STI's recent rise above 3100 proved unsustainable. A lacklustre upcoming 3Q earnings season and uncertain forward growth; the upcoming November US Presidential Election and the year-end fiscal cliff; plus the approach of the year-end lull dissuade investors from being gung-ho and tempt profit taking given the stock market's run-up over the past 4 months. Technically, while a minor rebound is seen off 3010-3020, it is likely capped at 3050-3088 before a subsequent decline towards 2950.

DBSV Research issues an Equity Explorer report on Golden Agri Resources (GGR), the largest listed Indonesian planter and most liquid plantation counter in Singapore, with a fair value of S$0.73. GGR is still in expansionary mode, with CPO output forecast to increase by 6% CAGR between 2011 and 2014; supported by an average oil palm tree age of 12 years and c.71k ha of new maturities over the next 3 years. Within our universe, GGR has the highest correlation to CPO price. We believe any recovery in CPO prices is an opportunity to trade GGR. Longer term, acquisitions of land bank and downstream distribution network overseas may boost GGR's fair value beyond our current estimates.

Malaysia revamps CPO policy following a cabinet meeting on 12 Oct 12. Effective 1 Jan13, the following will apply:

1. Duty-free export quota will be scrapped

2. CPO export tax will be set between 4.5% and 8.5%, incrementally rising on a sliding scale

3. Increase biodiesel blending percentage from 5% to 10%

4. Provide incentives to replant old, unproductive oil palm trees

The new export tax structure is still c.1-1.5% lower than the initial proposal, and will have negative impact on upstream planters (as they will still receive lower ASP vis-''-vis before the change). The announcement however did not mention how the government intends to address the issue of record palm oil inventory in the interim. We believe there may not be any spare storage capacity. If nothing is done, we suspect planters will start to slow down their harvesting activities to conserve cash. Overall, these changes is negative for upstream but positive for refiners. For SGX-listed CPO related stocks, Wilmar and Mewah could see 9-21%% upside to earnings. Our analyst has left forecasts unchanged for now, pending details of monthly price adjustments and reactions from various industry players to the proposed changes.

FY12 net profit for SPHdeclined 6%, marginally below expectations. Final and special dividend of 17Scts was declared, brings FY12 dividend to 24Scts, similar to FY11. Ad revenue growth is expected to remain lackluster on an uncertain economic outlook; FY13-14F earnings trimmed 3-5%. Maintain Hold for 5.9% yield, TP stays at S$4.01.

Stratech Systemshas entered into a partnership with Bayanat Airports Engineering & Supplies Co LLC (Bayanat) for its iFerret intelligent Airfield/Runway Surveillance and Foreign Object & Debris (FOD) Detection System in the United Arab Emirates (UAE). Under the deal, Bayanat will market, sell and deploy iFerret in the UAE market. With this expansion into UAE, Stratech hopes that there could be future opportunities to extend the partnership to the other parts of the rapidly-developing Middle East market.

United Food Holdingswarned of a loss in its third quarter results, citing rising soybean costs as a result of a US drought that affected its supplies.

The non-oil domestic export (NODX) figure for Sep12 due this week may bring some respite after a streak of poor economic numbers in recent months. The headline number is expected to register a 2.5% YoY rise after a massive 10.6% drop in the previous month. On the sequential basis, our economist is looking for a rebound of about 5-6% MoM sa after a 9.1% plunge in the previous month.

According to the IMF, growth across Asia and Pacific has "slowed markedly" and that "Asia's growth is unlikely to pick up in the second half of 2012" as previously expected. There is now a one in seven chance of Asia's growth falling below 4% in 2013 - close to the rate last observed in 2009, the year after the Lehman shock.

Source: DBSV