SINGAPORE (June 29): DBS is maintaining its “hold” call on Fraser and Neave after Vinamilk gained associate status from an investment previously.
Since December 2016, the group has been increasing its stake in Vinamilk, to 18.74% currently.
DBS is raising its FY17F and FY18F forecasts by 9% and 32% respectively, taking into consideration the treatment of its increased stake in Vinamilk
“Our higher TP of $2.57 (from $2.37) reflects the higher stake and market value in Vinamilk, coupled with a higher market price for F&N Berhad, the group’s Malaysia-listed subsidiary,” says analyst Andy Sim in a Thursday report.
Sim continues to believe F&N will be the vehicle for ThaiBev’s expansion outside of Thailand and for non-spirits businesses. But contrary to market expectations, Sim does expect an outright share swap between ThaiBev and TCC Assets for F&N shares.
“Instead, we believe ThaiBev will only increase its stake in F&N when opportune, such as when F&N undertakes an equity fund-raising exercise, as and when it requires additional capital for expansion,” says Sim.
Shares in F&N are trading at $2.34.
