MARKET PULSE: Golden Agri, Mapletree Logistics Trust (04 Oct 2012)

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.76

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.19

MARKET PULSE: Golden Agri, Mapletree Logistics Trust

04 Oct 2012

KEY IDEA Golden Agri: CPO prices tumbling fast Summary: Golden Agri-Resources (GAR), as the second largest palm oil plantation owner in the world, has undoubtedly been hit by falling CPO prices, which recently tumbled following weaker-than-expected demand from China and the apparent lack of substitution effect for the higher-priced soybean oil. For Oct alone, GAR's share price fell by as much as 4.5%, bringing its YTD decline to 13.1%. Despite the sharp pullback in CPO prices, we believe that GAR should still be able to achieve our US$925/ton target; hence we are keeping our FY12 forecasts unchanged. But we are cutting our CPO target for 2013 to US$750/ton, which in turn pares our revenue and earnings forecasts by 6.7%. While we are maintaining our 12.5x blended FY12/13F EPS peg, our fair value eases from S$0.81 to S$0.76. But we maintain our BUY rating as we believe that the company's longer-term fundamentals remain sound. (Carey Wong) MORE REPORTS Mapletree Logistics Trust: Strong showing to continue Summary: Mapletree Logistics Trust (MLT) announced last week that it has completed the acquisition of Hyundai Logistics Centre in Gyeonggi-do, South Korea for KRW22.5b (~S$24.7m). The date of completion was ahead of our projection as MLT had previously guided that the transaction was targeted to complete by 3QFY13 (Dec quarter). Hence, the property will contribute two quarters to MLT's FY13 income, as opposed to just a quarter in our estimate. For FY13, we remain confident of MLT's financial performance. While management expects business sentiments to stay cautious in light of the slowing growth in Asia and concerns over the Eurozone crisis, we expect MLT to continue to benefit from its recent acquisitions and enhanced operational metrics. We are now making minor adjustments to our FY13 forecasts to incorporate an earlier rental contribution from Hyundai Logistics Centre. However, there is no change to our fair value of S$1.19. Maintain BUY on MLT. (Kevin Tan)

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NEWS HEADLINES - US stocks rose following upbeat data on private-sector job growth and the services sector. The Dow climbed 0.1% to 13,494.61. The S&P 500 Index rose 0.4% to 1,450.99. - Hewlett-Packard Co. plunged 13% to close at US$14.91 - close to a 10-year low - after the company gave a forecast for the new fiscal year that was lower than expectations. - King Wan Corporation has secured five mechanical and electrical contracts in Singapore with an aggregate contract value of ~S$30.8m since Aug 2012. - Kreuz Holdings is to transfer to the Main Board on 8 Oct. It has also received a mandate from shareholders for the acquisition of a multipurpose subsea dive support and construction vessel. - Scorpio East Holdings has entered into a co-distribution agreement with Cathay-Keris Films Pte Ltd, which is a part of Cathay Organisation.