F&N: 3Q10 core earnings grew 14% yoy but -22% qoq to $133m, in line with expectations. The good performance was underpinned by progressive profit recognition from development projects, stronger F&B contributions & turnaround in publishing biz. 9M10 core earnings came to $440m, NAV at $4.19. F&B EBIT rose 21% yoy boosted by higher vol sales from soft drinks (+49%) and breweries (+25%), which was lifted by strong growth in Indochina & maiden contributions from PT Bintang. This was partially offset by lower dairy earnings (-12%) due to higher costs. On the property front, 11% increase in EBIT was attributed to pre-sales of Waterfront Waves, Woodsville 28 & 8@Woodleigh. FNN plans to launch Ph1 (623 units) of Central Park in Sydney in late Aug.
We expect its property earnings to be supported by new launches from potential 2.2m GFA in Spore and 21m sf lanbank in Aust & China. Expiry of Coke bottling franchise next yr & Kirin’s acqn of 14.7% stake in FNN would pave the way for more abundant mktg & M&A opportunities. Stock trades at 12.2x FY10 and 10.6x FY11 P/E, well below 17.5x historical mean. KE has TP of $6.50 for the stock, DB pits it at $6.40.
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