Stocks in focus: F&N and Genting

Thursday’s big news, says IG Markets Singapore, is ThaiBev’s new offer for Fraser and Neave.

OCBC Investment Research said:

The modest gains on Wall Street overnight could keep local sentiments positive this morning but gains are likely to be limited due to the poor Nikkei start (down 0.2% now).

As a recap, the STI continued to inch higher yesterday; after opening some 0.5% in the black, the index held on to most of the gains with a 0.4% higher close.

And with today's tone likely to remain fairly buoyant, we could potentially see the index heading higher towards the 3040 immediate obstacle for another retest.

Beyond that, the subsequent resistance is pegged at the 3090 recent peaks. On the downside, the immediate support is now marked at the 3005 minor troughs, with the next base lying at the 2980 key trough.

IG Markets Singapore meanwhile noted:

The big news in Singapore today is the Thais’ $7.2 billion cash offer for Fraser & Neave which was announced early this morning. There is a strong chance the purpose of the bid is to scupper Heineken's bid to acquire Asia Pacific Breweries. Whatever its intentions, it will definitely create some uncertainty among F&N shareholders as they head to the September 28 EGM.

ThaiBev have been a bit secretive in what their true intentions are and this bid sheds no real light on what these are. Thai Bev may still want to sell F&N’s APB share to Heineken and use the money to purchase F&N and then break it up. They also may want to take control of F&N to stop it selling its APB stake to Heineken. Both scenarios have equal probability.

There has been talk of ThaiBev now being interested in the non-beverage side of F&N as it owns more than $8 billion of properties and hospitality ventures. If it took control of F&N it would probably want to break the conglomerate up and sell it off.

But we still think ThaiBev is more interested in the alcoholic business of F&N, of which APB is the jewel in the crown. It would hate to see Heineken gain control of this and increase its foothold in Asia at ThaiBev’s expense.

Also likely to be in focus today is Genting, who could come under pressure today after the Singapore casino was fined for breaching safeguards. The Casino Regulator of Singapore whacked a $600,000 fine on Resorts World Sentosa for partly reimbursing entries fees to Singaporeans in the form of free tickets and hotel rooms.

Genting shares have already fallen about 8% this year while the STI has gained above 14%.