiBev from the improvement in financial profile to Baa2 Outlook Stable from Baa3 Outlook Positive.

There is marginal decrease in total sales revenue amid a full year of mourning period. Total sales dropped -0.02% to Baht 189,997 million. Spirits segment is still performing, volume +2.7% and net profit +2.1%.

There is rise in net profit (excluding F&N recognition of fair value gains on financial assets of Baht 8,497 million), net profit from normal operation increased 4.6% to Baht 26,184 million. Full year dividend payment increases from Baht 0.6/ share to Baht 0.67/ share. EPS increased 4% to 1.03 before F&N recognise fair value gains on financial assets. Net profit margin 12M16 (Oct15 - Sep16) is 11.5% compared to 12M17 (Oct16-Sep17) 12%. 

Business Segments

1. Spirits
Spirits sales revenue increases by 2.6% and net profit decreased from 18.8% to 18.7% for 12M16 compared to 12M17.

2. Beer
Beer sales revenue decreases by 4.7% and net profit increases from 5.4% to 5.5% for 12M16 compared to 12M17.

3. Non-alcoholic Beverages
Sales revenue decreases by 0.9% and net profit losses decreases from -9.3% to -5.1% for 12M16 to 12M17.

4. Food
Sales revenue for food increases by 1.5% and net profit increases from 1.3% to 1.5% for 12M16 to 12M17.

One key thing to note is non-current liabilities which went down and net bearing interest also went down from 41,026 to 30,729 for 30Sep16 to 30Sep17. Net Interest Bearing Debt to Equity Ratio decreases from 0.33 to 0.23 for 30Sep16 to 30Sep17.

LB update

LB recent quarter results met estimates but continuous weakness is seen.

I was forecasting a total EPS of about $3 and PE of 20. LB target price as $60. However, I sold LB 300 shares at $50.75 and I have added alot of sell puts and sell calls on this counter to further enhance the return.

I bought at $36.

$50.75-$36/$36 = 40%

This is good enough for me.

You can refer back to my post on LB.

I am gathering my funds to focus on TLT.

Deployment of JC Fund

I have been seating down with cash for a long while since probably May 2017 and has not deployed bulk of the cash into other stocks, missing one of the most spectacular bull run. This is the key reason why I have performed poorer than MSCI World Index. Nevertheless, I have achieved what I aim to achieve this year.

Going forward, the return will not be as high as this year, Schroders forecast the next seven MSCI world return will have a nominal 4.2% per annum. Going forward, it will be more challenging to achieve a decent return. 

The US market is all time high, I sold one of the counter and add more to IBM while Warren sold his shares and add to APPLE. I added an ADR China share to the portfolio.

I bought my first European company after it corrected by 10%. 

I redeployed some of the HKD to Welling Holdings, Hang Lung and L'occitane. I did not have time to acquire Welling Holdings as recently work is taking a toll on my time. I only bought 11,000 shares as it is lightly traded before my holiday. While overseas, I realized that Midea is proposing to acquire the rest of the shares to privatize Welling Holdings. This is luck not skill. While on holiday in Hong Kong, I was watching the news and they announced that all the tunnel tolls will be considering a price increase after many years, this is an opportunity to acquire some defensive stock - Cross Harbor Holdings. I was drinking Vitasoy and I googled it. This is an interesting company but overvalued at this current price. I have placed it in my watch list.

Two other companies I need to dig further are China Longyuan and Beijing Enterprise. Time to sleep, the next few days will be crazy working hours and lots of business trips again. 

I am planning to take 2018 to learn how to invest on a full time basis. 

JC Options Fund 6th Month Results

Fear creeps in and I close all the trades when I saw the earning reports. I think trading is very different from investing. I should not mix this two together. Option is a tool to enhance your return from investing but when it is used wrongly because of greed then it can cut you like this. 

This month losses have wiped out all the gain and set me in red.

Lesson learnt - do not be greedy and go back to the rules and fundamental of investing. 

I will not chase after premium blindly by selling put and forget portfolio sizing. I should deploy diagonal call strategy or Bull Put Spread as well. 

Let's start this from ground zero.

30/11/2017

I manage to make back a 2k on some sell put on TLT and IEF, I also made two other buy calls:

1. Buy 10 JD.com leap call 18 Jan 19 SP 30 - Average Premium 10.8
2. Sell 10 BZUN 15 Dec 17 SP 30 - Average Premium 1.2