ThaiBev – Profit taking on FNN news (potentially -ve)

Yesterday:

THBEV +23% although -25% in past 8-days; Combo of Short Covering & Retail Buying after FNN was on Trading Halt; Mkt was expecting clarity over FNN Property & F&B spin-off but in fact turned out to be related to a Myanmar brewery dispute; FNN spin-off is a +VE for THBEV given F&B synergies; Note THBEV hammered y’day on talk of a possible alcohol tax in Thai; 97% of THBEV NP comes from alcohol which is mainly from spirits (costs easily passed to consumer) whilst beer biz is loss making

Today:

Business Times reported FRASER and Neave’s (F&N) joint venture partner in Myanmar Brewery Ltd (MBL) is trying to oust the conglomerate from the partners’ promising beer-making business, F&N said yesterday.

Myanma Economic Holdings Ltd (MEHL), which holds 45 per cent of Myanmar Brewery, has informed F&N that it plans to begin arbitration proceedings to claim F&N’s 55 per cent stake in the brewery, based on Myanma Economic’s reading of the joint venture agreement.

Comments :
** this potentially can be very negative for FNN’s F&B biz as Myanmar Brewery contributed 72% of FNN’s berverage earnings…. which in turn may impact how THBEV will look at its structure and synergy with FNN in the future.

Morning Wrap by broker – 30 Aug 13

Baltic Dry: 1136 -0.87% Gold: 1405.67 -0.54% Palm Crude: 2440 -1.65%
VIX: 16.81 +1.94% WTI Crude: 106.99 -1.66% USD/SGD: 1.2758 +0.04%
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*(OLAM): 4Q13 NP of $56.8m -48%YoY was below reuters est.($75.4m), hit by increased tax charges of $50.6m, compared to a net tax credit of $8.2m a yr ago & amid challenging mkt conditions.

*China Minzhong(MINZ) unaudited FY13 #s: NP of RMB 755.1m (US$123.4m) +11%YoY while REV +26.4%YoY; says vegetable demand remains healthy but provided no fcst for period under review. Currently MINZ is preparing a response to Glaucus’s claim that it has deceived regulators & investors, by end of the wk.

*(FNN) in beer spat with Myanmar partner (MEHL); plans to start arbitration proceedings over the co.’s stake of 55% in Myanmar Brewery. Outcome likely to be watched as losing the stake would mean the exit from one of Asia’s fastest-growing beer mkts. **Trading to resume today

*(NOBL) wins court order to liquidate Ebullio Commodity Master Fund after latter failed to pay it ~$4.9m for contract breaches.

*Wilmar(WIL) signs agreement to supply raw sugar to Algeria’s Cevital.

*(GLP) signed expansion agreements of 21,000 sqm in China.

*(MIDAS) unit secures syndicated loan facility of RMB 1.16b for 9-yr tenure.