FY 2020 Full-Year Financial Results Briefing

Thank you for joining the Thai Beverage FY 2020 Results Call. All participants have been placed in listen only mode. Later, we will conduct a question and answer session and instruction will be given at a time. I will now hand over the call to the presenter, Ms. Nam Fong, Ang Sun Tong Rong-Sih, Thai Beth, Head of Investor Relations and the member of Thai Beth's Senior Management Team. Thank you. Good evening ladies and gentlemen. Welcome to Tai Weber 2020 Financial Results Conference call. I am Nam Foon. I'm Futhalang Si, Head of Investor Relations. For the conference call tonight, I will start with a summary of the 2020 results.

Then we will open the line for our Q&A session with our management team here. For the summary of the 2020 results total sales revenue of the company for the year ended the 30th September 2020 was 253,481 million baht a decline of 5.2 percent when compared to last year this was due to a decrease in sales revenue of beer non-alcoholic and for business from the impact of COVID-19 pandemic Other than that, an increase in sales of strict business. Net profit was $26,065 million, decreased 0.1% compared to last year. This was due to a decrease in net profit of F&N and SPR, a change in net profit upward business to net loss,

and due to other non-recurring calls and deferred tax utilization related to business restructuring during this year. Our board of directors has increased in net profit of spits, beer, and exchange in net loss of non-alcoholic barriers of business to net profit. However, our net profit from normal operation increased 10.1% year-on-year to 28,725 million baht. The Board of Directors has proposed to issue a dividend of 11,553 million baht, or 0.46 baht per share, which is 51% AR ratio. Please note that the inventory dividend was paid in June 2020 at 0.1 baht per share. For the final dividend will be 0.36 baht per share. For the highlights of this year in 2020, the company's first business generator sells revenue

amounting to $117,297 million, a 2.5% improvement compared to 2019. Despite being affected by the closure of entertainment venues and restaurants, after the temporary ban on alcohol, it better sells from airport to early May. The first business remains resilient and recall quickly as first are mostly confirmed via offshore channels. The following recorded by the business increased 0.2% year on year when including the granular group sales. The first business reported net profit amounting to 22,271 million dollars amount improvement of 14.7% year on year together with an improvement in space profit margin. perfect margin. The company's business record of sales revenue amounting to $1,871 million

by even 23% year-on-year with a total first volume decrease 12.7% year-on-year due to the impact from COVID-19 and implementation of the 300 in Vietnam, demonstrating zero time for drink driving. Excluding the vehicle, total sales volume decreased 0.9% year on year. The net profit of the company's bear business increased 7.3% year on year to 3,519 million baht. In addition, the proven cost control and the successful management of the COVID-19 situation in Thailand have enabled the domestic bear business to report satisfactory profit growth this year. The company's non-alcoholic births business generated sales revenue amounting to 15,281 million by 2020, that 3.1% year on year due to a 3.8%

decline in total sales volume. Nevertheless, the non-alcoholic births reported a net profit of 656 million births at 165.7% from the net last year. This was due to an increase in gross profit a decline in advertising and promotion expenses and staff costs, as well as an increase in other income. In 2020, the company's full business recorded sales revenue totaling 13,172 million baht, that 15.4% year on year. The full business was severely impacted by the pandemic and measures by the government to shut down department stores and the restaurants, which resulted in a significant decline in the sales revenue. The company implemented cost control measures and negotiated for when it needs to mitigate

the impact from sales courses. The full business reported earning before interest and tax or EBIT of 144 million baht. However, the full business inquiry and net loss are 101 million baht in 2020 as compared to a net profit last year. For the international business, The Company International Business recorded sales revenue targeting 62,627 million bonds in 2020, that 18% year on year. This was mainly driven by a 21% decline in B.S. sales due to the implementation of locked down measures due to the onset of the COVID-19 outbreak. However, revenue generated by the International Spirit Sales decreased by only 1% year on year due to the appreciation of local currency over the Thai bag.

We will now open the call to any questions on our research. For the questions, can you please start with a question from Sabeko, so our main speaker can go to another appointment. Operator, please open the line for Q&A. We will now begin the question and answer session. Participants with questions to post, please press 01 on your telephone keypad and you be placed in the queue. To cancel the queue, please press 02. Once again, please press 01 now. Our first question, Mingling from Kaisey Corn Security, please go ahead. Yes, I would like to ask about the situation in Vietnam right now about the bi-abibriate. I see the number in term of half on half basis

that it's improved like 3,000 million, but so I would like to know that the situation is better right now or what can I expect? This is Bennett from Sabeku. I mean, we are referring to the results that are published. So probably most of you know, I think Vietnam handled the COVID situation pretty well. In fact, a lot of restaurants are open and people are actually having meetings and events right now, but not to the scale of what we had last year, but it's generally improved. So for the last quarter, we see month-on-month improvement in the performance. So for July or September, so we've seen improvement.

Thereby the quarter was an improvement over the previous quarter that was reported. I'm just to caution is that I think it's coming this COVID situation plus the economic impact of the COVID situation has taken effect. We believe that there'll be some softness in the coming months before I hope buying starts again during the Lunar New Year period. So again, I'm in the last quarter, it was good because it was coming back, but I think we don't be too excited. The reality is that the country is still pretty much locked down with some domestic activities but that's not going to be a big jump or a big increase over the last year.

Any more further questions? Thank you. Thank you very much. Our next question, June from Goldman Please go ahead. Hi, Vannette. This is June. Hi. I have attended your conference call before. I just want to have a follow-up question on your new product, the exciting product, Saigon Chill, which is trying to break into the sub-premium segment. So my question is, in terms of compared to Saigon Special, which is the same product, When you sell your Saigon Chill in the same drinking outlet as where you are currently also selling Saigon Special or you need to actually try to discover, try to penetrate into more premium kind of drinking outlets in order to sell your Saigon Chill.

As we know, we absolutely have to have a market share in the on-trade segment for this sub-premium sector. So I'm just wondering how easy or how difficult are we to try to penetrate into those more premium drinking outlets. Do we already have a presence somehow? Yeah. Okay, first of all, I think we're all excited about the BSI Concho. The feedback from consumers and even distributors, retailers has been, you know, the packaging is beautiful and the product is good. So far, for me, as far as I'm concerned, almost 100% of people who have tried the product said is good and the product was, the packaging was good as well.

This is our first real foray into the sub-premium market. The sub-premium market is dominated by our competitor, Henican, with Tiger, Tiger Crystal. So we also try to participate in this area with Cygon Special, but we are not as successful as them. But I think we are very confident that BS Saigon Chill will be a big competitor for them, and we hope to be able to gain some share in the sub-premium market. Now, in terms of the distribution, I see upsides to it because Saigon Chill can go into any Saigon special outlet. The taste profile is a bit different, it's a bit lighter, and it's in clear bottle,

so the target salmon is slightly different. At the same time, I think with this product, plus the portfolio of the other brands, we are able to go into more outlets. In a part, I mean, if we have Saigon Special, Saigon Export, Saigon Lager, and ba-ba-ba, we can go to Southern Outlet. But with Bia Saigon Chill, we can even go to even more higher end outlets. So I think it's opened up more opportunities for us. So we can sell into our Saigon Special Outlet again. And if they even need this, cannibalization is actually good for us because there is higher margins, because it's higher price. And we also have opportunity to go into new outlook

that will never be in the people. Right, okay. And one last follow-up question is regarding your current stronghold in the mainstream segment or the mass segment. And then as we know, the competitors are trying to also penetrate into, so you go up, they go down, right? So they're trying to also launch new products to try to penetrate into the mainstream segment by launching a cheaper brand and also more nationwide coverage go to tier, lower tier cities or rural area. So what do you think you can do to try to protect your market share in place of the competitor being quite aggressive trying to take your shares from the mainstream segment?

That will be my last question. Thanks, Bennett. I think in the mainstream segment, it's a big segment. I think we have got a few brands in this segment. We've got a BSI gone larger, we've got a BSI gone export. To a certain extent, we have BabaBaba as well, and T3T3. So I think everybody wants to get into this mainstream. So especially those who are not, those competitors who do not have brands or products in this segment. But effectively, if you are, you know, been selling high premium products, if you try and come to this segment, you tend to keep away margins, you know. If you come in with a high margin

and a lower margin product going to outlet, it may cannibalize, but it's downwards. For us, you know, we cannibalize, we probably cannibalize upwards. So there is risk on that side. Regardless, I think we also launch a beer called Beer Luck Pit. And to us, India LAPIT is also a mainstream product that is used to complement our beer cyclone lager and X-Bones to go into those areas to fight. So we do not have to discount or we do not have to do too much promotion for beer cyclone lager to protect our margins, but we can use other brands to protect it and fight against competitiveness. So I can't deny that everybody wants to come in,

but I think we have a portfolio mainstream product to be able to hand them at different places. So we have different branches, our branch to take on competitors in different areas. Got it. Thank you. Thank you. Any more further question, Jun? Ah yes, that's all. Thank you very much. Thank you. Our next question, Pumada from UBS, please go ahead. Thanks for the opportunity. Hi, Bennett. Good evening. Hi. You're well. Good evening. I've got just two quick questions. In the prior sort of briefings, you've mentioned rising home consumption as a trend, and over the last couple of years, that's been the trend, too. We've seen, you know, increasing off-trade share in the Vietnam market.

For the industry from Saigon Beer's point of view, what is the current breakdown in terms of off trade and on trade? In regards to how Seveco sees the market of premium, sub-premium, mainstream and economy, what would be the industry breakdown as well? If you could give us some color on that, that would be much appreciated. I think I have said in my last briefing that we are more off trade, we are more than 50% off trade and that continues to be the case. I think during this pandemic period, nine months to 10 months, that has increased a few percent in terms of off trade in tandem with the market.

The market has gone more off trade than on trade obviously because the on trade is locked down, right? So we are moving in tandem with the market during this period. We believe that I mean, ultimately the growth of or trade will continue. But there always, I always believe that up to a certain extent in most developed nations, you see the off-trade growing and then up to a certain level, it settles off, but we are not at the stage where it's tattooing off yet. So we still believe that you'll grow. The COVID situation accelerated that a little bit, but I think that once everything is lifted, all the travel restrictions and everything is lifted, you'll go back again.

But in a way, you will not go back to the old level, but you'll go back again, down again, before it goes up again. So that's our view of trade. In terms of segmentation, I mean, again, the biggest segment is the mainstream. The second biggest segment is the south mainstream. And we combine the two in excess of 70, 80% of the market. We estimate it's not 70, 80 billion. So most of it are in mainstream and sub-premium for the market. And during this period, again, there's a little bit of down-trading. So people are trading now a little bit to mainstream products. And even if they consume the premium products,

I think there are more deals and also promotion and discounts and so on during this period. And for us, I think when we started launching Bear Cyclone Show, we see competitors reducing the price to compete against us. So, but we're determined, I think we're determined with a good product, good packaging. And the only thing I think that's stopping us is getting the bottle through the hands of the consumer. Once I believe, I strongly believe, very confident if the bottle gets into the hands of consumers, we will have winner and I think they'll like it. And I think if we continue to sell it and be present,

they'll continue to drink it. Thank you for that. And just one quick follow-up question. In regards to the trade loading or inventory loading that you alluded to in the first quarter, by now has that completely normalized or there's still quite a significant element of that in the market. I think we talk about trade loading. I think that just bear in mind that

for our business, our business is cash. We don't have credit. I think our competitors, they have some credit. We are cash business, which is good for our shareholders. And predominantly cash, what does it mean? The distributors are very careful in picking on stock. so they don't load unnecessarily. There's no point for them because the cost of capital is high. So there's a limit to how much they can load and usually they will try and keep minimal stocks until end of the month in order to hit certain incentives, probably. So I think it's pretty normal, but I think during this period, during the Lunar New Year,

there will be more loading from Malcolm. I think there'll be a lot of people trying to ask retailers to load up it, which is normal. So this is nothing different from the past few years. Everything is about the same. There is always some loading to some extent during the Northern New Year period. So I do not see anything significantly different from previous years. Great. Thank you very much, Bennett. Those are all my questions and good for the final quarter of the year, of course. Thank you. Our next question, Paul Chu from Felix Securities. Please go ahead. Thanks. Just one question for me for us, Abeku. I know it's harder to determine now because

of the long number. Can you comment on the longer term or lingering impact of the degree 100? Is there like a permanent get down in demand for alcohol or over the market address? Thanks. Just one question. I think that the Decree 100 coupled with COVID-19, we're seeing the change in behaviors of people. So I think people are behaving better. There's always a knee-jerk reaction initially. Both sides, one is from the tall, I think there will be stricter. And of course, on the other side, the consumer side, you'll be very worried and so on. So in the short term, that will be a knee-jerk reaction. But I think as you move to the middle term,

to long term, people behave better. The implementation, I think will be more moderate and not as, you know, it's almost close 100% in the past of enforcement. And plus the fact that I think hopefully the government, well, people trying to talk to government about some form of tolerance for alcohol. I think with all these, I think you'll normalize again, some, hopefully in a short term. So we see the various change. We hope the authorities will change the implementation of the law in terms of enforcement and also on the tolerance. So with that, I hope full in the coming short term, there will be some changes and you will not damper

as much and I think we'll slowly come back again. I mean, hopefully the demand will come back again. Okay, thanks so much. Thank you. There are currently no questions in queue. Once again, participants with question to pose, please press 01 on your telephone keypad now. Thank you, Kun-Bun-Ned, for helping us answering the questions about the Sabi your telephone keep it now. Our first question, Diva from Morgan Stanley, please go ahead. Thank you and good evening. Three questions from me. The first is on the spirit business.

I see that the spirit business volume was up about eight to nine percent in the September quarter, which looks quite high. Could you just confirm this as to how much of this is domestic and what's the trend been in October, November, especially since last year would have been a high base. So just curious to know how it's been shaping up. That's the first question on spirits. The second question is on bail. Wanted to understand that the implied number again for the September quarter suggests that both domestic and SABECO were probably down in volume in mid single digits. Again, can you just confirm this and also give some color on the market share for the

domestic business in bear? And last question is just trying to better understand the need and the intention of management, be a restructuring from a deleveraging perspective. Given the low cost of debt, very solid cash flows, just trying to better understand why management is more keen on deleveraging the balance sheet at the current point in time. Good evening, Vivian. This is Papakon, CEO of Spirit. First, before we just answer where we are in the Spirit business, I just want to say that we announced a full year earning with the segmentation with the Spirit business delivering both top-line revenue across profit, EBIT, you know, all-time measure, EBIT, net profit. This level that we have for this year is the

highest level since we listed on the exchange. So it's been a very good year for us if we look just at the number. So I think we have been very successful. The first six months up to March, In Thailand, there was no COVID impact, maybe throughout the last two weeks of the six months. That's why we had a very successful period of selling and the bows, but we also have a certain price increase that we were paying out in the first six months of the year, therefore delivering a good solid volume-based growth in the first half. Coming to the second half, obviously everyone knows April was a ban on sale.

And in May, we have announced the earnings. We can probably say that in May, when we are allowed to sell, So we basically cover pretty much almost everything to be lost in sale in April. So by the time we end June, we are looking quite all right, slightly down. The fourth quarter has been good. This is all about Thailand. The fourth quarter has been good. Our widespread sales are doing performance very well, given the situation. We believe there are tremendous amount of problem trade downs in Thailand. Because I think headlines everyone knows it's not about the spirit, it's about Thailand economy, it's about tourists not arriving in Thailand, but that's not because of Thailand.

It's COVID and the travel industry, the airline industry are affected. What it does to do with in the major city in Thailand, there are less people because there are less opportunity for the mass, you know, laborer, low-skill laborer, low-skill job and hotel, a lot of hotels are still not open, therefore related industry are sealed down in the major city. What I want to say is that it then delivers population back to the outskirts, meaning the northeast, the poorest part of the country, now has more population because people return home. Therefore, we believe that without strength in distributions, without wholesalers, and

our strength in our van sale to a cash van management. We have approximately about 1,200 van sales roaming around the country and covered a whole, basically, traditional trade. We believe that based on our number, we believe we have the most number of van sales than anyone single company in Thailand. With that, with the populations going back home, we have some start to be more farmers like. We believe our strengths are playing well. We have seen in the fourth quarter, our sale are up, especially the widespread sale. In the fourth quarter, our brows with sale are quite maintained. There's certain part of the brows with that affected

by on-premises, which is that less people and less people and nitrate, so those are the 25 standard. But we have other brands that continue to gain strength and market share, so our total market share in the year and especially even in the fourth quarter are not declining, they are maintained. And therefore, having said all that, so we close the year in Thailand with positive volume growth. We had a very good raw materials input cost. We had a very good strategic way of dealing with the trade and we did not happen opportunities who spent lots of money in concert and trade marketing because of social distance.

So with that, we deliver very good results for the year. I think that's probably a good three minutes that just covering most of the concern that you have. As for going forward, as usual, we're not talking about what's happening next, but so far, so good. Hello, Nitya. This is Khosit. For the domestic beer, the first question regarding the volume of the beer, domestic beers, I understand that despite the COVID situation and the government bans of the alcoholic sales in April, I think fortunately we start the first quarter with a very aggressive strategy. So I think we managed the entire year, we managed to close the years with a slightly better volume than

last year. So that's the first question. The second questions regarding the market share domestic beer market share. I think I love to tell you that the market share at the end of September, the whole year, I think it's by far we managed to close the whole year with the highest market shares I think since the past what 12 years? We have reached the highest market sharer is comparing to the past 12 years. So that's the good news for us. Thank you.

So for the third question, to which I see it all. When you ask, we make a BLE structure, the main purpose, we would like to set our beer in Thailand or Vietnam at the same direction, same holding company, which will be a core setup in Singapore. The objective is to measure the performance again on the peer-to-peer group. Let's say for other vehicle we can compare the performance and for other activities we are on the project survey you can see that you still have the re-leveraging. For you can see that our performance the year September 20 compared to September 19 our net depth, lower than last year about 30 million Baht. Even the net depth to EBITDA

now from 4.2 to 3.91. Now we are in the process to prepare. Even we are healthy, lower-depth, but we would like to make the community healthy. In order to, in future, we have any chance we can catch up with. So we are preparing the process to be leveraging, but it's still sensitive information. You will see, you will know. And then when we are ready, we are now to the stock market. We cannot fail here. Thank you very much. Just one small follow-up on the spirit side. So you mentioned that the Thailand business was seeing positive volume growth on a full-layer basis. Can you just quickly comment upon Myanmar spirits as well?

What was the volume growth for the full-layer there or the decline? Deepya, for Myanmar, I think everyone knows the headline. In April, about April, Myanmar has a bit of lockdown which turned out alright. Then the second wave came around September, August to September for our closing. And it still remains very challenging for Myanmar, but for the year, for a year, we had a very slight, we came in slightly down on the volumes. But Myanmar charts as a local currency has been gaining strength, so when it translated to our Thai Bhat financial statement, we record I think about 5% increase in top line and actually at the EBITDA level, we also recorded higher EBITDA in Thai Bhat as well.

Actually in the local term, it leveled out to about the same as last year. So far in the past year, Myanmar came out quite alright. However, I would say Myanmar will remain a challenging ground. It's just that we have a strong market share, but it's just that the lockdown will affect certain channels. All right. Thank you very much. Thank you. Our next question, Pamada from UBS, please go ahead. Hi, good evening. Thank you, management, for the opportunity. I have three questions. The first is just to follow up on a press statement from Bloomberg from the 1st of October when Bloomberg then couldn't happen and gave some interview.

And when asked about potentially bidding for the SABECO stake if the Vietnam government does sell it, he mentioned that Thai Beth was still waiting to hear the decision, whether They'd like to divest or keep the company and any decision by Tybeth to increase its stake in Sebecco would depend on valuation pricing. So implicitly not ruling out the possibility of bidding. Can I get some thoughts on that or update on that? Is that still the case? And there's been speculation that Tybev is in the poll position to acquire the 36% stake with regards to leverage. Does Tybev have the risk appetite or desire to increase leverage materially should it

buy the 36% stake? That's my first question. I think that couldn't, Sepana also mentioned, I think that any decision to buy a state would depend on pricing and valuation and of course other terms which we have not heard yet. But I think we are very happy, very comfortable to have the SCIC, previously MYT but now it's been transferred to SIC working together with us. And until we hear more about the government's decision, I think we look forward to working closely with the SIC to increase shareholder value for Subnico. On the question of the leveraging, I think Kunsti Chai has spoken very well about it. And of course, if in the event

that we should ever decide to do that, of course we would have to be in the financial position to do so. So I think it's a bit premature to speculate on this position, especially since the government has not really sit much further on it. And I think I'll leave it at that. Thank you. Thanks for the clarification. Second question, unrelated to the first question, the beer margin obviously expanded nicely in terms of, you know, if we look at kind of the beer, Ibeda, especially in Thailand, grew very nicely for this year. Would you be able to just provide some color in terms of the drivers of that?

I mean, there is a headline in terms of cut in advertising costs and stuff, but if you can provide some color on the actual initiatives that was done to drive that margin expansion in the domestic Thai beer business. All right, Ramada, this is Korset. On the beer performance, I think, as Parkhwan mentioned earlier, I think what you see as improvement is basically a cut on the spending especially on the A&P side and I think a prudent cost control at the production side as well. So that's I think that probably to us is something that is kind of a one off and I'm not sure how we have, we are going to actually perhaps

going to actually perhaps improve this furthermore. But I think that that's something that I think everyone is doing the same, right, during the COVID. So that's the explanation for my side. Thank you. What about just maybe some color on the advertising promotion spend on, because now the situation in Thailand is pretty much back to normal. How do you think about going forward on spending on trade versus off trade, above the line, below the line. Can you elaborate on that? I think if I touch a bit on, I think back to during the COVID, I think we actually achieved the spending towards the digital channels. And I think from that moment,

we started to realize that I think there's increase in maturity on the digital channels in Thailand. And that's something that we probably be looking forward to, you know, as compared to the conventional traditional channel in the past. Thank you. And what about on trade and off trade? Are you going to dedicate more resources to off trade versus on trade or vice versa? We closely monitor this trend, and if you ask at this point, I think cautiously, I think that would be the answer from our side. Thank you. Okay, and last question from my side. There's the over just, I think about 64 billion bot that's of loan that is maturing in one year's time.

Can Tybeth comment on the plans to address that? So to this time, we make announcement on lady on last month, 30 October. In fact, I would event at a big one. We have about $42.8 billion that we deal with in the middle of next year. We are preparing the way to hear this one, but to make all the data, your analysis, to be happy. So, I make the backup plan. We make a bidding plan as a commitment from the bank in Thailand to prepare to be a two-year bidding loan. The internet is only reasonable by to back up this one. So it means that on March next year, you have the backup money,

committed money from the six bank in Thailand to clear this one. Just to add, it's already been announced publicly and you look at our audited financial statement, there's a subsequent event that's been disclosed. So there's a loan back up and the loan is two years from dawn now. We are not intend to draw that loan until it needs to. So that we are bond deal is in March. So those have been pretty much in the backup liquidity for it.

Okay, great. Thank you so much for all the comments. Really appreciate it. And all the best for the next fiscal year. Thank you again. Thank you. Our next question, Nicholas from Credit Suisse. Please go ahead. Hi, thanks for taking my question. I just had three quick ones. So just to follow up on the SG&A spending, on a group level that's come down about 10% this year, when you're looking at your budgets for 2021, do you think with activities being a bit more normalized, this could go back to the same levels as 2019, or you're still looking at not being able to do certain activities, or just the structural shift into digital means

that you shouldn't see such a big increase back to the 2019 kind of levels. The other two question was on firstly, on the food side, how do you look at returning to possibility in 2021? And, or, you know, will we still see a difficult period given that, you know, if activities haven't returned fully to normal on the on the on trade? And the last question is just on non-alcohol side, the strong improvements in the gross profit margins that you've seen, you know, sound that through a shift in trade channels, how sustainable is this level of gross margin, or do you expect even better improvement going forward?

The first question is relating to probably opportunity to spend on both, I think mostly the alcoholic beverage was being spirit in Thailand. Let me just explain that not having COVID spreading in Thailand doesn't mean we are returning to normal. There have been changes like mentioned earlier in the big city. You have less traffic jams, less people. People are out in the province. There's less income circulating. What it does mean that in the on-premises, pop and bars, there's less number of pop and bar being reopened after COVID. So which means opportunity to spend money have become less probably by 30 percent. It just means the number of outlet that

you can actually go out and spend money to activate with a consumer. We, the word goes money, you know, save some, change some, and go into digital mode then that's But the answer is we have started to look at coming back and having activities. But so far, I think in the first quarter, at least from the spritz, we are still not even close to half of what we used to do. So I think it's just a matter of opportunity to spend the right money, the right places. Hello. Hi. This is Tip on food. Turn to profit. I think that the situation actually in Thailand, as Khun Brapakon mentioned,

is still not picking up. We expect that right now, I think it's a bit slow. Even we don't have the COVID situation with the persons, but we still don't have the tourists coming in. Our restaurant's majority is in the mall, shopping mall, and also in the prime location, which is the tourist spot also. So that was impact and still. And we see that until the beginning of next year, we see might the country or Thailand open up, then probably we'll see some tourists. However, based on the situation, we also have been a little in terms of ourselves in terms of the strategy. We put ourselves work hard in term of delivery and also the digital platform.

So no matter what happens, we still can serve our customers. In terms of the outlet expansion or the business growth, some of the outlets, for example, KFC, which is in the drive-through area, it's not in the mall, in the shopping mall, we still open those types of stores because it's still growing and we see the good trends in that momentum. So, NetNet, if you ask whether we will return, yeah, so if we would like to see whether it's returned, I think we do changing and focus on whatever we do all best in the digital, in the strategy, and also we're doing some kind of the efficiency at the store level,

okay? We focus on, yeah, domestic consumption as a priority at the moment. We shift the target group and we change the strategy to focus on these people and in term of the outlet as mentioned, we focus on where we can bring more growth to the business, which is our off the mall to balance that one. Thank you, Chai. Thank you, Chai. I would like to add on the food. You can see that the top line of the food component, just only 5% of the total sales of the type of food. to have a profit, net profit, that's 0.5% of the total profit in the group. So they are

not significant ones. Good evening, Nicholas. This Lester here regarding a third question about the profitability of NAD. For last year, I think we will help two main areas. One was a reduction in AMP spend and for the year moving forward, I believe if we maintain the same level of spend, we should be able to help the profitability margins. The second area that we benefited from was for the low price of PET. This one we have no control over. If oil prices start to go up, then of course we will be affected by this. But in the year moving forward, Koon Koseit is actually focusing on a third area to mitigate this risk, which is to look at

affecting efficiencies from the supply chain and the logistics. So to mitigate any possible increase in oil prices, looking at logistics and supply chain to get more efficiency there so that we can maintain the profitability levels and the margins. Thank you. Okay, thanks so much. Thank you. Once again, participants with questions to pose, please press 01 or to follow up your question you may also press 0 1 on the telephone keypad. Our next question June from Goldman Search please go ahead. Hi good evening management thank you very much. I have three questions one is regarding your observation about the current competition landscape you know spirits probably we

are pretty you know strong you know with 90 over percent market share but in the in the in a beer segment domestically, I heard that your new products. So what's our response, you know, especially the Changdia brand? So do you see that the competition, you know, starts to, you know, heat up again? So that that would, you know, will affect how your budget for your A&P as well. I understand that, you know, it's hard to find venue to spend on, etc. But, you know, it is a matter of time when things back to normal. So, you know, should we expect that, you know, in some sense, you know, this A&P spending,

you know, just now the NAB, you know, non-alcohol battery should sit very clearly, the A&P budget will maintain the same as last year. Is there any such kind of budget you can give us in terms of this year? You know, going forward, the A&P budget for the beer, that will be quite helpful. So, that will be my first question. I will go one by one perhaps rather than show all three questions at the same time. Thank you. June, this is Suo Chai. Your first question is very long. Let me address the competition. Let me address the competition on beer. I think because last year we launched Chang Ko Brew and it's quite successful.

So I think it's quite normal that the competitors have to react. just launched strong brew which is Leo strong brew and then I think they were focused on the area where we are strong this is quite normal and I mean if you ask us of course we confident that we can we we can we can defend ourselves but we we are not monitored closely to what do their move and then we also have a plan to react. So I mean the result will be known on the next conference call. Okay, any comments on the ANC budget for beer? June, this Lester here, I think just to follow up on the

competition part, I attended a press conference a couple nights ago where I was asked the same question and maybe let me just repeat the answer that I gave. I think that for us, I'm actually happy for competition. Competition keeps interest in the category so we get more people coming into the into the beer category and keeping interested in the category. In terms of what has been launched, if you see our competitor, they have launched almost one new brand a year in the last three or four years. I'm glad I'm actually very happy that none of them have been successful and I'm hoping that this trend continues. But this leads into

the amount of AMP that we spend. Last year's AMP was at a unusually low level because of COVID. And I'm hoping that we can keep at this level. But again, AMP is dependent on what the competitor does. So we need to be responsive. If they do go crazy and spend a lot of money, then obviously we will need to respond. But I'm hoping that everybody keeps clear heads and spends at a decent amount and keeps profitability at a nice level. Thank you. Got it. And outside of my second question is within SG&A, you know, A&P probably is a quarter of the selling expenses probably account for a quarter, but we do see that there's a lot of other

lines are being cut as well this year. I mean, as in FY20. So, I wonder any of them structurally become, let's say, convert to variable already, so it will be sustainable actually this here onwards. Or we probably may see that, you know, we'll bounce back again as well, just like A&P, as things go back to normal. Yeah, has any of the beard restructuring activity led to any cost savings yet that we have seen in FY20, or potentially may see in FY21? Hi, Jun, Kizan here, finance from India. I think what you mentioned about the rejection of the the SGNA is not a bit in team actually in the selling is expanding sales is including

some of the variables such as the transportation as well. If you see the volume is down, actually it's also down based on the volume, but some of the other component we kind of try to do all best to increase the productivity and efficiency. So even we need to incremental the cost, but is based on the volume incremental, higher than the cost rate. So that will be the health in term of the long-term sustained in terms of the profitability of the NAB. Thank you. Right. So the bear restructuring, which is actually mentioned in the press release that it would increase efficiency, et cetera. I wonder whether any of such cost-saving

has already been captured in FY20, or we have yet to see any of the positive impact or benefits from it yet. Would it reflect in the cost? Or we shouldn't expect any? That's a bit high speaking. When we consider the beer, first you can see we can, what is called, we have to ask one person to buy the raw material, but because it's more of a hub, every level, so the big saving come for the procurement other law material, to follow with the law district. This is a saving that gets the bill, doesn't come to just only one arm, not two arm.

So this will actually benefit and manifest itself in gross margin, benefit in the gross margin for beer, potentially? Yes, yes, yes, yes. You can see even we are lower sale, but our cost margin is still the same how we can save this one. Right, okay, got it, very helpful. My last question is on the spirit side. We noticed that the growth margin in the second half, let's say FY20, you know, we start to, you know, come down a bit already and I think the manager mentioned before that the higher year, what price will start to kick in from the second half onward. I'm still wondering, should we expect this pressure may continue into the rest of the

year and next year? So we may not be able to see the margin to be sustained at this level may come down further. Or is there any strategy we could do, for example, further price hike in order to help support the growth margin? That will be the last question. Thank you. Okay. On the split for Thailand, I think the, let's say, input price, not more, because we don't use more, but the input price, the raw material input price in the second half, yes, it's higher than the first half that affected the cost margin somewhat. But going out for this year, I think that that is the input price coming from the previous

crop. So that's probably staying on for a while. year-on-year shift. But the positive trend is that if some of you may recall, we've talked about exchanging bottle for the white spirit, long car, the main brand. The majority of our white spirit are sold under this wine brand. And we exchange the small bottle and the big bottle have an embossed local on the bottle and the idea is to increase the used bottle level. So going out, I mean we start to see that we have changed this bottle before COVID actually. The level of used bottle would probably have rised without COVID but now it starts to pick up already. Some of the data we've

seen in the big bottle we start to see use bottle around 30-40 percent and small bottle is coming close to 30 percent. So I think as this trend continues to the optimal level that's a positive because we would be able to have more cheaper packaging costs from higher use bottle. Just a very small follow-up you mentioned 30 percent now is recycled bottles now currently and the optimal product is half. Yeah, but that's coming from zero because when you change brand new bottle you would have zero use. It's all new. So in the past year we have gone all new and it will take about six to twelve months.

It's not too rise. I think used bottles like a lot slower but the big bottle have seen say the level of 40%. I think ideally we want to get cost 50. We will get there, but it's just a matter of time. Because again, the one thing that you may not know, a lot of people know, is that we have a company called Type of Recycle, which we run a use bottle recycling buyback facility throughout the nation. And we probably run the largest dealing use bottle. So our ability to gain those use bottle bags are very high. So I think so far we believe that the project to shame

why Spirit Potov for Ronkha has been successful level of use bottle going up. Yeah, so you had quite the questions with optimal B50, I think you've got to be 75, but I think that is too high to achieve for a use bottle level. somewhere between 50 and 60 percent would be quite ideal for us. Thank you so much. Appreciate it. Once again, participants with question to pose, please press 01 on the telephone keypad now. Our next question, Suzanne from CIMB, please go ahead. Hi, good evening. Congrats on a good set of numbers. Can I just ask, I didn't catch much of the down-trading

answer just now, could you please repeat in the sense of Thailand, have you seen quite a fair bit of that notice in the Thai production numbers? Actually the white spirit has seen quite a good growth versus blended spirits. So wondering if this is a case of down trading? That's my first question. Yes, in the second half we see since COVID we see now trading which is quite natural for the economy that in recession. I see then just say coming back towards the last few quarters, do you think this will continue or is this something that probably Thailand is moving away from again?

I think our widespread, we believe it's remained positive. Our brows, brown split, we are, the first half is against the first half that have no COVID, but I think the part, the second half, I think once we move to the second half, I think we already have the baseline for the brown split. So I, one would imagine the first half would be quite challenging in terms of brow split volume to beat the year before, because that's before COVID. and also in the first period where we, the first six months, we also have a price increase prospect where the dealer will be stocking up a bit.

So just for the first half, so I think that's the answer. Okay. Sorry, this would be the first half next year versus this year's first half, right? The price increase, just to reconfirm that. This happened October to March, October 19 to March 20. That's the first half reporting in the financial statement, right? So what I'm saying, we are in the first quarter of the year, so which is October 20 to December 20. So we found out October 20 to March 21 compared to six months earlier. Okay, got it. And just wondering, I think there were some cash handouts that were supposedly given out in Thailand. I think end of October or so, can you probably just get some color

on has that actually helped spur the buying for your products in Thailand? It was three months and then we COVID and then it's extended with a different kind of As for now, I think the government is still considering the measure. They haven't announced it. There's a lot of rumor about extension. But until we see on the newspaper, we would not know. Can you say that? This is Thai, Singapore. Now, Thailand government, they have the... They call the... For more... For the mainstream and high-stream people. high-steam people, mostly with the poor people. They suffer 50% challenge. They're effective from 23rd of October until 34 December. It's really good.

They help with on the government announcement, the healthy repeat got one to 2%. And then now they confirm that they will extend this one in next year. But how many of them we don't know? We have to wait next Tuesday when cabinet have the meeting. Second one for the high people. That's one for the health of the tech. If you're chopping and you get the tech, invoice you can make it as a deduction for your personal income tax. This one 30,000 bucks for people. This one they just rallied for to December. They don't make any extension. About 50% challenge with the low end people. They will exactly to extend but we don't know.

If you want to know, you will next Tuesday you will know. I see, got it, got it. So just to reconfirm, the cash handout one for the lower income did start on the 23rd of October and we still have to wait till Tuesday to see whether this is extended beyond December, right? Yes. Okay, okay. Got it. Thank you very much. Thank you. Our next question is Daniel from Franklin.

Please go ahead. Hi, management. Thanks for this presentation. Please go ahead. Hi management, thanks for this presentation. Just one quick follow up question on one of the comments you made on changing the bottle for the white spirit product. And you mentioned that that could potentially help drive down packaging costs. But if I look at the full year 2020 disclosures, I'm not sure if I got the numbers correct, but from what we have disclosed, I think the packaging cost actually has increased quite substantially despite your efforts to drive recycling. I just wanted to understand what's driving that momentum there. Thank you. Yeah, because under four years, look higher, I was saying that going forward, we start

to gain benefit because we will outrun new bottle this year in the physical year. That's why if you look at the percentage of packaging this physical year and just going back it might have been increased as well. That's on the widespread packaging. But the breakdown is actually a total packaging cost for the group. But yes, the number of widespread bottle are a lot more than any other products. I see. Thank you. I see, thank you. Just to clarify, does that understand that this recycling plan has been going on for some time, and there's this thought that your packaging costs should actually decline over time, but it doesn't seem to be the case.

What's your thoughts around this, and how should we think about this going forward? I think it's difficult to just look at those numbers just because of what's just one number for the full year. And we have many SKU, but the majority of the bottle in Weisbrit by unit count. And the recycling business has been ongoing, but we in the past four years, our ratio of Weisbrit has been changing over time. time. For five years ago, white spit bottle, big bottle would have been 100% used, used bottle. We're not using new bottle at all because we buy used bottle from the system. But later on, it has become an issue to use those. So we then have to move to brand new

of our own design and our own embossment of local and then put that into the market. So we are moving from 100% because basically we were coming from 100% use to 0 use up to 100% new. And now we are working back down to get the use bottle back up. That's just the evolution, the whole things of the browse, sorry, browse bottle, which is using it widespread throughout the past four or five years. Thank you. Any more further questions, Daniel? That's all from me, thank you. Thank you. Our next question, N.B. Sim from DBS, please go ahead. Hi, thanks for giving off for sure to ask a question.

I just have one question on exercise techs, which is one of my favorites. Just wanted to see any views and thoughts to share on any potential exercise tech changes, given the level of stimulus spending by the government during this period, noting that actually the last exercise tech was already a couple of years ago. So any views and thoughts to share will actually be helpful, if there's any. Andy, this is Sohe Chai. We don't normally we will hear something but up to now we don't hear anything at all. Normally our ears are very long. Okay, so that's for the next probably couple of months. Yeah actually the government the current government have a lot more issues, priority issues and

they haven't discussed about this because in the past we will probably hear about this six or seven months before they move on. But up to now, we haven't heard anything. But I can't promise that it will not happen because as I said many times, Andy, excise tax increase is the fact of life. It's very normal to us. It's how we manage it. And I have a proven record that every time they increase, I give more money, more profit to the company. I confirm. We can't accept the money from him. Okay, thanks. That's very helpful. Thank you. Thanks for your time. Thank you, Andy. Thank you.

Once again, participants with questions to pose, please press 01 on your telephone keypad now. As there are no further questions, we will now begin closing comments. Please go ahead Ms. Nam Fong, I'm Sun Tong Rong Si. Thank you. Thank you for joining Tybesh conference call tonight. If you have any more questions, please feel free to contact IR department at irattybesh.com. Thank you and have a good night. Thank you. Ladies and gentlemen, this concludes this evening's conference call. Thank you for your participation. You may now disconnect.