Hi may I have your thoughts on F&N? Is it worth the time to look into it? Also, how would you value F&N? The P/E and PCFO seems distorted due to their past divestment activities.
Here are some of my thoughts for this company, I hope maybe Victor can help input some of your views.
Firstly, the different segment seems to be lagging, such as beverages and printing & publishing. I am not sure if they should divest their printing & publishing services and focus fully on just beverages, as their management also mention they just increased their stake on Print Lab in April 2019. The only good thing is their dairies segment seems to have decent growth. Also, acquiring a 20% in Vietnam Vinamilk is seems like a good move as the numbers seem to be going up for now.
Secondly, their growth seems limited to only SG, MY and Thailand? Thailand is mainly their condensed milk, whereas MY seems to have the strongest foothold for their beverage segment. They are also expanding into Myanmar with Emerald Brewery Myanmar.
Lastly, the company is mainly owned by Thaibev as they have about 87% stake in it. After divesting all other segments, could ThaiBev turn F&N around and still make it a worthwhile to invest in F&N?
Moving forward, the risk seems to be their raw and packaging material costs. They seems to be handling sugar tax quite ok with the plan to have more healthy drinks with low and zero-calories beverages. The competition is also quite strong, with a net profit margin of 6%, the main contribution seems to be mainly from their dairies segment. Maybe to value F&N the best is to just value base on their dairies segment? Also what ratio would be the most suitable?
I also read the article you wrote, so what are your thoughts now?
Also, the profit in 2018 had a big plunge when F&N started to equity account its share of Vinamilk’s profit in April 2017. Could you help explain?
After the last divestment of the property arm in 2015, the overall profit is slowly rising back, so what are your views? (Including those I mentioned above)
The printing business was kinda forced on them and they won’t be selling at all. I remember hearing that from one of their AGMs.
Hi Qi Jie,
I think F&N is facing quite a structural disruption in their business because of the war in sugar. With more countries are aware of the sugar issue, government are increasing the tax on sugar around the region. With the increase in sugar tax, F&N have to come out with drinks that have less sugar but the issue is after they reduced the sugar, the consumption is reduced. I think we just have to wait and see how the situation will changed in the coming years.
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