F&N to return $4.73b to shareholders in cash via capital reduction

Distributing gains from the APB sale.

According to CIMB, 2H13 core earnings formed 39% of their and consensus’s full-year estimate.

"We deem this as in line given the stronger anticipated 2H. We maintain our core EPS estimates and target price on 20% discount to its property RNAV."

Here's more from CIMB:

Our pro forma SOP estimate after the cash distributions is S$7.75. We estimate investors will be getting its property business at an implied discount to RNAV of 43%.

Strong F&B and property
Group revenue in 2Q13 rose 17% yoy, buoyed by a strong F&B segment. Soft drinks revenue rose 9% yoy with key brands’ volumes up double-digits (%) yoy. Myanmar brewery revenue also rose 33% yoy.

Overall, PBIT from F&B jumped 44% yoy. In Thailand, dairies sales recovered to pre-flood levels. In properties, Twin Fountains, its last site in Singapore, was launched recently and is over 2.3x subscribed.

In Australia, the group sold 166 units in 1H13 with the completion of OCP and Park Lane (60-80% sold) to underpin stronger property income in 2H13. FNN still has S$3.4bn of unbooked presales.

Capital reduction (S$3.28)
FNN has announced that it will return S$4.73bn or S$3.28 (29% of SOP) to shareholders in cash via capital reduction. FNN explained this will help it achieve a more efficient capital structure and distribute the gains from the APB sale.

Its balance sheet will turn from net cash to one with a net gearing of 0.17x while its RNAV is expected to be around S$7.75 after the capital reduction. The cash distribution will be paid out on or around 31 Jul 2013.

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