Del Monte

Del Monte: DBSV upgrades to Buy with TP revised down to $0.82 (Prev $0.96), factoring in higher risk profile. The recent sell down looks overdone, and may have more than priced in uncertainty of its proposed US$1.675bn acquisition of Del Monte Food’s Consumer Food Business (DMF-CFB). The house lowers FY14F forecasts by 26%, taking into account an estimated one-off transaction cost relating to the acquisition, but have not factored in potential contribution from CFB. Risks would include higher interest rates, integration and performance of combined entity, and potential dilution from equity issuance.