Reuters: Hot Stocks: STOCKS NEWS SINGAPORE-F&N may rise above S$8.50 after capital reduction-Nomura

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STOCKS NEWS SINGAPORE-F&N may rise above S$8.50 after capital reduction-Nomura Sep 7th 2012, 02:25 Thu Sep 6, 2012 10:25pm EDT Nomura said shares of Singapore's Fraser and Neave Ltd , whose shareholders will vote on the sale of Asia Pacific Breweries to Heineken on Sept. 28, could rise above S$8.50 after a proposed capital reduction. F&N shares were up 0.2 percent at S$8.27 on Friday. The stock has fallen about 2 percent since the Singapore drinks and property conglomerate announced its plan to cancel one for every three shares held by all shareholders and pay out S$8.50 for each cancelled share. "Assuming shareholders approve the sale of APB and the capital reduction, we see an arbitrage opportunity since F&N is offering to acquire one third of its issued shares at S$8.50 per share," Nomura said. It added that after the capital reduction, F&N's earnings per share, dividend per share and revised net asset value will be enhanced, which should re-rate the share price above S$8.50. Nomura has a 'buy' rating and a S$9.86 target price on the stock. But Nomura said one possible risk is that shareholders may reject the proposed sale of F&N's nearly 40 percent stake in APB. With 80 percent of F&N's earnings expected to come from property after the capital reduction, investor interest in F&N may wane unless the management can increase the contribution from non-property activities over time, Nomura added. (Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com)

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