Thai Beverage Pcl Ord

half 2025 results call. All participants have been placed in a lesson-only mode. I later will conduct a question-and-answer session, and instructions will be given at the time. I will now hand over the call to the presenters, Amnesty Nanthong Anstoransi of Tybev's Head of Investor Relations and the members of Tybev's Senior Management Team. Thank you.

good evening ladies and gentlemen and welcome to thai barrage the first half 2025 uh ended the 31st of march 2025 financial results conference call i am nam phone asutarangsi head of investor relations for the call tonight i will start with a summary of the results then we will open the line for our q a with our management team here Please note that following the consolidation of F&N in September 2024, VCH accounted for asset-biz combination under common control by the same ultimate controlling shareholder. The group financial results for the first quarter, sorry, for the second quarter and the first half ended 31st of March 2024 have been restated for comparison purposes. For the summary of the first half results, The total sales revenue of the group for the first half was 177,617 million baht, an increase of 1% when compared to the same period last year. This was due to an increase in sales revenue of beer business, non-alcoholic beverage and food business, while there was a decrease in sales revenue from spirit business and other business. Net profit including associated companies was 17,769 million baht, a decrease of 9.2% compared to the same period last year. This was due to a decrease in net profit from spirits, non-alcoholic beverages, food business, and other business, partly upset by an increase in net profit from the beer business. High Best Board of Directors agreed to propose an interim dividend payment of 3,770 million baht or 0.15 baht per share, the same as last year. The company remains committed with our full-year dividend policy of not less than 50% of the net profit after deducting of our specified reserve subject to our investment plans and as the Board of Directors deem appropriate. In the first half of 2025, the Spritz business generated sales revenue of 64,520 million baht, a decrease of 1.5% year-on-year. This was due to a decrease of 1.9% year-on-year in total sales volume. In addition, higher raw material costs alongside increased brand investment and marketing activities led to a 10.3% year-on-year decline of net profit to 11,601 million baht. The beer business recorded sales revenue amounting to 66,201 million baht in the first half, an increase of 3% year-on-year. This was mainly due to a 7.4% year-on-year increase in total sales volume. The net profit increased by a robust 19% to 3,152 million baht, driven by a decrease in key raw material cost and improvement in production efficiency. The non-alcoholic beverage business recorded a 2.5% year-on-year rise in sales revenue to 33,438 million baht in the first half, supported by a 4.1% year-on-year increase in total sales volume driven by the drinking water and carbonated soft drink. Despite this, net profit decreased by 11.3% year-on-year to 3,114 million baht due to a lower share of profit from associated companies and higher tax expenses from expired tax incentives. In the first half of 2025, the food business registered 11,145 million baht in sales revenue, an increase of 0.7% year-on-year. Despite this, net profits fell by 61% year-on-year to 124 million baht, weighted down by a rise in raw material cost, labor and marketing expenses, and increased depreciation expense from restaurant expansion. In the first half of 2025, the group's other business registered a decline in sales revenue of about 0.8% year-on-year to 2,438 million baht. This was mainly due to a decrease from licensing income impact from depreciation of Thai baht against Singapore dollar, partly offset by an increase in education sales in this year. The net loss was 222 million baht. due to no profit sharing from FPL in this year. That's a summary of the first half result. We now open for a call to any questions on our result. Operator, please help open the line for Q&A.

Thank you.

Thank you. We now begin the question and answer session. By this point, with questions to pose, please press star 1 on the telephone keypad and you will be placed in the queue.

To cancel the queue, please press star 2.

Our first question comes from the line of from UB Keychain Research. Please go ahead.

Okay. Can everyone hear me?

Hi, Leighton, we can hear you.

Okay, thanks for letting me ask my question. So, I have three questions. So, I'll start off with the spirit. So, I see that the cost of salt increased, so it was increased for the second quarter, it was increased in raw material cost for the second quarter. I see that in the explanation. But I remember from the last meeting we had six months ago, it was stated that the crop yield for for this year is like 10 to 20% lower as compared to the crop cost is 10 to 20% lower than the previous year. So that means there will be lower raw material cost. So have we actually seen that coming through yet, or we will see that come through in the third quarter? And then we'll move on to my second question, the beer business. So I can see that it was taken as challenging market conditions overseas. So I'm assuming that's in Vietnam. So based on the past results of tobacco, volumes usually depress and market economy is not so good. So given that with this terrorist and Vietnam facing some larger terrorists than others, there will be some economic uncertainty there. So do you see volumes decreasing? actually going down like previously, or will the volumes be stable moving forward? Lastly, my last question is more of a general question with tariffs, and how does that impact costs, let's say for steel, for packaging? Is there any indirect impact to cost for the group as a whole?

Yeah, these three are my questions. Thanks.

This is from the separate group. The first question was on the , I believe, that the impact of the lower cost coming and when that will be happening. So I think from our estimation and following on the numbers, so it will be, to our average cost will be around the fourth quarter this year, our budget year.

Thank you. Hi, Leighton.

This is Lester here to talk about your question about how you see the outlook for international markets for the rest of 2025. I guess I speak only for the Vietnam market. We've seen the research numbers, the initial numbers for consumer confidence, and that has come down. One of the lowest rates, one of the lowest, not the lowest since COVID-19. So it doesn't look good in that sense for consumer confidence. But on the bright side of things is when the market takes a downturn, companies like Sebeco tend to do well because people down trade. We are primarily a mainstream brand company, and the bulk of our volumes are there, and we sell in channels that cater to the mainstream. So with the downturn, I believe there is a silver lining for Sebeco moving forward. But the entire market, the entire beer market in Vietnam, I believe, will be challenging.

Yes, a person who is speaking about tariffs, I will be answering in a very short way. We have only one item that we do have the business with the USA. That is only hops. And we have already closed all the risks by tariffs. bringing in all the hops that we ordered from the state into our hand in Thailand and keep it in our freezer. So there will be nothing, no impact at all to us, no matter what's going to happen. About the machineries or the spare parts or technology or whatsoever, we don't rely on them at all. So I think we will not be harmed or anything by this trade war. Thank you.

Okay. Thank you. Thank you so much.

Our next question comes from the line of Selvinia Aproping of HSBC Limited. Please go ahead.

Sure. Thank you very much for the opportunity to ask questions. My questions, I guess, primarily is, you know, probably a follow-up to the earlier question. on beer, particularly in Vietnam, you know, I guess your competitor actually, you know, showed pretty robust numbers, which probably implies, I guess, I guess, Cepico losing market share. And so, I guess, I do believe that confidence is actually key.

I guess, based on what Oh, hi. Hi, Savannah. I think we lost your line. Are you still with us?

It's just that Savannah's line is disconnected. Shall we move on?

Yeah, sure, sure.

Thank you. Our next question comes from the line of Cheng Fong Chee of DBS. Please go ahead.

Hi. Can you hear me?

Yes, we can hear you.

Right. Okay. So a couple of questions here. So firstly, in terms of the spirit, can I check what has actually changed in the spirit market in Thailand that warranted that step up in marketing spend, and should we expect that level of spend to persist? So that's my first question. And my second question would be, in terms of beer, I understand that you actually took a one-off loss. So, actually, if you remove that one-off loss, if you look at the first half, actually, what would be the growth like if you exclude that one-off expense loss?

So, two questions for now. Thank you.

Hi. This is from Bangkok. So, from your questions about the situation of the subject in Thailand. I would say that from the last meeting, I think overall, as you will be aware, that overall situation in Thailand, for the overall economy, still not doing really well. So that's created for the poor consumption. So I would say that our subject in Thailand are not really growing. I would say that we align with the growing of the overall economy in Thailand. And then for the ANP for Thailand, I think right now we are trying to, we control in order, I mean, our priority is to protect our bottom line.

So we are in the control mode of the ANP.

Hi, .

For the one time in the year, especially on the, we put on the Q2, actually that one is coming from, if you can see in the note to financial as well, because of the Sabi Beko itself in this quarter, we have acquisition. The used to be the associate company called Sabi Beko. So then by the accounting principle, we need to revaluation of the associate company. So we have some of the loss from fair values about 120 million. But actually, it's a non-cash one. The different bill, we go to the good bill. That is one time, which is going to be not happening in the next quarter.

Okay, got it. Thank you. I'll move back to you. Thank you.

Our next question comes from a line of Shen Tan of Goldman Sachs. Please go ahead.

Good evening. My first question is on Vietnam Beer. If you look at Heineken's results, it seems that they actually gained share in first quarter. Just wanted to understand what is happening there because is it just purely because of TED or because it is kind of counterintuitive to what you mentioned about downtrading?

Hi, Shren. Yes, let me, yeah, the downtrading part is the outlook for 2025. It's for the upcoming quarters. But yes, you answered your own question there about the effect of debt. And I will show it on our call on Monday because the Baker's Call is this coming Monday. I was going to present one of the very rare times a share chart. Yes, we did lose share in January and February. It was the debt effect. But we rebounded very well in March. If you look at the brand chart, here Saigon hit the highest share, I think, in the last four or five years in the month of March. So, yes, it was the TED effect. And we caught up in March, by the end of March already.

Got it. Thank you. Super helpful. Second question is on Thailand beer. Sorry.

Yeah, on Thailand beer, we've seen pretty strong volume. And on the flip side, I guess spirits is a bit weak. Can you help us understand on the ground what you've seen for first half and what's the expectation for these two segments going into the full year?

Okay, hi, this is Tiff for Beer Thailand. For us, the market situation for Beer Thailand, going forward, it looked pretty okay over the past quarter, but going forward, we start seeing the downward trend, especially from the AC news, and it start dropping over the past two months. And we see the future is not that positive or still challenging. But however, we protect our profitability. We try to manage our costs and whatever that we can manage to protect our bottom line.

And how about island spirits?

Actually, I mean, from report that if you see between the first quarter and second quarter, you may see that we see a little bit growth that in the second quarter. And what I maybe just add a bit that we also for the Songkran, I think we also see a little bit of the positive factor as well.

That's all I can say. Thank you. Okay. Got it. Thank you. Our next question comes from .

Please go ahead.

Yeah. Good evening. Can you hear me?

Hi, . We hear you.

Hello?

Hello. Hi. Hi, .

Thanks for the opportunity and management. I wanted to clarify on the beer revenue in Vietnam. That's my first question. It is down 19% year-on-year. Yeah, there's a tech effect, but down by nearly a fifth. That seems a little bit, you know, steep. Can you give us some color why that might be the case? Your main competitor is known for being very promotional during TED, but this is a comparison against your own numbers in the first quarter of last year, so down nearly a fifth. You know, if you can give us some color on that, Lester, that would be much appreciated.

Hi, Mara. Yeah, no issues. There are two big reasons for that. One is the timing of that. So because that was a little earlier this year, we saw some of the benefits of an early sell-in in November, December already. So Q1 versus Q1 doesn't 100% equate to TET versus TET because of the timing of TET. So that was a big one. The second issue also was internally we deliberately... held back a little bit of the of the tech sales. What we didn't want to happen, as we've seen in previous years is overstocking for tech. And then immediately after that you see price instability of people of our agents dumping stock. And I think we did a good job controlling that, which is why we see our share shoot up in March right after that. Again, like I mentioned, this is the highest in the last four or five years for beer Saigon. So it was some intentional holding back of that loading as well as timing of that last year versus this year.

And how would you characterize the inventory level in the distribution system now? Is it, you know, healthy or, you know, quite short?

Yeah.

How would you characterize?

It's healthy. We cleared out a lot of stocks in March and April. So we're cleaning up the pipeline. Obviously, we didn't want an overloaded pipeline as we used to see in previous years right after that. So it's healthy now, single digit in terms of number of stock days.

And what about for the industry?

Is the level of stock for the industry There's an overstock in the distributors. Like, you worried? Because, you know, my question is also obviously that could impact aggregate sales or your own sales.

Yeah, Mada, it's hard for me to comment on our competitors, especially on the stock levels. Yeah, I don't have a very, very clear picture. Although walking the market, I would say it's quite high. Maybe we can answer this in a lot more detail on Monday.

Yeah, and normally we don't want to comment on our competitors, though. Yeah, we're more talking about our performance.

I understand, but it was for the entire industry.

Yeah, but the industry, who's in the industry. So, yeah, we refrain from making the comment.

Okay. Moving on to Thailand. Normally, in a slow environment in Thailand, spirits tend to do better than beer. If I look at the second quarter, the rate of growth in spirits is weaker than beer. than beer, I would have anticipated spirits to be stronger than beer in a slowdown.

How can we understand the numbers? Okay.

Hi, this is from Bangkok. So overall, I mean, if I understand well, your question is what happened for the in Thailand in the second quarter and why it goes slower than beer Thailand in the second quarter. So you would say that, yes. Yeah, why did spirits grow slower than beer? Yes, yes, okay. So it was, how to say, not a growing economy in Thailand. And for our subject, we still are building a little bit stronger than last year. However, we don't get any benefit from the tourists that are coming to Thailand. The tourists, they prefer to take the other .

This is . I think because beer benefit a lot from tourists, Tourists drink beer, they don't drink white spirit. So spirit really depend on local economy, which you can see, you understand that it's not very good during this time. So that's the reason why beer overgrown spirit, okay? If the economy coming back, then the spirit will probably follow the growth of the general economy.

Okay.

So, it's just purely the tourist effect that essentially that's driving the beer volume growth incrementally versus spirits.

Correct.

Okay. That's a fair explanation. Thank you. I'll go back to the queue. I'll ask some more questions later if I do have any. Thank you so much, and best of luck in the subsequent quarters.

I appreciate it. Thank you.

Our next question comes from the line of Meghana Kendi of CGS International. Please go ahead.

Hi. Can everybody hear me? Yes, we hear you, Meg.

Okay. Thank you so much for taking my question. So, I have three questions. So, the first is on beer volume growth. I think in the second quarter was a bit of a slowdown compared to a really strong first quarter. So, and it was also a bit slower compared to industry beer sales as well. So, just trying to understand how, what was the trend in your market share in the second quarter and any color on whether you see the need to be more aggressive in the promotions going forward. And maybe just any color on also your performance during StoneCon recently would also be helpful on the beer side. So, that's my first question. The second is on the input costs for beer. So any color on how that is trending for beer and even for FNN. I think today they posted really strong revenue, but input costs impacted their gross margin. So just wondering how the input costs for your FNN side and the beer side are going. And the third question is on Vena milk. the reasons behind the poor performance this time.

Yes, thank you so much.

Hi, this is Tip again on Beer Thailand. Actually, our beer volume for the second half is also growing. We actually grow from our market share local. Okay, we gain from the market share, which not only the tourists, So we still see good momentum in the second quarter, especially after Songkran, we also good momentum continue. On the cost side, I would say that we, thanks to everyone and also God, we actually get a very good price, actually, especially from our raw materials and packaging materials. For example, the mall also decreasing, and we hedge and book in advance. At least we confirm that we can protect our profit as planned.

Thank you. Hi, this is .

Let me answer on the input cost on the FNN side. I think if you're aware of, I think we have a very favorable situation on the packaging side. You know, tin can PET ration, I think both costs are coming down. I think the only issue we keep watching is the palm oil, which is the cost actually increased a little bit. And I think pretty much on the sugar side is also a good trend as well. So I think for the F&N, that's not so much worried about. the dairy products, you know, with the volume that we are now growing, you know, I think we have anticipated on this one and we have a good stock on our raw material.

Thank you.

Yeah, in response to your question regarding vinaigre and the reason for the poor performance in the first quarter, I think the general question, the general answer really is consistent with what we've seen in Sabeko. There's basically been a poorer consumer sentiment, poorer trade sentiment. I think that affects all the consumer goods. And that's what's going to be the challenge, I think, in the months ahead. I think the uncertainties created by the tariffs recently and what's been going on geopolitically has affected consumer confidence. So I think that's generally the main reason. I mean, of course, you would know also that Venoma has done some restructuring of its own route to market, and that takes time, of course, to show results. And these are all publicly available information. They just had their call, I think, last week. So you might want to speak to their investor relations people.

Thank you. Thank you so much. I will join the queue again. Thank you. Thank you. Our next question comes from the line of Paul Chu of Philippe Securities. Please go ahead. Hello. Hi, Paul. Hello, Paul. Paul, please. Paul, please unmute your line and go ahead with the questions. Ray, I think you can switch to the desk in the line. Got it. Thank you.

Our next question comes from the line of, again, Candy of CGS International. Please go ahead.

Hi. Thank you again. So it's just a follow-up from one of my previous questions about the inventory for malt beer. Just wondering how long you expect these inventories to last and when you would have to replenish them. Yeah, and second question would be on, the tourism side with the recent news about a potential lift of ban, lift of the ban of alcohol sales during the afternoon and during Buddhist holidays. So, just wondering how much of an incremental impact you see from that? Is it pretty sizable or just any thoughts on that?

Thank you.

Let me take your question. I think only for you that I'm going to give this. I think it's up almost 20% down from last year. And our purchase can cover the whole of this year.

Special. Special.

Well, I personally, probably not much because currently even on that religious day, they're still drinking anyway. So I don't think that it would be impact very much.

Okay, got it. Thank you. Thank you so much. Thank you.

Our next question comes from the man of South Vienna, Apropane of HSBC Limited. Please go ahead.

Hello. Thanks for the opportunity to ask questions. I wanted to check on, I guess, the outlook around your, I guess, brand building, particularly for spirits. How should we think about, I guess, your brand buildings for spirits outlook going ahead into the second half of the year? Should we expect any more?

Hi, this is from Bangkok. I think if I understand correctly, you're asking about the activity of band building expense for the second half of the year, right? I will say that normally in Thailand, the second half of the year is, we call the low season after Songkran. So I would say that for the overall band building, it's going to be...

Just say that they're in our control that you put the seasonal.

Okay. Sorry, just to get my understanding correct, the experience brand building is primarily targeted at your, I guess, your local brands, right? We're not talking about, you know, one of your travel channels or that sort of thing, am I right?

Yeah, I mean, actually, for Thailand, I would say that the

uh the majority of for the first half of this year we launched two brands the first one that we call pacan that the first uh thai whiskey single more so that wanted to the first launch that uh so we had that expense for the first quarter and then second quarter we just run the we call the local local white split that local subject that we call a sad hole in thai and it is a very very imminent innovative product because it is the first start of sparking in canned format so we have a data for the extra explain for the new product launch in the first quarter and the second quarter any more that we should expect in the second half of the year uh right now we don't actually we i mean

I mean, we don't have any plan for the launch for the new product yet.

Okay, understand. Thank you very much. Thank you.

Our next question comes from the line of Paul Chu of Phillip Securities. Please go ahead.

Yeah, hi. I'm so sorry for the technical issue earlier. Just three questions for me. The first is regarding the product mix of your spirits. Could you maybe share a bit of the performance between the brown and white spirits? That's my first question. My second question is just on the weaker U.S. dollar. I'm just wondering, can we expect some creep up in margins if the trend continues, all else being equal of a weaker U.S. dollar against the Thai baht? And my final question is if you maybe give some color or maybe just consumer sentiment in Thailand. I think you mentioned it could be challenging. It was never great in the first place, but I just wondered has it maybe worsened recently because of the tariffs. Thanks so much for taking my question.

Hi. For the first question about the breakdown, actually, if you see our report, we don't really separate. white and brown. So this question, sorry that we cannot really break down for you. But you can see it as an overall majority still coming from Thailand anyway.

Yeah, now I was wondering if the mix in performance, not so much the percentage share, but has there been any particular difference in performance or generally in line? Thanks.

Paul, this is Prabhakar. I think on the breakdown of white and brown, we normally don't disclose this. Generally, they all in line with the same trend. Just a matter of different growth factor. When they go up, they go up together. But they normally don't diverge from each other. But anyway, back to the questions on foreign currency exchange or U.S. dollar strengthening or weakening. The current what we've seen, and we are on a consolidated basis, we are, you know, an Asian company or Southeast Asia company. So our revenue is a basket of, you know, both Thai baht, Vietnamese dong, or Malaysian ringgit and Singapore dollar. And then so far the currency have been moving in the same direction. So I think whether weakening or strengthening of U.S. dollar, I think we don't see that playing a role in shifting profitability or margin around.

Thank you. Thank you.

Our next question comes from the line of Nathan Tan of UB Keychain Research. Please go ahead.

Hi, it's me again. I just have two questions, but one was just so I have one question about any potential for price increases. So are there any SKUs within both spirits and beer that you see a potential for any price increases moving forward? Because I guess with higher cost of goods sold, higher cost and packaging, do you see any potential for some SKUs that price increases haven't been implemented before to actually see the potential in actually increasing it in the next few quarters? Yeah, that's my question.

Thanks. think on on potential price increases, remain to be seen as how the economy is affected or not affected by the the ongoing change in trade environment, I think, because the The difference in tariff or change in trade environment may impact each economy differently. So we actually remain to see that first before we make any decision. And if the market or if the economy remains soft, it's not likely that a price increase will be a factor in any of our major core markets at this point.

Okay. Thank you.

Our next question comes from the line of Xuan Tan of Goldman Sachs. Please go ahead.

Can I follow up on Thailand spirits? If you look at past cycle where economic growth was weak, do we see downtrending from down to wide or is it just weaker volume as a whole? And also if you look at the current cycle that we are in, Do you expect similar trend to follow, or is there any difference that you think could happen this cycle?

Thank you for your question. So normally for the consumer trend in Thailand, it is through the economy. Not very well. It seems that the customer may be a downward form of .

So that's right. Thank you. Is that what you are observing now as well? Not so apparent right now.

We are watching it. I think it's normally it's happening like that. In the history, it's always like that. But currently, we haven't seen that much yet. But we are looking forward to see what it happens.

And in terms of, I guess, while you are still monitoring that, in terms of your marketing activity, how you're running the spirits business, what is your strategy over the next one year?

Yeah, yeah, I think that's right.

I mean, based on our marketing, actually, it should be our A and P strategy. Right now, I think you may heard that we, as a Taipei group, we have to call the area management. Also, we also focus on the position management. So that means if we have to spend, we have to spend based on the area or based on the product category. It is region or even the province or the umpire. So I would say that we have more control and we also more precise for the spending.

Thank you. Okay. Got it. Thank you.

Our next question comes from the line of Shantan. Sorry, our next question comes from the line of Andy Singh of DBS. Please go ahead. Hello, can you hear me?

Yes, Andy, we can hear you.

Hello. Yeah, okay, thanks for the opportunity to ask questions. My question actually pertains to the financial position. If we look at the net debt to EBITDA, it has actually creeped up now to above 3.11 from 2.9. Can we sort of get a sense of the onward or rather going forward the plans for ideally leveraging? And, you know, and also in relation to that, maybe in terms of plans or other updates with respect to vehicle as well as the talks about strategic investor.

So this is actually two parts of one question.

Andy, this is for Parcoin. So on debt to EBITDA trending, well, I think our EBITDA is a bit slightly weaker than early year. So I think we'll continue to monitor and we'll focus on profit generation, cash flow generation at this point. See if the economy gets softened, we'll tighten our expense even more. I think that's game plan that we have. In terms of the debt, there's some spending that was required for the expansions at the moment that has been announced or discussed earlier. So that's continued. I think based on this, we still foresee in our forecast that our our headline or our total indebtedness will continue to come down. We don't expect that to just continue to creep up. At the moment, we'll probably have to see in the next six to 12 months after we complete all this spending, our debt will start to probably get back down again. So I think that's two things that arrive to that ratio. I wouldn't comment on the potential IPO and the strategy because the investor discussions, because I think if we have anything, we'll make a proper announcement, timely announcement on that. At the moment, the market remains soft, so I think we'll continue to monitor the potential IPO, I think, depending on where the markets are.

Thanks.

Just follow up on that. So in the light of case, will you see, I probably assume that there's no issue in terms of refinancing of your debentures that's upcoming and how will you see in terms of the interest rate in the light of current environment? Do you expect to see lower interest rate?

So let's just I think Back and then future potential. Back is the interest rate has been rising the past two, three years since COVID ended. We have experienced somewhat of an average interest cost that rise over the past two years. And that came from just a base interest rate to sell. It have nothing to do with our credit spread. Our credit spreads remain very competitive. We generally have our funding from Taipei Groups in Thailand. We continue to be benchmark ourselves against all those blue-chip names, so we have very competitive funding. On consolidated basis, we also have F&N now, and F&N continue to have a very good pricing as well, what we've seen. Going forward, future-wise, there are two things that we see. One, interest rates are coming down. The base interest rates are coming down. The central bank in Thailand have started to reduce interest rates. There's more expectation of interest rates to come down further. Currently, on the IRS basis, the floating rate is actually more expensive than the fixed rate. basically 30 to 50 basis points cheaper going out to five years. So we have started to take advantage of that as well. So basically, What I'm saying is the past two or three years, the interest rate has risen. We think our interest costs have peaked. We believe that in the next 12 months, we will start to enjoy lower interest costs on our debt, both from Thailand's perspective or even Singapore's perspective. The last factor is that we do see ample liquidity from both banks, bonds and capital markets. We do see ourselves as a blue ship company that we sought after security in term of issuing bonds and also lending wise banks continue to lend to us at the credit spread that are shrinking. So that's what we see. So I think we're quite confident Both the interest rate and credit spreads are lower for us going out in the next, well, 18 months.

Thank you. If I may, a follow-up question with respect to the three rates, A and G spend. Can I, because traditionally when the economy is soft, you know, I understand that the company's strategy is actually to pull back on spending because no point spending, you know, if consumers are not buying or consuming. So with respect to second quarter, in terms of investment, investment and marketing activities for spirits pertaining, Would this be arising from the new brand that was launched that has indicated earlier or is it on other things? Yes, that's my question.

Yes, yes, thank you.

would say that for the second quarter is the activity that we have one brand that we launched and also we have the marketing activity that we have data for the browser in the second quarter.

So can we assume that or rather expect that this, even that is a second half is similarly weaker, you know,

uh and also the low season uh would you expect the spending uh to to taper off as a percentage of sales yes uh for the sec for the second half that's true during the low season i think all the marketing activity let's say lower activity comparing for the to the for the first half of the year yeah we we we already i mean made And so for the SE&A for the second quarter, mainly for the, just only for the normal trade promotion.

Okay. Thank you. Thank you.

Our next question comes from Meghana Kami of CGS International. Please go ahead.

Hi. Thank you so much again for taking that question. Just one regarding the marketing side for the beer segment. So just wondering if you're at a comfortable level right now or just your thoughts on the marketing strategy going into the second half for the year. Thank you.

Hi, yes, in terms of the marketing spending, I think it's one part of it, it's the one that is a key driver of our volume growth. So we're still spending for the second half, but definitely it will be more efficient, and because of the activities and festive season, it's probably lower, so the spending in terms of the ratio will be continued.

This is . First half we have International New Year and Thai New Year. So A&P spending in Thailand is quite heavy in the first half. Second half is a lot lower, especially from July to September is a length period, Buddhist length period. During those time, A&P will be very low. So bottom line is the second half A&P, will be lower than the first half on both beer and spirit in Thailand.

Thank you.

Meghana, let me talk a little bit about the Vietnam beer market A&B spending. I think similar to Thailand, we also have heavy spend at the end of the year and the beginning of the year, the Christmas, New Year season, as well as debt. For us, we don't have Buddhist Lent. We do have a heavy summer coming up. Summer is also another big drinking season for us. But what we want to do is control the spend. This year's TED season spending overall, I think the entire market was a little bit heavier than last year. And we had to keep up. We're hoping that we can be a lot more efficient in the upcoming summer season for all the spending for the high drinking season.

Thank you so much for that. Thank you. Our next question comes from .

Oh, for UBS. Please go ahead.

Thank you. Just wanted to get an update on your plans on Agri Valley. Previously, you know, it was stated that the rationale to basically combine or consolidate Frasier Neve is partly to deepen diabetes exposure to high-growth non-alcoholic beverages and dairy segments. And one of this is, of course, Agri-Valley. I know that FNN has taken the first 2,500 cattle with a, you know, final plan to ramp up to 20,000 cattle. Can you just talk a little bit maybe provide us with some kind of guidance, you know, how long the startup losses will persist and, you know, what's the ramp up to the full capacity? When will we start seeing the higher growth rate that we can expect from your dairy operation?

Thank you, Pramada. This is Koshit. I think you have done a lot of homework for our Agri-Valley projects. Thank you very much. just would like to correct you know that 20 000 ram up was at the phase two i think the initial uh projection for us is to reach ten thousand cows you know that was the part of the first phase and you are right that actually we have imported you know um a car from chile i think that was um more than 2500 it just arrived in april and i think The indicator of the first milking has gone quite well. We have anticipated higher than industry average in Malaysia, but I think this is too early for us to judge, but the rate keep improving at this point. So if it all goes well as planned, you know, I would say, I think, for this project, I think there was, the ramp-up period would take close to about two years, you know, I think, as with what we actually planned. But that depends on a lot of factors, right? So I would say at this point, it would be early to tell, you know, whether or not, but But everything looks good on our side. It seems to be on plan. Please continue to keep studying us and perhaps following us. We'll keep you posted on the updates. But so far, I can say that things are going well. If it goes as planned, it will be close. It's about two years for us to be able to reach the target that we want. Thank you.

Sorry, thank you, but is that two years to 10,000 milking cows for phase one or two years to 20,000?

Yeah, I think it's quite a simple mathematic because when you bring in 2,500 cows, you know, it carries the babies, right? So that 2,500, we go through 5,000. So we need to bring another 2,500 and then we'll give birth, you know, to another, you know, 2,500 that we can reach 10,000. I think the point is not about reaching 10,000. It's about having a very quality meal, meaning that there's a lot of factors that we need to be mindful. I think, for example, you know that this agrarian is three parts of it, right? Cow is just one part. The biggest part is the crops. We are growing a lot of crops to feed the cow, especially corn, yes, cup. And the third part is we have the processing plan, which will be coming online, you know, in the coming August or if not September, you know. So that's what is our target. So 10,000 cows will be easily achieved. I think what is the challenging part for us is to have, you know, 10,000 cows and more giving birth, you know, and giving good quality of milk, you know, and a good – I think cost of the crops that can actually feed all the cow. Thank you.

And maybe just one follow-up on that. Is the target solely for Malaysia? The dairy penetration per capita in Malaysia is already quite high, or is it also to consider other export markets?

Well, at this point, I think... I think our initial goal is to address the, you know, is to have a good milk, you know, supply for Malaysia. Malaysia consumption is not high. I think just to correct you, it's more that Malaysian actually consume a lot of recombined milk, right, not the fresh milk. So our goal is to provide good access to a quality fresh milk for Malaysian people.

Thank you so much for all the very, thanks again. Much appreciated. Thank you.

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