Thai Bev

Thai Bev: StanChart reiterates Outperform on Thai Bev with TP $0.75, following the recent price correction. Sees the stock attractively valued at 12.5x FY14e P/E, and at a 43% discount to the liquor sector and a 29% discount to the blended beverage sector. Notes its 29% owned FNN’s capital reduction was effective last wk, with the approval of the Singapore High Court. This should boost Thai Bev’s cash balance by $1.3b, and reduce its net gearing to 61% in FY13e from 97%, thereby alleviating investors’ concerns about balance sheet strain. Notes restructuring is a potential catalyst, and continues to be a likely prospect for Thai Bev. This could add THB 8b in synergy gains over the next five years. StanChart sees a 75% probability that TCC, which controls both Thai Bev and FNN, would inject FNN’s F&B business into Thai Bev. Believes TCC is likely to retain control of FNN, mainly as a property company. Thai Bev could then acquire FNN’s F&B business. The potential deal could be financed by disposing off the 29% stake in FNN to TCC.