F&N promotes new drink variations

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KUCHING: Fraser & Neave Holdings Bhd (F&N) is set to witness increased competition from The Coca-Cola Company (TCCC) which is scheduled to set up bottling plant in Negeri Sembilan.

STIFF COMPETITION AHEAD: F&N’s strategy is to expand the market reach of its drinks and dairy products to the region particularly Indochina.

STIFF COMPETITION AHEAD: F&N’s strategy is to expand the market reach of its drinks and dairy products to the region particularly Indochina.

According to AmResearch Sdn Bhd (AmResearch), TCCC planned to bottle and market Coca-Cola and Sprite drinks as well as new drink products in different categories such as isotonic and tea.

It added TCCC’s decision to build a greenfield plant complete with its own bottling and distribution network would increase competition among local players such as F&N and CI Holdings.

CI Holdings currently held the exclusive rights to bottle and distribute Pepsi and 7UP drinks in Malaysia, the research house highlighted.

The research firm saw TCCC’s plant in Malaysia more as a potential export hub translated as a strong indication of positive growth opportunities within Southeast Asia.

In addition, this echoed F&N’s strategy to expand the market reach of its drinks and dairy products to the region particularly Indochina.

To recap, AmResearch recently stated it was announced that TCCC would be setting up a bottling plant at the Enstek Industrial Park in Nilai, Negeri Sembilan. It said that TCCC’s Malaysian unit, Coca-Cola Bottlers (M) Sdn Bhd had purchased a 12-hectare (ha) piece of land with plans to invest up to RM1 billion over the next five years in a bottling plant, which was slated to go commercial by the end of 2011.

In other developments, F&N had earmarked up to 50 drink variations to be launched over the next 24 months as parts of its transition plan to fill the vacuum left idle by the Coca-Cola contract, the research firm revealed.

AmResearch expected a decent second quarter for the financial year 2010 forecast (2QFY10F) for F&N given the Chinese New Year festivity in February 2010. The research firm stated it expected new drink product launches as competition heated up in the industry.

It pegged the company’s fair value at RM13.30 per share based on unchanged price earnings (PE) of 18 times current year 2010 forecast (CY10F) earnings.