Top Down Strategy and Large Cap Stock Picks - the DBS Vickers ...

Stock Profile: F & N
Regional Equity Strategy Q4 2007
Income Statement (S$ m) Balance Sheet (S$ m)
FY Sep 2006A 2007F 2008F 2009F FY Sep 2006A 2007F 2008F 2009F
Turnover 3,795.6 4,277.9 4,768.6 5,417.3 Net Fixed Assets 1,120.5 1,289.0 1,361.6 1,419.2
Cost of Goods Sold (2,555.8) (2,849.1) (3,124.3) (3,564.0) Invts in Assocs & JVs 384.9 461.9 538.9 615.9
Gross Profit 1,239.7 1,428.8 1,644.3 1,853.3 Invt & Devt Properties 5,191.3 5,363.6 5,591.9 5,886.6
Other Opg (Exp)/Inc (676.6) (737.5) (803.8) (876.2) Other LT Assets 5,584.0 5,945.4 6,361.7 6,743.4
EBIT 563.2 691.4 840.5 977.1 Cash & ST Invts 1,161.6 1,793.8 1,744.3 1,797.0
Other Non Opg (Exp)/Inc 12.0 0.0 0.0 0.0 Dev Props held for sale 178.4 178.4 178.4 178.4
Associates & JV Inc 28.4 39.7 39.7 39.7 Other Current Assets 1,242.4 1,350.1 1,459.6 1,604.4
Net Interest (Exp)/Inc (60.4) (56.6) (35.6) (37.3) Total Assets 9,671.8 11,018.5 11,644.6 12,358.3
Exceptional Gain/(Loss) 34.0 0.0 0.0 0.0
Pre-tax Profit 577.2 674.5 844.6 979.5 ST Debt 988.5 988.5 988.5 988.5
Tax (145.2) (169.7) (212.5) (246.4) Other Current Liab 1,100.0 1,182.5 1,337.3 1,519.2
Minority Interest (112.5) (139.5) (174.6) (202.5) LT Debt 2,834.7 2,834.7 2,834.7 2,834.7
Preference Dividend 0.0 0.0 0.0 0.0 Other LT Liabilities 143.9 143.9 143.9 143.9
Net Profit 319.5 365.4 457.5 530.6 Shareholder’s Equity 3,600.5 4,725.2 5,021.9 5,351.2
Net profit before Except. 285.5 365.4 457.5 530.6 Minority Interests 1,004.1 1,143.6 1,318.2 1,520.7
Total Cap. & Liab. 9,671.8 11,018.5 11,644.6 12,358.3
EBITDA 728.9 856.5 1,019.5 1,172.2
Sales Gth (%) 8.8 12.7 11.5 13.6
EBITDA Gth (%) 13.6 17.5 19.0 15.0 Non-Cash Wkg. Cap 320.8 345.9 300.7 263.6
EBIT Gth (%) 19.6 22.8 21.6 16.3 Net Cash/(Debt) (2,661.6) (2,029.5) (2,078.9) (2,026.3)
Effective Tax Rate (%) 25.2 25.2 25.2 25.2
Cash Flow Statement (S$m)
Rates & Ratios
FY Sep 2006A 2007F 2008F 2009F FY Sep 2006A 2007F 2008F 2009F
Pre-Tax Profit 543.2 674.5 844.6 979.5 Gross Margin (%) 32.7 33.4 34.5 34.2
Dep. & Amort. 125.3 125.4 139.3 155.4 EBITDA Margin (%) 19.2 20.0 21.4 21.6
Tax Paid (102.1) (197.2) (169.7) (212.5) EBIT Margin (%) 14.8 16.2 17.6 18.0
Assoc. & JV Inc/(loss) (28.4) (39.7) (39.7) (39.7) Net Profit Margin (%) 8.4 8.5 9.6 9.8
Chg in Wkg.Cap. (2.2) 2.4 2.4 3.2 ROAE (%) 9.5 8.8 9.4 10.2
Other Operating CF (270.3) (172.3) (228.3) (294.7) ROA (%) 3.6 3.5 4.0 4.4
Net Operating CF 265.6 393.0 548.6 591.2 ROCE (%) 6.1 6.8 7.7 8.4
Capital Exp.(net) (89.8) (283.0) (200.0) (200.0) Div Payout Ratio (%) 44.0 44.0 44.0 44.0
Other Invts.(net) (265.6) (200.0) (200.0) (100.0) Interest Cover (x) 9.3 12.2 23.6 26.2
Invts in Assoc. & JV (250.1) (50.0) (50.0) (50.0) Debtors Turn (avg days) 51.3 43.7 43.9 43.6
Div from Assoc & JV 12.7 12.7 12.7 12.7 Creditors Turn (avg days) 99.9 97.1 99.4 99.0
Other Investing CF (48.1) 0.0 0.0 0.0 Inventory Turn (avg days) 52.9 49.8 50.9 50.2
Net Investing CF (640.9) (520.3) (437.3) (337.3) Current Ratio (x) 1.2 1.5 1.5 1.4
Div Paid (185.7) (140.6) (160.8) (201.3) Quick Ratio (x) 1.1 1.3 1.3 1.2
Chg in Gross Debt 484.4 0.0 0.0 0.0 Net Debt/Equity (X) 0.6 0.3 0.3 0.3
Capital Issues 360.4 900.0 0.0 0.0 Capex to Debt (%) 2.3 7.4 5.2 5.2
Other Financing CF (21.7) 0.0 0.0 0.0 N.Cash/(Debt)PS (S cts) (225.8) (147.1) (150.7) (146.9)
Net Financing CF 637.4 759.4 (160.8) (201.3) Opg CFPS (S cts) 22.7 29.4 39.6 42.6
Net Cashflow 262.1 632.2 (49.5) 52.6 Free CFPS (S cts) 14.9 8.3 25.3 28.4
Valuation Graph : PE
20.0
15.0
10.0
5.0
0.0
2003 2004 2005 2006 2007
Source: Company, DBS Vickers
Price & Price Relative to Index
S$
Relative Index
7.00
159
6.00
149
5.00
139
129
4.00
119
3.00
109
2.00
99
1.00
89
2003 2004 2005 2006 2007
F & N (LHS) Relative STI INDEX (RHS)
47