Here's why F&N's operational crisis may soon be over

Revenue lifted by 19%.

According to CIMB, FNN’s remaining business will consist of S$9.4bn (75% of pro-forma value) of property developments, including a growing AUM platform. 

CIMB added development sales in Australia have been robust with inventory in Singapore running out on strong presales. Unbooked presales of S$3.4bn should underpin earnings for the next two years. 

"Its F&B business has recovered, with soft-drinks volume up 6% yoy. In Thailand, dairy sales have also recovered to pre-flood levels. All these have helped to lift its revenue by 19% yoy. Operational weaknesses of FY12 appear to be over," said CIMB.

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FNN is on the lookout to replenish its landbank. Investment properties in retail malls and commercial properties (FCOT) continue to generate stable NPI reversions.

We think its portfolio of serviced apartments worth S$1.6bn could be recycled to a REIT in the longer term.  

TCC/Thai Bev have yet to unveil their strategy for FNN. The decision to repay shareholders suggests to us that TCC/Thai Bev plan to use it as: 1) the group’s listed vehicle to develop its regional property business; and 2) a platform for future capital fund-raising. If so, we expect some placement of FNN shares to lift its free float above 10%.