F&N: 2Q hit by charges; No rights issue

2Q09 below on charges. 2Q09 net profit slipped 25% to $153m. The below expectation results was due to: (i) an allowance of $20m for foreseeable losses in overseas property development projects; and (ii) $11.7m impairment charge from its Printing and Publishing (P&P) division. Excluding these items, PBIT would have been within expectations.

70% ST debt covered; no plans for rights issue. Of the $2.1bn that is due within the year from Sep 08, 70% has been repaid/refinanced. The remaining 30% would be refinanced/repaid as and when they fall due. The Group has no plans for a rights issue, unless there was a substantial M&A deal.

Hold, TP raised to $3.44. We trimmed our FY09F earnings by 12.5%, taking into account the allowance for foreseeable losses for its overseas development properties and other one-offs. Our revenue forecast stays intact. Our TP is raised to $3.44. We narrowed our RNAV discount to 20%, from 30% previously, in line with our house view that the worst is over and a recovery in 2H. However, this counter has surged by 28% in the past week, catching up with the market rally. In view of the limited upside to our TP, we maintain our Hold recommendation

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