F&N

F&N: Announced that it has received a letter from Myanma Economic Holdings Ltd (MEHL) intending to issue a notice of arbitration regarding FNN’s 55% stake in Myanmar Breweries. MEHL is the holder of the other 45% stake in Myanmar Breweries, and claims that the joint venture agreement allows MEHL to give notice to FNN to sell its 55% stake to MEHL. FNN believes that there is no basis for the notice, and plan to resist the claim. Deutsche note tht while the validity and outcome of the claim remains undecided; based on latest disclosures from FNN, Myanmar Breweries accounted for $29.7m of FNN’s FY12 net profit (6.9% of FY12 core net profit, 6.4% of FY13). House estimate that Myanmar breweries accounts for 4.2% ($0.35/sh) of house RNAV of $8.24/sh based on the industry median P/E of 17x. Overall, house maintains its Hold recommendation pending the resolution of the lawsuit and with the restoration of an overhang.