Welcome to this week’s edition of top stock market highlights.
Singtel (SGX: Z74)
Singtel will support the amalgamation of Intouch Holdings (BKK: INTUCH) and Gulf Energy (SGX: TGED) to help simplify its shareholding in its Thai associate Advanced Info Services (AIS) (SGX: TADD).
Currently, Singtel and Gulf hold a 24.99% and 47.37% stake in Intouch, respectively, with Intouch owning a 40.44% stake in AIS.
An as-yet-unnamed company, NewCo, will result from this amalgamation and is expected to become one of the largest and most liquid listed companies in Thailand.
In exchange for its stake in Intouch, Singtel will receive an approximately 9% stake in NewCo.
The blue-chip telco will also book a gain of around S$400 million from this amalgamation.
After the transaction is completed, Singtel will evaluate its options for NewCo even as it continues to be a long-term investor in Thailand through its stake in AIS.
Arthur Lang, Singtel’s group CFO, mentioned that the telco will have the opportunity to increase its (now) direct 23.3% stake in AIS through this transaction.
This transaction should close by the second quarter of 2025 subject to the approval of the shareholders of both Intouch and Gulf.
Thai Beverage PCL (SGX: Y92)
Thai Beverage, or ThaiBev, has proposed a share swap transaction with TCC Assets Limited (TCC) with no cash outlay involved for either party.
The proposal will see ThaiBev transfer its entire 28.78% stake in Frasers Property Limited (SGX: TQ5), or FPL, to TCC.
In turn, TCC will transfer its 41.3% shareholding in Fraser & Neave (SGX: F99), or F&N, to ThaiBev.
This transaction can be clearly understood in the diagram below.
Source: Thai Beverage’s Presentation Slides
As a result of this transaction, ThaiBev will cease to hold any shares in FPL while increasing its stake in F&N from 28.3% to 69.61%.
For TCC, its stake in FPL will increase from the existing 58.1% to 86.89% and its shareholding in F&N will plunge from 58.9% to just 17.6%.
The proposed share swap will be carried out based on around 1.88 FPL shares for each share of F&N.
The ratio was determined based on a share price of S$1.89 per FPL share and S$3.55 per F&N share.
When completed, ThaiBev will become a pure-play food and beverage company with no stake in the property sector.
The group can also leverage its stronger relationship with F&N to increase its exposure to the fast-growing non-alcoholic beverage and dairy segments.
With F&N’s strategic focus on building a strong portfolio of non-alcoholic drinks, ThaiBev can also benefit as it gives the latter exposure to isotonic drinks and dairy products.
These new products are also in line with the growing consumer focus on health and wellness.
This consolidation exercise will result in ThaiBev’s earnings per share increasing by 3.4% from THB 1.06 to THB 1.10 for the 12 months ending 31 March 2024.
An extraordinary general meeting will be convened in mid-September 2024 for shareholders to vote on this proposal.
If the resolution is approved, the transaction should be completed by the end of September, which is also the fiscal year-end for F&N, FPL, and ThaiBev.
Yangzijiang Shipbuilding Holdings (SGX: BS6)
Yangzijiang Shipbuilding, or YZJ, has entered into an agreement with the government of Jinjiang City in Jiangsu province (China) for the acquisition of land use rights for approximately 1,300 acres of land.
This land is earmarked for the establishment of a new clean energy ship manufacturing base (the “project”).
The piece of land features around 1,320 metres of shoreline along the Yangtze River and offers expansion opportunities in the future.
This project is located adjacent to YZJ’s existing manufacturing base and will allow the group to seamlessly integrate the two facilities to achieve better productivity and higher operating efficiency.
YZJ plans to invest around RMB 3 billion in capital expenditure over two years to fund the project but is awaiting the outcome of a feasibility study before proceeding.
Management believes that there is good potential for LNG and other clean energy vessels, which forms the basis for this move.
The shipbuilder also needs to seek approval from various government agencies and if approval is granted, the project will be executed in phases to ensure resources are utilised optimally.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
