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OSK/DMG report on F&N

Scoop of the Day: Following its re-listing earlier this week, F&N’s stock price
has taken a 18% tumble in the course of the last 3 days from its ex-dividend
offer price of $9.43, closing at $7.81 yesterday. F&N concluded the sale of its
APB stake late last year and generated cash proceeds of S$5.6bn and a net
gain of S$4.8bn; this has lifted its NTA by 65% to $8.78/share. The company
ended its fiscal first quarter with a cash balance of S$7.4bn. Total borrowings
amounted to some S$4bn, most of which relate to property development loans
which will be pared down as construction progressed given the substantially sold
status of its residential projects. Excluding the cash proceeds from APB sale
(S$5.6bn or $3.89/share) and attributing $2.7bn to the remaining F&B
businesses and $200m for the publishing business, the implied valuation of
$2.7bn for the property business is a massive 60% discount to the valuation of
S$6.8bn pegged by the independent financial advisor in its valuation of F&N’s
property arm. F&N property business comprised readily marketable assets such
as the strata-titled Centerpoint shopping centre, stakes in listed REITs Fraser
Centerpoint Trust and Fraser Commercial Trust and a serviced residence
business that was valued at $1bn by third parties, among others. Given the
cash-generative F&B business and the healthy financial state of its property
division, we believe capital expenditure for the group is minimal in the absence
of large acquisitions. We think the prospect of a capital repayment or distribution
of excess cash back to shareholders is high. Moreover, now that F&N and Thai
Bev shared a common majority shareholder, there are also revenue synergies
that can be reaped on the F&B front with future collaboration with Thai Bev to
cross-sell each other’s products across their respective markets. Given the
above, the current price offers an attractive entry level. (Goh Han Peng)

Passive index tracking fund managers are the biggest SorChais of this world. Blindly doing things without looking at fundamentals and creating opportunities for the value hunters and the brave hearts.

F&N ended at $8.15 day high. Will move towards its General Offer Price of S$9.4+. Thai Bev towkay is the main driver now - if you dont trust him 90% or more, your trust who? SorChais anyone?

GG

(24-04-2013, 05:13 PM)KopiKat Wrote: [ -> ]What a close!

At 5pm, the low was $7.85, reached earlier at ~4pm and it'd slowly recovered to $8.09. My fingers got itchy when I saw the 5pm matching starting at $7.71.. before it finally matched at $7.81. Guess there were a lot of Index Funds doing their selling literally at the very last minute! I wonder if any will do their selling tomorrow...

For the record,

Vol = 39,516,000
Range $7.81 to $8.23
Open $8.10
Close $7.81

Wasn't aro' to see the close today, must have been fun for those who'd gotten vested recently!

For comparison with yesterday,

Vol = 18,109,000
Range = $7.87 to $8.15
Open $7.89
Close $8.15, +34ct

Vol remains rather high, more than the combined Shorts for the past 3 days. So... don't look like due to short covering (unless intraday, but on a rising price regime today, any new shorts means shortist 'die-pain-pain'). The Q is who is buying... Traders? Opportunists? Value Investors?

---

(25-04-2013, 07:55 AM)KopiKat Wrote: [ -> ]Short Sell data from SGX,

24-Apr-13 : Vol = 3,148,000 ; Value = $25,071,520 ; Avg Price = $7.96
23-Apr-13 : Vol = 2,923,000 ; Value = $24,121,580 ; Avg Price = $8.25
22-Apr-13 : Vol = 652,000 ; Value = $6,054,450 ; Avg Price = $9.29

The observation is that the intensity of shorting was increasing and avg price was dropping over the last 3 days after it resumed trading. The selling was likely still dominated by the Index Fund Mgrs. With the absence of this selling liquidity, let's see whether the shortists will continue to be in action or will scramble to cover their shorts...

Short Sell data,

25-Apr-13 : Vol = 259,000 ; Value = $2,089,663 ; Avg Price = $8.07

Ah... within my expectations.. ie. not a good idea to short at such prices, especially since the "motivated" sellers (aka Index Fund Mgrs) have moved on..

PS. Will stop posting daily data as it's very time consuming. Will keep the F&N shares I acquired yesterday for the time being till perhaps it gets closer to G.O. price or I need the $$ for some other tikam...

It used to be Old Friends With New Ideas. Now we are awaiting the New Boss With New Ideas to unlock value at F&N.

http://www.bangkokpost.com/business/news...hanabhakdi

Charoen denies takeover bid reports
Counter bid would 'disrupt financial plan'

Published: 26 Apr 2013 at 00.00Newspaper section: Business
Thai billionaire Charoen Sirivadhanabhakdi has denied reports that he was preparing a counter bid for shares in Siam Makro Plc to compete with the country's richest man, Dhanin Chearavanont.


Mr Charoen talks to his wife, Khunying Wanna, at the BJC’s shareholders’ meeting yesterday.

Mr Charoen said such a move would be outside his company's financial plan.

"Everything's ended already. Submitting a counter bid now would disrupt our financial discipline," Aswin Techajareonvikul, the president of Berli Jucker Plc (BJC), said on behalf of Mr Charoen at the company's annual general shareholders' meeting yesterday.

BJC failed to bid for a 64% stake in Makro from the Netherlands' SHV Holdings.

Mr Aswin earlier said BJC is open to new retail opportunities to be used in expanding throughout Asean more than in the domestic market.

Mr Charoen said that when buying any business, he does not like to buy up the entire stake.

Instead, he wants to be a good friend to existing shareholders or former owners so they can do business together in the future.

For example, when Mr Charoen bought Danone yoghurt company last year, he acquired only 51%.

He believes that one day Danone may hire BJC to distribute its Evian mineral water in Thailand.

But the case of Fraser and Neave Ltd (F&N) in Singapore is different. Initially, Mr Charoen did not want to buy 82.5% of F&N, but the tender offer saw him receive a bigger stake than he expected.

Mr Charoen ranked 82nd on the list of the world's top 100 billionaires in Forbes magazine early this year, with an estimated worth of US$11.7 billion.

The founder of Thai beverage firm the TCC Group just completed an $11.2-billion takeover of F&N in February.

Last year, the tycoon concluded a 15.4-billion baht deal with the purchase of a 42% stake in Pepsi-Cola bottler Sermsuk Plc.

Mr Charoen said he is very cautious about F&N's direction after his acquisition. His son Thapana has been tasked with formulating F&N management policy with an eye towards sustainable long-term growth.

"BJC turns 131 years old this year, one year older than F&N. While we consider how to take F&N beverages beyond Asean, we'll also be thinking how to pay down debt as well," said Mr Charoen.

One market analyst believes the purchase of F&N will enable TCC to use that company's marketing network in Singapore and Malaysia to distribute the Thai group's Chang beer and energy drinks.

Mr Charoen said BJC may be F&N's distributor in Thailand.

Apart from the group having more products in its portfolio, it hopes BJC will have a huge opportunity to sell more packaging if F&N branches out further.

Packaging is the foundation of BJC's operations.

Last year BJC achieved sales of 37.4 billion baht, up by 20% from 2011, for a net profit of 2.41 billion, up by 13%.

Suchada Ithijarukul, Siam Makro's chief executive, said the entry of CP All as its new major shareholder will provide much synergy to the cash-and-carry chain.

CP Group, the parent company of CP All, has been a major food supplier for Makro for years.

Makro will continue its focus on sales of foods and ingredients to mom-and-pop shops, which account for half of sales.

About 25% of Makro's sales come from hotel, restaurant and catering operations and the rest from retail customers.

Last year, the company achieved combined revenue of 115 billion baht, up by 15.3% from 2011, for a net profit of 3.55 billion, up by 14%.

Its sales are expected to grow by less than 15% this year.

Siam Makro has 60 branches nationwide.

(26-04-2013, 02:02 PM)greengiraffe Wrote: [ -> ]It used to be Old Friends With New Ideas. Now we are awaiting the New Boss With New Ideas to unlock value at F&N.

http://www.bangkokpost.com/business/news...hanabhakdi

Charoen denies takeover bid reports
Counter bid would 'disrupt financial plan'

Published: 26 Apr 2013 at 00.00Newspaper section: Business
Thai billionaire Charoen Sirivadhanabhakdi has denied reports that he was preparing a counter bid for shares in Siam Makro Plc to compete with the country's richest man, Dhanin Chearavanont.


Mr Charoen talks to his wife, Khunying Wanna, at the BJC’s shareholders’ meeting yesterday.

Mr Charoen said such a move would be outside his company's financial plan.

"Everything's ended already. Submitting a counter bid now would disrupt our financial discipline," Aswin Techajareonvikul, the president of Berli Jucker Plc (BJC), said on behalf of Mr Charoen at the company's annual general shareholders' meeting yesterday.

BJC failed to bid for a 64% stake in Makro from the Netherlands' SHV Holdings.

Mr Aswin earlier said BJC is open to new retail opportunities to be used in expanding throughout Asean more than in the domestic market.

Mr Charoen said that when buying any business, he does not like to buy up the entire stake.

Instead, he wants to be a good friend to existing shareholders or former owners so they can do business together in the future.

For example, when Mr Charoen bought Danone yoghurt company last year, he acquired only 51%.

He believes that one day Danone may hire BJC to distribute its Evian mineral water in Thailand.

But the case of Fraser and Neave Ltd (F&N) in Singapore is different. Initially, Mr Charoen did not want to buy 82.5% of F&N, but the tender offer saw him receive a bigger stake than he expected.

Mr Charoen ranked 82nd on the list of the world's top 100 billionaires in Forbes magazine early this year, with an estimated worth of US$11.7 billion.

The founder of Thai beverage firm the TCC Group just completed an $11.2-billion takeover of F&N in February.

Last year, the tycoon concluded a 15.4-billion baht deal with the purchase of a 42% stake in Pepsi-Cola bottler Sermsuk Plc.

Mr Charoen said he is very cautious about F&N's direction after his acquisition. His son Thapana has been tasked with formulating F&N management policy with an eye towards sustainable long-term growth.

"BJC turns 131 years old this year, one year older than F&N. While we consider how to take F&N beverages beyond Asean, we'll also be thinking how to pay down debt as well," said Mr Charoen.

One market analyst believes the purchase of F&N will enable TCC to use that company's marketing network in Singapore and Malaysia to distribute the Thai group's Chang beer and energy drinks.

Mr Charoen said BJC may be F&N's distributor in Thailand.

Apart from the group having more products in its portfolio, it hopes BJC will have a huge opportunity to sell more packaging if F&N branches out further.

Packaging is the foundation of BJC's operations.

Last year BJC achieved sales of 37.4 billion baht, up by 20% from 2011, for a net profit of 2.41 billion, up by 13%.

Suchada Ithijarukul, Siam Makro's chief executive, said the entry of CP All as its new major shareholder will provide much synergy to the cash-and-carry chain.

CP Group, the parent company of CP All, has been a major food supplier for Makro for years.

Makro will continue its focus on sales of foods and ingredients to mom-and-pop shops, which account for half of sales.

About 25% of Makro's sales come from hotel, restaurant and catering operations and the rest from retail customers.

Last year, the company achieved combined revenue of 115 billion baht, up by 15.3% from 2011, for a net profit of 3.55 billion, up by 14%.

Its sales are expected to grow by less than 15% this year.

Siam Makro has 60 branches nationwide.

For ppl who pick up between monday to wednesday ... their contra (t+3 T+5) trades are due liao anytime between now till next week... until this ppl cut their positions.. once this overhang is cleared hopefully F&N can march on upwards to 9bucks

anyone can help me understand why the P/E of F&N is now only at around 2 times?

(26-04-2013, 03:23 PM)isobront Wrote: [ -> ]anyone can help me understand why the P/E of F&N is now only at around 2 times?

There's a huge gain from disposal of their APB stake. If PE is computed using that EPS, will be aro' 2+

Not too long ago, a bunch of highly paid investment bankers did their comprehensive due diligence on F&N, RNAV ranges between $8.30 to $11.22:

The Independent Directors wish to highlight the following for Shareholders’ attention:
(a) The range of the estimated sum-of-the-parts valuation of each Share by J.P. Morgan (as set
out in Section 8.10 of the J.P. Morgan Letter)4 is between S$8.30 and S$11.22. As such,
while the Offer Price at S$8.88 falls within the range of such valuation, it lies at the low end
of the range.
(b) The fi gure of S$8.30 at the bottom end of J.P. Morgan’s valuation range comprises certain
valuations for the individual parts of the F&N Group which, in the Independent Directors’
opinion, present in aggregate a conservative view on the value of the F&N Group. The Board
especially notes, inter alia5, that:
(i) The bottom end of the F&N Group’s property business valuation is approximately
S$4,433 million, which is based on the median P/B multiple of listed comparable
companies as described in Section 8.10.1 Properties under “(iii) Valuation ratios
of listed comparable companies” of the J.P. Morgan Letter. This values the F&N
Group’s development and investment properties at approximately S$2,562 million,
an approximately 48% discount to the RNAV of approximately S$4,949 million6.
Shareholders should note that the median discount to RNAV implied by the share
prices of the selected Property Companies trading comparables, as shown in Chart 10
of the J.P. Morgan Letter, is 30% (or a P/RNAV ratio of 0.70).
(ii) The F&N Group’s 55.0% stake in Myanmar Brewery Limited (“MBL”) is valued at
approximately S$211 million, which is equivalent to approximately 7.1 times the
attributable profi t (before exceptional items) for the twelve month period ending 30
June 2012. The Independent Directors believe that MBL is a unique asset, with a
leadership position in the Myanmar beer market, at a time when Myanmar is attracting
foreign investor interest with the recent positive political and economic developments
in the country. Shareholders should also note that the median last twelve months’
price-to-earnings ratio of the select Asia breweries trading comparables, as shown in
Chart 17 of the J.P. Morgan Letter, is 22.5 times.
© Based on the advice of J.P. Morgan as set out in the J.P. Morgan Letter, the Independent
Directors note that the Offer Price (i) reflects a premium over the volume-weighted average
price of the Shares over various reference periods in the J.P. Morgan Letter; and (ii)
represents a premium to the valuation multiples implied by the Offer Price relative to the
historical trading levels of the Company.
However, the Independent Directors also note that such historical prices may not fully refl ect
the cash proceeds to be received by the Company pursuant to the APB Sale of S$5.591
billion in aggregate or S$3.88 per Share.

http://info.sgx.com/listprosp.nsf/5ec09b...4002c4d42/$FILE/F&N-OffereeCir-MAS.pdf

http://info.sgx.com/listprosp.nsf/5ec09b...300366582/$FILE/F&N%20Offeree%20Circular%2011.10.2012%20(%231%20of%204%20-%20Cvr-App%20IV).pdf

Old Friends With New Ideas - Old Company With New Towkay - Akan Datang

think Charoen can create alot of value for F&N and push F&N to great heights...compare to what the old management can do... case in pt... a couple of months ago i went bangkok... I went to this resturant and ordered coke...the waiter gave me an EST (Charoen Serm Suk's) new product...it prompted me to do some digging on this EsT

http://bizdaily.com.sg/newsite/pepsi-sud...r-breakup/

quote from the article in the link
“We did not deliberately set out to push Pepsi off the shelves but we have a very strong distribution network and if we stop distributing for one company, that company’s products will disappear from the shelves,” Pragnee Chaipidej, advertising manager at Serm Suk, said in an interview.

just imagine if Serm Suk distributes F&N products too....they can literally flood the thai market...suddenly your product is exposed to another 67million population...potential is there la...Charoen brings forth the start of an exciting era for F&N

It states a key part of story to justify F&N as asset play for me.

YMMV

(27-04-2013, 08:46 AM)greengiraffe Wrote: [ -> ]Not too long ago, a bunch of highly paid investment bankers did their comprehensive due diligence on F&N, RNAV ranges between $8.30 to $11.22:

The Independent Directors wish to highlight the following for Shareholders’ attention:
(a) The range of the estimated sum-of-the-parts valuation of each Share by J.P. Morgan (as set
out in Section 8.10 of the J.P. Morgan Letter)4 is between S$8.30 and S$11.22. As such,
while the Offer Price at S$8.88 falls within the range of such valuation, it lies at the low end
of the range.
(b) The fi gure of S$8.30 at the bottom end of J.P. Morgan’s valuation range comprises certain
valuations for the individual parts of the F&N Group which, in the Independent Directors’
opinion, present in aggregate a conservative view on the value of the F&N Group. The Board
especially notes, inter alia5, that:
(i) The bottom end of the F&N Group’s property business valuation is approximately
S$4,433 million, which is based on the median P/B multiple of listed comparable
companies as described in Section 8.10.1 Properties under “(iii) Valuation ratios
of listed comparable companies” of the J.P. Morgan Letter. This values the F&N
Group’s development and investment properties at approximately S$2,562 million,
an approximately 48% discount to the RNAV of approximately S$4,949 million6.
Shareholders should note that the median discount to RNAV implied by the share
prices of the selected Property Companies trading comparables, as shown in Chart 10
of the J.P. Morgan Letter, is 30% (or a P/RNAV ratio of 0.70).
(ii) The F&N Group’s 55.0% stake in Myanmar Brewery Limited (“MBL”) is valued at
approximately S$211 million, which is equivalent to approximately 7.1 times the
attributable profi t (before exceptional items) for the twelve month period ending 30
June 2012. The Independent Directors believe that MBL is a unique asset, with a
leadership position in the Myanmar beer market, at a time when Myanmar is attracting
foreign investor interest with the recent positive political and economic developments
in the country. Shareholders should also note that the median last twelve months’
price-to-earnings ratio of the select Asia breweries trading comparables, as shown in
Chart 17 of the J.P. Morgan Letter, is 22.5 times.
© Based on the advice of J.P. Morgan as set out in the J.P. Morgan Letter, the Independent
Directors note that the Offer Price (i) reflects a premium over the volume-weighted average
price of the Shares over various reference periods in the J.P. Morgan Letter; and (ii)
represents a premium to the valuation multiples implied by the Offer Price relative to the
historical trading levels of the Company.
However, the Independent Directors also note that such historical prices may not fully refl ect
the cash proceeds to be received by the Company pursuant to the APB Sale of S$5.591
billion in aggregate or S$3.88 per Share.

http://info.sgx.com/listprosp.nsf/5ec09b...4002c4d42/$FILE/F&N-OffereeCir-MAS.pdf

http://info.sgx.com/listprosp.nsf/5ec09b...300366582/$FILE/F&N%20Offeree%20Circular%2011.10.2012%20(%231%20of%204%20-%20Cvr-App%20IV).pdf

Old Friends With New Ideas - Old Company With New Towkay - Akan Datang