Carabao Group Thailand Upgraded to Strong Buy

Carabao Group Thailand Upgraded to Strong Buy

HEFFX have issued a STRONG BUY recommendation on Carabao Group. (CBG.BK) based on a one-year target price of 167.00 baht, offering a 75.79% upside potential from its closing price of 95.00 baht on May, 20th, 2020. Our recommendation is primarily driven by strong margins and growing revenue combined with an excellent balance sheet.

About Carabao Group

Carabao Group Public Company Limited is a Thailand-based holding company primarily engaged in the manufacture and distribution of bottled beverages through its subsidiaries.

The Company’s subsidiaries include Carabao Tawandang Co Ltd, which manufactures and distributes beverages; Asia Pacific Glass Co Ltd, which manufactures and distributes glass bottles and products, and Tawandang DCM Co Ltd, which distributes beverages. Some of its major brands are Carabao and Start Plus.

Why it Matters

In 2018 the energy drink market had surpassed $53Billion USD globally and is expected to reach $86Billion by 2026, as people buy less soda and more energy drinks. In the US, people are consuming about the same amount of soda since 1986, meanwhile consumption of energy drinks has grown rapidly.

Carabao Group is Thailand’s second largest manufacturer and seller of energy drinks, with a revenue of 15.63Billion Thai Baht, 489.5Million USD. With plans of taking the leading spot from Krating Daeng, by boosting its appeal with style-conscious young people.

Carabao Group is continuing a successful global expansion program.

Shayne Heffernan Trade Idea

“We are upgrading Carabao Group from Buy to Strong Buy given recent developments with respect to the balance sheet, sales growth and a strong 2021 economic outlook. We continue to believe the asset base has considerable value.”  Shayne Heffernan PhD in Economics

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 167.74.

The projected lower bound is: 85.18.

Candlesticks

A black body occurred (because prices closed lower than they opened).

During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles.  During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period.  Generally, changes in momentum tend to lead to changes in prices.  This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20).  The Stochastic Oscillator is 76.3736.  This is not an overbought or oversold reading.  The last signal was a sell  1 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas.  The current value of the RSI is 80.86.  This is where it usually tops.  The RSI usually forms tops and bottoms before the underlying security.  A buy or sell signal is generated when the RSI moves out of an overbought/oversold area.  The last signal was a buy 39 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas.  The current value of the CCI is 148.This is an overbought reading.  However, a signal isn’t generated until the indicator crosses below 100.  The last signal was a sell 10 period(s) ago.


MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9-period signal line.  The last signal was a buy 6 period(s) ago.


Profile

Technical Outlook

Short Term:          Overbought

Intermediate Term:   Bullish

Long Term:           Bullish

Moving Averages: 10-period     50-period     200-period

Close:             86.32          71.85          79.72

Volatility:           61            108             65

Volume:        6,092,180      5,444,706      4,378,030

 Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary CARABAO GROUP is currently 20.4% above its 200-period moving average and is in an upward trend.  Volatility is relatively normal as compared to the average volatility over the last 10 periods.  Our volume indicators reflect very strong flows of volume into CBG.BK (bullish). Our trend forecasting oscillators are currently bullish on CBG.BK and have had this outlook for the last 26 periods.   Our momentum oscillator is currently indicating that CBG.BK is currently in an overbought condition, buy on the dip.

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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