OCBC Report 16 Jan 14

KEY IDEA Golden Agri-Resources: Valuations look less pricey Summary: Despite a disappointing set of 3Q13 results, Golden Agri-Resources’ (GAR) share price rose to a high of S$0.61 on 18 Nov, likely buoyed by more signs that CPO (crude palm oil) prices are stabilizing around current levels (MYR2500/ton). However, as noted in our report dated 20 Nov, we believe that the run-up in share price looked overdone. And true enough, GAR’s share price has since corrected over 14% from that high. Nevertheless, with recent correction in share price, we note that GAR is just 5% above our unchanged fair value of S$0.50 (based on 13.5x FY14F EPS). As such, we upgrade our rating from Sell to HOLD. (Carey Wong) MORE REPORTS KSH Holdings: Acquires 40% stake in mixed development site in Malaysia Summary:  KSH announced that it has agreed to acquire, through an associated company, a 40% stake in a 679.5k sq ft site in Mukim Klang, Daerah Klang, Negeri Selangor. The total purchase consideration comes up to MYR 91.7m (S$36.0m), of which KSH’s effective share is S$14.4m. The site has a plot ratio of 1.5 and will likely be developed into a mixed development with hospitality, retail and SOHO components, forming part of a proposed business park in that area. Given a muted domestic residential outlook, we understand the group would actively seek accretive opportunities in the region, in particular China and Malaysia, and we are positive on management deploying capital in this manner if the acquisitions are optimally sized and alongside competent local partners. Pending more details and the completion of the acquisition (within 6 months), we hold our fair value estimate unchanged at S$0.73. Maintain BUY. (Eli Lee) Vard Holdings: Secures new contract worth an estimated NOK1.3-1.5b Summary: Vard Holdings Limited (VARD) announced its first contract win of the year last evening. This entails the design and construction of one Diving Support and Construction vessel (DSCV) for an international customer. This vessel is of VARD 3 06 design and has a length of 157m, beam of 27m and an accommodation capacity for 150 persons. Delivery of this vessel is slated in mid-2016 from one of its Norway yards. Although the value of the contract was not disclosed, we believe a ballpark range could be NOK1.3-1.5b, after drawing reference from a recent >NOK1b contract for a DSCV of smaller size secured on 30 Dec 2013 and a NOK1.4b Offshore Subsea Construction vessel contract secured in Jun 2012 with similar basic hull design and of a comparable size. While we are positive on VARD’s bright start to the year, we maintain our HOLD rating and S$0.84 fair value estimate on the stock (pegged to 8x FY14F EPS), as we believe challenging conditions in Brazil will continue to pose downside risks to its margins and profitability. (Wong Teck Ching Andy)

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NEWS HEADLINES - The S&P 500 closed at a record high on Wed, narrowly beating its previous peak reached on 31 Dec 2013. - Developers' private home sales shrank to 259 units (excluding executive condominiums) in Dec 2013 - a big drop from 1,271 units in Nov and 1,410 units in Dec 2012. - Singapore's retail sales fell a larger-than-expected 8.7% YoY in Nov, mainly due to a 41.8% drop in motor vehicle sales. - Kim Heng Offshore & Marine Holdings, which has a track record of more than 40 years, has launched its IPO to raise net proceeds of S$36.4m to help fund its expansion plans. - Global Logistic Properties will start work on developing a 72,000 sqm multi-tenant logistics facility in Greater Tokyo. - Singapore Airlines' passenger load factor edged up 0.3ppt to 82.5% in Dec 2013 as passenger carriage narrowly outpaced capacity growth. - A joint venture between Koh Brothers Group and Heeton Holdings has clinched the mandate to develop an executive condominium site in Westwood Avenue in Jurong West.