F&N

F&N: CLSA Reinitiating coverage on the counter, where they note that having divested its property business, FNN is now embarking to focus on its beverage business in the region. The house sees significant synergies from distribution network and product collaboration between parent TCC and FNN in Thailand and other new markets. In the near term, FNN is looking to expand into Indonesia, Thailand and Myanmar with the help of TCC/Thaibev by tapping complementary distribution networks. Less than 3mths since the spin-off of its property business, FNN has commenced on its growth strategy through the acquisition of Yoke Food Industries, paving the way for expansion into Indonesia. This wil widen FNN’s distribution network reach and more acquisitions are on the cards given its strong balance sheet. A strong balanc sheet offers opportunities for acquisitions which has just begun. The house TP of $3.20 TP (SOTP based) implies a 21x forward earnings in line with peers. While valuations are not cheap, recognize FNN’s strong franchise, growth potential from new shareholder and expansion of the brewery business in the medium term.