Call it the Fraser & Neave (F&N) effect. Since the conglomerate
entered the spotlight as the subject of an intense takeover battle, other food
and beverage-related stocks have soared.
The F&B theme spiced up
further yesterday as investors nibbled on more counters, leading many to scale
fresh year highs.
Shares of Yeo Hiap Seng, Khong
Guan Flour Milling, Auric Pacific Group, Bonvests Holdings and Super Group all
rose to new highs while other food-related counters notched big gains.
The relentless rise in some of
these stocks in the absence of plausible explanations - other than the F&N
effect - has confounded some market watchers.
"There is nothing much
actually happening with these firms to warrant the rise," said a remisier.
Not everyone agreed. OSK- DMG
research head Terence Wong said the battle for F&N and privatisation of
Cerebos Pacific, maker of Brand's Essence of Chicken, have highlighted the
value of food and beverage firms earlier not on investors' radar.
F&N includes brewing, soft
drinks and food businesses.
"It's a choppy year for the
stock market, and consumer staples, given their defensive earnings, have become
attractive," said Wong.
While investing in food and
beverage firms on the grounds that they are resilient in tough times may be
hard to fault, the extent of the rise seems overblown.
The broader market saw no such
exuberance, trading range- bound yesterday as the Straits Times Index (STI)
gained a paltry 0.1 per cent to close at 3,046.81.
"There's definitely a dose
of speculation here," said Wong.
Soft drinks and property firm Yeo
Hiap Seng continued its ascent for the sixth straight day on expectations that
it is a potential buyout candidate. It gained 32 cents, or 6 per cent, to hit
another record high yesterday of S$5.69.
Wheat flour supplier and biscuit
maker Khong Guan rose eight cents, or 3 per cent, to S$2.68. It had gained a
whopping 49 per cent on Monday.
Shares of Synear Food Holdings
inched up by 0.4 cent or 2.2 per cent to a year's high of 18.9 cents, higher
than the exit offer of 18.6 cents a share made by its main shareholders to
privatise the Chinese quick-freeze food maker.
Other related counters also
enjoyed the attention. Food Junction Holdings added 0.8 cent or 4.4 per cent to
18.8 cents. Food Empire Holdings rose 4.5 cents or 10 per cent to 50 cents.
Bonvests surged 10 per cent, or
10.5 cents, to a high of S$1.17, while Super Group gained 10 cents to hit a
high of S$2.52.
The sharp rises have led these
counters to far outperform the key STI, which has risen 15 per cent so far this
year.
A similar frenzy on food-related
counters took hold 10 years ago. Then, it involved shares of Thai Village,
United Foods, Tastyfood, Food Empire, TungLok, Tsit Wing International and
Super Coffeemix. But a glaring difference is that these counters chalked up
heavy turnover then and hogged the most actives list.
Dealers said the thin trading
volume behind the sugar rush lately in these food counters - some of which are
illiquid and have long been ignored - should provide retail investors with some
food for thought. "Caveat emptor (buyer beware) should rule for those
looking to jump in," said an analyst.
US$1 = S$1.22
Anita Gabriel
Business & Investment Opportunities
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