Brokers' Take

OUE | Buy

Nov 5 close: S$2.13

Target price: S$2.43

Deutsche Bank, Nov 5

Following Q3 results, we maintain our "buy" recommendation on OUE. Valuations remain attractive at a 40 per cent discount to our RNAV (revalued net asset value) of S$4.06 and 0.52x P/B (price to book). Our target price is pegged to a 40 per cent discount to RNAV, on par with long term averages, reflecting the lack of visibility on the redeployment of capital which would help offset the hollowing out of the company's asset base. The key catalyst for OUE will be the redeployment of capital, such as its JV (joint venture) in South Korea. Risks include execution risk and acquisition risk.

Giken Sakata (S) | Buy

Nov 5 close: S$0.305

Target price: S$0.65

DMG & Partners Research, Nov 5

We initiate coverage on Giken with a "buy" and a DCF-derived (discounted cash flow) S$0.65 target price, a 124 per cent potential upside. Giken transformed itself into an Indonesian onshore oil company with the 51 per cent acquisition of Cepu Sakti Energy and is focused on the old wells programme. We see production surging to 6,300 barrels of oil per day (bopd)/14,400 bopd in FY15/16 forecast (August) from circa 900 bopd at present. Giken's market cap only prices in two existing fields, with three new fields not valued yet.

Roxy-Pacific Holdings | Hold

Nov 5 close: S$0.535

Fair value: S$0.61

OCBC Investment Research, Nov 5

Roxy-Pacific's Q3 FY14 net profit dipped 23 per cent year on year to S$12.4 million mostly due to lower contributions from the property development segment, which fell S$9.7 million year on year as recognition from Spottiswoode 18 slowed and Treescape obtained TOP (temporary occupation permit) status over the quarter. Nine-month FY14 net profit cumulates to S$50.2 million, constituting 69.6 per cent of our FY14 forecast, and we judge Q3 FY14 earnings to be broadly within expectations with No 8 Russell Street's contribution expected to roll in over Q4. Performance at the group's key hotel asset, Grand Mercure Roxy Hotel, held fairly firm; average occupancy rate was 94.4 per cent in Q3 FY14 versus 90.8 per cent in Q3 FY13, while average room rates dipped 3.8 per cent year on year to S$184.50. While the group's core development business will likely face continued headwinds from an uncertain domestic residential outlook, we like management's strategy of growing recurring income and diversifying its portfolio geographically. Maintain "hold" with an unchanged fair value estimate of S$0.61 per share.

Compiled by Kenneth Lim

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.