Company Name: FRASER AND NEAVE, LIMITED
| Research House: StanChart | Price Call: BUY | Target Price: 3.58 |
F&N’s property assets and platform are complementary to OUE, Standard Chartered says, noting a successful bid would more than double OUE’s portfolio to $13 billion. It notes F&N is the largest listed residential developer by market share and manages two S-REITs with $4 billion of commercial assets, while OUE currently lacks this expertise, with its strength lying in its Singapore prime-office portfolio.
“By acquiring F&N’s property portfolio, OUE could become Singapore’s largest listed landlord and residential developer. With Singapore assets making up 73% of its enlarged portfolio, investors may see OUE as the key proxy for Singapore property. Potentially, the discount to RNAV could narrow from the current 45%,” StanChart says, noting City Developments’ and CapitaLand’s 15%-20% RNAV discounts.
StanChart puts its Outperform call and $3.58 target under review, pending more clarity on OUE’s proposal, citing key risks from the pricing and funding structure. While OUE would have about $2 billion to invest in F&N after a potential sale of Mandarin Orchard and Orchard gallery and taking on some debt, it would be insufficient, the house notes. “OUE’s low free float and steep discount to NAV makes equity issuance a challenge.” The stock is up 1.1% at $2.74.
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