F&N

F&N: UOB Kay Hian note that the recent sharp pull-back in share price reflects the expiry of the General Offer (GO) and the removal of the stock from various indices. A conglomerate discount of 10-20% suggests a potential valuation of S$8.60-9.70. As at Dec 12, F&N had net cash of $3,384m, or $2.35/share. This included the proceeds from the sale of its stake in APB and Asia Pacific Investment for $5.6b. To date, there has been no announcement of plans for the massive cash hoard. Although there was an initial offer of a 1-for-3 capital reduction, this was subsequently thwarted by the GO for F&N by TCC Assets. In the absence of any significant M&A, think F&N could consider raising its dividends to upstream funds to its major shareholders (TCC Assets and ThaiBev). House have a RNAV estimate of $10.80/share. Based on a 10-20% conglomerate discount, a potential valuation range for F&N is $8.60-9.70/share. House believe that with a new major shareholder, appointments of advisors and a significant cash war chest (>S$3b), seepotential M&A/restructuring catalysts to drive the share price closer to a discount of 10-20%.