KUALA LUMPUR: AmResearch reiterates its BUY on Fraser & Neave Holdings (F&N) with unchanged fair value of RM15.20/share, based on target PE of 18x CY11F earnings.

?We expect further upside arising from a possible earnings accretive M&A - while strong fundamentals of core soft drinks and dairies should continue to fuel positive investor interests,? it said in a research note issued on Wednesday, July 14.

While there is a 12 to 24 month timeline as F&N embarks on an M&A, the group remains open to the nature of the potential business opportunities or strategic alliances.

?In our opinion, we believe the group would be keen to enlarge its footprint in Indo-China via its bread-and-butter business in beverages and dairy products. Net cash is an estimated RM340mil for FY10F,? it said.

AmResearch said it maintained its earnings forecast for FY10F-12F, which already reflects a one-off disposal net gain of RM324.7 million.

There is no change to its FY10F-12F dividend forecasts. Should the group revert to a possible capital repayment, the potential special dividend of up to 91 sen/share would bump up AmResearch?s FY11F dividend forecast to 137sen/share, and raise its net dividend yield from 4% to 12%.