Shares of SET-listed Carabao Group Plc (CBG) slid drastically by 14% yesterday as investors were disappointed by the company's lower-than-expected operating results in 2017.
CBG shares closed at 59.75 baht, down 9.75 baht, in trade volume worth 2.4 billion baht.
The company's shares continued to decline throughout this week after opening at 77 baht per share on Monday.
Carabao Group's net profit logged in at 209 million in last year's final quarter, down 25.7% year-on-year, while full-year net profit registered at 1.25 billion baht, down 16% year-on-year.
"Such decline was mainly because of deterioration in gross profit margins and sales growth, administrative expenses as a result of consolidations for UK-based Intercarabao Ltd's [Carabao Group's second-tier subsidiary] operating performance and financial position, and increased financial expenses during the year," said Carabao Group in its management discussion and analysis filed to the Stock Exchange of Thailand.
"The key issue that could have an effect on the future cost of goods sold was the changes in government policy for the cane and sugar industry that saw the termination of the fixed sugar price scheme for domestic sugar consumption and introducing floating prices, effective from Jan 15, 2018."
Under the new regulation to the excise tax scheme effective from Sept 16, 2017, Carabao Group is also obligated to pay excise tax rates based on suggested retail prices proportionate to the sugar content per litre. The tax burden will be subject to up to three increases every two years, running until 2023.
The company's operating results last year were lower than expected by 47% of analysts, with beverage sales not meeting the company's target, said Bualuang Securities (BLS).
The move to sell CBG shares could continue going forward and analysts are poised to lower their forecasts of Carabao Group's net profit this year, said BLS.
But some analysts still have an optimistic view on CBG shares, with AEC Securities projecting the company's net profit will rise by 2 billion baht, equivalent to a 61.3% year-on-year increase, because of a bullish outlook on sales of energy drinks in overseas markets in addition to the company's plans to expand its distribution channels.
