San Miguel Food & Beverage Inc. seen as rebirth of SMC

San Miguel Food and Beverage Inc. (SMFB), the now consolidated food and beverage subsidiary of San Miguel Corp. (SMC), is seen as the re-birth of the old San Miguel Corp. which was considered the economic bellwether among listed companies.

SMC president and COO Ramon Ang is, in effect, reviving the San Miguel of old, which was a pure play on food into the newly renamed subsidiary, SMFB, said Raymond Neil Franco, head of research of Abacus Securities.

“SMC’s decision to fold in its beer and liquor businesses into Purefoods is like going ‘back to the future.’ RSA is, in effect, reviving the San Miguel of old (a pure play on food) into a subsidiary that will be renamed San Miguel Food and Beverage (SMFB). The old SMC used to be an economic bellwether for analysts in the 1990s,” Franco said.

He said that SMFB, which could be part of the Philippine Stock Exchange index (PSEi) as early as March 2019, has the potential to become even bigger than four stocks which are today’s economic bellwethers.

These are Ayala Land Inc. (ALI), SM Investments Corp. (SM), Ayala Corp. (AC) and Jollibee Foods Corp. (JFC).

Franco said that an equalweighted portfolio consisting entirely of only ALI, SM, AC and JFC would have widely outperformed the index over a seven, five and three-year period.

The next company that could join this league is SMFB.

“Moreover, its float and liquidity should make it much more attractive to both local and foreign investors and SMFB might eventually join the index as early as March 2019,” Franco said.

Last week, SMC and SMFB signed the deed of exchange of shares as part of SMC’s move to consolidate its food and beverage businesses into SMFB and create a stronger and bigger food business.

Under the agreement, SMC transferred to SMFB its 7.8 billion common shares of stock of San Miguel Brewery Inc. and 216.9 million common shares of the capital stock of Ginebra San Miguel Inc. for P336.3 billion.

The food and beverage company would also do a tender offer to attain at least 15 percent public ownership, a move that may be launched within the quarter.

Last month, SMFB received the green light from the Securities and Exchange Commission to rename the company to its present name, San Miguel Food and Beverage Inc. or SMFB from San Miguel Purefoods Co. Inc. previously.

SMFB earlier amended the company’s primary purpose to include engagement in the alcoholic and non-alcoholic beverage business.