Check out what will drag F&N profit down by 24%

After the sale of APB stakes, what's in store for F&N?

According to Nomura, F&N has proposed a capital reduction exercise in connection with the proposed sale of its 39.7% stake in APB for SGD5.6bn. If approved, shareholders will receive SGD8.50 per share for every 3 shares owned with one of the shares cancelled. The proposed exercise is larger than expected and will likely be viewed positively, as it will enhance EPS, DPS and NAV per share of the group.

Here's more from F&N:

Based on our current FY13 forecasts, F&N will see a 24% fall in net profits following the sale of APB assuming the transaction is completed on 1 October 2012. However, with the cancellation of 474mn shares under the proposed capital reduction, EPS for FY13 will be boosted by 13% on our estimates. In addition if F&N maintains a similar dividend payout of 40% based on its FY11 net profits, DPS for FY13 could also be boosted by as much as 39%.

Sum-of-parts valuation per share may rise to SGD10.38 from SGD9.64. Assuming the sale of APB is approved by shareholders, F&N will pay back SGD4,020mn to shareholders and will retain SGD1.6bn for future acquisitions in the F&B or property space. Meanwhile the proceeds retained will be used to pay down debt. With the cancellation of 474mn shares, our sum of parts valuation will rise to SGD10.38 from SGD9.64.