Thai Beverage Public Company

[weijian]

A monopoly/duopoly built by artificial barriers to stop competitors from entering your market, isn't exactly durable. Well, at least it is durable until one day, it isn't.

Row over beer sparks political debate in Thailand

Estimates show that at least 92 per cent of the country’s beer market that year was controlled by just two companies: Boon Rawd Brewery and Thai Beverage (ThaiBev). It is a similar picture in the spirits market, with ThaiBev dominating the majority of domestic sales.

Paetongtarn Shinawatra, a leader in Thailand’s largest opposition party, Pheu Thai, wrote on Twitter that the government’s new laws continue to block small producers and the “potential of the Thai people”. Posting images of her father, former premier Thaksin Shinawatra – who remains popular among poorer Thais – she said her party would liberalise rules further if elected into power.

https://www.businesstimes.com.sg/asean-b...n-thailand

[weijian]

Well, this "structure change" is probably 10 years late? I wonder what was the delay OR what is the catalyst for Chaoren to execute the share swap now (if we ignore the PR speak of "could advance their PASSION 2025 goals")

Interesting to note the the high level methodologies to value FPL and F&N, together with the "fair values" which are ~1-2x higher than market prices. An IFA will be appointed Thai Bev shareholders since this is a IPT exceeding certain thresholds and will be another data-point to see how both are been "fair valued" accordingly.

Finally the most interesting question on everyone's mind will of course be - TCC will directly own ~87% of FPL now. What's going to happen next?

THAIBEV PROPOSES SHARE SWAP WITH TCC ASSETS

The Proposed Share Swap will be executed at a ratio of approximately 1.88 FPL shares for each F&N share (“Swap Ratio”). This ratio was determined based on a negotiated price of S$1.89 per FPL share and S$3.55 per F&N share.

F&N’s valuation range took into account a sum-of-the-parts (SOTP) approach, which valued each of its component businesses by applying their respective peers’ valuation multiples. This was also cross-checked against a standalone discounted cash flow valuation based on ThaiBev’s internal projections of the key businesses under F&N, interviews with management, and equity analyst and industry research reports.

FPL’s valuation range took into account, inter alia, FPL’s net asset value and latest available financial statements as at 31 March 2024 and related public disclosures, the latest market valuations of its stakes in its listed real estate investment trusts, the value of its asset management platform based on precedent transactions, applying a 20-25% discount to its revalued net asset value (“RNAV”) which is in line with previous privatisations of SGX-listed real estate companies by controlling shareholders.

PR: https://links.sgx.com/FileOpen/2.%20Pres...eID=810121
ppt: https://links.sgx.com/FileOpen/3.%20Inve...eID=810122
Announcement: https://links.sgx.com/FileOpen/1.%20SGX_...eID=810120

[Ben]

Yes, it certainly came in late, but it is better late than never. During the recent annual information session on 21st June. a shareholder did asked the mgmt on the logic of holding on to FPL shares which is non core as far as Thai Bev is concerned. IIRC, the CEO and CFO acknowledged that indeed the business of FPL does not fit into their core F&B business, and at the right time, they will divest it. So, the right time came in much "early" than anticipated. I guess the decision is at TCC discretion, rather then Thai Bev.

Next catalyst will be the listing of BeerCo, which was originally planned for early 2020, and again in 2022, but was deferred due to market condition. According to the CEO, the plan is still on and will be executed at the right time. Will this right time comes early than anticipated?

[specuvestor]

Act 3 finally happened after almost 11 years. That's OPMI dealing with towkays... "early" is relative

FCL also name changed to FPL. Frankly I'm too lazy to see if this deal benefits Thaibev OPMI more or TCC but just happy the curtain finally closes and move on with a sensible structure

IMHO as per my post in FNN thread, ThaiBev and FNN beverage which are cashcow companies, will be left to foot the credit card bill for years to come after TCC had its fill

Hi specuvestor, do you mind explaining further? Coz when i looked at the FNN presentation, the remaining F&N entity will be net cash, while FCL will have 36% gearing. Even if the numbers change due to market condition (eventual pricing of FCL), i dont think it will differ too substantially? Thanks in advance

30/06/2013 (S$m) F&N (pre-DIS) F&N (ex-FCL) FCL
Net Debt /(Cash)         1,214                 -903                 2124
Total Equity         8,425                 2,790         5,905
Net Debt / Total Equity 14.40%         Net Cash         36.0%

IMHO based on what they are doing, the base case and logical conclusion is ThaiBev will align with FNN beverage while TCC will align with FCL

Someone has to foot ThaiBev's LBO bill. But if the remainder SGD1b from APB sale goes to FCL (which likely in future will in one way or another go into TCC), then ThaiBev will either get their cash by selling FCL shares (or swap FNN shares with TCC) and maybe FNN leverage up (aka capital management) and buyback ThaiBev's FNN shares.

Key is to figure out 1) how can ThaiBev delever, especially when i/r are expected to go up and 2) what would YOU do if you are TCC to maximise your interest.

I think it is likely there will be Act 3 for FNN but it is time to think about the exit strategy for FNN. OTOH ThaiBev shareholders' interest IMHO will depend largely on what price FCL will be sold or swapped.

PS CityFarmer is on the same wavelength but I think FNN will pay for ThaiBev while FCL will pay for TCC (through asset injection/ REIT)

Anyway it's good that I posted this on a strong day so that people might not think I am kicking one while it is down. Moody's has a different view obviously:

https://www.moodys.com/research/Moodys-T...-PR_281201