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Edited Transcript of Y92.SI earnings conference call or presentation 15-May-20 10:30am GMT

Q2 2020 Thai Beverage PCL Earnings Call

Bangkok May 22, 2020 (Thomson StreetEvents) -- Edited Transcript of Thai Beverage PCL earnings conference call or presentation Friday, May 15, 2020 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Gim Siong Neo

Saigon Beer - Alcohol - Beverage Corporation - General Director

* Hwai Keong Lau

* Kosit Suksingha

Thai Beverage Public Company Limited - Chief of Supply Chain Management, Chief of Beer Business - Thailand & Executive VP

* Namfon Aungsutornrungsi

Thai Beverage Public Company Limited - Head of IR Department

* Sithichai Chaikriangkrai

Thai Beverage Public Company Limited - Group CFO, Senior EVP of Finance & Director

* Ueychai Tantha-Obhas

Thai Beverage Public Company Limited - Senior EVP, COO & Director

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Conference Call Participants

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* Andy Sim

DBS Bank Ltd., Research Division - VP of Equity Research

* Cezzane See

CIMB Research - Analyst

* Divya Gangahar Kothiyal

Morgan Stanley, Research Division - Equity Analyst

* Jaimin Shah

* June Zhu

Goldman Sachs Group Inc., Research Division - Executive Director

* Nicholas Teh

Crédit Suisse AG, Research Division - Research Analyst

* Patrick Yau

* Paul Chew

Phillip Securities Pte Ltd., Research Division - Head of Research & Strategy

* Permada Darmono

UBS Investment Bank, Research Division - Executive Director & ASEAN Consumer Analyst

* Steve Loh

* Thitithep Nophaket

Phatra Securities Public Co. Ltd., Research Division - Director & Analyst

* Van Linh Vo

* Xuan Tan

CLSA Limited, Research Division - Research Analyst

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Presentation

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Operator [1]

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Good evening, everyone, and thank you for joining the Thai Beverage First Half 2020 Results Call. (Operator Instructions) 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.

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [2]

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Good evening, ladies and gentlemen. Welcome to Thai Beverage Second Quarter 2020 ended the 31st of March 2020 Financial Results Conference Call. I am Namfon Aungsutornrungsi, Head of Investor Relations. For the conference call tonight, I will start with a summary of second quarter results, then we will open the line for a Q&A session with our management team here.

Before we start the call, I would like to inform you that referring to the amendment to the Rule 705 Subsection 2 of the Listing Manual of Singapore Exchange Securities Trading Limited, which took effect from 7 February 2020, ThaiBev will be announcing our financial statements on a half-yearly basis instead of a quarterly basis. Accordingly, the next financial results announcement will be for the full year ended 30th of September 2020. ThaiBev stands committed to engaging shareholders as well as continuing its interaction with the investment community. In this regard, ThaiBev will provide shareholders with relevant business updates between the announcement of half-yearly financial statements.

For the summary of the second quarter financial results, total sales revenue of the company for the second quarter ended 31st of March 2020 was THB 51,411 million, a decrease of 12.3% when compared to last year. This was due to a decrease in sales revenue of the spirits business, beer business and food business, although there was an increase in sales of nonalcoholic beverage business.

Net profit from normal operation was THB 6,705 million, a slight decrease of 0.8% year-on-year. This was due to a decrease in net profit of beer business, a share -- from net profit to net loss of food business. Although, there was an increase in net profit spirits business, F&N/FPL and a change from net loss to net profit or nonalcoholic beverage business. However, when include other costs and income tax expenses from [BI] restructuring of THB 1,129 million.

The net profit came down to THB 5,576 million. Please note that even though the company recognized income tax expenses for the restructuring, but the company did not incur the actual tax payment in cash by utilizing deferred tax asset in the balance sheet.

ThaiBev Board of Directors agreed to propose an interim dividend payment of THB 2,512 million or THB 0.10 per share. The company will continue to pay a final dividend and remain committed with our full-year dividend policy of not less than 50% of net profit after deducting our specified reserves, subject to our investment plans and as the Board of Directors deem appropriate.

For the highlights of the second quarter operations. In the second quarter 2020, the company's Spirits business generated sales revenue amounting to THB 29,841 million, down 3.9% compared year-on-year, and our total sales volume recorded by business decreased 6.1% year-on-year. However, Spirits business reported net profit amounting to THB 5,501 million, an increase of 9.3% due to reduced advertising and promotional expenses as well as staff costs.

The company's beer business recorded sales revenue amounting to THB 23,653 million, a decrease of 23.5% compared with previous year. Total sales volume of year decreased 28% year-on-year when including Sabeco sales but increased 1.5% year-on-year when excluding Sabeco sales. Net profit decreased to THB 205 million.

The company's nonalcoholic beverage business in this quarter recorded sales revenue growth of 5.1% to THB 4,476 million. Total sales volume rose by 4% year-on-year due to the increase in drinking water sales, partially offset by a decrease in carbonated soft drink and ready-to-drink tea. As a result of profit generated from its operations and the recognition of the other income from gains on the back of insurance TAM, the business reported net profit amounting to THB 360 million.

The company's food business recorded sales revenue amounting to THB 3,477 million in the second quarter, down 8% compared year-on-year, due to a decline in advertising and promotion as a result of COVID-19 containment measures, together with a decrease in revenue from sales of Oishi food as well as an increasing in SG&A. This led to a net loss amounting to THB 43 million during the quarter compared to the net profit in the second quarter 2019.

For the International business, it recorded sales revenue totaling THB 12,230 million in the second quarter of 2020, down 38% year-on-year as a result of a decline in both spirits and beer year. International spirits revenue decreased 3% year-on-year. International beer business revenue declined 46% year-on-year, mainly due to a decrease in Sabeco's revenue.

We will now open the call to any questions on our results. Operator, please help open the line for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) First question, [Daryl] from DBS.

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Unidentified Analyst, [2]

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This is [Daryl] from DBS. I just wanted to ask about what are the reasons for the decrease in sales revenue with regards to Sabeco because it dropped quite steeply for this quarter.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [3]

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Hello. I am Bennett from Sabeco. I think this is what we reported. I think we reported this in our report as well. I mean there were mainly 3 impacts on revenue drop and is generally in line with market, with the industry. First, of course, everybody knows that Vietnam implemented the Decree 100, which is an (inaudible) policy, strictly on the 1st of January. And as a result, I think the on-trade business was very much affected from January 1, so January 1, January 2 .

And of course, everybody know that Vietnam, like any other countries in the world, was impacted by COVID-19 from about January, February, and we were, of course, not spared as well. So as a result of that, I think there were people -- less people were out and subsequently, Vietnam started locking up and -- from about 15 of March, and that also further impacted the sales revenue.

And lastly, I think one that is not really specifically for Sabeco is that we were impacted by fake news that were circulated around last quarter, last year. And because of that, our sales revenue dipped a bit. But I think the good news is on -- the fake news is that we've seen that tapered off, and we are actually claiming back the share in those areas that was lost because of fake news. So 3 impacts mainly, Decree 100, COVID-19 and fake news.

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Operator [4]

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Our next question Nicholas Teh from Credit Suisse.

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Nicholas Teh, Crédit Suisse AG, Research Division - Research Analyst [5]

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Just on Sabeco, I have one question. Since, I guess, the decline in market share because of fake news, have you seen that recover fully yet?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [6]

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As I've said just now, I think the fake news impact has plateaued, and we are on the road to recovery. I will not say that we recovered fully, but we were already on the road to recovery.

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Operator [7]

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Our next question, (inaudible), from Tokio Marine.

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Unidentified Analyst, [8]

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Just on Sabeco. Would you be able to give some color on the volume impact between the split of on-trade and off-trade that we've seen in Q1? And if possible, can you give some color on why the volume impact vis-a-vis (inaudible) numbers, the disparity is so huge. And is that something that we are missing?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [9]

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First, I think, as I mentioned just now, at the start of the year in January, Decree 100 kicked in, and that impacted the on-trade business. So in a way, the on-trade business was very much affected from January, all the way to the Lunar New Year. However, of course, the off-trade business continued to continue until, I think -- after that, I think on-trade continues to grow and -- but because of the COVID-19, I think it has also slowed down.

So in a way, on-trade slowdown from the 1st of January, all the way through uncertainty started to unlock. The off-trade business was a bit more buoyant before that. And after that, it slowed down, it did not grow, I mean, slowed down after that. I mean I don't have the numbers, but combined impact cost decline in revenue and volume, right? And on Heineken, we don't comment on Heineken. I think as I said to everyone just now, we only comment on our volume. Our volume is in line with market. One particular thing that I think we have also emphasized in our analyst briefing is that we do not encourage loading up. And every year, we do not encourage loading up, whether it is debt or non-debt. So I mean as we speak, as Vietnam unlocks, I'm out in the market and then I see our stocks are pretty fresh. Yes, fresh means that we manage to control inventory pretty well despite the sudden drop in volume. We have managed through -- we managed it quite well and the stocks that I'm seeing in the market now are still pretty fresh. So we cannot comment on Heineken. I think that you have asked Heineken.

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Hwai Keong Lau, [10]

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Yes. But I'd just like to add also that just like to add that actually, if you look at the market itself during COVID time, it's quite observant that not actually every outlet actually has closed down. So Sabeco and both companies actually have been impacted by the COVID situation. So that's the general market observation. So it's kind of the trending itself.

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Operator [11]

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Our next question is Cezzane from CIMB.

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Cezzane See, CIMB Research - Analyst [12]

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Okay. Okay. Sorry, I think my question is more for private. I think I'll let -- probably go for Sabeco, if they would like to. I'll come in later.

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Operator [13]

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Our next question, June from Goldman Sachs.

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June Zhu, Goldman Sachs Group Inc., Research Division - Executive Director [14]

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Bennett, so I wanted -- wondering in the January to March, for the whole quarter, the volume seems be down 42%, we're just looking at ThaiBev, the disclosure, so we back out this -- back haul volume seem to be down 42%. Would you comment on from January, February and March, with the 3 impacts, right, which month is the worst month? Is it in February? Or I think in January or March? This is one. And then secondly, with on-trade premises closed down due to COVID, do you see any transfer from the on-trade to off-trade? Consumers like -- they're behaving, they started to drinking the beer instead of on-trade, they're now more drinking at home. And do you think such behavior may they stay on even after the easing of the lockdown?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [15]

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Okay. So I think if you look at January to March, actually pretty much the same. I mean on the Decree 100 in January has a big impact, but because that was coming, so the off-trade was growing pretty well, right? So if you average it out, it's still down, right? February, down; March down. So the difference isn't that significant within the 3 months, not very significant.

And after the lockdown, I mean on-trade almost died, the off-trade didn't move as much, it's barely moved. So there wasn't a big -- it's not as if there's the on-trade drinking became the off-trade sales. It did not. So the off-trade didn't really move that much. But your question on whether things are going to change after COVID-19, I think -- yes, I think there is a new norm, right? In any country, I mean, many countries we operate in, you can see that our consumption habit moved from off-on to the off, pretty much and a lot moves to the modern on off-trade, more than often supermarkets and convenience stores and so on.

So in most markets, you see that. And I think because of COVID-19, I think people start to experiment and also start to order online, whether is it delivery services or ordering online to supermarket more than off-premise. So that process has been accelerated, right? So in the past, now people, now know how to use the computer or their mobile to order. Now they're getting used to ordering from using their mobile or the computer.

So that process has been accelerated. So the new norm is such that if you see the evolution, the buying on the off-premise has been accelerated. So maybe after COVID-19, that situation, if you don't have COVID, it would happen mid-3, 5 years later, but it's happened earlier now because of that. People are used to it, know how to use it, and people are happy with it. So I think there is a new (inaudible) of ordering online, whether is it delivery or on supermarket shopping.

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Cezzane See, CIMB Research - Analyst [16]

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But you did -- just to clarify, but during the -- when the on-trade in March, I presume the on-trade premises are closed at the time, you don't see the shift to supermarket buying, also beer yet. But it's more like in April, May that you started to see all this online buying behavior and going to supermarket to get beer, or you see a significant change yet?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [17]

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Yes. We don't see significant significance because it's -- how do I put it? It's not significant in moving -- there is growth in of- a little bit, but it's not because the on- is done primarily because of on-trade selling. I think people are used to ordering online and more people always off-line, I mean from the off-line. So I do not see any significant -- not significant growth. But I think that, that has changed a little bit in the future because people now know how to use it. I'm sure people will continue to order online in the future. General consumption is down during this period. General consumption has come down during this period. Yes. It was down less than food and drink.

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Cezzane See, CIMB Research - Analyst [18]

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Got it. And I have one very quick question. Last question is on the ASP. It was 42% volume down and the revenue is down about 47%. That seemed to suggest that average selling price is down 5%. Just wondering whether it's the first quarter. Is this all mixed impact? We haven't done any price adjustment at all in the first quarter, right? I just want to confirm that. That's my last question.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [19]

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Again and also, I mean, there is also a little bit of a mix impact in there and also a lot of deals. There's the tax deals as well. So I think it's a mix of the mix as well as due discounts and so on. Hwai Keong, do you want to comment on that?

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Hwai Keong Lau, [20]

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Yes. In short, there's no price change. In the sense, we do not meddle with the price, but it's more on the discount and the mix impact itself, even between the different channels, we have to increase some of the intensity of the discount itself. Even the -- the pile of the market as a string during COVID time, so the intensity of this current behavior.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [21]

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Yes. And I think because of COVID, I mean the general economy is not good. So people don't order the higher-end products as well.

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Operator [22]

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Our next question, Tan Xuan from CLSA.

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Xuan Tan, CLSA Limited, Research Division - Research Analyst [23]

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I just have one question on, on- and off-trade. Can you walk us through the key difference between price, cost structure and margin? And also, as we shift towards more off-trade, how are you looking to change the way Sabeco operates?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [24]

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We don't share our margins with -- we generally don't share our margin in the different segments with the public. We don't share it even -- we just don't share it in public. The margins, we don't.

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Xuan Tan, CLSA Limited, Research Division - Research Analyst [25]

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Maybe would you be able to share broadly, what about cost structure, price? I mean how should we think about this going forward?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [26]

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The on-trade business, if you look at it in an investment point of view, it's always expensive, right? But on the other hand, in the on-trade, there's a lot of bottles to be recyclable or maybe usable, so the cost structure is down. The off-trade, while there's no such investments, there are other kind of investments. So I can give you the thinking behind, but I will not be able to give you the true core margins of each on and off-trade, right? So it's a very different structure. The on-trade is very much about investment in outlets, having a lot of promoter agents, but as I said, a lot of bottles. So bottles are general better margins in general. But the off-trade, higher volume. So may have to give more discounts. In U.S. market, when it becomes more and more advanced, the modern retailers will demand for more discounts and more margins. And so how do I put it? We are not at this stage yet.

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Hwai Keong Lau, [27]

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I think, yes, maybe better, I can help here in the sense that if you look at that, it's actually about the total portfolio balancing. At the end of the day, if the volume comes through, there will be greater utilization. There will be economies of scale. That will generally bring the cost structure down. And that, in turn, in -- sorry, in the other channel itself, like modern trade is growing, the way we operate itself is the distribution itself has changed, right? Then we maybe extract more value out of here. So even though the discount behavior, but we may be able to extract value on our other areas. So that in totality, as a portfolio balancing, you will be able to create or sustain the positivity for the company.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [28]

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So it's very difficult for us to comment. And also some of the information, we feel that it's a bit more proprietary. We can't be giving out too much information out there.

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Operator [29]

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Our next question, Jason from Jupiter.

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Unidentified Analyst, [30]

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Do you see events of the last couple of months as an opportunity to build up your food business, your food outlet business? Are there any struggling companies that you would like to acquire?

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [31]

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No. We don't have any plan.

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Operator [32]

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Our next question, Permada from UBS.

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Permada Darmono, UBS Investment Bank, Research Division - Executive Director & ASEAN Consumer Analyst [33]

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I have a question for (inaudible) product corn, if I may. With regards to the domestic spirits sales, I calculate about down about 4% year-on-year. What was the sales volume performance for -- in the second quarter for spirits and within Thailand, and also within Myanmar in Grand Royal?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [34]

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Permada. So on Q2 for the spirits, I think, we stopped making disclosure separating the Myanmar business out of the global spirits business, after 1 year so comparison, we only disclosed their total amount of spirits stuff on Qualitrade. So what I can say, the spirits volumes, about 170 million, that's fixed (inaudible) then down from same, quarter year 4.

But then, we have to look at it on a 6-month basis. On the 6 months -- on a 6-month basis, the number is actually quite flat. It's only 1% up. Based on these data, in Thailand, we have a better mix in Q1 and Q2, continue a better mix of higher brown spirit than before. So we have a better mix, as mentioned earlier, that we had a plan, a price adjustment and increase in brown spirit, and we continue to sell very well in the brown spirit front in the first quarter, continuing to the second quarter.

So in the second quarter, brown spirit continue to grow against this quarter before. The decline come -- in Thailand is coming from the wine spirit for Q2. And because the same quarter due to year before, there's quite a significant onloading of stock in March, and that didn't quite happen in this year -- in Q2 this year because our trade promotion plan was for March and April. So toward the last week of March, the trade is a bit -- due to the situations in -- due to COVID shutdown, that all the reductions of closeout of the on-premises. So with that, they start to have -- the last week of March, we start to have a bit of disruptions in terms of (inaudible). So that's contributed to a bit of lower wine spirits.

As for the Myanmar business, the Q2 number continues to be down, about the same rate the year before, and this have to do with the weaker spirits consumptions in Myanmar for the past 6 months, and we do maintain -- based on third-party market research data, we do maintain and improve our market share. So that's not something we worry about. It's just the market softness in the Q2 period.

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Permada Darmono, UBS Investment Bank, Research Division - Executive Director & ASEAN Consumer Analyst [35]

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I may -- I just have some follow-up questions on the spirits. Historically, we look at past economic stress periods in Thailand, I've kind of seen that spirits has declined less than beer. Would you -- would it be fair to portray that in terms of consumption during periods that you cannot stress? Like right now, spirits volume historically tend to decline less than beer. And then also secondly, during the April ban of alcoholic sales, were you able to sell any spirits at all or totally no sales because of the ban?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [36]

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Okay. We addressed the first question. I think we don't -- in the economic downturns or in slowdown in economy, consumer continues to bring both alcoholic beverage and spirits in the year. I think it -- we don't have -- actually have a significant data to differentiate whether beer or spirits would decline more or less in an economic downturn. However, the product itself, alcoholic beverage products have proven globally, not just in Thailand to be quite resilient in this economic downturn as well. So that's just the nature of the product.

As for the sale in April. Before we get to April, I just want to say that even though the decline in the Q2 with sales is about 6%, but I just want you to also focus on EBIT, that we can maintain our EBIT -- both EBIT and EBITDA in Q2. And if you look at our profitability, EBIT and EBITDA for the 6-month period for the spirits, the 6-month period is (inaudible) all the way back to about period of 2012 to 2014, where our profits have been very high.

So I think in the first 6 months, this set of data, sets of result in the first 6 months, showing how we -- profitabilities remain. And that's coming from a lot of things we are trying to do, including some expense tightening, cutting down on activity. And we also have certain activities in March, which it started though that there's some COVID impact, due to certain activities like concerts cannot be held. So we start to cut back on those expenses. So that resulted to a better profitabilities for the Q -- Q2 as well.

As for April, started in some provinces in early April, they cannot sell alcohol. I think Bangkok started from the end of April. So at that point, throughout the country, the no sale of alcohol actually being prevented by each of the provincial governor. So it's correct that we saw -- I mean, in both spirits and beer for about 10 days in April. The remaining of the day -- times in April, we will not sell because we are not allowed to. The resumption of sales happened on the 3rd of May, on the 3rd of May. And as for -- as of now, out of 77 provinces, including Bangkok, there's only 2 provinces in Pattani, which didn't (inaudible) have the low volumes in alcohol consumption and 1 province in the Northeast, called Buriram.

There's only 2 provinces that remain -- have a restriction on sales. The rest of the country has been back on selling. And just from the sprits front for the month of May, we are back to our normal business.

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Permada Darmono, UBS Investment Bank, Research Division - Executive Director & ASEAN Consumer Analyst [37]

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Last question for me for Khun Kosit. The -- I noticed that in the second quarter, the beer sales was quite good. It was flat year-on-year despite the challenging situation. But if I back out Sabeco's gross income from the reported gross profit of beer, it seems that the beer gross margin went down in the second quarter on a year-on-year basis. Would that be fair to say? Or that's the wrong conclusion altogether? And if it did go down, why is that because Sabeco's margin actually went up on a year-on-year basis?

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Kosit Suksingha, Thai Beverage Public Company Limited - Chief of Supply Chain Management, Chief of Beer Business - Thailand & Executive VP [38]

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All right. This is Kosit. I'm -- well, I don't see any doubts on the (inaudible).

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Permada Darmono, UBS Investment Bank, Research Division - Executive Director & ASEAN Consumer Analyst [39]

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Sorry. You don't see any -- so I guess the question is how did your margins do in domestic beer in Thailand?

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [40]

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Permada, sorry. In terms of the separation for the beer business or even for spirits, we not separate Sabeco or (inaudible) out. We report only as a group for a type of domestic and Sabeco together. So I cannot separate for you.

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Permada Darmono, UBS Investment Bank, Research Division - Executive Director & ASEAN Consumer Analyst [41]

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That's fine then. The -- in that case then, in terms of the reduction in selling expenses as well as distribution, what was the driver behind the reductions?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [42]

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All right. I think that's a very tight control in A&P.

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Permada Darmono, UBS Investment Bank, Research Division - Executive Director & ASEAN Consumer Analyst [43]

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So primarily advertising and promotion in terms of the driver behind the reduction? Okay.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [44]

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Correct. Right.

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Operator [45]

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Our next question, Thitithep from Phatra Securities.

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Thitithep Nophaket, Phatra Securities Public Co. Ltd., Research Division - Director & Analyst [46]

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I have 2 questions. Number one is on the domestic sales of beer and spirit in May after the sales ban is lift. Can you give us any last idea of the state of the demand in Thailand? Usually, spirit and beers are quite (inaudible) but this time around, I think the magnitude of GDP decline is probably the deepest since 1997 crisis.

Should we be concerned about the impact of the unemployment rate on the consumption of beer and spirits in Thailand? That's number one question. And number two, you did say that the demand for spirit in Myanmar is quite weak for the past 6 months. Is COVID the only reason or is there any other reason that effect that the demand in Myanmar?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [47]

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(inaudible) For the Myanmar questions. The first 6 months remains a bit weak in term of demand and sellout data. Like I said, the market share remained fine and slightly improved. This is pre-COVID. So the COVID impact for Myanmar solely started in people with the lockdown and more of alert that COVID is something that every country in the world, if you pay attention to, including emerging markets.

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Ueychai Tantha-Obhas, Thai Beverage Public Company Limited - Senior EVP, COO & Director [48]

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Thitithep, this is Ueychai. On the first questions that you asked, I think the impact of the COVID and then post-COVID. There are 2 factors that impact the business, the alcoholic business. One is the on-trade. Okay, right now, the on-trade is totally close, and it's not likely to open, I would say, beginning of July maybe. But that will be the last thing to relax.

On the on-trade, you mean the on-trade that involve alcoholic beverage consumption but the FSR, they're already open, but the social distance and everything. So going forward, I think the impact of the on-trade will be there. And then the other one is the (inaudible) mix, which we think is not -- it's going to hurt us a bit. But if you look at the -- how this will affect on the on-trade, the most affected will be the category that depend much on on-trade like import spirit. That's, in fact, the most, and then moving up will be premium beer.

And beer, I think, on the spirit, which is -- we have only 2 brands that may affect from the on-trade like (inaudible) but percentage is quite low. Then moving up is the mass brown spirit. Like HongThong will not affect on the on-trade. And the white spirit will not affect at all on the on-trade. But the white spirit and the mass brown will probably affect from the economy, if the comment is bad.

So -- but what we are working now is to really protect our profitabilities. We focus on our expense, A&P, SG&A to make sure that even though volumes are not coming in, our profitability will not hurt us. I think that will be the situation. And we cannot tell. I think the government, as you know, start to relax already. On the 17th of May, which is on Sunday, the department store will start to open.

So our food shop in the department store will start to operate. But with the social distance, I think the thing was still going on, which means that the volumes, we will start to get the revenue, but it will not be as much as we used to be because we still have to implement the social distancing things. So that's my response to overall (inaudible) market there was -- impact from the COVID.

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Thitithep Nophaket, Phatra Securities Public Co. Ltd., Research Division - Director & Analyst [49]

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Do you expect to see a shift of consumption from on-trade to off-trade after they lift the ban?

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Ueychai Tantha-Obhas, Thai Beverage Public Company Limited - Senior EVP, COO & Director [50]

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Okay. There was a shift to be there because people will start drinking, they probably still, by the way, to bring in the party or whatever. But yes, I think the off-trade sector will be very -- will be -- will get more. And then, we'll get more focused on the off-trade sector.

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Thitithep Nophaket, Phatra Securities Public Co. Ltd., Research Division - Director & Analyst [51]

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Right. Okay. And then the last question, if I may. I think the reason -- the logic behind the ban of the alcohol sale is because people get together and doing alcohol. So even if they lift the ban, but there's still discouraged, the social gathering, so with this kind of measure, as long as the government doesn't want us to get together in the big group, may I have your view on potential impact on alcohol sales even without the sales ban?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [52]

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I think people will start to -- will not be the same. It will be a new normal. I think that will be the impact on the on-trade. But fortunately, we -- our portfolio have a lot more on the off-trade than the on-trade. But we will see the impact, and then the 2 products that we impact from the on-trade, like I mentioned, is SangSom and Blend 285. But the percentage that we -- depending on on-trade for these 2 brands is still lower than -- a lot lower than the import spirit and things and then other.

So I think there will be new normal gathering like before, probably until we get some vaccine and people will start -- are brave enough to really, really sort of head out like before. But before that, I think people will still -- even the on-trade outlets open. I think the impact will still be there. People will move the consumption to the outside and then home drinking and everything will be moved.

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Operator [53]

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Our next question, June from Goldman Sachs.

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June Zhu, Goldman Sachs Group Inc., Research Division - Executive Director [54]

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I have 3 questions. One is to just clarify on the domestic spirits volume. I know that we no longer give disclosures on exactly how much the volume move. But could we -- I just want to confirm again that you mentioned, there is continued high growth of brown spirit into the second quarter from the first quarter.

But the last week of March, the weak sales, we've seen the weak sells for the white spirits. But net-net, would you say the whole quarter -- because white spirit is still 2/3 of the volume, is it a positive volume number? Or is it a negative volume number for domestic spirits? This is one question. Maybe I will stop here first before I continue with the other 2.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [55]

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The white spirit for the Q2 is still lower than Q2 the same period last year. But the Q2 is the same period last year. There was a trade promotions and loadings happened in February and March. But for our plan this year, we plan it for March and April. That's why we're just halfway through our programs when the trade (inaudible) period. And of course, then you go into April, with no sales.

But since then, we basically -- we extended our base promotion that was supposed to end mid-April. We just ended mid-May [sales]. So that's how we recover the rating volumes and, like I mentioned earlier, may remain back to normal business book.

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June Zhu, Goldman Sachs Group Inc., Research Division - Executive Director [56]

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So -- but if you combine with the brown spirits performance, the overall domestic spirit, would you say it's still a decline year-on-year in second quarter?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [57]

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Volume-wise, it is a decline, but a better mix of brown spirit, the higher mix of brown spirit, and we have a positive brown spirit growth, and those bring much higher profitability, the case and per liter, and that's improved our margin in this current Q.

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June Zhu, Goldman Sachs Group Inc., Research Division - Executive Director [58]

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Got it. And my second question is on, so far, in the -- after the ban, and just now you mentioned briefly that we are back to normal business. What you mean it's not really the volume -- selling volume company back to before the alcohol sales ban volume level? What you mean is just back to normal businesses, operation not wise?

But what I mean is I wanted to understand how much is the inventory now. It's still -- the channel has the inventory level in the channel, is there still a lot of old stocks in the channels that needs to be clear before you can actually sell in again to your distributor and wholesalers? Could you comment both on the spirit side and perhaps also on beer?

The first -- the second quarter, the beer is still positive growth. But in the second -- coming into the June quarter, the third quarter, with the alcohol sale banned, et cetera, how is the inventory situation in the channel, yes?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [59]

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Yes. For the month of May -- and for the month of May for both spirit and beer, we're expecting the sale for demand will be the same or higher than the same month of May last year. That's what our estimate would be now, and we don't see any excessive inventories in the market.

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June Zhu, Goldman Sachs Group Inc., Research Division - Executive Director [60]

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The same month, probably, I couldn't get this -- just to clarify. I didn't hear very well.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [61]

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The month of May in 2019, okay? Now we now month of May in 2020. What I'm saying is our spirits sale and beer sale for the month of May in 2020 would be at least the same or higher than the month of May.

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June Zhu, Goldman Sachs Group Inc., Research Division - Executive Director [62]

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Right. Okay. Got it. So this is our sell-in volumes?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [63]

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Yes. It is sales volume.

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June Zhu, Goldman Sachs Group Inc., Research Division - Executive Director [64]

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Okay. All right. Got it. And my last question is on the SG&A reductions. Do you think with the now, slowly, the economy is kind of reopening it up, even though we are still living under the shadow of around social distancing, et cetera? In terms of the rest of the year, I know that we have already cut back a lot on A&P, but is there any plan that this -- is this sustainable for the rest of the year?

Will we go back to become a little more aggressive in order to push the volume so that we may see a bump of the A&P -- a resurge of A&P spending again? And it will be great that if we can share other than A&P, is there any other costs that we actively try to cut back that may be sustainable for the rest of the year?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [65]

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For the rest of the year, it's only 5 months left, 4.5 months. So yes, the spirits -- on the spirits front, we've -- a lot of marketing activities or spending occur -- the spirits, the activities in off-premises like mini concert, music events and we'll be -- because of the restrictions on gathering and social distance, very likely those activities even if you want to have it, you can't have it.

So which means those expenses have been very basically cut for our annual budget. Unless that we allow to happen, then we could consider it, but we do not think the pay ratio or the returns on investment will be justified based on our previous model. So I think we will then, they're worth now spending more on online communication, which is more effective, and that will be a reduced spending.

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Operator [66]

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Our next question, Divya from Morgan Stanley.

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Divya Gangahar Kothiyal, Morgan Stanley, Research Division - Equity Analyst [67]

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I had a couple of questions. The first is on beer. Could you share what the market share trend has been for beer in Thailand? And also, given that you're not able to do the typical marketing activities on concerts and things like that, how is the A&P strategy changing to make sure that this market position remains competitive to protect the market share? That's my first question on beer.

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Kosit Suksingha, Thai Beverage Public Company Limited - Chief of Supply Chain Management, Chief of Beer Business - Thailand & Executive VP [68]

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Hi, Divya, it's Kosit. We have seen a 6-month consecutive increase in market share. So I think that's very significant for this year. According to the Nielsen.

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Divya Gangahar Kothiyal, Morgan Stanley, Research Division - Equity Analyst [69]

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Sorry, can I clarify, it's a 6% increase in market share?

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Kosit Suksingha, Thai Beverage Public Company Limited - Chief of Supply Chain Management, Chief of Beer Business - Thailand & Executive VP [70]

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So, I mean, it's increase in market share for 6 months consecutively.

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Divya Gangahar Kothiyal, Morgan Stanley, Research Division - Equity Analyst [71]

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Okay. 6 months, okay. Got it.

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Operator [72]

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Our next question, Jaimin from RWC Partners.

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Jaimin Shah, [73]

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I had 3 questions. The first one on the spirit side. Could you talk a bit on the raw materials and inflation or deflation, what we are seeing given the energy prices are down? Is this broadly kind of trend? And any guidance, if any, for the rest of the year?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [74]

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In terms of the raw material impact on the costs, in general, have been good in the past 6 months. We haven't -- I think in the earlier call last quarter, a decision that we have a good molasses food cost and that remained for the finished goods for the Q2. For the Q3, the molasses in good cost will probably be higher, and therefore, the cost of goods will be adjusted upwards slightly.

But we have done very well and better than what we forecast view on the used rate -- used bottle for the white spirit that the participants in this call the past year or with the year that we have changed our Khao white spirit bottle to have that embossed on the bottle, and with the plan to then increase the use rates compared to used and old and new, yes, we use bottle rate that we collect back, and that has performed above expectations on both big bottle and smart bottle.

So I think from the Q2 data that we have, we are happy with what we see. So we should be able to cross the breakeven that we will be looking for much earlier, probably Q3 this year instead of later on. Thank you.

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Jaimin Shah, [75]

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Okay. My second question was on beer. As in -- just kind of going back to molasses question, when I kind of -- I understand you're not breaking down, but the implied number on the domestic business seems that your gross profit and EBIT kind of fell significantly.

But overall, when I see your sales numbers are probably kind of not as much fallen. Could you talk a bit on the operating leverage on the beer side? What is fixed cost? And how much can we save going into this quarter for the domestic side, not on the Sabeco side?

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [76]

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You are asking about the Q3 going forward, right?

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Unidentified Analyst, [77]

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Yes. Going forward.

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [78]

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In molasses, we -- yes, in molasses, we cannot comment in terms of the margin going forward. Yes. Sorry about that.

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Jaimin Shah, [79]

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No. I wanted to -- sorry, sorry, sorry. My question was could you talk on how much cost in the domestic side is fixed on the beer business. And how much is flexibility we have to control, to keep our profitability decent despite the sales kind of coming down? I'm not talking about margin. I wanted to know about a lot on the -- of the fixed versus flexible costs on the beer side, domestic.

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Ueychai Tantha-Obhas, Thai Beverage Public Company Limited - Senior EVP, COO & Director [80]

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Jaimin, this is Ueychai. With the new normal, we look at all our spending, okay? Yes, on A&P, we probably can spend -- can save quite a bit, okay, because we used to spend on concert and on-premise and everything. And now that area probably will not be good for us to do any activities. So that will be a saving. But we, of course, will spend more on the off-trade.

But as for your information, the off-trade activities is a lot cheaper than the on-trade. So that will be the area that we have a potential to save. And also on the SG&A, think we know that going forward, we will be -- it will be a difficult time for us. So we will focus on the cost side -- in cost, in A&P, SG&A. So we, as a management here, would like to, as much as possible, to defend our profitabilities. That's our task for the next 5 months, okay?

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Jaimin Shah, [81]

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Okay. Just one last question or rather comment is it would be good to kind of have some kind of a quarterly update, if not the full statement, maybe some top line or trends on how each of the market is doing. 6 months is slightly on the higher side of kind of -- not kind of hearing from you. Maybe just kind of a public information kind of press lease or something like that. Up to you. But I just -- as a shareholder, we would like to kind of be constantly be updated, yes, updated on our money.

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [82]

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Yes. We -- thank you for your suggestion. Yes, we will update shareholders in terms of the update for the next quarter, but it will be -- we will make decision later on how much information we'll give you out there, yes.

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Operator [83]

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Our next question, Nicolas Teh from Credit Suisse.

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Nicholas Teh, Crédit Suisse AG, Research Division - Research Analyst [84]

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Yes. I just had 2 questions. Firstly, on the volumes. Could we get a number on how the market volumes were growing for both beer and spirits during the quarter?

And the other question I had was just -- could you remind us on the effective tax incentives that you're using, this low tax rate that we are seeing? Is there any sort of incentives that will eventually kind of expire or anything like that?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [85]

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We had spirit consumptions reporting by Nielsen and Dow, okay? So the reason our beer is not going down, it's because all our efforts that we put in since October, we launched a campaign called Chang #1 and it's paid off. So we gained market share that's why even the consumption of the total market is declined by around 4%, but we actually do not -- are not decline.

It just proved that we already sort of -- on beer side, we'll gain share. But on spirit side, [kon Thongtheppairot] already explained because the product consumption is down. So the other thing is just a matter of managing between the brown and spirit to go in the market, okay? So that is #1. And #2, in terms of tax, I would ask Sithichai to respond.

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Sithichai Chaikriangkrai, Thai Beverage Public Company Limited - Group CFO, Senior EVP of Finance & Director [86]

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Sithichai, CFO. You see from Thailand, Thailand revenue department they interview, they call Internet business center in topic called IBC. So in Thai, we apply IBC, and then we apply, certainly, center also. This one will make our tax in the tightest side. Normally, TAC in Thailand, 20%, but one for the IBC on the ThaiBev ale and company, we just paid 3%.

I mean, overall, TheiBev tax is -- includes subsidiaries effective tax rate of 16%. Revenue department, they have the checking center. It reduced this one to ISU and convert IBC. Who, a few years, they check these first and confirm our practice is collect. So not any backlog on the tax.

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Operator [87]

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Our next question, Cezzane from CIMB.

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Cezzane See, CIMB Research - Analyst [88]

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A sorry to keep you guys. So sorry, the line has been a bit patchy. And I think I lost some of the portion where you had mentioned the outlook, not outlook per se, but how you see the volumes for domestic Thai side going into April, May and June. I think there was some mention just now. So sorry, if I missed it. Can I get some clarity on that, especially with the lockdown?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [89]

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Yes. I think for both spirit and beer in May, this year were better than last year. And then we see the rate of sales coming in. It just showed that the stock in the trade are not a bundle. That's all I can say. Thank you.

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Cezzane See, CIMB Research - Analyst [90]

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Okay. No. No direction for, so far, April and -- the April month? And you mentioned something about the next few months being challenging. Were you referring that to the on-trade business? Or is that something you're looking at because of -- you think that the economy will be slightly weakened, and as such, challenging -- tight challenging or because of the social distancing? How should we see that statement of the challenging?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [91]

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What I stated before is the market going forward will be difficult and more on the on-trade. But we -- I'm already also say that, fortunately, our portfolio is off-trade-oriented. So we will expect it, but not as much as our premium beer or premium-spirit competitors.

But and -- in any way, we see what is coming. That's why all our management team is now focused on how to protect the profitabilities. That's why we've focused a lot on we think about how to spend A&P, G&A, CapEx, everything. So the next 5 months, that will be on the management table to really focus on.

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Operator [92]

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Our next question, Patrick from Citi.

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Patrick Yau, [93]

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I wanted to actually just get a bit more clarity on the SG&A program going forward. So at the overall level, actually, there's only a slight decline in SG&A. So there's some divisions that are still spending more. So I understand from the discussion so far, that you're going to actually compress SG&A, especially for beer.

But I wanted to ask, is there a number that we can take home as guidance in terms of how much would you like to kind of reduce, right, especially on your beer-related SG&A? And at the overall level, can we expect a meaningful decline in the ratio of SG&A over revenue?

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [94]

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Patrick, unfortunately, we cannot really guide in terms of going forward on the cost cuts, sorry.

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Patrick Yau, [95]

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Okay. So another way to ask the question is that if the numbers has actually been published, right, let's say, for the second quarter, is that a good guide of what's going to go forward? Or it should be much better than what you've actually reported for the second quarter in terms of SG&A costs?

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [96]

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That one I also cannot, sorry.

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Operator [97]

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Our next question, Paul Chew from Phillip Securities.

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Paul Chew, Phillip Securities Pte Ltd., Research Division - Head of Research & Strategy [98]

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Just a couple of questions. Could I just get some comments from management on how this COVID-19 is affecting some income levels in Thailand? That's my first question.

My second question, could -- sorry, but could you elaborate a bit more when the process -- I can understand Bangkok, but in the provinces, provinces were banned from selling, does it mean like there was a total outright ban, and you can assume that there was no sales for Thai -- in Thailand for -- from April 10 to the -- that you mentioned, 3rd of May?

And my last question, could I have just have a general list between off and on trip for your beer and spirits businesses, the very broad numbers will be great.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [99]

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Okay. The impact of COVID to Thai baht probably mostly on food sector because that we cannot deny that is the most effect, okay? And then NAB, we're doing better because people still drink a lot of water and then nonalcohol, beer and spirit will affect the cost of the on premise. But let me tell you the on-trade, beer -- our beer is also off-trade-oriented compared to our competitors, which means that we have a higher percentage sales to the off-trade than the on-trade. So the impact is there but less than the competitors. So we hope that the -- with this, we probably continue to gain share.

On the spirit, as I mentioned already, for the white spirit, it will not impact from the COVID at all, but it will probably impact on the general economy. And then -- and we have the mass brown spirit, which is big volumes, also not affect by the on-trade because mostly it is consumed at the off-trade, okay?

So we have only 2 brands that might affect some bit on the on-trade, which is SangSom and Blend 285 in terms of total brown spirit portfolio, that's probably about 70% of our portfolio. So that's -- I can -- that's how I can mention -- let you know, okay?

But in terms of how we're going to manage our business, as I mentioned, over and over again, it's why we have to focus on how we spend money. A&P, definitely, I mean, people ask about A&P. How much percentage will be low, and we cannot answer that. But we definitely will probably be lower than the last year probably because there are things that we cannot do like concert, promotion, on-premise promotion, which is quite expensive and very competitive that we need to.

That's one we probably will not have to spend for the next 5 months and maybe until the end of the year even. But some of the money, we probably have to shift focus on the off-trade, where we are already strong, but we probably have to create a full-promotion things there.

In terms of ban, yes, government ban selling alcohol totally for the whole month of April, April. But at the retail level, I think there will be some leakage, we cannot mention much, but the reason I say that is because judging from the sale of our May sales is going quite well. And it just -- I feel like it's going like pipelining the stock that they trade. So that's all I can say.

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Paul Chew, Phillip Securities Pte Ltd., Research Division - Head of Research & Strategy [100]

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Okay. Sorry. Could you share the split between on and off-trade for beer and spirit in general?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [101]

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I think for our Chang beer, the on-trade, very small, roughly not more than 20%, okay? And in spirit, if you take the total, all white and brown spirits that we have and the on-trade, effectively, is less than 5%.

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Operator [102]

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Our next question, Linh Vo from Albizia Capital.

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Van Linh Vo, [103]

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I just have 2 questions in the both on the Spirit side. You mentioned about May that grew at least much as May 2019. I just wanted to get an idea of the sell-out trend. I mean, was there a pent-up demand from the consumer side and helping your sell-out sales, but it didn't reflect into your sell-in sales because they were still consuming from the inventory already at the distributor level? Is that a correct understanding?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [104]

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May consumption which you don't have the figures because we would not receive the figures 1 month later. We have...

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Van Linh Vo, [105]

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Also, I mean, yes. Got it. I mean after the -- sorry, go ahead.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [106]

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The sell-in rate right now, I believe there are some of the volume pipelining the market, which means that they syndicate that the stock in the trade before is not very high. So people sort of fill up the pipeline. And then as we come back to normal, like when Prapakon mentioned that already that May this year were definitely better than may last year, which means that there will be some upside to cover some of the April loss.

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Van Linh Vo, [107]

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Okay. Understood. That's clear. My other question is on the molasses prices. You mentioned that you like gotten a better-than-expected prices. Can you share with us how that is -- how that compares year-on-year on average?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [108]

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No. I didn't say it's better than expected. I'm just saying the input molasses costs that coming in -- that we are using for the Q2, that reflecting finished goods, also good, is still a good molasses cost because we use average cost. The last crop, which is started in December to April, December 2019 to April 2020, that drops. The price is higher and that's has not reflected to the input cost in the finished goods for the Q2 2020 because that -- if there's some lack of faith as to new input of molasses and become finished goods. So it would start to reflect it in finished good cost in Q3 and Q4 onwards.

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Van Linh Vo, [109]

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Understand. That's correct. I mean, would you be able to share what the molasses cost is versus Q3 and Q4 last year, I mean, how much higher?

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [110]

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Linh, the last answer that we say we cannot guide in terms of forward-looking for the molasses cost. That will affect our third quarter onwards.

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Operator [111]

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Our next question, Tan Xuan from CLSA.

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Xuan Tan, CLSA Limited, Research Division - Research Analyst [112]

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I just had one question on off-trade consumption. Please correct me if I'm wrong, but my understanding is that part of this -- significant part of off-trade consumption in Thailand is still for people together at homes or other places to drink together.

And even without the alcohol sales ban, the curfew and social deceasing measure will still impact off-trade consumption. Would you think that is entirely wrong?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [113]

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I think it will be effect only during the -- one this month, we -- one that relates the curfew. I think bringing together at home back -- to come back. you cannot stop rather to bring at home together.

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Xuan Tan, CLSA Limited, Research Division - Research Analyst [114]

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Right. Are you expecting the curfew to be lifted this month?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [115]

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We keep the finger crossed, Xuan. Yes. We follow-up closely. So I cannot tell the government. I -- that we follow closely to [plan].

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Operator [116]

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Our next question, Steven from Point72.

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Steve Loh, [117]

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Just a quick question on the alcohol ban in the month of April. Does that include both sell-through and sell-in? Just to clarify the ban.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [118]

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We, as a producer, who have license to operate and sell alcohol, are not allowed under this law, including our distributors and agents, are not allowed to sell at all. I mean, with people who have licensed, they are not allowed to sale, and that's covered most about 3 weeks in the whole April.

We will not be able to comment as to whether the retail store, what happened to their stock that they think in reality and based on some data, the third-party research data which I don't know how that rely -- how much reliable it would be because of there's a lot of disruption happened in the outlets in April, that show consumption for beer slip as a market, it's down about 50%.

But that means 50% for when you not allow to sell 3 weeks after 4 weeks. But again, I caution those data because when the -- when we don't have a typical month, and like the normal data flow, this data can be quite disruptive and so you shouldn't put too much reliability on those data. But that's all the guidance we have from the third party.

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Operator [119]

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Our next follow-up question, Permada from UBS.

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Permada Darmono, UBS Investment Bank, Research Division - Executive Director & ASEAN Consumer Analyst [120]

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I just got a quick follow-up question with regard to your off-trade distribution model. So you used a Cash Van in terms of selling the products for traditional outlets, which is quite distinct to the model employed by your chief -- the arrival in Thailand.

Can you share, just in terms of the thinking, how that model is -- it's appear and advantages to Thai baht? And what products are sold through the Cash Van? Is it just -- is spirits in there, too? Or just primarily be the -- your nonalcoholic beverages?

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [121]

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Permada, okay. So the way we distribute both beer and spirits in Thailand are quite the same. I will exclude the nonalcoholic beverage because the percentage of the sale through modern trade channel for nonalcoholic beverage are much higher than beer and spirit, okay?

For beer and sprit, the sell-through, the modern trade channel representing about 20%, 25% of total sales, and the traditional trade channel, which go through our Asian business, represent about 70%, and then our van sales representing maybe another 10%. That's approximation. The -- if all of these 3 channels actually run channel conflicts, all the way now to retailers. Channel conflict, meaning products are available through 3 different channels.

So that supply is available and shop can pick and choose from where the best price they can get, but definitely, they can always get our product. The advantage of our van sale, which have about -- why we have about 1,100 cars that running -- 1,200 cars that running the whole country, and that allow us to sell these basically on the van, our typical Street year and nonalcoholic beverage. That's we covered throughout the whole country. Our point-of-sale coverage is about 280,000 point of -- shop, trade-in -- traditional shop that we sell directly out of the universe that I've seen some reference around 440,000 throughout the nation.

So that's about 280 covered by ourselves and then our agent probably cover more than 100 -- another 150. And then certain shop will probably size directly on the B2B model from modern trade channel. So all in all, I think we run, like I said, channel conflict meaning channel sale will overlap throughout the country just to make sure that our products are available to the retailer, which generally, they would have at least 2 choices in their area to make sure that they get the product at the best price. I think that should answer your question.

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Operator [122]

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Our last question, Andy Sim from DBS.

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Andy Sim, DBS Bank Ltd., Research Division - VP of Equity Research [123]

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Just a very quick question. We have 3 debentures that are due probably in the 9 to 10 months' time, of which one is actually -- two is actually a large ones.

Can I just get elicit kind of comments on the thinking, the plans on this going forward, if it was the due -- to be due in, I say, in the next few months, assuming that that's the case? Or any plans on the thinking behind it? The -- yes.

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Sithichai Chaikriangkrai, Thai Beverage Public Company Limited - Group CFO, Senior EVP of Finance & Director [124]

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Andy, it's Sithichai, CFO. Yes. You are right. We have the debenture of our of [best view], but they have small sums in September, January this -- January next year. Total is about THB 6 million for our capital assets. And our big one, about THB 40 billion from March. You know that building our best decision October, December and marked on its own [task], that's a big task for us. So we can service certain other big ones by our cash flow.

The less we will roll over, but not the whole, we can service part by February lowers the base. We have really good relationship with the bank. Our cash is before they release by our product. And then we have the making investment gain. Then is the outlook stable. So we can low over by into debenture of us following the long term on the bank. You can see that now that capital markets in Thailand come back already of function. So no problem for the issuance.

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Gim Siong Neo, Saigon Beer - Alcohol - Beverage Corporation - General Director [125]

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Thank you very much. Thank you. Have a good.

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Namfon Aungsutornrungsi, Thai Beverage Public Company Limited - Head of IR Department [126]

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To thank you -- yes. Thank you for joining ThaiBev's conference for tonight. And if you have more questions, please feel fee to contact IR department at ir@thaibev.com. Thank you, and wish you all stay safe and healthy.