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Shares in Sappe Plc (SAPPE), a Thailand-based beverage producer, surged over 5 per cent on Thursday, fueled by the strong earnings outlook on the back of the weakening baht.
Despite a headwind after the United States revealed 40-year high inflation in June, SAPPE gained 5.56 per cent from its prior closing to 38 baht as of the morning session.
The drink maker shares traded near its 1-year high of 38.50 baht, the highest level since October 2016.
SAPPE’s key product lines distributed to Asia, Middle East, and Europe are fruit juice with coconut gel Mogu Mogu and Sappe Aloe Vera, according to the company’s data.
Analysts are expecting SAPPE to book about a 30 per cent jump in its second-quarter results thanks to growing exports and the weakening of the baht against the US dollar. The company reported a jump of 77 per cent in its first-quarter results.
Amid an increase in energy prices, “the baht’s weakness will assist to offset all of the growing costs,” Finansia Syrus analyst Sureeporn Teewasuwet said.
As of the end of March, export revenues accounted for 75 per cent of the company’s total revenue.
SAPPE’s management has targeted its annual growth rate at 22 per cent over the next five years, with India as a new emerging market, according to Sureeporn.
Anuwat Srikajornratkul, an analyst at Capital Nomura Securities, noted that overseas sales in the third quarter will likely continue to be robust backed by the high season for drink products.
Both Finansia Syrus and Capital Nomura analysts forecast SAPPE’s 2022 full-year earnings of around 575 million baht, up 40 per cent year-on-year.
Besides SAPPE, healthcare product supplier Mega Lifesciences Plc (MEGA) saw its shares rise 3.5 per cent to 51.75. Sentiment on MEGA was also boosted by improved export gains due to the weakening of the baht.