The movement of the stock price of Osotspa Public Company Limited (OSP) was heavily sold off during this afternoon's trading. The OSP price closed trading at 21.50 baht, down 4.87%, estimated by analysts. This is due to the intense competition in the energy drink market. and at the same time The Myanmar market is becoming more risky.
Securities analyst Maybank Securities (Thailand) revealed that the Thai energy drink market appears to be saturated. This is because there is almost no growth in sales volume (off-trade) from 2014-2022, which is due to the fact that the main customers are limited to the labor group. This makes the energy drink market likely to have limited growth. OSP's energy drink market share decreased after the price increase in March 2022, and intense competition from heavy promotions from competitors made it difficult for OSP to regain high market share. as before
While political uncertainty in Myanmar And increased competition from CBG, which is set to open a production facility in the second quarter, will put pressure on OSP's sales.
In this regard, the direction of OSP's net profit in 2023 is likely to recover 33% from the previous year and in 2024 grow 10% due to improved gross profit margins from lower energy prices and raw material costs. coupled with improved efficiency from the closure of the old glass factory. The main profits in 2023 will grow 19% and in 2024 will grow 24% from the previous year in 2023/24. Sales in 2023 are expected to decrease 4% from the previous year before recovering 6% in 2024. last year due to increased consumption new product launch and the energy drink market share that is gradually decreasing Improved from sales promotion and more marketing campaigns. However, we expect market share recovery to be slow. Due to intense competition
However, the target price based on the DCF method is 24.8 baht, which is equivalent to a 2024 P/E of 26.4 times. Currently, the stock is trading at a 2024 P/E of 24 times, which is higher than the average in the foreign food and beverage category. Including in Thailand, which is 21-22 times in terms of EPS in 2024, we expect OSP to have a growth rate of 10%, which is lower than the average growth rate of the food and beverage group in Thailand of 19%. As for OSP's ROE, it is at 15% compared to 24% of the group.
We recommend holding OSP with a target price (DCF) of 24.80 baht (WACC 7.7%, G. 2%) for reduced energy costs and increased production efficiency. will support profit growth But sales will remain weak. We assess that the energy drink business remains challenging. Due to limited market growth and intense competition, OSP shares trade at a 2024 P/E of 24x, which is higher than the food sector average of 21-22x, while EPS growth and ROE are lower. However, OSP rates The dividend yield is 4% and the stock is de-rated compared to the historical average P/E of 36 times. We like SNNP (Buy, target price 24 baht) more because of its clear earnings growth trend.
