MERRILL LYNCH, Feb 1

WE ARE initiating coverage on Gallant Venture (Gallant) with a Buy and a price objective of S$1.63/share. Our price objective is set at parity to our RNAV valuation of S$1.63/share.

Operational overview: Gallant is an investment holding company that listed on the SGX in June 2006. The company has four primary areas of operation including industrial parks, utilities, resort services and land sales. All assets are located on Indonesian islands (Bintan & Batam), which are 35 minutes by fast ferry from Singapore.

Upside to land value: Gallant's land bank has a book value of S$541 million and we believe it is worth S$3.3 billion. The company's land bank comprises about 18,000 hectares of undeveloped land, or approximately a third the size of Singapore. The prime beach front land can be acquired for one per cent of the cost of similar land in Singapore.

Investment risks: Regulatory and sovereign risks include changes to land title, ability to repatriate profits, rezoning of adjacent land currently designated for national parks, legalisation of casino gaming and decisions surrounding the SEZ. Macro risks include outbreaks of avian flu, terrorism in South-east Asia and economic shocks to Indonesia. Management risks include failure to implement strategy, departures of key executives and acquisitions that yield lower value than expected.

BUY

- Compiled by UMA SHANKARI