Value Investment on Singapore Stock Exchange - Valuation Report of Fraser and Neave Limited

Value Investment on Singapore Stock Exchange - Valuation Report of Fraser and Neave Limited

Evaluated on 14-Jan-2007 and I am currently not invested in this company.

About the company:

1. Core Business: Property, Food and Beverage, and Printing & Publishing industries, founded in 1883.
2. Date of Incorporation: Jan-1898
3. What I like about this company: Its Revenue for the last 10 years has been an upward trend. Even during the difficult years (1997-1999), it continued to be profitable. Its Net Asset Value has also been increasing in the last 10 years. It has got well diversified operations in 20 countries. Company is focused in increasing its value and its Earning Per Share.
4. What I do not like about this company: Seems to be increasing investment into property-related operations. Its long standing chairman is stepping down and the new chairman, although not new to the company, has yet to be tested in the new capacity. It has listed $286mil as intangible asset.
5. Competitive advantage (if any): Strong leader in its chosen industries, namely Food and Beverages, Properties and Printing and Publishing.

Valuation Statistics

1. Earning Per Share: $0.271
2. Price/Earnings ratio : 17.27
3. Operating Profit: 15.2%
4. Return on Equity Ratio: 8.87
5. Current Ratio: 1.24
6. Debt/Total Equity Ratio: 1.41
7. Net Tangible Assets: $3.07

Conclusion

1. Price: $4.68 (12-Jan-07)
2. Intrinsic Value: $4.43 (highly subjective)
3. Maximum Price I would purchase at: $3.76 (highly subjective)
4. Price to IV: 106%
5. Final word: At a 106% price to IV ratio, I would not be purchasing this yet. I would be very keen to keep track of its business performance in 2007 and wait for a good time to be invested in this company.

Information sources

1. Jurong Technologies company website at http://www.fraserandneave.com/
2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

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