Thai Bev

Thai Bev: StanChart believes that FNN’s spin off of its property arm, Fraser Centrepoint via a dividend-in-specie, could be a prelude to further restructuring of the Thai Bev-linked group of companies. Thai Bev owns a 29% stake in FNN. In addition, FNN shareholders will receive a further $607m in a capital reduction exercise proposed 26 Dec ’13. This may bolster Thai Bev’s cash reserves by ~$176m, leading to lower net gearing of 45.5% in FY14e from 49.3%. The cash infusion may allay rating agencies’ concerns about Thai Bev’s net gearing. StanChart notes the on-going Thai unrest should not have a major bearing on Thai Bev’s business as it should not hinder consumption. At 14.2x FY13e P/E, Thai Bev trades at a 41% discount to the liquor sector average. The house reiterates its Outperform rating and TP $0.72.