SINGAPORE - Fraser and Neave Ltd (F&N) shares rose on Monday after the Singapore property and drinks company proposed to distribute $4.73 billion in cash, or $3.28 per share, to shareholders.
The proposed cash payout accounts for around 85 per cent of the $5.6 billion proceeds from selling its 40 per cent stake in Tiger Beer maker Asia Pacific Breweries Ltd to Dutch company Heineken NV last year.
F&N shares gained as much as 3.7 per cent to $9.21, the highest since April 22. Shares of Thai Beverage surged as much as 6.4 per cent to a record of $0.67. More than 84 million Thai Beverage shares were traded, 1.6 times the average full-day volume over the past 30 days.
Thai billionaire Charoen Sirivadhanabhakdi, through Thai Beverage and TCC Assets Ltd, is F&N's biggest shareholder. In January, the tycoon won a two-month battle with a group led by Overseas Union Enterprise Ltd for F&N's remaining businesses.
After the cash payout, CIMB Research expects F&N to have a net gearing of 0.17 times and RNAV (revised net asset value) of around $7.75.
F&N's second-quarter earnings were lifted by its food and beverage as well as property units, CIMB said, adding that the second half of 2013 is expected to be stronger as many overseas development projects will be completed.
DBS Vickers raised its target price on F&N to $9.52 from $8.99 and maintained its 'hold' rating, saying it expects limited downside for the share price on the back of the company's proposed cash distribution and stable earnings.
It also initiated coverage of Thai Beverage with a 'buy' rating and a target price of $0.80. Thai Beverage is a market leader in spirits and green tea and has an established distribution network in Thailand, DBS said.