Warrants Highlight

F&N - Big winner from the brewing battle

Macquarie is pleased to list the following new warrant over FNN this morning:

* Note that F&N is on trading halt this morning. The new warrant will begin trading when trading resumes for the F&N

How brewing drama came about
The consolidation of the Southeast Asia beverage industry was sparked by Thai Beverage’s announcement on July 22 to buy a 22% stake in F&N (later increased to 23.9% on July 26). At the same time, the son-in-law of Thai Beverage’s chairman stuck a deal to purchase almost 9% of APB. Two days later, Heineken NV, the world’s third-biggest brewer and the owner of a 42% stake in APB, struck back with a $7.5 billion offer, at $50 a share to buy the rest of APB.

APB is majority owned by a joint venture between Heineken and F&N. Heineken owns a 42 percent stake in APB, and F&N controls about 40 percent. F&N’s, now majority owned by Thai Beverage, has up till tomorrow to make its decision on Heineken’s $50 per share offer for its 40% stake in APB.

APB closed at $49.50 yesterday.

F&N also sees potential bidding war
In the meanwhile, Japan’s largest brewer by market value, Kirin Holdings, unable to participate in the above said brewing war, is reportedly considering a bid for F&N’s soft drinks and dairy businesses. Kirin, already owns 15 percent of F&N and had been the latter’s largest shareholder until Thai Beverage’s recently acquired 23.9% stake.

According to Bloomberg, buying the F&N businesses will help jump-start Kirin’s expansion in Southeast Asia, where soft-drink sales are rising while beer consumption slows in Japan.

F&N is the biggest seller of soft drinks in Malaysia and Singapore and also accounts for more than half of sales of mixers, tonic, and seltzer in Indonesia. Besides its beverage business, it also owns a real estate arm with shopping centres, serviced apartments and industrial property which accounted for 34% of its revenue last year.

Heineken’s bid for its stake in APB coupled with Kirin’s reported acquisition of F&N sent F&N’s share price rocketing to a record high of $8.40 last Friday.

…from Coca Cola too?
F&N has requested this morning to be on a trading halt pending an announcement. According to the latest Bloomberg report, Coca-cola – the world’s largest soft drinks maker, is said to be exploring a bid for F&N as well.

Separately, Macquarie has also listed a UOB call warrant this morning:

Singapore Market Wrap

STI optimistic while awaiting ECB's decision

With investors having second doubts about the announcement of a quantitative easing later in the night, major Asian indices like the STI and HSI opened lower at the start of their respective trading sessions. Also, China announced disappointing manufacturing PMI with a reading at 50.1, lower that the Bloomberg survey of 50.5.

Despite gapping down at opening, both the STI and the HSI trended up steadily intraday and the HSI managed to close the gap, gaining a mere 0.1% day-on-day (dod). The STI saw a large spike at 3pm when Europe indices commenced trading with investors speculating that the ECB will take further action to support the economic recovery on Thursday.

At the end of its trading session, the STI closed at 3051.08, up 0.5% dod.

Call STI 2950MBeCW120831 (QE8W) exercise level 2,950.*
Put STI 2850MBePW120831 (QE9W) exercise level 2,850.*

HSI20200MBeCW120830 (QS5W) exercise level 20,200.*
HSI19800MBePW120830 (QS7W) exercise level 19,800.*

CapitaLand announces an 11.2% increase in revenue
Before the STI commenced trading, CapitaLand announced its 1H2012 results. Net profit was at S$519.1mil, up 3.7% as compared to 1H2011 while revenue came in at S$1503.6mil, up 11.2% compared to the previous year.

CapitaLand Chairman, Mr Ng Kee Choe said that the group is "well-positioned" in China and this is reiterated by its CEO, Mr Liew Mun Leong. Mr Liew elaborated that "Singapore and China will remain as the Group's key markets for new investments" and that "the underlying fundamentals of the housing sector in these markets remain sound."

As of the end of their 2011 financial year, CapitaLand holds more than 70% of its assets in Singapore and China. CapitaLand closed at $3.04, up 1.3% dod.

Call warrant CapitalaMBeCW130103 (Q0MW) exercise price $3.00.*
Put warrant CapitalaMBePW121004 (P5OW) exercise price $2.979.*

Cosco announces disappointing results
After market hours, Cosco announced its 1H2012 results. Net profit was at S$55mil, decreasing 20% as compared to 1H2011 and turnover was at S$1954mil, falling 3% as compared to the year before.

Cosco's vice chairman and president of the company mentioned that Cosco "maintains a cautious outlook for 2012 as the state of global economy remains fragile." Going forward, he is not optimistic and states that in the current global situation, "shipowners may be reluctant to place new orders for the vessels and the Group may experience a decline in new orders in ship building".

Cosco closed at 0.960, down 0.5% dod.

Call warrant CoscoCoMBeCW121105 (QK3W) exercise price $0.950.*
Call warrant CoscoCoMBeCW121001 (P9IW) exercise price $1.10.

Overnight Market Wrap

Dow dips below 13000 as Fed fails to deliver easing
Before the FOMC announcement last night, investors in the US and Europe were looking forward to monetary easing from the Fed and the European Central Bank. However, last night was a disappointment as the Fed refrained from taking action, commenting however that "economic activity decelerated somewhat over the first half of this year". ISM manufacturing figures also indicated a contraction with a reading below 50, at 49.8 for the month of July.

The Fed mentioned that the lengthening of its securities' maturities will continue and the "central bank will also continue reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities", Bloomberg said. With the disappointment that the Fed will not be increasing easing for the time-being, investors can only look to the ECB for more stimuli.

Investors were mildly dissatisfied and US indices erased gains, with both the S&P and Dow ending the session down 0.3%. The Dow closed below 13000 at 12943.

Overnight Markets

Indices	Last	Change
STI	3051.08	0.5%
HSI	19820.38	0.1%
DJIA	12976.13	-0.3%
S&P 500	1375.32	-0.3%
Nasdaq	2920.21	-0.7%
China A50	7542.85	0.8%

Corporate News

Corporate Announcements

OCBC 2Q12 net profit rose 12% year-on-year to $648mn.

Cosco 2Q12 net profit fell 13% year-on-year to $27.6mn.

Results announcements:
Thu 2 Aug: SembCorp Marine 2Q12, OCBC 2Q12
Fri 3 Aug: DBS 2Q12
Tue 7 Aug: UOB 2Q12, Ezion 2Q12
Mon 13 Aug: Noble 2Q12
Tue 14 Aug: IndoFood Agri 2Q12, Wilmar 2Q12, Singtel 1Q13, STX OSV 2Q12
Tue 28 Aug: Olam 4Q12

Ex-dividend dates:
Mon 6 Aug: SingTel ($0.09)
Wed 8 Aug: OCBC ($0.16)
Thu 30 Aug: Sakari ($0.02)
Wed 26 Sep: SGX ($0.15)