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This F&B stock is brimming with potential

PC Lee
PC Lee11/23/2016 04:20 PM GMT+08  • 2 min read
This F&B stock is brimming with potential
SINGAPORE (Nov 23): DBS is recommending a “long-term buy” on Thai Beverage with a target price of $1.09 as it sees the F&B manufacturer morphing into a regional player that could lead to a rerating of the stock.
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SINGAPORE (Nov 23): DBS is recommending a “long-term buy” on Thai Beverage with a target price of $1.09 as it sees the F&B manufacturer morphing into a regional player that could lead to a rerating of the stock.

In a Wednesday report, analyst Andy Sim says EPS growth is a key trait for stock price re-rating. ThaiBev’s current Spirits operations and dominant position in Thailand should provide a stable earnings base, while a further gain in market share for beer and turnaround in Non-Alcoholic Beverage will further boost growth.

Sim expects ThaiBev to use F&N as a regional expansion vehicle. The analyst estimates the two have enough funds of up to around $4 billion to undertake acquisitions. Assuming a $3 billion acquisition at a multiple of 20-25x using a mix of cash, debt and rights issue, he estimates an EPS accretion of 16-35% and 8-10% for F&N and ThaiBev respectively.

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