Mixed Outlook with Strategic Adjustments
Ichitan Group Public Company Limited (ICHI) is preparing for a board meeting on August 14 to approve its Q2 2025 financial statement. CEO Tan Passakornnatee is confident in the company’s continuous growth, anticipating a significant 25% increase in sales revenue from the previous quarter’s THB 1.75 billion. This optimism is partly fueled by a one-time gain of THB 120 million from the sale of a 72-rai plot of land in Phra Nakhon Si Ayutthaya province for THB 360 million. This sale is expected to boost cash flow and provide support for dividend payments. However, analysts from Pi Securities have a more nuanced view, projecting a net profit of THB 413 million for the second quarter, representing a 9% increase year-over-year. They attribute this growth primarily to the one-off gain from the land sale. When this gain is excluded, the company’s normalized profit is expected to be THB 317 million, which is a 10% decrease year-over-year but a 29% increase from the previous quarter. This reflects the company’s complex performance, with some segments growing while others face challenges.
Challenges in Core Products Despite Growing Segments
The projected decline in ICHI’s core product categories, ready-to-drink green tea and herbal drinks, is a notable challenge for the company. Analysts have forecasted a 9% and 26% year-over-year drop in sales for these products, respectively. This contraction in ready-to-drink green tea sales in Q2 2025 marks the first decline in fourteen quarters for the company’s primary revenue source. This downturn has been attributed to a combination of unfavorable weather conditions and weakened consumer purchasing power. To address these issues, ICHI is proactively adjusting its strategy and is currently reviewing its THB 9.5 billion revenue target for the year. The company is actively expanding its distribution channels, focusing on grocery stores and launching extensive marketing campaigns to boost sales. Additionally, ICHI has increased the product sizes of its offerings to provide better value to customers. While these strategic moves are expected to provide some support, analysts anticipate a profit decline in the second half of the year compared to the first half, due to continued seasonal factors and market pressures.
Diversifying Revenue Streams to Mitigate Risks
Despite the headwinds affecting its core tea and herbal drink segments, ICHI is seeing strong growth in its non-tea beverages and original equipment manufacturer (OEM) services. Sales of its alkaline water products are expected to exceed THB 100 million per quarter, and revenue from its OEM services is anticipated to reach THB 190 million in Q2. The robust growth in OEM revenue is particularly important, as it is expected to compensate for the negative factors impacting first-quarter sales. This is a direct result of ICHI’s strategic decision to boost its production capacity by 13% to an impressive 1,700 million bottles per year. Strong OEM orders have led analysts to speculate that Q2 OEM revenue would exceed the previous quarterly forecast of THB 170 million. These diversified revenue streams, along with a consistent dividend payment expected to be between THB 0.50 and THB 0.60 per share for the first half of the year, demonstrate the company’s resilience. However, Pi Securities has issued a “HOLD” rating on the stock, with a base price of THB 11.50 per share, reflecting caution about the company’s ability to fully offset the downturn in its core segments.
