KUCHING: F&N Holdings Bhd (F&N) is planning to launch 50 new beverage products within the next 24 months with a few of the variants to start hitting the shelves of supermarkets from January 27 this year.AmResearch Sdn Bhd (AmResearch) noted that the group took this approach in order to make up for the lost earnings from the termination of the Coca-cola franchise, which comes to an end on September 30 in the year 2011.
The group over the past five years reduced the sugar content by –7.5 per cent in its products as a move towards healthier beverages. According to the chief executive officer (CEO) of the group, Tan Ang Meng the beverages with less than 25 per cent sugar content qualify for less sweet drinks.
In the same report, the CEO said the group would not increase the prices of its soft drinks, at least until end of February 2010.
Though the government had increased the price of sugar by 13.8 per cent or 20 sen/kg as of late January, the group would absorb this increase until the Chinese New Year (CNY) kicks off on February 14 this year.
According to the report, sugar costs would reduce F&N’s earnings by about RM2 million per month, but computing the earnings of the CNY and Hari Raya Puasa, the group will be able to make up for an additional one month’s contribution.
Following this AmResearch estimated the loss of RM4 million would only be two per cent of this year’s net profit of RM234 million, further asserting the insignificance of the sugar costs to the group.
The group is poised to review the prices in the occurrence of a spike in tariff or raw material costs. The research unit noted the prices of packaging components such as aluminium, which make up circa 40 per cent of soft drinks operating costs would be of concern.
Due to the positive outlook of the company, AmResearch maintained its favourable perspective and pegged the shares at a fair value of RM12.21 per share based on price earning of 18 times of this year’s earnings.