Oishi Group

Oishi Group Plc (OISHI)

2Q12A profit surges 110% YoY. OISHI posted stellar 2Q12 net profit of Bt350mn, up
110% YoY and 45% above our estimate mainly due to stronger-than-expected margins.
While the company’s margins can be volatile on a quarterly basis, combined 1H12 net
profit of Bt597mn, up 11.5% YoY, prompts a revision of earnings. We raise our 2012-
2014 earnings forecast by 11-14%, up our TP to Bt205 and maintain our BUY call.
Key points:

- 2Q12 total sales up 37.8% YoY and 40.2% QoQ due to strong contribution from both
  beverage (+38.9% YoY, 60.1% QoQ) and food (+36.3% YoY, 18.8% QoQ) lines.
- OISHI’s MD&A attributed the strong growth to successful sales promotion for
  beverages and 44 new stores (vs 118 stores at end-2012) for the food business.
- 2Q12 net margin reached 10.3% versus 6.7% in 2Q11 and 10.2% in 1Q12. Beverage
  business net margin was 16.5% versus 8.6% in 2Q11 and 16.9% in 1Q12 and food
  business 1.4% versus 4.0% and 3.0% over the same periods.
- Our revised earnings forecasts are Bt1.15bn for 2012 (up 11%), Bt1.73bn for 2013
   (up 14%) and Bt2.36bn for 2014 (up 14%). With three-year earnings CAGR of 41%,
   we regard OISHI as one of the most exciting consumer growth stories in Thailand.
- Tracking our earnings upgrade, we raise our mid-2013 TP by 14% to Bt205/share
   based on 26.4x PER (average of regional comparables).