Fraser & Neave (F & N)

[hongonn]

Taken from the latest result.

Profit from continuing operations, net of tax $65,019
Attributable profit to:
Shareholders of the Company
- Before fair value adjustment and exceptional items
Continuing operations $38,078
Non-controlling interests
Continuing operations $30,658

SHARE CAPITAL AND RESERVES $2,329,411
NON-CONTROLLING INTERESTS $373,132

Something that i don't understand.

The minority interest is about 13.8% out of the total equity. But they are allocated about 47% of the profit. And they are not burdened by the loss of discontinued operation and exceptional loss.

How can it be like that? Please enlighten. Thanks.

May be I didn't know F&N detail enough? I don't quite understand the question? Where is the reference?

(vested)

[liphuang]

Don't have detail on it, but try to have a guess. It is very much depend on where is the profit comes from. One possible example is as following.

Group A has 2 companies,
Company A: share=100% Asset=10m profit= - 1m
Company B: Share=70% Asset =6m profit= 2.5m

Total asset = 16m, minority interest =1.8m, which is 12%
Total profit = 1.5m, minority interest = 0.75m, which is 50%

Am I right?

[AlphaQuant]

The minority interest is about 13.8% out of the total equity. But they are allocated about 47% of the profit.

In the 2013AR,

Stripping out the property results (which is due to FCL already distributed-in-specie), FNN is left with 3 biz segments:

1) Beverages - generates 887mio revenue, 122mio PBIT on 406mio assets - GPM 13%, ROA 30%

FNN owns 100% Sg+Indonesia Ops, 56% of Myanmar Breweries, 56% of Beverage Ops in M'sia+Thailand

2) Diaries - generates 1041mio revenue, 60mio PBIT on 591mio assets - GPM 6%, ROA 10%

FNN owns 56% of Manufacture + Distribution of Diary biz in Thailand, M'sia and 55-100% that of various Sg Ops.

3) Publishing - generates 363mio revenue, 9.6mio PBIT on 478mio assets - GPM 3%, ROA 2%. FNN owns 100% of this.

Given that almost all the profits come from Beverages and Diaries, and that the overseas operations are mostly 55% owned, you should expect a decent clip of the consolidated profits to be attributed to non-controlling interests.

Think the most interesting part of this analysis is the ROA of the beverage biz and how much further leverage going forward will boost the ROE.

[greengiraffe]

Last week's Edge Magazine has a good write-up on the beverage mkt in S E Asia.

In hindsight, the following are my thoughts:

Charoen saw a prolong political crisis coming in Thailand as early as 2 years ago.

Whilst Thai Bev has dominant mkt share in Thailand, Chang beer is losing mkt share hence there was a need to arrest the trend and F&N was the obviously target alongside with APB.

However, Charoen did not foresee that Heineken to be determined to protect APB and in the end even allow F&N and Charoen to profit from APB.

Historically, F&N has 3 core - APB (fast growing one), Beverage & Dairy (Overshadowed by breweries and also volatile earnings due to raw material prices), Property (FCL - benefited from asset inflation) and Others (Printing & non core investments - big mess really).

Hence, the main attraction (ex-brewery) is FCL. Beverage and Dairy has extensive distribution network but I would expect earnings volatility to remain going forward due to raw material input fluctuations.

Post the successful takeover of F&N, Charoen took the opportunity to strip the one-off APB gains (accumulated over nearly a century) via special dividends and capital reduction to pay down his leverage buyout. FCL was also stripped out so that the embedded discount to book value can be narrowed.

In my view, while the core operations of both the remaining F&N and Thai Bev remain defensive, consistent growth rates may be hard to come by due to the lack of lucrativeness relative to APB. F&N's small gem in Myanmar Breweries is also under threat due to its lucrativeness and potential in a largely virgin market. Thai Bev's spirit mkt share has been stable but Chang beer has yet to arrest the declining mkt share trend.

Overall, i would expect low and stable revenue growth for both F&N and Thai Bev. Bottomline, however is influenced by raw material input fluctuations and changes in taxes that may influence consumer demand as a result of disposable income.

Whether F&N and Thai Bev deserve their premium ratings will in the eyes of the beholder.

Vested Odd Lots
F&N Thai Bev

[hongonn]

Thanks AlphaQuant & liphuang. That explains a lot to me.

Anyone has any idea what is the chance that F&N able to protect their interest in Myanmar Brewery? I aware that the arbitration trial is going to hold in Singapore, does it mean chances are good?

Personally i think Myanmar beer going to be a big thing among the regions if promote well. I drank a lot there and it tastes better than any Thai beers like Chang or Singha. Everyone in Myanmar is drinking Myanmar beer.

If F&N lost that, to me is like losing an arm and a leg.

[Muser]

Is now a good time to buy F&N for the long term?

- cleaned up balance sheet. low debt.
- annualized ROE >20%
- strong brands riding on asian consumption growth
- proven management

What can go wrong?

[greengiraffe]

Good set of focus results for F&N.

Actually, a wild though came to my mind... With F&N being so clean with net cash of around S$350m, there is always the possibility that it may be delisted following extensive capital extraction and restructuring by Towkay himself.

If Towkay continued to face difficulties to increase F&N's free float, the next best alternative is to delist it and fold it under Thai Bev.

However, folding under Thai Bev will also mean placing a foreign owned entity under a predominantly Thailand based company and hence defeats the purpose of him diversifying his political risks.

Odd Lots Vested
GG

http://infopub.sgx.com/FileOpen/3Qtr-Jun...eID=309042

[greengiraffe]

Vintage article 1:

http://www.bloomberg.com/news/2013-02-22...aking.html

Charoen’s Fraser & Neave Takeover Was Years in the Making
By Joyce Koh Feb 22, 2013 6:15 PM GMT+0800
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Mar 1Apr 1May 1Jun 1Jul 1Aug 1Sep 1Oct 1Nov 1Dec 1Jan 1Feb 13.003.504.004.505.00* Price chart for FRASER AND NEAVE LTD. Click flags for important stories.FNN:SP4.6802/18/13
Thai billionaire Charoen Sirivadhanabhakdi’s $11.2 billion takeover of Singapore’s Fraser & Neave Ltd. (FNN), clinched after a rival bid was dropped at the last minute, was more than three years in the making.
Charoen debated an investment in the 130-year-old conglomerate as early as mid-2009 as he considered expanding outside Thailand, said four people with knowledge of the matter who asked not to be identified because the talks were private. A decision was put on hold amid doubts that pivotal F&N shareholders, including Oversea-Chinese Banking Corp. (OCBC), would be willing to sell, the people said.
The deal gained momentum again in late 2011, when Charoen learned that F&N was considering a restructuring that might boost its value, said the people. Charoen and representatives including son-in-law Chotipat Bijananda and son Thapana, then persuaded OCBC to sell its 22 percent stake in F&N, setting the stage for the seven-month takeover saga that pitted him against Dutch brewer Heineken (HEIA) NV and a Singapore property tycoon. The transaction closed on Feb. 18.
Charoen’s takeover of F&N, whose businesses range from milk to shopping malls, burnished the reputation of Thailand’s richest man, worth $11.8 billion, according to the Bloomberg Billionaires Index. Charoen, born and raised in Bangkok’s Chinatown district, has seen his wealth swell by $3 billion this year alone -- more than any other Asian billionaire -- as shares of his publicly traded companies rose, data compiled by Bloomberg show.
Stealth Moves
“He’s the man of the moment,” said Goh Han Peng, a Singapore-based analyst at DMG & Partners Securities Pte. “Charoen played his hand very well in the fight for F&N, often leaving the market to guess on his intentions and out- maneuvering the competition through stealth moves.”
Discussions on how to win OCBC’s stake in F&N intensified in mid-2012 with multiple meetings taking place in Charoen’s Bangkok home and at Singapore’s Intercontinental Hotel, the people said.
Charoen’s advisers were concerned that F&N might split its property and beverage businesses, increasing its market value and complicating a stake purchase. They pushed for quick action, according to the people, deciding in May to approach OCBC about its shares at a board meeting of Thai Beverage Pcl (THBEV), which Charoen also controls.
OCBC Meetings
On June 20 at 2:30 p.m. Chotipat and Thapana met with OCBC Chief Financial Officer Darren Tan at the bank’s Singapore headquarters to give him an offer document, said two people with knowledge of the meeting. A few days later Charoen met Cheong Choong Kong, OCBC’s chairman, Chief Executive Officer Samuel Tsien and Fang Ai Lian, chairman of the bank’s insurance unit, to convince them to sell, this person said.
Somthawin Patanavanich, a spokeswoman for TCC Assets Ltd., Charoen’s company, didn’t answer a call to her office or respond to an e-mail. Koh Ching Ching, a spokeswoman for OCBC, declined to comment on the meeting.
After weeks of talks, OCBC and two affiliates announced on July 18 an agreement to sell their combined 22 percent stake in F&N to ThaiBev for S$2.78 billion ($2.2 billion), or S$8.88 per share -- a 12 percent premium to the previous day’s closing price. An entity linked to Charoen also bought the companies’ shares in Asia Pacific Breweries Ltd. (APB), at the time 40 percent owned by F&N.
The battle for F&N revealed quirks in Charoen’s personality, including a penchant for lucky numbers -- the figure 8 is seen as auspicious among Thailand’s Chinese community -- and an attention to detail that went as far as dictating the exact timing of presenting the offer to OCBC, people close to the process said. They described the billionaire as low-key and favoring the same uniform: a white shirt and dress trousers.
Photographer: Munshi Ahmed/Bloomberg
Traffic moves past Frasers Centrepoint Ltd.'s The Centrepoint mall, center, on Orchard...Read More
Heineken Contest
The APB deal set the billionaire on crossing paths with Heineken, which was seeking control of the maker of Tiger beer. Charoen’s involvement ultimately forced Heineken, the world’s third-biggest brewer, to raise its offer for the rest of APB by 6 percent to S$5.6 billion, a deal that closed in November.
On Sept. 13, Charoen bid S$9 billion for the rest of F&N.
That was countered in November when a group led by Overseas Union Enterprise Ltd. (OUE), a Singapore-based property company, made a S$9.08 per share offer for F&N, topping the Thai tycoon’s bid. OUE Executive Chairman Stephen Riady is a son of Mochtar Riady, who controls Indonesia’s Lippo Group, with businesses ranging from real estate and financial services to food across Asia. OUE enlisted Kirin Holding Co., the Japanese brewer that held 15 percent of F&N, for its offer.
Bangkok Flight
As F&N shares kept trading above both offers, the deal remained in limbo until January as TCC and OUE repeatedly extended their bids without raising them. The impasse lasted until midnight on Jan. 18, when Charoen boosted his offer to S$9.55 a share and said he bought an additional 6.3 percent of F&N -- just three days before an auction to be directed by the city-state’s financial regulator was scheduled to start.
With a deadline for an OUE counterbid approaching, Charoen advisers flew to Bangkok from Singapore to plot a response, the people said. Only when they landed in the Thai capital did they learn that OUE had refrained from raising its offer, clearing the path for Charoen’s takeover.
Morgan Stanley, DBS Group Holdings Ltd., Malayan Banking Bhd (MAY), HSBC Holdings Plc and United Overseas Bank Ltd. (UOB) worked for Charoen on the deal, while Goldman Sachs Group Inc. and JPMorgan Chase & Co. advised F&N.
“This was undoubtedly one of the most fascinating deals to have worked on given the innumerable complexities,” said David Aronovitch, Morgan Stanley’s co-head of investment banking for Southeast Asia, who was among the firm’s lead bankers on the transaction
To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser atlagerkranser@bloomberg.net

[greengiraffe]

Vintage article 2:

http://www.reuters.com/article/2013/01/2...5W20130122
Thai billionaire Charoen builds empire with F&N takeover
BY KHETTIYA JITTAPONG
BANGKOK Tue Jan 22, 2013 12:09am EST
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Thai Beverage's Chairman Charoen Sirivadhanabhakdi speaks during a news conference at the Singapore Exchange in Singapore May 30, 2006.
CREDIT: REUTERS/TIM CHONG
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(Reuters) - For self-made Thai billionaire Charoen Sirivadhanabhakdi, the takeover of Singapore's Fraser and Neave Ltd (F&N) (FRNM.SI) will add legions of assets to his drinks and real estate empire that already stretches from Southeast Asia to the United States.
Charoen, the son of a Bangkok street vendor whom Forbes ranks as Thailand's third-richest person with a net worth of $6.2 billion, is no stranger to a challenge.
He lost to Heineken NV (HEIN.AS) last year in a battle for F&N's stake in Asia Pacific Breweries Ltd APBB.SI, the maker of Tiger beer, but forced the Dutch giant into a higher offer that made him a tidy gain on shares his group had amassed.
This week, Charoen emerged victorious when a consortium led by Indonesian tycoon Stephen Riady pulled out of the bidding for F&N's soft drinks, dairy and publishing businesses plus a real estate portfolio worth more than S$8 billion ($6.5 billion).
"He was ecstatic," said a person involved in the takeover who met Charoen just after his rival withdrew.
The $11.2 billion deal, Southeast Asia's biggest takeover, adds popular brands and distribution networks to Charoen's Thai Beverage PCL (TBEV.SI) that brews Chang (Elephant) beer and makes spirits, energy drinks and instant coffee.
F&N is the leader in Singapore and Malaysia's soft drinks markets, according to Euromonitor, and it has a 55 percent stake in Myanmar Brewery Ltd, a joint venture that produces the rapidly emerging country's best-selling beer.
Charoen, 69, is also heavily into property. His privately held TCC Land owns shopping malls and hotels, including the Hotel Plaza Athenee in New York, and he has substantial assets in Singapore's booming real estate market.
In 2007, the Straits Times newspaper reported he bought 47 of the 48 units in a luxury Singapore condominium a day before a private preview sale. He would have bought the whole thing, it said, if local laws did not prevent a foreigner from owning all of the units in a single development.
The F&N acquisition fits the pattern of expanding Charoen's drinks business and is also a chance for his son, who heads Thai Beverage, to cut his teeth with a big international deal.
Thapana Sirivadhanabhakdi, the third of the billionaire's five children, was named president and chief executive of Thailand's top beer and spirits group in 2008.
As patriarch, Charoen has kept the business in the family in other ways. He is chairman of venerable Thai trading firm Berli Jucker (BJC.BK), but son-in-law Aswin Techajaroenvikul leads it as it embarks on major expansion plans in the region.
FAMILY BUSINESS
Starting in the trading business, Charoen and his family expanded aggressively in the liquor, sugar milling, banking and insurance fields during the 1980s and early 1990s.
Charoen entered the Thai beer market in 1995 by setting up a joint venture with Danish brewer Carlsberg (CARLb.CO) to produce Chang. He later formed Beer Thai Co to manage marketing and distribution.
Asia's financial crisis of 1997/98, which led to the closure of financial institutions owned by his family, forced Charoen to leave Thailand and stay overseas for a while.
His fortunes changed after the firm intensified a battle for Chang's market share in 1999 by cutting its wholesale prices and gained ground on rival Singha Corp, which has been selling Thailand's best-known beer Singha (Lion) since 1933.
Beer Thai was later restructured and became part of Thai Beverage before listing in Singapore in 2006 as it faced opposition from monks and anti-alcohol activists at home. Since 2009, the beer business has made losses due to tax burdens and Chang's loss of market share.
Thai Beverage bought nearly 65 percent of Serm Suk PCL (SSC.BK), the local bottler of Pepsi, in 2011 to expand its soft drinks business. In 2008, it took over Thai green tea and sushi maker Oishi Group OISH.BK for $214 million.
Charoen has also ventured beyond drinks and real estate.
In 2004, he expressed interest in buying a stake in English soccer giants Liverpool FC with then Thai Prime Minister Thaksin Shinawatra as a potential partner in a 25 percent share.
The agreement fell through but Charoen stayed close to English soccer by winning a deal to advertise Chang on the shirts of Everton, Liverpool's biggest rivals.
($1 = 1.2283 Singapore dollars)
(Writing by John O'Callaghan; Additional reporting by Saeed Azhar in SINGAPORE; Editing by Ryan Woo)

[propertyinvestor]

F&N is up this morning while Fung choi is halted.