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Broker's take: Religare raises expectations of ThaiBev restructuring

SHARES of Thai Beverage Public Co (ThaiBev) gained 1.7 per cent or 1.5 Singapore cents as at 11.07am on Tuesday to trade at 87.5 Singapore cents as a Religare report speculated about a potential restructuring of the Chang beer brewer.

Religare analyst Nirgunan Tiruchelvam raised his target price for the stock to S$1.10 from 76 Singapore cents on a 50 per cent probability that ThaiBev parent TCC will restructure its holdings in ThaiBev, food and beverage (F&B) company Fraser & Neave (F&N) and property developer Frasers Centrepoint Limited.

Mr Tiruchelvam reckoned that in a restructuring, F&N will be split to separate its F&B business from its other businesses, namely publishing. The F&B business will then be injected into ThaiBev, which will dispose of its 29 per cent stake in F&N and become a pure F&B play.

Doing so will raise Mr Tiruchelvam's target price for ThaiBev to S$1.20. If F&N remains as an associate of ThaiBev, however, Mr Tiruchelvam's target price is lowered to S$1.10.

Notwithstanding the restructuring potential, ThaiBev's beer business is also turning around, picking up market share and turning profitable, Mr Tiruchelvam wrote. He raised his earnings estimate for the company by 11 per cent for 2016 and by 12 per cent for 2017.