OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: THBEV
Company Name: THAI BEVERAGE PUBLIC CO LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.57

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: UOB KayHian

Price Call: HOLD

Target Price: 1.60

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: Credit Suisse

Price Call: HOLD

Target Price: 1.50

Market Compass

18 November 2013~ Good Morning Singapore!

Singapore Idea Snippets:

18 Nov 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : All successful people men and women are big dreamers. They imagine what their future could be, ideal in every respect, and then they work every day toward their distant vision, that goal or purpose. - BRIAN TRACY Singapore: The Day Ahead SINGAPORE DAYBOOK : London stakes claim to be the global capital of Islamic finance. The UK capital is already the biggest such centre outside the Islamic world. [SINGAPORE] Which city, or nation, will be the global leader in Islamic finance over the next decade? The favourites at the moment are Kuala Lumpur and Dubai. But a lot of people are now beginning to bet on London. On Oct 29, the British government created a stir that reverberated across the financial capitals of the Islamic world. On that day, Prime Minister David Cameron announced that the UK Treasury would soon issue a £200 million (S$401 million) "sukuk" or Islamic bond. This will be the first sovereign sukuk issued by a Western country (a sukuk differs from a traditional bond in that it pays no interest; investors get a share of profits from an underlying syariah-compliant asset). Moreover, the UK sovereign sukuk could serve as a global benchmark for Islamic bonds, which at the moment have none. Mr Cameron was speaking at the 9th World Islamic Economic Forum (WIEF) in London at the end of October - the first time this annual convention - known as "the Davos of the Islamic world" - has ever been held in a non-Islamic nation. He was expansive about his country's ambitions in the realm of syariah-compliant finance. "London is already the biggest centre for Islamic finance outside the Islamic world," he said. "I want London to stand alongside Dubai and Kuala Lumpur as one of the greatest capitals of Islamic finance anywhere in the world." There's a lot to play for. According to a report by PwC, Islamic finance assets (including banking assets) total US$1.6 trillion globally. Between 2008 and 2012, they grew at close to 20 per cent per year and, by 2020, the market is expected to cross US$6 trillion. While Islamic finance assets are barely one per cent of all global financial assets, the number of players is also small. Nearly all of the Western world does not participate in this market - London being the significant exception. Nine countries hold about 90 per cent of Islamic finance assets and just three (Iran, Malaysia and Saudi Arabia) account for more than 50 per cent. Moreover, in certain areas of Islamic finance, demand exceeds supply - and this is particularly true of bonds. Sukuks outstanding at the end of 2012 totalled US$240 billion, with Malaysia being the biggest issuer, followed by Saudi Arabia. Last year, Ernst & Young forecast that sukuk demand is likely to jump to US$900 billion by 2017, partly driven by rising risk aversion following the global financial crisis. Sukuks are popular because they are backed by real assets or real projects. Significantly, they are also favoured by investors from the non-Islamic world. At the WIEF, Musaffar Hisham, CEO of Maybank Group Islamic Banking, pointed out that about half of the group's customers for Islamic products in Malaysia are non-Muslim. In Singapore, the figure is around 70 per cent. The wider world's interest in Islamic finance products also derives from the growing interest in "ethical finance". During a session on Internationalising Islamic Finance at the WIEF, Hasan Al Jabri, CEO of Sedco Capital, an asset manager in Saudi Arabia, said: "Syariah-compliant finance intersects 90 per cent with ethical finance, which is a US$6 trillion market." He added that common features include investments in sustainable development and avoiding investments in companies associated with gambling, alcohol, tobacco and weapons. A growing number of pension funds - such as Calpers, the California public employees retirement system, the biggest in the United States - and several foundations have strict guidelines mandating that they invest ethically. Many have Islamic finance products in their portfolio. However, even its promoters and practitioners acknowledge that Islamic Finance has some way to go before it becomes truly mainstream. Sajid Javid, a British MP and Financial Secretary to the UK Treasury, who is one of the key personalities driving the development of Islamic finance in Britain pointed out: "Islamic scholars don't always agree on what constitutes Islamic finance; they come from different schools of thought." Amr Al Menhali, head of Islamic Banking at the Abu Dhabi Commercial Bank in the UAE called for more simplicity in Islamic finance, including in the use of terminology. Maybank's Mr Hisham called for clearer global regulation to ensure more uniformity of syariah-compliant products. But the UK is undeterred by these obstacles. It is pulling out all the stops to promote itself as the centre for Islamic finance. It has set up an Islamic Finance Task Force. Its infrastructure is already relatively advanced: more Islamic products are listed on London exchanges than anywhere else. London has 25 law firms that provide services in Islamic finance and more syariah-compliant banks than anywhere in the Western world. And 16 British universities offer courses in Islamic finance. Even London's mayor Boris Johnson (who spoke at the WIEF) is on board. The mayor's office co-finances a corporation called London & Partners, which is the official promotional organisation for London, including for business, tourism, education, and conventions. Its director for International Business, David Slater told BT that London has seen what Islamic finance can do and likes what it sees. On the proposed British sovereign sukuk, he said: "Investors are demanding more Islamic finance products, so it's about following the market, responding to what the market wants." (Source: The Business Times) MARKET SCOOP Singapore Airlines says CFO to leave in Feb 468 units at Duo Residence sold as at 3pm Friday LionGold to issue 98.2m new shares at 18.3 cts/shr to raise S$17m Singapore retail sales slip 5.9% in Sept SIA, Tourism New Zealand renew partnership Ho Bee's Q3 net profit slips to S$7.3m Thai Beverage Co Q3 profit tumbles Kingsmen Q3 net profit down 8.2% to S$3.2m (Source: The Business Times) DBS VICKERS Securities says ... THAI BEVERAGE PUBLIC CO | HOLD | TP: 0.57 3Q13 core net profit grew by 36% y-o-y to THB4.1bn, from THB3bn in 3Q12, despite revenue falling by 7% to THB35bn The growth came largely from contribution of its associate stake in FNN Stripping out FNN's profit contribution, ThaiBev's net profit fell by 23% to THB3.7bn Beer and Non-Alcoholic Beverage (NAB) sales volume disappointed in 3Q13, while Spirits' volumes managed to show sequential volume growth of 7% from 2Q13 Beer revenue slipped by 9% as volumes dipped 14% arising from a hefty 15-20% ASP increase (due to a new excise tax passed on 4 Sep'13) NAB segment faces keen competition, and with lower sales (-52% y-o-y) and higher expenses, the segment registered a loss of THB419m in 3Q13 We revised our forecasts down by 17%/ 20%/15% for FY13F/14F/15F We expect competition to remain keen for its NAB segment while the Beer segment is likely to continue to see declining volumes on the back of the recent hefty price increase We have also lowered Spirits' gross margin assumption to c.32%, from 34-34.5% previously While we like the strong cash generation of its stable Spirits business, the projected slow ramp up and uncertainty in its other segments would be a drag on overall growth We expect growth momentum to pick up meaningfully only in FY15F, which is still some time away With the downward revision in earnings, our SOP-based TP is cut to S$0.57 In view of the limited upside, we downgrade ThaiBev to HOLD UOB KAY HIAN says ... OLAM INTERNATIONAL | HOLD | TP: S$1.60 Olam reported net profit of S$45.6m, up 5.7% yoy 1QFY14 results is about 10% of our full-year earnings and this a norm for Olam due to the seasonality of the production cycle The growth was driven by margin expansion in upstream and midstream activities Meanwhile, revenue dropped 7.9% yoy on lower commodity prices as sales volume was unchanged at 3.67m mt yoy Olam announced sale-and-leaseback of our Australian Almond assets (A$200m) and sale of Dirranbandi Cotton gin (A$20m) for A$220.0m We expect a one-time net profit of A$45m from the sale-and-leaseback of almond orchards Across all divisions, EBITDA margin showed good improvement (refer to following table) due mainly to a) better cost management, b) some upstream investments starts contributing better margin as they move into a more mature stage At group level, EBITDA margin for 1QFY14 was 5.7% vs 4.7% and 3.8% for 1QFY13 and 4QFY13 respectively Although management stressed in the past that Olam's operations are less dependent on prices as most trades are on cost plus formula, in this quarter, management did highlight that the lower coffee and rice prices could have an impact on their margin Both commodities prices corrected due to oversupply from Vietnam and Thailand respectively Food Staples & Packaged Foods division deliver best results, ie the only division that delivered yoy and qoq growth in EBITDA The good performance was mainly supported by the growth from African wheat milling, Packaged Foods and Indonesian Sugar refining segments Losses mainly attributed to the Market-making & Volatility Trading Division Both the Fund Management as well as the Market-making & Volatility Trading parts of the business have been restructured after the strategy review Gearing maintained at 1.9x for 1QFY14, still below the 2x limit The proceeds from the sale-and-leaseback of its plantations will be used to pair down the debts and working capital This should further improve its gearing and cashflow Capex for FY14 will be scaled back For 1QFY14 the capex was down by 24.5% yoy to S$159.5m No change to earnings estimates We are expecting core net profits of S$447m, S$532 and S$604m for FY14, FY15 and FY16 respectively Maintain HOLD with target price of S$1.60 based on FY15F PE and a 30% discount to Olam's long-term forward PE of 16.1x (or equivalent to 1SD below long-term mean PE) CREDIT SUISSE Securities says... OLAM INTERNATIONAL |HOLD | TP: S$1.50 Olam reported FY1Q14 PATMI of S$46 mn, inline with expectations and representing 12% of consensus FY14 PATMI While FY1Q14 volumes were flat YoY, an improvement in group margin particularly in the Edible nuts, spices and beans segment led to a 12% YoY increase in EBITDA Olam generated positive FCF of S$46 mn in FY1Q14, driven by both a reduction in working capital outflow and capex With a further A$220 mn (S$255 mn) expected to be released with the completion of the sale of its Dirranbandi cotton gin and sale-and-leaseback of its almond plantation assets in Australia, we believe Olam is on track to turning FCF positive in FY14 There were no further updates on Olam's Gabon fertiliser project, even though negotiations with EPC negotiations with contractors were supposed to be completed in CY 3Q13 based on previous guidance We maintain our NEUTRAL rating and DCF-based target price of S$1.50

SG: MARKET PULSE: Olam, Midas, Ezion (15 Nov 2013)

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.65

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.42

MARKET PULSE: Olam, Midas, Ezion

15 Nov 2013

KEY IDEA Olam Int'l: 1QFY14 results mostly in line Summary: Olam International Limited (Olam) posted 1QFY14 revenue of S$4321.0m, down 8% YoY, reflecting lower commodity prices and also relatively flat sales volume. Nevertheless, EBITDA improved 18% to S$243.0m, aided by margin expansion from upstream and midstream initiatives and also organic growth from core supply chain activities. As such, PATMI inched up 6% to S$45.6m; estimated core earnings (excluding bio-asset gains) climbed 25% to S$42.7m. We judge both revenue and core PATMI to be in line as these met 19% and 12% of our full-year estimates, respectively, with its first quarter being seasonally slower. As we are keeping our FY estimates unchanged, our fair value remains at S$1.45, still based on 10x FY14F EPS. Given the limited upside, we maintain our HOLDrating. (Carey Wong) MORE REPORTS Midas Holdings: 3Q13 results exceeded expectations Summary: Midas Holdings' 3Q13 results exceeded our expectations, with revenue jumping 48.5% YoY to CNY301.0m, or 15.8% above our forecast. While gross margin of 20.8% (-10.7 ppt YoY) disappointed, bottomline reversed from a CNY6.1m net loss in 3Q12 to a PATMI of CNY16.4m and beat our projection of CNY13.3m. This was attributed largely to a share of profit of CNY10.9m from its 32.5%-owned associated company Nanjing SR Puzhen Rail Transport (NPRT) as more train cars were delivered, versus a share of loss of CNY7.0m in 3Q12. For 9M13, revenue and PATMI increased by 20.6% and 145.6% to CNY787.5m and CNY26.4m, respectively. Regarding its financial position, Midas' net gearing rose from 42.1% as at end Jun 2013 to 49.0% as at 30 Sep 2013 due to larger borrowings to finance the purchase of PPE for its new Aluminium Alloy Plates and Sheets business. We will provide more details after speaking with management. We maintain our BUY rating but our fair value estimate of S$0.65 is under review. (Wong Teck Ching Andy) Ezion Holdings: Another steady quarter Summary: Ezion Holdings reported a 97.2% YoY rise in revenue to US$76.2m (+13% QoQ) and a 137.2% increase in net profit to US$38.2m (+5% QoQ) in 3Q13, with 9M13 net profit accounting for 77.5% of our full year estimate. Core 9M13 net profit represented 74.6% of our full year estimate. Looking ahead, we are expecting more liftboats/service rigs to be deployed in 4Q13, solidifying earnings. The group is also pursuing opportunities to support LNG related projects in Australia and its vicinity. Pending an analysts' briefing later in the morning, we maintain our BUYrating on the stock but put our fair value estimate of S$2.42 (adjusted for bonus issue) under review. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks on Thu closed at record highs for a second day in a row after Janet Yellen vigorously defended the central bank's bond-buying program. - COSCO Corp (Singapore) has secured contracts worth about US$380m to build two jack-up rigs and a bulk carrier vessel. - Singapore banks will be able to withstand even a 50% plunge in property prices here if this were to occur over the next two years, say stress tests done by IMF and MAS. - Global Logistic Properties announced the establishment of a US$3b China Logistics Fund, even as 2QFY14 net profit fell 26% YoY to US$145m. - Ho Bee Land posted a 76.7% YoY slide in 3Q13 net profit to S$7.3m due to lower revenue from property development. - Thai Beverage posted a 74% fall in its 3Q13 net profit to 4.08b baht (S$161m), on the lack of associate investment gains made in the corresponding period last year. - United Engineers posted net profit of S$12.5m for its 3Q13, down 2% YoY.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 2.00

Stock Name: Kep REIT
Company Name: KEPPEL REIT

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.46

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: OSK-DMG

Price Call: HOLD

Target Price: 8.10

Market Compass

22 October 2013~ Good Morning Singapore!

Singapore Idea Snippets:

22 Oct 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway. - WARREN BUFFETT Singapore: The Day Ahead SINGAPORE DAYBOOK : Asiasons, Blumont, LionGold stocks soar. Their prices nearly double after SGX lifts trading curbs. [SINGAPORE] Share prices of Asiasons Capital, Blumont Group and LionGold Corp almost doubled in yesterday's no-holds-barred trading as the market sought to put a value on the stocks after trading curbs were ended. Traders The Business Times spoke to said the share prices of the three counters can now be "freely" determined by market forces after the Singapore Exchange (SGX) lifted trading restrictions on the stocks. Asiasons shares surged 91 per cent, Blumont stock rose 80 per cent and LionGold soared 93 per cent by the close of trading yesterday. They were among the top 10 actively traded stocks in early trade, with higher volumes than their 30-day full-day average. Asiasons, Blumont and LionGold shares finished at 24.5 cents, 24 cents and 29.5 cents respectively. "The lifting of the trading curbs levels the playing field for these three counters. Investors put off by the trading restrictions previously can now buy into these counters just as they can buy into other counters," said Liu Jinshu, an analyst at Voyage Research. SGX yesterday allowed the counters to be traded freely without the trading shackles that had banned investors from contra trading and short-selling them since Oct 6. Traders said the "pent-up" demand for Asiasons, Blumont and LionGold shares will continue to move their prices to an equilibrium level determined by a free market. "I feel (the increase) can be further sustained because the stocks have taken such a huge bashing. Now the market is trying to do a price discovery on them," said a broker who requested anonymity. Asiasons, Blumont and LionGold experienced strong run-ups in their stock prices this year, trading at around $2 before they were struck by a downward spiral on Oct 4, prompting SGX to suspend trading in the three counters. The suspension was lifted the next trading day on Monday but SGX labelled them as designated stocks, in a move aimed at reining in excessive speculation and possible disorderly trading. The stocks traded between 10 and 15 cents. "The $2 they were trading before the designation was unrealistic; the 10 to 15 cent range was also unrealistic because it was due to unusual measures," the broker said. He believes Asiasons' "true" value could settle in the region of 30 to 40 cents, while LionGold's could lie between 40 and 50 cents as it has a higher book value. Blumont shares might, however, come under pressure as its recent rights issue was under-subscribed, he said. "Blumont may be the weakest of the three." (Source: The Business Times) MARKET SCOOP HPH Trust Q3 profit down 8.4% SGX to develop commodity products with Shanghai Futures ValueMax plans to raise S$70.4m in IPO Indofood plans to keep China Minzhong listed Singapore inflation seen easing in September (Source: The Business Times) NOMURA Securities says ... OLAM INTERNATIONAL | BUY | TP: S$2.00 The last day of our trip was a ride through the ~USD200mn Special Economic Zone Olam is developing in partnership with government of Gabon (60:40 share) This is the first SEZ in Gabon, and among the few in West Africa (probably one of the largest) Spread over 1,200ha of land, phase 1 is developing 440ha, which is divided into commercial (19ha), industrial (240ha) and residential (via government) In our view, the locational advantage is connectivity through water, land and rail Besides receiving good tax breaks, other incentives for corporates/industrial houses for being based in Gabon include cheaper infra (power), trade incentives, access to forest land, government departmental access, etc. Industries that have stepped foot range from timber, pharma, retail, banking, etc Phase 1 infra is 99% complete and a significant portion has already been sold We believe this SEZ could contribute significant one-time income in the near term, although there is not much clarity yet on recurring income to Olam from this In our view, this is more of a strategic partnership venture to receive better co-operation from government in other key projects Key takeaways from the trip - With this, we wrap ~USD3bn worth of capex in Gabon/Nigeria (most of which is yet to be invested) Key takeaways from the trip include: ? Olam has considerable on-ground expertise in Africa - in terms of local regulations, management bandwidth, asset and infrastructure access, etc It seems that Olam has efficiently made the progression from supply chain manager to pan value chain presence Most of the investments already made are not fully gestating (CFM, rice farms, palm etc) and could contribute significantly over next few years if execution stays strong There is some material progress on the Fertilizer plant but we think the market should still be waiting for key milestones The assets which we saw could alone contribute to run rate of ~USD500mn+ EBITDA in next few years, per our estimates More than anything, this trip provides us with confidence in Olam's execution capabilities and management presence for key processing and upstream assets and that capex could bear returns over a period of time We stick to our Buy call, as valuations appear reasonable, there are option values in terms of fertilizer/palm and growth vs sector should remain better The catalysts may yet take time but long term value creation should happen UOB KAY HIAN says ... KEPPEL REIT | BUY | TP: S$1.46 Management is currently comfortable with the level of investments into Australia (at 12% of portfolio) and is increasingly looking at opportunities in Singapore, such as the acquisition of the one-third stake in MBFC Tower 3 from parent Keppel Land Asset sales increasingly likely to support the acquisition of MBFC The tantalising prospect of the acquisition of MBFC Tower 3 with minimal equity fund raising was discussed As part of their portfolio reconstitution strategy, management is exploring options including the sale of older assets to fund the acquisition In our view, a possible scenario for MBFC Tower 3 (~S$1.2b) could include a ~S$500m divestment of an older Singapore office building (Prudential Tower or Bugis Junction Office Tower) and perhaps one or two buildings in Australia (~S$200m-300m), supported by additional debt headroom from year-end revaluation gains for its portfolio However, management highlighted that timing the asset sales with the acquisition is challenging as DPU could be impacted in the short term if there is a gap between the asset sale and the acquisition Early refinancing to lock in interest rates KREIT completed the early refinancing of its debt maturing in 2014 and will not have any refinancing requirements over the next 24 months Management is also proactively refinancing debt due in 2015, with S$60m of 2015 borrowings already extended Financing rates achieved are still relatively attractive, with new debt pricing at a 10-20bps discount over the debt which was refinanced Income support at Ocean Financial Centre (OFC) continues to remain substantial (S$15.2m in 3Q13, down 2% qoq) as committed tenants have not fully moved into OFC and as rental contributions from the retail podium are not significant yet Also, management highlighted that over the next 1-2 years, rent reviews for key anchor tenants, such as ANZ and BNP, will improve passing rents, as some of these large leases were signed at the height of the great recession in 2008-09 8 Chifley Square, Sydney has managed to achieve 70% pre-commitments upon completion in July, and negotiations are ongoing to fill up the remaining space Management is confident that committed occupancy would soon reach 95%, although downside risk is protected by a 5-year rental guarantee from the seller, Mirvac Office leasing demand continues to be resilient supported by smaller financial institutions, legal firms and IT firms With occupancies essentially full at key buildings, KREIT is in discussions with larger tenants to extend leases prior to expiry DMG OSK Securities says... SINGAPORE EXCHANGE | NEUTRAL | TP: S$8.10 SGX had a decent start to the year with 1QFY14 net profit up 24% y-o-y (+5% q-o-q, based on reported net profit) to SGD92m Average daily turnover (ADT) in the securities market was stable y-o-y but down 16% q-o-q to SGD1.3bn Meanwhile, derivative volume posted strong y-o-y growth (+36% y-o-y) Our earnings forecasts and SGD8.10 FV (23x CY14EPS) are unchanged1QFY14 results in line SGX's 1QFY14 net profit of SGD92m (+24% yo-y; +5% q-o-q) was within our and consensus expectations, accounting for 25% of our and consensus full-year net profit estimates Higher clearing fee, better derivative volume drive y-o-y profit growth Y-o-y, while average daily turnover (ADT) in the securities market was broadly stable at SGD1.3bn, securities revenue rose 15% Average clearing fee increased to 3.2bps from 2.7bps a year ago, as the proportion of capped trades fell to 35% from 46% in 1QFY13, with institutions trading a broader range of stocks and retail participation rising Turnover velocity, however, was weaker at 47% (1QFY13: 51%; 4QFY13: 55%) Meanwhile, derivatives revenue was up 16% y-o-y as total traded volume jumped 36% y-o-y to 26.4m contracts, led by the FTSE China A50 futures, Nikkei 225 futures and options, and iron ore swaps Q-o-q, revenue fell 9% reflecting weaker ADT (-16% q-o-q) and derivative volume (-16% q-o-q) Expenses broadly under control (+6% y-o-y; -6% q-o-q) Management continued to guide for FY14 operating expenses of SGD320m-330m (FY13: SGD300m) Technology-related capital expenditure is expected be around SGD35m-40m As expected, SGX declared an interim DPS of 4 cents (1QFY13: 4 cents) We are forecasting FY14 total DPS of 31 cents (FY13: 28 cents), based on a net payout ratio of 90% We are maintaining our SGD8.10 FV, which is based on target CY14 P/E of 23x (a 10% discount to average P/E of 25x) Maintain NEUTRAL

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Kep REIT
Company Name: KEPPEL REIT

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.46

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

Stock Name: OCBC Bk
Company Name: OVERSEA-CHINESE BANKING CORP

Research House: CIMB

Price Call: SELL

Target Price: 10.09

Market Compass

04 September 2013~ Good Morning Singapore!

Singapore Idea Snippets:

04 Sept 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : Wealthy men can't live in an island that is encircled by poverty. We all breathe the same air. We must give a chance to everyone, at least a basic chance. - AYRTON SENNA Singapore: The Day Ahead SINGAPORE DAYBOOK :Court quashes Thomson View sale [SINGAPORE] A proposed $590 million collective sale of Thomson View Condominium is scuppered after the High Court found that its marketing agent's offer of more than $548,000 in incentive payments to four owners to get a requisite 80 per cent majority amounted to bad faith. Justice Andrew Ang, in a 30-page decision released yesterday, found that HSR International Realtors "egregiously breached its duty to avoid any possible conflict of interest", and also "breached its duty of transparency" by failing to disclose the incentive payments to the Collective Sales Committee (CSC) and other owners. As such, the four owners should not be counted in the requisite 80 per cent majority for the sale to go through, he ruled. Discounting these owners, the 80 per cent consent threshold would not be reached; the plaintiffs were therefore not even in a position to apply for court approval of the sale, he said. Yesterday's ruling came two weeks after the Court of Appeal upheld a decision by Justice Belinda Ang to disallow a $33 million en bloc sale of Harbour View Gardens because she found its marketing agent's offer of a $200,000 inducement to a couple to join the sale is "commercially unacceptable", and that its CSC had failed to act in good faith. (Source: The Business Times) MARKET SCOOP Govt mulls underground version of Master Plan EMA fines PowerGas $1.5m for supply disruption $200m raised for needy students at 2 unis as LKY turns 90 Havelock Rd hotel site triggered fromReserve List Singapore Aug manufacturing activity expansion slows (Source: The Business Times) UOB KAY HIAN says... KEPPEL REIT | BUY | TP: S$1.46 Valuations are now more compelling as Keppel REIT (KREIT) offers a yield of 6.6%, 40bp over the average 6.2% yield for office S-REITs With physical office transactions at 3-3.5% cap rates, office REITs offer better value for investors to gain exposure to economic growth and improvements in office rentals Its recent private placement (completed on 6 August) of 95m new units at S$1.26 per unit raised gross S$120m (S$118m after fees) The proceeds were used to fund the S$192m acquisition of 8 Exhibition Street in Melbourne, Australia, and remove the near-term equity overhang following the recent acquisition Mirvac and KREIT recently announced that 8 Chifley Square in Sydney is 70% pre-committed ahead of its completion in Oct 13 This is 14ppt up from Apr 13's (56% pre-committed) and reflects positive leasing sentiment for high-quality office space despite slowing economic growth due to a moderation in commodity prices The new tenant, data analytics firm Quantium, joins other tenants including law firm Corrs Chambers Westgarth and insurance leader QBE Insurance Group, at 8 Chifley. Occupancies and pre-commitments for the other Australia properties (275 George Street, 77 King Street and Old Treasury Building) in KREIT's portfolio are all above 97% About 90% of KREIT's portfolio by valuation is centred in Singapore, despite recent acquisitions in Australia Among office REITs, KREIT has the highest quality office portfolio with over 92% of its Singapore portfolio located in the Raffles Place and Marina Bay precincts Following the latest distribution-in-specie of 8 KREIT units for every 100 Keppel Corp shares, we estimate Keppel Corp has pared down its stake to a mere 0.1% (~3.7m shares) Keppel Land remains a substantial shareholder, with a 46% stake in KREIT Although there could still be some near-term weakness when Keppel Corp's shareholders receive their KREIT units on 13 September, the previous distribution-in-specie on 8 May marked a 6.8% one-week rally in the share price as new unit holders did not divest of their KREIT units We view any near-term weakness as a good opportunity to accumulate KREIT We expect Grade-A office rentals to rise 8% yoy in 2014 after bottoming in 2013 Office rentals in 2Q13 remained unchanged qoq at S$9.55psf pm, slowing from the average 3.4% quarterly decline in 2012 We expect office demand to rebound to 2.1m sf p.a. in 2013-17, while demolitions could remove over 60% of upcoming supply over the next two years As MBFC Tower 3 achieves close to 80% occupancy, and following the positive leasing momentum for OFC, we believe MBFC Tower 3 will be leased by end-13 Any acquisition could be supported through asset divestments, potentially strata-office units in Prudential Tower, as demand for strata-office space remains buoyant Space at Prudential Tower is valued at S$2,200psf, while strata units at Suntec City are transacting at S$2,750psf Key risks remain the relatively high gearing of 44% post equity fund raising and the acquisition of 8 Exhibition Street, although further equity fund raising will likely be paired with acquisitions We upgrade the stock to a BUY (from HOLD) with an unchanged target price of S$1.46, based on dividend discount model (required rate of return: 7.1%, terminal growth: 2.2%) OCBC Securities says ... OLAM INTERNATIONAL | HOLD | TP: S$1.45 Muddy Waters (MW) has just issued a new report on Olam International Limited (Olam), titling its "Not Changing the Old Ways" following the release of its FY13 results The report again raised issues over transparency and corporate governance, as well as remaining skeptical if Olam will operate differently in the future; this given that there have been no changes to Olam's board since MW's initial report In particular, the viability of the Gabon fertilizer project was called into question, where MW believed that Tata Chemical (TCL) is highly unlikely to participate in the project We note that during the results briefing, Olam stated that its relationship with TCL is "still strong" but added that they are "still discussing and have not reached closing conditions" MW now recommends that Olam "fall on the sword" and terminate the project, despite spending significant money on dredging In any case, our current forecasts do not include any contributions from Gabon as we have always held the conservative view and would only include the project if it has achieved financial close Recall that the Gabon project was first raised in Apr 2011 where Olam announced that TCL will invest US$290m to acquire a 25.1% stake While we expect the new MW report to weigh slightly on sentiment, we are maintaining our forecasts for now, given that we have already pared our FY14F core net profit figure by 16% recently Maintain HOLD with an unchanged S$1.45 fair value (based on 10x FY14F EPS) for now CIMB Securities says... OCBC | UNDERPERFORM | TP: S$10.09 Our GGM-based target price of S$10.09 (based on 1.27x CY13 P/BV) remains unchanged Maintain Underperform, with the de-rating catalysts of rising interest rates, poor investment appetite from private banking clients and eventually, rising credit costs OCBC remains our least preferred Singaporean bank In Aug, 10-year SGS yields rose by ~30bp and 10-year US treasury yields rose by 20bp Talk of tapering has intensified The US Fed is widely expected to scale back QE by 4Q13 When interest rates rise, OCBC's insurance earnings will be dragged down as non-par gains subside OCBC's 2012 ROE beat peers because GEH's accounting earnings were buoyed by the rising bond market The reverse is now true We expect OCBC's ROE to lag peers now, making it difficult to justify current valuations If OCBC's non-interest income engines were more diversified, then there would be some support from transactional fee income Our findings show that it has lagged peers in trade fees, loan fees and investment-related fee growth The only fee streams that OCBC excels at are wealth management (WM) and insurance The recent guidance that private banking flows have been slower than normal does not foster confidence that WM will cushion the lower insurance contribution The worst credit quality problems of Singaporean banks typically do not emanate from their Singaporean loan books In 1998, it was Indonesian loans In 2008, it was OECD loans and investment securities (CDO, bank debt) OCBC was top in 2009's asset quality class because it did not have these credits However, as OCBC currently has the highest exposure to problematic Indonesia and India, it is likely that its NPL will deteriorate to the same level as its peers' Coming from especially low levels, increasing credit costs will pose a potential headwind to earnings

SG: MARKET PULSE: CDLHT, Olam, Geo Energy (3 Sep 2013)

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 1.56

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

MARKET PULSE: CDLHT, Olam, Geo Energy

3 Sep 2013

KEY IDEA CDL Hospitality Trusts: Industry remained challenging in July Based on STB figures, we estimate that RevPAR for Singapore hotels fell 8% YoY for July. 3Q13 for the sector as a whole could well show a contraction like in 1H13. This is disappointing as we were anticipating a possible YoY growth in RevPAR figures for July and August, based on industry sources. CDLHT's hotels in Singapore are best classified as being in the Mid-tier/Upscale categories. It is worth highlighting that we anticipate a huge growth of 10.9% p.a. in mid-tier room supply, which means that CDLHT's Singapore hotels could face significant RevPAR pressure over the medium-term. Previously using an RNAV model, we have transitioned to a DDM model. Incorporating a risk-free rate of 2.7% (versus 2.5% previously) into our model, our FV drops to S$1.56 from S$1.73. We maintain a HOLDrating on CDLHT. (Sarah Ong) MORE REPORTS Olam Int'l: New Muddy Water report Muddy Waters (MW) has just issued a new report on Olam International Limited (Olam), titling its "Not Changing the Old Ways", which again raised issues over transparency and corporate governance, as well as remaining skeptical if Olam will operate differently in the future. In particular, the viability of the Gabon fertilizer project was called into question, where MW believed that Tata Chemical (TCL) is highly unlikely to participate in the project. In any case, our current forecasts do not include any contributions from Gabon as we have always held the conservative view and would only include the project if it has achieved financial close. While we expect the new MW report to weigh slightly on sentiment, we are maintaining our forecasts for now, given that we have already pared our FY14F core net profit figure by 16% recently. Maintain HOLD with an unchanged S$1.45 fair value (based on 10x FY14F EPS) for now. (Carey Wong) Geo Energy Group - New kid on the mining block Geo Energy Group (GEG) is a coal mining specialist in Indonesia, which started as a mining contractor, and has since moved on to become a mine owner. We recently visited its BEK Mining Concession and BJPE site (where it is a mining contractor). For its own BEK mine, GEG has produced some 1.84m tonnes of coal from this site as of 30 Jun; and the company believes it is on track to achieve its 2m-tonne target by year end. It has also entered into five other mining concessions and these will start producing over the next few years. GEG remains upbeat about its prospects, noting strong demand from countries like China and India, even though near-term coal prices are likely to remain relatively soft due to the supply growth. We do not have a rating on GEG. Currently, GEG is trading at a historical PER of 15x versus the simple average of 36x of its peers in Indonesia. (Carey Wong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The White House's push for congressional approval of limited military strikes against Syria and the Aug jobs report will dominate when investors return Tue from the holiday weekend. - Thai Beverage Public Co has appointed Maybank Kim Eng as a financial adviser, as the beer brewer seeks to integrate recently acquired Fraser and Neave. - CNA Group's unit has landed a S$10.6m contract to renovate, upgrade and expand the domestic terminals in Ho Chi Minh's Tan Son Nhat International Airport. - Rawa Investments, a wholly owned subsidiary of Malaysia's sovereign wealth fund Khazanah Nasional, is exercising a put option to sell a 10% stake in OUC back to Raffles Education Corporation.

SG: MARKET PULSE: Raffles Medical, Olam (2 Sep 2013)

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.42

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

MARKET PULSE: Raffles Medical, Olam

2 Sep 2013

KEY IDEA Raffles Medical Group: Operations to remain resilient Summary: Raffles Medical Group's (RMG) share price has fallen ~5% since the start of Jul, and we believe this may have been caused by concerns over the impact of the weakening IDR on RMG's Indonesian patient visits, coupled with the broad market weakness. RMG updated us that it has not felt any significant effects of this on its medical tourism figures. We believe this is because a larger proportion of its foreign patients come to RMG for the treatment of more acute illnesses rather than elective procedures. Meanwhile, RMG would recognise a net gain of ~S$21.4m from the disposal of Raffles Medical Management (which owns the Thong Sia commercial podium) for S$120m, and this would bolster its cash balances. Maintain BUY and S$3.42 fair value estimate on RMG. (Wong Teck Ching Andy) MORE REPORTS Olam Int'l: HOLD with lower S$1.45 fair value Summary: Olam International Limited (Olam) posted FY14 revenue of S$20.8b, up 22%, and was around 5% ahead of our forecast; versus reported net profit, core earnings came in much lower at S$314.3m, but still up 13%, and was about 3% ahead of our estimate. Olam declared a final dividend of S$0.04/share, unchanged from last year. In view of the eroding profitability, we pare our FY14F core net profit figure by 16% (but still expect to see decent earnings growth in FY15). This also drops our fair value from S$1.73 to S$1.45, still based on 10x FY14F EPS. Maintain HOLD. (Carey Wong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks declined on Fri, with the Dow and S&P 500 recording their worst month since May 2012, as Wall Street considered a possible US strike against Syria. - The total market capitalisation of Singapore-listed companies suffered its steepest drop of 4.8% in over a year as tension in Syria and anticipation of US central bank tightening dampened sentiments in Aug. - The Singapore banking sector's loans-to-deposits ratio crossed 100 for the first time since the Asian financial crisis, providing evidence that MAS recent moves to curb excessive lending were timely. - The Singapore government has raised development charge rates for industrial use by around 15% on average, while leaving the rates for commercial use completely untouched. - Changi Airport's mega Terminal 5 will be able to handle 50m passengers per year when it opens in the mid-2020s. This is 75% of the capacity of the existing three terminals. - S i2i posted a net loss of US$11.4m for 4QFY13, compared with a net loss of US$115.7m a year ago.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: THBEV
Company Name: THAI BEVERAGE PUBLIC CO LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.71

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: Credit Suisse

Price Call: HOLD

Target Price: 1.50

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: DBS Vickers

Price Call: HOLD

Target Price: 1.60

Market Compass

02 September 2013~ Good Morning Singapore!

Singapore Idea Snippets:

02 Sept 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : The good life is one inspired by love and guided by knowledge - BERTRAND RUSSELL Singapore: The Day Ahead SINGAPORE DAYBOOK : Average DC rate for industrial use up 15% [SINGAPORE] THE government has raised development charge (DC) rates for landed residential use by an average of 7 per cent for the period Sept 1, 2013 to Feb 28, 2014. For non-landed residential use, DC rates have been increased by an average of 5 per cent. For industrial use, the hike averages 15 per cent. DC rates for commercial use and hotel/hospital use have been left completely unchanged. DC rates are payable for enhancing the use of some sites or building bigger projects on them. DC rates, revised on March 1 and Sept 1 each year, are stated according to use groups across 118 geographical sectors. The Ministry of National Development, in consultation with the Chief Valuer, revises DC rates based on current market values. (Source: The Business Times) CIMB Securities says... THAI BEVERAGE | OUTPERFORM | TP: S$0.71 There has been no official statement yet but we do not think that these changes will be detrimental to spirits margin There are no changes to our FY13-15 EPS estimates and SOP-based target price for now We keep our Outperform call and expect re-rating catalysts from further corporate restructuring We understand that a new tax policy will be implemented, specifically that a sum of both a specific rate per litre of pure alcohol and a percentage of the wholesale price will be used to compute the excise tax Currently, the excise tax is computed either using a specific rate or fixed percentage of factory prices, whichever is higher The specific rate ceiling will also be raised, with various media outlets reporting an increase to THB2,000 (THB 400 currently) There has been no official government announcement yet and there is little clarity at this stage The motivation for this change is to prevent importers from under-declaring their costs and to create a level playing field for domestic and foreign alcoholic beverage players in preparation for ASEAN economic integration in 2015 Sellers of imported spirits will have to raise ASPs to maintain their margins and Thai Bev‟s volumes may benefit The impact to Thai Bev‟s margins is uncertain but we do not think that it will be detrimental It is not in the government‟s interest to harm Thai Bev‟s business because it is a big tax contributor Furthermore, too large a tax increase could cause consumers to switch to black market spirits This will lead to lower tax revenue Further, changes to excise tax policies are a given in this business and management has successfully navigated this in the past 20 years On a separate issue, F&N (29% associate) is involved in a dispute over its 55% stake in Myanmar Brewery However, the impact to our SOP is minimal, with a decrease of just 1 Sct if it loses its stake We keep our Outperform call CREDIT SUISSE Securities says ... OLAM INTERNATIONAL LTD | NEUTRAL | TP: S$1.50 Olam's FY13 Net Contribution (NC) of S$1,616 mn represents 96% of our FY13 forecast of S$1,685 mn, but PATMI of S$363 mn was below our expectation of S$412 mn Income tax expense rose to S$51 mn in FY4Q13, representing a tax rate of 38% This was driven by an increased contribution from higher tax jurisdictions, as well as a one-off tax charge of S$13 mn resulting from the sale of the Basmati rice mill in India and sale-and-leaseback of almond orchards in the US Olam continued to see strong volume growth of 24% YoY in FY4Q13 However, NC/ton declined by 15%, driven by weakness in the Confectionary & Beverage Ingredients segment, which was impacted by the coffee rust disease in its Central and South American Coffee operations With Cash-to-cycle days reduced to 99 days from 119 days in FY12, we believe Olam is on track to turning FCF positive in FY14 should capex declines as planned We lower our 2013-14 EPS by 7-10% on higher tax assumption, which leads to a reduction in our DCF-based target price to S$1.50 Maintain NEUTRAL DBS Securities says... OLAM INTERNATIONAL LTD | HOLD | TP: S$1.60 Olam's FYJune13 core profit missed our/consensus estimates by 19%/23% as taxes were much higher than expected Excluding the one-off S$12.8m tax on sale of assets, the effective tax rate of 19.1% was also higher than guidance of 12-15%, which management attributes to tax adjustment for underprovided tax in the first few quarters and higher earnings from high tax jurisdiction countries in 4Q Excluding biological gains of S$96.3m and exceptionals of S$10.3m, net profit was flat y-o-y at S$256m despite 22% growth in revenue On a positive note, net gearing drifted to below 2x at 1.93x as of end-June Olam declared a final DPS of 4 Scts Operating environment is challenging in view of the macro uncertainties, currency depreciation in emerging markets and weak commodity prices, in particular affecting tomato, peanut, coffee and cocoa products Management continues to focus on its strategy to rebalance growth and cash flow in the coming year to bring free operating cash flow back to positive territory by end of FY14 We have trimmed our FY14/15F core profit by 17/5% to factor in higher tax rate of 1.5ppts each year and lower gross profit /tonne of S$10.90/7.40 Olam is trading at inexpensive valuations of 9x FY14F PE and 1.0x P/BV against decent ROE of 11% and EPS CAGR of 36% in FY13-15F However, we would like to see clearer signs of earnings delivery from previous M&As, and cash flow improvement before turning positive on the counter Maintain HOLD Our DCF-based TP is lowered to S$1.60 after factoring in earnings revisions and higher risk premium (WACC +0.6ppt)

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 2.30

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.15

Market Compass

03 July 2013~ Good Morning Singapore!

Singapore Idea Snippets:

03 July 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day :So many people try to grow up too fast, and it's not fun! You should stay a kid as long as possible! - VANESSA HUDGENS Singapore: The Day Ahead SINGAPORE DAYBOOK:Singapore's Temasek faces key tests over China banks [SINGAPORE] Singapore's sovereign investor Temasek Holdings Pte Ltd is coming under pressure to review its large exposure to Chinese banks as the world's second biggest economy is on track for its slowest growth in more than 20 years. The city-state's AAA-rated wealth fund has poured billions of dollars into the biggest Chinese banks over the past few years including about US$2.4 billion in the Industrial and Commercial Bank of China since 2012 alone. But Chinese banks now face a difficult outlook due to credit tightening and bad loans. Banks suffered an unprecedented cash crunch last month after the Chinese central bank allowed rates to shoot to record highs to punish banks for making risky loans, and to force them to curtail dodgy lending. The state investor will shed more light on its China strategy when it presents its annual report for the year ended March later this week. (Source: The Business Times) MARKET SCOOP GLP leases 23,000 sqm to Lefeng ICPAS now known as ISCA Property love affair drives up debt levels Transcu, SingLand unit agree to delay judgment debt, explore options FEOrchardplots move into Australia UBSopens vault, joins gold rush in Singapore Mixed showing for China's Asean infrastructure fund (Source: The Business Times) NOMURA Securities says... OLAM INTERNATIONAL | BUY | TP: S$2.30 In order to enhance stakeholder communication, Olam kick-started its efforts with an Investor day in Singapore (27 June, 2013) focussing on its Edible nuts, spices & beans and Spices & Vegetable Ingredients (SVI) segments Most of the global Agri players don't participate in niche segments such as edible nuts and spices, giving Olam an opportunity to take advantage of its global, value chain presence compared to its mostly local competition Edible-nuts is a US$34bn market (Peanut: 24%, Almond: 18%, Walnut: 15% & Cashew: 14%) and Olam has a stronghold with its leadership in cashews, is the #1 peanut blancher, the #2 almond grower and a top-3 Hazelnut supplier Olam is present in 80% of the producing countries and in all the major consumer markets The company is the largest supplier of dehydrated onion, garlic, capsicum, black pepper and organic tomatoes The global spices/tomatoes market is US$10bn/US$4bn, respectively, growing at a rate of 2-3% in developed markets (~5-7% in rest of the world) Olam currently has 32%/14% and 12% share of global onion/garlic and pepper markets, respectively The edible nuts, spices and beans segment has contributed ~25-30% of Olam's overall net contribution over the past five years (~15% of Olam's revenue and ~29% of Olam's net contribution in FY12) and thus is a key driver of its profitability The segment has seen significant growth in the recent past (three-year revenue/net contribution CAGRs at 29%/36% respectively) driven by acquisitions in this space Olam's key acquisitions in this segment include - Key Foods (2007), Universal Blanchers (2007), De Francesco & Sons (2008), IMC (2009), SK Foods (2009), Timbercorp (2009) and Gilroy (2010) We expect three-year CAGRs of 7%/11% for revenues/net contribution for the segment going forward (without considering any further acquisitions) A key profit driver would be maturing almond yields and new plantations and processing facility in California and Australia, respectively DMG OSK Securities says ... EZION HOLDINGS | BUY | TP: S$3.00 As Ezion's share price has fallen 14% since its recent peak, we see this as an opportunity to accumulate We believe concerns over the impact of rising interest rates on the Group is overdone Increasing awareness of its liftboat capabilities could herald in more contract awards, leading to more EPS upgrades for Ezion We estimate that net gearing will rise to 1.14x by end-FY13 However, we are not concerned as the borrowings are backed by steady cash inflow of ~USD1.6bn from its liftboat and service rig chartering business YTD 2013, Ezion has secured USD445m new charters vs USD1.12bn in 2012 Even in a scenario of zero new charters for the rest of 2013, we see little downside risk to our earnings projections as we have not factored in new charters apart from the contracts already announced We are projecting FY13/14/15F net profit of USD117m/USD200m/USD243m, primarily driven by charter contracts secured in the past three years Based on the current pipeline of contracts, Ezion's fleet is set to expand from 15 units in 1H13 to 26 units by 1H2015 Based on our analysis, Ezion can undertake capex of USD100m in FY14 and USD500m in FY15, assuming no fresh equity raising and renewal of the perpetual securities We forecast that the new investments can deliver up to USD65m net profit, implying potential FY15F EPS revision of up to 28% Maintain BUY with a TP of SGD3.00, based on 16x blended FY13/14F EPS Key risks are charter renewals and lower level of LNG activities in Australia OCBC Securities says... MAPLETREE LOGISTICS TRUST | HOLD | TP: S$1.15 Mapletree Logistics Trust (MLT) announced that Menlo Worldwide Logistics, the subsidiary of NYSE-listed Con-way Inc, has signed a binding commitment to lease 48,700sqm at MLT's Mapletree Benoi Logistics Hub (MBLH) for a period of 10 years This agreement marks the latest expansion by Menlo in Singapore and lifts Menlo as MLT's largest tenant (contributing 3.6% of MLT's enlarged monthly gross revenue) Together with Menlo's commitment which accounts for 55% of MBLH's NLA, we understand the property is now 75% preleased, with the balance in the advanced stage of negotiation MBLH is MLT's first redevelopment project in Singapore Formerly known as 21/23 Benoi Sector, the property commenced the refurbishment in 2011 and is scheduled for completion in 4Q13 It is strategically located within the Jurong Industrial Estate and is in close proximity to Jurong Port and easily accessible via expressways When completed, MBLH will be transformed into a modern five-storey ramp-up warehouse with significantly enhanced features such as floor loading capacity of up to 40kN/sqm and a clear height of up to 12m Total GFA is expected to increase by four folds from 22,500sqm to 92,500sqm, based on an increased plot ratio from 1.4 to 2.5 We are positive on this development as it reflects continued healthy leasing demand and strong interest from major third-party logistics service providers Judging from the strong pre-commitment levels, we believe that MLT will be able to meet its estimated yield-on-cost of 8-9% (development cost of ~S$128m) In addition, we expect the long lease to further enhance MLT's already resilient lease structure We make no change to our forecasts as we have previously factored in the redevelopment project MLT is currently offering a 6.5% current yield, which is relatively attractive in our view However, as the stock appears to be fairly priced when compared to our fair value of S$1.15, we maintain HOLD on MLT

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: KS Energy
Company Name: KS ENERGY LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.50

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OSK

Price Call: BUY

Target Price: 1.97

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 11.50

Market Compass

20 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

20 May 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : The hardships that I encountered in the past will help me succeed in the future. - PHILIP EMEAGWALI Singapore: The Day Ahead SINGAPORE DAYBOOK:Koh Boon Hwee's Credence to buy up to 36.05m new XMH shares at 27.74 cts/shr XMH Holdings Ltd said that Koh Boon Hwee founded Credence Capital Fund II (Cayman) Limited has agreed to subscribe up to 36.05 million new shares at S$0.2774 each, raising net proceeds of S$9.92 million. The other founders of Credence Capital, a South East Asia Private Equity Fund, are Tan Chow Boon and Seow Kiat Wang. After the subscription, Credence will become the company's first major institutional investor, holding 19.9 per cent of XMH's total enlarged issued and paid up share capital. The Fund provides growth stage capital and expertise to small and medium enterprises within the advanced manufacturing, information communication technology, services, logistics and consumer sectors. (Source: The Business Times) MARKET SCOOP Indian firms flock to S'pore debt market Sembcorp unit in utilities joint venture in Oman Asian markets hold hope for diamond rebirth MGCCT's fee model for future Mapletree Reits (Source: The Business Times) OCBC Securities says... KS ENERGY | HOLD | TP: S$0.50 KS Energy (KSE) reported a 27.6% YoY rise in revenue to S$153.4m and a net profit of S$1.1m in 1Q13, vs a net loss of S$315k in 1Q12 Though the group's operating profit went into the red again after four previous quarters in the black, we understand that S$5.8m of the group's "other operating expenses" relates to one-off foreign exchange losses from the disposal a jointly held asset Meanwhile, about S$6.5m of the group's share of results of jointly controlled entities relates to the disposal gain The jointly owned asset that was sold was the KS Titan 2 It was disposed for US$42m (~S$52m), and the buyer was Hercules Oilfield Services With this development, KSE currently has three offshore jack-up rigs seven land rigs and four workover rigs In addition, it has two jack-ups under construction at Cosco Looking ahead, management believes that the distribution business will continue to be an important contributor the group's overall performance this year We review the valuations of KSE's closest comparables on the SGX, and note that the average P/Book valuation is about 0.7x We ascribe a ~20% premium to arrive at a 0.85x P/Book for KSE due to its integrated operations which are larger in scale in comparison to some of its peers As such, our fair value estimate falls to S$0.50, based on 0.85x FY13/14F NTA DMG OSK Securities says ... OLAM INTERNATIONAL | BUY | TP:S$1.97 Olam reported strong 3QFY13 PATMI that grew 10% y-o-y to SGD109m This came in within our expectations and accounted for 26% of our full-year estimates Olam continued to report strong net contribution (NC) growth of 26.4% y-o-y in 3QFY13 In 3QFY13, sales volume rose 44% y-o-y, and NC increased 26% y-o-y The growth in NC was mainly due to a 142% surge in sales volume for food staples and packaged foods and a 36% growth in industrial raw materials, partially offset by a 20% decline in edible nuts, spices & beans and a 13% drop in confectionary & beverage ingredients Olam has initiated a strategy review of its businesses which will involve re-balancing its growth objectives with more focus on accelerating positive free cash flow generation Olam has sold 25.5% stake of its instant noodles business in Nigeria to Sanyo Foods for USD20m Olam's valuations appear attractive, as it is currently trading at a 9.1x FY14 P/E, a 37% discount to its five-year historical average of 14.4x We remain positive on Olam's growth potential from its food segment, which recorded a three-year (FY09-12) net contribution CAGR of 38% DBS VICKERS Securities says... SINGAPORE AIRLINES | HOLD | TP:S$11.50 Overall revenue grew just 1.6% y-o-y to S$15.1bn whilst only the group's core passenger airline segment recorded slightly better results of S$187m vs S$181m a year ago, whilst the other segments failed to improve on last year's performance Silkair -7.6% y-o-y to S$97m; SIA Cargo losses widened to S$167m from S$119m and SIA Engineering -1% to S$128 It was only thanks to a gain on sale of aircraft and spares (+S$56m) and lower net finance charges that SIA's profits grew Whilst we expect the group's yields to remain weak, with a mild recovery upside, we believe that lower jet fuel prices will help lead to better results for SIA ahead We have lowered our jet fuel price assumptions for SIA for FY14 and FY15 to US$125/bbl and US$130/bbl respectively but lower yield assumptions also mean that overall, our forecasts remain largely unchanged (+3.4% for FY14 and -2.1% for FY15 to S$653m and S$818m respectively) SIA has hedged 57% of its FY14 fuel requirement at US$119/bbl. SIA has a strong net cash position of S$3.50 per share but we see the stock as fairly priced at 1x P/B against a projected ROE of 5%, and at >20x FY14 PE A S17cts final dividend was declared; Maintain HOLD, TP S$11.50 (1x FY13 P/B)