OCBC Report 20 Nov 13

Golden Agri-Resources: Recent run-ahead likely overdone Summary: Despite a disappointing set of 3Q13 results, Golden Agri-Resources’ (GAR) share price has continued to do well, likely buoyed by more signs that CPO (crude palm oil) prices are stabilizing around current levels (MYR2500/ton), aided by slightly better demand and supply factors. Note that our US$830/ton (MYR2650/ton) forecast has already taken these factors into consideration. But further CPO price upside may still be capped by the expected jump in global oilseed production. And as the market appears to be taking on a more “risk on” approach, we apply a higher 13.5x peg (versus 12.5x previously) to our FY14F EPS, thus raising our fair value from S$0.465 to S$0.50. But given the potential downside risk, we maintain our SELL rating. (Carey Wong) MORE REPORTS ST Engineering: ST Kinetics in Myanmar Summary: The land systems arm of Singapore Technologies Engineering (STE), ST Kinetics, has set up a wholly-owned subsidiary, Kinetics Automotive & Specialty Equipment Co., Ltd (KASE), in Yangon, Myanmar, with a paid up capital of US$423,000 (S$524,000). KASE will serve as a platform to introduce and support ST Kinetics’ automotive and specialty vehicles products and services in Myanmar. The setting up of KASE is not expected to have any material impact on EPS of STE for the current financial year. We maintain our HOLD rating and S$4.32 FV on STE. (Sarah Ong)

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NEWS HEADLINES - US stocks pulled back on Tue, as investors showed caution after the Dow and S&P 500 failed to hold above milestone levels in the prior session. - Singapore's growing status as a commodities trading hub has drawn global heavyweight IntercontinentalExchange Group Inc, which will fork out US$150m to acquire commodities market operator Singapore Mercantile Exchange. - Organisation for Economic Co-operation and Development (OECD) announced yesterday a "significant" downward revision of its earlier growth forecasts for 2013 and 2014. - The blueprint for Singapore's development over the medium term identifies new districts that will provide 14,500 homes and 100,000 jobs in Woodlands Regional Centre. - CapitaMalls Asia Limited announced that it is acquiring a new shopping mall in Guangzhou, China – its first in the city. - Standard & Poor's Ratings Services yesterday lowered the long-term corporate credit rating of First Ship Lease Trust to "B-" from "B".