F&N: recap from yesterday, 57%-owned subsidiary F&N Holdings Berhad (FNH) is acquiring a 23% stake in Cocoaland (COLA) for RM54.6m, or RM1.38/share. The price represents a current PER of about 8x. While size of the acquisition is small and unlikely to have a major impact on F&N's profitability, we note that F&N purchase price is at 50% discount to CocoaLand last traded price of RM2.87. Market could react positively to this news…
Strategically, move is also positive for FNH, as it enables FNH to diversify away from soft drinks and dairy products and venture into the manufacturing and distribution of snacks, fruits, gummy and other food related businesses. This acquisition will be funded by cash, allowing FNH to optimize its strong balance sheet capacity…
F&N Group is clearly actively looking for M&A opportunities within Southeast Asia to expand its F&B portfolio and regional presence, which bodes well for future prospects. Deutsche rates as Buy with $6.55 target.
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