Thai Beverage

Thai Beverage: CIMB note that without an offer from TCC/Thai Bev which intend to keep F&N listed, F&N’s share price will fall when trading resumes on Monday. But the share price fall will have only 1-4 Scts impact on Thai Beverage’s SOP. Thai Bev’s price weakness reflects concern that F&N may continue in its current structure (29% owned by Thai Bev, 62% by TCC), necessitating a holding company discount at Thai Bev’s level. Note that TCC and Thai Bev own a combined 90.3% of F&N currently. Restoring the free float to 10% simply entails a selldown of 0.4% or a placement of some new F&N shares. That is not difficult. The puzzling issue is why they are keeping F&N listed. With Thai Beverage interested in only the F&B assets and TCC Assets clearly more interested in the property assets, it would be easier to split up the conglomerate by taking F&N private. The two reasons house can imagine for this choice are: 1) TCC needs F&N to stay listed for its stake in F&N to be better recognised as bank collateral, and 2) the group wants to keep F&N listed for the purpose of brand value. Either way, we do not think that this is the end stage of the F&N restructuring. House still expect F&N to eventually be broken up into its property and consumer parts. Conclude that in the near term, a decline in F&N’s share price on Mon will shave only 1-4c off House SOP valuation for Thai Bev, which do not think is a big negative. Unless a holding company discount is required because the group does not undertake further restructuring,