OCBC Report

KEY IDEA Goodpack Limited: Promising but fairly priced now We draw investors’ attention back to fundamentals as speculation about possible share offer for Goodpack wanes. Since our last BUY call in Feb-14, the share price has gained 15%. We keep our fair value estimate of S$2.17 intact and downgrade to a HOLD. We acknowledge that Goodpack continues to hold compelling value propositions: its global presence and ~20% cost savings over alternatives. There are also barriers to entry from IBC design patent, stickiness of existing clients, and large capex spending. We believe Goodpack is among the top choices for any new synthetic rubber (SR) plant, as exemplified by Goodpack being the supplier for Singapore’s new SR plants, including the latest Sumitomo Chemical plant opened in Mar-14. Further catalysts for rerating could be 1) current trial-stage auto parts manufacturers switching over fully to IBCs before 2QFY15 as assumed in our base case, and 2) another upside risk is higher-than-expected demand from rubber industry. (Yap Kim Leng) MORE REPORTS Noble Group: To dispose 51% stake in Noble Agri Limited Noble Group Limited has entered into a share sale agreement with COFCO (Hong Kong) Limited to dispose 51% stake in Noble Agri Limited (NAL). Upon completion, COFCO will make an initial payment of US$1.5b. The closing amount will be adjusted after completion so that the final consideration is equal to 1.15x of 51% of the audited book value of NAL Group for FY14. As of end FY13, the audited book value of NAL Group was ~US$2.8b and net debt was ~US$2.5b. However, the deal is subject to several conditions with a long stop date of 31 Dec 2014 (unless mutually extended or terminated). According to Noble, the excess over book value is US$47.6m; the estimated gain on disposal is ~US$64.8m. We will be speaking to management to get more colour. In the meantime, we place our Hold rating and S$1.03 fair value under review. (Carey Wong)

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NEWS HEADLINES - US stocks rose for a third straight session, with S&P 500 ending at a record close, after positive data on factory activity indicated economic growth gaining ground after a harsh winter. - China Mining International is acquiring China Minerals Energy for around S$1b as it seeks to transform itself from a property development company into a pure mining play through a RTO. - Swissco Holdings has finalised the terms of a S$285m RTO deal with privately owned oil and gas contractor Scott and English Energy. - Japan’s economy entered a more uncertain phase as the national consumption tax rose for the first time in 17 years from 5% to 8%, threatening to snuff out recovery and as a BOJ survey forecast a decline in business sentiment in coming months. - GIC opened an office yesterday in Brazil, as it looks for more investment opportunities in Latin America. - Competition Commission of Singapore issued a proposed infringement decision against an alleged cartel of freight forwarders for fixing rates for shipments from Japan to Singapore.