OCBC Report 2 Dec 13

Oil and Gas: Good performance to continue in 2014 Summary: The FTSE Oil and Gas index has performed more or less in-line with the broader market this year. Still, it is among the top three best-performing FTSE sub-indices YTD, along with the FTSE Telecommunications and FTSE Maritime indices. Stepping into 2014, we continue to advocate a focused stock-picking strategy, overweighting companies that are operating in sub-sectors with more favourable demand-supply dynamics, and those with strong balance sheets and order books. The local rigbuilders are expected to continue securing orders at a pace that will at least match this year’s, while the offshore support vessel sub-sector should also see continued recovery as the market situation gradually tilts in favour of vessel owners. Maintain OVERWEIGHTon the oil and gas sector, preferring Keppel Corporation [BUY, FV: S$12.87], Sembcorp Marine [BUY, FV: S$5.68], Ezion Holdings [BUY, FV: S$2.57] and Nam Cheong Ltd [BUY, FV: S$0.37]. (Low Pei Han, Andy Wong) MORE REPORTS Vard Holdings: Secures NOK400m contract Summary: Vard Holdings Limited (VARD) announced that it has secured a new contract for the construction of one advanced offshore support vessel (OSV) worth ~NOK400m. This contract was awarded by Island Offshore, which is an existing customer of VARD. VARD has delivered more than 30 vessels to Island Offshore previously, while it also has five vessels under construction for Island Offshore. Delivery for this OSV is scheduled for 1Q15. This latest contract brings total YTD order wins for VARD to NOK12.3b, within our forecast of NOK12.9b. Hence, we maintain our HOLD rating and S$0.84 fair value estimate on VARD, pegged to 8x FY14F EPS. (Wong Teck Ching Andy)

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NEWS HEADLINES - US stocks closed mostly lower on Fri, pulling back from Wed’s record levels, but still achieved gains for the week and month. - After the great penny stock collapse of Oct, a listless month of trading in Nov saw the Singapore market lose around S$12.6b of value. - Business loans continued to power Singapore's bank lending growth in Oct, with total loans rising 1.4% MoM, according to preliminary figures released by MAS. - Keppel Corp's Keppel Shipyard is in talks with Norway's Golar LNG on a contract for a landmark conversion of an LNG carrier into a floating LNG production facility. - GSH Corporation Ltd's subsidiary signed a sales and purchase agreement with Tropicana Kia Peng to acquire a parcel of prime land in downtown Kuala Lumpur for RM132.4m (S$51.55m). - Asiatravel.com Holdings posted deeper losses of S$5.74m for FY13, from the S$3.77m loss in FY12. - Casa Holdings Ltd’s FY13 net profit rose to S$9.53m from S$9.45m a year ago. - CapitaMalls Asia will open two new shopping havens this week, one on each side of the island.