3 Key Investing Differences Between Fraser And Neave Limited And Fraser & Neave Holdings Bhd

Fraser and Neave Limited (SGX: F99) was once a major conglomerate in Singapore.

But, after most of its shares were bought by TCC Assets and Thai Beverage Public Company Limited (SGX: Y92) in 2012 and 2013, Fraser and Neave has since divested its core property business by spinning off Frasers Centrepoint Limited (SGX: TQ5). It had also recently sold its stake in the appropriately named Myanmar-based beer brewer Myanmar Brewery Limited.

Today, 88% of Fraser and Neave’s shares are held in the hands of TCC Assets and Thai Beverage. It’s worth noting that both TCC Assets and Thai Beverage are under the control of Thai billionaire Charoen Sirivadhanabhakdi.

As a business, much of Fraser and Neave’s revenue actually comes from its 55.5%-owned  subsidiary Fraser & Neave Holdings Bhd (KLSE:3689.KL), which is listed and based in Malaysia. Investors who are interested in Fraser and Neave might be wondering if there are any key differences between the company and Fraser & Neave Holdings. So, let’s take a look.

A publishing arm

Given that a significant portion of Fraser and Neave’s revenue comes from Fraser & Neave Holdings, it’s no surprise to find that there is strong overlap in the two companies’ businesses.

But, an obvious difference between the two companies is that Fraser and Neave has a publishing arm, which is one of its remaining legacy assets. The publishing arm now publishes trade books, educational books, magazines, and runs bricks-and-mortar bookshops under the Times brand.

That being said, the publishing business is a very small segment for Fraser and Neave, generating just 16% of the company’s total revenue in FY2015 (fiscal year ended 30 September 2015). The publishing arm also reported a loss even before interest and taxes are factored in.

An ice cream business

In 2011, Fraser & Neave Holdings had to sell its entire ice cream business to Fraser and Neave. The ice cream business is still held by Fraser and Neave, so that’s another difference between the Singapore-listed company and its Malaysia-listed subsidiary.

But, in a similar manner to the publishing business, ice cream is still an insignificant portion of Fraser and Neave. That said, as Fraser and Neave actually classifies ice cream as one of its business segments, it might be one area of future growth for the company.

A Fool’s take

The name of both companies can be quite confusing. Although Fraser & Neave Holdings has the word “Holdings” in its name, it is Fraser and Neave that is actually the one that should be seen as a holding company.

Based on Fraser and Neave’s results for FY2015, 84% of its operating profit actually comes from Fraser & Neave Holdings’ businesses.

This means that although the Singapore-based parent has multiple business segments, the main bulk of its profits and revenue are still being generated by its Malaysia-based subsidiary. In this sense, we can see that Fraser and Neave actually fits the investment holding company mould, with its 55.5% stake in Fraser & Neave Holdings being its crown jewel.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns shares in Frasers Centrepoint Limited.