Gallant Venture has confirmed that it has received notification from the Supreme Court of Indonesia over its decision against it in a land dispute at Bintan Resorts. The court has ordered them to relinquish rights over the ownership of 963,353 sq m of land and pay damages to plaintiff PT Raflesia Marawisata. The total compensation amounts to Rp. 33.25m (S$4,300) for a survey fee, Rp. 57.54bn (S$7.4m) for loss of rent between 1996 and 2005, and a cash charge of 500,000 rupiah. Gallant says it will file a special appeal against the judgment with the Supreme Court of Indonesia.

This has also finally confirmed earlier Business Times articles alluding to this, but Gallant had not fully commented on it previously, as it had not received the notification prior to yesterday. As has been maintained by Gallant all along when news of the lawsuit arose, Gallant will suffer no adverse financial impact from the outcome of the lawsuit, given a full indemnity offered by its substantial shareholder Parallax Venture Partners XXX. Furthermore, damages awarded under the judgment total less than 0.6% of the Gallant Group's net tangible assets of about $1.3bn. There will also be no adverse impact the operations as the plot in question is currently vacant land.

With regards to its core operations, our view on Gallant remains neutral, where the current economic climate is not conducive to land sales, and therefore the overall development of Bintan Resorts. Gallant currently trades at a 82% to its last reported book value per share of $0.52. Our long term price target of $1.05 is intact, but is based on the long-term development plans of Bintan Resorts, which we estimate to take the next 15-20 years. While we maintain a Buy recommendation on fundamentals, we do not expect the stock to outperform in the current market, due to a lack of positive catalysts. Gallant releases its FY08 results on the 25th of February. We expect its earnings to remain slightly above breakeven, and with neutral cashflow. We will provide updates accordingly.