Suggesting that its clients sell the stock, the securities company said Thai Beverage was still confined to an eroding share of a mature domestic market. The spirits market is mature and in the beer market Boonrawd Brewery continues to take a larger share with its Leo brand, which has risen from 35 per cent in 2005 to 42 per cent last year.

It added that current political sentiment ran counter to the alcoholic beverage industry. Proposals are in place to completely ban both television and outdoor advertising. Worse yet, a potentially higher excise duty for Thai Beverage's key white spirits products would be detrimental to sales.

Thai Beverage earlier announced a plan to take over an alcohol company in China. Still, such overseas expansion is viewed as insufficient by Citigroup.

"Despite reports that Thai Beverage was negotiating for a Bt5-billion acquisition in China, larger opportunities will be needed to significantly increase Thai Beverage's Bt91-billion sales base," Citigroup reported.

"Regional markets are either too small to make an impact or are subject to foreign domination. This leaves only organic growth - a slow and difficult path," it added.

Incorporated in 2003, Thai Beverage is the largest liquor manufacturer, distributor and marketer in Thailand. It engages in alcoholic drinks, water, industrial alcohol and by-products.

The Sirivadhanabhakdi family owns 61 per cent of the company, which listed in Singapore in May 2006.

"We see a lack of growth drivers for Thai Beverage and believe the company also

faces emerging threats which could actually cause sales to decline. While Thailand is the largest Southeast Asian alcoholic beverages market on a per capita basis, and third largest in Asia after Japan and South Korea, we point out that it is a relatively mature market subject to slowing growth," Citigroup said.

Thai Beverage has a dominant market share with 49 per cent and 74 per cent of domestic beer and spirit sales respectively, but the beer segment has seen recent share losses and the low-end spirits market is mature and potentially declining.

Other downside risks include changes in consumer preferences and the general level of consumer confidence. Any significant change in these areas would affect the company's product mix, which in turn affects profitability due to margin difference across the product spectrum.

Meanwhile, any material change in Thailand's gross domestic product or other economic and political conditions could have a significant impact on the company's operations and profitability.

Supporting the company is its strong cash flow. And the company's outlook could be brightened if it can successfully introduce a premium product, boost beer margins, take a more meaningful share of the urban market as well as successfully execute an offshore acquisition, Citigroup said.