Del Monte

Del Monte: Maybank-KE reiterate its Buy call with $1.00 TP (From $1.25). The house believe the recent share price correction is overdone, considering the deal to buy Del Monte Foods is still accretive, even with fresh financing details. The deal is expected to close by 1Q14. The positive news is the lower-than-expected debt cost, with the major syndicated loan portion for its acquisition now upsized to US$970m on strong subscription. On the negative side, there will now likely be a rights issue in the 2nd stage of the transaction, representing some dilution to earnings. The house lower our TP to SGD1.00, pegged at 12.5x FY15E post-deal EPS, a 20% discount to peers on higher gearing and execution risk. Maintain BUY.