Fraser & Neave (F & N)

[CityFarmer]

The post-DIS, FCL market price will be known once the share listed on 9 Jan 2014. IMO, the market price should be within the valuation of CityDev, Keppel Land, and CapitalLand, which have PB of 0.8-1.2x. It means the market price per share should be around $1.7-$2.5, with FCL's NAV of about $2.04 per share.

The remaining part of the F&N post-DIS, is the interesting part, IMO. Let's take PBIT of 220 million (as in Freedom's post, and ref below), and P/EBIT of 15, the market price should be around $2.3 per share.

That means total is $5.7-$7.3 pre-DIS. The market price today is $6.1 which is at the lower side of the valuation.

Any other view?

Ref: http://infopub.sgx.com/FileOpen/FNN_Grou...eID=263963

[Andrewgoh]

Hi Andre,

I don't know how you calculate the implied PER. But from my simple calculation that it is far beyond 10x.

F&N - FCL PBIT for FY2013 was only around 220 million (slide 6 of the F&N group presentation). 3 * 1.4 billion shares = 4.2 billion market value. Implied PE(E before tax) is almost 20x.

Hi Freedom

Yeap, went to check my numbers. Made a mistake, you are right, almost 20X. I go back amend my post

[specuvestor]

Not necessary. What TCC needs is merely the interest payment only. F&N + FCL's dividend can cover that part well enough.

Further how TCC restructures FCL is anyone's guess. but one thing is that TCC can't reduce its stake in FCL in two years(? can't remember exactly in the circular)

FCL still has good asset to monetize.

Depends on level of TCC debt used to take over FNN. It is a LBO. At 30% LTV, service interest payments can liao. At 60-70%, better pay it down or lose it at the next downturn.

Towkay will want to get hands on 100% of FNN cashflow. cannot do it if owned less than 100%.

As mentioned by others here, best way to rip cash out is sell assets to FCL. FCL debt level will likely to go up...

TCC can consolidate FCL & F&N's financial result into its own. The banks will look at the whole group, rather than individual companies within the group.

I doubt TCC will simly take advantage of FCL's minority shareholders by injecting assets. It does not reflect well. A honorable man will do it honorably and fairly. TCC can team up with FCL to monetize the assets instead of injecting assets directly.

You are belittling the man.

No. I am referring to the tried and tested option of getting cash fast out of a company. That life in the real world where everyone is looking out for no. 1. Alignment of interests is better than fair and honor, in area of investment.

I also hope for a day when fairness and honor prevails. Then no need code of corp gov and independent directors and IFAs liao.

Accounting profits cannot pay debts one. To get hard cash to repay debt, company better to have 100% ownership. If not, troublesome and leaky. Cashflow leaked to minority investors. So if want to see more dividends from FNN, better reject any share swap. U want to be the toll booth between TCC and FNN. But don't know who are the minority shareholders now after compliance placement.

I do recall Freedom believes that majority shareholder is not obligated to take care of minorities. It is capitalistic, nothing to do with honor or fairness. (paraphrased cause too lazy over the holiday season to dig up posts). Not trying to be nitpicking but trying to be consistent.

And my view remains that I doubt ThaiBev is getting a good deal out of the whole saga. TCC will take care of their own interest.

[freedom]

I still believe that there is no obligation. Correct me if I am wrong, I never mentioned it is because of capitalistic or honor or fairness. That's by law. Taking care of minorities shareholders is more about whether the minority shareholders can demand equal rights as the majority shareholders who take initiatives to achieve something. If I remember correctly, that's the argument previously. Or if you are talking about free loaders, then yes, I am capitalistic. Capitalism values fairness. So you can't say that being capitalistic but unfair. Fairness means the minority shareholders fairly, but not necessary equally.

I don't see how my above statements contradict any of my previous ones.

[toiletsiao]

FNN capital reduction 42cents per share... Congrats all shareholders

http://infopub.sgx.com/FileOpen/FNL_Pres...eID=268971

[CityFarmer]

FNN capital reduction 42cents per share... Congrats all shareholders

http://infopub.sgx.com/FileOpen/FNL_Pres...eID=268971

Yes, a pleasant surprise from Mr. Towkay. A X'mas gift from him, but will be paid only next year

(vested)

[HitandRun]

Ha Ha. Good news for MI. My interpretation of the announcement is that extra cash is meant for Big Brother to pay down loan => so X'mas gift was meant for him => the benefit to MI was merely coincidental.

Hopefully, many more such happy coincidences for MI as Big Brother should be quite desperate to reduce gearing.....

[opmi]

Ha Ha. Good news for MI. My interpretation of the announcement is that extra cash is meant for Big Brother to pay down loan => so X'mas gift was meant for him => the benefit to MI was merely coincidental.

Hopefully, many more such happy coincidences for MI as Big Brother should be quite desperate to reduce gearing.....

Yes. To keep it going, say NO to any share swap
or IPT asset sales.

[CityFarmer]

Ha Ha. Good news for MI. My interpretation of the announcement is that extra cash is meant for Big Brother to pay down loan => so X'mas gift was meant for him => the benefit to MI was merely coincidental.

Hopefully, many more such happy coincidences for MI as Big Brother should be quite desperate to reduce gearing.....

As MI, it is illogical to receive the X'mas gift without Mr. Towkay (Big Brother?). The X'mas gift is meant for shareholders, including Mr. Towkay and MI.

IMO, the Capital reduction without a cancellation of shares, is a friendly gesture from Mr. Towkay toward his fellow shareholders.

(vested)

[Dividend Warrior]

Ha Ha. Good news for MI. My interpretation of the announcement is that extra cash is meant for Big Brother to pay down loan => so X'mas gift was meant for him => the benefit to MI was merely coincidental.

Hopefully, many more such happy coincidences for MI as Big Brother should be quite desperate to reduce gearing.....

Hmmmmm.....

In other words, does this benefit Thai Bev indirectly?