In addition, many firms have restructured their operating expenditures to make them more variable, through higher gross turnover rents and lower base rental rates, as well as using more casual labour. These initiatives will mitigate the surge in expenses when revenue grows, according to Ms Cai.
Firms heavily dependent on tourism may see an uptick in revenue for Q4 2020 and Q1 2021 on the back of holidays and festive demand. However, Ms Cai believes the recovery in tourist numbers over the next 12 months will be slow, given the uncertainty on the mass distribution of the Covid-19 vaccines. ThaiBev's spirits segment caters largely to off-premise local consumption, and has wide exposure to the upcountry region. This means the segment has been less affected by social-distancing restrictions during the Covid-19 pandemic as well as the protests in Bangkok, said Ms Cai.
Although investor interest in grocery retailers has moderated after the Covid-19 lockdown ended and encouraging vaccine development news emerged, the work-from-home trend and travel restrictions may remain in place till late 2021, according to Ms Cai. He maintained his"buy" call on the coffee-shop operator and raised the target price to S$0.34. The counter fell 0.5 Singapore cent or 1.6 per cent to trade at 30 cents as at 10.06am.