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Fosters - Time to buy

  1. munch

    3,567 Posts.

    Fundamentally Fosters looks very cheap at the moment.

    Here is a brief run down on the stock.

    Merrill Lynch report:

    1) They have a Buy/Buy on the stock
    2) 12 month target of $6
    3) Are worried about cashflow
    4) Worried about growth in the domestic beer sector

    Events that have occured sine their last report was issued (just after last results):

    1) The two largest shareholders bought anothe 40m odd shares... these are both US value pension fund managers. Together they own about 20% of the stock.

    2) Fosters will restructure the beer division to increase growth (todays fin, I'll attach the article after this post)

    3) Fosters management has stated cashflow has returned to normal levels (poor cashflow last report was the main reason it was sold down in the first place) + indicated that wine sales were at/better than expectations.

    4) Looking to reduce costs... deal with lion nathen to share brewery... + slash costs across the whole group.

    5) India beer growth poor, asia groth going well... purchase of vietnam brewery asset.

    6) A few small purchases adding to the RTD segment + wine segment.

    7) Royalties overseas start to come from a % of volume rather than a fixed payment... keeping in mind more beer is sold overseas than in Aust we should see some solid growth.

    8) Recent consolidation in major global breweries has started.

    Is it time to stock up on Fosters shares? I think so.


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