Gallant Venture

Gallant Venture: OSKDG initiate coverage on Gallant Venture with Buy call and $0.57 TP, derived through SOP RNAV, which represents a 58% upside. Gallant is the largest land owner in Bintan Island (of Indonesia) with landbank a quarter the size of Singapore. After a long development gestation period, catalysts for unlocking its value are: i) new renowned resorts open in Lagoi Bay, ii) new airport to accelerate its projects, and iii) synergistic businesses ride on the success. It has been a long wait as financial crises slowed Bintan’s development timeline but currently, our checks show that Lagoi Beach Village is complete and ready to open in 2H14. An ultimate resort tourism environment, Bintan Resort 3.0 seems ready. The inflection point is now on the horizon as new renowned resorts open. Momentum may snowball, to finally unlock the value of its 14,000ha landbank. The new Bintan airport could fast-track Bintan’s development through two major avenues: i) tourist numbers will jump to 1m by 2016 through the introduction of direct flights for regional visitors, greatly benefiting Gallant’s Bintan Resort; ii) the airport will also mean the introduction of the aerospace MRO industry tenant, revitalizing Gallant’s Industrial Park. As activities on Bintan grow, industrial park rental and captive utilities customers on Bintan and Batam will grow as well, providing stable recurring income. Hence, the new airport and Bintan Resort 3.0 will actually help all of its Bintan businesses.