Case Study: Investing in Fraser and Neave Limited

Fraser and Neave, Limited (F&N) is a Group of companies that has very diverse business operations, namely in the soft drinks, dairies & breweries, glass containers, investment & development properties and publishing & printing. They do this through the many subsidiaries, associated and joint venture companies that they have, both locally and globally.

The purpose of this report is to determine if it is profitable for Great Central Bank to invest in the shares of F & N long-term, and we can do this by analyzing the financial statements of the Group, and also through information that we have obtained from other sources. We will look at the trends of their financial ratios for the past 5 years, and from there, project the future trends of the share prices. Using Porter's 5 Forces of Industry Attractiveness, we will also evaluate the prospects of the industries that F&N is in. We will then look at their competitive strategy, their value chain and other non financial measures.

Thus, we conclude that it would be profitable for us to invest in their shares as they are expected to rise in the future.

2.0 Business Environment

Now we will move on to evaluate the business environment of F&N. To facilitate discussion, our group uses the Porter's 5 Forces of Industry Attractiveness model.

Firstly, looking at the first force, F&N do not face strong substitutes. This is mainly because of F&N has a diversified range of products. Although, in the property segment, F&N might face substitutes like terrace and other freehold properties launched by its competitors like Far East Property and CapitalLand, these are not close substitutes. This is similar to the case of Printing and publishing segment. Though it faces substitutes like ...

... middle of paper ...

...e swelling beer market in Vietnam. They are also going into the China market, which has immense potential for growth. In the properties segment, F&N has also acquired several sites both locally and in China, and there are plans to develop residential properties. In the printing and publishing segment, F&N is also actively expanding globally. It has acquired a 51% stake in Everbest, a printing plant in China and excellent profits were reaped. Sales were also encouraging in Australia and New Zealand. As seen, F&N has many opportunities for growth in this segment. Internally, F&N also benefit from knowledge sharing through its several joint ventures with it subsidiaries and other companies. This will unarguably enhance the intellectual capital of F&N. In order to measure this aspect, number of successful projects and number of joint ventures carried out can be used.