OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: M1
Company Name: M1 LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 3.70

Market Compass

11 December 2013~ Good Morning Singapore!

Singapore Idea Snippets:

11 Dec 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 : Those who deny freedom to others deserve it not for themselves. - ABRAHAM LINCOLN Singapore: The Day Ahead SINGAPORE DAYBOOK :Stable bottom line for local telcos next year PROFITABILITY for the telco sector in Singapore is set to remain stable, with data revenue cushioning the bumps on the road ahead, according to the Fitch Ratings 2014 outlook report for telcos in the region. While revenue from text messages and international service will fall, a 20 per cent increase in mobile data revenue will offset the declines, resulting in a flat topline for the industry. "Data revenue will increase as a greater portion of users move to tiered data bundles, currently around 25-30 per cent of the overall subscriber base," the report said. "The data pricing structure has improved as customers now have to pay for incremental data use above 4 gigabytes (GB) per month; previously, users had a fixed monthly allocation of 10GB.". (Source: The Business Times) MARKET SCOOP Lum Chang incorporates two subsidiaries; buys UK property Far East Organization unit tops bids for Gambas Crescent Parcel 3 S'pore market offers 'safer path to growth' : Credit Suisse No TPP breakthrough after all, ministers to try again next month (Source: The Business Times) NOMURA Securities says ... M1 | BUY | TP: S$3.70 M1 will double its excess data usage charges from SGD5.30 to SGD10.7 per month per GB from 1 January 2014 Also for excess outgoing local voice calls, there will be a minimum one-minute charge and they will be billed per second thereafter At face value, the data re-pricing could boost revenues and EBITDA by 1-3%, but... 1) there could be some customers who may migrate to higher plans (especially if their excess usage is more than 2GB, we think customers could even become more vigilant towards their usage patterns, and cut back on usage As of Sept-13, M1 had 32% of its post-paid subs on tiered plans (or 322k subs), and around 16% were exceeding data bundles (or 52k subs) This is yet another attempt by the Singaporean operators to reprice data up, which is a positive for ARPUs SingTel also doubled its excess usage charges in September this year We maintain Buy on M1 - it is a simple story with simple catalysts There is a lot of focus on ARPUs since the operators moved away from 12GB to tiered pricing plans At a reported level, we haven't seen much improvement yet but a majority of this is attributed to falling roaming rates, which are still around 10-15% of wireless revenues we understand We think the Singaporean telcos missed out on a perfect opportunity to increase the base-line prices for all plans when 4G/LTE was launched - initially the operators intended to charge another SGD10/mth for 4G VAS, but it was waived during the promotion period, which seems to be continuing still This could potentially be introduced, and may provide a further boost to ARPUs Valuation Methodology Our DCF-based target price of SGD3.7 uses a WACC of 7.3% and terminal growth rate of 2%, with cashflows discounted to FY16F The benchmark index for this stock is MSCI Singapore Risks that may impede the achievement of the target price 1) More aggressive competition in Singapore; 2) limited ability to offer fixed-mobile bundles; and 3) a macro slowdown in Singapore OCBC Securities says ... COMMODITIES | NEUTRAL | As expected, the commodities sector performed relatively poorly against the broader market for most part of 2013, after we maintained our Underweight rating from 2012 Against the STI's 0.4% showing until 6 Dec 2013, the commodities stocks under coverage fell by an average of 6% They had also fallen by as much as 19% at their lowest versus the STI's 6% slide before staging a recovery in late 2H13 Part of the recovery was buoyed by news that economies are slowly recovering, led by the US According to its latest World Economic Outlook (WEO) report out in Oct, the IMF (International Monetary Fund) now expects World Output to grow 3.6% in 2014, up slightly from the likely 2.9% growth in 2013. However, it warns that downside risks remain Some of the "fresh" risks include slowing growth in China, which may affect many other economies, notably the commodity exporters among the emerging and developing economies However, IMF believes slower near-term growth is a worth-while trade-off as there will be positive net effects in the longer term, which should lead to more stable demand for commodities While market sentiment may remain somewhat cautious until investors get a better handle on the magnitude and extent of the Fed tapering (widely expected to take place sooner rather than later), we believe that further signs of a firmer recovery in the US economy could lead investors to adopt a more "risk on" approach And with the valuations of some of the commodity plays still looking relatively inexpensive, we could see potential upgrades for some of them if there is an over-correction in the market Hence we also upgrade our rating from Underweight to NEUTRAL OCBC Securities says... MIDAS HOLDINGS | BUY | TP: S$0.64 We expect firm earnings rebound for Midas in FY14F as high speed railway (HSR) contracts roll in Midas won its first HSR contract (Rmb168m) in over two years in October, as China resumed its HSR development programme, with more likely to come We believe the Group could win a substantial order arising from the recent second rolling stock tender for 314 train sets, or about 2,500 train carriages Over the next two years, we believe a further 700 over train sets could be tendered for, resulting in further wins for Midas in the HSR segment At the same time, we expect (PRC) metro orders to continue flowing in, and overseas orders, which have grown substantially in 2013, to continue to be robust as Midas looks to maintain a more diversified earnings base Maintain BUY, with our 12-month TP raised to S$0.64 (Prev S$0.60), based on 1.2x FY14F P/BV We believe current valuations are attractive for a stock whose earnings are poised for a strong rebound into FY14F and FY15F

SG: MARKET PULSE: CDL Hospitality Trusts (5 Dec 2013)

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 1.84

MARKET PULSE: CDL Hospitality Trusts

5 Dec 2013

KEY IDEA CDL Hospitality Trusts: Proposed acquisition of Jumeirah Dhevanafushi CDL Hospitality Trusts (CDLHT) has entered into conditional land and business sale agreements with Xanadu Holdings Pvt Ltd for the acquisition of Jumeirah Dhevanafushi in the Maldives at US$59.6m (~S$74.8m). Based on the purchase price and assuming that CDLHT owned the property from 1 Jan 2013, the pro forma annualised net property income yield of the property for the nine months ended 30 Sep 2013 would be 6.2%. While management indicated that the 4Q13 and 1Q14 performance for its Singapore hotels is still lackluster, this is within our expectations. We roll over our DDM model to FY14 numbers. Despite using a more conservative risk free rate of 3.0% (instead of 2.4% previously), our FV increases from S$1.83 to S$1.84 and we maintain our BUY rating on CDLHT. (Sarah Ong)

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

NEWS HEADLINES - US stocks ended mostly lower on Wed, with the S&P 500 and the Dow Jones Industrial Average extending their losing streak to four straight sessions. - Singapore's economic growth will stay strong in the next two years relative to the other countries in Asean, the Centre for Economics and Business Research has predicted. - SGX and Hong Kong Exchanges & Clearing said they have agreed to cooperate in various areas, including developing yuan-denominated products jointly. - Genting Hong Kong and other shareholders have agreed to sell up to 25.3m shares in Nasdaq-listed Norwegian Cruise Line Holdings in a secondary public offering. - WE Holdings is acquiring Hong Kong-based electronics distributor Everbest Industrial (International) for US$7.4m. - Swissco Holdings has placed orders to add S$42m worth of vessels to its fleet, while Cosco Corporation has secured a US$54m contract. - Yoma Strategic Holdings has unveiled plans for a joint-venture company to build and operate a steel mesh products manufacturing plant in Yangon, Myanmar.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: UOB KayHian

Price Call: SELL

Target Price: 0.43

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.02

Market Compass

04 December 2013~ Good Morning Singapore!

Singapore Idea Snippets:

04 Dec 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 : An advertising agency is 85 percent confusion and 15 percent commission. - FRED ALLEN Singapore: The Day Ahead SINGAPORE DAYBOOK : Property fuels surge in S'poreans' net wealth. MAS review shows household debt rising, but savings piling up faster; cautions that risks remain. [SINGAPORE] Singapore households have been given a clean bill of health as far as their debt is concerned. Despite warnings of an increasing exposure to mortgages, net wealth has grown robustly over the past decade and stands at about four times GDP, according to the Monetary Authority of Singapore Financial Stability Review 2013. While household debt continues to increase, savings are piling up faster and massive cash deposits outweigh total liabilities, the review showed yesterday. Measures to cool the residential property market are having a significant impact, too. "However caution is in order as uncertainties and risks remain," MAS warned. (Source: The Business Times) MARKET SCOOP Nov PMI dips to 50.8, points to slower growth SGX derivatives and clearing activities grow Yuan overtakes euro in trade finance S'pore household net wealth robust: MAS S'pore shadow banking small: MAS S'pore-based banks lending more to China, India: MAS S'pore jumps 50 spots up on World Giving Index (Source: The Business Times) UOB KAY HIAN says ... TIGERAIR | SELL | TP: S$0.43 We are not confident of Tigerair's prospects in 2HFY14 due to weak loads out of Singapore We, thus, lower our fair value to S$0.43, valuing the stock at 0.9x FY14F P/B from 1.0x P/B October pax load factor (LF) fell to a 21-month low as the 21% capacity growth vastly outstripped the 8% traffic growth The 74.4% load was substantially lower than the 88.0% breakeven load achieved in 2QFY14 The weak October loads do not bode well for 4Q13, which is a peak quarter for Tigerair As such, we have lowered our FY14 traffic growth by 5ppt to 20% and revise down our pax LF by 2ppt to 79% 2QFY14 LF was at its lowest in eight quarters, declining 5.6ppt yoy The weak October loads suggest little leeway in raising prices and yields are thus unlikely to improve in 2HFY14 At the 2QFY14 analysts briefing, Tigerair highlighted the possibility of implementing fuel surcharges on select routes after a successful implementation on Indonesian routes However, October's weak loads suggest that Tigerair does not have much pricing power and the odds of the airline implementing surcharges appear low One of the key concerns we have on Tigerair is the uncertainty regarding the financial stability of its associates and the extent and duration of continued financial backing For 1HFY14, combined associate losses and impairments amounted to S$99m Despite the losses, Tigerair invested an additional S$71m in associates during 2QFY14 We assume just S$34m in associate losses and impairment for 2HFY14 If November's operating statistics do not show an improvement, we believe the stock will face further downward pressure Political unrest in Thailand, which is a key sector for Tigerair would very likely lead to lower loads Under such a scenario, we believe that the odds of Tigerair underperforming for the next six months are high We lower our FY14 earnings forecast by S$20.0m and now expect Tigerair to report a net loss of S$19m compared to S$1m net profit previously The downward revision is mainly due to a 5ppt reduction in pax traffic growth assumptions We lower our target price by 17% to S$0.43 after lowering the fair value to 0.9x FY14F P/B from 1.0x It is worth noting that parent airline SIA's own airline operations are implicitly valued at a lower 0.7x P/B after adjusting for its stake in SIA Engineering DBS Securities says ... YOMA STRATEGIC HOLDINGS | BUY | TP: S$1.02 Yoma announced that its telecom JV with Digicel and FMI named Digicel Asian Holdings, has signed an agreement with Ooredoo Myanmar, one of the winners of Myanmar's telco operating licence, to develop, construct and lease telecom towers to the latter This joint venture will be amongst the first telecoms tower companies to begin construction in Myanmar and will accept multi-tenancy agreements This development is in line with Yoma's aspiration to be a conglomerate and we believe it will contribute positively to the company in the long haul although the accretion may be insignificant Yoma has not released any quantifiable details at this stage But, Yoma would surely need funding to invest in this JV although we believe their stake would not be substantial Based on Myanmar government's timeline to expand mobile penetration from less than 5% to 80% by 2015-2016, we believe this would be a fast-paced development and should start no later than 2014 That said, we do not expect immediate profits in its first year of operations considering start up expenses We expect further update on this JV over the next few weeks and will update accordingly Maintain Buy on Yoma with TP of S$1.02 OCBC Securities says... YOMA STRATEGIC HOLDINGS | HOLD | TP: S$0.84 Yoma reported that a consortium, Digicel Asian Holdings, comprising Digicel Group, First Myanmar Investment Co., Ltd and Yoma Strategic Holdings Ltd, has signed an agreement with Ooredoo Myanmar to develop, construct and lease telecommunications towers in Myanmar This will facilitate Ooredoo's commitment to rapidly achieve coverage across the country after winning a coveted telecommunication license earlier this year We understand that Digicel Asian Holdings' company in Myanmar, Myanmar Tower Company, will construct multi-tenancy towers in Myanmar and aim to work with multiple telecommunications operating companies We will speak further with management regarding this development and, in the meantime, maintain a HOLD rating with our fair value estimate of S$0.84 under review

SG: MARKET PULSE: Yoma Strategic, CDLHT (4 Dec 2013)

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.84

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 1.83

MARKET PULSE: Yoma Strategic, CDLHT

4 Dec 2013

KEY IDEA Yoma Strategic Holdings: Signs agreement with Ooredoo Summary: Yoma reported that its consortium, Digicel Asian Holdings, comprising Digicel Group, First Myanmar Investment Co., Ltd and Yoma Strategic Holdings Ltd, has signed an agreement with Ooredoo Myanmar to develop, construct and lease telecommunications towers in Myanmar. We understand from management that detailed terms regarding ownership and capital outlay for the consortium are still being negotiated and will be announced in due time. Digicel Asian Holdings' company in Myanmar, Myanmar Tower Company, will construct multi-tenancy towers in Myanmar and aim to work with multiple telecommunications operating companies, including Ooredoo's to facilitate its commitment to rapidly achieve coverage across the country after winning a coveted telecommunication license earlier this year. Maintain HOLD with an unchanged fair value estimate of S$0.84. (Eli Lee) MORE REPORTS CDL Hospitality Trusts: Proposed acquisition of Jumeirah Dhevanafushi in the Maldives Summary: CDL Hospitality Trusts (CDLHT) has entered into conditional land and business sale agreements with Xanadu Holdings Pvt Ltd for the acquisition of Jumeirah Dhevanafushi in the Maldives at US$59.6m (~S$74.8m). Based on the purchase price and assuming that CDLHT owned the property from 1 Jan 2013, the pro forma annualised net property income yield of the property for the nine months ended 30 Sep 2013 would be 6.2%. On a pro forma annualised basis for the nine months ended 30 September 2013, this translates to a DPS accretion of 2.2%, with potential for improvement as the property is currently still gestating as it only opened on 1 Nov 2011. These transactions will entail the activation of the CDLHT's business trust (HBT). Upon the completion of the acquisition, the HBT lessee will lease the property from the H-REIT (CDLHT's REIT) lessor pursuant to a lease agreement. We maintain a BUY rating on CDLHT but place our fair value estimate of S$1.83 under review pending a call with management. (Sarah Ong)

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

NEWS HEADLINES - US stocks fell Tue, with the S&P 500 and the Dow falling for a third straight day over uncertainty on the Fed tapering and fears that the market was overdue for a pullback from record levels. - Singapore's Nov purchasing managers' index fell short of expectations, dipping 0.4 point to 50.8, but the electronics index continued to strengthen, pointing to a surer-footed recovery for the sector. - Dynamic Colours is selling Suzhou Huiye Chemical & Light Industry Co and Suzhou Huiye Plastic Industry Co to AEI Compounds for about US$15m. - Tiong Seng Holdings has boosted its order book with a S$204.5m contract win from the Housing and Development Board (HDB).

SG: MARKET PULSE:Telecoms Sector, Yoma (3 Dec 2013)

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.84

MARKET PULSE: Telecoms Sector, Yoma

3 Dec 2013

KEY IDEA Telecoms Sector: Limited growth, steady dividends Summary: Going into 2014, we believe that there is a possibility of investors switching out of more defensive stocks into the cyclical ones as the developed economies continue to improve. And because of their outperformance in 2013, dividend yields have fallen to around 4.5%, making them merely "decent" when compared to the STI's 3.5%. In summary, we think that the telcos will likely see just limited growth in the mobile market; stiffer competition in the broadband market; and a relatively unexciting Pay TV market. As such, earnings growth is not likely to be exciting. Hence we maintain our NEUTRAL rating on the sector. (Carey Wong) MORE REPORTS Yoma Strategic Holdings: Signs agreement with Ooredoo Myanmar Summary: Yoma reported that a consortium, Digicel Asian Holdings, comprising Digicel Group, First Myanmar Investment Co., Ltd and Yoma Strategic Holdings Ltd, has signed an agreement with Ooredoo Myanmar to develop, construct and lease telecommunications towers in Myanmar. This will facilitate Ooredoo's commitment to rapidly achieve coverage across the country after winning a coveted telecommunication license earlier this year. We understand that Digicel Asian Holdings' company in Myanmar, Myanmar Tower Company, will construct multi-tenancy towers in Myanmar and aim to work with multiple telecommunications operating companies. We will speak further with management regarding this development and, in the meantime, maintain a HOLD rating with our fair value estimate of S$0.84 under review. (Eli Lee)

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

NEWS HEADLINES - US stock indexes ended lower on Mon, with the Dow briefly falling below 16,000 ahead of the closing bell as investors debated whether a record rally has become overextended. - The massive construction of HDB flats will start to taper off from next year as balance is restored between demand and supply in the market, Minister Khaw Boon Wan said. - Better-quality Chinese companies will come to Singapore following last month's agreement between the regulators of the two countries. - Sitra Holdings has obtained JTC approval to sell its Sungei Kadut property to World Furnishing Hub Pte Ltd for S$8.65m. - Sembcorp Industries' new S$154m multi-utilities centre at Banyan sector has started supplying steam, water and on-site logistics services to petrochemical plants there. - A "software bug" gave M1's mobile data service the sniffles yesterday, with some of its users experiencing patchy 3G data access for several hours. - LionGold Corp, together with a subsidiary of associated firm ISR Capital and Chinese firm Suzhou Power, is partnering a new private equity fund that invests in natural resources.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.84

Market Compass

03 December 2013~ Good Morning Singapore!

Singapore Idea Snippets:

03 Dec 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 : You can have peace. Or you can have freedom. Don't ever count on having both at once. - ROBERT A.HEINLEIN Singapore: The Day Ahead SINGAPORE DAYBOOK : The constraints and advantages that S'pore has: Tharman [SINGAPORE] The global economy, especially the developed countries, should expect to go through a period of "sub-normal growth" for several years to come, says Deputy Prime Minister Tharman Shanmugaratnam. And while this will cause problems for everyone, he said Singapore is "fortunate" because of the many opportunities available to its people across regions such as Asia, Africa and Latin America that will help "balance the loss of demand growth" in the advanced economies. He made these points during a question-and-answer session after delivering the S Rajaratnam Lecture yesterday, an annual event organised by the Ministry of Foreign Affairs' Diplomatic Academy in honour of Singapore's first and longest-serving foreign minister. Mr Tharman, who is also Finance Minister, said the government is doing all it can to improve the lives of Singaporeans, especially the lower-income group. (Source: The Business Times) MARKET SCOOP Keppel confirms BT report of Norway deal, with option for two more Do Not Call registry opens; businesses required to sign up Genting Singapore near one-month high on CIMB upgrade; index flat Private housing site beside Aljunied MRT triggered from reserve list Andrew Tan to become MPA's CEOfrom Jan 1 HDB construction to taper from '14: Khaw (Source: The Business Times) UOB KAY HIAN says ... PROPERTY - SINGAPORE | OVERWEIGHT | Maintain OVERWEIGHT as the market has priced in an overly bearish scenario for property and REITs stocks on expectations of a rise in interest rates with the Fed's tapering Tapering will have minimal impact on short-term rates and we expect a growth pick-up to offset a rise in long-term rates We are already factoring in a 3% rate for bond yields (60bp higher than the current yields of 2.4%) We prefer diversified, deep-value developers and high-beta REITs in the office space with OUE, Ho Bee and CapitaCommercial Trust as our top BUYs Most upbeat on the office segment, wich is turning around with spot rents picking up and positive rental reversions accelerating, underpinned by healthy demand and limited supply We forecast office rents to pick up by 8% yoy in 2014 Retail rents are expected to remain stable, rising 0-2% yoy in 2014, while industrial rental growth will likely moderate to 0-2% yoy following a larger upcoming supply in 2014-15 REITs: High-beta office and industrial REITs to outperform as the economic recovery gains momentum We expect S-REITs to transition from yield vehicles to growth vehicles, led by the rental growth pick-up in the office segment Business parks and high-tech industrial spaces should follow as these segments are closely linked to the office segment Suntec REIT, CapitaCommercial Trust and Ascendas REIT are our preferred REIT picks Developers are deep in value but lack near-term catalysts Peak/trough P/B multiples suggest developers offer an attractive upside potential of 131% vs a downside risk of 40% However, near-term newsflow from the residential segment is likely to be negative as the latest property measures will result in a 5-10% yoy fall in property prices and 20-30% yoy fall in volumes in 2014 Slowing residential demand and elevated land prices are prompting developers to explore overseas land acquisitions We prefer diversified developers with exposure to the commercial segment CapitaLand, OUE and Ho Bee are our preferred picks OCBC Securities says ... VARD HOLDINGS | HOLD | TP: S$0.84 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 OCBC Securities says... Oil and Gas: Good performance to continue in 2014 | OVERWEIGHT | Index mostly in-line with market; among top three best performing sub-indices 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. On the other hand, price performances of individual stocks have differed greatly, with the key outperformers being Kreuz Holdings (+95% YTD) and Ezion Holdings (+45% YTD) in the Offshore & Marine space. Positive on the rig building sector and certain OSV segments 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 - the Indonesian and Malaysian OSV sectors are especially looking relatively promising. Meanwhile, subsea tendering activity remains firm. Solid long-term fundamentals; near term driven by macro events We believe that the offshore sector has strong long-term fundamentals as countries have an interest in fulfilling as much domestic demand as possible in order to boost energy security. Investors should be mindful, however, that macro events remain a key driver of the broader sector in the near term. Going into 2014, we remain OVERWEIGHT on the oil and gas sector, as we expect that the favourable oil price environment will continue to be conducive for capital expenditure. Our preferred picks are 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].

SG: Market Pulse: Oil & Gas Sector, Vard (2 Dec 2013)

Stock Name: Vard Holdings
Company Name: VARD HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.84

MARKET PULSE: Oil & Gas Sector, Vard

2 Dec 2013

KEY IDEA 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 OVERWEIGHT on 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)

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

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.