Thai Beverage Public Company

(17-07-2012, 03:59 PM)freedom Wrote: for Question 1, it is declared in the end of full year financial statement (FY2011).

Sorry, I could find only relationship of Charman (husband) and Vice Chairman (wife) but no mention of sons (CEO) and father (Chairman) relationships.

Moreover why they have to mention about husband and wife relationship in last few pages of 240 pages of annual report. Normally it should be specified as part of directorys profiles or somewhere in Corporate Governance report in Annual Report.

I really have doubt about company's governance.

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Past Acquisitions:
1. Serm Suk in 2011 at 32x PE and 1.54x NTA and ROE of 4-5%. Acquisition rational: distribution network synergy
2. Oishi in 2006-07 at 10x PE and 4x NTA with very low ROE. Acquisition rational: synergy of food and tea distribution with its existing spirit/beer.

I consider both of above acquisitions at over price. From execution of merger point of view also the company has not done well as they could not leverage synergies. Oishi's profit margins (%) have almost became half from 2007 to 2010, and making loss in FY11 (ok, special situation of flood).


Now acquisition of F&N at close to historically higher price. Without any control and with presence of Kirin and Heiniken, how ThaiBev can leverage the synergy.

Just because spirit business is facing excise duty, in desparation of diversification ThaiBen is ending up acuiring assets generating very low return on equity.

Main job of Chairman of a company is right cash allocation. ThaiBev should have just remained focused on Spirit business enjoying strong cash flow and return the cash to shareholders in dividend forms and let shareholders to decide where they invest it instead of company investing cash in 4-5% return generating businss.

what a rise. all time high of 0.38 as of now

Earnings for Thai Bev is pretty good even with a continued loss-making beer segment. The acquisition and uncertainty surrounding F&N is a drag on its share performance.

Serm Suk is showing its worth. The acquisition was not that expensive. But it is still uncertain of the impact of loss of distribution agreement of Pepsi on Serm Suk's financial performance.

assumption:
earning without F&N: THB 17billion
earning with F&N without APB attributable to ThaiBev only: THB 20billion (rough estimate only)
dividend: THB 9 billion
SGD/THB = 25


buying stake in F&N: S$3.5 billion, THB 87 billion
current debt in ThaiBev: THB 16 billion
cash and cash equivalent: THB 4 billion
equity of ThaiBev: THB 65 billion

without buying F&N stake:
net debt/equity ration: 20%
net debt/earning: < 1.
net debt/(earning - dividend): 1.5

post-buying F&N stake:

1 billion return from F&N after sale of APB

total deb: 16 + 87 - 25 = THB 78 billion
cash and cash equivalent: THB 4 billion
equity of ThaiBev: THB 65 billion

net debt/equity ration: > 1
net debt/earning: 3.7.
net debt/(earning - dividend): > 6

so with pure debt funding without any equity injection, ThaiBev would become a financially unstable company. So very likely, there would be an equity raising exercise (right issue) soon. dividend also could be cut or scrip dividend or both. but how big would be the equity raising exercise?

to maintain a healthy balance sheet of net debt/equity of around 0.5, the equity required to raise is around THB 28billion. after this,
net debt/earning: 2.3.
net debt/(earning - dividend): 4 (can be improved if dividend is cut or scrip dividend is implemented or both)

how big is a THB 28billion equity raising exercise? current market cap of ThaiBev is more than THB 200 billion. It seems that it should not be a big problem for ThaiBev to accomplish it.

using 30 cents as the price of new share issued, roughly, around 4 billion new shares. earning per share likely continue to be around 2 - 3 cents.

a very simple and rough calculation only. not induce to trade. please feel free to correct any mistake.

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on the surface, it seems that there is no much value created from the acquisition of stake in F&N. But there could be a lot of synergy between F&N and ThaiBev and other strategical importance. Only the future can tell.

F&N will get 8+b while thaibev owns 26.4% of F&N, seems like even if thaibev loses the bid, they'll earn a chunk of profits from their future competitor while at the same time gain exposure to the remaining F&N beverages & profitable property biz. Doesn't sound like a no value deal.

with potential majority control over Fraser and Neave, how much synergy can ThaiBev extract?

1. ThaiBev would have a portfolio of non-alcohol drinks to distribute in Thailand, especially after its termination of distribution with Pepsi.
2. ThaiBev would be able to access a matured distribution network in the rest of ASEAN less Thailand, which might expand the presence of ThaiBev's spirits and beer.

For F&N's property portfolio, probably it would not help ThaiBev much. The non-alcohol drinks distribution in Thailand and spirits and beer expansion would propel Thaibev to great height.

best guess is that after ThaiBEV takes over F&N, SG residential properties will be converted to service apartments or hotels.

Would that control justify a 25% increase in the company's worth today?

(19-09-2012, 08:06 PM)freedom Wrote: with potential majority control over Fraser and Neaver, how much synergy can ThaiBev extract?

1. ThaiBev would have a portfolio of non-alcohol drinks to distribute in Thailand, especially after its termination of distribution with Pepsi.
2. ThaiBev would be able to access a matured distribution network in the rest of ASEAN less Thailand, which might expand the presence of ThaiBev's spirits and beer.

For F&N's property portfolio, probably it would not help ThaiBev much. The non-alcohol drinks distribution in Thailand and spirits and beer expansion would propel Thaibev to great height.

ThaiBev is part of the TCC Group, which also has a separate Property Division,

[Image: org_chart.gif]

The Offer is by TCC Assets, not ThaiBev. I don't see it in their Org Chart, but likely, it's directly under TCC Holding.

If the privatization is successful, I guess one possibility would be to do some internal shuffling of assets. In exchange for ThaiBev's 28.9% stake in F&N, TCC could give them the entire F&B biz (of F&N) +/- Cash (Depending on the Valuations of the other assets like Properties). The Properties (of F&N) could be merged into TCC Land and perhaps in the near future, get it listed on SGX. Some of TCC Land assets could be offered to FCOT or FCT. They could also package their Hospitality assets together to list another Trust. I don't see any synergy for Times Publishing, so, can sell it to get cash (to pay down debts).

Possible?? I think the breakup value of F&N will likely end up making lots of $$ for the Thais...

(19-09-2012, 09:24 PM)KopiKat Wrote: Possible?? I think the breakup value of F&N will likely end up making lots of $$ for the Thais...

According to http://www.bloomberg.com/news/2012-08-05...-sale.html there are also other possibilities:

Quote:“The elephant in the room is what happens to the property assets,” said Jonathan Foster, Singapore-based director of Global Special Situations at Religare. Selling them to CapitaLand, Southeast Asia’s biggest property company, would create a Singapore developer with the scale to compete with global peers, he said.

“With a strong balance sheet including a strong cash position of S$5.1 billion, CapitaLand is always open to exploring opportunities in markets where we have a presence,” the company’s corporate communications department wrote in an e- mail Aug. 4.

Quote:Kirin is interested in F&N’s soft drinks business because of its reach in Southeast Asia, the company said Aug. 3. Coca- Cola is deciding whether to find a partner with which it can take F&N’s line of mixers and tonics, according to one person familiar with the matter.

And the publishing outfit? Popular Holdings?