TCC Assets’ takeover of F&N (F99.SG) marks a milestone for Thai Beverage (Y92.SG), says CIMB.
“Gaining control of F&N’s brands and extensive distribution network in Singapore, Malaysia, and Brunei could transform ThaiBev/TCC into a regional consumer name. The grouse that it was a single-country, low-growth beer/spirits company is now no longer valid.”
CIMB expects restructuring to deposit F&N’s F&B businesses within ThaiBev, while TCC takes singular ownership of F&N’s property assets. “Synergies can show up via F&N’s entry into Thailand and Oishi’s overseas expansion. Valuations should also expand as growth accelerates.”
CIMB raises its target to $0.70 from $0.60 after increasing FY12-14 EPS forecasts by 1%-8% on lower Thai corporate tax rates coming into effect in FY12; it also expects dividends could be lowered as management will likely be keen to pay down debt.
But it notes its sum-of-the-parts target price hasn’t taken potential F&N synergies into account, valuing ThaiBev’s 29% F&N stake in any break-up situation at $9.55/share. It keeps an Outperform call. The stock is up 1.0% at $0.525.