Good evening, everyone. Thank you for joining the Thai Beverage FY 2022 results call. All participants have been placed in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. I will now hand over the call to the presenters, Ms. Namfon Aungsutornrungsi, ThaiBev Head of Investor Relations, and the members of ThaiBev Senior Management Team. Thank you. Please go ahead. Good evening, ladies and gentlemen. Welcome to Thai Beverage fiscal year 2022 ended 30th of September 2022 financial results conference call. I am Namfon Aungsutornrungsi, Head of Investor Relations. For the conference call tonight, I will start with summary of the full year results, then we will open the line for Q&A session with our management team here. For the summary of the full year results, total sales revenue of the company for the year ended 30th September 2022 was THB 272,359 million, an increase of 13.2% when compared to last year. This was due to an increase in sales revenue of our business segment. Net profit was THB 34,505 million, an increase of 26.2% year- on- year. This was due to an increase in net profit of beer business, non-alcoholic beverages business, food business, and associated companies. There was a slight decrease in net profit of spirits business. The board of directors has proposed to issue a dividend of THB 15,072 million, or THB 0.6 per share, which is higher than THB 0.5 per share of last year. The payout ratio for 2022 dividend is 50.1% payout ratio. Please note that the interim dividend was paid in June 2022 at THB 0.15 per share, and the final dividend will be THB 0.45 per share. In 2022, the company's spirits business generated sales revenue of THB 116,177 million, a 1% increase year-on-year. While total sales volume increased 0.1% year-on-year. The spirits business reported net profit of THB 21,902 million, a decrease of 1.1% year-on-year due to changing in product mix and higher packaging costs. Although molasses costs started to come down in the Q3 2022. To mitigate the impact, the company made appropriate price adjustments. The company's beer business recorded sales revenue of THB 122,489 million in 2022, a 23.5% increase compared to the previous year. In view of higher beer sales volume following the relaxation of COVID-19 control measures in Thailand and Vietnam. Total sales volume increased 14.5% year-on-year when including Sabeco sales, and increased 3.7% year-on-year when excluding Sabeco sales. Net profit show a satisfactory increase of 143.6% year-on-year to THB 7,597 million. The company's non-alcoholic beverage business generated sales revenue of THB 17,432 million, up 14.6% year-on-year. Total sales volume increased 10.9% year-on-year, mainly driven by higher demand for our drinking water, carbonated soft drink, and ready-to-drink tea products. Although there was an increase in materials cost, the non-alcoholic beverage business reported net profit amounting to THB 586 million, increased 27.8% year-on-year, mainly due to the improvement of production efficiency and the cost-saving initiatives. The company's food business recorded sales revenue of THB 16,433 million in 2022, a 45.7% increase year-on-year following the resumption of dine-in services. Net profit increased significantly by 177.1% year-on-year to THB 376 million. This was mainly due to an increase in sales as well as the prudent management of distribution costs and administrative expenses. The company's international business recorded sales revenue of THB 78,872 million in 2022, a 37% increase year-on-year. The increase was mainly due to a 46% increase in beer sales revenue from Sabeco, in line with Vietnam's strong reopening momentum. Sales revenue was further boosted by a 7% increase in revenue generated by the international spirit sales on the back of higher contribution from Grand Royal Group in Myanmar, as well as from the Scotch whisky sales and the sale of Chinese spirits. That is the summary of our full year 2022 financial results. Now we will open the line for any questions on our results. Operator, please help open the line for Q&A. We will now begin the question and answer session. Participants whose question is to pose, please press 01 on your telephone keypad and you will be placed in a queue. To cancel the queue, please press 02. Participants whose question is to pose, please press 01 on your telephone keypad and you'll be placed in a queue. To cancel the queue, please press 02. Our first question is from Hong Han, CICC. Please go ahead. Hi. Hello. Good evening, everyone. Thank you for the presentation and giving me the opportunity to ask some questions. The first question. Hello. Hong Han, can you please speak out a little bit? Hello? Sure. Sure. Can you hear me clearly? Can you speak a little bit louder? Is this better now? This is louder? Okay, it's much better. Hello. Hello. Yeah, yeah. Can you hear me? Yes. It's good now. Thank you. Sorry about it. Yeah. Thanks. Thank you so much for the patience. The first question I have is on pricing. Can we try to understand, this year, how many times has Chang Beer raised prices? I understand there was a price increase in Q1, sometime in March. Has there been any price increase subsequently after that? Will management be planning any in FY 2023? Thank you. Okay. Yes, I plan. Yes. Okay. Hong Han. Yes, we did a price increase across the entire portfolio, all brands and all SKUs in the Q1 of this calendar year. We haven't. For the rest of the financial year, we did not make another price increase, although there are plans. There are plans in the works for another one within the financial year. Sure. Sorry, maybe I didn't hear you clearly, sir. You mentioned that next financial year, FY 2023, you may have some plans to raise prices again, right? Yes. Correct. These are forward-looking statements, so I cannot give you in any in clear definition. Yes, it's within the plan for this financial year that we will do another price increase. Okay. Sure. Understand. The second question I have is on the inventory. W ith regard to the beer business, can we try to understand in terms of the procurement for your raw materials, how much has it changed compared to a year ago when you were buying then, say, in December, November in 2021 versus now in November, December 2022? Can you give us some sense in terms of the increase? I, Hong Han, you talk about the raw material for the beer? Yes, that's right. With regards to the malt barley. Don't worry. We have already secured our malt for, I mean, during the end of this year production at a lower price than market. Also for the next half year, next year, we have already secured our malt price. It will be higher than this year. Okay. Okay. Sorry, because I think your... It will be higher than this year. Sure. It's still significantly lower than the market price now, which is above 800 EUR a ton. We have secured. Okay. Yeah. Okay. Please go ahead. Ask me. Okay. Sorry. I think your voice was breaking out a little bit. I think what I hear is that, Oh. The price that you are buying now is higher than last year, but it's a lot lower than market price. Am I correct? Yes, you are correct. We have already booked for the next half year. The price of next half year will be higher than average of this year, but still lower than the market price. We are so lucky that we have booked it ahead of the game. Okay. Okay. Can we try to understand how much lower is it compared to market prices? Is it like a 5% lower or is it like 10%-15% lower than market price? Higher. Higher than that. Compared to-. Higher than 5% for sure. Compared to the industry peers. Much more than 5%. You will be surprised. Okay. I... The people tell me because otherwise, for the average cost of this year, extremely low, lower than the market price. Next year will be higher than this year, but still cheaper than the market price because we move ahead of the game. The inventory will be at least,. The last question. Yeah. Yeah. Sure. If I was to try to understand what's the price difference between your buying last what you bought last year, is it like 20%, 30% more? Is there some kind of guidance you can give, sir? Hong Han, I'm afraid this one is kind of forward-looking because if we tell you how much we... It's more than you can guess the numbers. Sorry about that. No problem. It's okay. Thank you for understanding. I'll let the others ask questions then. Thank you so much. Thank you. Thank you. Of course, I do. Thank you once again. Thank you. Our Q&A session is still open. If you would like to ask a question, please press zero one on your telephone keypad now. Our Q&A session is still open. If you have a question, please press zero one on your telephone keypad now. We have got Permada Darmono from UBS. Please go ahead. Hi. Good evening. Thanks for some of the input. Any comments on the outlook for molasses?, just how will you plan to tackle the packaging costs? I suspect the packaging costs that have increased a lot is aluminum. Is that right? Bob, Prappakorn, can you respond to that about molasses, please? Okay. On molasses which related more of the spirit in Thailand, we use molasses as an input cost. Packaging-wise, we use glass bottle, aluminum can will probably be more related to the beer business in Vietnam because use a lot more aluminum can than the beer business in Thailand, which is mostly glass bottle. Okay. On molasses-wise, last crop, as reported in previous meetings, that price have been better than the year before. We are now expecting a much higher sugarcane crop this year, should be expecting sugarcane, which should start harvesting middle of December. Based on the government forecast, it's been that at least 15%-20% upward in term of output. With that, it should allow for more molasses in the market. That will allow us to acquire more molasses. Pricing-wise, we see quite stable pricing, due to recent baht weaknesses, have caused some of molasses price to stay firm, due to export price competition. That, that's where we are. I think Thai baht have strengthened back. When the crops start harvesting and the product is available to purchase, we expecting that price will be soften than currently. That's where I am on molasses. Aluminum cans, I will let my colleague to answer. The alu can, the price comes down already,. We enjoy it also. That what I can say. The price of the alu can come down quite significantly from its peaks. Got it. Thanks for the color. Just on domestic spirit, the sales volume growth seems impacted this year, and I understand that's because of the brown spirit. As Thailand continues to reopen tourists continue to come. I know spirits generally or tourism doesn't really benefit spirits too much, but as the economy reopens, how should we think about the spirits volume consumption? Will it recover further? What's the reason behind the relatively profit increase for this fiscal year? Okay. In term of the brown spirit, we have started to see in our last quarter, July, August, September, the higher increase in consumption. This is not our number, this, third party the big company third party, market research that we, those acquire those data. The consumption for brown spirit in Thailand have increased, I think, last quarter over 20%. The latest number in October, I've also seen the number at 20%. These are third party data. That's in line with the level we are selling in. These are the baseline. Last year may be a bit low because of the kind of like tail end of COVID, with the social distance and all that. I think we're looking very positive with the recovering of the brown spirit consumption. The reason in fiscal year 2022 of the relatively slow growth of spirits? In term of profit-wise, actually, Thailand representing about, say, 90%, 92% of those number. The part about 8% are coming from Myanmar. Myanmar-wise, we are doing very well, both high volumes as well. In term of Myanmar jobs, everyone know their currency have been weakened rapidly due to change in the political environment there. With that, the profits that came in, although they actually, our business in Myanmar made record profits in local currency. When we translate back to our reporting currency, the profit declines drastically. That's in line with that. In term of our spirit in Thailand past year is the cost structure that cost of raw material and packaging that we have to deal with. We have some price increase, but not offsetting the overall increase in structuring cost, structure cost on the input. That's why we report slightly lower number. understood. What about the top line? The top line grew only by 1%. Just wondering what's the driver? 'Cause like in FY 2021, I think was better, right? Yeah. I think the overall, I would say blame on economy. I think we were quite large in term of the volumes, and these are all number based out of what the economy would generate. This past year, like again, the tail end of those COVID and the government income support and the general economy start to soften quite a fair bit. Again, toward the last quarter, we start to see a lot of a better side in term of recovery in spending by the consumer. Thank you. Last question from my side. Any views or any kind of indications of excise tax increase? There's no excise tax increase at the moment. It's unlikely at this point till we have the new government. According to the government term, the new election should be called by the four-year parliament terms ending in March. Between now and then, there should be a new government, and therefore, quite any excise tax changes will probably be the policy of the new government. Got it. Thank you so much. Have a good evening and of course best of luck for the Q1 of the fiscal year 2023. Really appreciate it. Thank you. Thank you. Our next question is from Divya Gangahar, Morgan Stanley. Please go ahead. Thank you. Good evening. Two questions from me. The first question is just on the spirits margins. Can you help us understand why the spirit margins at the operating level are much weaker than what we saw in the H1 of this year? We are seeing about a 200 basis points lower margin in the H2 versus the H1, and even versus last year it's down about 50 basis points. What I understand the raw material side, the gross margins are actually still higher, but it's the operating margin which is lower. Just want to understand what SG&A increases are you really seeing on the spirit side? That's the first question. The second question is if you can comment on the law on the progressive liquor law that's been debated in Thailand now. Based on the bill that's been passed, the changes that you see, I mean, what do you expect, how do you expect that to impact the business? Thanks. Divya, okay, this is Paul. I will take the new law first. The new law, actually passed by the government, under ministry, the law, that allow for home brew, meaning people can brew beer and drink at home. People can spirit, distill spirit and drink at home for their own personal consumptions. They are not allowed to sell or distribute it outside of their premises. There are limits up to how much they can actually produce for their own use per month. Sorry for what? My voice has been having this bad cold. Supposed to be cold already. The... With that law, the change in that law and some additional parts that the smaller, we call it, village products, have allowed, we are being allowed to increase their capacity. Those products are let's tackle two parts. The home consumptions, I mean, do your own thing at home consumption. We do not see it as it's going to change the landscape of the consumer because I think home consumption or home doing has always been there, whether regulate, not regulate. It's just being regulated properly, and people have to have a license to do that. Distilling your own spirit, it also comes with a lot of risk in terms of quality. Those are something that we do not support that thinking, but it's just, it's too risky for the consumer. We don't see it gonna change the landscape of the competition. As for the additional capacity from the low-cost spirit, it potentially will increase the competition of that low price spirit. That low price spirit has always been in a space where tax collection has not been effective. I think it's a question of the government who are trying to collect tax as the producer show their true side that their capacity increased, although the capacity probably already increased from the beginning, but they're not quite regulated and supported by law. I think these two parts of the law are actually been out there to regulate what have been breached of the law. We don't see that as a much changes to the way we do the business. Because our product are priced, although our products are priced, we call it low price, but it's low price that within the standard mass market. These products we're talking about, the increased capacity are priced much lower, and again, at lower quality as well. Okay. Back to the gross margin or brain margin. Can you ask me that question again, 'cause I wasn't sure what you're asking. I understand- Yeah, yeah. Sure. The Q1 and. Sure. After the half, yeah. What I was saying is that in terms of the spirits margin, like I understand that at the gross profit level, the margins have actually been better on a year-on-year basis in the H2 of this year. What we've seen is that the SG&A spends have gone up quite a bit, and in the H2 of this year. If I look at the SG&A spends, it's the reason why the operating margins are actually lower year-on-year. Trying to understand where the pressures have been on the SG&A spends, and are there any one-offs or do you expect these kind of margins to persist? Yeah. Because, the spirits margins are now below 21% in the H2. Yeah. I think this is. We don't break down into different country, but I think most of it you see is in Thailand. What happened really on the product mix, we have a lot of price rate mix at the beginning of the year. From the volume perspective, it might be self-supporting that baseline term when you calculate the margin back. The H2, the wide spread volumes are much lower than the normal half 'cause I think we did price increase in the H1, so a lot of volume is loaded upfront. In the Q4, as the brown spirits start to return, with increasing growth, we also have to increase our spending on the brown spirits. That's been increasing, in anticipation of more sale in the, in Q1 and Q2. I think with that mix is probably, you see maybe a shift of margin devotion, but I think it just have to do with the mix the way we cut the H1 and H2. I wouldn't put much weight onto that change. Got it. Basically, marketing spends is what you're saying have been increased in the H2 to support the brown spirits business as you have more on-trade comeback. Yeah. It is spend and so that's anticipating of the sale in the Q1. Got it. Just my last question is on beer market share in the domestic side. Could you help us understand? Like, it seems to be that the volume growth in the H2 has been 3%-4%. How have your market shares trended in beer within Thailand? Divya, hi. This is Lester here. Our market share has been climbing. In fact, by the end of September, the gap between our competitor and ourselves, was the smallest in the last 13 years. Our share continues to grow. It's been trending up since the market opened. In fact, even during the COVID period. Trending upwards, although we're not number one yet, but we're getting there. Thanks, Lester. Any number? Like, I mean, is it 41%, 42% in market share? I don't think we are allowed to share the numbers, but you're close. You're... What you say there, you're close. Okay. Got it. All right. Thank you very much. Again, Lester here. Before we continue, I just wanted to go back to the question that Hong Han raised earlier about price increases. I mentioned that we had plans in the pipeline. Actually, we did a price increase in October already. It is public information, therefore I can share it with you. I thought that we're not supposed to talk about FY 2023, but because it's public information, we did do another round of price increases in October already. Thanks, Lester. The Q&A session is still open. If you have a question, please press 01 on your telephone keypad now. We have a question from Lerttanapun Nirun, UOB Kay Hian. Please go ahead. Hi. Yeah, thanks for taking my question. Just for a clarification on that. The price increase in October was for the Chang Beer in, obviously in Thailand. Was there any price increases for the Vietnam, for the product launch in Vietnam? You talk about the price increase in Vietnam. Yes. Yes. Was there any? Yes, there was. Is Bennett on the line? Yes, I'm on the line. Yeah. Bennett, could you please? 'Cause it's your market. Yeah. Yeah. For Vietnam Sabeco, as it's also public knowledge, we have increased our price in October as well across most of our products. Oh, okay. Yeah. Thanks. Thank you for that. Yeah. I have no other questions. Thank you. Thank you. We have a follow-up question from Divya, Morgan Stanley. Please go ahead. Yeah. thanks. just, Lester on the October price hike, just, was curious to know if you can share how much has the price been increased and if competition has followed, in line, and what is the current price gap between Leo and Chang? Divya as usual, we're not allowed to give you the number. It was at different percentages across the different SKUs. For now, it was a low single digit increase. The gap right now, we're pretty close to Leo already. We still have a ways to go in terms of on a per carton basis, we're pretty close. Got it. Just an overall question on the outlook for next year. I mean, it's an election year. Typically, there is a little bit more cash in floating around. I mean, can you maybe comment on what you expect on overall consumption trends for next year for both spirits and beer for the domestic business for Thailand, particularly? Divya, you refer to election in Thailand, Divya? Yeah. I'm just saying it's an election year, so does that kind of play into the consumption outlook? You think it's usually-? Yeah. Which I hear. I think Divya, you've been follow us for the last 10 years. E very time we have elections, I think our business is doing very good because there seem to be a lot of drinking, a lot of free beer, free spirit. Yeah. We expect it to have some good impact in Thailand. Got it. Both beer and spirit, though. Both beer and spirit. Can you do expect for volumes to remount? Pardon me. Okay. Divya, say it again. I think you're happy now. Thank you. Sorry, I was on mute. No, I said compared to this year where spirits was actually weak, you do expect a bounce back in volumes for next year, given you'll have the additional catalyst of the election? Yes, we hope so. I think we always expect for the best or better. It's gonna be good. It gonna be good. It gonna be good. All right. Thank you very much, Prapakorn Yep. Thank you. Our next question is from Ong Khang Chuen, CGS-CIMB. Please go ahead. Hi. Good evening. Thanks for taking my question. I guess just now we touched on election. I guess there's a nearer term event, FIFA World Cup. Can you comment a bit about the the mood in Thailand right now, since FIFA World Cup? I guess the timing is quite favorable. Are we seeing pretty strong sentiment? How does it compare to the last round of World Cup? Okay, well, the World Cup has just only started. Unfortunately, I wasn't in the beer business four years ago, so I can't really. I don't have a basis for comparison. I was walking around in Chiang Mai on over the weekend, watching all the preparations for the first game. Oh, sorry, the second day of games. I can say that, at least in the market in Chiang Mai and in Bangkok, you see that there's a lot of not hype, but a lot of energy surrounding the World Cup. A lot of interest there. We also will be having, viewing tents, the beer viewing tents around Bangkok and a couple other cities, to tap on this, towards the end of the tournament where the bigger matches will be played. I can say for now that the, as the market reopens, we're starting to see a new energy, and the World Cup is helping with that. Let me add, because this year, there's four games from 5:00 P.M., 7:00 P.M., I think 5:00 P.M., 7:00 P.M., 11:00 P.M., and then late night. This, the first three game is very good for drinking. We have long, long drinking hours. I mean, compared to last time, it's not like this. I have to remind you that we just come back from the COVID incident. It's right now must be about 80% of the on-trade is open. A lot of people during the game start from early evening until about midnight. Got it. That's good. I guess, good that you increased the price of your beer before the World Cup. Can you confirm that the price hike is only for the beer? Have you adjusted the pricing on spirit side recently? Yeah, brother, we always go together with different timing. Yes. Definitely yes. Got it. Last one is more of a housekeeping question. I'm not sure. Sorry. If you can break down the mix for your spirits business, let's say brown versus white in terms of revenue contribution, how is it like in Q3 and Q4 of this financial year? How does that compare with pre-COVID levels? Thanks. We don't disclose that. I mean, we have not, we never been doing that in the past, so. Got it. If you cannot share in number-wise, maybe some qualitative commentary would help. No. No, we don't. That's the way it is. The way we disclose is, Thailand representing about 90-92%, and we've got about 8%, coming out from Myanmar, and then 1-2% coming out from other international market. That's how we disclose the number. Right. Thank you so much for all the questions. Yeah, I'll jump back to the queue. Thank you. Our Q&A session is still open. If you'd like to ask a question, please press zero-one on your telephone keypad now. We have a follow-up question from Permada Darmono, UBS. Please go ahead. Thank you for the opportunity. I just have two questions related to the beer business. The first one is to either Bennett or Alan, if Alan's also on the line. There's been a worry about the bond market in Vietnam. SABECO has some 20.6 trillion VND in terms of short-term financial investment. According to the notes, it's all term deposits. I just wanna confirm that you don't have any exposure to the bond market in Vietnam. Um. I can take that. Oh. This is Alan. Yeah. Yeah. The quick answer to that is they are all short-term deposits or fixed deposits with the banks, and these are our panel banks that have pretty good credit standing in the market. High interest rates. That's encouraging to hear. Then the second question is in relation to the beer marketing spend plan in Thailand. As the economy fully reopens, as Thailand reopens, how should we think about marketing expenses going forward in fiscal year 2023? Should it be an increase on a year-on-year basis? W hat kind of, sort of, advertising to sales ratio that we should think about, particularly coming out of Thailand in terms of marketing spend? Okay. This is Lester here. I think to compare year on year against last year would be an unfair comparison because it was the COVID for the entire year, so definitely marketing expenses will be going up. What we've seen in the last quarter when the market opened in July, what we saw in the last quarter of the financial year was that our marketing expenses went up. Compared to 2019, the last, the year before COVID hit us, our spend on a baht per liter basis continues to be lower than 2019, and we intend to keep it that way moving forward. That's great color. Thank you so much, Lester. Much appreciated. Those are all my questions. Thanks again. Thank you. We've got a follow-up question from Llewelyn Tan Yerong, UOB Kay Hian. Please go ahead. Sorry, my reception was a bit bad. I didn't catch the question about the price increase or the spirit. I'd just like to clarify, one final clarification is, was this, was there a price increase? Like, Like, was it hand in hand with the beer? Sorry about that. To make you repeat that back, the answer. Yes. That's what I said. Yeah, we do have a price increase plan. In fact, in October, we increased some of the SKU. Okay. Okay. Thank you. Thank you. Our Q&A session is still open. If you would like to ask a question, please press 01 on your telephone keypad now. We have a question from Selviana Aripin, HSBC Research. Please go ahead. Sure. Thank you very much for the opportunity, management, and thank you very much for the presentation. I have a follow-up question with regards to the earlier comments around advertising spend, and this question is probably directed to both Lester as well as Bennett. How are you observing your competitors behaving in terms of their marketing spend? Do you have the sense that they are spending less than they did in 2019 in Thailand and Vietnam as well? Can you speak also about qualitatively, how their behaviors have changed this time around versus, let's say, in 2019? Thank you. Hi, Selviana. Lester here. I will start with Thailand, and then I'll pass it on to Bennett after this. I think that because for Thailand, the market only reopened in July, so fairly recently only, we have not come back to the types of levels that we saw prior to COVID hitting us in 2019. But I'm saying that I'm seeing the trends starting to pick up. We start to see more and more activities in the market. We also have had some big events happening, so, like the MotoGP, which is an international race coming to Thailand. You had the APAC meetings just last week as well, and then now you have the World Cup. We see more and more opportunities for marketing activities to take place, so therefore, the trend will be continuing to pick up. In terms of have we reached 2019 levels yet, I don't think we've reached that level yet. It may come during the financial year, but on our end, we're looking to control it so that on, like I said, on a THB per liter basis, we continue to be lower than 2019. Okay. For Vietnam, I think our main competitors have increased their spend, particularly so this year, because last year, the southern provinces were locked down, and I think they are very strong, the south, so they lost quite a lot of volume last year. They're trying to regain share this year, so they're spending a lot more. Also, I think there are more brands now. They have to take the marketing budget and spread over more brands. I think that it's gonna be tough moving forward. For us, I think we've been managing our spend, although absolutely increasing, but we're as Lester had said we're trying to manage it from a unit basis to remain or lower, if we can, over the coming years. We expect the marketing activities to be very, very aggressive in the next months and years. We will prevail, so we'll be more efficient. Got it. Thank you very much. Thank you. The Q&A session is still open. If you would like to ask a question, please press 01 on your telephone keypad now. There are currently no questions. If you would like to ask a question, please press 01 on your telephone keypad now.