Sunday, March 20, 2011

F&N Stock Review (Part 1-Food & Beverage)

As mentioned in my earlier post, I am now a shareholder of F&N Limited. Naturally, I did my homework (fundamental analysis) before making this decision. In the next few posts, I am going to share the positive aspects of F&N with my readers. The conglomerate is too big for me to condense all the information into a single post. Lol ^^


Profile of F&N:


F&N is one of the oldest, if not the oldest company in Singapore. It 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 business of brewing in 1931, dairies in 1959, property development and management in 1990 and publishing & printing in 2000. 


This company has weathered the Great Depression, 1998 Asian financial crisis, 2001 Dot Com bubble burst, 9/11 and 2008 Sub-Prime Crisis. Wow. Not many companies in Singapore can boast that kind of track record.


F&N owns an impressive array of renowned brands that enjoy market leadership across a mix of beer, dairies and soft drinks; residential properties, retail malls and serviced residences; as well as publishing and printing services.


F&N  is present in over 20 countries spanning Asia Pacific, Europe and the USA




Outstanding Performance under Strong Leadership:


F&N's revenue, profits and dividends have been increasing steadily over the past decade (2001-2010).  

  • Revenue increased from S$3,802m in 2006 to S$5,697m in 2010. There was revenue growth even during the financial crisis in 2008! 
  • Profit before tax increased from S$537m (45.9 cents/share) in 2006 to S$1,009m (72.2 cents) in 2010. Again, there was profit growth  throughout the 2008-2009 global recession.
  • Attributable profit increased from 25.3 cents/share in 2006 to 42.8 cents/share in 2010.
  • Net Asset Value increased from $3.07/share in 2006 to $4.38/share in 2010.
  • Dividends increased from 12 cents/share 2006 to 17.5 cents/share in 2010. Dividends were maintained during the 2008 financial crisis. 
Based on the financial results between 2006 and 2010, I noticed something interesting. F&N is under the strong leadership of Mr Lee Hsien Yang. He became the Chairman of F&N since 2007. Since then, F&N has been performing well (even weathering a financial storm in 2008-2009) under his distinctive leadership.


Well-Established Brands in the Food and Beverage market:

Over the years, F&N has built up a portfolio of regionally and globally renowned brands in the Food and Beverage market. F&N generates about 58% of its revenue from its F&B arm. This provides a defensive, stable cash flow for the company.

Asia Pacific Breweries Limited ("APB") is a leading brewer with a portfolio of over 40 beer brands and brand variants in Asia Pacific. It is renowned for its flagship beer brands, Tiger and Heineken beers, which enjoy international standings and numerous awards and accolades such as the UK Beer Industry International Award (BIIA). Today, APB operates in 36 breweries across 13 countries in Singapore, Malaysia, Thailand, Vietnam, Cambodia, China, New Zealand, Sri Lanka, Indonesia, New Caledonia, Papua New Guinea, Laos and Mongolia.



Under the soft drinks portfolio of brands, there are F&N Sparkling Drinks, 100PLUSisotonic drinks, F&N SEASONS Asian drinks and fruit teas, F&N ICE MOUNTAIN bottled water, F&N FRUIT TREE juice drinks and F&N cordials that consumers of all ages have come to love and enjoy.


F&N Creameries markets a wide range of products, including sweetened condensed milk, evaporated milk, pasteurised milk and tea, UHT milk, juices, ice cream, yoghurt and snacks under the well known brands such asF&N, F&N MAGNOLIA, FARMHOUSE, F&N DAISY, F&N NUTRITEA, F&N NUTRISOY, F&N FRUIT TREE FRESH, F&N MEADOW GOLD and F&N aLIVE.




An exclusive deal to sell and distribute Red Bull energy drinks in Malaysia is expected to generate some RM120mil, or about 10% of revenue, to F&N Beverages Marketing Sdn Bhd in the first full year of the agreement. The deal, which takes effect on April 1, has been sealed between Fraser & Neave Holdings Bhd’s (F&N Holdings) soft drinks arm F&N Beverages and Allexcel Trading Sdn Bhd. The rights had previously belonged to its rival Yeo Hiap Seng (M) Bhd.Red Bull is the leading energy drink in Malaysia with a 40% market share in the last decade, according to Allexcel Trading.
Stay tune for Part 2 of my review on F&N's property arm.^^



Peace out,
Dividends Warrior


P.S. - I am NO expert or guru. This post is NOT a call to purchase F&N stocks.




10 comments:

Musicwhiz said...

Hi!

Do you happen to have the more detailed numbers? Gross margin, net margins, debt levels, current ratios, free cash flow generation and ROE to name a few? Perhaps over the last 10 years? Looking forward to that, thanks!

WK said...

yea.. wats the EPS FY10 & 11?

Singapore Man Of Leisure said...

Interesting review of F&N.
Hope to see your part 2 review on their property arm soon!

Cheers!

Anonymous said...

Hi

Just wondering what would be a good price to enter?

thanks.

options trading said...

I like your article and it really gives an outstanding idea that is very helpful for all the people on the web
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Dividends Warrior said...

Hi WK,

EPS FY10 is 72.2 cents

Dividends Warrior said...

Hi anonymous,

A good price can be rather subjective.

For me, below $5.50 is still attractive.

Dividends Warrior said...

Hi Options Trading,

Thanks! ^^

Dividends Warrior said...

Hi Musicwhiz,

Still trying to gather all the data. Collating 10 years of data is not easy. Sighz......

Paul said...

I find it interesting that you diverted your money into F&N. I can only surmise that you regard this as your growth stock rather than as part of your dividend portfolio.

No doubt F&N is a well-managed and has diversified businesses covering many essentials. However, for its price, the dividend yield is unimpressive. And so that makes its proposition as a dividend yield stock unconvincing.

As a growth stock, I suppose the jury is still out. I'm still churning the numbers from the annual reports. And I have not reached a conclusion yet.

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