We update our estimates and lower our FY14-15 core EPS by 2-3% to factor in the latest land win at Cecil Street. Our SOP value rises to S$7.73 from S$7.70 with the target price still based on a 20% discount to property RNAV, up from S$6.53 to S$6.61. Maintain Outperform with catalysts from more corporate actions.

https://brokingrfs.cimb.com/dE7o-12lUzkN7qwyw264pWoq5kjxI-ICg50An67b2XzpU6_8zPzIk5lujVg--36I0ElQ3El5hSs1.pdf

 

Step-one: price discovery

FNN?s planned demerger and listing of two separate entities appear to be a price discovery exercise for now. While questions remain on the consumer division, it is clear that more is expected to be done to unlock the property value. A hospitality REIT may be a start.

 

What You Should Do

FNN remains an Outperform. We will give more updates after the analyst briefing.

https://brokingrfs.cimb.com/dE7o-12lUzkN7qwyw264pWoq5kjxI-ICg50An67b2XzpU6_8zPzIk5lujVg--36I0ElQ3El5hSs1.pdf

https://brokingrfs.cimb.com/dE7o-12lUzkN7qwyw264pWoq5kjxI-ICg50An67b2XzpU6_8zPzIk5lujVg--36I0ElQ3El5hSs1.pdf

Details of the FCL distribution in specie

FNN has announced a proposal to list its property arm Fraser Centrepoint Limited (FCL) by way of a dividend in specie (DIS) distribution of FCL shares to FNN shareholders. The process and structure will be as such:

a) Two FCL shares will be distributed back for every one FNN share owned, at no cost

b) FNN and FCL will be traded separately on the SGX mainboard. The listing of FCL is expected in Nov or Dec 2013

c) The listing of FCL on SGX will be by way of introduction

d) Upon the proposed transaction, FNN will no longer hold any stake in FCL

e) FCL will hold all property and property-related assets, including its AUM business. FNN will hold all the F& B businesses, including FNH and Myanmar Brewery, and Times Publishing and all its related businesses.

The DIS exercise is subjected to shareholder approval at an EGM by way of a simple majority vote. TCC, which owns 61.7% of FNN, has voted in favour.

Financial impact

The NAV of FNN shares pre-DIS was S$5.59 as at Jun 2013. This will rise to S$5.77 post-DIS, after factoring revaluation gains from investment properties and realisation of gains from DIS. The NAV split post-DIS will be S$2.04 per FCL shares (FNN shareholders will get two FCL shares for every one held) and S$1.69 for FNN. This will amount to S$5.9bn and S$2.44bn respectively. FNN (ex-FCL) will have a 9M13 proforma net cash position of S$903m, while FCL will have a 9M13 proforma net gearing of 36%. FCL?s balance sheet will remain strong with S$980m in cash and over S$2.75bn of financial resources at hand. Property Development│ Singapore August 12, 2013 IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

FCL?s net gearing is expected to decline in FY14-15 with over S$3.3bn of  presales proceeds yet to be recognised.

 

 

 

 

For Immediate Release

Fraser and Neave further unlocks shareholder value via the listing of its property arm, Frasers Centrepoint Limited

? F& N shareholders to receive, at no cost, two FCL shares for each F& N share held

? The listing of FCL shares is expected in November or December 2013

? TCC Assets intends to vote in favour of the in-specie distribution

Singapore, 27 August 2013 ? Fraser and Neave, Limited (" F& N" or the " Company" ) today announced a proposal to list its property arm, Frasers Centrepoint Limited (" FCL" ) by undertaking a dividend in-specie distribution of FCL shares to F& N shareholders. FCL is expected to be listed by way of introduction on the Main Board of the Singapore Exchange Securities Trading Limited (" SGX-ST" ).