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Thai Beverage Sabeco seemingly pricey; M&As likely underway
■ Vietnam Beverage wins bid for 53.6% of Vietnam's largest brewer Saigon Beer Alcohol Beverage Corp (Sabeco); ThaiBev now has 26.3% effective stake in Sabeco. ■ The aggregate acquisition price for the 53.6% stake is c.VND109.7tr (THB156bn) based on VND320k/share. ■ Illustrative FY9/17 net debt of 1.3x (vs. existing 0.2x) implies ThaiBev foots majority of the consideration and that the deal may be pricey at c.78.7x forward valuations. ■ We tweak our forecasts and downgrade our SOP-based TP to S$1.00. ■ Downgrade to Hold. ThaiBev may embark on prospective M&As to re-optimise its balance sheet but near-term uncertainties may cap interest in the stock.
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Singapore Strategy Charting the journey
■ We think investors may be interested to use the technical charts to support their investment decisions in 1H18. ■ In this lull-season report, we showcase short- and medium-term technical analyses for 33 stocks, including those on the FSSTI and 10 fundamental picks for 2018. ■ Our fundamental Alpha picks remain unchanged: KEP, VMS, UOL, GENS, SMM, AEM, Memtech, mm2, Yongnam and Sunningdale. ■ Fundamental Overweight sectors: capital goods, financials, gaming, tech/manufacturing and property developers. ■ We are Underweight on transport and telcos, and Neutral on commodities, consumer/healthcare and REITS.
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CapitaLand (CAPL SP) : BUY Deepens exposure in Shanghai’s fast growing decentralised office market
• Enters into agreement to acquire adjacent site to Innov Center in Wujiaochang district • Total investment of RMB 1.3bn to develop a new Grade A office tower • Estimated entry yield of 4.3% with potential total return of 15% • Maintain BUY, TP S$4.35
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