HONG KONG- Turning to drink is never the solution – unless you are a banker in Singapore, where two boozy deals could help to end an activity drought. Tapping into rising domestic consumption has long been a favorite investor theme in Southeast Asia, and it looks like a comforting tipple amid global uncertainty.
Capital-raising in the region’s stock markets in the first six months of 2022 ran at its lowest rate in 17 years, according to Refinitiv data, with just $5.6 billion of shares sold. Activity though has begun to pick up with insurer Thai Life due this week to price its initial public offering in Bangkok, raising up to $980 million. Bankers could genuinely raise a glass if Thai Beverage pushes ahead with its brewery business spin-off and if $5.3 billion Philippine brandy giant Emperador achieves a secondary listing.
It would be third time lucky for billionaire Charoen Sirivadhanabhakdi’s attempts to spin off his prosaically-named BeerCo, whose Thai and Vietnamese operations produce the Chang and Saigon Beer brands among others. Those with a taste for something harder can hit tycoon Andrew Tan’s group spanning several whisky brands including Jura and Dalmore, Spain’s Fundador brandy and Harveys sherry.
Well-priced deals could crack open the wider market. Emperador is trading in Manila on 23 times expected earnings versus an average of 25 for peers including Pernod Ricard and Remy Cointreau. BeerCo’s expected market value of between $3.6 billion and $5 billion, per Refinitiv publication IFR, is also lower than in its previous attempts. If BeerCo’s net profit recovers well to grow 10 percent and those earnings are valued on the average multiple of Budweiser APAC, Kirin and Heineken at 22 times, the lower end of its valuation target looks achievable. – Reuters
