On 8 November 2024, Fraser and Neave Limited (“F&N”) announced their full year result for FY2024. This quarter remained relatively consistent with the previous quarters, contributing to the stable financial performance for FY2024. F&N has also seen its share price increase since the previous update, though currently still trading at a discount from its book value, which provides investors a margin of safety.
During the quarter on 20 September 2024, Thai Beverage Public Co Ltd (“ThaiBev”) announced the completion of the proposed share swap with TCC Assets Limited (“TCCAL”). With the completion, ThaiBev now holds approximately 70% of F&N, with TCCAL will hold the remaining 18%. There remains speculation if privatization of F&N may occur.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: Financial Statements And Related Announcement::Full Yearly Results
Website: (ThaiBev) Asset Acquisitions And Disposals::Completion Of The Proposed Share Swap
Financial Highlights
Revenue
| Metrics | Current | Previous |
|---|---|---|
| Revenue | +3.0% | +2.1% |
| Rating | Favorable | Favorable |
Revenue for FY2024 increased by 3.0% to SGD2,162 million from SGD2,099 million in the previous financial year. Overall, the revenue metric is Favorable.
Unchanged from previous quarter, the food and beverage segment drove the Group’s top line growth where revenue increased by 7% in constant currency. Management have disclosed that there were favorable sales mix, higher volumes of Beer and Soft Drinks from successful festive campaigns and new product launches drove growth in Beverages.
There are also increase in domestic and export demand which lifted canned milk volumes across core markets despite forex impact.
Revenue continues to be weighed down by decrease in publishing and printing segment due to lower print demand and closures of retail stores.
Earnings per share
| Metrics | Current | Previous |
|---|---|---|
| Earnings per share | +12.0% | +35.5% |
| Rating | Favorable | Favorable |
The earnings per share for FY2024 increased by 12.0% to SGD0.103 per share as compared to SGD0.092 per share in the previous financial year. This metric remains Favorable and is a good aspect of the dividend stock. The smaller increase compared to the previous quarter was due to F&N saw significant earnings in the final quarter of FY2023.
Operating Cash Flows
| Metrics | Current | Previous |
|---|---|---|
| Operating Cash Flows | -17.3% | No Update |
| Rating | Unfavorable | Unfavorable |
Operating cash flows for FY2024 saw a decrease by 17.3% to SGD216 million from SGD262 million in the previous financial year. Through the condensed cash flow statement, noted that the significant decrease arose from change in receivables, indicating a slower collection. This may present as an indication of impairment of receivables. The metrics is Unfavorable.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing ratio | 35.0% | 34.4% |
| Rating | Favorable | Favorable |
Gearing ratio stands at 35.0% as of 30 September 2024. This metric is computed using total assets of SGD5,202 million and total liabilities of SGD1,821 million. The metrics remain Favorable as F&N is less reliant on external sources to fund operations. Do note management have provided a gearing ratio of 18.8% using borrowings less cash and bank deposits over total equity.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest coverage | 7.1x | No Update |
| Rating | Favorable | Favorable |
The interest coverage stands at 7.1 times as of 30 September 2024, using profit before interest and tax of SGD297 million and finance costs of SGD42 million. The metric is Favorable.
Price-to-book ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 0.70 | 0.64 |
| Rating | Favorable | Favorable |
The Price-to-book (“P/B”) ratio for F&N is 0.70. This is computed using the Net Asset Value (“NAV”) per share of the Group as of 30 September 2024 of SGD1.97 per share and the closing share price of SGD1.37 as of 4 December 2024. This is Favorable as you will be paying a discount to its book value.
As of 4 December 2024, the Market Capitalization is approximately SGD1,994 million.
Website: Yahoo Finance: Fraser and Neave, Limited (F99.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 2.92% | SGD 0.040 |
| 2024 | 4.01% | SGD 0.055 |
| 2023 | 3.65% | SGD 0.050 |
| 2022 | 3.65% | SGD 0.050 |
| 2021 | 3.65% | SGD 0.050 |
| 2020 | 4.01% | SGD 0.055 |
F&N have been paying relatively consistent dividends over the last few years. With the total dividend payout in 2024 of SGD0.055 per share and using the closing share price of SGD1.37 as of 4 December 2024, this translates to a recurring dividend yield of 4.01%. For my benchmark, a general reasonable yield would be around 5.00%. The dividend yield is thus Unfavorable. Do note that the dividend yield is currently low as the share price had increased recently with the share swap agreement.
Website: Reasonable Dividend Yield 2024Q4 – 5.00%
If using dividend yield of 5.00% as a benchmark, based on the dividend of SGD0.055 there is potential for F&N to see its share price drop by another 19.7% to SGD1.10. Investors will need to be mentally prepared that the share price may fall further to match market expectations.
| Yield | Share Price | Downside |
|---|---|---|
| Current (4.01%) | 1.37 | – |
| 5.00% | 1.10 | -19.7% |
| 6.00% | 0.92 | -33.1% |
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Revenue | +3.0% | Favorable |
| Earnings per share | +12.0% | Favorable |
| Operating Cash Flows | -17.3% | Unfavorable |
| Gearing ratio | 35.0% | Favorable |
| Interest coverage | 7.1x | Favorable |
| Price to Book Ratio | 0.70 | Favorable |
| Overall | Favorable |
Overall, it remains Favorable to invest in F&N. Their operations looks to remain sustainable. Though their dividend yield is relatively low, it provides a good base and assurance for investors. Keep in mind that the share price is at the highest it has seen over the last one year, indicative of speculation.
Background
Fraser and Neave, Limited (“F&N” or the “Group”) had its origins more than a century ago, in the spirited decisions of two enterprising young men, John Fraser and David Neave, who diversified from their printing business to pioneer the aerated water business in Southeast Asia in 1883. From a soft drinks base, F&N ventured into the businesses of beer in 1931, dairy in 1959, property development and management in 1990, and publishing & printing in 2000. In 2012, the Group divested a substantial part of its beer business. In 2013, as F&N celebrated its 130th year of operation, it also welcomed its new majority shareholder, the TCC Group, which is engaged in food and beverage, real estate, industrial trading and consumer products, insurance and agriculture. In January 2014, through a distribution in specie and re-listing of Frasers Property Limited by way of introduction on the Singapore stock exchange, the Group demerged its Properties business.
Today, F&N is a leading Southeast Asian consumer group with expertise and prominent standing in the Food & Beverage and Publishing & Printing industries. Leveraging its strengths in marketing and distribution, research and development, brands and financial management, as well as years of acquisition experience, the Group provides key resources and sets strategic directions for its subsidiary companies across both industries.
Listed on the Singapore Stock Exchange, F&N ranks as one of the most established and successful companies in the region with an impressive array of renowned brands that enjoy strong market leadership. F&N is present in 11 countries spanning Asia Pacific and the Americas, and employs over 7,200 people worldwide.
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