Revenues will still increase this year because higher ASPs will compensate for any fall in volumes. We tweak our estimates slightly for housekeeping matters, which trims our SOP-based target price. Maintain Outperform. Catalysts could come from corporate restructuring.

Spirits revenue will hold 
We are not worried that the excise tax hike and any cuts in rice subsidies will affect spirits sales. Yes, volumes may be flat or could decline slightly. As consumers adjust to a new price reality, this will be temporal and unlikely to be large enough to wipe out ASP increases (est. 8% in FY13). Comparing with the most challenging period for spirits in the past (2005-2007), a 6%-decline in volume only came through when two large excise tax hikes of more than 50% took place and there was flooding in rural provinces. Yet, revenues still rose 3%. 2012's excise tax hike of 15-25% is hardly painful. The fear that a decline in farm income will impair white spirits sales is also speculative, in our view. Unskilled labourers from other labour-intensive industries, such as manufacturing, motor vehicle repair and construction, outweigh agriculture's three to one! If any, consumption should increase because these consumers will have benefited from the rise in minimum wage put in place in 2012-13. At the end of the day, spirits revenue has never had a down year in the past decade. Thai Bev enjoys an effective monopoly and consumers eventually return because they have little other choice. History says so, not just us!

Restructuring risk low 
Minorities hold the key to any proposed transaction because TCC and Thai Bev, as related parties, cannot vote. As long as F& N is listed, selling out its properties on the cheap to TCC can be ruled out.

Maintain Outperform 
Current share price only accounts for the spirits business, with no value ascribed to beer and non-alcoholic beverage businesses. We acknowledge short-term earnings strains as spirits take time to digest the impact of excise duties and A& P expenditure stay elevated. But, these are needed to build the business and it will pass.