Navigating Singapore 2013

NAVIGATING SINGAPORE
November 29, 2012
2013
Navigating
1
November 29, 2012
Table of Contents Step out of the comfort zone......................................................................................................... 3 KEY CHARTS.............................................................................................................................. 4 Step out of the comfort zone......................................................................................................... 6 1. EXECUTIVE SUMMARY ................................................................................................. 6 1.1 Downgrade Singapore to Neutral .............................................................................. 6 1.2 Singapore has its own set of problems ...................................................................... 6 1.3 Polarisation in valuation multiples & 2013 strategies ............................................... 6 1.4 What are 2013s big risks? ......................................................................................... 6 CHALLENGES IN THIS ENVIRONMENT ..................................................................... 7 2.1 Intermediate challenges are still daunting ............................................................. 7 2.2 Oil prices and interest rates........................................................................................ 7 2.3 Singapore has its share of headaches ......................................................................... 8 2.4 Coping with costlier labour .................................................................................. 9 2.5 and rising rentals .................................................................................................. 10 2.6 Stress on small businesses is telling ........................................................................ 11 2.7 Themes to consider for stock selection .................................................................... 11 SECTOR VIEWS, STOCK PREFERENCES................................................................... 13 3.1 Financials ................................................................................................................. 13 3.2 Property.................................................................................................................... 15 3.3 REITs ....................................................................................................................... 16 3.4 Commodities ............................................................................................................ 18 3.5 Capital Goods .......................................................................................................... 21 3.6 Telecommunications ................................................................................................ 23 3.7 Transport .................................................................................................................. 26 3.8 Gaming & Others ..................................................................................................... 27 VALUATIONS AND RECOMMENDATIONS ............................................................... 29 4.1 Downgrade to Neutral from Overweight; cheap but lacking growth ...................... 29 4.2 Polarisation of valuation multiples .......................................................................... 30 4.3 Step out of the comfort zone .................................................................................... 31
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3.
4.
Company Briefs .......................................................................................................................... 37 Appendices ............................................................................................................................... 209
CIMB Research Pte Ltd (Co. Reg. No. 198701620M)
MICA (P) 048/02/2012
November 29, 2012
SINGAPORE
SHORT TERM (3 MTH)
LONG TERM
Conviction
CIMB Analyst
Step out of the comfort zone

We downgrade Singapore to Neutral from Overweight as its 2012 outperformance, lack of earnings growth and restructuring-induced cost pressures act as headwinds for further performance. Our 3,316 (bottom-up) end-CY13 FSSTI target is unchanged. It implies 13.2x P/E.
Kenneth Ng CFA
T (65) 62108610 E kenneth.ng@cimb.com
Figure 1: Ratio of defensive stocks P/Es to cyclicals P/E (x)

1.30 +1SD 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 2002 2003 2004 2005 2006 2007 2008 2009 2010 PE ratio 2011 2012 -1SD m ean
Singapore Research Team
SOURCE: CIMB Research
Highlighted Companies CapitaLand

Best proxy for sustained asset inflation in Asia and an improving China. China residential take-up is rising. CAPLs earnings are backed by project completions with CAPEX expected to peak in 2013. NTA growth will come thereafter.
Within the Singapore market, our main recommendation is to drift out of yields and hunt for safe growth at a reasonable price. Although global growth is slow, fears of a China hard landing is receding. Any breakup in Europe seems less imminent and the US should look beyond its fiscal cliff after 1Q13. Ahead, investors could price out doomsday scenarios and stretch for growth. Singapore could lag as it is not associated with growth.
Four themes for 2013

The four themes we focus on are: 1) how to benefit from sustained asset inflation and an improving China; 2) stocks with visible earnings that are not yet richly priced; 3) smaller bets on unloved cyclicals that could provide some beta; and 4) why safe REITs are looking expensive and yield stocks need to be stapled with stock-specific catalysts to attract.
Stocks that we love

DBS and CapitaLand will benefit from asset inflation and a recovering China, we believe. UOL is the third NAV play that trades at attractive discounts to RNAV. Dairy Farm, Ezion and Tat Hong are our picks with earnings visibility and reasonable valuations. We reach for growth by going for Wilmar, CWT and Keppel Corp; they belong to the unloved cyclical category that can surprise positively. Lastly, we steer out of large-cap REITs (CMT, CCT) and choose AREIT, ST Engineering and StarHub as yield picks with catalysts.
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Polarisation of valuations
Defensive stocks have gotten expensive vs. cyclicals. The FSSTI is 10% below its 4Q10 high but REITs are at their 4Q10 P/BV highs. Some consumer stocks have hit even higher valuations while big laggards have been commodity and transport stocks. Banks are in-between their 2009-10 P/BV levels. Property stocks vary: CAPL looks cheap, CityDev is still expensive. Capital Goods was looking rich till its recent selldown; we now spot value. We advocate a shift out of REITs into visible growth.
DBS Group
Cheapest Singapore bank with the right SingaporeGreater China profile. Lending should return with trade. Margin pressure will be lesser, without deposit-funding constraints. Best poised to capture IB fees from a booming debt capital market in Singapore.
Wilmar
The commodity sector has been the worst performing sector of 2012. Wilmar is our pick in this unloved space. Stock is trading 50% below its 3-year P/BV. Its oilseed and grains division is turning around with guidance of better timing of purchases.
IMPORTANT DISCLOSURES. INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
November 29, 2012
KEY CHARTS The world has its problems, so does Singapore

The world is dealing with slow growth prospects and deleveraging of governments stretched balance sheets. As it moves along at stall speed, markets tend to be more vulnerable to intermittent selldowns. Singapore has a different set of headaches, namely inflation and cost pressures. With negative interest rates, asset prices face upward pressures and with this, rents. At the same time, restriction of foreign inflows adds to its manpower costs. Rising costs are SMEs main complaints. Corporate earnings were already dragged down by higher costs in 3Q12. SMEs bad debts may next feature, in 2013.
Survey of Singapore SMEs: Top concerns
Manpow er 72%
Materials
48%
Rental
38%
Transport Currency exchange
17%
7%
These are reflected in -1SD valuations

Following a year of persistent earnings downgrades by analysts, our FY13 market EPS growth expectations are +8%, which is below consensus; it could end up lower. Corporates have been building up balance-sheet buffers, banks margins have been falling; all these provide no help to ROEs. The negative are reflected in Singapores -1SD valuations though. Singapores greatest attractions are its valuations and yields, but the flip-side is a lack of growth and business cost pressures. With positive statistics from China assuaging hard-landing fears, we believe investors will start to stretch for growth. That is the time that the Singapore market could lag.
2.8x 2.6x
Core ROE
16.0% 15.0% 14.0% Core ROE 13.0% 12.0%

Current P/BV
2.4x Current P/BV 2.2x 2.0x 1.8x 1.6x 1.4x 1.2x 1.0x
13 02 14 03 04 05 06 07 08 09 10 11 12 nnnnnnnnnnnnn-Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 1 -Ja 31 3 3 3 3 3 3 3 3 3 3 3 3
Forecast period
11.0% 10.0% 9.0% 8.0%
and polarisation of valuation multiples

The ratio of defensive stocks P/Es to cyclicals P/Es has gone to its range-high. Consumer stocks make all-time highs while commodity stocks sink to their all-time lows. Larger REITs trade at 1.0-1.3x P/BV while developers are still trading at 25-30% discounts to RNAV. We think the quest-for-yields flight-to-safety theme is nearing its end. Even as we downgrade Singapore, it does not mean we have turned bears. We advocate: 1) a switch out of large-cap REITs to CapitaLand; 2) an upgrade of Commodities to Overweight (from Underweight) with specific, preferred exposure to Wilmar and CWT; and 3) a Capital Goods Overweight, after its recent de-rating.
Sector ratings
OVERWEIGHT Commodities Capital Goods Property
NEUTRAL Financials Telcos Transport
UNDERWEIGHT REITs Gaming

Just as Singapores SMEs would need to consider ways and means of stepping out of their comfort zone and survive, we think investors need to step out of their yield comfort zone too. Our top picks are DBS, CapitaLand, UOL, A-REIT, StarHub, Keppel Corp, Ezion, ST Engineering, Wilmar, CWT, Dairy Farm and Tat Hong.
Financials Property REITs Telcos Transport Capital Goods DBS
Top Picks
Other favored stocks
Capitaland AREIT Starhub
UOL
GLP FCOT MCT
Keppel Corp ST Engineering
Ezion
Commodities Others
Wilmar Dairy Farm
CWT Tat Hong
Noble
SOURCE: CIMB, COMPANY REPORTS
November 29, 2012
Figure 2: CIMB top picks for 2013

Company Ascendas REIT CapitaLand CWT Limited Dairy Farm Int'l DBS Group Ezion Holdings Keppel Corporation StarHub ST Engineering Tat Hong Holdings UOL Group Wilmar International Average Bloomberg Ticker AREIT SP CAPL SP CWT SP DFI SP DBS SP EZI SP KEP SP STH SP STE SP TAT SP UOL SP WIL SP Recom. Outperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Price Target Price (local curr) (local curr) 2.38 2.68 3.46 1.24 10.72 14.17 1.40 10.63 3.63 3.53 1.33 5.56 3.14 4.02 1.68 12.00 17.36 1.68 13.20 4.35 3.97 1.69 6.55 3.90 Market Cap (US$ m) 4,359 12,040 609 14,478 28,263 988 15,639 5,098 8,892 615 3,502 16,440 Core P/E (x) CY2012 CY2013 16.3 16.2 41.5 9.0 26.9 9.8 14.3 9.6 17.5 19.0 10.4 13.5 15.5 14.1 21.7 8.1 23.5 9.5 7.9 11.6 16.2 18.0 9.0 11.4 12.3 13.1 3-year EPS CAGR (%) 5.0% 45.1% 22.3% 14.8% 6.6% 44.0% 4.0% 11.9% 7.5% 28.7% -8.7% -0.3% 8.3% P/BV (x) CY2012 CY2013 1.23 1.22 0.95 1.31 12.46 1.09 1.93 2.24 127.14 5.80 1.26 0.79 1.16 1.55 0.93 1.16 10.04 1.03 1.60 2.02 168.28 5.54 1.17 0.75 1.08 1.46 Recurring ROE (%) CY2012 CY2013 CY2014 7.6% 7.5% 7.7% 2.3% 15.4% 51.7% 11.5% 16.2% 24.3% 961.1% 30.4% 12.0% 5.9% 7.7% 11.2% 4.3% 15.2% 47.3% 11.1% 22.0% 18.3% 896.5% 31.5% 13.5% 6.8% 9.1% 11.4% 6.5% 14.9% 44.6% 11.0% 24.3% 16.7% 814.4% 32.0% 14.2% 6.7% 9.5% 11.8% EV/EBITDA (x) Dividend Yield (%) CY2012 CY2013 CY2012 CY2013 na na 5.8% 6.1% 39.3 9.2 16.7 na 17.5 9.4 9.4 12.1 5.6 17.9 13.4 14.3 25.7 7.2 14.5 na 8.5 10.8 8.9 11.3 4.9 16.3 11.8 13.1 1.3% 2.0% 2.2% 4.7% 0.1% 4.7% 5.5% 4.7% 1.8% 1.6% 0.0% 3.2% 2.3% 2.0% 2.5% 4.3% 0.1% 3.9% 6.6% 5.0% 1.9% 1.9% 0.0% 3.3%
Calculations are performed using EFA Monthly Interpolated Annualisation and Aggregation algorithms to December year ends
November 29, 2012

Table of Contents
1. EXECUTIVE SUMMARY 2. CHALLENGES IN THIS ENVIRONMENT 3. SECTOR VIEWS, STOCK PREFERENCE 4. VALUATIONS & RECOMMENDATIONS p.4 p.5 p.11 p.27
1. EXECUTIVE SUMMARY 1.1 Downgrade Singapore to Neutral

Heading into 2013, there is a likelihood that: 1) Europe will probably not resolve its problems without some major dislocations; 2) the USs resolution to its fiscal cliff will probably lead to shrinking demand; and 3) GDP growth for Asia would likely be sub-par. Yes, the ongoing global drags will be daunting but four years into the crisis, what else is new? Sluggish global growth is now a permanent resident in investors minds; it should not be fuel for undue pessimism on markets. Instead, signs of China turning around, ASEANs relative political stability, closer inter-government cooperation, promising consumer-led growth and increased infrastructure spending, all support a shift of the investment mindset from defensive to growth. Singapore is cheap but has limited corporate earnings growth, so increased risk appetites could mean that Singapore would lag. We downgrade Singapore from Overweight to Neutral.
Singapore faces a higher inflation rate and slower economic growth as the government allows in fewer foreign workers. A tight labor market has hindered the expansion plans for many companies, some businesses may leave Singapore a growing demand for workers should boost wages, which will increase business costs, undermine competitiveness and quicken inflation.
Lee Hsien Loong, Prime Minister
1.2 Singapore has its own set of problems

Singapore faces domestic challenges that are different from the west. It is not about the need for austerity, nor the process of deleveraging. It is about inflation and cost pressures. Local liquidity is abundant. Negative domestic real rates have caused bubbly property prices; they are not the sole culprit. The bees of global liquidity have zeroed-in on assets in Singapores honey pot, amid: 1) never-ending QEs in the developed world; 2) an ever-strengthening S$; and 3) its gold-plated AAA-sovereign rating. Compounding its asset-inflationary pressures are spiralling labour costs from its current restructuring initiatives. Unemployment rates remain low and efforts to wean the country off its dependence on cheap foreign labour are causing obvious pain. Labour constraints will likely hurt corporate earnings now and hurt GDP growth further ahead via less foreign direct investments.
1.3 Polarisation in valuation multiples & 2013 strategies

Even as we downgrade Singapore, we believe the most logical strategy now must be to drift out of yield plays, towards: 1) growth at reasonable price; 2) NAV plays; and 3) sold-down cyclicals with less earnings-impairment risks. The global environment will likely be characterised by spasms of anaemic recoveries, followed by further drags and monetary-policy resuscitation. Markets should not crack but neither can they soar. However, safety has been a priority the last two years, and there is a clear polarization of valuations for companies whose fortunes hinge on the whims of global demand vs. companies humming on domestic/Asian consumption engines now. Commodities and Transport stocks have done badly. Consumer has done well and REITs have benefitted from abundant liquidity chasing yields, over 2012. The big call now is whether one should step away from the comfort zone of REITs & Consumer and take some cyclicality risks. We say, yes! We opt to Overweight Capital Goods, Property and Commodities and Underweight REITs and Gaming.
1.4 What are 2013s big risks?

Our recommendation to step out of the comfort zone is clearly at risk if Europe falls apart or if rising protectionism, nationalism and uncontrollable social unrest is triggered as a backlash to austerity. If these do not materialise, the more likely outcome in 1H13 is weak global growth (possibly, a technical recession in Singapore), more money-printing in the western world and an eventual threat of inflation or rather, stagflation. In such an environment, NAV plays should serve investors well. Companies will have to manage rising business costs and earnings risks are still on the downside. Sold-down cyclicals might start to perform as liquidity overflow and earnings disappointments taper off. Lastly, no one is expecting interest rates to rise but if they somehow do, the over-owned REIT sector stands at risk.
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2. CHALLENGES IN THIS ENVIRONMENT 2.1 Intermediate challenges are still daunting

Global economic conditions have improved modestly in 4Q. Euro-zone credit spreads have come down. Recent indicators in the US suggest some bottoming. China statistics are encouraging and imply that one of the major risks for markets (a Chinese hard landing) has receded. Singapore exports have turned uglier; but that is because its tech sector is not part of the tablet and smartphone supply chain. North Asia is faring better. Sure, this is not 2009, there is no V-recovery, but some indicators of economic activity in Asia are clearly finding a floor. Others, geared to Europe, are still sliding. Heading into 2013, the likelihood is: 1) Europe will probably not be able to solve its problems without some major dislocations. The 1997 Asian crisis and 1990s Latin America crisis were only ended by short and sharp currency devaluations. History does not bode well for Europes future. Even if the euro zone does not collapse in the near-term, it may not be able to sustain for the long term. 2) The resolution of the US fiscal cliff will probably lead to shrinking demand. GDP is the sum of consumption, investment, government spending and net exports. Whatever combination of tax increases or spending cuts is chosen, a component of GDP will have to come down. The alternative of raising debt limits yet again invokes the threat of a US$ currency crisis and rising interest rates, one day down the road. 3) GDP growth for Asia, with exports already slowing, could be below-trend, but without major concerns of a hard landing.
2.2 Oil prices and interest rates

In this global context, our regional energy analyst believes that while the change in the energy balance will tilt towards North America, it alone will not equate to lower crude oil prices next year; however, the combination of shale gas, weaker end-demand and availability of refining capacity could bring down crude oil prices in 2013, by around 5%.
Figure 3: Crude oil prices (US$/bbl)
US$ 140 130 120 110 100
4 8
Figure 4: Exceptionally low interest rates to remain until 2015

% pa 10 3M S$ SIBOR 3M US$ SIBOR
90 80 70 60 Jan-08
0 Jan-88 Jan-91 Jan-94 Jan-97 Jan-00 Jan-03 Jan-06 Jan-09 Jan-12
5% dow n over 2013
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
SOURCES: CIMB, Bloomberg
On interest rates, our regional economists believe that the US Feds resolve to keep interest rates low till 2015 will not be shaken i.e. rates will stay depressed for the whole of 2013. On our part, we do not question the consensus view of low interest rates but rather, are wary that the US could end up raising its debt ceiling again. In the developed world, all that money that had been stuffed into the system by central banks has failed to get banks lending mechanism going. The banks are afraid, need to build up capital and liquidity, while the public is over-indebted. We are wary of the time when the negative ramifications of money printing will manifest themselves, be it in 2013, 2014 or 2015. Next year,
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November 29, 2012
a slow, intermittently growing environment could make central banks push even harder on QE, plausibly culminating in a future when people choose to opt out of US$ bonds and cash. In our opinion, rising inflation expectations are a tail risk, even if this is far from the consensus view. With it comes the risk of rising interest rates.
2.3 Singapore has its share of headaches

Singapores problems centre on asset inflation and cost pressures. Liquidity is clearly abundant and flowing into property, bonds and REITs. Household cash surpluses have kept growing and do not portray any sign of over-leveraging. In the five years preceding 3Q08, cash balances in citizens pension funds (CPF) had grown by a 7.6% CAGR. In the next four years after 3Q08, such cash balances grew even faster (11.2% CAGR). Property prices, since recovering from 2009s trough, have stayed buoyant. Numerous rounds of property-cooling policies have failed to make a lasting impact. Transaction activity is still relatively high while high prices have not deterred buyers altogether. As a marker for comparing price points, Singapores GDP per capita today is 50% higher than Spains but its home prices, in psf terms, are four times the level of Spain - worrying. Thankfully, increased property buying is not built on over-leveraging.
Figure 5: Singapores resale property transaction volumes stay high, despite multiple property restrictions
Units 8,000 7,000 6,000 5,000 4,000 3,000
100 150
Figure 6: Total CPF balance (S$bn)

S$b
OCR (units) RCR (units) CCR (units)
250
CPF Cash Balance
11.2% CAGR
200
7.6% CAGR
2,000 1 ,000 0
0 3Q03 3Q04 3Q05 3Q06 3Q07 4Q08 4Q09 4Q10 4Q11 50
SOURCES: CIMB, URA
SOURCE: CPF
Figure 7: Money raised from Singapores debt markets (S$bn)

S$bn 20 22.0
Figure 8: S$ NEER: MAS is expected to focus on inflation concerns, rather than growth
NEER 112 Stronger S$
Liquidity-flushed environment
15
16.5
110
108
11.4 10 6.5 5 4.1 3.8 8.8 5.8 5.9

106 Weaker S$
104
3.1
3.2
102
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
100 Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
November 29, 2012
Figure 9: Singapores real interest rates are deeply negative

Real Interest Rates (%) 8 6 4 2 0 -2 -4 -6 -8 Jan-07 China Thai Jan-08 Jan-09 Jan-10 Spore Indo Jan-11 Msia Jan-12
Figure 10: Wealth per household (S$'000)

S$'000 800 700 600 500 400 300 200 100 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 Average cash savings per household (RHS) Average property w ealth per household (RHS)
SOURCES: CIMB Research, MAS
Higher property stamp duties for foreigners have so far capped further inflows into property, but have not entirely doused the enthusiasm for S$ assets and liquidity inflows. The inflows have merely percolated into bond markets, REITs and alternative yield instruments. The Singapore bond market has been a prime beneficiary this year. Total debt issuance has broken the record volumes of 2010. All these inflows have been propping up the S$ exchange rate. While a stronger currency benefits citizens in general, capital inflows promote inflationary pressures and could hurt Singapores international competitiveness via currency appreciation. Singapore is getting increasingly expensive. In recent results, some manufacturing companies suffered from forex translation as their receipts are in U$ while costs are in S$. Another data point is hotel bookings. CDL-HT recently guided that booking visibility for its hotels has turned poorer as business travelers defer bookings to the last minute. We reckon this has been caused by belt-tightening among corporates (affecting business travel) as well as the high cost of hotel rooms, after both the appreciation of hotel rates and the S$.
2.4 Coping with costlier labour

Compounding its overall inflationary pressures are its labour costs as Singapore slows down its intake of foreign workers. That is already hurting small and medium enterprises through a severe shortage of manpower. To recap, the decision to reduce foreign-worker inflows was borne out of the need to ease social frictions after rampant foreigner growth in 2005-10 caused crowded conditions, a widening income divide and an increase in social discontent.
Figure 11: Population and infrastructure statistics, in Singapore
Population ('000) (mid-year) Population density - population per sq km Hospital beds per thousand people Person per km of public road Passenger per train km operated Ratio of train km operated to MRT length Passenger per bus km operated (SMRT) Taxis per thousand people Hotel occupancy rate (%) Housing units per capital (x) - Implied household size (heads/hh) Primary school pupils per school ('000) Unit Person ('000s) Person/Sq km Unit Person Person Unit Person Unit % Residence/population People per household Person ('000s) 1995 3,525 5,260 1,186 30 137 4.7 78 0.24 4.25 1.36 2000 4,028 6,012 2.94 1,299 31 151 4.3 4.6 77 0.26 3.86 1.54 2005 4,266 6,273 2.78 1,319 32 137 3.5 5.2 82 0.26 3.85 1.64 2010 5,077 7,252 2.27 1,503 36 155 3.9 5.1 83 0.23 4.38 1.49 2011 5,184 7,257 2.12 1,519 35 153 4.1 5.2 86 0.23 4.35 1.44
SOURCES: CIMB, Department of Statistics
November 29, 2012
Our economist, Song Seng Wun, believes that the tight labour market is here to stay. Although the government has narrowed its 2012 GDP growth forecast to 1.5% (from 1.5-2.5%) and trimmed its 2013 GDP growth projection to 1-3%, the lower forecasts do not necessarily imply higher unemployment prospects. The economy is on track to create about 115k new jobs this year (123k in 2011) despite slower economic growth. Overall unemployment could stay at 1.9%. In fact, Song estimates that about 110k new jobs could be created in 2013, with the service sector accounting for about 70% of that job creation. Overall consumer price inflation is expected to remain firm. Inflation will stem from the pass-through of higher business costs (rentals and wages) to consumer-service prices. For 2013, we expect CPI inflation to average 4%, within the official forecast of 3.5-4.5% (2012E: 4.7%, 2011: 5.2%). As inflation remains elevated and a tight labour market feeds into higher wages and service costs, the MAS should maintain its policy of a modest and gradual appreciation of the S$NEER policy band well into 2013 and beyond.
Figure 12: Jobs created and GDP growth (%): slower growth has not affected employment creation
Persons 80000 %y oy 25
20
6
Figure 13: Firmer wages and service costs in non-tradable sectors

%y oy 8
60000
15
40000
10
4
20000
5
2
0 -5
-20000
-10
-40000 1Q05 1Q06
Mfg 1Q07
Construction 1Q08
Svcs 1Q09
GDP grow th (RHS) 1Q10 1Q11 1Q12
Headline Inflation
MAS Core Jan-12 Jul-12
-15
-2 Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
SOURCES: CIMB, CEIC
SOURCES: CIMB, CEIC
2.5 and rising rentals

At the same time, rentals have held up, giving traditional manufacturing businesses a double whammy. For industrial REITs, we are wary of flatted factories that have higher exposure to traditional manufacturing and SMEs, and more positive about business parks.
Figure 14: Rentals defying weaker manufacturing production
MPI (Excl. Bio-med) 130 120 110 100 90 80 70 60 50 40 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12
SOURCES: CIMB, URA, SINGSTATS
Figure 15: Occupancy costs on the rise

11.0% MTB rentals as % of manufacturing GDP 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0%
20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 3Q 12 *
* PEGGED TO FY12 FORECASTED MANUFACTURING GDP SOURCES: CIMB, URA, SINGSTATS
Warehse rental index (4Q lag)
Factory rental index (4Q lag)
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November 29, 2012
2.6 Stress on small businesses is telling

The government is unlikely to relent on its tighter foreigner policy for a while, while a lack of DPU growth for REITs could mean that they will continue to push for rental increases, whenever possible. Meanwhile, we do not expect S$ appreciation to reverse either. The implication for Singapore is that some of the small, medium enterprises (SMEs) could fold up or move out of Singapore. Tellingly, the number of bankruptcy petitions in Singapore has been rising since 2H11, when Singapore started to limit its foreign-labour intake. A recent survey of more than 10,000 SMEs also shows that their top three worries are manpower, material costs and rentals.
Figure 16: No. of petitions for bankruptcy in Singapore
600 550 500 450 400
4000 6000
Figure 17: Survey of SMEs: what are your greatest concerns?

Manpow er Materials
5000
Number of Petitions for Bankruptcy (Singapore) 12-mth total (RHS)
72% 48% 38% 17% 7% 7% 7% 6% 4%
5500
Rental
4500
Transport Currency exchange

3500 3000 2500 2000
350 300 250 200 150 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Other operating costs Financing Governm ent com pliance/charges Advertisem ent & m arketing
SOURCE: CIMB Research, CEIC
SOURCES: CIMB, DP Information Group
There are implications for Singapore stocks, particularly for the banks. In a plentiful-liquidity environment, coupled with a rising S$ (consensus view), we doubt that the property market will correct dramatically, suddenly. The labour market remains tight even if unemployment may climb in the finance industry. Employment is backstopped by a broadening of the service industry to other non-financial sectors, which is a positive. Mortgage on banks books are on average, at 50-60% loan-to-value ratios, so banks should be able to withstand a fall in property prices. Obviously, the big risk would come from a sudden spike in interest rates or a quick step-up in unemployment rates, neither of which is deem as a high probability at the moment. Instead, we believe that credit-quality strains for banks are likely to perpetuate from SME lending in 2013.
2.7 Themes to consider for stock selection

The backdrop that we have been painting is one of: 1) slow, fragile global growth; 2) healthy ASEAN economies; 3) Chinas bottoming; 4) a surfeit of liquidity in Singapore; and 5) worrying business costs. This shapes our thoughts on stock selection for 2013. We are not too jittery about business costs as there are few manufacturing firms left in the listed space while Corporate Singapores earnings have gone increasingly offshore, in the past decade. That said, we acknowledge that more pressure on corporate earnings will come forth. The themes we are pondering are: Asset inflation, improving China: NAV plays should still do well. The truth is that there is no solution in the western world apart from continued money printing. This may buy time and cultivate hopes that growth will show up somewhere. In the western world, a higher volume of money has been swallowed up by a lower velocity of money, with some seepage into healthier Asia. Asia has been trying to control its incoming liquidity, as evidenced by the property measures in Singapore and recently, Hong Kong. Someday, if growth expectations turn for the better, the velocity of money may swell and it is quite likely to show up first in Asia. Property stocks that
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November 29, 2012
are still trading at large-enough discounts to their NAV must command attention, especially after the strong performance of REITs which are now trading above their book values. Another growing consideration must be how investors can position for improving China dynamics. While most market participants nurse a justified degree of skepticism on Chinese statistics, it is hard to argue with the general trend of the recent plethora of PMIs, monetary aggregates, real retail sales and infrastructure spending (e.g. railways), all of which suggest a nascent revival of growth. Singapore companies that have a China angle must be worth considering. Growth at reasonable price: ASEAN consumer stocks have done well this year, being proxies for more stable sources of demand. Investors preferences for such earnings will not vanish overnight. The tougher act is to find affordable stocks now, to be positioned for a ramp-up of infrastructure investment and consumption in ASEAN. We call this a growth at reasonable price strategy. Unloved cyclicals with semblance of downside support: Today, there is valuation polarisation between consumer stocks and shaky, global-demand proxies. With the task of finding affordable consumer stocks increasingly a challenge, the risk-reward seems to favour cyclicals that are: 1) close to some sort of bottom-value support; and 2) have the scope for a good earnings quarter that can be meaningful for share-price performances. It is time to stretch out for growth. Yields with the right catalysts: REITs are well-owned and one has to start to be very selective with them. Although yield spreads are still wide, that has to be view in the context that interest rates are now exceptionally low. The overarching negative for the sector is potentially rising interest rates some time in future, though that seems to be a risk further out in time. It is a sector that we would opt to reduce exposure. The nearer-term negative catalyst for REITs would be non-accretive acquisitions. Companies to avoid are those with revenue highly dependent on the well-being of global demand or face growing overcapacity. Shipping and airlines are longstanding examples. CPO processors based in Indonesia are more recent new examples of industries that will struggle with upcoming surplus capacity. These stocks are cheap but will stay cheap. Pinning your hopes on any V-shape recovery today is blind hope. Pure operating leverage is certainly not favoured in this environment.
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3. SECTOR VIEWS, STOCK PREFERENCES 3.1 Financials

Figure 18: FINANCIALS
FINANCIALS Pot ent ial drivers t hat can spur out performance Banks Valuations (1 .1 x P/BV, -1 SD) look cheap especially as ROEs (1 1 %) hav e held up, ev en as m argins contract. Non-NII has been the sav iour. Such v aluations leav e room for perform ance.
2.10
NEUTRAL
Pot ent ial risks t hat can t rigger underperformance Business cost pressures could trigger an increase in bad debts. Banks' healthy cov erage buffers could easily seem less adequate when NPLs spike, as UOB's case illustrated in 3 Q1 2 .
160%
SG Banks' P/BV
SG Banks' Cov erage
1.90
140%
+1 SD = 1.7x
1.70
120%
1.50 Mean = 1.5x
1.30
-1 SD = 1.2x
100% DBS
1.10
OCBC UOB 80%
0.90 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
Non-interest income is driv ing returns, am id slowing grow th and low m argins. Positiv e surprises will likely com e from trade fees, IB and treasury .
3.5 S$bn 3.0 2.5
Funding can be a future problem . DBU LDRs hav e crept up abov e 90%, S$ LDR is still liquid but banks are com peting for sticky deposits, w ith an ey e on Basel-3 liquidity requirem ents SG Loan-deposit ratios
DBU ACU S$
Non-interest incom e v s. Net interest incom e

Total NII Total Non-NII
100
90
2.0 1.5 1.0

70
80
0.5 0.0 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12
60 Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Exchanges
Resolution of western world's bloated balance sheets can rem ov e m arket uncertainties. Without a full resolution, inv estors could stay in bonds and y ield play s, and m arket v olum es will shrink.
3,000
QE has not helped stock m arkets' v olum es globally . The threat to exchanges is a further deferm ent of actual solutions, capping turnov er v elocity and de-rating stocks further.
1 00%
SGX Av erage Daily Trading
SGX Turnov er v elocity
ADVT (S$m)
2,500
80%
2,000
1,500
60%
1,000
40%
500
May-07 May-08 May-09 May-10 May-11 May-12 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Jan-12 Sep-12
20% M ay1 0 A ug1 0 No v1 0 Feb1 1 M ay1 1 A ug1 1 No v1 1 Feb1 2 M ay1 2 A ug1 2
CIMB Research
Outlook for 2013: The macro environment does not look supportive of earnings growth. Loan growth guidance remains in the mid- to high-single digits. Mortgage volumes are still holding up but business loans are slowing. Upside for loan growth stems from a more sustainable recovery in the US as clients have been deferring plans for expansion this year, faced with uncertain
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November 29, 2012
end-demand. Margins should narrow in 1H13, but could bottom in 2H13 given that it is already at record lows and mortgage re-pricing effects are petering out. Net interest income growth is difficult. Banks are dependent on non-interest income to lift their revenue. Trade- and loan-related fee growth could pick up if the recent recovery in Chinas manufacturing data keeps up. Within ASEAN, growing infrastructure investments are positive for financing opportunities. In the area of IB fees, DBS is poised to do better, especially if the underperforming China equity market turns around; without this, DBS can still count on booming debt-market issuance in Singapore. Trading income will not be significantly stronger. Trading income was strong in 2012 on the back of bond markets making new highs; it might be tough to repeat such investment gains. There is no pressure on operating expenses but NPLs could spike if business bankruptcies rise, even if all three banks flag no asset-quality red flags for now. We do not think mortgage NPLs need be a worry.
Figure 19: DBSs NII (S$m)
In S$ 1336 Quarterly net interest income 1290 1300 1214 1199 1324 1332 1400
Figure 20: OCBCs NII (S$m)

1,200
Figure 21: UOBs NII (S$m)

1,200 Quarterly net interest income
1,100
1,100 999
951
978
944
1140
1127
925
1200 1112
931
1,000 925 908 892 900 884 883 913 916
1106
1122
1079
1066
1067
710
689
900
700
686
704
720
1000
800
754
769
784
827
1100
800
700
800 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
600 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
600 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
SOURCES: CIMB, COMPANY
Figure 22: Banks NIM (%)

2.3% DB S OCB C 2.1 % UOB
Figure 23: Banks NPL ratio (%)

3.0% DB S OCB C 2.5% UOB
Figure 24: Banks core Tier-1 (%)

1 3%
1 2%
2.0%
1 .9%
1 .5%
1 1 %
1 .7%
1 .0%
1 0%
865
900
871
900
874
DB S OCB C UOB
1 .5% 1 Q1 0 3Q1 0 1 Q1 1 3Q1 1 1 Q1 2 3Q1 2
0.5% 1 Q1 0 3Q1 0 1 Q1 1 3Q1 1 1 Q1 2 3Q1 2
9% 3Q1 1 4Q1 1 1 Q1 2 2Q1 2 3Q1 2
SOURCES: CIMB, COMPANY REPORTS
Recommendation: Current valuations (less than -1SD of P/BV and P/E bands) are not lofty but considering that we expect a marginal decline in 2013 ROEs (11.1% average) and flat core EPS growth, CY13 average dividend yields (4.2%) would appear fair for a no-growth year. The three largest REITs trade at 5.5% CY13 yields, but banks provide 4.2% yields on 40% payouts with some cyclical growth option. We think they look more attractive than the large-cap REITs but a lack of earnings growth has deterred us from taking a more optimistic view. We are Neutral on the sector. Our stock preference is DBS as we believe its strong IB fees recently can be sustained into 2013 as Asian debt markets develop. Catalysts for positive surprises are the use of freed-up capital from RWA optimisation to buy growth.
14
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1,000
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November 29, 2012
3.2 Property
Figure 25: PROPERTY
Propert y Pot ent ial drivers t hat can spur out performance Negat ive real rat es and sustained inflation should keep interest in hard asset play s. With S-REITs' y ields com pressed, w e now prefer dev elopers for their m ore attractiv e v aluations, China and m ore asset-recy cling opportunities.
Index 1200 1000 800 600 400 200 0 J an-02 J an-03 J an-04 J an-05 J an-06 J an-07 J an-08 J an-09 J an-10 J an-11 J an-12 J u l- 0 2 J u l- 0 3 J u l- 0 4 J u l- 0 5 J u l- 0 6 J u l- 0 7 J u l- 0 8 J u l- 0 9 J u l- 1 0 J u l- 1 1 J u l- 1 2
OVERWEIGHT
Pot ent ial risks t hat can t rigger underperformance Declining GDP poses one of the biggest risks to dev elopers. 3 Q1 2 data shows a worse-than-expected GDP contraction of 5.9 %, seasonally -adjusted and annualised
Persons 80000
Property
Negativ e real rates a boon for NAV
% 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00
GDP growth (%) and Jobs created
%y oy 25 20 15
60000
40000 10 20000 5 0 -5 -20000 -10 -40000 1Q05 1Q06 Mfg 1Q07 Construction 1Q08 Svcs 1Q09 GDP grow th (RHS) 1Q10 1Q11 1Q12 -15
FSTRE Index (LHS)
MASB10Y (RHS)
Valuat ions rem ain attractiv e with dev elopers trading at an av erage 2 8% discount to RNAV. Many hav e com m itted dev elopm ent capex which should start to bear fruit in 2 01 3 -1 5, lifting NTAs
Prem/(disc) 10% 0%
GL P OU E CA PL KP LD CD L CM A UO L SL Ho be TA I
A China slowdown w ill be v ery negativ e for dev elopers as China m akes up 2 0-50% of their GAVs. GAV breakdown, by geography (%)
Developer BukitSemb CapLand CMA CityDev GLP Hobee KepLand OUE SingLand UOL Wheelock Wing Tai UEM Singapore 100% 39% 38% 81% 0% 68% 51% 99% 98% 82% 94% 88% 100% China 0% 47% 51% 3% 42% 31% 33% 1% 2% 9% 6% 0% 0% Vietnam Australia Japan 0% 0% 0% 1% 5% 1% 0% 0% 4% 0% 0% 0% 0% 0% 51% 0% 0% 0% 8% 2% 0% 0% 0% 0% 0% 0% 0% 0% 4% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Europe 0% 2% 0% 6% 0% 0% 0% 0% 0% 4% 0% 0% 0% US 0% 0% 0% 6% 0% 0% 0% 0% 0% 0% 0% 0% 0% Others 0% 5% 7% 5% 7% 1% 7% 0% 0% 2% 0% 12% 0%
Stock v aluations, discounts to RNAV

Prem/Disc to RNAV/SOTP
-10% -20% -30% -40% -50% -60%
(insert a relev ant chart)
IN G
CIMB Research
Outlook for 2013. Negative real rates look set to support property values in 2013. In an environment of depressed funding costs and rising capital values, we believe developers, particularly those with established REITs and/or private-funds platforms, are in an advantageous position to crystallise value through asset recycling. We expect this to remain a source of growth for developers in 2013. China could yet again emerge as an important determinant of growth as risks of further (residential) policy curbs recede and signs of a turnaround in its real economy emerge. In Singapore residential, vacancy could rise further and we would continue to avoid this segment. The office sector is showing signs of a bottoming, though investors may only see a turnaround in rents in 2014. Given their YTD outperformance, we would switch out of office REITs to developers which are still trading at deep discounts to RNAV. Recommendation: Developers have done well YTD, albeit from a very low base. They are trading at an average 28% discount to RNAV or 1.05x P/BV, still below their historical five-year average. Many have committed development capex, which should start to bear fruit in 2013-15 and lift NTAs. We like developers with: 1) NTA growth visibility, backed by large development pipelines in commercial/mixed developments; 2) established platforms for asset recycling; and 3) exposure to a recovering China. Our preferred picks are CapitaLand (top pick), GLP (Outperform), UOL (top mid-cap pick) and KepLand (Outperform). CityDev remains an Underperform.
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November 29, 2012
Figure 26: Sector comparison

Bloomberg Ticker Bukit Sembawang Estates BS SP CapitaLand CAPL SP CapitaMalls Asia CMA SP City Developments CIT SP Fraser & Neave FNN SP Global Logistic Properties GLP SP Ho Bee Investments HOBEE SP Keppel Land KPLD SP Overseas Union Enterprise OUE SP Singapore Land SL SP United Engineers UEM SP UOL Group UOL SP Wheelock Properties (S) WP SP Wing Tai Holdings WINGT SP Singapore average Company Recom. Outperform Outperform Neutral Underperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Neutral Outperform Price Tgt Px (local curr) (local curr) 5.57 6.45 3.41 4.02 1.88 1.99 11.28 10.80 9.39 9.85 2.55 2.93 1.54 1.93 3.41 4.00 2.59 3.38 6.79 8.44 2.45 3.13 5.43 6.55 1.82 2.00 1.73 2.00 Mkt Cap RNAV Prem./(Disc.) P/BV (x) Div. Yield (%) Core P/E (x) (US$ m) CY2012 CY2013 CY2012 to RNAV (%) CY2012 CY2012 1,178 7.7 6.6 9.92 -44% 1.19 3.2% 11,841 40.9 21.4 5.02 -32% 0.93 1.3% 5,955 30.9 26.9 2.22 -15% 1.10 1.6% 8,379 22.4 16.2 12.71 -11% 1.48 1.4% 11,045 22.0 16.9 10.52 -11% 1.82 1.9% 9,910 26.1 23.0 2.93 -13% 1.17 1.4% 876 8.0 9.0 2.76 -44% 0.61 3.2% 4,302 10.9 12.5 4.99 -32% 0.88 3.0% 1,925 24.0 19.7 4.50 -42% 0.76 2.1% 2,288 13.6 11.9 14.07 -52% 0.62 2.9% 607 17.1 9.8 4.81 -49% 0.59 4.1% 3,414 13.2 11.1 8.73 -38% 0.77 1.7% 1,779 19.8 16.1 2.67 -32% 0.74 3.3% 1,106 7.5 7.1 2.67 -35% 0.63 4.4% 20.4 16.5 -28% 1.05 1.9%
SOURCES: CIMB, BLOOMBERG, COMPANY REPORTS
3.3 REITs
Figure 27: REITs
REITs Pot ent ial drivers t hat can spur out performance REITs Risk aversion can force inv estors back to th e safety of REITs
UNDERWEIGHT
Pot ent ial risks t hat can t rigger underperformance Capital-raising risks as sector asset lev erage heads higher and with REITs opportunistically raising capital in the absence of accom pany ing inv estm ents. Equity issuances in 2 01 2
900 800 700 Amt raised (S$'m) 600 500 400 300 200 100 Primary Secondary
and yield spreads.

REITs' y ield-spread against 1 0-y r bond y ields
% 8 7 6 5 4 3 2 1 2003 2004 2005

Div yield
LT Ave: 4.1%
2006
2007
2008
2009
2010
2011
2012
Spread over 10y GB
LT ave. spread
0 1Q12 2Q12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12
DPU growth should rem ain positiv e for m ost, anchored by organic rental rev ersions, acquisitions and asset enhancem ent com m itted in the past. Inorganic v s. Organic growth
20% Organic (%) Inorganic (%)
Interest rates (short-term ) are already near 0%. Risks are on the upside as rates cannot go any lower. Acquisitions (which look accretiv e against low funding costs) m ay turn out not that attractiv e when rates norm alise. Historical interest rate trends
Interest rates (%) 6.0 5.0 4.0 2-Yr 10-Yr
15% FY13* DPU growth
10%
3.0 2.0 1.0
5%
0% FCOT** Starhill Suntec** Plife AREIT Cache ART CDLHT FCT CCT KREIT M INT CM T M CT M LT
0.0 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10 Jun-12
-5%
CIMB Research
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November 29, 2012
Outlook for 2013: We expect more acquisitions in 2013 on the back of easier accretion, particularly for REITs with pipeline assets from sponsors. Companies that could go down the acquisition path include AREIT, Cache, MLT, K-REIT (MBFC Phase 3), Suntec REIT (MBFC Phase 3), CMT (Star Vista, ION Orchard), FCT (Changi City Point) and MCT (Mapletree Business City, Twenty Anson). Sector gearing (35%) is edging up and some REITs are pre-emptively raising funds - not the most endearing. With debt aversion a post-GFC characteristic, more could opt for a higher portion of equity funding in acquisitions. Risks for REITs include: 1) expensive and risky acquisitions e.g. overseas or speculative greenfield developments; and 2) dilution from equity fund-raising. Operational performances remain resilient. Office should bottom, supported by tenants from non-finance industries (legal, commodities). Supply pressure could be alleviated by the removal of older inventory. Retail remains well-supported by full employment. Competition from incoming supply is localised and mitigated by good pre-commitments ahead of physical completion. Industrial tenants could face cost pressures and demand weakness, though the effects on landlords should be attenuated by low occupancy costs, long leases and a shallower economic pull-back than past crises. In the Hotel segment, new rooms supply and added pressure from less corporate travel, cap REVPAU upside.
Figure 28: Pipeline acquisitions
REIT ART CDLHT AREIT Cache M IT M LT FCOT CCT K-Reit Suntec CM T FCT M CT Starhill Plife Sponsor/ Parent Ascott Ltd M &C Holdings Ascendas Grp CWT M apletree Investments M apletree Investments FCL/ F&N Capitaland Keppel Land Cheung Kong CM A CM A FCL/ F&N M apletree Investments YTL Khazanah Pipeline Assets Other assets from sponsor W Hotel Business parks in Sg and China Warehouses in Sg, M alaysia and China Overseas warehouses Alexandra Point & Valley Point M arket Street Car Park M BFC Phase 2 M BFC Phase 2 ION Orchard Star Vista Changi City Point M apletree Business City M apletree Anson Pantai Chain, Novena Hospital Expected timeline M id-term M id-term M id-term End 2012 - 13 End 2012 - 13 M id term; hard to inject near-term Option to purchase on completion End 2012 to early 2013 End 2012 to early 2013 Near- to mid-term Near- to mid-term End 2012 to early 2013 End 2012 to early 2013 Near- to mid-term Est. value (S$'m) ~S$400m ~S$350m ~S$1.1bn ~S$1.1bn ~S$1.4bn S$360m >S$300m ~S$1.2-1.3bn (M BC) ~S$700m (M apletree Anson) -
Figure 29: DPU growth unlikely to return to the past

S-REITs Industrial Ascendas REIT Cache Logistics Trust Mapletree Industrial Trust Mapletree Logistics Trust Office Capitacommercial Trust Keppel REIT Suntec REIT Frasers Commercial Trust Retail CapitaMall Trust Frasers Centrepoint Trust Mapletree Commercial Trust Starhill Global REIT Hospitality Ascott Residence Trust CDL Hospitality Trust Healthcare Parkway Life REIT Sector CAGR (2006 - 2008) 10% na na 5% 8% 26% 29% 20% 0% 19% 11% na na 11% 11% 16% 30% 23% na 16% CAGR (2012 - 2014) 4% 5% 5% 1% 3% 0% 0% 1% 13% 3% 6% 4% 11% 7% 7% 4% 2% 3% 9% 5%
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November 29, 2012
Recommendation: The sector is now trading at 1.1x P/BV, with forward yields of 6%. Yield spreads are still 50bp above their historical five-year mean. While above-average yield spreads have been commonly cited for REITs to keep rising, this can only continue with sustained risk aversion. Risk indicators seem to be turning net positive, which could prompt investors to switch out of defensives. This is particularly so with REITs which are unlikely to see the strong growth of 2004-8, given increased caution on leverage and acquisitions after GFC. Interest rates are also near 0% also, meaning risks are on the upside over the longer term. We think it does not pay to stay too bearish and continue taking shelter in yields. We recently downgraded the sector to Underweight from Overweight given its poor risk-reward at current valuations with emerging risks from expensive acquisitions and capital-raising. We prefer AREIT for its good DPU growth next year (anchored by past committed developments/ AEI and rental reversions), long WALE and debt headroom for acquisitions. An added comfort is managements record for making astute purchases.
OVERWEIGHT
3.4 Commodities
Figure 30: Commodities
COMMODITIES Pot ent ial drivers t hat can spur out performance CPO prices hav e fallen 40% from their 2 01 2 peak due to record stockpiles in Malay sia. Malay sia's palm -oil inv entory could ease as dem and picks up while CPO supply could decline from the low production season
(mil tonnes) 2.6 2.4 2.2 1,100 2.0 1.8 1.6 1.4 600 1.2 1.0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 500 400 1,000 Stock (LHS) CPO price (RHS) (US$ /tonne) 1,400 1,300 1,200
5.0 4.0 3.0 2.0 1.0 0.0 -1.0
Pot ent ial risks t hat can t rigger underperformance Weak global growth is negativ e for CPO prices as it will dam pen dem and for edible oils (from de-stocking), drag down crude oil prices which indirectly lower the support lev el for CPO prices and lead to outflows of speculativ e funds from com m odities
(%) 7.0 6.0 Global GDP Edible oil demand growth
Upstream
CPO price and inv entory
900 800 700
GDP growth and global edible oil dem and
We expect CPO dem and to recov er due to its attractiv e pricing against soy bean oil and crude oil. This would help narrow its price gap with soy bean oil
(US$/tonne) 400 350 300 250 200 150 100 50 Jan-10 (50) Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Slower biodiesel dem and growth. Most countries are already producing close to their targets. The EU plans to reduce the use of biofuels m ade from crops to 5% of total fuel usage in its transport sector in 2 02 0, from 1 0%. This could lim it biofuels' growth.l
Country France Germany Other EU countries USA Argentina Brazil 2008 1.9 2.7 3.0 2.7 0.7 1.0 2.3 14.3 2009 2.0 2.5 4.3 1.9 1.2 1.4 3.0 16.3 2010 2.0 2.8 4.8 1.1 1.8 2.1 3.7 18.3 2011 1.8 2.7 4.6 3.0 2.4 2.4 4.8 21.7 2012F 1.8 2.4 4.8 2.8 2.9 2.7 5.8 23.2 CAGR -0.8% -2.9% 12.4% 1.0% 42.2% 27.2% 25.7% 12.8%
3-year average discount: US$150/tonne CPO price prem ium
and discount against soy bean oil
Rest of world Total
CIMB Research
18
November 29, 2012
Figure 30: Commodities (contd)

COMMODITIES Pot ent ial driv ers t hat can spur out performance Trader & Logistics Valuations (1 xP/BV, -1 .7 SD) hav e fallen to historical lows, spurring share buy backs by Noble and Olam . Low institutional ownership and v aluations leav e room for perform ance.
SG T r a der s' P/BV 4.0 3.5 3.0 2.5 2.0 1.5 1.0 2006
Pot ent ial risks t hat can t rigger underperformance Refining m argins could suffer as new processing capacity is added. Indonesia's policies hav e spurred dow nstream inv estm ents for CPO and cocoa. Cocoa-grinding m argins hav e cracked. CPO refining m argins could be next as capacity com es onstream .
US$/Mt 300 250 200 150
10 9 209
Cocoa pr oc essin g m a r g in s
100 50 0 2007 2008 2009 2010 2011 2012 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12
China's econom ic growth will spur the dem and for com m odities. Hard com m odities will benefit from im prov em ents in industrial production. China's IPI and GDP grow th
21
Actual GDP growth (%YoY) Projected GDP growth IPI growth
Trade finance costs are at all-tim e lows. Traders could get hurt by higher borrow ing costs when rates clim b.
7 % 6 5 4 3 2
Libor
17
13
9
1
5 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
CIMB Research
Outlook for 2013: The operating environment in 2013 will hinge on global macroeconomics. The USs fiscal cliff and sluggish European economies remain risks, though these are well-known and have arguably been priced in, going by traders all-time low valuations. What could surprise positively is Chinas recovery. Economic data has been pointing to a bottoming out in China. Sustained trends will be supportive of commodity demand. Wilmar should benefit from stronger demand for its consumer products, soybean products and refined oil in China, while Noble should benefit from stronger demand for hard commodities and agricultural products. Spot CPO currently trades close to its 3-year low due mainly to Malaysias burdensome CPO stock. We expect the CPO stock to decline in 1H13 from slower palm-oil output growth as estates enter their low production season. Demand for CPO should improve in 2013 following attractive CPO price discounts to soybean oil and lower supplies of other edible oils. However, rising soybean supplies in 2H13 and declining biodiesel demand growth may cap the upside for CPO prices. Overall, we project an average price of US$960/tonne for 2013 (-3% yoy), up from the current spot price of US$780. Lower selling prices and a recent proposed increase in Indonesia's minimum wage by up to 44% may hurt profit margins from estates though we expect the pinch to be partially offset by higher output growth and local CPO prices as upstream producers claw some of the refined tax benefits from refiners.
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November 29, 2012
Figure 31: Soybean crushing margins from Wilmar to recover

(US$ m) 250 200 150 100 50 2 0 1Q09 -50 -100 -150 -200 (173) 3Q09 1Q10 3Q10 (37) 1Q11 3Q11 1Q12 (53) (40) 3Q12 99 193 169 146 182 146 192
Figure 32: 4Q12 earnings for planters may remain dull

(RM/tonne) 3,800 3,600
129 100 60
3,400 3,200 3,000 2,800 2,600 2,400 2,200 2,000 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12
CPO price chart
Figure 33: Noble's core net profit

US$m
200
Figure 34: Olam's core net profit

S$m 150
150 100 100
50
50
1Q CY11 2Q CY11 3Q CY11 4Q CY11 1Q CY12 2Q CY12 3Q CY12 -50 1Q CY11 2Q CY11 3Q CY11 4Q CY11 1Q CY12 2Q CY12 3Q CY12
Recommendations: Traders valuations have fallen to historical lows (< -1SD of P/BV, P/E bands) following repeated earnings disappointments. We cannot rule out further earnings misses, but valuations seem to have already reflected little expectations with the sector at 1x P/BV. Institutional ownership is low and share prices have been recently supported by share buybacks. Against very low expectations, any incremental improvement in sentiment or economic data could reignite interest in this space. Rather than dwell on Noble or Olam, we highlight CWT. The company has morphed from a warehouse operator into a logistics player. Our earlier concerns of a more opaque business (when it bought a base metal trading business) have died down as management delivers consistent earnings with its metal and energy businesses. In palm oil, we prefer Wilmar over CPO producers as Wilmar is expected to report stronger earnings growth in 2013 with the aid of higher crushing margins and processing volumes. The stock is also trading at 50% below its three-year P/BV average, which we believe more than accounts for poor earnings viability in its crushing business. At current valuations, its strengths such as strong distribution channels and an integrated business seem to have been forgotten by investors. We see re-rating catalysts from: 1) improving crush margins (better timing of purchases of feedstock and potential industry consolidation in China); 2) higher sales volume from expansion; 3) recovering demand for edible oils; and 4) potential M&As.
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November 29, 2012
3.5 Capital Goods

Figure 35: Capital Goods
CAPITAL GOODS Pot ent ial driv ers t hat can spur out performance Valuat ions are beat en-down post-selldow n of Sem bm arine Offshore & on m ore bearish m argins. Order pipelines are strong in 2 01 3 Marine with a m inim um US$6 bn of projects up for grabs. New orders could still spur v aluations for rig builders to about 1 5x.
25 A ggr ega t e for wa r d P/E for KEP a n d SMM 12M - Forw ard FD Core P/E (x) +1SD: 16.5x
OVERWEIGHT
Pot ent ial risks t hat can t rigger underperformance Order moment um will slow in 2013 from a lack of m ega rig orders from Sete Brasil. Non-Brazilian orders continue to face stiff com petition from Korean y ards.
A n n u a l or der win for KEP a n d SMM 10 8 Keppel Corp Sembcorp Marine 6.5 6 10.0 8.8 7.3 7.4 5.2 3.1 5.4 5.5 2.2 2.1 0.7 0.7 0.8 3.1 2 4.2 1.7 1.3 2.6 9.6 5.5 5.5
21
17
13 Ave (02-12): 9 -1SD: 7.4x 5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2.7 4.5 3.7 4.5 2014F
2002
2004
2006
2008
2010
2012 YTD
Earnings upside. With m argin declines priced in, share-price upside could com e from stronger-than-expected m argins from m assiv e jack-up deliv eries in 2 01 3 , especially for Keppel Corp
20 Ri g del iv er i es (u n it s) Rigs delivered per year by Keppel Corp 16 13 12 9 8 7 6 3 6 19
Margins and earnings will likely be lower in 2013 w ith the execution of lower-v alue, low er-m argin projects (secured after GFC), and Brazilian orders. New designs could also inv olv e a learning curv e and related costs, com pressing m argins.
31% 27% 23% 19% 15% 11% 7% KEP 1Q08 1Q09 1Q10 1Q11 1Q12 SMM FY13F KEP a n d SMM m a r gin s (% )
0 2008 2009 2010 2011 2012 2013 2014
MRO
Sust ainable order moment um. We expect 1 5% y oy growth in ST Engineering's orders to S$2 .2 bn in FY1 3 (9M1 2 : S$1 .6 bn). STE is the second-largest independent MRO prov ider in the US and has gained m arket share with firm er rates thanks to an exodus of com petitors.
1,787 A er ospa ce's qu a r t er l y or der win FY11:S$1.68bn 9M12:S$1.6bn FY13F: S$2.2bn
Expensiv e. STE was the top stock perform er in Capital Goods. Trading at 1 7 .8x CY1 3 P/E, it is expensiv e for staid earnings growth. The stock tends to underperform in a bull m arket when high-beta /growth stocks w ould be preferred.
22 ST En gin eer in g P/E ba n ds (x)
1,600
1,004
1,148
20 +1SD: 19.5x
1,200
800 48 139 207 363 237 319
370 429 320 560 453 350 540 370 689
18 5-yr Ave (0812): 17.7x 16 -1SD: 15.9x 12M - Forw ard FD Core P/E (x) 14 39448 39814 40179 40544 40909
1Q06 4Q06 3Q07 2Q08 1Q09 4Q09 3Q10 2Q11 1Q12
30
62
124
400
CIMB Research
21
November 29, 2012
Outlook for 2013: We see the potential for more non-Petrobras orders in 2013, to S$4.5bn-5.5bn each for Sembcorp Marine and Keppel Corp (from an average of S$2.5bn in FY12). FY12 was the year when most Singapore yards were busy securing mega-sized rig orders from Sete-Brasil. Going forward, we expect SMM and KEP to turn more aggressive in bidding against the Koreans. Among the big three Korean yards, Daewoo Shipbuildings and Samsung Heavy Industries yards are full, with very little capacity for 2H14 deliveries. This leaves room for the Singapore yards to chase after fast-track jobs for 2H14 deliveries, potentially with better margins. We are not worried about the threat from newcomers in China with the only exception of Dalian Shipbuilding which has a proven jack-up rig track record. CIMC Raffles China and Cosco are struggling with design technicality, project management, yard efficiency and on-time delivery. Established rig operators and national oil companies are still more inclined to order from the Singapore and Korean yards. We believe bearish margin guidance has also been priced in, after the 3Q12 selldown. Any improvements in margins in FY13 could trigger outperformance, we believe. MRO operators could provide a safe haven with earnings growth, margin expansion and sustainable orders in FY13. Hangars are busy for both ST Engineering and SIA Engineering. STEs increased market share in the US could lead to more MRO contracts while SIAE could perform more intensive checks for new fleets of aircraft acquired by SIA four years ago.
Figure 36: Jack-up orders still dominated by Singapore yards
40 35 30 25 20 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Dalian Shipbuilding China KEP Singapore SMM Singapore Others
Figure 37: Singapore yards losing semi-sub market share

16 14 12 10 8 6 4 2 0 2001 2005 2006 2007 2008 2009 2011 2012 CIMC Raffles, China Daew oo Korea Samsung Korea KEP Singapore Cosco, China Hyundai Korea SMM Singapore
Figure 38: More B777-312s due for second D checks, more B377-212s and A380s due for first D checks
unit 12 Second "D" checks for B777-212s B747s B777-312s A340-541 B777-212s A330s A380-841 8 10 12
10
First "D" checks for B777-312s and A380-814
0 1 2 3 4 5 6 7 8 9 10 11 13 14 15 16 17 SIA's current fleet aging profile (no. of years in operation)
22
November 29, 2012
Recommendation: Current valuations (12x CY13 P/E) are high against the rigbuilders history. We think that new orders could still spark the sectors re-rating, to about 15x. Maintain Overweight. Between the two rigbuilders, we prefer Keppel Corp for: 1) its better strategy in this rig cycle, by taking on calculated risks in bidding aggressively for jack-up rigs in 2010-11 and hence dominating about 45% of the market; 2) its scalable overseas yards; 3) lower slippage risks for Brazilian orders thanks to its 12 years of operation in the country, building familiar products (semi-subs); and 4) better valuations, below its 10-year average of 12x and SMMs 16x CY13 P/E. Among the MRO players, we prefer ST Engineering for its liquidity, global operations (to cushion S% appreciation) and upside from M&As. Catalysts are stronger-than-expected margin expansion for its Aerospace business and reduced competition among global MRO providers.
Figure 39: Keppel Corp is trading below its 10-year average
23 12M - Forw ard FD Core P/E (x)
23
Figure 40: Downside for SMM if earnings or orders disappoint
20
20
+1SD: 19.6x
17
17
+1SD: 16.5x
14
14
Ave (02-12): 15.2x
11
Ave (02-12): 12.0x
11
-1SD: 10.7x
8
-1SD: 7.4x
5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
5 2002
12M - Forw ard FD Core P/E (x) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
3.6 Telecommunications
NEUTRAL
Outlook for 2013: Singapore's telcos are trying to monetise the surging usage of mobile data by reducing the volume of data bundled. They have reduced data allowance from 12GB to 2GB for new contracts. As 10-20% of the users consume more than 2GB of data per month, telcos will be able to earn higher revenue by revising their data plans. The adoption of LTE devices should also spur greater usage of data. Data usage per smartphone user has almost doubled over the last two years, we think because of: 1) more content available; 2) the switch from Blackberry devices to Android and iPhones; and 3) the generous data bundles offered. We also believe that the adoption of 4G handsets will be faster than the take-up of 3G because of: 1) the availability of content currently vs. a lack of content during the early days of 3G; and 2) greater availability of 4G devices vs. the initial launch of 3G. Dividends will be the focus for StarHub and to a lesser extent, M1. With its net debt/EBITDA falling to multi-year lows of 0.4x, we expect StarHub to raise its DPS by 20% to 24 cts in FY13. To top it off, StarHub sat on S$576m of cash in 3Q12 after selling S$220m of bonds. M1 could also possibly undertake a small capital-management exercise (end-2013) as its net debt/EBITDA had gone down to 0.88x in 3Q12, below its target of 1-1.5x. However, such a prospect would depend on how much it pays for refarmed spectrum. Singapores telco regulator, IDA, plans to re-farm and auction 1800MHz, 2.3GHz and 2.5GHz spectrum bands. The auction is likely to be held in 1H13, way ahead of the expiry of existing spectrum allocations in 2015 and 2017, to allow telcos to plan ahead. We do not anticipate aggressive bidding as there is ample spectrum, unless: 1) all three telcos bid for more than 2x20MHz; or 2) new contenders emerge; both unlikely. There were no new takers for the residual 3G spectrum in 2010. 3G auctions in 2001 and 2010 were awarded at reserve prices as there was sufficient spectrum for the three incumbents.
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November 29, 2012
Figure 41: Telecoms

TELECOMS Pot ent ial drivers t hat can spur out performance Telecom s Turnaround in m obile rev enue growth can spur perform ance. Mobile rev enue grow th has ground alm ost to a halt. Mobile rev enue growth (%)
18% yoy grow th 13% 4% 600 8% 2% 300 1Q10 -2% 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 -2% Singapore 3Q10 Australia 1Q11 Telkomsel 3Q11 AIS 1Q12 Bharti 3Q12 Globe 1Q13
Warid
Pot ent ial risks t hat can t rigger underperformance Turnaround in Bharti, lower com petition in Australia, im prov ing profitability in Singapore SingTel Pretax profits, by subsidiary (S$m )
1,200
8%
qoq grow th
6% 900
3%
0%
PBTL
Higher div idends or special div idends by StarHub giv en its low and rapidly falling net debt/EBITDA (cts)
40 32 24
Stiffer-than-expected com petition for LTE spectrum

Category 1800MHz 2.5GHz FDD TDD Lots available 14 x 2x5MHz (total 2 x 70MHz) 8 x 2x5MHz (total 2 x 40MHz) 6 x 10MHz (total 60MHz) Spectrum range (MHz) Lower Band 1715 - 1785 Lower Band 2500 - 2600 Upper Band 1810 - 1880 Upper Band 2620 - 2680
No special div idend in the last fiv e y ears
(x ) 1.5
DPS or capital redn/share Net debt/annualised EBITDA 1.2 0.9
2300 - 2330 & 2570 - 2600

16 8 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 0.6 0.3 -
CIMB Research
Figure 42: Data as % of revenue

45%
40%
35%
30%
25%
20%
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
SingTel
StarHub
M1
Average
24
3Q12
November 29, 2012
Figure 43: Singapore telcos 4G mobile plans

M1 Monthly fee - new Monthly fee - old Voice credit (mins) - new Voice credit (mins) - old SMS/MMS credit - new SMS/MMS credit - old Data credit - new ^ Data credit - old ValueSurf $39 $39 120 120 600 500 2GB 12GB LiteSurf $59 $55 300 250 800 500 3GB 12GB ExtremeSurf $98 $95 700 600 1,000 500 5GB Unlimited 12GB 2,000 Unlimited MaxSurf $198
Starhub Monthly fee * Voice credit (mins) * SMS/MMS credit - new SMS/MMS credit - old Data credit - new Data credit - old
3G SmartSurf 100 $38 $100 500 800 12GB 2GB
3G SmartSurf 300 $58 $300 500 900 12GB 4GB
3G SmartSurf 700 $98 $700 500 1,000 12GB 6GB
3G SmartSurf Unlimited 205 2,000 2,000 2,500 Unlimited 12GB
SingTel Monthly fee * Voice credit (mins) * SMS/MMS credit - new SMS/MMS credit - old Data credit - new Data credit - old
Flexi Lite $39.90 100 800 550 2GB 12GB
Flexi Value $59.90 200 900 650 3GB 12GB
Flexi Plus $99.90 500 1,000 700 4GB 12GB
Flexi Premium $205.00 2,000 2,500 2,000 12GB 30GB
* no change ^ Free 1GB added for re-contracting users

Recommendation: The sector is a Neutral as it lacks re-rating catalysts and valuations are not compelling. Despite appreciating over 20% in 2012, StarHub remains our top pick because: 1) it offers the highest dividends among Singapore telcos; and 2) we expect its quarterly DPS to be raised by 5 cts to 6 cts given its low and rapidly falling net debt/EBITDA; and 3) its FCFE/share is a healthy 25-30 cts/year. Mirroring StarHub, M1's growth is unexciting but we do not anticipate special dividends until after the spectrum auction. SingTel is an Underperform given a myriad of risks, including: 1) regulatory risks in India with a government hell-bent on extracting maximum cash from the telecom players through spectrum sales and licence fees; 2) intense competition in Australia as we expect VHA to return to the market and pursue market share; and 3) margin pressures in Singapore as it continues to acquire market share and content.
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November 29, 2012
3.7 Transport
Figure 44: Transport
TRANSPORT Pot ent ial drivers t hat can spur out performance Valuations rem ain undem anding at around 0.9x P/BV. A significantly im prov ed m acro env ironm ent could spur fasterthan-expected trav el dem and and y ield growth
15 Passenger traffic growth looks stable and is now outpacing capacity growth (% yoy)
NEUTRAL
Pot ent ial risks t hat can t rigger underperformance Further econom ic deterioration, particularly in Europe, could hurt profitability . A spike in jet kerosene costs in the ev ent of Middle Eastern tensions is also likely to hurt the sector
25 20 15
Av iation
(% yoy)
Cargo traffic and capacity are both declining
10
5 0
10
5
0 -5
-5
-10
-10
-15 -20 -25 Jan-05
-15 -20 -25 Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10 RPK
Jan-11
Jan-12
Jan-06
Jan-07
Jan-08 ACTK
Jan-09
Jan-10 RTCK
Jan-11
Jan-12
ASK
A global recov ery can help prop up dem and and arrest falling freight rates. Rates hav e fallen 4 0-50% from 1 H1 2 . Shipping
200%
More likely scenario is that freight rates will stay pressured as container fleet growth of 7 .3 % surpasses 5% dem and growth Container ships supply v s. dem and
Fleet Capacity ('000 teu) growth Title: Fleet grow th (%, RHS) Source:
Asia-Europe rates (US$/teu)

Yoy (%) - LHS SCFI: Shanghai-North Europe (US$/teu)
2,500
20,000
15%
150%
2,000
16,000
100%
Please fill in the values above to have them entered in your report Supply grow th (% yoy) 12%
1,500 50% 1,000 0% 500
12,000
9%
8,000 Dem and grow th (% yoy)
6%
-50%
4,000
0 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
3%
-100% Jan-10
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0%
Land Transport
Margins could recov er if the new fare adjustm ent form ula (due 2 01 3 ) allows cost inflation to be passed on v ia fare hikes or gov ernm ent subsidies. Higher inflation and wage prov ide rationale for fare hikes,
Weakening free cash flows threaten div idends. Div idend y ields are not attractiv e at 3 %, while EPS growth is lacklustre (< 1 0%). REITs offer higher y ields while stay ing defensiv e.
S$m 400
Land Transport free cash flow
Year 2005 2006 2007 2008 2009 2010 2011
Actual fare increase 2.4 1.7 1.1 0.7 -4.6 -2.5 1.0
Max fare adjustment 2.4 2.0 2.1 3.0 6.3 -1.0 2.8
CPI Wage Productivity (%) increase (%) extraction 1.7 3.6 0.3 0.5 3.5 0.3 1 3.2 0.3 2.1 6.9 1.5 6.6 6 1.5 0.6 -2.6 1.5 2.8 5.8 1.5
300
200
100
Actual Yr -4 (100) Actual Yr -3 Actual Yr -2 Actual Yr -1 Forecast Yr 1 Forecast Yr 2
(200) ComfortDelGro (300) SMRT
CIMB Research
Outlook for 2013: SIA continues to project a difficult operating environment for 2013. Passenger-yield and load-factor softness is likely to linger as a result of continuing economic problems in Europe. The group is likely to mitigate the weakness by offering promotional fares, but these will leave yields compressed. Additionally, as a large portion of its revenue is derived from outside Singapore,
26
November 29, 2012
SIA is likely to remain affected by any further strength of the S$ against the US$. SIA also believes that the cargo market will remain downbeat; it recently decided to park one of its 13 freighters in an attempt to reduce costs. Although jet kerosene costs have stabilised, we think that with the confluence of negative factors above, SIA could find it difficult to stave off these issues completely. In shipping, NOL saw Asia-Europe rates and intra-Asia rates turning soft; only rates for the Americas held up. It is valiantly trying to cut costs but even as unit costs fall, the rate environment will remain challenging in 2013 as global fleet growth is set to exceed global demand growth, yet again. In land transport, we believe cost pressures will remain a headache. ComfortDelGro has additional recruitment and training costs ahead of the Downtown Lines 2013 opening while both land transport operators have to grapple with costs to raise service levels. Recommendation: We do not see an environment for stock picks in this sector. The sector is cheap but could stay cheap. Crude oil prices should weaken slightly as a global recession develops, but not fall off a cliff; lower energy costs will not provide much of a reprieve amid weak demand. SIA trades at around 0.9x CY14 P/BV; NOL trades at 1x P/BV. The cyclicals (SIA, NOL) are not expensive on a P/BV basis, but have poor prospects of a recovery when business travel is tightening and Singapores manufacturing data keeps deteriorating. While SIAs strong balance sheet has been mooted as a potential area of resilience, the company is likely to accelerate its capital expenditure in each of the next five years. As such, dividend payments may remain muted even if earnings recover moderately. The more defensive land-transport operators have to grapple with increased operating costs and are not likely to get substantial fare hikes approved.
3.8 Gaming & Others
UNDERWEIGHT
Outlook for 2013: Analysts are still grappling with how much earnings downside there will be if the integrated resorts (IRs) are indeed at the start of a downcycle. The first two years of operations was driven by pent-up demand and a novelty factor, but also coincided with a macro cycle upswing post-2008. Expectations became hyped-up as the IRs kept beating expectations. Now, the IRs are making the difficult transition to an ex-growth state, where the full implication of a strict regulatory regime is biting i.e. limited licensing and provision of credit by junkets capping VIP growth and the clampdown on local mass market. At the same time, a clampdown on corruption in China means the international VIP market face added headwinds. Both IRs were implicit in their post-mortem of their 3Q results that the only avenue for growth is the international mass market. Although the market is still under-penetrated (limited to Indonesian and Malaysian arrivals at this stage), we think it will take many years to bear fruit in our view. Growing the international mass-market is made more difficult with limited availability of hotel rooms where occupancy at MBS and RWS are trending at 99% and 94% respectively. Genting Singapore had to buy land in suburban Jurong just to expand their hotel capacity. Recommendation: We see a difficult operating environment for Genting Singapore over the next two years. Earnings are likely to have gone ex-growth and this means the shares are likely to underperform particularly if we take into account current valuations, where CY13 EV/EBITDA of 11.4x is in-line with the Macau average; unjustified when Macau does not have the strict regulatory landscape of Singapore. At 1.5x P/BV, valuations are also not justified against forward ROEs of 8-9%, levels close to its cost of capital. We see downside on valuations especially if this is the start of its cycle of earnings downgrades. Our stock preference in the gaming sector right now is Genting Hong Kong which is all about the nascent growth of the Philippines gaming industry. Comparatively, Genting Hong Kongs CY13 EV/EBITDA is only 6.6x and it trades below book value.
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November 29, 2012
Figure 45: Gaming & Others

Gaming & Ot hers Pot ent ial driv ers t hat can spur out performance Gam ing GENS - With S$4 bn in cash and FCF strongly swinging positiv e, GENS has the financial m uscle for M&As - but don't hold y our breath for any div idend policy
1600
Pot ent ial risks t hat can t rigger underperformance GENS - Operating lev erage at the start of an earnings downcy cle is painful
700 600
Genting Singapore FCF (S$m )
EBITDA (S$m ) & EBITDA m argins (%)

RWS RWS margins
MBS MBS margins
0.6 0.55 0.5 0.45 0.4
800
500 400 2007 2008 2009 2010 2011 2012 2013 2014 2015 300 200 100 0
0.35 0.3 0.25 0.2 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
-800
-1600 Free cash flow
-2400
Healthcare
IHH - Pipeline deliv ery of beds in all key m arkets will prov ide the m eans to lift rev enue and earnings
No. of beds 10000 8000 6000 4000 2000 0 2012F 2013F 2014F 2015F
New beds added Operational beds
IHH - With little or no m edical suite sale proceeds in FY1 3 -1 4 , rev enue grow th will not reflect the buildout of the business
400 S$m
Other operating profit Total depreciation Sales of medical suites Net revenue
+21% 861
+8% 500
+17% 1,087
+10% 770
300 200 100
5,132
5,993
6,493
7,580
0 (100) (200) 2012F 2013F 2014F
Media & Consum er
Super - Branded Consum er sales hav e been grow ing steadily , m argins hav e im prov ed as coffee prices fall.
95 Branded Consumer sales (LHS) 90 85 80 75 70 65 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 GP margin (RHS) 42% 46%
Super - A spike in com m odity prices as seen in early FY1 1 would erode profitability
0.45
0.4
38% 34% 30% 26% 22%
0.35
0.3
Gross margins
0.25 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12
CIMB Research
Aside from gaming stocks, we think other non-Index sectors bets would include ASEAN consumer plays and Asian infrastructure plays, at reasonable valuations. Super Group had been one of our highlighted Consumer stock in 2012 but it has been a very impressive outperformer, which makes it harder to be convicted at these levels. Whoever emerge as the new owner of F&N, would look interesting. We highlight Dairy Farm as a combination to developed Asia consumption trends and developing ASEAN growth. Lastly, Tat Hong is a great play on infrastructure spending across Thailand, Singapore, Australia and China.
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November 29, 2012
4. VALUATIONS AND RECOMMENDATIONS 4.1 Downgrade to Neutral from Overweight; cheap but lacking growth
Our end-CY13 FSSTI target is 3,316, bottom-up and implying 13.2x CY14 P/E and 1.5x CY13 P/BV (-1SD valuations are at 13x P/E and 1.5x P/BV). The Singapore markets saving grace is that it is not expensive but this probably reflects a general lack of earnings growth and the headwinds from restructuring. A review of key sectors throws up a common problem: a lack of stocks with clear earnings growth drivers. Stocks that have some earnings growth visibility or NAV growth certainty are pricier as well. That said, though overall market valuations might not change drastically from their current -1 SD levels, we think there are opportunities for pursuing specific stocks that can: 1) offer steady earnings growth and are yet not overpriced; and 2) produce positive earnings surprises but have been priced to disappoint. We cut our Overweight on Singapore to Neutral, as we expect the country to lag after its outperformance in 2012, and as investors shift to growth i.e. developing ASEAN or Greater China. The large stocks of Singapore lack stronger earnings drivers. Singapores lack of growth stocks is, however, compensated by its attractive valuations and yields. So some stocks that deliver on earnings could selectively do well.
Figure 46: FSSTI valuations
STI Core P/E (x) FD Core P/E (x) Core EPS growth (%) Core Net Profit Growth (%) P/BV (x) Dividend yield (%) EV/EBITDA (x) P/FCF (x, equity) P/FCF (x, firm) Net gearing (%) ROE (%, recurring) FSSTI level CIMB/consensus (x) CY2010 16.7x 16.7x 10% 23% 1.8x 3.2% 13.1x 11.2x (290.6x) 14.0% 11.9% 3,190 CY2011 13.3x 13.4x 4% 2% 1.4x 4.1% 10.7x 20.4x 26.3x 17.1% 10.6% 2,646 CY2012 14.4x 14.5x 5% 13% 1.4x 3.5% 12.5x 37.0x 35.4x 17.2% 10.7% 3,012 1.07 CY2013 13.3x 13.4x 8% 9% 1.4x 3.5% 11.5x 29.4x 17.2x 16.1% 10.6% 3,012 1.00 CY2014 12.0x 12.1x 11% 11% 1.3x 3.8% 10.3x 15.2x 11.8x 13.7% 11.0% 3,012 1.00
Figure 47: FSSTIs 12M forward core P/E (x)

21.0
Figure 48: Core P/E (current) vs. EPS Growth

30.0x
80% 60% 40% Current Core P/E 20% 0% EPS Growth
+2SD : 19.7
19.0
+1SD : 17.5 Mean : 15.3

15.0
25.0x
Current Core P/E
17.0
20.0x
13.0 11.0
-1SD : 13.1 -2SD : 10.9
15.0x
10.0x
9.0 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
EPS Growth
-20% -40%
12M Fw d Core P/E
5.0x 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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November 29, 2012
Figure 49: FSSTIs P/BV (x) trading band

2.8 2.6 2.4
Figure 50: FSSTIs P/BV (x) vs. ROE (%)

2.8x
+2SD : 2.6
16.0%
Core ROE
2.6x 2.4x C u rre n t P /B V
15.0% 14.0% C o re R O E 13.0% 12.0%

Current P/BV
2.2 2.0 1.8 1.6 1.4 1.2
+1SD : 2.2 Mean : 1.8
2.2x 2.0x 1.8x 1.6x 1.4x

Forecast period
11.0% 10.0% 9.0% 8.0%
-1SD : 1.5 -2SD : 1.1
1.2x 1.0x
4 5 6 7 8 9 0 1 2 3 4 n n-0 n-0 n-0 n-0 n-0 n-0 n-1 n-1 n-1 n-1 n-1 n Ja -Ja -Ja -Ja -Ja -Ja -Ja -Ja -Ja -Ja -Ja -Ja -Ja 31 3 1 3 1 31 3 1 3 1 31 3 1 31 31 3 1 31 31
1.0 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
-0 2
-0 3
P/BV
4.2 Polarisation of valuation multiples

The polarisation of valuation multiples between defensive stocks and cyclicals cannot be clearer. The FSSTI hit its post-GFC high in 4Q10 and is now 10% below that peak, but REITS P/BV valuations have returned to the same highs.
Figure 51: REITs P/BV (x): defensives have done very well
1.40 Capitacommercial Trust Suntec REIT Keppel REIT CapitaMall Trust (RHS) Ascendas REIT (RHS) 2.10 1.90 1.70 1.50 1.30
Figure 52: Consumer stocks P/BV (x): have also done very well
4.5 4.0 3.5 3.0 2.5 Super Group Thai Beverage Fraser & Neave Dairy Farm Int'l (RHS) 28 26 24 22 20 18 16 14 12 10 Jan-08A Jan-09A Jan-10A Jan-11A Jan-12F
1.20
1.00
0.80
2.0
0.60 1.10 0.90 0.40 0.70 0.50 Jan-08A Jan-09A Jan-10A Jan-11A Jan-12F
1.5 1.0 0.5 0.0 Jan-07A
0.20 Jan-07A
SOURCES: CIMB Research, Bloomberg
Figure 53: Commodity-related companies P/BV (x): de-rated, unloved, ostracised

6 Wilmar International Golden Agri-Resources Noble Group Indofood Agri Resources Olam International (RHS) 12
Figure 54: Transport companies P/BV (x): also clearly de-rated

2.3 5.0 Singapore Airlines Neptune Orient Lines ComfortDelGro (RHS) SMRT Corporation (RHS) 4.2
10
1.9
8
1.5 3.4
6
1.1 2.6
4
0.7 1.8
0 Jan-07A
0 Jan-08A Jan-09A Jan-10A Jan-11A Jan-12F
0.3 Jan-07A
1.0 Jan-08A Jan-09A Jan-10A Jan-11A Jan-12F
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November 29, 2012
Figure 55: Capital Goods P/BV (x): doing well, until their recent de-rating on margin concerns; they look cheap again
4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 Jan-07A Keppel Corporation Sembcorp Industries STX OSV Sembcorp Marine (RHS) 6.6 5.8
Figure 56: Financials P/BV: look cheap, reflecting a year of no growth

2.5 DBS Group OCBC United Overseas Bank Singapore Exchange (RHS) 20
2.1
5.0 4.2 3.4 2.6
17
1.7
14
1.3
11
0.9
1.8 1.0 Jan-08A Jan-09A Jan-10A Jan-11A Jan-12F
0.5 Jan-07A
5 Jan-08A Jan-09A Jan-10A Jan-11A Jan-12F
Figure 57: Property companies P/BV (x): mostly still at discounts to forward NAVs
3.8 3.3 2.8 2.3 1.8 1.3 0.8 0.3 Jan-07A CapitaLand City Developments CapitaMalls Asia Global Logistic Properties Keppel Land
Figure 58: Singapore: P/Es of defensives vs. cyclicals (x)
1.30 '+1SD 1.20 1.10 1.00 m ean 0.90 0.80 '-1SD 0.70 0.60
Jan-08A
Jan-09A
Jan-10A
Jan-11A
Jan-12F
0.50 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
PE ratio 2012
In contrast, commodity and transport companies have sunk to P/BV lows. Banks are about 25% below their 2010 P/BV highs while developers performances are mixed. CapitaLand is closer to its 2009 low than its 2010 high; CityDev is the opposite. Capital Goods stocks were above their post-GFC mean before their recent selldown; they are now cheaper. Overall for the market, the ratio of defensive stocks P/Es to cyclical stocks P/Es is near the higher end of the ratios usual trading range; at such levels, analysts would have to cut their earnings for cyclicals further (as effects of a recession become clearer) or cyclicals would have to be re-rated. By all accounts, defensives and yields are looking more and more yesterdays game. We think they might find it difficult to outperform from here.
4.3 Step out of the comfort zone

We ask investors to venture out of their safety zone, go for selected, unloved cyclicals and shoot for growth at reasonable price. If we get another year of slow growth, no blowups and more money printing, refuge in safety stocks might not get you the outperformance anymore. At current polarised valuations, yield sharks will morph into meek growth-hunters. The quest for safe growth is our key proposition for 2013, against a backdrop of an improving China and the potential for an acceleration of asset inflation.
31
November 29, 2012
Figure 59: CIMBs sector views and top picks

Sector Rating MSCI weight (%) Top pick Least preferred Comments Banks are cheap but slowing loan growth, sustained margin pressures and a likely retreat in business-related fees and treasury opportunities equate to flat earnings growth. Earnings risks stem from higher credit costs, if business NPLs start to edge up. Mortgages should be relatively safe. DBS is most preferred for its growth potential. Macro climate of slow growth and sustained inflation in Asia is supportive of hard assets. Asset recycling in the current climate is more positive for developers than REITs. Valuations still leave upside.
Financials
Neutral
33.3%
DBS
UOB
Property
Overweight
15.7%
CapitaLand UOL
City Dev
REITs
Underweight
AREIT, FCOT MCT, FCT
Strong outperformance is a reason to be wary. Larger REITs are trading at premiums above book CMT, CCT while it might be tougher for NAV accretion as tenants struggle with Singapore's cost pressures; KREIT, ART low interest rates have already depressed cap rates. We like REITs with meaningful organic DPU growth drivers. There is a clear difference in value. SingTel has 3% earnings growth and 5.1% yields, it has been gaining market share in Singapore but is dragged down by its overseas subsidiaries, particularly Bharti. Taken together, these are not attractive characteristics. StarHub still offers 6.7% yields and special dividend potential. Sector is already cheap, capping downside, but has no reason to recover either. Aviation (SIA) faces a tough, competitive environment but is already at 0.9x P/BV. Shipping (NOL) rates are falling as fast as costs can be cut. Land transport faces all sorts of cost pressure (staff, maintenance, depreciation) from the need to raise service levels. Offshore & Marine already had a recent de-rating. The sector faces slowing orders, lower margins and earnings but order books are full. A strong S$ raises the potential for M&A growth. The sector has been deeply sold down. It is the most under-owned sector on earnings disappointments and unpredictability. Upstream CPO planters have been weighed down by falling CPO prices, Ivy Ng is less bullish on CPO prices in 2013. Wilmar has turned around and is guiding positively; it is one of our picks. Traders are cheap but have little earnings predictability. CWT is an under-the-radar performer, with its base metal business showing consistency. Tat Hong is a beneficiary of infrastructure buildout in Singapore, Thailand and China, commodity infrastructure developments in Australia and Malaysia. Dairy Farm is a steady outperformer through tough times; the accumulation of its capital base brings on the possibility of special dividends. Gaming faces a pullback in VIP rolls and tight government regulations.
CIMB Research
Telcos
Neutral
11.7%
Star hub
SingTel
Transport
Neutral
6.3%
NOL, SIA
Capital Goods
Overweight
13.7%
Kep Corp Ezion ST Enggr
Cosco
Commodities Overweight
9.5%
Wilmar CWT
Gaming & Others
Underweight
9.8%
Tat Hong Dairy Farm
Genting SG
Our themes and stock picks are: 1. Asset inflation, improving China: CapitaLand is a relatively cheap proxy for a bottoming China, having a large asset-development pipeline in China and manageable gearing, even on a look-through level. DBS can be differentiated from its Singapore and Malaysian peers by its deepest links to China, though its assets in Hong Kong, Taiwan and China. It has both the capability and geographical presence to benefit from regional trade across Asia and developing debt-capital markets.
2. Growth at reasonable price: DBS, Dairy Farm, Ezion and Tat Hong fall into this category. Dairy Farm offers steady growth and can benefit from consumer spending in Hong Kong and Singapore as well as store growth in Indonesia. P/BV is near historical lows as an excess capital base builds up. Ezion is still at 8x P/E after its massive outperformance, its earnings are underpinned by a deluge of orders won in the past 12 months while its recent pairing with industry veterans could produce new growth drivers. Tat Hong is benefiting from infrastructure build-out across Australia and Asia, with power plants, oil & gas projects, flood defence infrastructure and metro projects coming through. 3. Unloved cyclicals: Wilmar has had a good quarter and is guiding profitability for its oilseed and grains division as it has been timing its feedstock purchases well. After two bad quarters, there are few owners of the stock. Share buyback is also proving to be a support. The traders are cheap but there is low visibility in their earnings, CWT is an under-the-radar offshoot, whose base metal trading division has been
32
November 29, 2012
doing well ever since the company brought it under its wings. Keppel Corp has been de-rated together with peer, SembMarine, but has less execution risk in Brazil and could even spring positive margin surprises, on any early deliveries. 4. Yields with right catalysts: Among the REITs, we have gone cold on the large caps as valuations turn rich. SingTel is not loved as its overseas businesses face all sorts of pressure. We like yield stocks with the right catalysts. REITs need organic DPU growth to perform from these levels. Pre-commitments/occupancy for AREITs industrial developments tend to ramp up when the properties are near their completion, providing catalysts. StarHub has the potential for special dividend surprises. ST Engineerings two major divisions are doing well while dividend yields are comparable to large-cap REITs. Its catalyst would be a spike in U$ on any risk aversion.
33
November 29, 2012
TOP PICKS Ascendas REIT (TP S$2.68)

AREIT trades at 1.3x P/BV, in-line with its historical average while yield spreads against bond yields are still above mean. Yields of 6% are slightly below mean but are still the highest among large-cap S-REITs. DPU growth next year is among the highest among large-cap S-REITs, with AEIs and developments anchoring 70-80% of revenue growth in FY13-4 and low passing rents auguring well for rent reversions. Asset leverage of 32.5% leaves room for accretive debt-funded acquisitions. Managements past track record and good discipline in paying for acquisitions leaves us confident of potential acquisitions (if any). CapLand trades at a 32% discount to RNAV, making it the cheapest large cap in the sector.. Take-up rates in China are rising. Around 10 residential projects will be delivered in the next 12 months, which will underpin a earnings resurgence in FY13. Its capex is expected to peak next year, which could mark the start of an NTA growth and asset recycling cycle. Between CapLand and CMA, we estimate that around 14 commercial/retail projects will be completed in FY13-14. We estimate that CapLands past commercial capex commitments should also add c.90cts to its book value by end-FY14. We have a conviction Outperform on CWT. 9.9x CY14 P/E is unjustified for stable earnings from logistics and high growth potential from commodities trading. Five quarters of consistent earnings has quelled concerns of inability to manage newly acquired base metal trading business. Management continues to grow product suite of refined metals and energy products. CWT is implementing a risk management system which standardizes group-wide reporting and processes. Lowers earnings risks.
20% Organic (%) Inorganic (%)
15% FY13* DPU growth
10%
5%
0% FCO T** Starhill Suntec**

9.1 8.6 3Q12
Plife
Cache
CDLHT
ART
AREIT
-5%
Capitaland (TP S$4.02)

Potential NTA/Sh 4.90 RC Chongqing Four retail/mixed devts at CMA/CapLand level Four retail malls at CMA/CapLand level ITC, Tianjin Cairnhill serv appt CapitaGreen Office OODL projects Tw o RC projects Four retail malls at CMA level Nine China resi projects in phases Nine malls at CMA level Three China resi projects in phases 3.54 2012F
2013F
2014F
2015F
2016F
CWT (TP S$1.68)

S$m 25
Commodities trading
Logistics net prof it
20
9.9 10.1 10.2 8.2
15
10 14.4 5 10.6 7.6 8.5
0 3Q11 4Q11 1Q12 2Q12
Dairy Farm Intl (TP US$12.00)

Dairy Farm is our conviction consumer pick. While its 23x CY13 P/E is at the higher-end of its 5-year trading range, its 10x P/BV is at the lower-end. This reflects book value growing faster than earnings. Given managements track record in uplifting ROE and effective capital management, we believe special dividends could be in the offing. Recession or no, Dairy Farm has beaten the Index in every market cycle over the past decade, on the back of resilient earnings, market leadership and track record.
(US$m) 800 700 600 500 400 300 200 100 -
65% 57% 52% 47% 45%
FY10
FY11 FY12F Core earnings (US$m)
FY13F ROE (RHS)
FY14F
34
KREIT
70% 60% 50% 40% 30% 20% 10% 0%
M INT
CM T
M CT
CCT
FCT
M LT
November 29, 2012
TOP PICKS DBS Group (TP S$17.36)

DBS is our conviction Financials pick. 9.3x CY13 P/E, 1x CY13 P/BV is the cheapest in the region, discounting earnings stability trends and franchises fee strengths. The environment to earn interest income is tough, but banks compensate with fees and treasury. DBS fees look more sustainable with IB fees doing well, on the back of booming debt capital markets. Another positive is the improved capital positions from RWA optimization, with guidance that there is further scope for improvement.
S$ debt capital markets league table (2012) Underwriter Rank DBS Group Holdings Ltd 1 Standard Chartered PLC 2 Oversea-Chinese Banking Corp 3 HSBC Bank PLC 4 United Overseas Bank 5 ANZ Banking Group 6 Deutsche Bank AG 7 Citi 8 CIMB 9 JP Morgan 10 Mkt Share(%) 40.6 12.6 12.1 9.2 7.6 4.4 4.1 2.7 2.3 2.2 Amount (S$ m) 8,186.9 2,547.4 2,451.7 1,849.1 1,535.8 888.0 829.5 539.2 474.2 451.7
Keppel Corp (TP S$13.20)

Keppel is our preferred Singapore rig builder. The stock is trading at 11.5x CY13 P/E and 2.3x P/BV. The is inexpensive against its history as it could trade up to 13x on news of orders. It is a laggard play in Capital Goods sector that had performed in line with FSSTI in 2012 while peers outperformed the market by an average of 15%. With conservative margin decline guidance priced in, share price upside could come from stronger-than-expected margins from massive jack-up deliveries in 2013.
20 Rigs delivered per year by Keppel Corp 16 13 12 9 8 7 6 3 6 19
0 2008 2009 2010 2011 2012 2013 2014
Ezion (TP S$1.68)

Despite phenomenal outperformance, Ezion remains our top small-mid-cap O&M pick. Blended P/E & P/BV valuations imply 9.5x CY13 P/E & 1.9x P/BV (premium for its superior earnings growth & ROE). Ezions first-mover advantage, resourcefulness in securing finance, growing stickiness with clients and growing critical mass should reinforce its edge. We believe it has excellent competitive strengths. Further, there is upside should Ezion successfully re-contract its assets, against market expectations.
(US$m) 200 23.9% 160 120 24.3% 22.0% 19.3% 24.3%
30.0% 25.0% 20.0% 15.0%
80 10.0% 40 FY10 FY11 FY12F Core earnings FY13F ROE (RHS) FY14F 5.0% 0.0%
StarHub (TP S$4.35)

StarHub is our top pick in the telco sector. It trades at 16.3x CY13 P/E and 9.0x CY13 EV/EBITDA. StarHub is liked for its multi-year low net debt/EBITDA levels, strong FCFE generation, pure domestic operation (shielding it from currency fluctuations and foreign regulations) and highest yields of 6.6% FY13 among Singapore telcos. Catalysts are 1) increase in dividend payouts in 2013, 2) reduced competition in the residential segment and 3) faster-than-expected rise in mobile data usage.
(cts) 40 35 30 25 20 15 10 5 6 0 Q 1 6 0 Q 2 6 0 Q 3 6 0 Q 4 7 0 Q 1 7 0 Q 2 7 0 Q 3 7 0 Q 4 8 0 Q 1 8 0 Q 2 8 0 Q 3 8 0 Q 4 9 0 Q 1 9 0 Q 2 9 0 Q 3 9 0 Q 4 0 1 Q 1 0 1 Q 2 0 1 Q 3 0 1 Q 4 1 1 Q 1 1 1 Q 2 1 1 Q 3 1 1 Q 4 2 1 Q 1 2 1 Q 2 2 1 Q 3
(x) 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 -
DPS or capital redn/share
Net debt/annualised EBITDA
35
November 29, 2012
TOP PICKS Tat Hong (TP S$1.69)

Tat Hong is our favorite in the industrial equipment sector. It trades at 9.1x CY12 P/E, below its mid-teens multiples when rental rates are at its peak. Industrys crane rental supply crunch will almost guarantee that TATs rental rates for all its crawler and mobile units surpass their FY08 peaks. Surging utalisation for tower crane segment is remarkable as more cranes are deployed for new infrastructure projects around China.
Metric Tons
200000 Total crane tonnage (LHS) 170000 Utilisation rate (RHS) 80% 85%
140000
75%
110000
70%
80000
65%
50000 3QFY13F 4QFY13F 1QFY14F 3QFY14F 4QFY14F 1QFY10 2QFY10 3QFY10 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 2QFY14
60%
ST Engineering (TP S$3.97)

ST Engineering is our top pick in the MRO segment. It is trading at 17.8x CY13 P/E and 5.7x P/BV on the back of 30% ROE. We think the stock could trade up to +1SD 5-year mean of 20x on 7% earnings growth. The stock traded at 20x in 2011 on 5% growth. We like STE over MRO peer, SIA Eng for its liquidity, global operations (to cushion appreciation of S$) and upside from M&A. Catalysts are stronger-than-expected margin expansion from Aerospace business and reduced competition on global MRO providers.
24 22
0.24 0.21 0.18 0.15 0.12 0.09 Current core P/E Recurring EPS 0.06
Current core P/E
20 18 16 14 12
Dec-00
Dec-02
Dec-04
Dec-06
Dec-08
Dec-10
Dec-12
Dec-14
UOL (TP S$6.55)
UOL trades at a 38% discount to RNAV, or 0.76x P/BV. This assumes a 25% discount to UICs RNAV. We estimate a c.S$9.50 SOP value assuming RNAV for UIC UOL has a resilient property portfolio across the commercial, retail and hospitality segments. The group has been building up its investment property/recurring income base with the new 363-room Parkroyal on Pickering Street and PanPac Serviced Suites on Beach Road set to open in 4Q12-1Q13 UOL has become more active in putting capital to work. It has expressed interest for the Thomson Road White Site located just beside its Novena Square. Wilmar, our top pick in the commodity sector trades at P/BV of 1.1x against its historical 3-year average of 2x . We believe the stock could trade up to our SOP value of S$3.90, which translates to a P/BV of 1.5x. We expect the group's earnings to recover in 2013 driven by improved crush margins and higher sales volumes for its palm and consumer products. . Catalysts include higher-than-expected oilseeds crush margin in China, stronger refining margins and potential M&As.
Potential NTA/Sh 8.30 Lion City Site (Resi/Retail) The Esplanade, Tianjin (Mixed-D) Plaza Beach Rd ext (Serv Appt) 7.30 One Up Pickering (Hotel/Office) 2012F
5 Shenton Way (Resi/Office)
2013F
2014F
2015F
Wilmar (TP S$3.90)
Quarterly core net profit (US$ m)

500 450 400 350 300 250 200 150 1QFY10 3QFY10 1QFY11 3QFY11 1QFY11 3QFY12
36
EPS
November 29, 2012
Company Briefs
37
Technology Components SINGAPORE

November 28, 2012
Amtek Engineering
AMTK SP / AMEL.SI Current S$0.50 S$0.56 S$0.56 13.1%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
Target Previous Target Up/downside
US$220.5m
S$269.4m
US$0.34m
S$0.42m
25.0%
543.2 m shares
CIMB Analyst Jonathan Ng

T (65) 62108650 E jonathan.ng@cimb.com
Little excitement in 2013 but supported by decent dividend

We expect Amtek to face another tough year in 2013 after a difficult 2012 as most of its customers remain cautious amidst the slowdown in Europe and US. However, the management is committed to maintaining its 50% payout ratio, providing decent yields.
Our target price for Amtek is based on 1.5x CY13 P/BV, valuing the group in line with the industry average. Although we expect earnings to remain under pressure, we see its decent yields, good cash flow and healthy balance sheet as lending support to its share price. Hence, we stay Neutral. enclosures for servers and networking products, (iii) medical cards for hospitals for a European customer, and (iv) casings for lithium batteries for a Japanese customer.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Metcom Group Hldgs Standard Chartered 1M -17.4 -18.9 3M -16.4 -17.5 12M -11.8 2.1 % held 28.3 29.9 7.1
Automation to lower costs and improve efficiency

Recognising the continuous margin pressure from the rising labour costs in China and ASEAN regions, Amtek will be embarking on a series of automation efforts, starting with its facilities in China. This will help alleviate the cost pressure and improve efficiency and yields at the same time.
Another tough year but still getting new programmes

We expect Amtek to face another challenging year as most of the industry segments it serves are facing slowdowns amid the uncertain economic environment in Europe and slow recovery in the US. On a brighter note, however, Amtek saw healthy tooling sales in the last two quarters. These could eventually translate into higher component sales when customers turn on these projects. Some of the potential new programmes that may contribute in FY14 include: (i) cold forged base plates for 5mm drives (current base plates are diecast and machined), (ii)
Cashflow to stay healthy

The management is committed to focusing on cost- and cashflow control and, based on our cashflow projections, Amtek should turn net cash by end-FY14. Projected dividends based on a 50% payout ratio also translate into a decent 4-8% in FY13-15.
Vol m
0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 20 15 10 5

Nov-11
Price Close
Relative to FSSTI (RHS)
153 144 136 127 118 109 101 92 83
Financial Summary
Revenue (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) Price To Sales (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Jun-11A 681.6 46.29 0.087 79.5% 4.65 0.32 0.0% 2.99 NA 13.0% 1.41 36.1% Jun-12A 675.1 33.60 0.061 (30.5%) 6.68 0.33 0.063 15.4% 3.50 7.55 10.7% 1.45 21.4% Jun-13F 654.9 24.19 0.046 (24.3%) 8.82 0.34 0.018 4.4% 3.76 12.91 0.6% 1.35 15.8% 0% 0.71 Jun-14F 710.0 35.57 0.066 42.8% 6.18 0.31 0.022 5.5% 3.00 16.82 (4.0%) 1.21 20.7% 0% 0.80 Jun-15F 765.0 40.19 0.075 13.9% 5.42 0.29 0.033 8.1% 2.31 3.51 (18.1%) 1.09 21.2% 0% 0.90
Feb-12
May-12
Aug-12
Source: Bloomberg
52-week share price range

0.50 0.49 0.77
Current
0.56
Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Amtek Engineering
November 28, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Jun-12A 675.1 132.6 69.1 (22.1) 46.9 (6.2) 1.6 1.0 43.3 0.8 44.2 (8.1) 36.0 (2.4) 0.0 Jun-13F 654.9 131.1 59.7 (24.1) 35.6 (5.5) 2.0 1.5 33.5 (1.0) 32.5 (6.7) 25.8 (1.6) 0.0 Jun-14F 710.0 145.5 71.9 (25.7) 46.2 (3.8) 2.3 2.8 47.5 (0.1) 47.4 (9.5) 37.9 (2.4) 0.0 Jun-15F 765.0 156.8 79.5 (27.3) 52.2 (3.1) 2.6 2.4 54.1 (0.5) 53.6 (10.7) 42.9 (2.7) 0.0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Jun-12A 110.3 168.9 56.9 5.7 341.9 115.5 14.7 0.0 2.2 132.4 69.4 168.8 7.6 245.8 58.5 0.5 59.0 5.8 310.6 151.4 12.3 163.7 Jun-13F 108.4 157.8 54.1 5.7 326.0 116.4 16.6 0.0 2.4 135.4 64.4 158.2 10.2 232.7 45.0 0.5 45.5 5.8 284.0 163.5 13.9 177.4 Jun-14F 92.4 193.7 65.5 5.7 357.3 110.6 18.9 0.0 2.3 131.8 64.5 191.3 9.7 265.5 20.0 0.5 20.5 5.6 291.6 181.3 16.2 197.5 Jun-15F 125.9 185.2 63.3 5.7 380.1 103.3 21.5 0.0 2.3 127.2 66.1 185.6 9.2 260.8 20.0 0.5 20.5 5.7 287.0 201.4 18.9 220.3
33.6 32.9 32.9
24.2 24.9 24.9
35.6 35.6 35.6
40.2 40.6 40.6
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Jun-12A 69.07 (1.60) 1.57 Jun-13F 59.69 (1.98) 3.24 Jun-14F 71.94 (2.28) (14.16) Jun-15F 79.55 (2.62) 4.94
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Jun-12A (0.96%) (18.3%) 10.2% (0.032) 0.28 7.03 18.4% 84.9% 80.80 38.59 83.64 20.4% 15.3% Jun-13F (2.98%) (13.6%) 9.1% (0.002) 0.30 6.19 20.7% 31.5% 78.48 38.68 83.81 16.9% 12.1% Jun-14F 8.40% 20.5% 10.1% 0.015 0.33 9.62 20.0% 27.8% 78.48 38.66 84.31 22.5% 16.3% Jun-15F 7.76% 10.6% 10.4% 0.073 0.37 12.36 20.0% 35.8% 78.48 38.64 84.31 24.2% 17.8%
3.64 (5.56) (10.46) 56.65 (14.12) 0.61 0.00 0.74 (12.78) (14.73) 0.00 0.00 (33.96) 16.04 (32.64)
7.65 (5.51) (6.72) 56.37 (25.00) 4.59 0.00 (0.36) (20.76) (18.56) 0.00 0.00 (9.65) 16.90 (11.31)
11.08 (3.81) (9.48) 53.29 (20.00) 4.37 0.00 0.30 (15.33) (24.88) 0.00 0.00 (12.09) 2.18 (34.79)
9.66 (3.12) (10.71) 77.69 (20.00) 3.19 0.00 0.23 (16.58) 1.59 0.00 0.00 (17.79) 8.28 (7.92)
Key Drivers
ASP Change (%, Main Product) Unit sales growth (%, main prod) No. Of Lines (main Product) Rev per line (US$, main prod) ASP chg (%, 2ndary prod) Unit sales grth (%, 2ndary prod) No. Of Lines (secondary Product) Rev per line (US$, 2ndary prod) Jun-12A 5.0% 6.8% N/A N/A N/A N/A N/A N/A Jun-13F -2.0% 4.5% N/A N/A N/A N/A N/A N/A Jun-14F -2.0% 10.5% N/A N/A N/A N/A N/A N/A Jun-15F -2.0% 10.3% N/A N/A N/A N/A N/A N/A
39
Property Devt & Invt SINGAPORE

November 28, 2012
ARA Asset Management

ARA SP / ARAM.SI Current S$1.63 S$1.81 S$1.81 11.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,022m
S$1,249m
US$0.48m
S$0.59m
53.0%
768.3 m shares
CIMB Analyst Tan Siew Ling

T (65) 62108698 E siewling.tan@cimb.com
AUM growth
Management remains confident of AUM growth despite recent plans to suspend its Rmb REIT listing. Such growth could be led by acquisitions by REITs under its management. Management may also start funds in new markets like China and Japan.
We keep our EPS and SOP target price. Maintain Outperform. We see catalysts from a successful Rmb REIT listing and acquisition-fee boosts from REITs under management.
Not all lost for ADF I

ARA recently announced the suspension of the listing of Dynasty REIT but could revisit its plans next year if sentiment improves. While we view a successful listing as the best option for ARA, we believe all is not lost as ARA can still earn fees through the divestment of assets to third parties. In fact, ADF I recently announced the sale of Manulife Tower in Hong Kong for HK$3.3bn, more than 40% above its purchase price.
Share price info

Share price perf. (%) Relative Absolute Major shareholders John Lim Hwee Chiang Cheung Kong Holdings Matthews International 1M 4.3 2.8 3M 12.4 11.3 12M 25 38.9 % held 33.1 13.9 7.0
AUM growth on track

We remain confident of higher AUM and recurring management fees over the next few years. ARAs AUM has grown to S$21.5bn (+S$1.7bn in 9M12) with management confident of hitting S$22bn by year-end on the back of the potential portfolios of REITs under management and investments by its newly set-up private funds, ADF II and CIP. Going forward, an overall decline in S-REITs equity yields (and thus funding costs) should facilitate acquisitions by REITs under management (such as Suntec REIT, Cache and Fortune REIT). In particular, MBFC Phase II is reportedly 76% occupied and could be injected into Suntec REIT as occupancy rises. Low interest rates could, meanwhile, provide cap-rate and capital-value support.
Maintain Outperform
We continue to like ARA for its recurring management fees and asset-light business. A game-changer remains the successful listing of its Rmb REIT which could serve as a ready exit option for ADF I and future ADFs and elevate ARAs status from a fund manager to a sponsor. We also see catalysts from acquisition-fee boosts from REITs under management. Management also sees ample liquidity and opportunities to raise funds in markets like China and Japan.
1.70 1.60 1.50 1.40 1.30 1.20 1.10 1.00 50 40 30 20 10

Nov-11
Price Close
134 128 121 115 108 102 95 89
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)
|
Feb-12
May-12
Aug-12
Source: Bloomberg

1.15
1.63 1.64
Current
|
Target
1.81
Dec-10A 112.5 73.94 63.81 0.09 32.4% 17.79 0.048 2.95% 15.03 41.00 (13.2%) 6.57 42.4%
Dec-11A 122.8 73.97 68.20 0.09 (2.8%) 17.47 0.050 3.08% 15.35 23.49 (30.0%) 6.61 37.7%
Dec-12F 123.3 80.39 73.79 0.10 8.2% 16.92 0.050 3.08% 14.36 17.12 (40.7%) 5.57 35.7% 0% 0.98
Dec-13F 126.8 82.70 75.32 0.10 2.1% 16.58 0.050 3.08% 13.95 16.20 (40.9%) 5.53 33.5% 0% 0.97
Dec-14F 131.7 85.86 78.10 0.10 3.7% 15.99 0.050 3.08% 13.41 15.47 (41.4%) 5.46 34.4% (0%) 0.94
Vol m
ARA Asset Management

November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit
|
Balance Sheet
Dec-11A 122.8 122.8 74.0 0.0 74.0 (0.4) 2.8 0.0 76.3 0.0 76.3 (6.8) 69.5 (1.3) 0.0 Dec-12F 123.3 123.3 80.4 0.0 80.4 (0.0) 4.1 0.0 84.4 0.0 84.4 (9.1) 75.3 (1.5) 0.0 Dec-13F 126.8 126.8 82.7 0.0 82.7 (0.0) 3.5 0.0 86.2 0.0 86.2 (9.3) 76.9 (1.6) 0.0 Dec-14F 131.7 131.7 85.9 0.0 85.9 (0.0) 3.5 0.0 89.4 0.0 89.4 (9.7) 79.7 (1.6) 0.0
68.2 68.2 68.2
73.8 73.8 73.8
75.3 75.3 75.3
78.1 78.1 78.1
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Dec-11A 57.3 30.6 0.0 24.8 112.7 1.4 3.1 0.0 97.4 101.9 0.1 17.3 7.1 24.6 0.3 0.0 0.3 0.1 25.0 188.9 0.7 189.6
Dec-12F 91.9 30.7 0.0 24.8 147.4 1.4 3.1 0.0 97.4 101.9 0.1 17.4 7.1 24.7 0.3 0.0 0.3 0.1 25.1 224.3 0.7 224.9
Dec-13F 93.0 31.6 0.0 24.8 149.4 1.4 3.1 0.0 97.4 101.9 0.1 17.9 7.1 25.2 0.3 0.0 0.3 0.1 25.6 225.8 0.7 226.5
Dec-14F 95.3 32.8 0.0 24.8 152.9 1.4 3.1 0.0 97.4 101.9 0.1 18.6 7.1 25.9 0.3 0.0 0.3 0.1 26.3 228.6 0.7 229.2
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing
|
Key Ratios
Dec-11A 73.97 (5.13) Dec-12F 80.39 (0.06) Dec-13F 82.70 (0.38) Dec-14F 85.86 (0.52)
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
|
(10.67) (0.43) (8.82) 48.92 (0.44) 0.00 (0.00) 21.23 20.79 (18.97) 0.00 0.00 (36.66) 0.00 (55.63)
(7.49) (0.01) (9.12) 63.70 0.00 0.00 0.00 9.35 9.35 (0.12) 0.00 0.00 (38.42) (14.19) (52.72)
(4.57) (0.01) (9.31) 68.43 0.00 0.00 0.00 8.75 8.75 (0.12) 0.00 0.00 (38.42) (37.48) (76.02)
(3.61) (0.01) (9.66) 72.05 0.00 0.00 0.00 8.76 8.76 (0.12) 0.00 0.00 (38.42) (40.00) (78.54)
Dec-11A 9.1% 0.0% 60.3% 0.07 0.25 173 8.9% 56.3% 84.72 N/A N/A 41.0% 38.6%
Dec-12F 0.4% 8.7% 65.2% 0.12 0.29 5,487 10.8% 52.1% 91.08 N/A N/A 51.5% 38.7%
Dec-13F 2.9% 2.9% 65.2% 0.12 0.29 5,645 10.8% 51.0% 89.76 N/A N/A 52.9% 36.6%
Dec-14F 3.8% 3.8% 65.2% 0.12 0.30 5,860 10.8% 49.2% 89.36 N/A N/A 54.8% 37.6%
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)
|
Dec-11A N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.0% 1.0%
Dec-12F N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.0% 1.0%
41
REIT SINGAPORE
November 27, 2012
Ascendas REIT
AREIT SP / AEMN.SI Current S$2.38 S$2.68 S$2.68 12.4%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$4,355m
S$5,325m
US$11.14m
S$13.68m
81.0%
2,078 m shares

Potential entry point

With below-market rents for expiring leases and asset enhancements and developments coming onstream, we expect AREITs growth visibility in FY13-14 to be among the strongest. Its current asset leverage leaves debt headroom for acquisitions.
We keep DPU estimates and DDM-based target price (discount rate: 6.7%). Maintain Outperform. We see catalysts in accretive asset enhancement initiatives (AEI) and acquisitions and positive rental reversions. The recent share price pullback presents a potential entry point. repositioning of well-located assets. older but
Donald Chua
T (65) 62108606 E donald.chua@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Ascendas Funds Mgt CBRE ING 1M -2.2 -3.7 3M 2.8 1.7 12M 8.2 22.1 % held 19.0 5.0 4.5
Reaping fruits of past labour

To supplement organic growth, we expect AREIT to reap fruits from AEIs and developments undertaken in FY11-12. With several developments and asset enhancements coming onstream, we estimate that asset enhancements and developments will contribute 70-80% of AREITs revenue growth in FY13-4. Its DPU growth and visibility should be one of the highest among the large-cap S-REITs.
Organic growth potential

We expect AREITs portfolio to remain resilient and rental reversions to remain positive. Occupancy was at a high 96.6% at end-2QFY3/13. Rental reversions were likewise strong at 9.5-13.3% and should remain positive, with market rents 16-35% above rentals for leases that are due for renewal. Lease expiries will be more substantial in FY14 (25.5%) and FY15 (21.9%), of which 70-73% will come from single-tenanted buildings. Notwithstanding downtime from slower leasing of space returned on lease expiry, this could provide rental upside through potential conversion of single-tenanted buildings to multi-tenanted ones and
Maintain Outperform
We expect AREIT to show both organic and inorganic growth over FY13-4. Its asset leverage of 32.5% (34.8% factoring in committed developments) still leaves room for accretive debt-funded acquisitions that would enhance DPU growth. Management has been known for having good discipline in acquisitions. We see a potential entry point after the recent profit-taking.
Price Close 2.5 2.3 2.1 1.9 1.7 25 20 15 10 5

Nov-11 Source: Bloomberg Feb-12 May-12
Vol m
118 114 110 106 102 99 95 91 87 83
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Mar-11A 447.6 339.4 578.6 248.0 0.12 (1.8%) 19.11 0.13 5.56% 35.0% 1.76 1.36 7.48% Mar-12A 503.3 368.3 494.1 281.7 0.14 11.5% 17.13 0.14 5.70% 36.5% 1.88 1.26 7.62% Mar-13F 575.5 408.6 319.3 311.4 0.15 6.6% 16.07 0.14 5.86% 32.1% 1.96 1.21 7.70% 0% 1.08 Mar-14F 622.0 438.5 328.2 328.2 0.15 (0.9%) 16.22 0.15 6.16% 34.9% 1.95 1.22 7.50% 0% 1.04 Mar-15F 638.0 449.8 340.0 340.0 0.15 3.3% 15.70 0.15 6.36% 35.0% 1.95 1.22 7.77% 0% 1.05
Aug-12

1.83
2.38 2.50
Current
Target
2.68
Ascendas REIT
November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Mar-12A 503.3 0.0 503.3 (135.0) 368.3 0.0 (29.1) (5.0) 0.0 334.2 0.0 334.2 (58.8) 0.0 0.0 220.3 495.7 (1.6) 0.0 0.0 494.1 281.7 Mar-13F 575.5 0.0 575.5 (166.9) 408.6 0.0 (29.9) (5.1) 0.0 373.6 0.0 373.6 (62.3) 0.0 7.9 0.0 319.3 0.0 0.0 0.0 319.3 311.4 Mar-14F 622.0 0.0 622.0 (183.5) 438.5 0.0 (32.2) (5.5) 0.0 400.9 0.0 400.9 (72.7) 0.0 0.0 0.0 328.2 0.0 0.0 0.0 328.2 328.2 Mar-15F 638.0 0.0 638.0 (188.2) 449.8 0.0 (32.2) (5.5) 0.0 412.1 0.0 412.1 (72.1) 0.0 0.0 0.0 340.0 0.0 0.0 0.0 340.0 340.0
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Mar-12A 6,170 0 334 6,505 20 0 38 2 60 116 575 62 754 1,823 73 1,895 3,915 0 3,915 Mar-13F 6,328 0 425 6,754 19 0 38 2 59 116 575 62 754 1,608 73 1,681 4,377 0 4,377 Mar-14F 6,807 0 235 7,043 23 0 38 2 63 116 575 62 754 1,901 73 1,974 4,377 0 4,377 Mar-15F 6,820 0 235 7,055 25 0 38 2 65 116 575 62 754 1,916 73 1,989 4,377 0 4,377
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Mar-12A 495.7 58.8 (12.2) 1.5 (214.9) 328.8 (234.1) (614.4) (7.2) (855.6) 479.3 393.8 (270.1) (64.5) 538.6 11.8 (521.4) (107.5) Mar-13F 319.3 54.4 0.0 0.0 0.6 374.2 (109.2) 32.0 0.0 (77.2) (214.6) 295.5 (311.4) (67.0) (297.5) (0.5) 302.3 20.0 Mar-14F 328.2 72.7 0.0 0.0 0.4 401.3 (64.0) (225.4) 0.0 (289.4) 292.9 0.0 (328.2) (72.7) (108.0) 3.9 118.3 333.2 Mar-15F 340.0 72.1 0.0 0.0 0.3 412.3 (13.0) 0.0 0.0 (13.0) 15.0 0.0 (340.0) (72.1) (397.1) 2.3 406.4 342.9
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Mar-12A 12.4% 8.5% 73.2% 2.42% 5.21 0.326% 57.0% 0.079 0.079 0.026 (2288%) 8.2% Mar-13F 14.3% 10.9% 71.0% 2.79% 5.52 0.000% 97.5% 0.079 0.079 0.025 190% 4.8% Mar-14F 8.1% 7.3% 70.5% 5.10% 5.14 0.000% 100.0% 0.084 0.084 0.031 140% 4.7% Mar-15F 2.6% 2.6% 70.5% 3.30% 5.25 0.000% 100.0% 0.087 0.087 0.034 424% 4.8%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Mar-12A 1.9 N/A N/A N/A 94.9% 6,291.7 N/A Mar-13F 1.9 N/A N/A N/A 94.9% 6,541.3 N/A Mar-14F 2.0 N/A N/A N/A 94.9% 6,830.7 N/A Mar-15F 2.0 N/A N/A N/A 94.9% 6,843.7 N/A
43
REIT SINGAPORE
November 27, 2012
Ascott Residence Trust

ART SP / ASRT.SI Current S$1.29 S$1.38 S$1.38 7.2%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,202m
S$1,469m
US$1.11m
S$1.34m
41.0%
1,130 m shares
CIMB Analyst Lee Syn Yi

T (65) 62108685 E synyi.lee@cimb.com
Uncertainty continues
While downside risk is limited by master/minimum income leases in Europe and lower reliance on tourist travel in Asia, Ascotts wide geographical reach increases susceptibility to uncertain macro conditions ahead. Risk of forex fluctuations is still at the forefront.
The uplift in RevPAU could also disappoint despite the spate of enhancements planned. We make no changes to our estimates, DDM-based target price (8.2% discount rate) or Neutral call. Stronger-than-expected RevPAU and receding forex risk are potential rerating catalysts. could be further topped up, given the steady acquisition pace in the past. We have factored in S$100m acquisitions over 2013-14, within debt headroom of S$235m based on 45% gearing (3Q12: 41%).
Tan Siew Ling

Share price info

Share price perf. (%) Relative Absolute Major shareholders CapitaLand 1M 1.1 -0.4 3M 5.1 4 12M 16.4 30.3 % held 48.8
Forex concern not yet lifted

Forex volatility continues to be a concern as management utilises a portfolio hedge that has worked out so far (within the +/-3% fluctuation limit) but worsened steadily to -2.8% in 3Q12, eroding gains in RevPAU for its Europe portfolio. Further fluctuations in 2013 could crimp upside from enhancements. Hedging the euro is a possibility.
Enhancements take the lead in 2013

2013 will see a number of enhancements, with the completion of three properties in France in 1Q13 and Ascott Jakarta in 4Q13, followed by two assets in Paris and Brussels in 1Q14. The payback period for enhancements has typically been within five years. The UK asset saw 30-40% increase in room rates. Management expects 10-15% increase on average, depending on pricing relative to the market prior to renovation. The newly acquired assets of Ascott Raffles Place, Ascott Guangzhou and Madison Hamburg will provide full-year contributions. Acquisitions
No compelling catalyst
At close to 1x P/BV and 7% yield, valuations are reasonable. However, we see no compelling reason to turn positive yet. A turnaround in macro headwinds and unexpectedly strong RevPAU growth are potential rerating catalysts.
Price Close 1.30 1.20 1.10 1.00 Vol m 0.90 8 6 4 2

123 119 115 111 107 104 100 96 92 88
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-10A 207.2 101.4 156.1 57.7 0.054 6.5% 23.80 0.067 5.17% 39.6% 1.28 1.01 4.18% Dec-11A 288.7 157.5 180.3 96.2 0.065 19.0% 20.00 0.085 6.60% 40.4% 1.36 0.95 4.89% Dec-12F 312.2 167.7 161.2 99.5 0.066 2.8% 19.46 0.087 6.77% 38.9% 1.40 0.92 4.80% 0% 0.93 Dec-13F 331.9 175.8 82.8 105.8 0.074 10.9% 17.55 0.092 7.15% 40.1% 1.38 0.94 5.29% 0% 0.57 Dec-14F 342.3 181.0 85.7 109.4 0.076 2.8% 17.06 0.095 7.35% 41.2% 1.35 0.96 5.56% 0% 0.98
Aug-12

0.96
1.29 1.30
Current
Target
1.38
Ascott Residence Trust

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 288.7 0.0 288.7 (131.2) 157.5 (3.9) (13.7) (0.3) (2.1) 137.5 0.0 137.5 (38.0) (0.0) 0.0 125.5 225.0 (31.2) (13.5) 0.0 180.3 96.2 Dec-12F 312.2 0.0 312.2 (144.5) 167.7 (4.0) (18.5) (0.3) (2.2) 142.7 0.0 142.7 (40.3) (0.0) 87.4 (1.5) 188.2 (20.6) (6.4) 0.0 161.2 99.5 Dec-13F 331.9 0.0 331.9 (156.1) 175.8 (4.0) (13.9) (0.3) (2.4) 155.3 0.0 155.3 (42.1) (0.0) 0.0 (1.5) 111.6 (22.5) (6.4) 0.0 82.8 105.8 Dec-14F 342.3 0.0 342.3 (161.4) 181.0 (4.0) (13.9) (0.3) (2.4) 160.3 0.0 160.3 (43.7) (0.0) 0.0 (1.5) 115.1 (23.0) (6.4) 0.0 85.7 109.4
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-11A 2,789 0 64 2,854 145 0 24 0 169 119 261 10 390 960 45 1,005 1,537 91 1,628 Dec-12F 2,815 0 69 2,884 201 0 24 0 225 119 123 10 252 1,086 45 1,130 1,599 128 1,727 Dec-13F 2,823 0 74 2,897 221 0 24 0 245 119 285 10 413 974 45 1,019 1,576 134 1,710 Dec-14F 2,832 0 78 2,909 242 0 24 0 266 119 309 10 437 1,000 45 1,045 1,552 141 1,693
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 225.0 38.0 (11.6) (13.9) (107.6) 129.8 (24.6) (5.7) 1.6 (28.7) 30.4 (1.2) (76.7) (43.5) (91.0) 10.1 101.1 91.4 Dec-12F 188.2 (47.1) 0.0 (20.6) 25.6 146.1 (30.8) 72.3 1.4 42.9 (12.9) 0.0 (99.5) (21.4) (133.8) 55.2 189.0 134.4 Dec-13F 111.6 42.1 0.0 (22.5) 22.9 154.2 (25.4) 0.0 1.9 (23.4) 50.0 0.0 (105.8) (54.5) (110.3) 20.5 130.8 136.7 Dec-14F 115.1 43.7 0.0 (23.0) 23.6 159.4 (25.5) 0.0 2.1 (23.3) 50.0 0.0 (109.4) (56.3) (115.6) 20.4 136.0 140.2
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-11A 39.3% 55.4% 54.6% 27.6% 3.48 13.9% 53% 0.43 0.43 0.37 (149%) 6.19% Dec-12F 8.2% 6.5% 53.7% 2.6% 3.42 11.0% 62% 0.89 0.89 0.80 (315%) 5.26% Dec-13F 6.3% 4.9% 53.0% 5.7% 3.52 20.1% 128% 0.59 0.59 0.54 (353%) 2.65% Dec-14F 3.2% 2.9% 52.9% 2.8% 3.50 20.0% 128% 0.61 0.61 0.55 (417%) 2.71%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-11A N/A N/A 243.0 N/A N/A 2,786.1 N/A Dec-12F N/A N/A 233.3 N/A N/A 2,811.5 N/A Dec-13F N/A N/A 217.0 N/A N/A 2,819.9 N/A Dec-14F N/A N/A 227.8 N/A N/A 2,828.4 N/A
45
Offshore & Marine SINGAPORE

November 28, 2012
ASL Marine
ASL SP / ASLM.SI Current S$0.64 S$0.85 S$0.85 32.7%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$221.1m
S$270.1m
US$0.12m
S$0.14m
37.2%
419.5 m shares
CIMB Analyst Yeo Zhi Bin

T (65) 62108669 E zhibin.yeo@cimb.com
Sometimes, ignorance is not bliss

Supported by three robust businesses, ASL is poised for a sterling FY13, though the market may be overlooking its improved outlook.
Maintain Outperform, EPS and target price at 0.9x CY14 P/BV, its 5-year mean. We see catalysts from stronger-than-expected orders and results. end 1HFY14, we only expect S$250m of orders for FY13 vs. S$500m for FY12.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Ang Kok Tian Ang Ah Nui Ang Kok Eng 1M -3.7 -5.2 3M 6.9 5.8 12M 11.6 25.5 % held 13.7 13.1 11.5
Strong order book for FY13

Underpinned by a strong order book of S$573m its highest since 2009 we expect ASLs shipbuilding revenue to surge 46% yoy in FY13. About 92% of its FY13 shipbuilding revenue has been secured by orders. Additionally, the potential acquisition of a dredging engineering and contracting company, Vosta, could lift its margins as ASL vertically integrates its value chain. ASL is building a dredger which accounts for about 14% of its order book. Despite productivity improvements (FY12 gross margins for shipbuilding: 10.5%; 1QFY13: 21.4%), we are conservatively modelling in an 8.7% blended gross margin, its FY09-11 mean. Lastly, as yard slots are full until end-2013 or
Ship repair & chartering keep pace

We expect 25% growth in gross profits for ship repair/conversion jobs for FY13, backed by the delivery of refurbishment jobs for six jack-ups. ASL only books repair work on completion. One had been delivered in 1QFY13, resulting in a 40% yoy increase in gross profits. Further, we expect 7% growth in gross profits for ship chartering for FY13, with higher utilisation and contributions from new higher-end offshore support vessels.
Better outlook overlooked?

Trading at 0.7x P/BV, we think the market has not priced in its improved outlook and uptick in ROEs.
0.75 0.70 0.65 0.60 0.55 0.50 0.45 Vol m 0.40 2 1 1

Nov-11
Price Close
127 121 116 110 104 98 93 87
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Jun-11A 363.2 76.4 31.92 0.06 (26.6%) 10.51 0.015 2.34% 6.38 NA 60.6% 0.80 7.9% Jun-12A 391.2 80.3 32.33 0.07 14.3% 9.19 0.018 2.73% 5.82 5.09 52.2% 0.76 8.5% Jun-13F 506.7 94.4 34.26 0.08 16.6% 7.88 0.020 3.13% 5.21 NA 54.3% 0.71 9.3% 0% 0.85 Jun-14F 572.2 105.5 42.80 0.10 24.9% 6.31 0.020 3.13% 3.88 5.28 30.4% 0.65 10.7% 0% 0.94 Jun-15F 540.2 103.8 41.27 0.10 (3.6%) 6.54 0.020 3.13% 3.55 25.86 19.1% 0.60 9.6% 0% 0.82
Feb-12
May-12
Aug-12
Source: Bloomberg

0.47
0.64 0.69
Current
Target
0.85
ASL Marine
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Jun-12A 391.2 56.9 80.3 (36.9) 43.5 (10.2) 0.5 0.0 33.7 3.4 37.1 (4.7) 32.4 (0.1) Jun-13F 506.7 66.5 94.4 (41.5) 52.8 (12.0) 0.2 0.0 41.0 0.0 41.0 (5.7) 35.3 (1.0) Jun-14F 572.2 74.5 105.5 (43.5) 62.0 (11.3) 0.2 0.0 50.9 0.0 50.9 (7.1) 43.8 (1.0) Jun-15F 540.2 72.7 103.8 (43.2) 60.6 (11.7) 0.2 0.0 49.0 0.0 49.0 (6.8) 42.3 (1.0)
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Jun-12A 95.5 147.4 10.9 86.3 340.0 509.0 1.5 0.0 3.8 514.2 110.6 152.6 44.9 308.2 174.7 0.0 174.7 8.0 490.8 354.1 9.2 363 4 Jun-13F 42.7 152.7 10.9 111.4 317.7 527.4 1.7 0.0 3.8 532.9 104.6 152.7 43.4 300.7 150.7 0.0 150.7 8.0 459.3 381.0 10.2 391 3 Jun-14F 85.5 156.8 10.9 117.9 371.0 523.9 1.9 0.0 3.8 529.6 96.6 188.1 62.7 347.4 118.7 0.0 118.7 8.0 474.0 415.4 11.2 426 6 Jun-15F 87.5 148.0 10.9 108.4 354.7 520.7 2.1 0.0 3.8 526.6 88.6 177.6 60.0 326.2 86.7 0.0 86.7 8.0 420.8 448.2 12.2 460 5
32.3 29.4 29.4
34.3 34.3 34.3
42.8 42.8 42.8
41.3 41.3 41.3
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Jun-12A 80.3 (1.4) 5.5 (3.1) (11.4) (5.6) 64.3 (63.8) 30.4 (0.8) (0.1) (34.3) 23.0 0.0 0.0 (6.3) (0.9) 15.8 Jun-13F 94.4 (32.0) 0.0 (12.0) (5.7) 44.7 (80.0) 20.0 0.0 0.0 (60.0) (30.0) 0.0 0.0 (7.4) 0.0 (37.4) Jun-14F 105.5 44.1 0.0 (11.3) (7.1) 131.2 (60.0) 20.0 0.0 0.0 (40.0) (40.0) 0.0 0.0 (8.4) 0.0 (48.4) Jun-15F 103.8 5.2 0.0 (11.7) (6.8) 90.4 (60.0) 20.0 0.0 0.0 (40.0) (40.0) 0.0 0.0 (8.4) 0.0 (48.4)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Jun-12A 7.7% 5.1% 20.5% (0.45) 0.84 4.19 12.7% 25.5% 124.7 12.83 157.4 6.40% 6.86% Jun-13F 29.5% 17.4% 18.6% (0.50) 0.90 4.34 14.0% 24.6% 108.1 9.00 126.6 7.83% 8.08% Jun-14F 12.9% 11.8% 18.4% (0.31) 0.98 5.42 14.0% 19.7% 98.7 7.96 125.0 8.44% 9.53% Jun-15F (5.6%) (1.6%) 19.2% (0.21) 1.06 5.10 13.8% 20.4% 103.0 8.47 142.8 8.94% 9.39%
Key Drivers
Outstanding Orderbook (S$m) Order Book Wins (S$m) Orderbook Depletion (S$m) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Jun-12A 586.0 500.0 N/A N/A N/A N/A Jun-13F 509.1 250.0 N/A N/A N/A N/A Jun-14F 434.5 300.0 N/A N/A N/A N/A Jun-15F 411.8 300.0 N/A N/A N/A N/A
47
Medical Equipment & Svs SINGAPORE

November 28, 2012
Biosensors Int'l
BIG SP / BIOS.SI Current S$1.14 S$1.79 S$1.79 57.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,601m
S$1,956m
US$4.31m
S$5.29m
42.0%
1,718 m shares
CIMB Analyst Gary Ng

T (65) 62108699 E gary.ng@cimb.com
Unfazed by the howling wind

All of BIGs vital signs appear healthy. Results indicate that earnings are firmly on target. More positive clinical evidence for products will enhance product penetration. BIG could be a prime M&A candidate given its runaway success in the growing DES market.
We think that the risk of weaker licensing income from Japan and potential price cuts in various countries were overplayed. This does not affect our Outperform call as product profitability remains strong and valuations are really palatable now. Our SOP-based target price remains intact at S$1.79.
The M&A scene

We can re-think the balance sheets of BIGs international competitors. BIG has already taken away market share from peers in the international market with its game-changing product. We think it is impossible for these larger players to look at what BIG is doing and not offer to collaborate with it or even acquire it, although such a deal would be subject to how major shareholder Shangdong Weigao will play the card.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Shangdong Weigao Hony Capital Atlantis 1M 1.1 -0.4 3M -7 -8.1 12M -27.5 -13.6 % held 21.6 15.7 5.5
Guidance unchanged
Terumo has stated that it will be fighting to claw back market share lost in 2HFY13, which should offer a respite for BIGs licensing revenue. Management guidance for FY13 revenue growth remains intact at 20-30%, largely because BIG is giving Terumo help in Nobori sales in Japan and the newly-renegotiated favourable royalty agreement should offset competition and any mandatory potential price cut. That said, we stay conservative and pare down our licensing revenue assumptions in view of the lingering effects of competition in 2H13. But we hold on to our optimistic FY14-15 estimates.
BIG positive trials

BIG also said that its four-year data from the DIVERGE study showed that the use of its Axxess bifurcation DES resulted in positive clinical results. Additionally, BioMatrix Flex was chosen as the stent platform for the global LEADERS, the largest ever randomised clinical trial involving a DES. Plans are in place for the LEADERS FREE trail, the first large-scale study for BioFreedom, which is awaiting CE Mark approval.
Vol m
1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0 30 20 10

Nov-11
Price Close
121 114 106 99 91 84 76 69 61
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-11A 156.6 47.3 43.3 0.04 26% 24.32 0% 14.57 63.30 (59.5%) 2.75 16.1% Mar-12A 292.1 111.5 364.3 0.21 451% 3.66 0% 9.97 NA (24.7%) 1.46 48.8% Mar-13F 321.8 149.9 117.8 0.07 (68%) 13.87 0% 8.30 17.77 (44.7%) 1.87 11.8% 0% 0.93 Mar-14F 391.0 176.8 145.8 0.08 24% 11.20 0% 6.86 11.01 (46.6%) 1.81 16.4% 0% 1.03 Mar-15F 434.8 191.2 160.6 0.09 10% 10.17 0% 6.45 9.67 (43.7%) 1.78 17.7% 0% 1.04
Feb-12
May-12
Aug-12
Source: Bloomberg

1.14 1.07 1.68
Current
Target
1.79
Biosensors Int'l
November 28, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Mar-12A 292.1 234.6 111.5 (5.0) 106.5 (3.8) 8.0 0.0 110.7 254.9 365.6 (1.4) 364.3 0.0 0.0 Mar-13F 321.8 251.6 149.9 (17.2) 132.7 2.0 0.0 0.0 134.7 0.0 134.7 (16.8) 117.8 0.0 0.0 Mar-14F 391.0 307.7 176.8 (12.3) 164.6 2.1 0.0 0.0 166.7 0.0 166.7 (20.8) 145.8 0.0 0.0 Mar-15F 434.8 344.4 191.2 (9.6) 181.5 2.0 0.0 0.0 183.5 0.0 183.5 (22.9) 160.6 0.0 0.0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Mar-12A 314 73 35 8 430 43 0 784 0 828 37 21 58 115 0 3 3 22 140 1,118 0 1,118 Mar-13F 390 85 44 3 523 30 0 622 0 653 0 10 42 53 0 229 229 22 303 873 0 873 Mar-14F 420 103 52 3 579 23 0 622 0 646 0 12 44 56 0 247 247 22 324 901 0 901 Mar-15F 400 115 57 3 575 19 0 622 0 642 0 12 44 56 0 224 224 22 301 916 0 916
364.3 365.2 365.2
117.8 117.8 117.8
145.8 145.8 145.8
160.6 160.6 160.6
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Mar-12A 111.5 (7.2) (28.1) (259.4) 13.3 10.9 (1.2) (12.9) (173.1) (5.2) 0.1 (26.5) 0.0 (31.7) (0.0) 7.7 0.0 0.0 (196.9) (189.2) Mar-13F 149.9 0.0 (25.7) 0.0 17.2 (2.0) 2.0 (8.4) 133.0 (4.0) 0.0 0.0 0.0 (4.0) (37.1) 0.0 0.0 0.0 (51.6) (88.7) Mar-14F 176.8 0.0 (25.4) 0.0 12.3 (2.1) 2.1 (10.4) 153.3 (5.0) 0.0 0.0 0.0 (5.0) 0.0 0.0 0.0 0.0 (184.6) (184.6) Mar-15F 191.2 0.0 (15.4) 0.0 9.6 (2.0) 2.0 (11.5) 173.9 (5.0) 0.0 0.0 0.0 (5.0) 0.0 0.0 0.0 0.0 (211.3) (211.3)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Mar-12A 86.6% 136% 38.2% 0.16 0.64 17.69 0.4% 0% 69.45 178.4 31.49 259% 13.7% Mar-13F 10.2% 34% 46.6% 0.22 0.50 N/A 12.5% 0% 87.53 204.8 32.30 15% 13.0% Mar-14F 21.5% 18% 45.2% 0.24 0.51 N/A 12.5% 0% 86.59 211.9 23.03 22% 18.3% Mar-15F 11.2% 8% 44.0% 0.23 0.52 N/A 12.5% 0% 90.22 220.9 24.01 24% 19.7%
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) Mar-12A N/A 55.6% N/A N/A 370.4% N/A Mar-13F N/A 24.5% N/A N/A -23.2% N/A Mar-14F N/A 13.9% N/A N/A 54.8% N/A Mar-15F N/A 12.9% N/A N/A 7.3% N/A
49
Property Development SINGAPORE

November 27, 2012
Bukit Sembawang Estates

BS SP / BSES.SI Current S$5.77 S$6.45 S$6.45 11.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,222m
S$1,494m
US$0.31m
S$0.39m
41.0%
258.9 m shares

Landed resilience
We like Bukit Sembs competitive advantage in landed developments, which should benefit from resilient domestic demand fuelled by prolonged low interest rates. The net cash position continues to strengthen further. We see a possibility of stronger dividends ahead.
We continue to like the stock for its landed sites, making up >75% of landbank. Non-landed high end apartments, while still seeing slower sales, have likely bottomed and are less exposed to a policy overhang. No change to estimates and RNAV target price (35% discount to RNAV). Catalysts include a pick-up in high-end sales and dividend surprise. Maintain Outperform.
Donald Chua
but buffered by landed landbank

Management will likely time the market and potentially focus on monetising its landed landbank. Phase 6 showflat has been completed, and we await the public launch, likely at >S$1,600psf. Phase 5 was cleared at ASPs of S$1,500psf to S$1,640psf. Meanwhile ample landed presales should prop up earnings going forward with recognition of Phases 3 to 5 of Luxus Hills, all fully sold.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Lee-related entities 1M 8.8 7.1 3M 21.3 20 12M 29.2 42.8 % held 32.4
High end non-landed apartments slightly weak...

Having cleared the bulk of Paterson Suites, Bukit Semb can shift its focus to Paterson Collection, the 2nd phase of the Paterson sites in its landbank. With projects substantially sold and cost recovered, the company continues to achieve higher ASPs on remaining launched high end projects, albeit at the expense of asset turnover. Originally planned for 2012/13, we remain watchful for St Thomas Walk and Paterson Collection launches, which could happen the moment the market takes a turn for the better. We expect completion for these two projects around 2013/14.
Prudent balance sheet; laggard

The company has lagged its peers and still trades at a 42% discount to RNAV. We do not rule out higher dividend payouts for FY13 on the back of a resilient balance sheet, having pared down debt and strengthened its net cash position for consecutive quarters, buffering against risk of compounding finance cost on small increase in interest rates. Cash collections will also continue to stream in from Luxus Hills. At 1.3x P/BV, the stock trades below its 10-year historical average of 2.0x.
6.2 5.7 5.2 4.7 4.2 Vol th 3.7 600 400 200
Nov-11
Price Close
133 124 115 106 97 88
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-11A 515.1 181.3 168.9 0.65 419% 8.92 0.12 2.13% 9.13 13.45 24.8% 1.51 18.4% Mar-12A 390.6 143.1 169.4 0.51 (21%) 11.30 0.18 3.16% 10.14 11.66 (2.1%) 1.37 12.7% Mar-13F 544.3 247.2 204.9 0.79 55% 7.29 0.17 3.02% 6.42 NA 7.5% 1.19 17.5% 0% 1.00 Mar-14F 625.7 271.4 222.6 0.86 9% 6.71 0.16 2.71% 4.67 5.36 (15.9%) 1.04 16.6% 0% 1.04 Mar-15F 636.3 259.8 217.7 0.84 (2%) 6.86 0.15 2.65% 3.35 3.14 (38.6%) 0.93 14.3% 0% 1.05
Feb-12
May-12
Aug-12
Source: Bloomberg

3.89
5.77 5.77
Current
Target
6.45
Bukit Sembawang Estates

November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Mar-12A 390.6 390.6 143.1 0.0 143.1 (2.1) 0.0 0.0 141.0 52.4 193.4 (24.0) 169.4 0.0 0.0 Mar-13F 544.3 544.3 247.2 0.0 247.2 2.7 0.0 0.0 249.9 0.0 249.9 (45.0) 204.9 0.0 0.0 Mar-14F 625.7 625.7 271.4 0.0 271.4 0.1 0.0 0.0 271.5 0.0 271.5 (48.9) 222.6 0.0 0.0 Mar-15F 636.3 636.3 259.8 0.0 259.8 5.7 0.0 0.0 265.5 0.0 265.5 (47.8) 217.7 0.0 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Mar-12A 298 16 0 1,124 1,438 0 5 0 0 5 0 49 18 67 275 10 285 0 352 1,092 0 1,092 Mar-13F 157 75 0 1,338 1,569 0 17 0 0 17 0 45 25 70 250 15 265 0 335 1,251 0 1,251 Mar-14F 371 86 0 1,192 1,649 0 25 0 0 25 0 51 29 81 143 17 160 0 241 1,433 0 1,433 Mar-15F 783 87 0 969 1,840 0 32 0 0 32 0 52 30 82 161 17 178 0 260 1,612 0 1,612
169.4 130.5 130.5
204.9 204.9 204.9
222.6 222.6 222.6
217.7 217.7 217.7
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Mar-12A 143.1 77.9 Mar-13F 247.2 (269.5) Mar-14F 271.4 145.2 Mar-15F 259.8 223.4
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Mar-12A (24%) (21%) 36.6% 0.09 4.22 21.2 12.4% 39.8% 17.37 N/A N/A 10.3% 10.7% Mar-13F 39% 73% 45.4% (0.36) 4.83 74.8 18.0% 22.0% 30.33 N/A N/A 19.1% 17.7% Mar-14F 15% 10% 43.4% 0.88 5.54 90.4 18.0% 18.2% 46.75 N/A N/A 16.8% 17.8% Mar-15F 2% (4%) 40.8% 2.40 6.22 151.0 18.0% 18.2% 49.58 N/A N/A 18.0% 16.0%
52.4 1.0 0.0 (25.9) 248.5 0.0 1.3 0.0 44.2 45.5 (167.6) 15.6 0.0 (46.6) (2.3) (200.8)
0.0 0.0 (31.3) (53.6) 0.0 6.0 0.0 0.0 6.0 (25.2) 0.0 0.0 (45.1) (24.0) (94.3)
0.0 0.0 (34.0) 382.6 0.0 3.1 0.0 0.0 3.2 (106.9) 0.0 0.0 (40.5) (24.0) (171.4)
0.0 0.0 (33.2) 449.9 0.0 7.4 0.0 0.0 7.5 17.8 0.0 0.0 (39.6) (23.0) (44.8)
RNAV RNAV (S$m) 7 2,294 41 2,342 228 2,570 259 9.92 Discount to RNAV 35% % of GAV 0% 98% 2% 100%
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%) Mar-12A N/A N/A N/A N/A N/A N/A 41.4% N/A 100.0% N/A N/A Mar-13F N/A N/A N/A N/A N/A N/A 45.9% N/A 100.0% N/A N/A Mar-14F N/A N/A N/A N/A N/A N/A 43.4% N/A 100.0% N/A N/A Mar-15F N/A N/A N/A N/A N/A N/A 41.7% N/A 100.0% N/A N/A
Investment Properties Development GDV AFS financial assets and others GAV Less: FY14 net debt (incl any off b/s debt) RNAV Fully-diluted no. of shares (m) RNAV per share (S$)
Target Price
6.45
51
REIT SINGAPORE
November 27, 2012
Cache Logistics Trust

CACHE SP / CALT.SI Current S$1.20 S$1.36 S$1.36 14.1%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$686.5m
S$839.4m
US$1.25m
S$1.53m
87.9%
638.9 m shares

Stability premium
With almost all assets on master leases, this is one of the most stable REITs. Growth is driven by 1.25-2.5% rental escalation per annum while the pipeline of sponsor and third-party assets provides greater certainty of acquisition growth. Yields are still attractive at this level.
No change to DPU estimates and DDM-based target price (7.7% discount rate). We like Caches portfolio of quality assets and defensiveness of leases. We reiterate our Outperform rating, with accretive acquisitions being the catalyst. On top of resilient organic growth, acquisitions are a possibility with a clear pipeline of assets from the sponsor and third parties though the former remains subject to market conditions, the sponsors need for divestment and pricing. Management has kept a close watch on the Malaysia market and one Malaysian asset has been added to the pipeline since 2Q12. Managements acquisition track record, albeit short, lends comfort.
Tan Siew Ling

Share price info

Share price perf. (%) Relative Absolute Major shareholders CWT Ltd Capital Research Capital Group 1M -1.7 -3.2 3M 6.4 5.3 12M 11.9 25.8 % held 12.2 6.4 6.0
Quarter on quarter of resilience

Caches portfolio of assets is almost fully backed by master leases with annual rental escalations, making it one of the most defensive REITs. 2H12 will be strengthened by rental escalations. We see potential for stronger rental reversions with the market and later acquisitions incorporating 2-2.5% step-ups. Enhancements in exchange for rental increase are a possibility. We understand that this has been done for CWT Commodity Hub. IPO portfolio assets had step-ups of 1.5% per annum. We expect such enhancements to further boost organic growth.
Valuations still decent

Dividend yields still remain in the 6-7% region, supported by strong organic growth from strengthening rental escalations. With master leases on almost all properties, we like the DPU resilience, particularly in the current climate. Its weighted average lease expiry remains one of the longest at 4.1 years, with the team having extended some of the IPO leases. Rental income is backed by 89% MNC and government entity end users.
Acquisition-led growth
Vol m
1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 0.90 8 6 4 2

Nov-11
Price Close
124 120 115 111 107 102 98 93 89
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-10A 42.44 41.36 62.00 35.44 0.049 0.0% 24.31 0.056 4.67% 23.0% 0.91 1.32 Dec-11A 64.61 61.92 69.84 52.49 0.073 47.7% 16.46 0.082 6.89% 29.1% 0.93 1.29 7.91% Dec-12F 72.26 68.65 50.83 55.84 0.076 4.5% 15.75 0.081 6.81% 32.0% 0.93 1.28 8.16% 0% 1.15 Dec-13F 80.93 77.32 54.96 60.71 0.078 3.1% 15.28 0.086 7.21% 38.3% 0.93 1.29 8.43% 0% 0.99 Dec-14F 86.30 82.69 58.55 65.13 0.083 5.9% 14.43 0.092 7.68% 38.3% 0.92 1.30 8.98% 0% 1.04
Feb-12
May-12
Aug-12
Source: Bloomberg

0.94
1.20 1.26
Current
Target
1.36
Cache Logistics Trust

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 64.61 0.00 64.61 (2.69) 61.92 0.00 (5.04) (0.24) (1.26) 55.38 0.00 55.38 (8.90) 0.00 0.00 23.72 70.19 (0.36) 0.00 0.00 69.84 52.49 Dec-12F 72.26 0.00 72.26 (3.61) 68.65 0.00 (5.75) (0.28) (1.71) 60.91 0.00 60.91 (10.08) 0.00 0.00 0.00 50.83 0.00 0.00 0.00 50.83 55.84 Dec-13F 80.93 0.00 80.93 (3.61) 77.32 0.00 (6.38) (0.31) (1.71) 68.91 0.00 68.91 (13.95) 0.00 0.00 0.00 54.96 0.00 0.00 0.00 54.96 60.71 Dec-14F 86.30 0.00 86.30 (3.61) 82.69 0.00 (6.46) (0.31) (1.71) 74.20 0.00 74.20 (15.65) 0.00 0.00 0.00 58.55 0.00 0.00 0.00 58.55 65.13
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-11A 843 0 0 843 12 0 0 0 12 6 0 0 6 249 5 254 594 0 594 Dec-12F 944 0 0 944 33 0 0 0 33 6 0 0 6 313 5 318 652 0 652 Dec-13F 1,044 0 0 1,044 33 0 0 0 33 6 0 0 6 413 5 418 652 0 652 Dec-14F 1,044 0 0 1,044 33 0 0 0 33 6 0 0 6 413 5 418 652 0 652
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 70.2 8.9 2.9 (0.4) 3.8 85.4 (6.6) (67.7) (0.0) (74.3) 75.0 (0.0) (51.4) (6.7) 16.9 28.0 11.1 79.4 Dec-12F 50.8 10.1 0.0 0.0 3.3 64.2 (0.0) (101.0) 0.0 (101.0) 64.0 58.0 (55.8) (6.7) 59.5 22.7 (36.8) 20.5 Dec-13F 55.0 14.0 0.0 0.0 3.8 72.7 (0.0) (100.0) 0.1 (99.9) 100.0 0.0 (60.7) (10.6) 28.7 1.4 (27.2) 62.1 Dec-14F 58.5 15.7 0.0 0.0 4.8 79.0 (0.0) 0.0 0.1 0.1 0.0 0.0 (65.1) (12.3) (77.5) 1.7 79.1 66.8
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-11A 52.2% 49.7% 95.8% 47.5% 6.21 0.51% 75% 2.03 2.03 1.99 (1866%) 8.69% Dec-12F 11.9% 10.9% 95.0% (1.2%) 6.02 0.00% 110% 5.50 5.50 5.47 (1075%) 5.55% Dec-13F 12.0% 12.6% 95.5% 5.9% 4.91 0.00% 110% 5.50 5.50 5.46 (1216%) 5.35% Dec-14F 6.6% 6.9% 95.8% 6.6% 4.71 0.00% 111% 5.50 5.50 5.46 (1309%) 5.44%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-11A 1.5 N/A N/A N/A 100.0% N/A N/A Dec-12F 1.5 N/A N/A N/A 100.0% N/A N/A Dec-13F 1.5 N/A N/A N/A 100.0% N/A N/A Dec-14F 1.6 N/A N/A N/A 100.0% N/A N/A
53
REIT SINGAPORE
November 27, 2012
Capitacommercial Trust
CCT SP / CACT.SI Current S$1.60 S$1.69 S$1.69 6.1%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$3,709m
S$4,535m
US$11.80m
S$14.60m
67.9%
2,833 m shares

Positives priced in
CCT has been among the top performers across S-REITs YTD. Trading now at 1x P/BV and with yields of 5% (lowest among office REITs), we see upside limited, given the flat DPU profile over the next two years, as positive rental reversions are eroded by expiring income support.
No change to DPU estimates and DDM-based target price (discount rate: 7.3%). Maintain Underperform. We see de-rating catalysts from potentially expensive acquisitions. search of purchases, and has previously noted possibilities of venturing outside the CBD in search of good-quality assets in suburban regional centres. Possible purchases here could include Westgate Tower (co-developed by CMA, CMT and Capland), though completion is further out at end-FY14. Whilst this could help mitigate the cash drag, risks could come from expensive or poor purchases given the current tight yields for office properties.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders CapitaLand Capital Group CBRE 1M 2.4 0.9 3M 13 11.9 12M 38 51.9 % held 32.1 6.3 6.1
Stable FY13
We expect FY13 to remain stable for CCT as positive rental reversions of low expiring rents of S$7-9psf and potential interest cost savings (with the expiry of a high-cost interest rate swap) mitigate downside from downtime on back-filling and the expiry of income support at One George Street. Management has thus far been fairly successful in back-filling departures at One George Street and Capital Tower. The next test is likely to come from the departure of Wong Partnership in mid-2013, which is among its largest tenants at One George Street.
Downgrade to Underperform
CCT has been among the top share price performers across S-REITs YTD. Trading now at 1x P/BV and with yields of 5% (lowest among office REITs and among lowest within sector), we believe that a potential office bottoming could have been priced in. Upside is also limited, particularly given the fairly flat DPU profile over the next two years, as positive rental reversions are eroded by expiring income support at One George Street.
In search for acquisitions

Asset leverage is among the lowest across S-REITs at 30.9%, leaving debt headroom of about S$1bn before it hits 40% levels. Management said that it is still in
1.7 1.5 1.3 1.1 0.9 25 20 15 10 5

Nov-11
Price Close
Vol m
147 140 132 125 117 110 102 95 87
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-10A 391.9 299.0 498.1 221.0 0.11 39.0% 14.42 0.078 4.91% 25.2% 1.51 1.05 7.57% Dec-11A 361.2 277.3 474.4 212.8 0.07 (41.0%) 24.44 0.075 4.71% 29.9% 1.60 0.99 4.19% Dec-12F 386.1 301.5 263.9 226.1 0.07 9.3% 22.36 0.080 4.99% 30.4% 1.61 0.99 4.43% 0% 1.24 Dec-13F 386.9 304.9 224.3 230.4 0.07 4.0% 21.51 0.081 5.06% 31.1% 1.61 0.99 4.60% 0% 1.04 Dec-14F 387.3 303.5 221.9 225.6 0.07 (1.5%) 21.83 0.079 4.94% 32.0% 1.60 0.99 4.55% 0% 0.92
Feb-12
May-12
Aug-12
Source: Bloomberg

1.04
1.60 1.60
Current
Target
1.69
Capitacommercial Trust
November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 361.2 0.0 361.2 (83.9) 277.3 0.0 (19.4) (2.3) 0.0 255.6 (0.4) 255.2 (77.2) 5.0 1.6 289.9 474.4 (0.0) 0.0 0.0 474.4 212.8 Dec-12F 386.1 0.0 386.1 (84.6) 301.5 0.0 (25.4) (2.5) 0.0 273.6 (6.5) 267.1 (69.6) 5.0 0.0 61.5 263.9 (0.0) 0.0 0.0 263.9 226.1 Dec-13F 386.9 0.0 386.9 (82.0) 304.9 0.0 (21.2) (2.5) 0.0 281.2 (4.5) 276.7 (70.5) 5.0 0.0 13.1 224.3 (0.0) 0.0 0.0 224.3 230.4 Dec-14F 387.3 0.0 387.3 (83.8) 303.5 0.0 (21.3) (2.5) 0.0 279.6 (2.1) 277.5 (73.7) 5.0 0.0 13.2 221.9 (0.0) 0.0 0.0 221.9 225.6
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-11A 6,151 0 1 6,152 577 0 25 0 602 70 569 17 657 1,448 93 1,542 4,541 0 4,541 Dec-12F 6,730 11 1 6,742 93 0 25 0 118 75 0 17 93 2,085 93 2,178 4,590 0 4,590 Dec-13F 6,828 7 1 6,837 66 0 25 0 91 75 197 17 290 1,955 93 2,048 4,590 0 4,590 Dec-14F 6,954 6 1 6,961 36 0 25 0 61 76 350 17 443 1,896 93 1,989 4,590 0 4,590
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 474.4 71.1 (66.4) 0.0 (271.0) 208.0 (276.5) 33.0 (59.6) (303.1) 269.9 0.0 (217.6) (16.3) 36.1 (59.0) (93.5) 114.7 Dec-12F 263.9 71.1 4.8 (0.0) (44.8) 295.1 (28.6) (446.7) (60.3) (535.7) 67.2 0.0 (231.2) (79.3) (243.3) (483.9) (237.3) (243.1) Dec-13F 224.3 70.0 0.2 (0.0) 2.9 297.4 (31.2) (0.7) (63.1) (95.0) 67.2 0.0 (235.5) (61.3) (229.6) (27.2) 203.0 199.1 Dec-14F 221.9 70.9 0.1 (0.0) 5.4 298.3 (31.4) (0.7) (90.1) (122.2) 94.1 0.0 (230.7) (69.3) (205.9) (29.9) 176.4 196.4
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-11A (7.83%) (7.25%) 76.8% (4.18%) 3.23 0.001% 45% 0.92 0.92 0.88 (84%) 7.33% Dec-12F 6.88% 8.72% 78.1% 5.88% 3.66 0.011% 86% 1.28 1.28 1.01 (435%) 3.88% Dec-13F 0.22% 1.14% 78.8% 1.55% 3.90 0.011% 103% 0.31 0.31 0.23 (503%) 3.25% Dec-14F 0.09% (0.49%) 78.4% (2.37%) 3.74 0.011% 102% 0.14 0.14 0.08 (470%) 3.18%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-11A 7.8 N/A N/A N/A 85.1% 6,011.7 N/A Dec-12F 8.3 N/A N/A N/A 96.6% 6,590.8 N/A Dec-13F 8.1 N/A N/A N/A 95.6% 6,689.2 N/A Dec-14F 8.1 N/A N/A N/A 98.0% 6,814.6 N/A
55

November 27, 2012
CapitaLand
CAPL SP / CATL.SI Current S$3.46 S$4.02 S$4.02 16.2%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$12,029m
S$14,708m
US$24.25m
S$29.65m
60.5%
4,262 m shares
CIMB Analyst Donald Chua

Building up a new growth phase

Rising take-up rates in China is auguring well for an FY13 earnings resurgence. Its capex is expected to peak next year, which could mark the start of an NTA growth and asset recycling cycle. We see room for more streamlining initiatives that will narrow valuation discounts.
No change to estimates and RNAV target price, still at 20% discount to RNAV. Maintain Outperform. CapLand remains our top pick in the sector. Stronger-than-expected sales and asset recycling initiatives are the expected stock catalysts. which will underpin a resurgence of operating income in FY13.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings 1M 5.6 3.9 3M 14.7 13.4 12M 28.8 42.4 % held 39.5
The next phase of growth

Between CapLand and CMA, we estimate that around 14 commercial/retail projects will be completed in FY13-14. Its capex phase is expected to peak next year, potentially marking the start of an NTA growth and asset recycling cycle. We estimate that CapLands past commercial capex commitments should also add c.90cts to its book value by end-FY14.
Turnaround in operating performance

CapLands 3Q12 core earnings rose 50% yoy as operating performance improved across its key segments. CMAs core income jumped 46% yoy while China home sales at CapLand level also surged 180% yoy. We are sanguine on Chinas residential market in FY13, backed by falling inventories and the receding risk of further curbs. Our recent tour of CapLands projects in China suggests a sustained improvement in sentiments in the mass-mid tier segments. Last month, CapLand reported that all of the units launched at Imperial Bay, Hangzhou had been snapped up within two hours. Around 10 residential projects will be delivered in the next 12 months,
Valuation discounts
CapLand trades at a 31% discount to RNAV, making it the cheapest large cap in the sector. While some investors do not like its overly diversified structure, we believe that the group is making strides in focusing on and going deeper into its core markets. We see scope for more streamlining initiatives which may include rationalising its presence in Australia and ownership of some non-core industrial properties.
3.6 3.4 3.2 3.0 2.8 2.6 2.4 2.2 2.0 50 40 30 20 10

Nov-11
Price Close
Vol m
130 124 119 113 108 102 96 91 85
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 3,383 881 1,273 0.08 (35.1%) 42.57 0.060 1.73% 25.38 NA 19.2% 1.04 2.55% Dec-11A 2,882 831 782 0.08 1.5% 46.65 0.042 1.20% 31.69 NA 24.3% 1.00 2.47% Dec-12F 2,830 745 835 0.08 (0.5%) 46.96 0.046 1.33% 43.11 NA 45.7% 0.95 2.34% 0% 1.20 Dec-13F 4,079 1,115 679 0.16 91.6% 24.51 0.080 2.31% 28.96 NA 45.0% 0.93 4.32% 0% 0.85 Dec-14F 5,186 1,573 1,059 0.25 56.0% 15.71 0.075 2.16% 20.44 31.55 41.5% 0.89 6.52% 0% 1.07
Feb-12
May-12
Aug-12
Source: Bloomberg

2.21
3.46 3.49
Current
Target
4.02
CapitaLand
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 2,882 1,087 831 (39) 792 (360) 303 0 735 428 1,163 (125) 1,038 (256) 0 Dec-12F 2,830 1,068 745 (41) 704 (398) 221 0 527 552 1,079 (62) 1,016 (182) 0 Dec-13F 4,079 1,539 1,115 (42) 1,073 (463) 424 0 1,034 0 1,034 (122) 912 (233) 0 Dec-14F 5,186 1,957 1,573 (48) 1,525 (420) 427 0 1,532 0 1,532 (181) 1,351 (292) 0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 4,836 2,053 5,677 395 12,961 1,190 16,764 392 0 18,346 1,598 1,737 423 3,758 7,796 966 8,762 0 12,520 14,776 4,011 18 787 Dec-12F 3,877 1,706 8,110 194 13,886 1,135 21,546 430 0 23,111 919 2,093 413 3,426 12,110 1,415 13,525 0 16,951 15,526 4,520 20 045 Dec-13F 2,054 2,235 7,030 279 11,598 1,193 23,569 620 0 25,382 795 3,017 581 4,394 10,471 1,632 12,103 0 16,496 15,865 4,618 20 484 Dec-14F 1,813 2,557 6,639 355 11,364 1,244 25,668 788 0 27,700 756 3,836 710 5,303 9,964 2,357 12,321 0 17,623 16,606 4,834 21 440
782 357 357
835 355 355
679 679 679
1,059 1,059 1,059
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 831 (107) Dec-12F 745 (1,047) Dec-13F 1,115 1,557 Dec-14F 1,573 941
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (14.8%) (5.7%) 28.8% (1.07) 3.47 1.75 10.7% 50.0% 265.5 1,128 349.0 7.0% 3.13% Dec-12F (1.8%) (10.3%) 26.3% (2.15) 3.65 1.44 5.8% 69.0% 243.1 1,432 397.8 7.3% 2.59% Dec-13F 44.1% 49.6% 27.3% (2.17) 3.73 2.06 11.8% 50.0% 176.3 1,088 367.2 9.7% 3.49% Dec-14F 27.1% 41.1% 30.3% (2.10) 3.91 3.38 11.8% 30.0% 168.7 773 387.3 16.3% 4.87%
(332) 482 0 (106) 768 (2,012) 770 0 0 (1,242) (965) 0 0 (177) (452) (1,594)
(333) 183 0 (128) (579) (2,858) 1,207 0 0 (1,651) 839 (15) 0 (195) (488) 141
81 (231) 0 (122) 2,399 (2,358) 759 0 0 (1,598) (1,764) 0 0 (339) (521) (2,624)
41 (191) 0 (181) 2,183 (2,104) 994 0 0 (1,110) (546) 0 0 (318) (451) (1,314)
RNAV China Resi SIN Resi Other Resi Mixed D/Commercial China SIN Others Fund Management & Origination / Others Listed vehicles Group GAV (S$m) Other adjustments Less: Adj net debt, OBS debt and devt capex Group RNAV (S$m) Share base Group RNAV (S$ per share) -Disc/Prem to RNAV -20%
RNAV (S$m) 4,000 2,151 335
% of GAV 13% 7% 1%
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%) Dec-11A N/A N/A N/A N/A N/A N/A N/A N/A 65.3% 29.7% N/A Dec-12F N/A N/A N/A N/A N/A N/A N/A N/A 58.7% 36.9% N/A Dec-13F N/A N/A N/A N/A N/A N/A N/A N/A 70.1% 26.8% N/A Dec-14F N/A N/A N/A N/A N/A N/A N/A N/A 75.4% 22.1% N/A
5,276 17% 2,871 9% 816 3% 2,015 6% 13,769 44% 31,233 100% 2,089 (11,987) 21,335 4,250 5.02
Target price
4.02
57
REIT SINGAPORE
November 27, 2012
CapitaMall Trust
CT SP / CMLT.SI Current S$2.07 S$2.23 S$2.23 7.7%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$5,640m
S$6,896m
US$13.63m
S$16.72m
70.0%
3,328 m shares

Yields are not compelling

We believe that CMTs forward yields of <5% after its recent dilutive placement are not compelling, notwithstanding the growth offered by AEI fruition. The placement could precede potential acquisitions which may be accretive due to cheap funding but would not come cheap.
Our DPUs and DDM-based target price (discount rate: 6.7%) are unchanged. We maintain our Underperform rating as yields are unattractive after the recent dilutive placement. We see derating catalysts in the cash drag (if CMT does not use its cash) and expensive acquisitions. from JCube and Bugis+, both of which are near 100% leased. More than 90% of the Atrium@Orchard has been leased out and the mall opened in Nov, in time for the festive season. The opening of Westgate (30% stake) by end-13 should sustain growth in FY14.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders CapitaLand Capital Research Capital Group 1M -3.6 -5.1 3M 7.3 6.2 12M 4 17.9 % held 30.0 7.7 7.0
Slight weakening of consumer sentiment

Consumers have turned more cautious and pulled back on discretionary spending. In keeping with this trend, CMT has seen a slight weakening of its operating metrics, including a 2% drop in shopper traffic YTD and slower sales in trade categories such as department stores, home furnishing and fashion. This appeared a tad weaker than its peers though it is probably because its malls are more mature than its peers younger and more under-rented ones.
Placement could precede acquisitions

CMT recently closed a placement at S$2.00 apiece to raise S$250m. Despite a good placement price and small dilution of 4%, we were disappointed with managements decision given that the bulk of proceeds will be used to repay debt and fund existing AEIs. Assuming full debt repayment, asset leverage should drop from 38% to 35%. The placement could precede potential pipeline acquisitions, with pipeline assets from sponsor including recently-completed StarVista and ION (50% stake). A lowered gearing should facilitate accretion from the ability to take on more debt.
Growth from AEI fruition

We expect AEIs and developments to supplement growth in FY13 and 14. FY13 will see full-year contributions
2.3 2.2 2.1 2.0 1.9 1.8 1.7 1.6 1.5 25 20 15 10 5

Nov-11
Price Close
Vol m
114 110 107 103 99 95 92 88 84
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-10A 581.1 399.1 265.7 294.8 0.08 (12.0%) 25.74 0.09 4.48% 35.1% 1.55 1.33 5.17% Dec-11A 630.6 418.2 389.6 301.6 0.08 2.5% 25.11 0.09 4.53% 37.3% 1.58 1.31 5.27% Dec-12F 667.5 446.1 486.5 324.8 0.09 11.4% 22.53 0.10 4.71% 36.8% 1.60 1.29 5.78% 0% 1.45 Dec-13F 707.6 476.4 329.0 348.0 0.10 5.6% 21.34 0.10 4.87% 36.4% 1.62 1.28 6.03% 0% 0.99 Dec-14F 723.2 488.7 362.5 381.5 0.10 8.2% 19.72 0.11 5.34% 36.7% 1.62 1.28 6.48% 0% 1.00
Feb-12
May-12
Aug-12
Source: Bloomberg

1.64
2.07 2.20
Current
Target
2.23
CapitaMall Trust
November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 630.6 0.0 630.6 (212.3) 418.2 0.0 (39.4) (3.9) 0.0 375.0 0.0 375.0 (132.6) 26.1 0.0 121.1 389.6 (0.0) 0.0 0.0 389.6 301.6 Dec-12F 667.5 0.0 667.5 (221.4) 446.1 0.0 (39.9) (3.9) 0.0 402.2 0.0 402.2 (124.5) 26.1 0.0 180.7 484.5 1.9 0.0 0.0 486.5 324.8 Dec-13F 707.6 0.0 707.6 (231.2) 476.4 0.0 (40.2) (3.9) 0.0 432.3 0.0 432.3 (129.3) 26.1 0.0 0.0 329.0 (0.0) 0.0 0.0 329.0 348.0 Dec-14F 723.2 0.0 723.2 (234.5) 488.7 0.0 (40.3) (3.9) 0.0 444.4 0.0 444.4 (130.1) 48.2 0.0 0.0 362.5 (0.0) 0.0 0.0 362.5 381.5
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-11A 8,383 0 2 8,385 758 0 30 0 788 255 782 1 1,039 2,641 246 2,887 5,246 0 5,246 Dec-12F 8,522 0 4 8,526 543 0 30 0 573 269 933 1 1,204 2,414 155 2,570 5,326 0 5,326 Dec-13F 8,625 0 6 8,632 819 0 30 0 849 286 782 1 1,070 2,668 155 2,823 5,587 0 5,587 Dec-14F 8,684 0 10 8,694 833 0 30 0 863 292 782 1 1,076 2,726 155 2,882 5,599 0 5,599
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 390 107 0 0 (116) 380 (132) (285) 0 (417) 551 231 (300) (100) 382 345 (34) 415 Dec-12F 485 98 14 2 (92) 508 (148) 44 38 (65) (182) 0 (325) (124) (632) (189) 446 135 Dec-13F 329 103 17 (0) 5 455 (58) 11 36 (11) 103 250 (348) (129) (125) 319 446 417 Dec-14F 363 82 6 (0) 5 456 (20) 34 34 48 59 0 (382) (130) (453) 51 508 433
Key Ratios
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-11A 11.4 N/A N/A N/A 85.0% N/A N/A Dec-12F 11.4 N/A N/A N/A 90.7% N/A N/A Dec-13F 11.6 N/A N/A N/A 98.7% N/A N/A Dec-14F 12.1 N/A N/A N/A 99.1% N/A N/A
59

November 27, 2012
CapitaMalls Asia
CMA SP / CMAL.SI Current S$1.91 S$1.99 S$1.99 4.4%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$6,073m
S$7,426m
US$8.53m
S$10.49m
30.0%
3,884 m shares

Now on execution
We believe operating indicators are finally on a rise. Yields on cost are gradually rising though still dragged by leasing cycles and legacy issues. We believe valuations have reflected a turnaround and see execution and asset recycling to dictate share price in FY13.
No change to estimates and RNAV target price, still at 10% discount to RNAV. Maintain Neutral. We retain 0ur preference for CapLand.
1M 7.5 5.8 3M 17.4 16.1 12M 37.4 51 % held 65.5
Now on execution for 2013

Management tells us that the focus for FY13 will be on execution. One action point will be to leverage on its operational expertise to improve portfolio yields at each leasing cycle. Walmart, makes up on average 30-40% of tenancy for its older malls with long and unproductive leases. CMA hopes to rationalize some of these leases in the future. Stepping up on asset recycling remains the plan with the establishment of the China Development Fund III. With the yield compression in CRCT, we also believe there is scope for its stabilized malls to be injected. Much has been said on the possibility of injecting ION into CMT. We would be cautious on this move if no clear reinvestment plans are articulated. ION forms c.35% of CMAs EBIT.
Share price info

Share price perf. (%) Relative Absolute Major shareholders CapLand
Operational turn in FY12

CMAs 3Q12 core earnings jumped 46% yoy as past acquisitions in Japan and China drove rental income. With seven malls expected to be completed this year and two in FY13, NPI growth outlook looks to be on a steady uptrend and will drive asset revaluations and NTA growth in the next two years. Growth is expected to be driven largely by China. Our recent visit of its China malls in West China suggests a more sanguine operational outlook based a few fronts: 1) Rents for older 1 & 2G malls are fast catching up to market rates, 2) First year NPI yields achieved for its newer malls are c.200bps higher (c.5-6%) than what its older malls have achieved previously and 3) Its malls in tier-1 cities appear to be progressing faster than expected in lifting NPI yields.
Valuations
Maintain Neutral. We see execution and asset recycling to dictate share price in FY13.
2.0 1.8 1.6 1.4 1.2 Vol m 1.0 30 20 10

Nov-11
Price Close
143 137 131 125 119 113 107 101 95 89 83
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 245.4 67.0 446.8 0.070 (2.6%) 27.30 0.020 1.05% 102.3 8.7 (10.5%) 1.27 4.81% Dec-11A 246.2 27.6 539.8 0.042 (39.8%) 45.36 0.030 1.57% 286.3 8.5 3.8% 1.19 2.71% Dec-12F 296.0 71.2 470.5 0.061 44.1% 31.47 0.030 1.57% 149.2 804.2 43.3% 1.12 3.67% 0% 1.10 Dec-13F 338.7 98.9 270.3 0.070 14.7% 27.45 0.030 1.57% 119.6 43.0 59.4% 1.10 4.05% 0% 0.92 Dec-14F 386.0 122.0 324.2 0.083 19.9% 22.88 0.030 1.57% 105.3 15.6 71.7% 1.07 4.73% 0% 0.95
Feb-12
May-12
Aug-12
Source: Bloomberg

1.13
1.91 1.91
Current
Target
1.99
CapitaMalls Asia
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 246.2 154.1 27.6 (6.8) 20.7 (8.5) 173.2 0.0 185.5 383.1 568.6 (20.3) 548.3 (8.5) 0.0 Dec-12F 296.0 185.3 71.2 (7.3) 63.9 (40.9) 220.9 0.0 244.0 261.9 505.9 (26.8) 479.1 (8.5) 0.0 Dec-13F 338.7 212.0 98.9 (11.2) 87.6 (84.3) 312.8 0.0 316.1 0.0 316.1 (34.8) 281.4 (11.1) 0.0 Dec-14F 386.0 241.6 122.0 (9.8) 112.2 (123.0) 390.0 0.0 379.2 0.0 379.2 (41.7) 337.5 (13.3) 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 982 218 0 2 1,202 16 6,860 0 0 6,876 239 213 51 504 991 107 1,097 0 1,601 6,250 228 6 477 Dec-12F 800 284 0 2 1,086 17 9,979 0 0 9,996 731 284 62 1,077 3,033 128 3,161 0 4,238 6,604 240 6 844 Dec-13F 745 371 0 3 1,119 14 11,315 0 0 11,328 953 325 71 1,348 3,950 147 4,097 0 5,445 6,757 246 7 003 Dec-14F 957 423 0 3 1,383 12 12,575 0 0 12,587 1,192 370 81 1,643 4,944 167 5,111 0 6,754 6,965 254 7 219
539.8 163.6 163.6
470.5 235.7 235.7
270.3 270.3 270.3
324.2 324.2 324.2
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 28 191 Dec-12F 71 15 Dec-13F 99 (38) Dec-14F 122 3
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 0.3% (59%) 11.2% (0.06) 1.61 0.62 3.6% 74.4% 530.9 1,008 13% 0.64% Dec-12F 20.2% 158% 24.1% (0.76) 1.70 0.85 5.3% 55.9% 310.2 821 (212%) 1.07% Dec-13F 14.4% 39% 29.2% (1.07) 1.74 0.79 11.0% 43.1% 352.9 877 (183%) 1.01% Dec-14F 13.9% 23% 31.6% (1.33) 1.79 0.76 11.0% 35.9% 375.5 878 (1231%) 1.08%
(365) 541 0 (33) 360 (19) 0 0 6 (13) 530 0 0 (117) (41) 373
(350) 435 0 (30) 141 (3,450) 749 0 34 (2,666) 2,534 0 0 (117) (75) 2,343
(217) 217 0 (19) 42 (1,034) 0 0 26 (1,008) 1,138 0 0 (117) (110) 911
(257) 257 0 (22) 103 (885) 0 0 24 (861) 1,233 0 0 (117) (147) 970
RNAV RNAV (S$m) % of GAV China 7,567 49% Singapore 5,287 34% Malaysia 887 6% Japan 624 4% India 80 1% Fund and REIT management 957 6% GAV 15,402 100% Less: Est net debt (incl any off b/s capex) (6,797) RNAV 8,605 Fully-diluted share base 3,884 RNAV per share 2.22 -Disc/Prem to RNAV Target price -10% 1.99
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%) Dec-11A N/A N/A N/A N/A N/A N/A N/A 22.8% N/A 429.9% N/A Dec-12F N/A N/A N/A N/A N/A N/A N/A 29.0% N/A 65.2% N/A Dec-13F N/A N/A N/A N/A N/A N/A N/A 32.5% N/A 66.1% N/A Dec-14F N/A N/A N/A N/A N/A N/A N/A 35.6% N/A 66.0% N/A
61
REIT SINGAPORE
November 27, 2012
CDL Hospitality Trust

CDREIT SP / CDLT.SI Current S$1.92 S$2.15 S$2.15 12.3%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,517m
S$1,855m
US$3.27m
S$3.97m
67.0%
964.8 m shares

Little to excite
With visitor arrivals moderating and RevPARs still near previous peaks, we see little room for further outperformance. Acquisitions will be pricey while foreign asset additions could dilute its positioning and the appeal of its pure local tourism exposure.
We maintain our DPU estimates, DDM-target price (discount rate: 7.7%) and Neutral rating. The stock could be catalysed by a recovery in the corporate travel market and accretive acquisitions. 2013 additions expected to be double 2012s. This, coupled with a slowdown in arrivals, point to a trough in the room-to-arrivals ratio in 2012 as room supply starts outpacing arrivals next year. We are projecting a 1% yoy RevPar increase in 2013 (2012E: +6-7%), reflecting a combination of weaker occupancy and marginally stronger ARR.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Hospitality Holdings Pte Ltd Aberdeen Investment Bank of America 1M -5.1 -6.6 3M -1.7 -2.8 12M 11.7 25.6 % held 32.8 4.4 4.4
Moderating hospitality trends

After a strong eight months, the hospitality sector appears to be moderating with weaker corporate travel in Sep. Despite the weakness, we believe that arrivals could still show growth in 2013, albeit a lower 4.5% (14.8m), given the signs of recovery in China and upcoming attractions such as River Safari in 1Q2013.
Maintain Neutral
With visitor arrivals moderating and RevPARs still near previous peaks, we see little room for outperformance. Acquisitions could lead to a rerating but these could be pricey and foreign asset additions could dilute CDLHTs almost pure-local positioning. Management may revert to a 100% payout (currently 90%) policy amid a moderating performance, strong balance sheet and lack of concrete acquisition targets. These could however be more one-off in nature, and not provide much catalyst to the stock.
Supplies coming on; 1% yoy RevPar growth for 2013

We expect the room-to-arrivals ratio to hit trough in 2012 as room supply starts outpacing arrivals in 2013. The room supply situation has been tight in the past few years but more supply is expected to come on stream, with
2.2 2.0 1.8 1.6 Vol m 1.4 15 10 5

Nov-11
Price Close
128 123 118 113 108 103 98 93 88
Financial Summary
Feb-12
May-12
Aug-12
Source: Bloomberg

1.47
1.92 2.10
Current
Target
2.15
CDL Hospitality Trust

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 141.1 0.0 141.1 (5.9) 135.2 0.0 (11.7) (0.2) (2.5) 120.7 0.0 120.7 (13.2) 0.0 0.0 73.2 180.8 (4.5) 0.0 0.0 176.3 106.3 Dec-12F 149.0 0.0 149.0 (9.7) 139.2 0.0 (11.7) (0.2) (2.5) 124.7 0.0 124.7 (14.1) 0.0 0.0 0.0 110.6 (1.5) 0.0 0.0 109.2 111.6 Dec-13F 151.7 0.0 151.7 (9.9) 141.7 0.0 (11.8) (0.2) (2.5) 127.2 0.0 127.2 (14.2) 0.0 0.0 0.0 113.0 (1.5) 0.0 0.0 111.5 113.7 Dec-14F 155.2 0.0 155.2 (10.2) 145.0 0.0 (11.8) (0.2) (2.5) 130.4 0.0 130.4 (14.3) 0.0 0.0 0.0 116.1 (1.6) 0.0 0.0 114.5 116.5
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-11A 2,030 0 0 2,030 70 0 18 0 88 23 0 1 24 535 12 547 1,547 0 1,547 Dec-12F 2,036 0 0 2,036 65 0 18 0 83 24 0 1 25 535 12 547 1,547 0 1,547 Dec-13F 2,042 0 0 2,042 60 0 18 0 78 24 0 1 25 535 12 547 1,547 0 1,547 Dec-14F 2,048 0 0 2,048 54 0 18 0 72 25 0 1 26 535 12 547 1,547 0 1,547
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 180.8 13.2 0.2 (4.5) (57.8) 131.8 (12.4) (156.1) 2.2 (166.2) 153.6 0.0 (102.3) (13.5) 37.8 3.5 (33.7) 106.8 Dec-12F 110.6 14.1 1.3 (1.5) 12.3 136.8 (6.1) 0.0 1.4 (4.7) 0.0 0.0 (111.6) (25.4) (136.9) (4.8) 133.5 118.0 Dec-13F 113.0 14.2 0.4 (1.5) 12.3 138.4 (6.1) 0.0 1.3 (4.8) 0.0 0.0 (113.7) (25.5) (139.2) (5.7) 134.9 119.4 Dec-14F 116.1 14.3 0.6 (1.6) 12.2 141.6 (6.1) 0.0 1.2 (4.9) 0.0 0.0 (116.5) (25.7) (142.3) (5.6) 137.9 122.4
Key Ratios
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-11A N/A N/A 202.2 N/A 88.7% 2,029.8 N/A Dec-12F N/A N/A 213.8 N/A 89.3% 2,035.9 N/A Dec-13F N/A N/A 216.2 N/A 88.6% 2,042.0 N/A Dec-14F N/A N/A 220.6 N/A 88.6% 2,048.2 N/A
63
Food & Beverages SINGAPORE

November 27, 2012
China Minzhong Food

MINZ SP / CMFC.SI Current S$0.79 S$0.82 S$0.82 4.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$357.9m
S$437.6m
US$4.49m
S$5.46m
56.4%
557.4 m shares
CIMB Analyst Kenneth Ng CFA

Dividends would be the best catalyst

Maturing farmland, domestic demand for processed vegetables and new beverage sales could power its earnings in FY13. However, unless management pays dividends, corporate-governance concerns are likely to linger.
Margins for its processed business could stay low on sluggish global demand. We continue to keep an eye on receivable days. Maintain Neutral on a lack of catalysts. Our target price is intact at 3x forward P/E, pegged to the sector average. domestic orders for higher-margin crops like king oyster mushrooms. Encouraging sales of newly-launched beverages could also provide a new earnings stream.
Lee Mou Hua

T (65) 6210 8600 E mouhua.lee@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders GIC OCA Siek Wei Ting 1M -4.3 -6 3M 11.1 9.8 12M -21.8 -8.2 % held 16.9 10.3 7.1
Watch out for receivables

Receivable days, while declining, remained elevated at 85 days in FY12, up from 35 in FY11. We think this is the clearest indicator of the health of export demand for its processed business.
Vegetable business outlook

We look for: 1) the maturing of existing farmland to drive cultivation sales. Management is no longer acquiring new farmland, citing rising labour costs. About 55% of its existing 59,507 mu of farmland is roughly two years away from maturity. Margins for its processed business could struggle to recover to their historical high of 30% on sluggish demand from global export markets. What we think could lead its earnings growth next year instead is more
Pay dividends!
We think that unless dividends are declared, corporate-governance concerns may not go away. Management has put in place a share buyback programme but this is unlikely to lead to a stock re-rating, as investors concerns stems from the mis-trust over their assets.
1.2 1.0 0.8 0.6 Vol m 0.4 40 30 20 10

Nov-11
Price Close
134 123 112 100 89 78 67 55 44
Financial Summary
Revenue (Rmbm) Operating EBITDA (Rmbm) Net Profit (Rmbm) Core EPS (Rmb) Core EPS Growth FD Core P/E (x) DPS (Rmb) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Jun-11A 1,929 766 566.5 1.04 (7.8%) 3.06 0% 2.44 NA 5.7% 0.75 21.8% Jun-12A 2,569 920 679.6 1.22 16.9% 3.24 0% 2.98 NA 15.3% 0.62 20.9% Jun-13F 3,419 1,067 779.3 1.40 14.7% 2.86 0% 2.16 7.64 1.7% 0.51 19.6% (0%) 1.06 Jun-14F 3,870 1,159 863.4 1.55 10.8% 2.58 0% 1.36 2.57 (12.5%) 0.43 18.0% 0% 1.06 Jun-15F 4,548 1,315 997.1 1.79 15.5% 2.23 0% 0.49 2.09 (25.3%) 0.36 17.4% 1.02
Feb-12
May-12
Aug-12
Source: Bloomberg

0.53
0.79 1.15
Current
0.82
Target
China Minzhong Food

November 27, 2012
Profit & Loss

(Rmbm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Jun-12A 2,569 986 920 (180) 740 (36) 0 22 726 0 726 (47) 680 0 0 Jun-13F 3,419 1,178 1,067 (204) 863 (33) 0 8 838 0 838 (59) 779 0 0 Jun-14F 3,870 1,299 1,159 (216) 943 (23) 0 8 928 0 928 (65) 863 0 0 Jun-15F 4,548 1,526 1,315 (228) 1,087 (23) 0 8 1,072 0 1,072 (75) 997 0 0
Balance Sheet
(Rmbm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Jun-12A 66 1,384 104 105 1,659 1,832 0 0 1,096 2,928 613 343 16 972 4 25 29 0 1,000 3,587 0 3,587 Jun-13F 255 1,614 184 98 2,151 2,102 0 0 962 3,064 322 352 157 831 5 13 18 0 848 4,367 0 4,367 Jun-14F 980 1,867 211 98 3,156 2,007 0 0 961 2,968 322 397 157 876 5 13 18 0 894 5,230 0 5,230 Jun-15F 1,905 2,071 248 98 4,322 1,912 0 0 948 2,860 322 459 157 938 5 13 18 0 955 6,227 0 6,227
680 680 680
779 779 779
863 863 863
997 997 997
Cash Flow
(Rmbm) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Jun-12A 920 (551) Jun-13F 1,067 65 Jun-14F 1,159 (235) Jun-15F 1,315 (180)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (Rmb) BVPS (Rmb) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Jun-12A 33.2% 20.2% 35.8% (0.99) 6.44 20.7 6.4% 0% 85.3 18.27 34.77 18.0% 19.9% Jun-13F 33.1% 15.9% 31.2% (0.13) 7.83 26.1 7.0% 0% 100.4 23.48 42.59 15.5% 19.4% Jun-14F 13.2% 8.6% 30.0% 1.17 9.38 41.2 7.0% 0% 98.1 28.07 46.79 15.9% 18.4% Jun-15F 17.5% 13.4% 28.9% 2.83 11.17 47.5 7.0% 0% 101.8 27.76 46.27 17.8% 18.0%
83 (36) (58) 359 (640) 0 0 0 (640) 255 0 0 0 0 255
41 (33) (59) 1,081 (500) 0 0 0 (500) (289) 0 0 0 0 (289)
31 (23) (65) 868 0 0 0 0 0 0 0 0 0 0 0
31 (23) (75) 1,068 0 0 0 0 0 0 0 0 0 0 0
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) ASP (% chg, tertiary prod/serv) Unit sales grth (%,tertiary prod/serv) Util. rate (%, tertiary prod/serv) Unit raw mat ASP (%chg,main) Total Export Sales Growth (%) Export Sales/total Sales (%) Jun-12A N/A 22.0% N/A N/A N/A N/A N/A 10.0% N/A N/A N/A N/A Jun-13F N/A 17.0% N/A N/A N/A N/A N/A 10.0% N/A N/A N/A N/A Jun-14F N/A 17.0% N/A N/A N/A N/A N/A 10.0% N/A N/A N/A N/A Jun-15F N/A 17.0% N/A N/A N/A N/A N/A 10.0% N/A N/A N/A N/A
65

November 27, 2012
City Developments
CIT SP / CTDM.SI Current S$11.52 S$10.80 S$10.80 -6.2%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$8,567m
S$10,475m
US$6.89m
S$8.44m
54.7%
954.3 m shares

Remains fearful of oversupply

Investment properties now account more of CityDevs portfolio in this cycle. However, we believe residential remains the key driver of share price, of which already reflects lofty valuations. CityDevs Chairman remains fearful that the market will see an oversupply in 2014-2015.
No change to estimates and RNAV target price (still based on 15% discount to RNAV). The stock trades at what we believe as a tight 9% discount to RNAV against potentially further curbing measures and physical supply still to come. Maintain Underperform.
Remains fearful of supply

CityDev Chairman, Quek Leng Beng, reiterated his fear of a potential oversupply in residential units in 2014-2015 in its 3Q12 result. In particular, the launch window for its high-end projects remains elusive. Our sector thesis shows that a build up of physical completions in the private and HDB segments could lift vacancy to 8-10% by 2014-2015, from 6.1% currently. While investment properties now form a more meaningful part of its portfolio (69%), RNAV remains most sensitive to residential prices. We estimate a 10% fall in residential prices will lead to a 5% decline in RNAV.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Hong Leong Aberdeen 1M 2.7 1 3M 1 -0.3 12M 12.7 26.3 % held 45.3 19.0
3Q12 results review

3Q12 core net profit collapsed 51% yoy partly due to the lack of divestment gains. More notably, EBITDA margins appear to have fallen significantly, reflecting a property market characterized by rising land costs and low pricing power. Its recent residential land wins in the Sengkang/Fernvale EC and a site at Tai Thong Crescent at S$296psf and S$796psf respectively also do not suggest that residential margins will improve going forward. CityDev reported strong sales in 3Q12, with its mass market launches largely sold. Rental revenues remained flat yoy while RevPARs in Singapore is starting to show weakness on more cautious corporate spending, down 0.9% yoy.
Trade on valuations
The stock trades at what we believe as a tight 9% discount to RNAV against potentially further curbing measures and physical supply still to come. Short of asset recycling events, we believe current valuation is not compelling.
Vol m
12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.0 8.5 8 6 4 2

Nov-11
Price Close
115 112 109 106 103 99 96 93 90
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 3,129 943 749.0 0.63 (1.1%) 18.34 0.18 1.56% 15.31 8.5 27.6% 1.64 9.23% Dec-11A 3,280 1,023 798.6 0.63 0.8% 18.19 0.18 1.56% 14.11 9.8 21.0% 1.61 8.93% Dec-12F 3,311 854 588.3 0.50 (20.6%) 22.90 0.15 1.33% 18.44 414.3 29.8% 1.51 6.81% 0% 0.94 Dec-13F 3,654 1,027 664.6 0.70 38.4% 16.54 0.17 1.51% 14.86 14.9 21.5% 1.42 8.84% 0% 0.96 Dec-14F 4,429 1,174 799.8 0.84 20.3% 13.75 0.18 1.60% 11.96 7.5 7.0% 1.31 9.90% 0% 1.06
Feb-12
May-12
Aug-12
Source: Bloomberg

8.90
11.52 11.98
Current
Target
10.80
City Developments
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 3,280 1,736 1,023 (133) 889 (30) 62 0 922 215 1,136 (175) 962 (163) 0 Dec-12F 3,311 1,752 854 (130) 724 (36) 78 0 766 87 853 (128) 726 (138) 0 Dec-13F 3,654 1,933 1,027 (130) 896 (52) 138 0 982 0 982 (147) 835 (170) 0 Dec-14F 4,429 2,343 1,174 (131) 1,043 (42) 173 0 1,174 0 1,174 (176) 998 (198) 0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 2,581 1,201 9 3,295 7,086 3,313 0 0 4,564 7,877 1,477 982 361 2,819 2,929 518 3,447 0 6,266 6,827 1,869 8 696 Dec-12F 2,334 1,361 9 3,669 7,372 3,334 0 0 5,438 8,772 1,707 952 317 2,976 3,386 523 3,908 0 6,885 7,269 1,990 9 259 Dec-13F 2,816 1,452 10 3,373 7,650 3,353 0 0 5,798 9,152 1,658 1,001 350 3,009 3,289 609 3,898 0 6,907 7,767 2,127 9 894 Dec-14F 4,060 1,699 12 2,551 8,321 3,372 0 0 6,125 9,497 1,612 1,213 425 3,250 3,198 681 3,879 0 7,129 8,391 2,297 10 689
799 590 590
588 480 480
665 665 665
800 800 800
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 1,023 (15) Dec-12F 854 (606) Dec-13F 1,027 286 Dec-14F 1,174 859
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 4.9% 8.5% 31.2% (1.91) 7.15 13.13 15.4% 29.4% 115.6 2.17 227.5 6.89% 7.30% Dec-12F 0.9% (16.5%) 25.8% (2.89) 7.62 9.67 14.9% 29.2% 141.6 2.08 227.1 5.58% 5.56% Dec-13F 10.4% 20.3% 28.1% (2.23) 8.14 10.35 15.0% 25.0% 140.5 1.99 207.2 6.07% 6.38% Dec-14F 21.2% 14.4% 26.5% (0.79) 8.79 12.40 15.0% 22.0% 129.8 1.90 193.8 7.02% 7.15%
(114) 181 (68) (162) 845 53
0 75 (75) (122) 125 (785)
44 42 (87) (140) 1,172 (287)
0 84 (84) (168) 1,866 (265)
0 0 53 201 0 0 (185) (435) (419)
0 0 (785) 687 0 0 (159) (114) 413
0 0 (287) (145) 0 0 (179) (78) (403)
0 0 (265) (137) 0 0 (189) (31) (357)
RNAV Office Hospitality Retail Industrial SIN Residential China Residential Others China Mixed Devts South Beach GAV Add: Adjustment for M&C debt Less: FY11F net debt (incl off b/s debt) RNAV Fully-diluted share base RNAV per share (S$) Target price Disc/Prem -15%
RNAV (S$m) % of GAV 4,331 29% 3,439 23% 1,954 13% 466 3% 3,293 22% 184 1% 48 0% 311 2% 1,136 7% 15,162 100% 10 (3,046) 12,126 954 12.71 10.80
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%) Dec-11A N/A N/A N/A N/A N/A N/A N/A N/A 41.0% 56.2% N/A Dec-12F N/A N/A N/A N/A N/A N/A N/A N/A 39.5% 57.7% N/A Dec-13F N/A N/A N/A N/A N/A N/A N/A N/A 42.6% 54.9% N/A Dec-14F N/A N/A N/A N/A N/A N/A N/A N/A 52.4% 45.5% N/A
67
Public Transportation SINGAPORE

November 27, 2012
ComfortDelGro
CD SP / CMDG.SI Current S$1.68 S$1.76 S$1.76 5.2%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,877m
S$3,517m
US$4.03m
S$4.99m
82.0%
2,086 m shares
CIMB Analyst Lee Wen Ching

T (65) 62108604 E wenching.lee@cimb.com
Defensiveness comes at a price

ComfortDelGros excellent cost-management and defensive earnings have made it the preferred land transport stock in Singapore. But its 23% and 6% YTD outperformance over SMRT and the STI respectively suggest that this crowded trade could be getting expensive.
Its dividend yield of 3.6% is not overly enticing, especially when compared against what REITs are offering. We think that positives are largely in the price, and maintain a non-consensus Neutral call on the stock vs. the streets bullish calls. Our EPS and target price (DCF, 7.4% WACC) are intact. Going forward, creeping expenses arising from the Downtown Lines start-up costs threaten to dampen profit margins. The Downtown Line will be opening in three stages, phased over 2013, 2015 and 2017. Staff costs will inflate as the group embarks on a recruitment drive for the new line. We expect losses from the new line to have a drag on earnings for a few years. The Circle Line, for instance, remains loss-making after three years of operation.
Share price info

Share price perf. (%) Relative Absolute Major shareholders S'pore Labour Foundation Silchester Int'l Investors Capital Group 1M 2.4 0.9 3M 2.3 1.2 12M 6.2 20.1 % held 12.1 12.1 6.4
Great execution, at a price

ComfortDelGro deserves credit for successfully navigating a challenging year. The group has maintained its profit margins despite cost pressures, and has demonstrated excellent cost control vs. its peer SMRT, which has been plagued by margin erosion. However, these positives appear to have been mostly priced in, with the stock outperforming both the STI and SMRT YTD.
Still the preferred stock

We prefer ComfortDelGro to SMRT for its favourable earnings outlook (3-year EPS CAGR of 9.2% vs. SMRTs 7.8%) and proven execution. Dividend yields for both are similar at 3.6%.
The Downtown Line drag
Price Close 1.70 1.60 1.50 1.40 Vol m 1.30 15 10 5

112 110 108 105 103 101 99 96 94 92
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 3,207 679.3 228.5 0.11 4.10% 15.29 0.055 3.27% 5.98 12.84 6.16% 1.94 13.1% Dec-11A 3,411 715.8 235.6 0.11 3.11% 14.83 0.060 3.59% 5.76 25.73 2.23% 1.85 12.8% Dec-12F 3,566 752.4 251.6 0.12 6.79% 13.88 0.060 3.60% 5.64 50.29 4.18% 1.73 12.9% 0% 1.02 Dec-13F 3,706 770.9 254.9 0.12 1.30% 13.71 0.061 3.65% 5.54 20.40 2.36% 1.63 12.2% 0% 1.01 Dec-14F 3,866 804.1 264.5 0.13 3.76% 13.21 0.063 3.79% 5.25 14.04 (1.58%) 1.53 12.0% 0% 0.98
Aug-12

1.39
1.68 1.72
Current
Target
1.76
ComfortDelGro
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 3,411 700 716 (317) 399 (25) 5 0 379 0 379 (82) 298 (62) 0 Dec-12F 3,566 740 752 (326) 426 (21) 7 0 412 0 412 (89) 323 (71) 0 Dec-13F 3,706 761 771 (338) 433 (24) 7 0 416 0 416 (87) 329 (74) 0 Dec-14F 3,866 791 804 (355) 449 (24) 8 0 433 0 433 (91) 342 (77) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 577 346 57 0 979 2,604 92 553 361 3,610 198 601 203 1,002 434 140 574 540 2,115 1,892 582 2,474 Dec-12F 520 320 71 0 912 2,828 99 553 361 3,841 198 535 235 968 434 140 574 540 2,081 2,017 654 2,671 Dec-13F 564 324 74 0 963 2,990 107 553 361 4,010 198 556 233 987 434 140 574 540 2,100 2,145 728 2,873 Dec-14F 681 329 77 0 1,087 3,095 114 553 361 4,123 198 580 236 1,015 434 140 574 540 2,128 2,277 805 3,082
236 236 236
252 252 252
255 255 255
264 264 264
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 715.8 (5.3) 98.5 (336.6) 349.2 (35.3) (44.1) 742.2 (560.6) 78.0 (6.5) 2.6 (486.5) (119.9) 0.0 0.0 (115.0) (19.3) (254.2) Dec-12F 752.4 (7.1) (55.0) (340.0) 357.8 (31.6) (57.0) 619.5 (550.0) 0.0 0.0 0.0 (550.0) 0.0 0.0 0.0 (125.8) 0.0 (125.8) Dec-13F 770.9 (7.4) 14.0 (354.4) 369.3 (31.6) (89.5) 671.3 (500.0) 0.0 0.0 0.0 (500.0) 0.0 0.0 0.0 (127.4) 0.0 (127.4) Dec-14F 804.1 (7.7) 16.0 (371.5) 386.9 (31.6) (87.5) 708.8 (460.0) 0.0 0.0 0.0 (460.0) 0.0 0.0 0.0 (132.2) 0.0 (132.2)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 6.37% 5.37% 21.0% (0.026) 0.91 11.31 21.5% 53.3% 12.65 7.76 77.09 11.2% 11.4% Dec-12F 4.54% 5.11% 21.1% (0.053) 0.97 13.49 21.7% 50.0% 12.33 8.28 73.58 11.3% 11.7% Dec-13F 3.94% 2.46% 20.8% (0.032) 1.03 13.71 21.0% 50.0% 10.74 9.01 67.58 10.7% 11.2% Dec-14F 4.31% 4.31% 20.8% 0.023 1.09 14.20 21.0% 50.0% 10.72 8.99 67.40 10.6% 11.0%
Key Drivers
Avg fare/trip (%chg,main prod/serv) Ridership grth (%,main prod/serv) Avg fare/trip (%chg,2ndary prod/serv) Ridership grth (%,2ndary prod/serv) Dec-11A N/A 6.0% N/A 13.2% Dec-12F N/A 5.0% N/A 5.0% Dec-13F N/A 5.0% N/A 5.0% Dec-14F N/A 5.0% N/A 13.0%
69

November 28, 2012
Cosco Corporation
COS SP / COSC.SI Current S$0.90 S$0.88 S$0.88 -2.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,650m
S$2,015m
US$3.57m
S$4.39m
36.0%
2,239 m shares
CIMB Analyst Lim Siew Khee

T (65) 62108664 E siewkhee.lim@cimb.com
Still an uphill battle

Despite its low-quality shipbuilding earnings, we think that Cosco deserves some credit for its improved execution with no more provisions expected for losses on construction jobs.
Maintain Neutral and target price, based on its trough P/BV of 1.4x. We believe stock re-rating could come about only on above-expectation earnings and margins from offshore projects. Valuations are still unattractive at 18x CY13 P/E vs. Singapore rig builders 12x. and bulk carriers. New vessel contracting continues to decline. Coscos shipbuilding order book has dwindled to about 31 vessels for delivery by end-2013. We see risks of yard under-utilisation beyond 2013. We believe shipbuilding yards such as Zhoshan could be shut down in 2014 to avoid high fixed costs.
Share price info

Share price perf. (%) Relative Absolute Major shareholders China Ocean Shipping (Group) Company Temasek SembCorp Marine Ltd 1M 2.6 1.1 3M -8.5 -9.6 12M -6.1 7.8 % held 53.4 5.0 5.0
Improved execution
For two consecutive quarters, Cosco wrote back S$24.8m of provisions for expected losses on construction contracts. We believe the write-backs, mainly for offshore projects, were made possible by improved efficiency and an appreciating Rmb/US$. Cosco has finally climbed the learning curve in shipbuilding with 300-340 bulker construction days now vs. 540 days in 2009.
Stretched balance sheet

Net gearing in 3Q13 shot up to 1.02x from 0.8x in 2Q12 and 0.6x in 1Q12. Management expects more bank borrowings as it executes more offshore projects on 20:80 payment terms. Net operating cashflow in 3Q12 was -S$193m and could remain negative in FY13. Cosco expects to shift towards more long-term debt but has ruled out immediate needs for equity-funding.
Idle yards
Still, conditions are deteriorating in global shipbuilding for containerships
1.40 1.30 1.20 1.10 1.00 0.90 0.80 80 60 40 20

Nov-11
Price Close
142 132 122 112 102 92 82
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 3,861 598.5 248.8 0.11 126% 8.10 0.030 3.33% 4.57 NA 7.0% 1.68 21.8% Dec-11A 4,163 469.1 139.7 0.06 (44%) 14.43 0.040 4.44% 7.03 2.50 29.1% 1.55 11.2% Dec-12F 3,914 464.8 108.8 0.05 (22%) 18.52 0.022 2.43% 8.99 56.29 65.5% 1.48 8.2% 0% 0.99 Dec-13F 3,242 441.9 106.6 0.05 (2%) 18.91 0.021 2.38% 9.31 3.01 56.7% 1.42 7.7% 0% 1.06 Dec-14F 2,789 437.9 109.0 0.05 2% 18.50 0.022 2.43% 8.90 6.26 42.3% 1.36 7.5% 0% 0.97
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

0.90 0.85 1.31
0.88
Current Target
Cosco Corporation
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 4,163 381 469 (164) 305 (18) 1 0 288 0 288 (74) 213 (74) 0 Dec-12F 3,914 402 465 (178) 286 (50) 1 0 237 0 237 (59) 177 (69) 0 Dec-13F 3,242 339 442 (176) 265 (49) 1 0 218 0 218 (54) 163 (57) 0 Dec-14F 2,789 307 438 (174) 263 (42) 1 0 222 0 222 (56) 167 (58) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 1,585 2,010 491 160 4,247 2,412 0 10 332 2,754 1,668 2,697 131 4,496 498 6 504 0 5,000 1,301 699 2,000 Dec-12F 1,572 2,681 300 97 4,651 2,384 0 10 333 2,726 1,748 2,145 131 4,024 1,218 6 1,224 0 5,247 1,361 768 2,129 Dec-13F 2,194 2,221 249 83 4,746 2,357 0 10 333 2,700 1,798 1,599 131 3,528 1,668 6 1,674 0 5,202 1,420 824 2,244 Dec-14F 2,467 1,910 214 73 4,664 2,333 0 10 334 2,676 1,798 1,375 131 3,304 1,668 6 1,674 0 4,978 1,480 882 2,362
140 140 140
109 109 109
107 107 107
109 109 109
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 469 (454) Dec-12F 465 (969) Dec-13F 442 (19) Dec-14F 438 132
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 7.8% (21.6%) 11.3% (0.26) 0.58 6.53 25.8% 64.1% 174.8 48.71 281.9 13.2% 9.6% Dec-12F (6.0%) (0.9%) 11.9% (0.62) 0.61 2.99 25.0% 45.0% 219.3 41.26 252.3 9.2% 7.2% Dec-13F (17.2%) (4.9%) 13.6% (0.57) 0.63 3.28 25.0% 45.0% 275.9 34.51 235.3 6.2% 5.5% Dec-14F (14.0%) (0.9%) 15.7% (0.45) 0.66 3.78 25.0% 45.0% 270.3 34.02 218.7 6.2% 5.1%
5 (49) (43) (73) (258) 27 0 (5) (235) 1,115 0 0 (90) 0 1,026
(96) (59) (659) (150) 0 0 45 (105) 800 0 0 (49) 0 751
(81) (54) 287 (150) 0 0 32 (118) 500 0 0 (48) 0 452
(70) (56) 444 (150) 0 0 28 (122) 0 0 0 (49) 0 (49)
Key Drivers
Outstanding Orderbook (S$m) Order Book Wins (S$m) Orderbook Depletion (S$m) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Dec-11A N/A 2,200.0 N/A N/A N/A N/A Dec-12F N/A 2,000.0 N/A N/A N/A N/A Dec-13F N/A 2,000.0 N/A N/A N/A N/A Dec-14F N/A 2,000.0 N/A N/A N/A N/A
71
Oil & Gas - Equipment & Svs SINGAPORE

November 28, 2012
CSE Global
CSE SP / CSES.SI Current S$0.80 S$1.06 S$1.06 33.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$335.8m
S$410.3m
US$0.35m
S$0.43m
86.0%
516.1 m shares

Setting the foundation right for 2013

2012s operational performance was mediocre but recent orders offer optimism that CSEs earnings would pick up in 2013.
Maintain Outperform, EPS and target price at 8x CY14 P/E, 0.5x standard deviation below its 5-year mean. Stronger-than-expected quarters and orders are expected to catalyse its stock.
Eyeing higher-margin work

CSE mitigated the drop-off in offshore work following the Macondo incident in the Gulf of Mexico by venturing into more greenfield onshore shale-gas development jobs. Though turnover from these jobs is high, this has been more than offset by lower profitability (also a function of more competitors), which somewhat explains its YTD anaemic results. With the acceleration of permits for deepwater drilling in the Gulf of Mexico, CSE is now riveting its attention back to higher-margin offshore work.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Fidelity Management & Research Tan Mok Koon Chartered Asset Management 1M -8.2 -9.7 3M -6.5 -7.6 12M -15.8 -1.9 % held 13.2 13.0 12.7
Building the foundation for 2013

We expect 22% yoy earnings growth for 2013 and 15% growth over 2010. We believe this could be underpinned by its recent order momentum. We expect CSE to book S$170m of orders in 4Q12 to meet our FY12 target of S$500m. Already, some of the sizeable orders which the group has been tracking including an estimated S$50m telecoms project for a Northern Australia LNG project have been secured. Further projects for 4Q12 could include Phase 3 of the said project, and US offshore and furnace jobs.
Undemanding valuations
CSE is trading at 6.8x CY13 P/E, roughly 0.5x standard deviation below its 5-year mean. It also offers 5% dividend yields. An earnings recovery should set it up for stock outperformance.
Vol m
1.00 0.95 0.90 0.85 0.80 0.75 0.70 0.65 0.60 15 10 5

Nov-11
Price Close
112 107 102 97 92 87 82 77 72
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 448.1 75.8 52.48 0.10 20.2% 7.74 0.040 5.03% 5.27 NA 0.3% 2.08 31.6% Dec-11A 457.2 46.9 27.66 0.05 (47.5%) 14.76 0.020 2.52% 10.01 39.30 34.6% 2.01 13.9% Dec-12F 532.1 73.2 57.08 0.10 77.6% 8.31 0.040 5.03% 5.85 10.76 7.1% 1.64 21.7% (0%) 1.01 Dec-13F 562.0 91.9 60.19 0.12 21.9% 6.82 0.045 5.66% 4.29 11.73 (5.7%) 1.41 22.2% 0% 1.01 Dec-14F 619.8 104.4 68.62 0.13 14.0% 5.98 0.050 6.29% 3.45 11.18 (14.9%) 1.22 21.9% 0% 1.08
Feb-12
May-12
Aug-12
Source: Bloomberg

0.80 0.67 0.95
Current
Target
1.06
CSE Global
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 457.2 144.5 46.9 (5.3) 41.7 (3.3) 1.4 0.0 39.8 0.0 39.8 (12.1) 27.7 (0.0) 0.0 Dec-12F 532.1 165.0 73.2 (4.8) 68.4 (4.6) 0.3 0.0 64.1 10.0 74.1 (17.1) 57.1 0.0 0.0 Dec-13F 562.0 199.5 91.9 (6.7) 85.1 (4.9) 0.0 0.0 80.2 0.0 80.2 (20.1) 60.2 0.0 0.0 Dec-14F 619.8 223.1 104.4 (7.4) 96.9 (5.4) 0.0 0.0 91.5 0.0 91.5 (22.9) 68.6 0.0 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 53.5 109.3 15.3 120.8 298.9 25.0 9.2 103.4 15.2 152.8 123.8 62.9 55.5 242.2 0.3 0.0 0.3 5.1 247.6 204.1 0.0 204.1 Dec-12F 81.4 104.9 14.6 131.2 332.0 24.2 (0.2) 103.4 15.2 142.6 24.9 80.2 39.4 144.5 74.1 0.0 74.1 5.1 223.8 250.9 0.0 250.9 Dec-13F 95.7 110.6 15.4 138.6 360.3 21.5 (0.2) 103.4 15.2 139.9 14.9 84.7 40.9 140.5 64.1 0.0 64.1 5.1 209.8 290.4 0.0 290.5 Dec-14F 109.2 121.7 17.0 152.8 400.7 18.0 (0.2) 103.4 15.2 136.5 4.9 93.4 43.7 142.1 54.1 0.0 54.1 5.1 201.3 335.8 0.0 335.9
27.7 27.7 27.7
57.1 49.4 49.4
60.2 60.2 60.2
68.6 68.6 68.6
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 46.9 (48.8) 16.8 (0.7) (2.6) (18.5) (6.9) (9.1) 0.6 (39.4) 0.0 (47.9) 65.2 6.0 0.0 (20.6) 0.0 50.6 Dec-12F 73.2 10.8 (15.0) 10.0 (4.6) (17.1) 57.4 (4.0) 0.0 9.7 0.0 5.7 (25.0) 0.0 0.0 (10.3) 0.0 (35.3) Dec-13F 91.9 (8.0) 0.0 (4.9) (20.1) 59.0 (4.0) 0.0 0.0 0.0 (4.0) (20.0) 0.0 0.0 (20.6) 0.0 (40.6) Dec-14F 104.4 (15.3) 0.0 (5.4) (22.9) 60.7 (4.0) 0.0 0.0 0.0 (4.0) (20.0) 0.0 0.0 (23.2) 0.0 (43.2)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 2.0% (38.1%) 10.3% (0.14) 0.40 10.38 30.4% 37.1% 74.12 16.47 80.10 18.0% 14.3% Dec-12F 16.4% 56.0% 13.8% (0.03) 0.49 12.86 23.0% 43.9% 71.71 14.87 71.33 21.0% 20.1% Dec-13F 5.6% 25.5% 16.3% 0.03 0.56 15.14 25.0% 38.6% 68.14 15.09 83.00 25.8% 23.5% Dec-14F 10.3% 13.6% 16.8% 0.10 0.65 15.64 25.0% 37.6% 66.74 14.90 81.93 28.8% 25.2%
Key Drivers
Outstanding Orderbook (S$m) Order Book Wins (S$m) Orderbook Depletion (S$m) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Dec-11A 437.0 500.0 N/A N/A N/A N/A Dec-12F 454.9 550.0 N/A N/A N/A N/A Dec-13F 492.9 600.0 N/A N/A N/A N/A Dec-14F 603.3 675.0 N/A N/A N/A N/A
73
Supply Chain Managers SINGAPORE

November 28, 2012
CWT Limited
CWT SP / CWTD.SI Current S$1.24 S$1.68 S$1.68 35.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$609.3m
S$744.4m
US$0.46m
S$0.56m
40.0%
600.3 m shares
CIMB Analyst Daniel Lau

T (65) 62108614 E daniel.lau@cimb.com
On surer footing
We were initially sceptical when CWT moved into the unknown world of base metal trading in 3Q11. Five solid quarters allayed our fears of earnings volatility and inefficient risk management. CWTs growth trajectory is certainly on an elevated plane right now.
2012 was an important year for CWT and management performed up to expectations. Over the past five quarters, CWT has already recovered close to 40% of MRIs acquisition consideration of US$94m, by our estimates. Over the past year, management has been busy with expanding its trading product suite, providing further growth boosters. Maintain Outperform with an unchanged SOP-based target price. metal concentrates as well as the systems and processes throughout the organisation.
Kenneth Ng, CFA

Share price info

Share price perf. (%) Relative Absolute Major shareholders C&P Holdings Morgan Stanley EDB Investment 1M -0.5 -2 3M 2.3 1.2 12M 10.1 24 % held 57.3 4.7 2.7
2013 should be exciting
Consistent performance
Since 3Q11, CWT has been consistently generating around S$17m-20m of quarterly profits. Revenue has grown to over S$1bn every quarter and 9M12 earnings have risen 71.3% yoy. We think that this bears testament to a quality acquisition and the consistent performance is also commendable in a volatile base metal trading business. According to management, CWT does not take proprietary positions, unlike other commodity traders, and is in the process of implementing a risk management system to effectively manage the physical flows of base
Management is not resting on its laurels. In 2012, CWT expanded its trading product suite to refined metals and energy-related products. In addition, despite base metal trading contributing around 50% of groups earnings, CWT has not neglected its core logistics business. CWT ventured into Turkey and Australia in 2012. It is also exploring collaboration in China in Lianyungang Port. Its second cold hub facility is under construction with completion targeted for 1Q14.
Attractive valuations
CWT is currently trading at 7.16x CY14 EPS, which we think is unjustified given its high growth potential. We think that CWT deserves a higher valuation multiple for its elevated growth trajectory and our target price implies a 9.9x CY14 EPS valuation.
Price Close 1.30 1.20 1.10 1.00 Vol m 0.90 6 4 2

120 117 113 110 107 103 100 97 93 90
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)
|
Aug-12

1.24 0.99 1.30
Current
|
Target
1.68
Dec-10A 747 21.6 29.3 0.05 (14.9%) 24.66 0% 24.70 639.6 (41.2%) 1.71 8.1%
Dec-11A 2,580 37.9 55.9 0.09 86.6% 13.21 0% 24.55 NA 35.7% 1.56 12.4%
Dec-12F 4,634 113.2 82.8 0.14 46.9% 8.99 0% 8.90 NA 42.5% 1.31 15.9% 0% 1.04
Dec-13F 4,465 123.5 91.6 0.15 10.7% 8.12 0% 7.14 4.5 19.6% 1.16 15.2% 0% 0.98
Dec-14F 4,765 136.5 102.3 0.17 11.7% 7.27 0% 5.69 8.1 4.4% 1.02 14.9% 0% 0.95
CWT Limited
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit
|
Balance Sheet
Dec-11A 2,580 158 38 6 44 2 8 12 37 (1) 64 (6) 58 (2) Dec-12F 4,634 214 113 (31) 82 (4) 8 31 119 (23) 94 (9) 85 (2) Dec-13F 4,465 231 123 (31) 93 (7) 9 8 106 0 103 (9) 94 (2) Dec-14F 4,765 251 136 (30) 106 (10) 12 8 119 0 115 (11) 105 (2) (S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Dec-11A 212 537 170 86 1,006 311 48 140 101 599 311 486 19 816 83 167 249 31 1,096 476 33 509
Dec-12F 192 772 218 1 1,183 301 56 132 108 597 358 589 0 947 90 110 200 31 1,178 566 35 602
Dec-13F 378 698 232 1 1,308 305 65 124 112 607 409 565 0 974 102 127 229 31 1,234 643 37 680
Dec-14F 493 701 260 1 1,454 310 77 116 117 620 422 600 0 1,022 105 146 251 31 1,304 730 40 770
56 56 56
83 83 83
92 92 92
102 102 102
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing
|
Key Ratios
Dec-11A 37.9 156.0 Dec-12F 113.2 (181.4) Dec-13F 123.5 37.7 Dec-14F 136.5 3.7 Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
|
(18.4) (16.3) (5.7) 153.5 (79.7) 32.4 19.3 (435.1) (463.0) 72.9 12.4 (16.0) (10.2) 59.0
(8.7) (21.2) (8.6) (106.7) 0.0 12.0 (20.0) 0.0 (8.0) 54.4 0.0 (15.0) 0.0 39.4
0.0 (25.3) (9.1) 126.7 0.0 (4.5) (20.0) 0.0 (24.5) 63.0 0.0 (15.0) 0.0 48.0
0.0 (29.3) (10.7) 100.2 0.0 (4.6) (20.0) 0.0 (24.6) 16.0 0.0 (15.0) 0.0 1.0
Dec-11A 245% 75% 1.47% (0.30) 0.79 0.98 8.8% 50.9% 48.31 13.03 43.97 3.85% 4.8%
Dec-12F 80% 199% 2.44% (0.43) 0.94 4.03 9.1% 13.9% 51.70 16.08 40.91 8.45% 10.2%
Dec-13F (4%) 9% 2.77% (0.22) 1.07 3.78 8.9% 15.8% 60.08 19.40 45.99 8.44% 9.9%
Dec-14F 7% 11% 2.86% (0.06) 1.22 3.72 9.3% 14.2% 53.56 19.88 43.61 10.00% 10.0%
Key Drivers
(S$) Volumes Moved (% Change) Rates Charged (% Change) Acquisitions (m)
|
Dec-11A 0.0% 3.0% N/A
Dec-12F 33.3% 3.0% N/A
Dec-13F 25.0% 3.0% N/A
Dec-14F 20.0% 3.0% N/A
75
Retail SINGAPORE
November 28, 2012
Dairy Farm Int'l

DFI SP / DAIR.SI Current US$10.72 US$12.00 US$12.00 11.9%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$14,478m
US$14,478m
US$1.39m
US$1.39m
22.0%
1,350 m shares

ASEAN consumer champion

Buoyed by emerging ASEAN markets, particularly Malaysia and Indonesia, Dairy Farms growth looks set to ascend. Meanwhile, the withdrawal of French retailer, Carrefour, offers an enticing window of opportunity for the group to entrench its market leadership.
Maintain Outperform, EPS and residual income-based target price. Catalysts could come from stronger retail sales, margin expansion and special dividends, in our view. increase as well as upcoming elections in both countries (more populist handout measures?) should bolster mass-market retail spending.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Jardine Strategic Holdings Franklin Resources Aberdeen Asset Management 1M -1.5 -3 3M -4 -5.1 12M 13.4 27.3 % held 77.7 7.2 1.6
Unabated growth
Backed by store expansion in Malaysia and Indonesia as well as its excellent Mannings/Guardian health and beauty franchise, we expect 14% yoy core earnings growth for FY13. Already, Dairy Farm looks set to book similar growth this year. Core earnings grew 13% yoy in 1H12 on an 8% yoy increase in revenue. In particular, Malaysia and Indonesia offer potential for growth for the group. These markets are supported by accelerating income, rapid urbanisation, favourable population demographics and an underpenetrated modern retail market. Additionally, the enactment of a minimum wage in Malaysia, Jarkatas recent 44% minimum-wage
Au revoir, Carrefour
With the withdrawal of French retailer, Carrefour, 2013 offers an enticing window of opportunity for Dairy Farm to entrench its market leadership further. In Singapore, it is exploring the takeover of one of Carrefours two hypermarkets. Meanwhile, Japans retailer, Aeon, has acquired Carrefours Malaysian operations while CT Corp, Carrefours Indonesian partner, has taken full control of Carrefour Indonesia.
Scope for special dividends?

We project net cash of US$1.4bn by FY14, forming 80% of its equity base. Given its track record of lifting its ROEs, special dividends could be in the offing.
Vol th
12.1 11.6 11.1 10.6 10.1 9.6 9.1 8.6 8.1 1500 1000 500
Nov-11
Price Close
132 128 123 119 115 110 106 101 97
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 7,971 637 411.4 0.30 12.5% 35.28 0.18 1.68% 22.11 39.78 (30.4%) 19.74 65.1% Dec-11A 9,134 717 484.6 0.35 15.6% 30.52 0.21 1.96% 19.28 49.94 (50.1%) 15.69 57.3% Dec-12F 10,219 813 538.6 0.40 13.6% 26.87 0.24 2.24% 16.75 34.30 (54.6%) 12.46 51.7% 0% 1.01 Dec-13F 11,419 914 616.3 0.46 14.4% 23.48 0.27 2.52% 14.51 23.59 (66.6%) 10.04 47.3% 0% 1.00 Dec-14F 13,178 1,050 718.0 0.53 16.5% 20.16 0.32 2.99% 12.15 18.36 (79.6%) 8.15 44.6% (0%) 1.00
Feb-12
May-12
Aug-12
Source: Bloomberg

8.45
10.72 11.49
Current
Target
12.00
Dairy Farm Int'l

November 28, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 9,134 2,683 717 (181) 535 (18) 66 0 584 0 584 (99) 485 0 Dec-12F 10,219 3,035 813 (204) 609 (21) 61 0 649 0 649 (110) 539 0 Dec-13F 11,419 3,392 914 (217) 697 (21) 67 0 743 0 743 (126) 616 0 Dec-14F 13,178 3,914 1,050 (237) 813 (21) 73 0 865 0 865 (147) 718 0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 730 218 949 48 1,945 896 198 352 148 1,594 130 2,140 87 2,357 133 17 150 101 2,609 923 8 930 Dec-12F 852 196 984 48 2,080 1,022 229 372 148 1,771 120 2,264 87 2,471 93 17 110 101 2,682 1,162 8 1,169 Dec-13F 1,129 219 1,100 48 2,496 1,045 265 392 148 1,851 110 2,529 87 2,726 53 17 70 101 2,898 1,442 8 1,449 Dec-14F 1,533 253 1,269 48 3,103 1,047 309 412 148 1,917 100 2,919 87 3,106 13 17 30 101 3,237 1,775 8 1,783
485 474 474
539 539 539
616 616 616
718 718 718
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 717 39 73 Dec-12F 813 30 110 Dec-13F 914 30 127 Dec-14F 1,050 30 186
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 14.6% 12.6% 7.85% 0.35 0.68 25.37 17.0% 58.5% 7.56 49.94 113.4 95% 42.8% Dec-12F 11.9% 13.5% 7.96% 0.47 0.86 24.35 17.0% 60.2% 7.41 49.24 112.2 131% 44.8% Dec-13F 11.7% 12.4% 8.00% 0.72 1.07 27.87 17.0% 59.1% 6.63 47.37 109.0 138% 44.4% Dec-14F 15.4% 14.9% 7.97% 1.05 1.31 32.51 17.0% 60.2% 6.53 46.66 107.3 201% 44.5%
8 (18) (88) 730 (242) 1 (0) (242) (199) 8 (257) 9 (438)
0 (21) (110) 822 (350) 0 0 (350) (50) 0 (300)
0 (21) (126) 924 (260) 0 0 (260) (50) 0 (336)
0 (21) (147) 1,098 (260) 0 0 (260) (50) 0 (385)
(350)
(386)
(435)
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) No. of POS (main prod/serv) SSS grth (%, main prod/serv) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) No. of POS (2ndary prod/serv) SSS grth (%, 2ndary prrod/serv) Dec-11A N/A 13.9% 4,552 N/A N/A N/A N/A N/A Dec-12F N/A 10.1% 4,715 N/A N/A N/A N/A N/A Dec-13F N/A 9.9% 4,903 N/A N/A N/A N/A N/A Dec-14F N/A 13.2% 5,102 N/A N/A N/A N/A N/A
77
Banks SINGAPORE
November 28, 2012
DBS Group
DBS SP / DBSM.SI Current S$14.17 S$17.36 S$17.36 22.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$28,263m
S$34,527m
US$36.11m
S$44.35m
70.3%
2,350 m shares
CIMB Analyst Kenneth Ng, CFA

Fees in the limelight again

DBS has been the most successful in driving sustainable non-NII growth precious in a low interest rate environment. The result is lower earnings volatility and a narrowing ROE gap. Conditions are ripe to marry yield-hungry investors with providers of yield securities.
DBS has delivered on its promise to drive fee income and we think that the recently positive trends are likely to continue with strong debt issuance in Singapore and a bottoming-out China. DBS remains an Outperform and our top banking pick. Our GGM-based target price (r: 9.8%, g: 4.2%; ROE: 11.3%) values DBS at 1.27x CY13 P/BV. built a strong presence in trade financing compared to local peers. The only negative will be continued margin compression in China.
Daniel Lau
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings 1M 2.6 1.1 3M -1.3 -2.4 12M 4.9 18.8 % held 29.7
RWA optimisation another positive

Another positive is the strengthening of its capital position from RWA optimisation. Management indicated that there is scope for further improvement as optimisation efforts are still in their infancy. DBS already has the strongest capital position. The freeing up of more capital will not only increase its attractiveness as an investment but will also provide additional buffer in the event that asset quality sours.
Strong fee income trends

The outlook for DBS is rosy as we deem the fixed income behemoth a key beneficiary of growing debt capital market activity in Singapore. Sustained growth in debt issuance in the coming quarters could turn typically volatile investment banking fees into a recurring source of income. In addition, while a slowing China was a drag for DBS over the past two quarters, management has guided for a potential bottoming-out for China where loan volumes returned in Oct. Of the three banks, DBS should be the best-positioned to partake in an improving Chinese economy, having
Valuations
At 1.03x P/BV, DBS is the cheapest bank in the region. We expect price support as the market begins to appreciate the reduction in DBSs earnings volatility, strong fee income trends and robust capital position.
16.0 15.0 14.0 13.0 12.0 11.0 Vol m 10.0 30 20 10

Nov-11
Price Close
109 106 104 101 98 96 93
Financial Summary
Net Interest Income (S$m) Total Non-Interest Income (S$m) Operating Revenue (S$m) Total Provision Charges (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield BVPS (S$) P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)
|
Feb-12
May-12
Aug-12
Source: Bloomberg

11.26
14.17 14.98
Current
|
Target
17.36
Dec-10A 4,318 2,748 7,066 (911.0) 1,632 1.07 18.0% 13.20 0.56 3.95% 11.55 1.23 9.4%
Dec-11A 4,825 2,806 7,631 (722.0) 3,035 1.30 21.9% 10.77 0.56 3.95% 12.25 1.16 11.0%
Dec-12F 5,325 3,192 8,517 (363.1) 3,807 1.45 11.0% 9.71 0.66 4.66% 12.98 1.09 11.5% 0% 1.13
Dec-13F 5,755 2,898 8,654 (589.6) 3,555 1.49 2.6% 9.48 0.61 4.30% 13.69 1.03 11.1% 0% 1.04
Dec-14F 6,268 2,939 9,207 (717.2) 3,735 1.54 3.8% 9.13 0.64 4.52% 14.43 0.98 11.0% 0% 1.01
DBS Group
November 28, 2012
Profit & Loss

(S$m) Net Interest Income Total Non-Interest Income Operating Revenue Total Non-Interest Expenses Pre-provision Operating Profit Total Provision Charges Operating Profit After Provisions Total Pretax Income / (Loss) from Associates Operating EBIT (incl Associates) Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Consolidation Adjustments & Others Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX And Other Adj. Net Profit Recurring Net Profit
|
Balance Sheet
Dec-11A 4,825 2,806 7,631 (3,303) 4,328 (722) 3,606 127 3,733 0 3,733 0 3,733 (443) Dec-12F 5,325 3,192 8,517 (3,577) 4,940 (363) 4,577 132 4,709 0 4,709 0 4,709 (683) Dec-13F 5,755 2,898 8,654 (3,782) 4,872 (590) 4,282 138 4,420 0 4,420 0 4,420 (641) Dec-14F 6,268 2,939 9,207 (3,996) 5,211 (717) 4,494 143 4,637 0 4,637 0 4,637 (672) (S$m) Total Gross Loans Liquid Assets & Investments (Current) Other Interest Earning Assets Total Gross Interest Earning Assets Total Provisions/Loan Loss Reserve Total Net Interest Earning Assets Intangible Assets Other Non-Interest Earning Assets Total Non-Interest Earning Assets Cash And Marketable Securities Long-term Investments Total Assets Customer Interest-Bearing Liabilities Bank Deposits Interest Bearing Liabilities: Others Total Interest-Bearing Liabilities Bank's Liabilities Under Acceptances Total Non-Interest Bearing Liabilities Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Dec-11A 216,186 24,430 240,616 3,660 244,276 4,802 14,810 19,612 25,304 51,655 340,847 218,992 27,601 50,031 296,624 0 11,154 307,778 28,794 4,275 33,069
Dec-12F 238,862 25,212 264,074 4,023 268,097 4,802 15,425 20,227 24,414 54,238 366,975 236,511 32,017 51,565 320,093 0 11,511 331,604 30,877 4,494 35,371
Dec-13F 262,136 26,019 288,154 4,613 292,767 4,802 16,068 20,870 28,003 53,695 395,335 255,432 37,140 53,201 345,773 0 11,879 357,653 32,964 4,718 37,682
Dec-14F 288,436 26,851 315,287 5,330 320,617 4,802 16,737 21,539 28,886 53,158 424,201 273,823 43,082 54,948 371,854 0 12,259 384,113 35,139 4,949 40,088
3,290 (255) 0 0 3,035 3,035
4,026 (219) 0 0 3,807 3,422
3,779 (224) 0 0 3,555 3,555
3,965 (230) 0 0 3,735 3,735
Balance Sheet Employment

Gross Loans/Cust Deposits Avg Loans / Avg Deposits Avg Liquid Assets / Avg Assets Avg Liquid Assets / Avg IEAs Net Cust Loans/Assets Net Cust Loans/Broad Deposits Equity & Provns / Gross Cust Loans Asset Risk Weighting Provision Charge / Avg Cust Loans Provision Charge / Avg Assets Total Write Offs / Average Assets
|
Key Ratios
Dec-11A 87.0% 86.8% 87.4% 100.0% 57.0% 78.8% 17.0% 62.7% 0.099% 0.062% 0.363% Dec-12F 87.6% 87.5% 87.3% 100.0% 57.5% 78.6% 16.8% 63.3% 0.069% 0.041% 0.205% Dec-13F 90.0% 90.1% 87.7% 100.0% 59.3% 80.1% 16.4% 65.2% 0.081% 0.050% 0.309% Dec-14F 93.3% 93.7% 87.9% 100.0% 61.5% 82.3% 15.8% 67.6% 0.097% 0.062% 0.350% Total Income Growth Operating Profit Growth Pretax Profit Growth Net Interest To Total Income Cost Of Funds Return On Interest Earning Assets Net Interest Spread Net Interest Margin (Avg Deposits) Net Interest Margin (Avg RWA) Provisions to Pre Provisions Operating Profit Interest Return On Average Assets Effective Tax Rate Net Dividend Payout Ratio
|
Dec-11A 8.0% 4.5% 61.3% 63.2% 0.69% 2.40% 1.71% 2.14% 2.43% 16.7% 1.55% 11.9% 43.4%
Dec-12F 11.6% 14.1% 26.1% 62.5% 0.77% 2.49% 1.72% 2.19% 2.39% 7.4% 1.50% 14.5% 41.2%
Dec-13F 1.6% (1.4%) (6.1%) 66.5% 0.79% 2.51% 1.72% 2.20% 2.35% 12.1% 1.51% 14.5% 41.3%
Dec-14F 6.4% 7.0% 4.9% 68.1% 0.80% 2.54% 1.74% 2.24% 2.30% 13.8% 1.53% 14.5% 41.7%
Key Drivers
Loan Growth (%) Net Interest Margin (%) Non Interest Income Growth (%) Cost-income Ratio (%) Net NPL Ratio (%) Loan Loss Reserve (%) GP Ratio (%) RWCR (%) Deposit Growth (%) Loan-deposit Ratio (%) Gross NPL Ratio (%) Fee Income Growth (%)
|
Dec-11A 28.4% 1.8% 2.1% 43.3% 1.4% 138.7% 1.2% 15.8% 16.7% 88.7% 1.4% 10.4%
Dec-12F 8.7% 1.7% 13.8% 42.0% 1.3% 147.7% 1.2% 16.5% 8.0% 89.3% 1.3% 3.1%
Dec-13F 10.9% 1.7% -9.2% 43.7% 1.4% 144.7% 1.3% 15.7% 8.0% 91.8% 1.4% 7.2%
Dec-14F 11.2% 1.7% 1.4% 43.4% 1.4% 145.0% 1.3% 14.9% 7.2% 95.2% 1.4% 3.0%
79

November 28, 2012
Ezion Holdings
EZI SP / EZHL.SI Current S$1.40 S$1.68 S$1.68 19.9%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$988.1m
S$1,207m
US$10.61m
S$13.03m
70.0%
713.7 m shares

Owner of the largest fleet of high-spec liftboats

In 2013, Ezion looks to reinforce its first-mover advantage in ASEAN by enhancing its relationships with clients, expanding its fleet of liftboats/service rigs to a critical mass and partnering industry veterans which could conceivably have been competitors.
Maintain Outperform, EPS and target price, still based on blended P/E & P/BV valuations (implied 6.7x CY14 FD core P/E). Catalysts could come from further contracts and earnings momentum, in our view. We estimate that Ezion has used about 60% of its proceeds from perpetual securities, leaving it with sufficient financing for two more new liftboats. However, that may not be all. In the coming year, we believe Ezion will arrange sale-and-leaseback for one of its liftboats, draw down its perpetual securities and re-invest is FCF to fund more projects.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Chew Thiam Keng Franklin Resources Havenport Asset Management 1M 4.8 3.3 3M 35.7 34.6 12M 113.7 127.6 % held 20.1 8.0 6.6
80% yoy core EPS growth

In the past year, Ezion has gained traction with national oil companies. We think its track record, marketing efforts and niche offerings are some of the reasons for its growing customer stickiness. Ezion now has projects to be deployed in ASEAN, the North Sea, Gulf of Mexico, Middle East, West Africa, Caspian Sea, Yellow Sea and even Alaska. As a result, we expect its core EPS to grow 80% yoy in FY13 as it doubles its fleet of liftboats/service rigs in 2013 from eight as at end-2012 to 17.
Re-contracting of units could be catalyst

Current valuations suggest that the market is pricing in nine years of economical life for its liftboats. Of this, an average of 4.25 years has already been contracted. Further, current valuations do not appear to have factored in any re-contracting of its service rigs. Hence, re-rating could be expected if Ezion manages to re-contract its assets.
Managing balance-sheet constraints
1.7 1.5 1.3 1.1 0.9 0.7 Vol m 0.5 200 150 100 50
Nov-11
Price Close
227 204 180 157 134 110 87
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 117.1 42.3 40.2 0.05 184% 25.17 0.001 0.087% 22.24 264.0 26.2% 3.90 23.7% Dec-11A 107.0 50.9 58.1 0.07 35% 20.00 0.001 0.087% 20.19 NA 35.2% 3.05 23.9% Dec-12F 152.4 70.3 76.2 0.08 20% 15.66 0.001 0.087% 21.23 NA 94.4% 1.93 18.0% 0% 1.06 Dec-13F 348.6 158.4 128.8 0.14 80% 8.09 0.001 0.087% 10.29 140.0 99.1% 1.60 23.6% 0% 1.02 Dec-14F 466.0 222.2 180.0 0.20 38% 5.76 0.001 0.087% 6.89 230.6 70.9% 1.25 25.7% 0% 1.05
Feb-12
May-12
Aug-12
Source: Bloomberg

0.64
1.40 1.50
Current
Target
1.68
Ezion Holdings
November 28, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 107.0 55.3 50.9 (9.8) 41.1 (0.7) 9.5 0.0 50.0 11.1 61.0 (2.9) 58.1 0.0 0.0 Dec-12F 152.4 71.8 70.3 (13.5) 56.8 (2.6) 13.7 0.0 67.9 13.2 81.0 (4.8) 76.2 0.0 0.0 Dec-13F 348.6 145.9 158.4 (35.8) 122.5 (2.5) 25.3 0.0 145.3 0.0 145.3 (8.7) 136.6 0.0 (7.8) Dec-14F 466.0 206.5 222.2 (45.0) 177.2 (2.5) 25.1 0.0 199.7 0.0 199.7 (12.0) 187.8 0.0 (7.8)
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 63 32 0 32 127 271 69 0 3 343 39 38 4 82 118 2 120 0 202 268 0 268 Dec-12F 25 50 0 32 107 896 82 0 3 982 111 44 4 160 406 2 408 0 568 521 0 521 Dec-13F 24 115 0 32 171 1,126 108 0 3 1,237 141 84 4 230 526 2 528 0 758 650 0 650 Dec-14F 20 153 0 32 205 1,209 133 0 3 1,346 129 108 4 242 478 2 480 0 722 829 0 829
58.1 47.6 47.6
76.2 63.8 63.8
128.8 128.8 128.8
180.0 180.0 180.0
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 50.9 (19.5) (6.6) 11.1 (0.7) (1.4) 33.8 (144.9) 87.2 (15.1) 0.5 (72.3) 26.5 0.1 0.0 (0.6) 0.0 0.0 26.0 Dec-12F 70.3 (12.1) 0.0 13.2 (2.6) (4.8) 64.0 (663.8) 25.0 0.0 0.0 (638.8) 360.0 77.4 0.0 (0.6) 0.0 100.0 536.9 Dec-13F 158.4 (24.2) 0.0 (2.5) (8.7) 122.9 (265.5) 0.0 0.0 0.0 (265.5) 150.0 0.0 0.0 (0.6) (7.8) 0.0 141.6 Dec-14F 222.2 (14.5) 0.0 (2.5) (12.0) 193.2 (128.8) 0.0 0.0 0.0 (128.8) (60.0) 0.0 0.0 (0.7) (7.8) 0.0 (68.5)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (9%) 20% 47.6% (0.13) 0.38 15.11 4.74% 1.21% 117.0 2.56 198.6 15.3% 11.3% Dec-12F 42% 38% 46.1% (0.56) 0.59 9.16 5.90% 1.01% 98.8 0.00 129.0 15.9% 8.2% Dec-13F 129% 125% 45.4% (0.71) 0.72 30.63 6.00% 0.55% 86.2 0.00 92.7 10.9% 10.5% Dec-14F 34% 40% 47.7% (0.65) 0.92 44.29 6.00% 0.40% 104.9 0.00 117.7 12.4% 13.0%
Key Drivers
Outstanding Orderbook (US$m) Order Book Wins (US$m) Orderbook Depletion (US$m) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Dec-11A Dec-12F N/A N/A N/A N/A N/A N/A 10,007.4 12,490.3 29 37 N/A N/A Dec-13F N/A N/A N/A 27,260.5 40 N/A Dec-14F N/A N/A N/A 35,728.3 41 N/A
81

November 28, 2012
Ezra Holdings
EZRA SP / EZRA.SI Current S$1.04 S$1.55 S$1.55 48.7%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$832.5m
S$1,017m
US$6.89m
S$8.46m
64.0%
973.5 m shares

Big turnaround story

We believe earnings further earnings upside are possible for Ezra from improving margins in offshore and subsea division amidst execution of more projects.
Maintain Underperform and target price still based on 12 CY14 P/E (5-year mean for small/mid-cap industrials). Catalysts could come from stronger-than-expected order wins. US$271.1m should the full extension of three years be exercised. The FPSO will be deployed in North Malay Basin, Malaysia and is targeted to be on station from mid-2013.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Lionel Lee Chye Tek Aker Solutions 1M -9.2 -10.7 3M 6.2 5.1 12M 24.5 38.4 % held 24.0 7.0
Subsea: above water

We estimate Ezras YTD subsea wins to be about US$355m (vs. our estimate for FY13 of US$900m). Industry prospects are strong with the group continuing to see healthy customer enquiries. Ezra is currently bidding for about US$4.4bn worth of subsea contracts in the North Sea, Africa, Asia Pacific and the Americas, and management believes its success rate is about 30-40%. The group is also bidding for US$1.5bn worth of jobs in for 2014/2015 for its upcoming ice class subsea vesselLewek Constellation.
Offshore bottomed out

We believe day rates for offshore vessels have bottomed out and should head towards a gradual recovery from 2013 as the global supply of vessels gets progressively absorbed. There are only about 30 AHTS expected to join the global fleet in 2013. This should screech fleet growth to a halt. We expect Ezras offshore division margins to improve to about 22% in FY13, backed by: 1) increase in fleet size from 42 to 45, 2) slight improvement in day rates (average day rate now at about US$1.90), and 3) only about 10 vessels scheduled for dry-dock vs. 15 in FY12.
EOC on the road to recovery

We expect EOC to return to profitability in 2013 with its FPSO, Lewek Arunothai being chartered out. The FPSO found a charter contract with Hess E&P Malaysia recently with a contract value of US$272.1m for three years and potential for another
Price Close Relative to FSSTI (RHS)
Valuations are still cheap

Ezra is trading at 1SD below its 5-year mean. FY13 could be the turning point for Ezra as we expect 87% core earnings growth, backed by recovery in OSV and expansion from subsea.
1.30 1.20 1.10 1.00 0.90 0.80 0.70 200 150 100 50
Nov-11
154 144 134 124 114 104 94
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Aug-11A 559 88.0 39.2 0.05 (49.3%) 19.14 0.012 1.45% 19.28 NA 99% 0.87 5.45% Aug-12A 984 32.7 70.7 0.04 (12.6%) 21.48 0.024 2.78% 64.11 NA 110% 0.82 4.35% Aug-13F 1,363 182.1 79.9 0.08 87.5% 11.40 0.016 1.93% 11.47 NA 90% 0.70 7.27% 0% 1.11 Aug-14F 1,510 214.9 98.3 0.10 23.0% 9.26 0.020 2.37% 10.44 NA 95% 0.65 7.98% 0% 0.94 Aug-15F 1,741 252.2 117.0 0.12 19.0% 7.78 0.024 2.82% 9.42 10.26 98% 0.61 8.88% 0% 0.80
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

1.04 0.77 1.22
1.55
Current Target
Ezra Holdings
November 28, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Aug-12A 984 187 33 45 78 (29) 3 0 53 40 92 (22) 71 0 0 Aug-13F 1,363 283 182 (55) 128 (42) 8 0 94 0 94 (14) 80 (0) 0 Aug-14F 1,510 323 215 (60) 155 (49) 10 0 116 0 116 (17) 98 (0) 0 Aug-15F 1,741 386 252 (70) 183 (56) 11 0 138 0 138 (21) 117 (0) 0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Aug-12A 133 439 89 391 1,053 1,167 0 0 510 1,677 606 120 299 1,026 638 58 696 0 1,722 1,008 (0) 1,008 Aug-13F 188 560 123 307 1,178 1,321 0 0 634 1,955 620 148 481 1,249 638 53 692 0 1,941 1,192 (0) 1,192 Aug-14F 58 620 136 309 1,124 1,370 0 0 786 2,156 620 163 528 1,311 650 48 698 0 2,009 1,271 (0) 1,271 Aug-15F 67 716 157 307 1,247 1,392 0 0 965 2,357 750 186 601 1,537 650 53 703 0 2,240 1,365 (0) 1,364
71 40 40
80 80 80
98 98 98
117 117 117
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Aug-12A 32.7 (97.0) 139.3 (92.2) 0.0 (2.4) (19.6) (289.1) 0.0 (22.8) 0.0 (311.9) 288.1 95.2 0.0 0.0 (34.6) 348.7 Aug-13F 182.1 47.8 1.1 90.9 0.0 (19.4) 302.5 (200.0) 0.0 (124.3) 0.0 (324.3) 14.0 0.0 0.0 (16.0) 78.0 76.0 Aug-14F 214.9 (20.6) 3.2 (5.2) 0.0 (14.1) 178.2 (100.0) 0.0 (151.3) 0.0 (251.3) 11.8 0.0 0.0 (19.7) (48.6) (56.5) Aug-15F 252.2 (32.7) 11.3 4.8 0.0 (17.4) 218.2 (80.0) 0.0 (179.3) 0.0 (259.3) 130.0 0.0 0.0 (23.4) (56.3) 50.3
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Aug-12A 76.0% (63%) 3.3% (1.14) 1.04 2.43 23.4% 70.2% 137.8 33.30 43.92 3.78% 4.01% Aug-13F 38.5% 458% 13.4% (1.10) 1.22 2.79 15.0% 20.0% 133.8 35.85 45.31 4.86% 5.58% Aug-14F 10.8% 18% 14.2% (1.25) 1.31 2.94 15.0% 20.0% 142.7 39.92 47.75 5.54% 6.35% Aug-15F 15.3% 17% 14.5% (1.37) 1.40 3.02 15.0% 20.0% 140.0 39.57 46.90 5.99% 7.04%
Key Drivers
Outstanding Orderbook (US$m) Order Book Wins (US$m) Orderbook Depletion (US$m) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Aug-12A Aug-13F Aug-14F Aug-15F 1,082.8 1,120.4 1,473.1 249.6 800.0 900.0 1,350.0 N/A N/A N/A N/A 21,503.6 23,703.1 24,401.3 24,827.7 38 40 40 40 N/A N/A N/A N/A
83
REIT SINGAPORE
November 27, 2012
Frasers Centrepoint Trust

FCT SP / FCRT.SI Current S$1.98 S$2.18 S$2.18 10.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,330m
S$1,626m
US$1.56m
S$1.90m
38.0%
822.0 m shares

Going from strength to strength

FCT ended FY9/12 on a record high, thanks to a strong performance from Causeway Point. The completion of the AEI at Causeway Point by end-2012 and the potential acquisition of Changi City Point may add to and sustain growth in FY13.
We maintain our DPU estimates and DDM-target price (discount rate: 6.9%). Maintain Outperform. We see catalysts from stronger-than-expected performance for the revamped Causeway Point and the accretive acquisition of Changi City Point next year. An acquisition of the 207k sf Changi City Point could be on the cards for FCT. We estimate that the S$300m+ purchase will be accretive on 50:50 debt-equity funding, with management capable of increasing accretion by taking on more debt given its debt headroom of about S$300m based on 40% asset leverage. As potentially FCTs third largest asset behind Causeway Point and NorthPoint, Changi City Point could lead to more significant accretion on acquisition.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Fraser Centrepoint Ltd Capital Research AIG entities 1M 1.8 0.3 3M 11.4 10.3 12M 22.3 36.2 % held 42.9 7.9 4.8
Causeway strength
We expect a full-year contribution from a revamped Causeway Point and lease renewals at higher rates for this asset and NorthPoint to drive FCTs FY13 performance. Its FY12 performance surpassed expectations because of a stronger-than-expected performance from Causeway Point. With shopper traffic yet to return to pre-AEI level at Causeway Point and operating statistics like tenant sales and shopper traffic at its two largest malls bucking some peers downtrends, we remain optimistic about FCTs performance in FY13.
Maintain Outperform
We remain positive on FCT, backed by its resilient suburban retail exposure and strong execution capabilities exhibited by the Causeway Point AEI. We see catalysts in a stronger-than-expected performance for the revamped Causeway Point and the accretive acquisition of Changi City Point next year.
Changi City Point
Vol m
2.1 2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 6 4 2

Nov-11
Price Close
132 126 120 113 107 101 95 88 82
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Sep-11A 117.9 82.6 152.3 64.38 0.07 (11.7%) 27.23 0.08 4.21% 31.3% 1.40 1.41 5.38% Sep-12A 147.2 104.4 185.6 82.35 0.10 41.5% 19.24 0.10 5.07% 30.1% 1.53 1.29 6.99% Sep-13F 155.7 111.3 90.5 87.09 0.11 6.9% 18.00 0.11 5.34% 31.0% 1.53 1.29 7.15% 0% 1.02 Sep-14F 159.7 114.2 93.0 89.64 0.11 2.5% 17.56 0.11 5.48% 31.3% 1.53 1.29 7.33% 0% 1.05 Sep-15F 162.4 116.2 94.6 91.25 0.11 1.4% 17.31 0.11 5.57% 31.6% 1.53 1.29 7.44% 0% 0.98
Feb-12
May-12
Aug-12
Source: Bloomberg

1.43
1.98 2.02
Current
Target
2.18
Frasers Centrepoint Trust

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Sep-12A 131.3 15.9 147.2 (42.8) 104.4 0.0 (10.7) (1.4) 0.0 92.3 0.0 92.3 (18.2) 10.4 0.0 101.1 185.6 0.0 0.0 0.0 185.6 82.3 Sep-13F 139.5 16.2 155.7 (44.4) 111.3 0.0 (10.8) (1.4) 0.0 99.1 0.0 99.1 (19.0) 10.4 0.0 0.0 90.5 0.0 0.0 0.0 90.5 87.1 Sep-14F 143.5 16.2 159.7 (45.5) 114.2 0.0 (10.8) (1.5) 0.0 101.9 0.0 101.9 (19.3) 10.4 0.0 0.0 93.0 0.0 0.0 0.0 93.0 89.6 Sep-15F 146.2 16.2 162.4 (46.3) 116.2 0.0 (10.9) (1.5) 0.0 103.8 0.0 103.8 (19.6) 10.4 0.0 0.0 94.6 0.0 0.0 0.0 94.6 91.3
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Sep-12A 1,888 0 0 1,888 23 0 0 6 29 40 58 15 112 519 23 542 1,263 0 1,263 Sep-13F 1,899 0 0 1,899 34 0 0 6 41 34 58 15 107 544 23 567 1,266 0 1,266 Sep-14F 1,910 0 1 1,910 37 0 0 6 44 35 58 15 108 554 23 577 1,270 0 1,270 Sep-15F 1,921 0 1 1,922 40 0 0 6 46 36 58 15 108 564 23 587 1,273 0 1,273
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Sep-12A 185.6 7.8 5.4 0.0 (110.9) 87.9 (19.0) (8.7) 0.0 (27.7) 183.0 (0.8) (78.4) (181.5) (77.6) (17.4) 60.2 226.7 Sep-13F 90.5 8.6 (5.8) 0.0 (8.3) 85.0 (10.9) 4.1 0.0 (6.8) 25.0 0.0 (87.1) (15.1) (77.2) 1.0 78.3 84.2 Sep-14F 93.0 8.9 0.9 0.0 (8.2) 94.5 (11.0) 4.1 0.0 (6.8) 10.0 0.0 (89.6) (15.5) (95.1) (7.4) 87.7 78.4 Sep-15F 94.6 9.2 0.6 0.0 (8.2) 96.2 (11.0) 4.1 0.0 (6.9) 10.0 0.0 (91.3) (15.8) (97.0) (7.7) 89.3 79.6
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Sep-12A 24.9% 26.4% 70.9% 20.3% 5.06 0% 44.4% 0.26 0.26 0.20 (182%) 10.0% Sep-13F 5.7% 6.6% 71.5% 5.4% 5.20 0% 96.3% 0.38 0.38 0.32 (206%) 4.7% Sep-14F 2.6% 2.6% 71.5% 2.7% 5.27 0% 96.4% 0.41 0.41 0.35 (243%) 4.8% Sep-15F 1.7% 1.7% 71.5% 1.5% 5.28 0% 96.5% 0.43 0.43 0.37 (244%) 4.8%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Sep-12A 12.9 N/A N/A 879 96.8% 1,816.0 N/A Sep-13F 12.8 N/A N/A 879 99.0% 1,826.9 N/A Sep-14F 13.0 N/A N/A 879 99.4% 1,837.9 N/A Sep-15F 13.3 N/A N/A 879 99.4% 1,848.9 N/A
85
REIT SINGAPORE
November 27, 2012
Frasers Commercial Trust

FCOT SP / FRCR.SI Current S$1.24 S$1.37 S$1.37 11.1%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$653.3m
S$798.8m
US$1.03m
S$1.25m
75.0%
634.3 m shares

Executing well
Since taking over, management has executed well with the stabilisation of FCOTs capital structure, hiving off of non-core/ older assets such as KeyPoint and more recently, a clean exit out of the Japanese market. At 0.8x P/BV, FCOT looks set to continue rerating.
Our DPU estimates, DDM-target price (discount rate: 7.7%) and Outperform call are unchanged. We see catalysts from CPPU redemption and use of debt headroom for accretive AEIs, acquisitions or further CPPU redemption. FCOT should have S$198m left of the KeyPoint divestment proceeds. Management can, therefore, redeem 50% of its CPPU without gearing up, which should take the gearing position to about 31% eventually, which we have factored in. Upside could come from the potential debt headroom which could be used for accretive AEIs, acquisitions or further CPPU redemption. Pipeline assets from its sponsor include Alexandra Point and Valley Point, valued at S$230m and S$235m, respectively in F&Ns books.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders F&N 1M 4.4 2.9 3M 11.9 10.8 12M 49.7 63.6 % held 24.6
Executing well
Since taking over, management has been executing well with the stabilisation of FCOTs capital structure, hiving off of non-core/ older assets such as KeyPoint and more recently, a long-awaited clean exit out of the Japanese market. Management has also successfully filled 76% of the space left by Marsh & McLennan at China Square Central within one quarter of its departure, with GroupM signing a six-year lease from 1 Apr at S$7 psf. More positive rental reversions could follow when the remaining space is leased out given the low expiring rents of S$6+ psf and after its S$7.7m asset enhancement.
Rerating could continue

The stock is trading at an undemanding 0.8x P/BV and yields of 6-7%. With management executing well in improving the portfolio and unlocking value for shareholders, the rerating looks set to continue. Some risks could come from potential conversion by CPPU holders given that share price has now exceeded conversion price of S$1.18, though we see some mitigation with sponsor holding on to >90% of the CPPUs.
Next up: CPPU redemption

With partial debt repayment and divestment of Japanese properties,
1.3 1.2 1.1 1.0 0.9 0.8 0.7 Vol m 0.6 8 6 4 2

Nov-11
166 155 143 132 120 109 97 86
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates Sep-11A 119.6 96.0 46.1 36.32 0.058 4.66% 36.0% 1.38 0.89 1.69% Sep-12A 132.9 102.5 150.1 43.05 0.067 5.42% 31.9% 1.53 0.81 1.58% Sep-13F 117.8 91.2 38.7 51.78 0.079 6.37% 31.2% 1.50 0.82 3.42% 0% Sep-14F 124.2 97.0 40.1 57.59 0.086 6.95% 31.1% 1.48 0.84 4.05% 0% Sep-15F 127.4 99.3 42.4 59.93 0.088 7.10% 31.1% 1.45 0.85 4.28% 0%
Feb-12
May-12
Aug-12
Source: Bloomberg

0.74
1.24 1.25
Current
Target
1.37
Frasers Commercial Trust

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Sep-12A 132.9 0.0 132.9 (30.3) 102.5 0.0 (13.1) (2.2) 0.0 87.3 0.0 87.3 (43.6) 0.0 72.8 68.5 185.0 (16.0) 0.0 (18.8) 150.1 43.1 Sep-13F 117.8 0.0 117.8 (26.6) 91.2 0.0 (11.8) (2.0) 0.0 77.4 (0.7) 76.6 (33.3) 0.0 4.9 0.0 48.3 (0.1) 0.0 (9.4) 38.7 51.8 Sep-14F 124.2 0.0 124.2 (27.2) 97.0 0.0 (11.8) (2.0) 0.0 83.2 (0.2) 82.9 (33.3) 0.0 0.0 0.0 49.6 (0.1) 0.0 (9.4) 40.1 57.6 Sep-15F 127.4 0.0 127.4 (28.1) 99.3 0.0 (11.8) (2.0) 0.0 85.5 (0.3) 85.2 (33.3) 0.0 0.0 0.0 51.9 (0.1) 0.0 (9.4) 42.4 59.9
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Sep-12A 1,758 0 0 1,758 459 0 10 113 582 65 0 124 189 747 71 818 990 0 343 1,332 Sep-13F 1,758 0 0 1,758 114 0 10 0 124 58 0 5 63 586 71 657 990 0 171 1,161 Sep-14F 1,758 0 0 1,758 117 0 10 0 127 61 0 5 67 586 71 657 990 0 171 1,161 Sep-15F 1,758 0 0 1,758 119 0 10 0 129 63 0 5 68 586 71 657 990 0 171 1,161
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Sep-12A 185.0 (29.2) 36.3 (0.5) (59.6) 132.0 (5.0) 240.1 0.7 235.7 110.7 0.0 (58.0) (27.4) 25.4 393.1 368.5 447.5 Sep-13F 48.3 29.1 (7.4) 0.0 6.4 76.3 0.0 113.5 0.7 114.2 (279.4) (171.3) (61.2) (23.2) (535.1) (344.6) 191.2 (122.2) Sep-14F 49.6 33.5 3.2 0.0 6.4 92.7 0.0 0.0 0.7 0.7 0.0 0.0 (67.0) (23.2) (90.2) 3.2 94.1 60.1 Sep-15F 51.9 33.6 1.6 0.0 6.4 93.5 0.0 0.0 0.7 0.7 0.0 0.0 (69.4) (23.2) (92.6) 1.6 94.9 60.9
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Sep-12A 11.1% 6.8% 77.2% 16.3% 1.97 8.65% 29% 3.08 3.08 2.42 (358%) 6.85% Sep-13F (11.4%) (11.1%) 77.4% 17.6% 2.26 0.27% 134% 1.96 1.96 1.80 (117%) 1.83% Sep-14F 5.5% 6.4% 78.1% 9.1% 2.44 0.27% 144% 1.91 1.91 1.76 (155%) 2.13% Sep-15F 2.6% 2.4% 78.0% 2.2% 2.51 0.26% 141% 1.89 1.89 1.75 (151%) 2.25%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Sep-12A 6.0 N/A N/A 2,658 95.8% 1,757.5 N/A Sep-13F 7.0 N/A N/A 2,456 94.1% 1,757.5 N/A Sep-14F 7.1 N/A N/A 2,456 96.0% 1,757.5 N/A Sep-15F 7.3 N/A N/A 2,456 96.0% 1,757.5 N/A
87
Gaming SINGAPORE
November 28, 2012
Genting Hong Kong

GENHK SP / GENH.SI Current US$0.32 US$0.48 US$0.48 50.9%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,448m
US$2,448m
US$1.31m
US$1.31m
20.0%
7,772 m shares
CIMB Analyst Lucius Chong

T (603) 2084 9869 E lucius.chong@cimb.com
Plenty on its plate

In contrast to Genting Singapore, Genting Hong Kong (GENHK) is positioned to reap a whole range of growth drivers over the next few years - from the build out of more IR capacity in Manila Bay to the addition of its fifth ship to its Asian cruise operations in the near term.
Outperform maintained. No change to our EPS forecasts and target price which continues to be valued by a blended EV/EBITDA multiple of its cruise and gaming operations. Key catalysts for the stock is the listing of NCL and construction of the second IR in the Philippines. World Manila (RWS) has already achieved its pay-back period for its US$335m investment in just over two years and is now self-funding GENHK's second Manila IR in Resorts World Bayshore. The entry of competing IRs next year will likely see the same effect to that of Macau which saw growth accelerate as more capacity came onstream, expanding its appeal as an IR destination.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Lim Kok Thay Resorts World Limited 1M 1.5 0 3M -6.5 -7.4 12M -1.3 10.5 % held 57.5 18.4
The big play on Manila Bay

Keen interest continues to build on GENHK for its proxy to the nascent growth of the Philippine gaming market which is positioning itself to be the third major IR destination in Asia. Coupled with low gaming tax rates and in contrast to Singapore and Macau - low labour and real estate costs, profitability and expansion of the Manila IRs is poised to be a multi-year theme.
Plenty of other catalysts

GENHK is ready to pull the trigger on the listing of NCL in the US. Considering its initial cost of US$1bn and subsequent valuation of US$2bn when 50% was sold to private equity, we expect a substantial amount of money could be realised from the event. This will put added strength to GENHK's balance sheet which is expected to turn net cash in FY13, despite adding a fifth ship to its Asian operations.
A big headstart
GENHK's headstart in the Manila landscape is unrivalled. Resorts
0.45 0.40 0.35 0.30 0.25 Vol m 0.20 80 60 40 20

Nov-11
Price Close
141 131 121 111 101 91
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 399.8 102.1 82.6 0.008 1085% 40.66 0% 15.97 58.87 17.6% 1.21 3.07% Dec-11A 515.5 141.1 182.2 0.021 168% 15.14 0% 10.42 11.19 8.7% 1.14 7.78% Dec-12F 529.3 130.1 162.3 0.021 0% 15.76 0% 10.40 28.10 5.6% 1.06 7.31% 0% 1.23 Dec-13F 589.2 151.5 197.7 0.025 22% 13.05 0% 7.25 23.10 2.1% 0.98 8.23% 0% 1.16 Dec-14F 657.3 169.5 228.4 0.029 16% 11.35 0% 4.76 20.08 (1.5%) 0.90 8.72% 0% 1.09
Mar-12
Jun-12
Sep-12
Source: Bloomberg

0.32 0.26 0.41
Current
Target
0.48
Genting Hong Kong

November 28, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income/(Expense) Total Pretax Income/(Loss) from Assoc. Total Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 515.5 141.1 141.1 (73.6) 67.5 (30.4) 127.5 0.0 164.7 23.3 188.0 (2.5) 185.4 (3.2) 0.0 Dec-12F 529.3 130.1 130.1 (68.0) 62.1 (32.7) 143.2 0.0 172.6 0.0 172.6 (8.6) 164.0 (1.7) 0.0 Dec-13F 589.2 151.5 151.5 (65.8) 85.7 (32.4) 156.8 0.0 210.2 0.0 210.2 (10.5) 199.7 (2.0) 0.0 Dec-14F 657.3 169.5 169.5 (63.7) 105.7 (32.3) 169.3 0.0 242.8 0.0 242.8 (12.1) 230.6 (2.3) 0.0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 570 97 8 1 676 1,186 1,249 0 11 2,446 71 32 143 246 690 0 690 0 936 2,139 48 2,186 Dec-12F 629 97 8 1 735 1,148 1,393 0 11 2,551 114 32 143 289 647 0 647 0 936 2,303 48 2,350 Dec-13F 707 97 8 1 812 1,112 1,549 0 11 2,672 114 32 143 289 647 0 647 0 936 2,502 48 2,550 Dec-14F 804 97 8 1 910 1,078 1,719 0 11 2,808 114 32 143 289 647 0 647 0 936 2,733 48 2,781
182.2 159.2 166.6
162.3 162.3 169.5
197.7 197.7 204.8
228.4 228.4 235.5
Cash Flow
(US$m) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 141.1 (46.0) Dec-12F 130.1 0.0 Dec-13F 151.5 0.0 Dec-14F 169.5 0.0
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 28.9% 38.2% 27.4% (0.025) 0.28 1.95 1.35% 0% 70.19 6.86 34.19 5.8% 2.63% Dec-12F 2.7% (7.8%) 24.6% (0.017) 0.30 1.59 5.00% 0% 66.64 6.93 28.66 5.5% 2.26% Dec-13F 11.3% 16.5% 25.7% (0.007) 0.32 2.18 5.00% 0% 59.70 6.30 26.06 7.9% 2.89% Dec-14F 11.6% 11.9% 25.8% 0.005 0.35 2.62 5.00% 0% 53.51 5.65 23.38 10.0% 3.32%
(29.8) 2.6 (2.3) 65.6 0.0 74.5 (8.3) 56.9 123.1 36.7 213.2 0.0 0.0 (13.8) 236.1
(32.7) 6.3 (8.6) 95.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(32.4) 7.0 (10.5) 115.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(32.3) 8.0 (12.1) 133.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Key Drivers
SC's Total Capacity Days SC's Occupancy Rate (%) SC:tkt. rev/pax cruise day (%chg) SC:onboard&gaming rev. (%chg) NCL's Total Capacity Days NCL's Occupancy Rate (%) NCL: tkt. rev/pax cruise day (%chg) VIP gross gaming rev (%chg) Mass mkt gross gaming rev (%chg) Slot gross gaming rev (%chg) Dec-11A 1,878,462 84.0% 7.0% 38.5% 9,455 108.2% 7.0% 64.6% 13.5% 24.9% Dec-12F 1,878,462 84.0% 4.0% 15.0% 9,833 108.0% 3.5% 14.8% 51.3% 10.0% Dec-13F 1,878,462 84.0% 4.0% 12.0% 10,193 108.0% 3.0% 22.5% 22.5% 22.5% Dec-14F 1,878,462 84.0% 4.0% 12.0% 10,913 108.0% 3.0% -6.5% 23.4% 2.9%
89
Gaming SINGAPORE
November 29, 2012
Genting Singapore
GENS SP / GENS.SI Current S$1.22 S$1.20 S$1.20 -1.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$12,178m
S$14,899m
US$24.26m
S$29.81m
25.0%
12,193m shares
CIMB Analyst Lucius Chong

T (60) 3 20849869 E lucius.chong@cimb.com
Navigating in a difficult environment

Recent developments on the issue of regulation and real estate show how difficult it can be to navigate and grow in the Singapore IR landscape. We believe Genting Singapore is at the start of a protracted earnings downcycle going into 2013.
We downgrade our recommendation from Neutral to Underperform as we believe the shares faces not just earnings risk but increased risk premium from overregulation and other issues that will restrict capacity to grow. No change to our EPS forecasts and our RNAV-based target price. M&A seems to be the only catalyst at this stage. regulatory regime is being priced in as unlike other international gaming destinations, it has a reputation to protect.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Genting Genting Bhd 1M -6.1 -7.6 3M -9.4 -10.3 12M -30.2 -18.4 % held 51.7
No just regulation but real estate

The recent record bid for land in Jurong East for S$238m at S$1,167 psf by GENS to build a three-star hotel 15 minutes away from RWS, shows the additional difficulties of navigating in the Singapore landscape. More hotel rooms are key to growing the international mass market business. Again, unlike other gaming destinations, the scarcity of land is an additional factor that could restrict growth.
Start of an earnings downcycle

We believe the weak performance seen over the last 2 quarters is the start of a protracted earnings downcycle. We believe there is more downside risk to our numbers as Resorts World Sentosa (RWS) grapples with the challenges of restricting its focus only to the international mass market as the only avenue of growth. The significance of the regulatory regime is starting to bite and illustrated by the last two quarters where the lack of junket VIP credit and clampdown on local mass market access is squeezing earnings. The risk premium of Singapore
1.8 1.7 1.6 1.5 1.4 1.3 1.2 Vol m 1.1 400 300 200 100
Nov-11 Source: Bloomberg Mar-12 Jun-12 Sep-12
M&A the only catalyst

GENS is trading at a 20% discount to the Macau averages which is justified. The shares should find support at these EV/EBITDA multiples but the overhang of continued earnings risk will keep the shares range bound. M&A focus in Japan seems to be the only catalyst for now.
Price Close
110 104 97 91 84 78 71 65
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 2,753 1,422 657 0.063 na 19.33 0.00% 10.11 5.89 (3.4%) 2.91 16.3% Dec-11A 3,223 1,648 1,011 0.084 32.6% 14.58 0.010 0.82% 8.86 15.79 (4.4%) 2.43 18.1% Dec-12F 3,167 1,377 696 0.057 (31.8%) 21.37 0.010 0.82% 10.40 9.05 (31.3%) 1.63 9.1% (0.59%) 1.04 Dec-13F 3,415 1,522 794 0.065 14.1% 18.73 0.010 0.82% 8.76 10.97 (38.7%) 1.50 8.3% (1.14%) 1.02 Dec-14F 3,588 1,739 971 0.080 22.3% 15.32 0.010 0.82% 6.97 9.40 (46.3%) 1.37 9.3% (1.02%) 1.08

1.22 1.21 1.75
1.20
Current
Target
Genting Singapore
November 29, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income/(Expense) Total Pretax Income/(Loss) from Assoc. Total Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 3,223 1,648 1,648 (321) 1,326 (82) (1) 0 1,243 (11) 1,232 (221) 1,011 0 0 Dec-12F 3,167 1,377 1,377 (373) 1,004 (174) (2) 0 827 0 827 (131) 696 0 0 Dec-13F 3,415 1,522 1,522 (398) 1,124 (177) (2) 0 945 0 945 (151) 794 0 0 Dec-14F 3,588 1,739 1,739 (408) 1,331 (168) (2) 0 1,160 0 1,160 (190) 971 0 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 3,421 722 46 0 4,189 6,230 3 119 80 6,432 446 896 59 1,401 2,707 23 2,730 355 4,485 6,133 2 6,136 Dec-12F 5,852 607 43 0 6,502 6,657 3 119 80 6,859 423 824 59 1,307 2,571 23 2,594 355 4,256 9,129 2 9,132 Dec-13F 6,691 655 47 0 7,393 6,459 3 119 80 6,661 402 889 59 1,351 2,443 23 2,466 355 4,171 9,924 2 9,926 Dec-14F 7,753 688 49 0 8,490 6,251 3 119 80 6,453 382 934 59 1,376 2,321 23 2,344 355 4,074 10,894 2 10,897
1,011 1,020 1,020
696 696 696
794 794 794
971 971 971
Cash Flow
(S$m) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 1,648 (370) Dec-12F 1,377 46 Dec-13F 1,522 14 Dec-14F 1,739 10
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 17% 16% 51.1% 0.02 0.50 13.87 17.9% 9.8% 74.52 11.37 236.3 21.4% 14.5% Dec-12F (2%) (16%) 43.5% 0.23 0.75 5.33 15.9% 14.7% 76.81 9.09 175.8 13.3% 9.2% Dec-13F 8% 11% 44.6% 0.32 0.81 5.47 16.0% 12.9% 67.47 8.70 165.2 14.1% 9.0% Dec-14F 5% 14% 48.5% 0.41 0.89 6.62 16.3% 10.5% 68.31 9.47 179.8 17.2% 10.1%
294 (205) (201) 1,165 0 0 0 136 136 (360) 0 0 0 0 (360)
437 26 (221) 1,665 0 0 0 136 136 (158) 2,300 0 (88) 0 2,055
465 (500) (131) 1,369 0 0 0 136 136 (150) 0 0 (88) 0 (238)
466 (474) (151) 1,590 0 0 0 136 136 (142) 0 0 (88) 0 (230)
Key Drivers
VIP Chip Volume (% Change) VIP Chip Win Percentage (%) Mass mkt chip drop (% chg.) Mass mkt chip win (%-tage) Slot Handle (% Change) Slot Hold Percentage (%) Net Win Per Slot (% Change) Net Win Per Table (% Change) No. Of Slots No. Of Tables Dec-11A 43.4% 2.7% N/A N/A N/A N/A N/A N/A N/A 580 Dec-12F 4.5% 2.7% N/A N/A N/A N/A N/A N/A N/A 600 Dec-13F 12.4% 2.7% N/A N/A N/A N/A N/A N/A N/A 630 Dec-14F 6.3% 2.7% N/A N/A N/A N/A N/A N/A N/A 650
91

November 27, 2012
Global Logistic Properties

GLP SP / GLPL.SI Current S$2.63 S$2.93 S$2.93 11.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$10,232m
S$12,511m
US$20.54m
S$25.25m
49.4%
4,596 m shares

Growth engine in higher gear

We are now more positive on GLP after digesting its recent slew of corporate actions. With its Brazil platform in place and JREIT on the way, we believe that its recycling growth engine is now in higher gear. Recent China macro indicators also augur well for logistics rents.
No change to estimates and our RNAV target price. Maintain Outperform, with catalysts being a higher listing multiple for its JREIT and reinvestment upside.
On a higher gear
With the inclusion of Brazil, GLP now has multiple platforms for asset recycling growth. AUM will increase and looks set to balloon. The Brazil venture comes with higher execution and negative carry but also promises a projected IRR of 18-19% with rental step-ups for the stabilised portfolio. We believe that the investment could turn accretive earlier than expected. We do not expect this latest move to derail its China strategy. Landbank in reserves now amount to over 9m sm, potentially providing a powerful development pipeline. GLP has earmarked the JREIT proceeds largely for reinvestments in China.
Share price info

Share price perf. (%) Relative Absolute Major shareholders MOF Lone Pine Capital 1M 4.6 3.1 3M 12.5 11.4 12M 36.8 50.7 % held 50.6 10.1
China indicators augur well

The China Flash PMI for Nov rose to a 13-month high of 50.4pts, indicating that the real economy is on the mend. During its 2Q13 results briefing, GLPs management stated its belief that preleasing demand will be stronger in 2013, a reversal from its cautious guidance in 1Q12. The climate for logistics warehousing in China remains conducive. CBRE said in its 3Q12 assessment that demand for quality logistics facilities remains very strong, with rental growth of 1-4% qoq seen in the key cities. The latest circular released by the central government to promote foreign trade is also expected to create demand for logistics facilities.
Current and potential value

We estimate that a higher JREIT listing multiple (e.g. 1.1x P/BV) and reinvestment of proceeds into China can add 3% to its valuation or 10 cts per share. A near-perfect execution of its capital recycling strategy could lead to a c.S$3.40 SOP valuation.
2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 50 40 30 20 10

Nov-11
Price Close
147 138 130 121 113 104 96 87
Financial Summary
Total Net Revenues (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-11A 473.9 358.5 706.1 0.04 13.9% 53.76 0.00% 34.54 13.63 30.5% 1.49 4.49% Mar-12A 565.6 403.6 540.8 0.06 37.6% 39.07 0.030 1.39% 32.12 NA 30.8% 1.27 3.51% Mar-13F 727.2 523.3 579.4 0.09 59.1% 24.56 0.030 1.39% 26.51 NA 33.3% 1.18 5.07% 0% 1.17 Mar-14F 851.0 601.0 436.6 0.09 4.8% 23.43 0.030 1.39% 23.74 NA 36.1% 1.15 4.97% 0% 0.88 Mar-15F 909.7 631.3 489.2 0.10 12.0% 20.91 0.030 1.39% 23.06 19.27 33.6% 1.00 5.12% 0% 0.80
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

1.62
2.63 2.74
Current
Target
2.93
Global Logistic Properties

November 27, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Mar-12A 565.6 565.6 403.6 (3.7) 400.0 (96.8) 24.0 0.0 327.2 310.8 637.9 (82.7) 555.3 (14.5) 0.0 Mar-13F 727.2 727.2 523.3 (5.1) 518.2 (107.5) 42.5 0.0 453.2 212.3 665.5 (77.0) 588.5 (9.1) 0.0 Mar-14F 851.0 851.0 601.0 (5.0) 595.9 (119.7) 62.7 0.0 539.0 0.0 539.0 (91.6) 447.3 (10.8) 0.0 Mar-15F 909.7 909.7 631.3 (5.0) 626.2 (114.1) 91.7 0.0 603.9 0.0 603.9 (102.7) 501.2 (12.1) 0.0
Balance Sheet
(US$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Mar-12A 1,616 220 0 87 1,923 8 11,151 498 0 11,657 1,006 463 16 1,485 3,169 618 3,787 0 5,272 7,788 520 8 308 Mar-13F 1,543 282 0 87 1,912 8 12,727 490 0 13,225 1,014 498 20 1,532 3,594 795 4,389 0 5,921 8,639 577 9 216 Mar-14F 845 331 0 87 1,263 7 13,594 490 0 14,092 729 583 24 1,336 3,559 930 4,489 0 5,825 8,933 597 9 530 Mar-15F 1,237 353 0 87 1,678 7 15,214 490 0 15,711 293 623 25 942 4,594 994 5,588 0 6,529 10,179 680 10 860
540.8 253.0 253.0
579.4 416.5 416.5
436.6 436.6 436.6
489.2 489.2 489.2
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Mar-12A 404 (280) Mar-13F 523 (7) Mar-14F 601 40 Mar-15F 631 19
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Mar-12A 19.4% 12.6% 71.4% (0.56) 1.69 3.85 13.0% 59.9% 100.4 N/A N/A 875% 3.52% Mar-13F 28.6% 29.6% 72.0% (0.64) 1.82 4.51 11.6% 38.9% 126.0 N/A N/A 137% 4.00% Mar-14F 17.0% 14.8% 70.6% (0.72) 1.88 4.70 17.0% 32.7% 131.5 N/A N/A 142% 4.36% Mar-15F 6.9% 5.0% 69.4% (0.77) 2.14 5.31 17.0% 29.2% 137.2 N/A N/A 169% 4.26%
(234) 338 (104) (14) 110 (1,114) 0 0 (1) (1,115) 483 0 0 (138) 408 753
(142) 257 (115) (14) 502 (1,267) 0 0 (20) (1,287) 433 414 0 (143) 7 712
62 65 (127) (12) 630 (852) 0 0 (20) (872) (320) 0 0 (143) 7 (455)
27 91 (118) (13) 637 (685) 0 0 (20) (705) 598 0 0 (143) 4 460
Valuation CHINA GAV of completed properties GDV of properties under development GDV of land for future development China Value Japan Value Brazil Value Asset management platform GAV ($US m ) Less: Est net debt (Incl future capex needs) RNAV ($US m) Fully-diluted share base RNAV per share ($US m ) Target price (USD) RNAV per share (S$) Target price (S$) Disc/Prem to RNAV 0% (m ) 3,596 1,476 1,296 6,394 7,483 843 706 15,425 (4,175) 11,250 4,756 2.37 2.37 2.93 2.93
Key Drivers
Unbooked Presales (m) (US$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (US$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%) Mar-12A N/A N/A N/A N/A N/A N/A N/A 100.0% N/A 70.7% N/A Mar-13F N/A N/A N/A N/A N/A N/A N/A 100.0% N/A 71.3% N/A Mar-14F N/A N/A N/A N/A N/A N/A N/A 100.0% N/A 70.0% N/A Mar-15F N/A N/A N/A N/A N/A N/A N/A 100.0% N/A 68.8% N/A
93
Plantations SINGAPORE
November 29, 2012
Golden Agri-Resources
GGR SP / GAGR.SI Current S$0.64 S$0.80 S$0.85 26.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$6,663m
S$8,152m
US$40.26m
S$49.40m
50.0%
-86.04 m shares
CIMB Analyst Ivy Ng Lee Fang CFA

T (60) 3 20849697 E ivy.ng@cimb.com
CPO price recovery play

We upgrade Golden Agri from Trading Buy to Outperform as it is a good play on the theme of CPO price recovery given its strong liquidity and high earnings exposure to the plantations business.
We chop our FY12-14 earnings by 3-15% to reflect our lower CPO price assumptions and higher estate costs stemming from Indonesias recent proposal to jack up its minimum wages. In line with our earnings revision, we downgrade our target price, which is still based on 14x forward P/E. Key catalysts include improving CPO prices and better earnings from its China agribusiness.
Labour cost pressures

The recent proposal to raise the minimum wage in Indonesia by up to 44% in certain provinces will lead to higher production costs for planters including Golden Agri as some estate workers are currently paid the minimum wage. Labour costs account for around 45% of the group's cost of production for CPO. Imputing a rough estimated rise in labour costs of around 13%, we estimate that this could increase its production costs by 6% in 2013.
Share price info

Share price perf. (%) Relative Absolute Major shareholders The Widjaja Family Master Trust 1M 0.7 -0.8 3M -10.3 -11.2 12M -20.4 -8.6 % held 50.0
CPO price downgrades

We are paring our 2012-14 CPO price forecasts by 7-9% to US$960-1,000 per tonne to account for the recent upgrade of US soybean crops and the fading El Nino. However, we continue to hold the view that CPO price will recover on the back of slower output growth and improving demand. We expect the spot CPO price to rise by 23% from its current US$780 per tonne to an average of US$960 for 2013. However, the timing of the price rally may be delayed from our previous projection of end-2012 to 1Q13 if demand stays soft due to uncertain global economic prospects or if supply exceeds our forecasts.
Better earnings in 2013

We are projecting better earnings in FY13 as we expect the improvement in FFB production and better contributions from its China agribusiness to offset higher production costs. We also like the group's planned expansion of its Indonesian refining business which will allow it to benefit from lower export taxes for refined products in Indonesia and achieve better profit margins for its palm products. Its plan to acquire estates to beef up its output growth will boost earnings prospects.
Price Close 0.85 0.80 0.75 0.70 0.65 0.60 0.55 300 0.50 250 200 150 100 50
Nov-11 Mar-12 Source: Bloomberg Jun-12
Relative to FSSTI (RHS) 107 102 97 92 87 82 77 72
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 3,505 676 1,422 0.032 69.6% 15.70 0.005 0.97% 10.14 303.4 10.2% 0.92 6.31% Dec-11A 5,953 955 1,268 0.047 47.6% 11.04 0.014 2.73% 7.44 34.6 8.8% 0.79 7.69% Dec-12F 5,897 764 430 0.034 (26.7%) 15.07 0.007 1.29% 9.61 206.8 9.1% 0.80 5.25% (2.5%) 0.84 Dec-13F 6,355 873 495 0.039 12.0% 13.45 0.008 1.49% 8.73 552.4 9.7% 0.76 5.78% (15.0%) 0.77 Dec-14F 7,037 1,031 594 0.046 20.0% 11.21 0.009 1.78% 7.34 36.2 8.5% 0.72 6.60% (6.7%) 0.91
Vol m
Sep-12

0.64 0.60 0.80
0.80
Current Target
Golden Agri-Resources
November 29, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income/(Expense) Total Pretax Income/(Loss) from Assoc. Total Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 5,953 1,837 955 (95) 860 (52) 1 0 809 903 1,712 (428) 1,284 (16) 0 0 0 1,268 571 571 Dec-12F 5,897 1,819 764 (114) 650 (65) 2 0 587 0 587 (148) 439 (9) 0 0 0 430 430 430 Dec-13F 6,355 1,961 873 (134) 739 (67) 2 0 674 0 674 (169) 506 (10) 0 0 0 495 495 495 Dec-14F 7,037 2,171 1,031 (153) 877 (71) 2 0 809 0 809 (202) 607 (12) 0 0 0 594 594 594
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 370 761 751 0 1,882 1,759 168 224 7,804 9,956 422 0 647 75 1,143 664 0 41 705 1,876 3,725 8,025 87 8,112 Dec-12F 315 873 744 0 1,932 2,145 170 224 7,804 10,343 422 0 732 75 1,229 664 0 41 705 1,876 3,810 8,369 96 8,465 Dec-13F 228 947 802 0 1,977 2,511 172 224 7,804 10,712 422 0 736 75 1,232 664 0 44 708 1,876 3,817 8,766 106 8,872 Dec-14F 293 997 888 0 2,178 2,857 174 224 7,804 11,060 422 0 793 75 1,289 664 0 48 713 1,876 3,878 9,241 118 9,360
Cash Flow
(US$m) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 955 0 (115) 0 0 (13) (46) (142) 639 (446) 6 (57) (65) (561) 105 0 8 (79) (52) (19) Dec-12F 764 0 (20) 0 0 0 (65) (148) 531 (500) 0 0 0 (500) 0 0 0 (86) Dec-13F 873 0 (125) 0 0 0 (67) (169) 512 (500) 0 0 0 (500) 0 0 0 (99) Dec-14F 1,031 0 (74) 0 0 0 (71) (202) 684 (500) 0 0 0 (500) 0 0 0 (119)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 69.9% 41.2% 16.0% (0.059) 0.66 13.42 25.0% 47% 13.61 60.59 36.32 7.71% 8.46% Dec-12F (0.9%) (20.0%) 13.0% (0.060) 0.65 8.55 25.2% 20% 16.04 67.11 47.89 5.04% 5.87% Dec-13F 7.8% 14.2% 13.7% (0.067) 0.68 9.73 25.0% 20% 17.08 64.21 48.02 5.52% 6.43% Dec-14F 10.7% 18.1% 14.6% (0.062) 0.72 11.54 25.0% 20% 16.38 63.38 45.63 6.27% 7.31%
(86)
(99)
(119)
Key Drivers
Planted Estates (ha) Mature Estates (ha) FFB Yield (tonnes/ha) FFB Output Growth (%) CPO Price (US$/tonne) Dec-11A 361,060 306,827 20.9 12.1% 1,125 Dec-12F 372,060 326,330 21.5 9.7% 990 Dec-13F 384,060 338,619 22.5 8.6% 960 Dec-14F 399,060 349,965 23.0 5.6% 1,000
95
Logistics SINGAPORE
November 28, 2012
Goodpack
GPACK SP / GPAK.SI Current S$1.86 S$2.10 S$2.10 13.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$809.1m
S$988.4m
US$0.28m
S$0.34m
58.0%
496.0 m shares

Near-term positives priced in

We have always been a big fan of Goodpack. However, we deem current valuations as fair and fully pricing in its near-term potential. The much-anticipated autoparts contract win, a major price catalyst, could also take some time to materialise.
Therefore, we maintain Neutral on Goodpack. While operating momentum has been positive over the past two quarters, we deem Goodpacks current 13.0x CY14 EPS valuation as fair. Poor trading liquidity may also cap valuation upside. Our target price is unchanged, still based on 14.2x CY14 EPS (-0.5SD from historical 5 yr fwd avg). should help boost operating margins. We expect earnings growth of 20-25% from FY13 to FY15.
Kenneth Ng, CFA

Share price info

Share price perf. (%) Relative Absolute Major shareholders Goodpack Holdings Pte Ltd Capital Research Capital Group Companies Inc 1M 2 0.5 3M 7.4 6.3 12M 8.1 22 % held 28.7 8.2 6.9
Autoparts could take some time

Goodpacks autoparts expansion has been rather slow-moving compared to its foray into synthetic rubber. 2012 marks Goodpacks second year of expansion into autoparts but we have yet to see any major contracts thus far. Our recent discussion with management suggests that development in this space is still slow. In our opinion, any near-term breakthrough is rather unlikely.
Positive operating momentum to continue

In 2012, Goodpack successfully extended its market share in the synthetic rubber segment after securing a major contract from Russian synthetic rubber producer, Sibur. Goodpack also made a psychologically significant breakthrough in autoparts transportation, scoring a contract with General Motors (South Africa). The strong operating momentum was reflected in a rather decent showing in 1Q13, with net profit up 10.2% yoy. In anticipation of stronger box demand, Goodpack has recommenced its box purchase plan, a cheaper alternative to leasing boxes. This
Valuations
Goodpacks mid-teens P/E does not make a very compelling investment thesis. Trading liquidity has been rather poor, cursed by large holdings by long funds lured by its longer-term potential. The lack of trading liquidity could also limit upside potential. Therefore, we maintain Neutral. The largest risk to our recommendation is a contract win for autoparts in the near term.
2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 5 4 3 2 1

Nov-11
Price Close
Vol m
119 113 108 102 97 91 85 80 74
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)
|
Feb-12
May-12
Aug-12
Source: Bloomberg

1.29
1.86 1.95
Current
|
Target
2.10
Jun-11A 158.6 72.1 43.22 0.09 24.9% 18.55 0.02 1.6% 11.95 17.9 20.4% 3.00 18.5%
Jun-12A 177.2 73.2 45.22 0.09 2.4% 17.68 0.03 2.1% 11.50 7.0 13.1% 2.67 16.9%
Jun-13F 204.6 88.5 54.77 0.11 21.1% 17.26 0.04 2.6% 11.12 101.7 7.9% 2.36 18.2% 0% 1.04
Jun-14F 233.3 103.9 68.21 0.14 24.5% 13.86 0.05 3.2% 9.09 17.3 (2.2%) 2.04 19.8% 0% 1.10
Jun-15F 263.4 120.0 81.37 0.16 19.3% 11.62 0.22 14.6% 7.40 12.9 (12.6%) 1.75 20.3% (0%) 1.09
Goodpack
November 28, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit
|
Balance Sheet
Jun-12A 177.2 93.9 73.2 (16.2) 57.0 (5.7) 0.0 2.9 54.2 0.0 54.2 (7.0) 47.2 (2.0) 0.0 Jun-13F 204.6 114.9 88.5 (16.8) 71.7 (7.9) 0.0 1.0 64.8 0.0 64.8 (8.3) 56.5 (1.7) 0.0 Jun-14F 233.3 134.6 103.9 (17.0) 86.9 (7.2) 0.0 1.0 80.7 0.0 80.7 (10.4) 70.3 (2.1) 0.0 Jun-15F 263.4 153.0 120.0 (17.2) 102.8 (7.5) 0.0 1.0 96.3 0.0 96.3 (12.4) 83.9 (2.5) 0.0 (US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Jun-12A 165.2 84.8 2.2 0.0 252.1 272.2 0.0 5.3 2.0 279.5 11.3 26.7 1.8 39.8 191.5 14.2 205.6 0.0 245.5 283.0 3.2 286.1
Jun-13F 149.8 91.3 2.2 7.6 251.0 285.4 0.0 5.0 2.0 292.4 83.1 27.5 1.8 112.5 92.5 14.2 106.6 0.0 219.1 319.4 4.9 324.3
Jun-14F 187.7 97.7 2.2 7.4 295.0 298.4 0.0 4.7 2.0 305.1 87.2 28.4 1.8 117.4 92.3 14.2 106.4 0.0 223.8 369.4 7.0 376.3
Jun-15F 244.0 104.0 2.2 7.2 357.4 311.2 0.0 4.4 2.0 317.6 91.3 29.3 1.8 122.3 97.0 14.2 111.1 0.0 233.5 432.1 9.5 441.6
45.2 45.2 45.2
54.8 54.8 54.8
68.2 68.2 68.2
81.4 81.4 81.4
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing
|
Key Ratios
Jun-12A 73.2 (5.3) Jun-13F 88.5 (5.8) Jun-14F 103.9 (5.6) Jun-15F 120.0 (5.4) Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
|
0.0 (4.6) (5.9) 57.5 (26.0) 0.0 0.0 0.0 (26.0) 82.2 1.0 0.0 (11.5) (0.7) 71.1
0.0 (7.9) (8.3) 66.5 (30.0) 0.0 0.0 0.0 (30.0) (27.2) 0.0 0.0 (17.7) 0.0 (44.9)
0.0 (7.2) (10.4) 80.7 (30.0) 0.0 0.0 0.0 (30.0) 3.9 0.0 0.0 (10.6) 0.0 (6.7)
0.0 (7.5) (12.4) 94.6 (30.0) 0.0 0.0 0.0 (30.0) 8.8 0.0 0.0 (10.6) 0.0 (1.9)
Jun-12A 11.7% 1.6% 41.3% (0.08) 0.57 10.06 12.9% 39.2% 118.7 11.06 60.86 14.8% 13.2%
Jun-13F 15.5% 20.8% 43.2% (0.05) 0.64 9.07 12.9% 19.4% 108.7 9.05 51.81 17.6% 14.5%
Jun-14F 14.0% 17.4% 44.5% 0.02 0.74 12.10 12.9% 15.6% 102.4 8.23 47.82 19.8% 16.5%
Jun-15F 12.9% 15.5% 45.6% 0.11 0.87 13.65 12.9% 17.4% 96.8 7.35 43.31 22.3% 17.3%
Key Drivers
(US$) Volumes Moved (% Change) Rates Charged (% Change) Acquisitions (m)
|
Jun-12A -1.7% 9.5% N/A
Jun-13F 14.2% 5.0% N/A
Jun-14F 8.1% 5.5% N/A
Jun-15F 8.5% 4.0% N/A
97
Tech Manufacturing Services SINGAPORE

November 28, 2012
Hi-P International
HIP SP / HIPI.SI Current S$0.81 S$0.74 S$0.74 -8.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$580.1m
S$708.6m
US$1.12m
S$1.37m
16.2%
595.7 m shares

Not so hip at the moment

Hi-Ps recent results disappointment stemmed from delays in new projects. While the management has highlighted that issues affecting its customers supply chain have gradually improved, we remain cautious given its still-weak order visibility.
We make no changes to our recently-adjusted FY12 core net profit estimate, which incorporated 3Q12s results and higher expected gross margin and operating costs for 4Q12. FY13-14 forecasts were also left untouched. Our price target for Hi-P is based on 1x CY13 P/BV (slight discount to its historical average given its weak outlook). We maintain our Underperform call with possible de-rating catalysts coming from another results setback. yield issues stemming from other parts of its customers supply chain. Although two of the projects have now commenced, we still hold the view that orders could be slow for Hi-P, in addition to the unrecoverable lost sales due to the delays.
Renfred Tay
T (65) 62108692 E renfred.tay@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Yao Hsiao Tung Molex Inc. Hi-P International 1M 7.4 5.9 3M -8.9 -10 12M 16.7 30.6 % held 55.9 20.4 7.1
We remain cautious at the moment

As Hi-P does not have much to show for its capex of S$180m in FY12, coupled with its weak order visibility, we remain sceptical about its ability to generate the kind of profits that were initially expected when it announced that S$300m will be spent on capacity expansion in China.
Not out of the woods

Following its setbacks with Research in Motion, Hi-P initially thought that it was in the clear when the company received new smartphone, tablet and e-book reader projects from new and existing customers. This prompted the company to turn positive about its 2H12 outlook; but this was not to be. During its 3Q12 results briefing, management confirmed that the delay in three major new projects led to its weak results. These delays resulted in
Relook in 2Q13
Given its current lack of visibility, we believe the stock will continue to underperform the market. A better time to relook the stock would be in 2Q13 when there is more clarity on the progress of its new projects.
1.20 1.10 1.00 0.90 0.80 0.70 0.60 Vol m 0.50 8 6 4 2

Nov-11
Price Close
169 158 146 135 123 112 100 89
Financial Summary
Revenue (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) Price To Sales (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 958 67.27 0.066 28% 12.23 0.72 0.036 4.44% 3.04 22.05 (37.9%) 1.19 9.85% Dec-11A 1,204 44.99 0.035 (48%) 23.37 0.56 0.024 2.96% 4.05 14.83 (37.1%) 1.12 4.94% Dec-12F 1,182 12.71 0.024 (31%) 33.94 0.57 0.007 0.84% 8.35 6.28 (1.2%) 1.17 3.38% 0% 0.91 Dec-13F 1,327 46.73 0.057 137% 14.31 0.50 0.025 3.08% 4.56 NA 15.1% 1.10 7.92% 0% 0.80 Dec-14F 1,445 52.74 0.064 13% 12.68 0.46 0.028 3.47% 4.11 7.01 2.7% 1.04 8.42% (0%) 0.70
Feb-12
May-12
Aug-12
Source: Bloomberg

0.60
0.81 1.08
Current
0.74
Target
Hi-P International
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 1,204 131 111 (59) 52 3 0 4 59 0 59 (14) 45 0 Dec-12F 1,182 93 79 (72) 7 4 (0) 5 16 0 16 (3) 13 (0) Dec-13F 1,327 133 167 (118) 49 1 0 10 60 0 60 (13) 46 0 Dec-14F 1,445 145 166 (110) 56 1 0 11 68 0 68 (15) 52 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 341 293 125 16 775 284 2 0 14 301 117 311 47 475 3 0 3 2 479 596 1 597 Dec-12F 408 333 133 60 934 470 2 0 16 488 201 379 69 648 201 0 201 2 851 569 1 570 Dec-13F 309 412 192 70 983 540 2 0 18 560 201 448 80 728 201 0 201 3 932 610 1 611 Dec-14F 384 433 206 74 1,097 495 2 0 19 516 201 481 84 766 201 0 201 3 970 643 0 643
45 29 29
13 20 20
47 47 47
53 53 53
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 111.1 0.0 (0.5) 10.4 0.0 3.4 (22.8) 101.5 (65.5) 1.2 0.0 8.2 (56.2) 0.0 0.0 0.0 (29.8) 103.9 74.1 Dec-12F 79.1 0.0 (22.2) 26.7 0.0 3.6 (6.0) 81.2 (265.0) 1.7 0.0 4.2 (259.1) 284.3 0.8 (1.1) (19.8) (3.7) 260.5 Dec-13F 166.5 0.0 (69.2) 9.7 0.0 1.3 (13.4) 94.9 (187.7) 0.0 0.0 (0.7) (188.4) 0.0 0.0 0.0 (5.6) 0.0 (5.6) Dec-14F 166.4 0.0 (2.0) 10.6 0.0 1.0 (15.4) 160.7 (65.0) 0.0 0.0 (0.3) (65.3) 0.0 0.0 0.0 (20.6) 0.0 (20.6)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 25.7% (28%) 9.2% 0.27 0.72 35.2 24.3% 44.1% 84.7 38.32 91.1 12.1% 8.7% Dec-12F (1.8%) (29%) 6.7% 0.01 0.69 1.8 21.2% 44.0% 97.0 43.26 116.0 1.6% 1.8% Dec-13F 12.3% 110% 12.5% (0.11) 0.74 9.7 22.4% 44.0% 102.4 49.58 126.3 7.2% 5.5% Dec-14F 8.9% (0%) 11.5% (0.02) 0.78 11.2 22.7% 44.0% 106.7 55.88 130.4 6.6% 6.0%
Key Drivers
ASP Change (%, Main Product) Unit sales growth (%, main prod) No. Of Lines (main Product) Rev per line (US$, main prod) ASP chg (%, 2ndary prod) Unit sales grth (%, 2ndary prod) No. Of Lines (secondary Product) Rev per line (US$, 2ndary prod) Dec-11A N/A 25.7% N/A 1.0 N/A N/A N/A N/A Dec-12F N/A -1.8% N/A 0.7 N/A N/A N/A N/A Dec-13F N/A 12.3% N/A 0.7 N/A N/A N/A N/A Dec-14F N/A 8.9% N/A 0.6 N/A N/A N/A N/A
99

November 27, 2012
Ho Bee Investments
HOBEE SP / HBEE.SI Current S$1.60 S$1.93 S$1.93 21.1%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$910.8m
S$1,114m
US$0.85m
S$1.05m
24.0%
737.3 m shares

Moving into better territory

With high end inventory cleared on the back of price cuts, we see a year of positives ahead with Metropolis to complete and China projects (JV with Yanlord) launched and construction underway. Strong office valuations and China residential launches, >70% of GAV, are catalysts.
Ho Bee has shifted away from persistently weak Sentosa sales into two key areas of strength. We see share buybacks at current levels as some indication of a floor. No change to estimates and RNAV/target price (at 30% discount to RNAV). Maintain Outperform. We also expect the Shanghai project to commence construction in 2013, for sale in 2014.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Ho Bee Holdings 1M 10 8.5 3M 23.3 22.2 12M 17.9 31.8 % held 68.5
Metropolis to boost NAV on completion

We see the bulk of the rationalisation of its investment property portfolio already completed, with a Metropolis completion in 2013 plugging the gap. Strong leasing interest, e.g. from companies seeking larger floor plates on expansion, points to strong pre-commitments at or above target rents (S$6psf) when leases are signed. The completion of the asset in 2013 should further strengthen book values.
China projects come into the forefront

With Orange Grove cleared in a bulk sale in October at S$2,071 psf (10-15% below previous ASPs), we now look forward to the China projects to mitigate a persistently slow Sentosa segment. Ho Bee has three joint ventures with Yanlord for projects in Shanghai, Tangshan and Zhuhai. Phase 1 of the Tangshan project, which we estimate to be c.20% of total GFA, was slated for 3Q12 launch. We understand that Yanlords projects have seen 50-60% sell-through ytd. We expect more launches for the Tangshan project and the sale of balance units in 2013.
Maintain Outperform
The stock trades at >30% discount to book, compared to its long-term average of 0.9x P/BV. The discount gap is attractive on stronger book values next year. Proceeds from the divestment of Hotel Windsor could also be channelled into acquisitions.
1.7 1.5 1.3 1.1 Vol m 0.9 3 2 1

Nov-11
Price Close
124 118 112 105 99 93 87 80 74
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 539.0 216.1 374.9 0.30 (45.1%) 5.40 0.050 3.14% 7.89 6.71 33.9% 0.80 16.3% Dec-11A 341.5 130.0 211.4 0.19 (36.1%) 8.46 0.050 3.14% 11.63 NA 19.0% 0.71 8.9% Dec-12F 430.5 116.0 153.7 0.19 1.4% 8.34 0.049 3.06% 15.87 NA 35.1% 0.63 8.1% 0% 1.11 Dec-13F 188.8 124.6 142.8 0.17 (10.8%) 9.35 0.050 3.13% 13.29 4.68 24.8% 0.59 6.5% 0% 1.17 Dec-14F 135.4 95.3 160.4 0.23 34.1% 6.97 0.050 3.13% 16.37 3.82 18.4% 0.55 8.2% 0% 1.04
Feb-12
May-12
Aug-12
Source: Bloomberg

0.98
1.60 1.60
Current
Target
1.93
Ho Bee Investments
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 341.5 341.5 130.0 (2.0) 128.0 4.5 33.0 0.0 165.6 73.1 238.7 (25.8) 212.8 (1.4) 0.0 Dec-12F 430.5 430.5 116.0 0.0 116.0 5.1 33.5 0.0 154.7 18.0 172.7 (17.7) 155.0 (1.3) 0.0 Dec-13F 188.8 188.8 124.6 (30.4) 94.3 (1.1) 41.2 0.0 134.4 25.9 160.3 (16.4) 143.9 (1.1) 0.0 Dec-14F 135.4 135.4 95.3 (22.8) 72.5 7.8 99.2 0.0 179.6 0.0 179.6 (18.4) 161.2 (0.8) 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 193 51 0 341 585 113 1,609 0 0 1,722 118 45 47 210 391 41 432 0 641 1,645 21 1,666 Dec-12F 89 41 0 750 880 125 1,752 0 0 1,877 169 71 71 311 561 62 622 0 933 1,771 53 1,824 Dec-13F 294 18 0 740 1,052 106 1,649 0 0 1,755 180 31 31 242 597 27 624 0 866 1,886 56 1,942 Dec-14F 553 13 0 758 1,324 96 1,657 0 0 1,753 217 22 22 261 718 19 738 0 999 2,018 60 2,078
211.4 138.9 138.9
153.7 137.5 137.5
142.8 119.6 119.6
160.4 160.4 160.4
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 130.0 518.4 Dec-12F 116.0 (349.0) Dec-13F 124.6 (46.0) Dec-14F 95.3 (30.4)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (36.6%) (39.8%) 38.1% (0.43) 2.23 51.03 10.8% 21.3% 53.49 N/A N/A 11.5% 6.1% Dec-12F 26.1% (10.7%) 27.0% (0.91) 2.53 32.58 10.2% 20.7% 39.36 N/A N/A 23.3% 5.3% Dec-13F (56.1%) 7.4% 66.0% (0.69) 2.69 18.46 10.2% 24.0% 57.41 N/A N/A 10.1% 3.7% Dec-14F (28.3%) (23.5%) 70.4% (0.54) 2.88 13.34 10.2% 17.5% 41.90 N/A N/A 7.5% 3.0%
73.1 (708.9) 0.0 (0.9) 11.7 (12.3) 0.0 (51.7) 0.0 (63.9) (241.4) 0.0 0.0 (29.5) 273.6 2.7
0.0 (0.6) (233.6) (12.0) 0.0 (15.1) 0.0 (27.1) 220.8 (32.5) 0.0 (28.0) (3.6) 156.8
0.0 (0.6) 78.0 (12.0) 125.7 0.0 0.0 113.7 47.2 0.0 0.0 (28.0) (5.1) 14.1
0.0 (0.7) 64.2 (12.0) 81.8 0.0 0.0 69.8 158.3 0.0 0.0 (28.0) (5.4) 124.8
RNAV Investment properties PV of residential GDV Other assets GAV Less: FY13F net debt (incl off b/s debt) RNAV Fully diluted no. of shares (m) RNAV per share (S$)
RNAV % of (S$m) GAV 1,288 47% 1,461 53% 18 1% 2,767 100% (732) 2,035 737 2.76 Discount to RNAV 30% 1.93
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%) Dec-11A N/A N/A N/A N/A N/A N/A N/A 5.0% 92.6% N/A N/A Dec-12F N/A N/A N/A N/A N/A N/A N/A 4.2% 93.8% N/A N/A Dec-13F N/A N/A N/A N/A N/A N/A N/A 10.0% 87.7% N/A N/A Dec-14F N/A N/A N/A N/A N/A N/A N/A 47.6% 52.4% N/A N/A
Target price
101
Water Treatment & Services SINGAPORE

November 28, 2012
Hyflux
HYF SP / HYFL.SI Current S$1.28 S$1.41 S$1.41 10.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$861.8m
S$1,053m
US$0.84m
S$1.03m
30.0%
860.2 m shares

The march to the promise land

The worst is over for Hyflux. We see pockets of strength in upcoming results although lumpiness in quarterly reporting may not necessarily accrue the group enough credit. Its forward-looking strategy is sound and could bear fruit but not immediately.
We felt that triggers to own the stock are still missing at the moment. Our SOP-based target price remains intact, largely anchored on the higher multiples for Tuaspring. Maintain Neutral as evidence of project wins, although present, is not entirely concrete. The good thing is that the stocks de-rating has eased considerably.
Capital recycling theme in 2013

Hyflux has all the operational expertise needed to run any project, although financing can be tricky. As Tuaspring progresses, there is a need for project financing against the current arrangement of internal funding. We feel that management needs to execute various asset divestments in China at some stage to fund this project and other potential new projects. Net gearing is still healthy at 0.55x but new projects and divestments could change that in 2013.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Olivia Lum (CEO) Matthew Intl 1M -3 -4.5 3M -5.2 -6.3 12M -6.3 7.6 % held 33.8 3.4
2013 revenue profile

Increased EPC activities in Asia, particularly in Singapore, will be key to 2013 revenue growth. But we are cautious given accompanying higher staff costs and raw material expenses, coupled with other additional overheads. Contribution from Singapore, driven by Tuaspring, could still make up around 70% of total revenue in 2013. Earnings surprises could come from possible success in the two tendered projects in MENA. Our fear is that the competitive bidding environment could lead to margin-damaging outcomes for any potential winners.
No re-rating or de-rating catalysts for now

Hyflux has come out of its transitional mode and is tendering for various projects in MENA. Its earnings profile has stabilised as a result of Tuaspring and global project wins could add to its order book.
1.7 1.5 1.3 1.1 Vol m 0.9 15 10 5

Nov-11
Price Close
130 124 119 113 108 102 96 91 85
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 569.7 156.9 88.5 0.13 35.8% 10.15 0.042 3.27% 9.19 NA 73.3% 2.18 23.9% Dec-11A 482.0 109.5 53.0 0.05 (57.2%) 23.68 0.028 2.17% 11.68 2.04 18.0% 1.19 6.5% Dec-12F 683.1 125.6 58.3 0.07 22.0% 19.40 0.020 1.59% 10.44 8.23 19.8% 1.10 5.9% 0.000% 1.25 Dec-13F 772.2 156.2 105.0 0.12 85.8% 10.44 0.037 2.87% 9.07 6.72 26.4% 0.97 9.9% 0.000% 1.72 Dec-14F 708.1 119.6 70.7 0.08 (32.6%) 15.51 0.025 1.93% 12.10 38.09 26.6% 0.90 6.0% 0.000% 1.23
Feb-12
May-12
Aug-12
Source: Bloomberg

1.03
1.28 1.58
Current
Target
1.41
Hyflux
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 482.0 222.1 109.5 (36.6) 72.9 (19.6) 1.2 0.0 54.6 7.5 62.0 (6.3) 55.7 (2.7) 0.0 Dec-12F 683.1 259.6 125.6 (41.9) 83.7 (23.7) 4.0 0.0 64.0 2.0 66.0 (7.9) 58.1 0.2 0.0 Dec-13F 772.2 270.3 156.2 (13.8) 142.4 (25.0) 4.0 0.0 121.3 0.0 121.3 (14.6) 106.8 (1.7) 0.0 Dec-14F 708.1 247.9 119.6 (14.9) 104.7 (24.1) 4.0 0.0 84.6 0.0 84.6 (10.2) 74.5 (3.7) 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 662 231 24 182 1,099 189 0 199 546 933 118 228 10 356 712 28 741 0 1,097 921 15 936 Dec-12F 652 87 107 699 1,544 274 0 82 225 580 118 117 116 351 734 28 763 0 1,113 996 15 1,011 Dec-13F 627 273 41 559 1,500 669 0 86 257 1,013 118 273 131 522 813 28 841 0 1,363 1,133 16 1,149 Dec-14F 622 57 95 1,277 2,051 27 0 85 268 380 118 84 120 323 834 28 863 0 1,186 1,225 20 1,245
53.0 46.3 46.3
58.3 56.5 56.5
105.0 105.0 105.0
70.7 70.7 70.7
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 109.5 (141.0) Dec-12F 125.6 80.4 Dec-13F 156.2 26.0 Dec-14F 119.6 (21.0)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (15.4%) (30.2%) 22.7% (0.20) 1.07 3.23 10.2% 60.9% 156.6 35.43 307.5 7.9% 5.3% Dec-12F 41.7% 14.7% 18.4% (0.23) 1.16 3.11 12.0% 31.1% 85.2 56.61 148.8 7.4% 4.8% Dec-13F 13.0% 24.3% 20.2% (0.35) 1.32 4.99 12.0% 30.0% 85.0 53.85 141.5 11.5% 7.4% Dec-14F (8.3%) (23.4%) 16.9% (0.38) 1.42 3.48 12.0% 30.0% 85.0 53.85 141.5 7.1% 5.2%
0.0 352.5 (7.4) 313.7 0.0 (9.5) 0.0 1.3 (8.1) 231.2 1.5 0.0 (47.9) 0.0 184.8
0.0 (23.7) (7.9) 174.3 0.0 (46.8) 0.0 (16.0) (62.8) 21.8 0.0 0.0 (29.5) 0.0 (7.7)
0.0 (25.0) (14.6) 142.6 0.0 (40.9) 0.0 (17.0) (57.9) 78.5 0.0 0.0 (43.5) 0.0 35.0
0.0 (24.1) (10.2) 64.3 0.0 (39.4) 0.0 (18.0) (57.4) 21.8 0.0 0.0 (33.2) 0.0 (11.4)
Key Drivers
(S$m) Outstanding Orderbook Orderbook Depletion Orderbook Replenishment ASP/tariff (% chg, main prod/serv) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP/tariff (%chg, 2ndary prod/serv) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) Non Revenue Water (NRW, %) Dec-11A 422.5 N/A 120.0 N/A N/A N/A N/A N/A N/A N/A Dec-12F 683.1 N/A 35.0 N/A N/A N/A N/A N/A N/A N/A Dec-13F 772.2 N/A 135.0 N/A N/A N/A N/A N/A N/A N/A Dec-14F 708.1 N/A 136.0 N/A N/A N/A N/A N/A N/A N/A
103
Hospitals SINGAPORE
November 28, 2012
IHH Healthcare
IHH SP / IHHH.SI Current S$1.26 S$1.53 S$1.53 21.9%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$8,276m
S$10,110m
US$1.53m
S$1.89m
30.5%
8,055 m shares

Destined to reign
We believe IHHs extensive footprint in a defensive sector is one of the best businesses around to buy into. IHH possesses steady growth, led by an unquenchable thirst for better healthcare even as global healthcare costs climb.
IHH has an extensive footprint in Asia and the CEEMENA region where we believe it has unparalleled dominance of the private healthcare market. In our opinion, this should sustain its profitability and status as a world premier private healthcare operator. IHHs ability to capture the huge demand for medical travel is a big plus, especially when its home markets are able to act as regional hubs for medical travel. Demographic changes like ageing populations are raising healthcare consumption, as are higher expectations on healthcare standards. Management has experience extracting synergies from the integration of Pantai with Parkway. We believe such experience, allied with IHHs growing scale and market leadership, will produce opportunities for raising service quality and wringing further cost synergies.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Khazanah Mitsui Aydinlar family 1M -1.6 -3.1 3M 2.3 1.2 % held 45.7 20.5 3.2 12M
Distinctive global presence

IHHs ownership of/investments in Parkway, Pantai, Apollo, plus a regional presence, provide exposure to growing demand for private healthcare in the region. Its PPL and Acibadem operations give the group first-mover advantages in their respective markets, where we believe there are no other major opponents. In our opinion, IHH has excellent brand equity from its record of high-quality services, extensive suite of premier medical solutions and a proven management that has succeeded in superior performances against peers.
Capital-recycling angle
In addition, IHHs sponsorship of the Parkway Life REIT via a substantial stake provides opportunities not readily available to other healthcare players in the world. Further asset-recycling opportunities could emerge from its Malaysian assets in due course, with the freed capital redeployed to other growth frontiers.
Favourable themes
1.35 1.30 1.25 1.20 1.15 1.10 1.05 Vol m 1.00 150 100 50
Jul-12
Price Close
118 115 112 109 107 104 101 98
Financial Summary
Revenue (RMm) Operating EBITDA (RMm) Net Profit (RMm) Core EPS (RM) Core EPS Growth FD Core P/E (x) DPS (RM) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 4,507 965 226 0.05 0.0% 60.27 0% 22.96 27.73 172% 5.86 Dec-11A 5,191 1,006 158 0.03 (36.2%) 94.47 0% 20.19 NA 37% 1.74 2.85% Dec-12F 7,940 1,498 580 0.06 72.1% 54.90 0% 14.09 NA 5% 1.42 2.80% 0% 1.13 Dec-13F 8,120 1,850 866 0.11 88.7% 29.10 0% 13.42 10.44 2% 1.38 4.81% 0% 1.18 Dec-14F 9,626 2,181 1,062 0.13 22.6% 23.72 0% 11.17 8.79 (1%) 1.33 5.72% 0% 1.13
Aug-12
Sep-12
Oct-12
Source: Bloomberg

1.26 1.11 1.31
Current
Target
1.53
IHH Healthcare
November 28, 2012
Profit & Loss

(RMm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 5,191 3,585 1,006 (442) 565 (526) 94 0 204 132 (88) 44 114 Dec-12F 7,940 5,478 1,498 (413) 1,086 (197) 70 0 959 959 (236) 723 (144) Dec-13F 8,120 5,603 1,850 (522) 1,328 (125) 74 0 1,277 1,277 (225) 1,052 (186) Dec-14F 9,626 6,642 2,181 (580) 1,600 (121) 81 0 1,560 1,560 (316) 1,245 (183)
Balance Sheet
(RMm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 1,311 518 79 1,170 3,078 4,727 890 8,106 554 14,277 47 1,576 162 1,785 4,991 0 4,991 470 7,247 9,862 247 10,108 Dec-12F 2,574 973 136 1,191 4,873 6,250 1,091 11,234 639 19,214 8 2,081 163 2,252 3,467 0 3,467 569 6,289 17,731 67 17,798 Dec-13F 3,041 1,146 152 1,191 5,530 6,508 1,094 11,234 639 19,475 8 2,293 163 2,465 3,467 0 3,467 569 6,501 18,251 253 18,503 Dec-14F 3,674 1,334 190 1,191 6,389 6,676 1,101 11,234 639 19,650 6 2,510 163 2,679 3,467 0 3,467 569 6,716 18,888 435 19,323
158 182 182
580 386 386
866 866 866
1,062 1,062 1,062
Cash Flow
(RMm) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 1,006 386 Dec-12F 1,498 (74) Dec-13F 1,850 22 Dec-14F 2,181 (9)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (RM) BVPS (RM) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 15.2% 4.3% 19.4% (0.68) 1.79 1.09 66.5% 0% 35.21 17.48 776.7 7.59% 5.34% Dec-12F 53.0% 48.9% 18.9% (0.11) 2.20 4.79 24.6% 0% 34.37 15.96 271.9 8.09% 5.95% Dec-13F 2.3% 23.5% 22.8% (0.05) 2.27 7.76 17.6% 0% 47.62 20.87 317.1 7.30% 6.19% Dec-14F 18.5% 17.9% 22.7% 0.02 2.34 9.36 20.2% 0% 47.02 20.95 293.8 8.69% 7.19%
(585) (120) 687 (2,365) 37 61 (2,267) (5,549) 7,806 (5) (348) 1,903
(226) (236) 962 (1,047)
(171) (225) 1,476 (780)
(171) (316) 1,685 (749)
1,258 212 (4,233) 5,468 0 (130) (2,362) (1,257)
1,718 938 0 0 0 (346) (1,371) (1,717)
1,930 1,181 0 0 0 (425) (1,508) (1,932)
Key Drivers
No. Of Patient Admissions (m P.a.) Revenue Per Patient Bed (RM) Occupancy Rate Of Beds (%) Average Length Of Stay (days) Beds Opened (units) Bed Turnover A Year (x) % of fgn patients to patient load Dec-11A Dec-12F 51,037.0 62,399.5 7,500.1 7,596.0 64.4% 61.8% 3.3 3.2 N/A N/A N/A N/A N/A N/A Dec-13F 71,974.2 7,893.1 71.5% 3.2 N/A N/A N/A Dec-14F 76,231.5 8,175.8 67.1% 3.2 N/A N/A N/A
105
November 29, 2012
Indofood Agri Resources

IFAR SP / IFAR.SI Current S$1.23 S$1.51 S$1.55 22.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,442m
S$1,764m
US$2.87m
S$3.52m
31.1%
1,448 m shares

Cheap assets play

We continue to like Indofood Agri in view of its attractive valuations and exposure to the sugar business in Indonesia. We estimate the current share price implies an EV/ha of only US$8.914, below the market value of recent plantation estate transactions in Indonesia.
We cut our earnings estimates by 5%-7% for FY12-13 to reflect our CPO price downgrades and higher costs of production. However, we raise FY14 earnings by 5% to account for the weaker rupiah. In line with our earnings revisions, we reduce our target price, which is based on an unchanged 10% discount to SOP. Key re-rating catalysts include higher CPO and sugar prices as well as the potential for M&A activities. global economic prospects or if supply exceeds our forecasts.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Indofood Singapore Holdings 1M -1.7 -3.2 3M -13.4 -14.3 12M -17.6 -5.8 % held 69.0
Minimum wage impact

Indofood Agri will be negatively impacted if the recent proposal to hike the minimum wage by up to 44% in certain Indonesian provinces is implemented, as this may lead to higher labour costs for the group's estate operations. We gathered that labour costs make up around 45-50% of the group's estate costs. Imputing an estimated 13% increase in labour costs, we estimate this could increase its costs of production for CPO by 6% in 2013.
CPO price downgrades

We are paring our 2012-14 CPO price forecasts by 7-9% to US$960-1,000 per tonne to account for the recent upgrade of US soybean crops and fading El Nino prospects. However, we continue to cling onto the view that CPO prices will recover on the back of slower output growth and improving demand. We expect spot CPO prices to rise by 23% from its current US$780 per tonne to an average of US$960 for 2013. However, the timing of the price rally may be delayed from our previous projection of end-2012 to 1Q13 if demand stays soft due to uncertain
Attractive EV/ha
We continue to favour Indofood Agri due to its attractive asset valuations. Stripping out the value of its stake in London Sumatra and cash balances from the group's market capitalisation, we find the market is pricing an EV/ha of only US$8,914, which is below the recent transacted prices of c.US$10-15k for planted estates in Indonesia. This and share buy-back activities reaffirm its attractive asset valuations.
Price Close 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 15 1.0
Relative to FSSTI (RHS) 123 117 112 106 101 95 89 84 78
Financial Summary
Revenue (Rpb) Operating EBITDA (Rpb) Net Profit (Rpb) Core EPS (Rp) Core EPS Growth FD Core P/E (x) DPS (Rp) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 9,484 3,138 1,402 828.7 10.7% 11.70 0.000% 7.23 13.27 25.3% 1.27 11.7% Dec-11A 12,605 3,841 1,490 993.5 19.9% 9.76 0.003 0.000% 5.90 4.98 0.0% 1.10 12.1% Dec-12F 12,131 3,139 1,063 734.3 (26.1%) 13.20 0.000% 7.86 NA 5.3% 1.01 8.0% (6.95%) 0.86 Dec-13F 14,033 3,708 1,238 854.9 16.4% 11.34 0.000% 6.63 20.65 0.9% 0.93 8.5% (5.22%) 0.77 Dec-14F 16,207 4,230 1,419 980.5 14.7% 9.89 0.000% 5.65 10.52 (5.7%) 0.85 9.0% 4.87% 0.83
Vol m
10 5
Nov-11 Mar-12 Source: Bloomberg Jun-12 Sep-12

1.23 1.15 1.68
1.51
Current Target
Indofood Agri Resources

November 29, 2012
Profit & Loss

(Rpb) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 12,605 4,601 3,841 (488) 3,353 (224) 0 0 3,129 425 3,554 (913) 2,641 (1,151) 0 0 0 1,490 1,438 1,438 Dec-12F 12,131 4,428 3,139 (530) 2,609 (176) 0 0 2,433 0 2,433 (584) 1,849 (786) 0 0 0 1,063 1,063 1,063 Dec-13F 14,033 5,122 3,708 (590) 3,118 (261) 0 0 2,857 0 2,857 (686) 2,172 (934) 0 0 0 1,238 1,238 1,238 Dec-14F 16,207 5,915 4,230 (590) 3,640 (261) 0 0 3,380 0 3,380 (845) 2,535 (1,115) 0 0 0 1,419 1,419 1,419
Balance Sheet
(Rpb) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 6,535 1,141 1,678 84 9,437 7,245 0 3,156 13,368 23,770 3,334 0 1,380 78 4,792 3,201 Dec-12F 2,617 1,098 1,614 81 5,409 8,715 0 3,156 13,752 25,623 3,334 0 1,438 78 4,849 518 Dec-13F 3,649 1,270 1,868 93 6,879 9,625 0 3,156 14,135 26,916 3,334 0 1,662 78 5,074 533 Dec-14F 5,477 1,466 2,157 108 9,208 10,535 0 3,156 14,135 27,826 3,334 0 1,872 78 5,283 533
1,748 4,949 2,025 11,766 12,819 8,622 21,441
1,079 1,598 1,296 7,743 13,882 9,408 23,289
1,206 1,739 1,522 8,335 15,119 10,342 25,461
1,347 1,880 1,875 9,038 16,539 11,457 27,996
Cash Flow
(Rpb) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 3,841 Dec-12F 3,139 Dec-13F 3,708 Dec-14F 4,230
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (Rp) BVPS (Rp) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
Dec-11A 32.9% 22.4% 30.5% (0) 8,854 7.53 25.7% 0.405% 30.13 68.37 59.01 14.5% 12.9% Dec-12F (3.8%) (18.3%) 25.9% (854) 9,588 6.42 24.0% 0.000% 33.76 78.21 66.94 10.3% 9.7% Dec-13F 15.7% 18.1% 26.4% (151) 10,443 7.32 24.0% 0.000% 30.79 71.31 63.48 11.6% 11.1% Dec-14F 15.5% 14.1% 26.1% 1,112 11,424 8.55 25.0% 0.000% 30.81 71.37 62.67 12.8% 11.8%
(279)
167
(213)
(291)
337 (231) (899) 2,768 (1,770) 9 0 (212) (1,972) 2,020 0 (81) 0 0 0 1,939
0 (176) (584) 2,546 (2,383) 0 0 0 (2,383) (3,408) 0 0 0 0 (673) (4,081)
0 (261) (686) 2,548 (1,883) 0 0 0 (1,883) 15 0 0 0 0 352 367
0 (261) (845) 2,834 (1,500) 0 0 0 (1,500) 0 0 0 0 0 494 494
Key Drivers
Planted Estates (ha) Mature Estates (ha) FFB Yield (tonnes/ha) FFB Output Growth (%) CPO Price (US$/tonne)
Dec-11A 239,022 180,348 17.7 9.0% 1,125 Dec-12F 250,683 184,400 16.4 6.2% 990 Dec-13F 263,683 193,400 16.6 5.0% 960 Dec-14F 275,684 218,548 17.0 5.8% 1,000
107
Conglomerate SINGAPORE
November 28, 2012
Keppel Corporation
KEP SP / KPLM.SI Current S$10.63 S$13.20 S$13.20 24.2%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$15,639m
S$19,104m
US$34.80m
S$42.72m
60.0%
1,796 m shares

Preferred yard
Keppel Corp is diversifying amid stiff competition in the rigbuilding industry. We expect future orders to be dominated by new designs, including the conversion of FLNG, ice-class jack-ups and drillships.
Maintain Outperform and target price, still based on RNAV. Keppel is a laggard in Singapores Capital Goods segment with outperformance of 11% vs. a 24% average for its peers. Catalysts could be margin expansion from the backend-loading of profits from 19 jack-up rigs to be delivered in 2013. drillships through the application of slim-hole drilling technologies for the exploration and development of subsea wells and well interventions.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings 1M -2.7 -4.2 3M -4.4 -5.5 12M 5.4 19.3 % held 21.3
Preferred yard
Keppel is our preferred yard in Singapore because of: 1) its better strategy in this rig cycle, taking on calculated risks in bidding for jack-up rigs in 2010-11 and hence dominating about 45% of the market; 2) its scalable overseas yards, which may benefit from any nationalist sentiment for local content among oil companies; 3) lower execution slippage risks for Brazilian orders thanks to its 12 years of operation in the country; and 4) valuations, below its 10-year average of 12x vs. SMMs 16x.
Ahead of the curve

Keppels latest agreement with Golar LNG to embark on a FEED study and conversion of up to three LNG vessels into floating LNGs (FLNG) underscores its attempts to diversify its O&M product mix to stay competitive. Other products under development are a first-of-its-kind ice-worthy jack-up rig which Keppel is working on with ConocoPhillips. Given rig owners increasing preference for drillships over semi-subs, it is a matter of time before Keppel moves into drillships, in our view. Its slim drillship (collaboration between Keppel and Stena Drilling) could create a niche market as it offers distinct advantages against traditional
S$5.5bn orders for 2013

We forecast S$5.5bn of orders for 2013. Our target is already 25% achieved, incorporating a FPSO topside option from Petrobras (about US$950m) and production platform work from Shell Philippines (about US$150m).
12.1 11.6 11.1 10.6 10.1 9.6 9.1 8.6 15 10 5

Nov-11
Price Close
123 119 116 112 109 105 102 98
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 9,140 2,202 1,511 0.74 (0.1%) 14.29 0.38 3.62% 9.70 8.9 (1.9%) 2.93 21.1% Dec-11A 10,082 2,892 1,841 0.84 13.1% 12.60 0.43 4.06% 8.44 NA 16.6% 2.57 21.6% Dec-12F 13,400 2,751 1,982 1.11 32.3% 9.54 0.50 4.70% 9.07 442.2 14.5% 2.24 25.0% 0% 1.03 Dec-13F 14,801 2,344 1,636 0.92 (17.5%) 11.59 0.41 3.88% 10.74 28.6 11.7% 2.02 18.3% 0% 1.06 Dec-14F 15,469 2,350 1,642 0.92 0.3% 11.55 0.41 3.90% 10.76 43.2 8.8% 1.84 16.7% 0% 1.03
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

10.63 8.96 11.60
13.20
Current Target
Keppel Corporation
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 10,082 3,809 2,892 (209) 2,683 16 240 25 2,964 349 3,313 (641) 2,673 (832) 0 Dec-12F 13,400 5,063 2,751 (206) 2,545 9 294 26 2,873 0 2,873 (411) 2,462 (479) 0 Dec-13F 14,801 5,592 2,344 (217) 2,128 9 132 27 2,296 0 2,296 (382) 1,914 (277) 0 Dec-14F 15,469 5,845 2,350 (228) 2,122 9 139 28 2,299 0 2,299 (387) 1,912 (270) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 3,020 2,028 6,219 981 12,249 2,716 0 99 9,420 12,234 808 5,323 2,484 8,616 4,069 607 4,675 0 13,292 7,390 3,801 11,191 Dec-12F 2,331 2,680 8,040 1,200 14,251 3,385 0 99 9,814 13,297 600 6,700 3,478 10,778 3,569 508 4,077 0 14,856 8,481 4,212 12,693 Dec-13F 2,138 2,960 8,881 1,355 15,334 4,044 0 99 10,046 14,188 704 7,400 3,817 11,921 3,069 558 3,626 0 15,548 9,381 4,594 13,974 Dec-14F 1,879 3,094 9,281 1,393 15,647 4,692 0 99 10,285 15,075 652 7,734 3,970 12,356 2,569 533 3,102 0 15,458 10,284 4,980 15,264
1,841 1,491 1,491
1,982 1,982 1,982
1,636 1,636 1,636
1,642 1,642 1,642
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 2,892 (2,050) Dec-12F 2,751 (304) Dec-13F 2,344 (241) Dec-14F 2,350 (89)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 10.3% 31.3% 28.7% (1.04) 4.14 27.38 19.3% 51.4% 72.17 295.6 281.2 28.2% 19.0% Dec-12F 32.9% (4.9%) 20.5% (1.03) 4.75 20.77 14.3% 45.0% 64.29 313.0 263.9 18.6% 16.3% Dec-13F 10.5% (14.8%) 15.8% (0.92) 5.26 16.54 16.6% 45.0% 69.55 335.3 279.4 14.1% 13.1% Dec-14F 4.5% 0.2% 15.2% (0.75) 5.77 15.71 16.8% 45.0% 71.42 344.4 287.0 13.1% 12.5%
(742) 0 (343) (243) (876) 0 (558) 176 (1,258) 809 99 0 (882) 248 275
34 0 (641) 1,841 (876) 0 (100) (114) (1,090) (708) 0 0 (767) 34 (1,441)
36 0 (411) 1,729 (876) 0 (100) 306 (670) (396) 0 0 (892) 36 (1,252)
38 0 (382) 1,917 (876) 0 (100) 50 (926) (552) 0 0 (736) 38 (1,251)
Key Drivers
Rev. growth (%, main biz.) EBITDA mgns (%, main biz.) Rev. as % of total (main biz.) EBITDA as % of total (main biz.) Rev. growth (%, 2ndary biz.) EBITDA mgns (%, 2ndary biz.) Rev. as % of total (2ndary biz.) EBITDA as % of total (2ndary biz.) Rev. growth (%, tertiary biz.) EBITDA mgns (%, tertiary biz.) Rev.as % of total (tertiary biz.) EBITDA as % of total (tertiary biz.) Dec-11A -18.5% 27.0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Dec-12F 50.1% 17.5% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Dec-13F 23.5% 17.5% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Dec-14F -0.4% 18.0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
109

November 27, 2012
Keppel Land
KPLD SP / KLAN.SI Current S$3.47 S$4.00 S$4.00 15.3%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$4,383m
S$5,359m
US$5.04m
S$6.16m
52.7%
1,449 m shares

Worth a relook
We turn more constructive on KepLand on two fronts: 1) potential turnaround in Chinas home sales, and 2) possible recycling of MBFC 2 in 2013, forming the short-term stock catalyst. Its ability to redeploy capital into accretive assets will dictate its longer-term share price.
No change to estimates and RNAV target price (20% discount to RNAV). Maintain Outperform. The stock trades at 30% discount to our RNAV.
1M 2.7 1.2 3M 2.3 1.2 12M 30.1 44 % held 52.7
Share price info

Share price perf. (%) Relative Absolute Major shareholders Keppel Corp
China stabilisation could open up launch window

China residential accounts for 28% of KepLands RNAV, we estimate. While 3Q12 EBITDA fell 47% qoq on declining margins, more projects in China are due for completion/ delivery in 4Q12. This should help prop up earnings. We hold a sanguine view on the China residential market in 2013 as declining inventories and stable physical prices should keep further policy curbs in check. KepLand has pushed back certain launches awaiting better market conditions. We believe launch windows will be opened up for the group next year. Demand in the mass mid-tier segments has been most resilient; this is a segment KepLand is largely exposed in (e.g. townships).
Development of the MBFC Tower 3 is complete and 76% committed as at 3Q12. We believe it has moved up to over 80% since. We note that this is the occupancy level which OFC was injected into Keppel REIT previously. With Keppel REIT yields compressed and interest rates expected to remain very low, we believe the macro environment in FY13 will be conducive to an asset injection. We estimate divestment gains from this move to be around 7-8% of KepLands RNAV or 40-50Scts per share. The past two asset injections into the REIT were followed by special dividend payouts.
Deployment to dictate longer term share price

KepLands asset mix (directly owned) is now skewed in favour of residential developments in China than commercial properties in Singapore. While we believe KepLand is worth a relook on a near-term perspective, we believe where excess capital is deployed will dictate its longer-term share price.
The MBFC trade
Price Close 3.5 3.0 2.5 Vol m 2.0 20 15 10 5

136 130 125 119 114 108 103 97 92 86
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 685 274.7 1,046 0.21 34.5% 16.26 0.18 5.19% 22.60 15.71 20.2% 1.20 8.22% Dec-11A 889 246.9 290 0.18 (15.9%) 19.33 0.08 2.33% 21.91 14.24 1.6% 1.15 6.07% Dec-12F 944 221.5 479 0.31 75.0% 11.05 0.10 2.95% 30.88 NA 23.5% 0.90 9.11% 0% 1.20 Dec-13F 1,364 345.7 406 0.27 (13.2%) 12.72 0.09 2.59% 18.52 13.80 14.2% 0.86 6.89% 0% 1.05 Dec-14F 1,870 435.2 427 0.29 5.1% 12.10 0.09 2.73% 13.11 9.65 2.9% 0.82 6.91% 0% 0.94
Aug-12

2.22
3.47 3.60
Current
Target
4.00
Keppel Land
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 889 276 247 (8) 239 (13) 125 0 351 30 381 (56) 325 (35) 0 Dec-12F 944 293 221 (9) 213 (6) 346 0 553 17 570 (80) 490 (11) 0 Dec-13F 1,364 424 346 (9) 336 24 123 0 483 0 483 (70) 413 (7) 0 Dec-14F 1,870 581 435 (10) 425 27 58 0 510 0 510 (74) 436 (9) 0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 1,330 292 4 2,896 4,523 216 1,044 0 1,373 2,633 177 853 220 1,250 1,227 0 1,227 0 2,477 4,373 306 4 679 Dec-12F 1,003 517 4 3,797 5,321 217 2,557 0 1,433 4,206 193 905 116 1,214 2,237 0 2,237 0 3,452 5,762 313 6 075 Dec-13F 1,321 654 5 3,371 5,352 230 2,659 0 1,433 4,322 177 934 150 1,261 2,050 0 2,050 0 3,311 6,035 328 6 363 Dec-14F 1,805 615 7 2,868 5,296 243 2,640 0 1,433 4,316 159 768 179 1,106 1,841 0 1,841 0 2,947 6,321 343 6 664
290 260 260
479 462 462
406 406 406
427 427 427
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 247 Dec-12F 221 Dec-13F 346 Dec-14F 435
Key Ratios
Dec-11A 29.8% (10.1%) 27.8% (0.05) 3.02 4.74 14.7% 45.0% 180.4 2.23 520.1 6.6% 4.21% Dec-12F 6.2% (10.3%) 23.5% (0.96) 3.87 4.19 14.1% 33.0% 156.9 2.23 494.4 4.9% 3.53% Dec-13F 44.5% 56.1% 25.3% (0.61) 4.05 9.23 14.5% 33.0% 156.7 1.76 357.1 5.8% 4.64% Dec-14F 37.0% 25.9% 23.3% (0.13) 4.24 12.74 14.5% 33.0% 123.8 1.80 241.1 7.9% 5.63%
(481)
(545)
350
404
(134) (80) (50) (66) (564) (9) 2,040 0 0 2,030 (1,113) 0 0 (117) (513) (1,743)
(348) 436 (51) (102) (389) (13) (267) 0 0 (280) (107) 0 0 (152) (11) (271)
(138) 194 (36) (84) 632 (13) (41) 0 0 (54) (203) 0 0 (134) 78 (259)
(75) 128 (33) (89) 770 (13) 6 0 0 (7) (228) 0 0 (141) 89 (279)
RNAV SIN Office SIN Residential China Vietnam Others Asset management platform GAV Less: Net debt + Viet and office capex RNAV Shares (m) RNAV per share (S$) Target price (S$) Disc -20%
RNAV (S$m) 2,862 1,375 2,595 739 1,038 739 9,347 (1,906) 7,441 1,490 4.99 4.00
% of GAV 31% 15% 28% 8% 11% 8% 100%
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)
Dec-11A N/A N/A N/A N/A N/A N/A N/A N/A 74.9% 16.6% N/A Dec-12F N/A N/A N/A N/A N/A N/A N/A N/A 77.0% 13.8% N/A Dec-13F N/A N/A N/A N/A N/A N/A N/A N/A 83.9% 9.4% N/A Dec-14F N/A N/A N/A N/A N/A N/A N/A N/A 88.0% 6.8% N/A
111
REIT SINGAPORE
November 28, 2012
Keppel REIT
KREIT SP / KASA.SI Current S$1.22 S$1.26 S$1.26 3.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,624m
S$3,210m
US$1.01m
S$1.24m
23.1%
2,548 m shares

Holding up well
K-REITs portfolio has held up amid headwinds in the office sector. Yields are compelling but we see this as compensation for the high asset leverage and limited accretion expected from the acquisition of MBFC Phase 2 due to the likely need for a cash call.
We maintain our DPUs, DDM-based target price (discount rate: 7.7%) and Neutral stance. We would turn more positive on more clarity of an accretive acquisition of MBFC Phase 2. should be mitigated by increasing Australian contributions.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Keppel Land Keppel Corp Ltd Capital Group 1M 1.5 0 3M 8.9 8 12M 29.2 41 % held 46.2 29.3 1.4
High asset leverage

K-REITs aggregate leverage of 44% is the highest in the sector, even without factoring in its recent Australia purchase. While this is expected to be less of a concern as capital values remain buoyed by low interest rates, higher asset leverage could still warrant equity fundraising for the remaining tranches of its Aussie purchase and a potential acquisition of MBFC Phase 2. But we understand that KREIT has yet to indicate its interest in MBFC while mitigation could come from potential divestments of its older local or Australian assets at good prices to part-fund the purchase.
Holding up well
Unlike consensus, we remain positive on an earlier bottoming of the office sector, particularly with the pace of vacancy increase and rental declines moderating in 3Q12. We expect the drivers to be take-ups by non-financials and support from good backfilling, sub-peak rents and the removal of older stock to alleviate supply pressure. K-REITs portfolio has held up well despite office headwinds in FY12 due to incremental take-ups each quarter and fairly stable signing rents (with no additional rent-frees). With high occupancy of 98.2%, limited lease expiries of 7% by NLA for FY13 and underpinned by the long WALE of 7.5 years, we continue to expect a stable performance for FY13. Lower GST rebate from ORQ in FY13
Maintain Neutral
Forward yields are compelling but we see this as compensation for its higher asset leverage. This should warrant equity-raising for further purchases, which could, in turn, limit accretion. We remain Neutral.
1.30 1.20 1.10 1.00 0.90 0.80 0.70 10 8 6 4 2

Nov-11
Price Close
137 129 120 112 104 95 87
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-10A 84.6 67.3 109.2 85.6 0.040 59.2% 30.73 0.064 5.21% 31.8% 1.52 0.80 2.63% Dec-11A 78.0 61.7 290.1 113.0 0.047 18.6% 35.60 0.071 5.80% 37.0% 1.28 0.95 2.52% Dec-12F 169.3 130.4 120.5 201.1 0.047 (1.1%) 26.19 0.078 6.38% 40.7% 1.27 0.96 3.65% 0% 0.86 Dec-13F 183.1 140.9 140.3 201.5 0.053 14.4% 22.89 0.077 6.27% 42.5% 1.26 0.97 4.20% 0% 0.94 Dec-14F 189.4 145.7 156.0 206.7 0.058 9.0% 21.00 0.077 6.31% 41.9% 1.25 0.97 4.62% 0% 1.00
Vol m
Mar-12
Jun-12
Sep-12
Source: Bloomberg

0.81
1.22 1.25
Current
Target
1.26
Keppel REIT
November 28, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 78.0 0.0 78.0 (16.3) 61.7 0.0 (23.7) (4.5) 0.0 33.4 (36.0) (2.6) (5.9) 37.4 45.6 227.9 302.5 (6.3) (6.1) 0.0 290.1 113.0 Dec-12F 169.3 0.0 169.3 (38.9) 130.4 0.0 (41.2) (4.5) 0.0 84.7 (57.9) 26.8 (15.8) 45.2 82.7 0.0 138.9 (14.4) (4.0) 0.0 120.5 201.1 Dec-13F 183.1 0.0 183.1 (42.2) 140.9 0.0 (41.4) (4.7) 0.0 94.8 (37.8) 57.0 (10.7) 54.1 53.9 0.0 154.3 (14.0) 0.0 0.0 140.3 201.5 Dec-14F 189.4 0.0 189.4 (43.7) 145.7 0.0 (41.0) (4.8) 0.0 100.0 (28.0) 72.0 (2.6) 59.9 40.0 0.0 169.3 (13.4) 0.0 0.0 156.0 206.7
Balance Sheet
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 302 5 (49) (4) (215) 39 (1) (1,727) 107 (1,622) 765 986 (96) (34) 1,620 37 (1,583) (845) Dec-12F 139 28 (44) (14) 25 134 0 (314) 155 (159) 244 70 (201) (70) 43 19 (25) 171 Dec-13F 154 (6) 8 (14) 36 179 0 (190) 136 (55) 190 0 (201) (67) (78) 46 124 260 Dec-14F 169 (29) 4 (13) 44 174 0 (84) 128 44 0 84 (207) (64) (186) 32 218 163
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets
Dec-11A (8%) (8%) 79.1% 11.3% (0.09) 2.1% 39% 0.18 0.18 0.13 52% 6.47% Dec-12F 117% 111% 77.0% 9.9% 0.56 10.4% 167% 0.23 0.23 0.17 67% 2.05% Dec-13F 8% 8% 76.9% (1.6%) 1.04 9.1% 144% 0.30 0.30 0.24 249% 2.33% Dec-14F 3% 3% 76.9% 0.5% 1.32 7.9% 133% 0.35 0.35 0.29 (266%) 2.53%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$)
Dec-11A 7.8 N/A N/A 2,861 95.2% N/A N/A Dec-12F 8.0 N/A N/A 2,861 98.1% N/A N/A Dec-13F 8.3 N/A N/A 3,027 99.0% N/A N/A Dec-14F 8.6 N/A N/A 3,027 99.3% N/A N/A
113
Logistics SINGAPORE
November 28, 2012
Keppel T&T
KPTT SP / KTEL.SI Current S$1.30 S$1.29 S$1.29 -0.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$586.3m
S$716.3m
US$0.37m
S$0.46m
13.6%
552.6 m shares

Long gestation period

While developments in KPTTs core logistics and data centre operations could raise its longer-term growth trajectory, current valuations are rich. Given the long gestation period of upcoming developments, we expect only longer-term earnings upside.
Maintain Underperform. Our estimates and SOP-based target price remain unchanged.
1M 0.3 -1.2 3M 16.7 15.6 12M -1.3 12.6 % held 80.1 5.3
Kenneth Ng, CFA

Share price info

Share price perf. (%) Relative Absolute Major shareholders Keppel Corp Kapital Asia
Data centres were the focus of 2012

Having completed its data centre acquisitions at end-2011, KPTT was able to ride on full contributions from profitable data centres in 2012. Operating earnings from logistics and data centres have been strong for the first nine months of 2012, consistently generating north of S$5m every quarter, compared to its previous average of S$2m-3m. Management also delivered on its promise of divesting non-core operations and ploughing capital into its core logistics and data centre businesses.
major projects in China. It is expecting the completion of its Tianjin Ecocity distribution centre sometime in 2H13 or early-2014. It also commenced work on its Jilin Logistics Park development in Oct 2012. The first phase of the development, spanning 40 hectares, is expected to be operational by 2014. In addition, KPTT is collaborating with state-owned logistics behemoth SinoTrans to develop a river port along the Yangtze.
Long gestation period, rich valuations

We remain positive on KPTTs longer-term growth potential. We appreciate managements efforts to re-engineer KPTTs strategic direction, having failed to achieve its previous ambition of becoming a major telco player. However, we deem its current valuation of 10.5x CY14 EPS as rich vs. its historical 10.2x. Therefore, we stay Underperform.
Entering capex-intensive phase

From 2013 onwards, KPTT will be commencing development of several
1.50 1.40 1.30 1.20 1.10 1.00 0.90 3 2 2 1 1

Nov-11
Price Close
117 110 104 97 90 84 77
Financial Summary
|
Feb-12
May-12
Aug-12
Source: Bloomberg

1.02
1.30 1.43
Current
|
Target
1.29
Dec-10A 107.8 19.69 57.60 0.10 30.9% 12.56 0.035 2.70% 27.11 81.53 32.7% 2.09 17.9%
Dec-11A 118.1 34.04 79.43 0.15 40.9% 8.92 0.033 2.56% 18.34 17.62 56.4% 1.81 21.8%
Dec-12F 136.6 41.37 56.87 0.10 (29.2%) 12.60 0.033 2.54% 15.83 26.25 64.5% 1.65 13.7% 0% 0.98
Dec-13F 147.4 58.03 63.68 0.12 12.0% 11.25 0.037 2.85% 11.07 21.24 62.6% 1.50 14.0% (0%) 0.92
Dec-14F 184.6 66.74 68.02 0.12 6.8% 10.53 0.039 3.04% 10.61 12.32 69.2% 1.37 13.6% 0% 1.03
Vol m
Keppel T&T
November 28, 2012
Profit & Loss

|
Balance Sheet
Dec-11A 118.1 93.9 34.0 (13.4) 20.6 (2.7) 59.3 0.0 77.2 22.8 100.0 (12.3) 87.7 (8.3) 0.0 Dec-12F 136.6 111.2 41.4 (16.9) 24.5 (4.6) 53.6 0.0 73.4 0.0 73.4 (10.6) 62.8 (6.0) 0.0 Dec-13F 147.4 120.7 58.0 (24.6) 33.5 (6.5) 54.7 0.0 81.7 0.0 81.7 (11.3) 70.4 (6.7) 0.0 Dec-14F 184.6 156.6 66.7 (25.6) 41.1 (7.2) 55.2 0.0 89.1 0.0 89.1 (13.9) 75.2 (7.1) 0.0 (S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Dec-11A 65.6 35.8 0.5 3.4 105.3 311.3 355.2 0.0 0.0 666.5 47.1
Dec-12F 68.7 37.4 1.9 3.4 111.4 379.4 393.4 0.0 0.0 772.8 57.2
Dec-13F 75.3 40.4 2.0 3.4 121.1 409.3 434.9 0.0 0.0 844.2 61.6
Dec-14F 104.6 50.6 2.1 3.4 160.6 512.8 447.8 0.0 0.0 960.5 76.9
40.5 1.2 88.9 255.7 0.0 255.7 6.9 351.4 395.1 25.3 420.4
42.3 1.2 100.7 311.6 0.0 311.6 6.9 419.2 433.7 31.3 465.1
44.4 1.2 107.2 336.2 0.0 336.2 6.9 450.2 477.0 38.0 515.0
46.6 1.2 124.7 421.1 0.0 421.1 6.9 552.7 523.3 45.1 568.4
79.4 80.3 80.3
56.9 56.9 56.9
63.7 63.7 63.7
68.0 68.0 68.0
Cash Flow
|
Key Ratios
Dec-11A 34.0 Dec-12F 41.4 Dec-13F 58.0 Dec-14F 66.7
(3.6) (2.2) 4.8 (2.8) (2.7) 27.5 (82.3) 1.7 33.4 4.6 (42.6) 55.7 0.2 0.0 (21.9) 3.0 37.0
(1.2) 1.4 0.0 (4.6) (10.6) 26.4 (68.1) 0.0 0.0 3.0 (65.1) 66.0 0.0 0.0 (24.2) 0.0 41.8
(0.9) 2.1 0.0 (6.5) (11.3) 41.4 (29.9) 0.0 0.0 (6.8) (36.7) 29.0 0.0 0.0 (27.1) 0.0 1.9
(8.1) 3.2 0.0 (7.2) (13.9) 40.8 (103.5) 0.0 0.0 20.6 (82.9) 100.3 0.0 0.0 (28.9) 0.0 71.4
|
Dec-11A 9.6% 72.9% 28.8% (0.43) 0.71 6.05 12.3% 32.4% 93.98 20.78 608.3 11.8% 3.33%
Dec-12F 15.6% 21.5% 30.3% (0.54) 0.78 4.48 14.4% 32.0% 98.14 16.85 596.9 6.6% 3.22%
Dec-13F 7.9% 40.3% 39.4% (0.58) 0.86 4.54 13.9% 32.0% 96.35 26.36 593.5 7.3% 3.90%
Dec-14F 25.3% 15.0% 36.2% (0.71) 0.95 4.95 15.6% 32.0% 89.91 26.36 593.5 8.3% 4.24%
Key Drivers
(S$) Volumes Moved (% Change) Rates Charged (% Change) Acquisitions (m)
|
Dec-11A 0.0% -4.5% N/A
Dec-12F 0.0% -10.0% N/A
Dec-13F 0.0% -2.0% N/A
Dec-14F 0.0% 10.0% N/A
115
Telco - Mobile SINGAPORE

November 28, 2012
M1 Limited
M1 SP / MONE.SI Current S$2.70 S$2.96 S$2.96 9.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,018m
S$2,465m
US$2.17m
S$2.67m
39.2%
905.8 m shares
CIMB Analyst Kelvin Goh, CFA

T (60) 3 20849699 E kelvin.goh@cimb.com
4G takes the front seat

M1 is relying on 4G to claw back market share as it faces strong competition, mainly from SingTel. Its fixed line business has yet to take off due to installation delays on OpenNet's end. However, we think there is the possibility of capital management at end-13.
But this depends on M1's FY13 capex and the outcome of the spectrum auction, which we anticipate will be held in 1H13. M1 lacks re-rating catalysts, although downside should be cushioned by its dividend yields of 4-5% backed by free cashflow yields of 5-8%. Maintain Neutral and our DCF-based (WACC: 8%) target price. that the company will repackage its fibre plans, possibly bundling together free wireless broadband, to attract more customers. According to publicly available stats, M1 had an estimated 19% market share in fibre in 9M12, which is behind StarHub's 23% and well below SingTel's 58%. We continue to hold the view that M1 has the most to gain from the fixed line business given its near-zero base of fixed lines
Share price info

Share price perf. (%) Relative Absolute Major shareholders Sunshare (Axiata) Keppel T&T Singapore Press Holdings 1M 4.2 2.7 3M 6.6 5.5 12M -1.4 12.5 % held 29.7 19.0 13.9
4G takes the front seat

M1's new 4G plans should help bolster its ARPUs as more customers re-contract and switch to higher-tiered plans. Initial take-up for its 4G services has been overwhelming and it now has over 43k subscribers, of which 25-30% are new. It continues to lead in LTE coverage in Singapore and expects to have full coverage by 1H13. In spite of this, it is still losing market share to SingTel. We attribute this to SingTel's aggressiveness in bundling discounts for pay TV and broadband, which we believe is more attractive than M1's.
Capital management cards in the deck in end-13

We believe M1 could perform a capital management exercise in end-13 as its 3Q12 net debt to EBITDA has trended down to 0.88x, its lowest since 2Q09. However, this depends on its capex plans and the outcome of the auction for refarmed spectrum, which we anticipate will be held in 1H13. Although M1 has not announced its capex plans for FY13, we think that it will remain elevated at over S$100m. We project FCF/share of 13 Scts, above estimated net DPS of 12.1 Scts for FY13.
Knocking on fibre's door

The delays caused by OpenNet have capped M1's potential to diversify its single-product base. We understand
2.90 2.80 2.70 2.60 2.50 2.40 Vol m 2.30 6 4 2

Nov-11
106 103 99 96 93 89 86
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Operating EBITDA Margin Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)
|
Feb-12
May-12
Aug-12
Source: Bloomberg

2.40
2.70 2.80
Current
|
Target
2.96
Dec-10A 979 310.9 31.8% 157.1 0.17 7.56% 15.42 0.18 6.48% 8.78 21.26 101% 56.2%
Dec-11A 1,065 308.6 29.0% 164.1 0.18 3.56% 14.85 0.14 5.32% 8.84 16.39 90% 52.5%
Dec-12F 1,089 298.9 27.5% 152.8 0.17 (7.44%) 16.05 0.13 4.97% 9.00 13.13 68% 45.5% 0% 1.00
Dec-13F 1,132 318.4 28.1% 166.6 0.18 9.06% 14.76 0.15 5.42% 8.51 20.50 64% 45.2% 0% 0.99
Dec-14F 1,153 331.8 28.8% 171.9 0.19 3.16% 14.31 0.15 5.59% 8.00 12.61 45% 42.3% 0% 0.97
M1 Limited
November 28, 2012
Profit & Loss

|
Balance Sheet
Dec-11A 1,065 611 309 (107) 202 (4) 0 0 197 0 197 (33) 0 164 0 0 Dec-12F 1,089 615 299 (110) 189 (5) 0 0 184 0 184 (31) 0 153 0 0 Dec-13F 1,132 644 318 (113) 205 (5) 0 0 201 0 201 (34) 0 167 0 0 Dec-14F 1,153 660 332 (120) 212 (5) 0 0 207 0 207 (35) 0 172 0 0 (S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Dec-11A 11.8 187.7 36.3 24.9 260.7 606.8 0.0 110.5 0.6 717.9 53.3
Dec-12F 67.0 164.0 26.8 24.9 282.8 619.1 0.0 110.5 0.6 730.2 53.3
Dec-13F 55.5 170.6 21.7 24.9 272.6 625.9 0.0 160.5 0.6 787.0 53.3
Dec-14F 110.9 158.0 15.8 24.9 309.6 628.1 0.0 160.5 0.6 789.2 53.3
229.8 27.6 310.7 250.0 95.3 345.3 0.0 656.0 322.6 0.0 322.6
238.0 27.6 318.9 250.0 95.3 345.3 0.0 664.2 348.8 0.0 348.8
245.1 27.6 326.0 250.0 95.3 345.3 0.0 671.3 388.2 0.0 388.2
247.5 27.6 328.4 250.0 95.3 345.3 0.0 673.7 424.9 0.0 424.9
164 164 164
153 153 153
167 167 167
172 172 172
Cash Flow
|
Key Ratios
Dec-11A 308.6 Dec-12F 298.9 Dec-13F 318.4 Dec-14F 331.8
1.0 4.2 10.8 (4.2) (34.9) 285.5 (102.5) 0.0 (21.7) 0.1 (124.1) (12.7) 0.0 0.0 (161.3) 15.7 (158.3)
41.3 5.0 0.0 (5.0) (31.3) 308.9 (122.1) 0.0 0.0 0.0 (122.1) 0.0 0.0 0.0 (126.6) (5.0) (131.6)
5.8 4.5 0.0 (4.5) (34.1) 290.1 (120.0) 0.0 (50.0) 0.0 (170.0) 0.0 0.0 0.0 (127.2) (4.5) (131.7)
20.9 4.5 0.0 (4.5) (35.2) 317.5 (122.3) 0.0 0.0 0.0 (122.3) 0.0 0.0 0.0 (135.2) (4.5) (139.7)
|
Dec-11A 8.8% (0.74%) 29.0% (0.32) 0.36 33.60 16.9% 65.1% 62.71 24.01 169.4 23.9% 32.7%
Dec-12F 2.2% (3.15%) 27.5% (0.26) 0.38 31.52 17.0% 65.6% 59.13 24.39 180.7 21.9% 29.8%
Dec-13F 4.0% 6.54% 28.1% (0.27) 0.43 37.32 17.0% 65.6% 53.95 18.15 180.7 24.7% 30.7%
Dec-14F 1.9% 4.20% 28.8% (0.21) 0.47 38.48 17.0% 65.6% 51.99 13.89 182.4 23.7% 30.0%
Key Drivers
Group Mobile Subscribers (m) Group Fixed Voice Subscribers (m) Grp fixed brdband subscribers (m) Group Pay TV Subs (m) Group Mobile ARPU (US$/mth) Grp fixed voice ARPU (US$/mth) Grp fixed brdband ARPU (US$/mth) Group Pay TV ARPU (US$/mth)
|
Dec-11A 2.02 N/A 0.06 N/A 27.8 N/A 66 N/A
Dec-12F 2.10 N/A 0.11 N/A 27.6 N/A 64 N/A
Dec-13F 2.15 N/A 0.16 N/A 29.1 N/A 62 N/A
Dec-14F 2.20 N/A 0.21 N/A 29.0 N/A 59 N/A
117
REIT SINGAPORE
November 27, 2012
Mapletree Commercial Trust

MCT SP / MACT.SI Current S$1.21 S$1.39 S$1.39 14.9%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,852m
S$2,264m
US$2.20m
S$2.69m
80.7%
1,863 m shares

Growth engine intact

Having negotiated >90% of the leases expiring at VivoCity in FY13 and booked strong committed rental reversions, a solid 2H13 appears to be in the bag. Stronger-than-peer operating stats continue to bode well while accretive acquisitions could be the icing on the cake.
Our DPU estimates and DDM-based target price (discount rate: 6.9%) are unchanged. We reiterate our Outperform recommendation, with rerating catalysts being stronger-than-expected positive rental reversions at VivoCity and accretive acquisitions.
Donald Chua
Progress at PSAB office and ARC

PSAB office and ARC also made progress with stronger occupancy and commitments. Committed occupancies are at 99.8% for PSAB office and 75.9% for ARC. In particular, PSAB office saw strong rental reversions (albeit on a low base) on signing rents of about S$7+ psf.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings AIA Group Ltd Citigroup 1M -2.9 -4.4 3M 11.1 10 12M 29.3 43.2 % held 46.0 7.6 6.2
Strong 2HFY13 in the bag for VivoCity

We expect a greater DPU uplift in 2H13 when committed rental reversions at VivoCity flow through. Management has negotiated >90% of leases expiring in FY13, booking a strong 33.4% uplift in fixed rents and having just 2% of leases remaining for 2HFY13. Operating stats were healthy, with yoy growth in shopper traffic (+8.4%) and tenant sales (+5.6%) a tad stronger than that for 1Q13 and its peers. Occupancy cost before rental reversions kicked in were healthy at 17% on rents of about S$11+ psf but could edge closer to 19-20% on a stabilised basis.
Acquisitions for FY13?

Pre-commitments from Mapletree Business City (MBC) have risen above 90% though physical occupancy remains <90% as some tenants have yet to move in. With overall cost of capital dropping as equity yields compress and borrowing costs remain low, we estimate that a 40:60 debt-equity funded acquisition of MBC can be accretive and yet keep asset leverage below 40%. However, an accretive acquisition of Mapletree Anson could remain difficult without income support in our view.
1.30 1.20 1.10 1.00 0.90 0.80 Vol m 0.70 30 20 10

Nov-11
Price Close
143 133 123 113 103 93 83
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Mar-11A 166.5 114.4 219.2 75.8 0.041 (3.1%) 29.68 0.041 3.37% 39.6% 0.89 1.35 4.68% Mar-12A 177.3 124.0 208.0 98.2 0.048 18.8% 24.99 0.053 4.36% 37.5% 0.96 1.27 5.24% Mar-13F 215.6 150.7 111.8 118.5 0.060 23.6% 20.22 0.063 5.23% 37.5% 0.95 1.27 6.28% 0% 1.01 Mar-14F 224.8 157.1 115.7 122.5 0.062 3.1% 19.61 0.065 5.39% 37.5% 0.95 1.28 6.50% 0% 1.03 Mar-15F 230.8 161.2 119.7 126.6 0.064 3.2% 19.00 0.067 5.57% 37.5% 0.95 1.28 6.72% 0% 1.06
Feb-12
May-12
Aug-12
Source: Bloomberg

0.83
1.21 1.27
Current
Target
1.39
Mapletree Commercial Trust

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Mar-12A 177.3 0.0 177.3 (53.3) 124.0 0.0 (11.8) (0.4) (1.1) 110.7 0.0 110.7 (20.6) 0.0 0.0 117.9 208.0 0.0 0.0 0.0 208.0 98.2 Mar-13F 215.6 0.0 215.6 (64.9) 150.7 0.0 (13.4) (0.6) (1.9) 134.7 0.0 134.7 (23.0) 0.0 0.0 0.0 111.8 0.0 0.0 0.0 111.8 118.5 Mar-14F 224.8 0.0 224.8 (67.7) 157.1 0.0 (13.7) (0.6) (1.9) 140.9 0.0 140.9 (25.2) 0.0 0.0 0.0 115.7 0.0 0.0 0.0 115.7 122.5 Mar-15F 230.8 0.0 230.8 (69.6) 161.2 0.0 (13.8) (0.6) (1.9) 144.9 0.0 144.9 (25.2) 0.0 0.0 0.0 119.7 0.0 0.0 0.0 119.7 126.6
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Mar-12A 2,945 0 0 2,945 50 0 5 0 55 59 0 5 64 1,126 19 1,144 1,780 0 1,780 Mar-13F 2,952 0 0 2,953 42 0 5 0 48 59 0 5 64 1,126 19 1,144 1,780 0 1,780 Mar-14F 2,952 0 0 2,953 42 0 5 0 48 59 0 5 64 1,126 19 1,144 1,780 0 1,780 Mar-15F 2,952 0 0 2,953 42 0 5 0 48 59 0 5 64 1,126 19 1,144 1,780 0 1,780
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Mar-12A 208 21 16 (13) (112) 120 (50) (779) 0 (828) (713) 1,506 (69) (18) 706 (2) (708) (1,439) Mar-13F 112 23 0 0 7 141 (8) 0 (0) (8) 0 0 (118) (23) (141) (8) 134 110 Mar-14F 116 25 0 0 7 148 0 0 (0) (0) 0 0 (123) (25) (148) (0) 148 122 Mar-15F 120 25 0 0 7 152 0 0 (0) (0) 0 0 (127) (25) (152) (0) 152 126
Key Ratios
Mar-12A 6.5% 8.4% 69.9% 29.3% 5.35 0% 47% 0.86 0.86 0.77 (224%) 7.11% Mar-13F 21.6% 21.5% 69.9% 20.1% 5.84 0% 106% 0.74 0.74 0.65 (228%) 3.73% Mar-14F 4.3% 4.3% 69.9% 3.0% 5.56 0% 106% 0.74 0.74 0.65 (240%) 3.86% Mar-15F 2.7% 2.6% 69.9% 3.3% 5.72 0% 106% 0.74 0.74 0.65 (247%) 3.99%
Key Drivers
Mar-12A 7.6 N/A N/A 1,770,643 97.8% N/A N/A Mar-13F 8.1 N/A N/A 1,770,643 98.7% N/A N/A Mar-14F 8.3 N/A N/A 1,770,643 100.0% N/A N/A Mar-15F 8.5 N/A N/A 1,770,643 100.0% N/A N/A
119
REIT SINGAPORE
November 27, 2012
Mapletree Industrial Trust

MINT SP / MAPI.SI Current S$1.38 S$1.50 S$1.50 8.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,840m
S$2,249m
US$2.45m
S$3.03m
69.7%
1,629 m shares

Lacking compelling catalysts

Rental reversions continue to improve as passing rents catch up with the market, though weaker economic conditions going forward may hinder rental hikes. Management remains on the lookout for acquisitions and AEI but there are no concrete targets for the former.
No change to DPU estimates and DDM-based target price (discount rate: 7.3%). Maintain Neutral on a lack of compelling catalysts. We could turn more positive on lower valuations and stronger-than-expected rental reversions. new leases (17% of take-up) were signed at a higher S$1.87psf.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings Capital Research Capital Group 1M -2 -3.5 3M 3.7 2.6 12M 16.3 30.2 % held 30.3 5.8 5.6
Seeking BTS/ AEI

Management continues to evaluate AEI potential in its portfolio. Pre-commitments for existing projects are pretty much unchanged from 1Q, though more take-up could flow through nearer to completion.
Passing rents catching up with the market

We expect MINTs portfolio to remain resilient as positive rental reversions offset potential weakness for its business-park assets with the departure of some major tenants from Signature. Rental reversions for its flatted factories continue to improve as passing rents catch up with the market. Going forward, there could be increased resistance from its tenants amid demand headwinds and cost pressures. In 2QFY13, renewal rents of S$1.58psf for its flatted factories were only a tad above passing rents of S$1.52psf, though
Maintain Neutral
The key draw of MINTs portfolio is its bond-like income stream given its pure local exposure and positive rental reversions. Investors have, however, priced in its growth potential, in our view at current valuations of 1.4x P/BV. Owing to a lack of asset-divestment plans by JTC, expensive assets and fairly-high asset leverage, we are not expecting major purchases. Though this might limit risks of poor purchases, longer-term growth could also be hindered. We see a lack of compelling catalysts.
1.50 1.40 1.30 1.20 1.10 Vol m 1.00 15 10 5

Nov-11
Price Close
128 124 120 116 112 108 104 100 96 92 88
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x)
|
Feb-12
May-12
Aug-12
Source: Bloomberg

1.06
1.38 1.44
Current
Target
1.50
Mar-11A 204.6 141.3 205.7 50.6 0.071 19.6% 19.46 0.035 2.51% 36.1% 0.95 1.46 7.85%
Mar-12A 246.4 171.3 220.4 131.7 0.082 15.3% 16.88 0.084 6.09% 37.7% 1.02 1.36 8.32%
Mar-13F 269.0 189.4 140.1 145.5 0.086 5.2% 16.04 0.089 6.47% 39.1% 1.02 1.36 8.47% 0% 0.98
Mar-14F 275.3 194.4 143.0 148.4 0.088 2.1% 15.72 0.091 6.60% 39.7% 1.02 1.36 8.64% 0% 0.99
Mar-15F 285.3 201.4 148.2 153.6 0.091 3.6% 15.17 0.094 6.83% 39.7% 1.02 1.36 8.96% 0% 1.02
Mapletree Industrial Trust

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit
|
Balance Sheet
Mar-12A 246.4 0.0 246.4 (75.1) 171.3 0.0 (19.0) (0.4) (2.2) 149.7 0.0 149.7 (23.3) 0.0 0.0 94.1 220.4 0.0 0.0 0.0 220.4 131.7 Mar-13F 269.0 0.0 269.0 (79.6) 189.4 0.0 (20.3) (0.4) (2.2) 166.4 0.0 166.4 (26.3) 0.0 0.0 0.0 140.1 0.0 0.0 0.0 140.1 145.5 Mar-14F 275.3 0.0 275.3 (80.9) 194.4 0.0 (20.8) (0.4) (2.3) 170.9 0.0 170.9 (27.9) 0.0 0.0 0.0 143.0 0.0 0.0 0.0 143.0 148.4 Mar-15F 285.3 0.0 285.3 (83.9) 201.4 0.0 (21.2) (0.4) (2.3) 177.5 0.0 177.5 (29.2) 0.0 0.0 0.0 148.2 0.0 0.0 0.0 148.2 153.6 (S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity
|
Mar-12A 2,696 0 1 2,697 122 0 3 0 126 90 84 5 179 981 7 988 1,655 0 1,655
Mar-13F 2,697 0 0 2,697 176 0 3 0 180 90 0 0 90 1,125 7 1,132 1,655 0 1,655
Mar-14F 2,760 0 0 2,760 143 0 3 0 147 90 0 0 90 1,155 7 1,162 1,655 0 1,655
Mar-15F 2,791 0 0 2,791 112 0 3 0 116 90 0 0 90 1,155 7 1,162 1,655 0 1,655
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity
|
Key Ratios
Mar-12A 220 23 21 (10) (93) 162 (1) (405) (0) (405) 105 299 (124) (22) 259 15 (243) (160) Mar-13F 140 26 0 0 0 166 (1) 0 1 (0) 62 0 (145) (29) (112) 54 167 202 Mar-14F 143 28 0 0 0 171 (1) (62) 1 (62) 30 0 (148) (24) (142) (33) 110 111 Mar-15F 148 29 0 0 0 177 (1) (30) 1 (30) 0 0 (154) (25) (178) (31) 147 117
|
Mar-12A 20.4% 21.2% 69.5% 143% 6.35 0% 60% 0.70 0.70 0.68 (185%) 8.59%
Mar-13F 9.2% 10.5% 70.4% 6% 6.17 0% 104% 2.00 2.00 1.96 (184%) 4.92%
Mar-14F 2.4% 2.7% 70.6% 2% 5.92 0% 104% 1.63 1.63 1.59 (197%) 4.95%
Mar-15F 3.6% 3.6% 70.6% 4% 5.91 0% 104% 1.28 1.28 1.25 (205%) 5.10%
Key Drivers
|
Mar-12A 2.0 N/A N/A N/A 97.5% N/A N/A
Mar-13F 1.9 N/A N/A N/A 96.8% N/A N/A
Mar-14F 1.9 N/A N/A N/A 97.5% N/A N/A
Mar-15F 1.9 N/A N/A N/A 97.5% N/A N/A
121
REIT SINGAPORE
November 27, 2012
Mapletree Logistics Trust

MLT SP / MAPL.SI Current S$1.10 S$1.21 S$1.21 10.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,173m
S$2,657m
US$3.07m
S$3.78m
59.0%
2,426 m shares

Harder to find growth

Underpinned by its long WALE and high occupancy, MLTs portfolio should remain resilient. But the current environment of elevated asset values could throw a spanner in the works for MLTs asset hunt while bite-sized AEIs are unlikely to be major game changers.
Maintain DPU estimates and DDM-target price (discount rate: 7.3%). Maintain Neutral. We see rerating catalysts in accretive acquisitions and developments. With this in mind, management remains on the lookout for capital-recycling opportunities, i.e. divestment of mature lower-yielding assets and ploughing the capital into higher-yielding assets in countries like China, Korea, Australia and Indonesia. Management will also be looking at a more aggressive AEI strategy and was recently in advanced negotiations with a major Japanese third-party logistics service provider on a BTS development at Iwatsuki Centre, which was destroyed by a fire in 2011.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings Bank of New York Columbia Wanger 1M -0.7 -2.2 3M 2 0.9 12M 19.6 33.5 % held 41.0 6.4 5.0
Sustained stability
Underpinned by its long WALE of >5 years and strong occupancy of 99.2% at end-2QFY3/13, MLTs portfolio remains resilient. Leasing has also remained stable, with MLT still booking positive rental reversions of 8% in 2QFY13.
Harder to acquire
Acquisitions and developments are the key sources of growth for MLTs portfolio, given its long WALE. But the current environment of elevated capital values should make this difficult. Excluding our assumed S$100m in acquisitions, FY14 DPU growth would be a more muted <2% than our current 4%.
Adoption of distribution reinvestment plan

Following in the footsteps of some of its peers, MLT announced the adoption of a distribution reinvestment plan which will give unitholders the option to reinvest distributions in MLT. Apart from helping to increase the capital base and liquidity, funds could also be channelled into some bite-sized AEIs.
More active on AEI and asset-recycling
1.20 1.10 1.00 0.90 0.80 Vol m 0.70 200 150 100 50
Nov-11
Price Close
130 126 122 118 114 110 106 102 98 94 90
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Mar-11A 231.1 202.7 161.1 137.1 0.059 8.2% 18.45 0.060 5.47% 38.5% 0.86 1.28 6.96% Mar-12A 279.7 242.3 161.1 163.5 0.068 14.9% 16.05 0.067 6.15% 35.0% 0.90 1.21 7.74% Mar-13F 323.3 280.6 169.3 172.2 0.071 3.6% 15.50 0.071 6.48% 36.5% 0.90 1.21 7.82% 0% 0.96 Mar-14F 331.5 287.3 175.5 178.3 0.073 3.6% 14.96 0.073 6.71% 36.5% 0.90 1.21 8.09% 0% 0.98 Mar-15F 333.3 289.3 177.3 180.1 0.074 1.0% 14.81 0.074 6.78% 36.5% 0.90 1.21 8.18% 0% 0.95
Feb-12
May-12
Aug-12
Source: Bloomberg

0.83
1.10 1.18
Current
Target
1.21
Mapletree Logistics Trust

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Mar-12A 279.7 0.0 279.7 (37.4) 242.3 0.0 (29.4) (0.6) (0.2) 212.1 0.0 212.1 (35.0) 0.0 0.0 (4.7) 172.3 (10.6) 0.0 (0.7) 161.1 163.5 Mar-13F 323.3 0.0 323.3 (42.7) 280.6 0.0 (35.6) (0.6) (2.9) 241.5 0.0 241.5 (37.9) 0.0 0.0 (2.2) 201.4 (13.3) 0.0 (18.7) 169.3 172.2 Mar-14F 331.5 0.0 331.5 (44.2) 287.3 0.0 (35.8) (0.6) (2.9) 247.9 0.0 247.9 (37.8) 0.0 0.0 (2.2) 207.9 (13.7) 0.0 (18.7) 175.5 178.3 Mar-15F 333.3 0.0 333.3 (44.0) 289.3 0.0 (35.9) (0.6) (2.9) 249.9 0.0 249.9 (37.8) 0.0 0.0 (2.2) 209.8 (13.9) 0.0 (18.7) 177.3 180.1
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Mar-12A 4,058 0 0 4,058 168 0 26 21 214 152 244 31 427 1,251 56 1,308 2,194 0 344 2,538 Mar-13F 4,158 0 0 4,158 168 0 26 21 214 152 244 31 427 1,351 56 1,408 2,194 0 344 2,538 Mar-14F 4,158 0 0 4,158 168 0 26 21 214 152 244 31 427 1,351 56 1,408 2,194 0 344 2,538 Mar-15F 4,158 0 0 4,158 168 0 26 21 214 152 244 31 427 1,351 56 1,408 2,194 0 344 2,538
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Mar-12A 172.3 35.0 58.1 (6.9) (126.8) 131.8 0.0 (459.4) 0.0 (459.4) 101.6 343.3 (153.7) (31.4) 259.8 (67.8) (327.6) (257.5) Mar-13F 201.4 37.9 0.0 (13.3) 2.7 228.6 0.0 (99.6) 0.0 (99.6) 100.0 0.0 (172.2) (38.3) (110.5) 18.5 129.0 190.7 Mar-14F 207.9 37.8 0.0 (13.7) 2.7 234.7 0.0 0.5 0.0 0.5 0.0 0.0 (178.3) (38.3) (216.6) 18.6 235.2 196.9 Mar-15F 209.8 37.8 0.0 (13.9) 2.7 236.5 0.0 0.5 0.0 0.5 0.0 0.0 (180.1) (38.3) (218.4) 18.6 237.0 198.7
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Mar-12A 21.1% 19.5% 86.6% 12.6% 5.96 6.16% 101% 0.50 0.50 0.39 (178%) 3.93% Mar-13F 15.6% 15.8% 86.8% 5.4% 6.31 6.60% 102% 0.50 0.50 0.39 (165%) 3.92% Mar-14F 2.5% 2.4% 86.7% 3.5% 6.48 6.60% 102% 0.50 0.50 0.39 (169%) 4.01% Mar-15F 0.5% 0.7% 86.8% 1.0% 6.53 6.60% 102% 0.50 0.50 0.39 (171%) 4.05%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Mar-12A N/A N/A N/A N/A N/A 4,158.3 N/A Mar-13F N/A N/A N/A N/A N/A 4,158.3 N/A Mar-14F N/A N/A N/A N/A N/A 4,158.3 N/A Mar-15F N/A N/A N/A N/A N/A 4,158.3 N/A
123
November 27, 2012
Mewah International
MII SP / MEWI.SI Current S$0.47 S$0.45 S$0.45 -2.4%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$573.1m
S$700.8m
US$0.64m
S$0.78m
36.0%
1,507 m shares

No revival in sight
Mewahs net profits are drifting down. Lacklustre CPO prices and poor consumer confidence could continue to take a toll on its sales volumes, while higher fixed costs from business expansion could further gnaw at its profits.
Add to that a poor track record and we see little chance of a reversal of fortunes soon. Profits have fallen to an all-time low. Management expects the weakness to persist amid poor consumer confidence. We maintain our Underperform, EPS and target price, based on CY13 NAV.
Too late in the competition

Mewah has since attempted to keep up with its competitors by expanding into Indonesia to earn higher refining margins. We do not think this will provide much relief. Supernormal refining profits from Indonesias revamped export-tax structure have spurred a flurry of downstream investments by industry players, with the bulk coming onstream in 2H13. We expect margins to be eroded by intensifying competition by the time Mewahs facilities are commissioned at end-2013.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Eighteenth Tenth Nineteen Forty Four Cheo Seng Jin Cheo Tiong Choon 1M 5 3.3 3M 12 10.7 12M -13.6 0 % held 35.0 8.2 7.7
Strong headwinds
Mewahs earnings record is littered with disappointments, a trend that may not reverse any time soon. It has been hit by a series of unfortunate events since listing. The first was falling CPO prices, which weighed on its volumes and processing margins. Worsening matters was Indonesias revamp of its palm-oil export-tax structure, putting Malaysian refiners such as Mewah at a disadvantage to their Indonesian counterparts. These had led to a sharp tumble in Mewahs net profits since listing in 2010.
Costs set to rise

We expect structurally higher operating expenses from its expansion. Its new facilities will lift depreciation charges and staff costs, further weighing on profits. With no turnaround in sight, we maintain our bearish view on the stock.
Vol m
0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 80 60 40 20

Nov-11
Price Close
139 130 122 113 104 95 87 78 69
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 3,533 131.7 92.35 0.064 (7.5%) 5.46 0.015 3.85% 4.81 40.92 21.8% 1.13 26.0% Dec-11A 4,468 65.1 42.25 0.027 (58.5%) 14.24 0.004 1.10% 12.60 NA 46.4% 1.06 7.7% Dec-12F 3,699 59.2 17.35 0.012 (56.9%) 33.03 0.002 0.61% 12.80 8.26 33.9% 1.04 3.2% (0%) 0.46 Dec-13F 3,933 64.6 22.62 0.015 30.4% 25.34 0.003 0.79% 11.91 NA 34.8% 1.01 4.0% (0%) 0.50 Dec-14F 5,102 75.0 31.08 0.021 37.4% 18.44 0.004 1.08% 11.44 NA 48.2% 0.96 5.3% 0% 0.54
Feb-12
May-12
Aug-12
Source: Bloomberg

0.47 0.38 0.66
Current
0.45
Target
Mewah International
November 27, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 4,468 186 65 (14) 51 (13) 0 0 38 38 1 39 3 0 Dec-12F 3,699 200 59 (22) 37 (17) 0 0 20 20 (3) 17 (0) 0 Dec-13F 3,933 207 65 (26) 38 (12) 0 0 27 27 (4) 23 (0) 0 Dec-14F 5,102 270 75 (27) 48 (12) 0 0 37 37 (6) 31 (0) 0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 137 411 307 84 939 288 0 3 14 305 339 210 95 645 47 15 62 0 706 540 (2) 538 Dec-12F 200 370 222 89 881 361 0 3 14 378 339 210 99 648 47 15 62 0 710 551 (2) 549 Dec-13F 188 393 236 91 908 369 0 3 14 387 339 224 102 665 47 15 62 0 727 570 (2) 568 Dec-14F 99 510 306 100 1,016 373 0 3 14 390 339 290 120 749 47 15 62 0 811 597 (2) 595
42 40 40
17 17 17
23 23 23
31 31 31
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 65.1 0.0 (70.0) Dec-12F 59.2 0.0 107.8 Dec-13F 64.6 0.0 (33.8) Dec-14F 75.0 0.0 (124.1)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 26.5% (50.6%) 1.46% (0.17) 0.36 3.95 (2.9%) 14.9% 34.23 23.50 19.74 6.7% 5.8% Dec-12F (17.2%) (9.2%) 1.60% (0.12) 0.37 2.15 13.0% 20.0% 38.63 27.69 21.99 3.9% 4.0% Dec-13F 6.3% 9.2% 1.64% (0.13) 0.38 3.29 15.0% 20.0% 35.41 22.43 21.23 4.2% 4.0% Dec-14F 29.7% 16.1% 1.47% (0.19) 0.40 4.16 15.0% 20.0% 32.32 20.47 19.39 5.1% 5.0%
8.4 (5.5) (26.4) (28.4) (92.2) (11.5) 0.0 0.0 (103.8) 59.8 (1.4) 0.0 (4.3) 0.8 54.8
0.0 0.0 (2.6) 164.4 (95.0) 0.0 0.0 0.0 (95.0) 0.0 0.0 0.0 (6.3) 0.0 (6.3)
0.0 0.0 (4.0) 26.8 (35.0) 0.0 0.0 0.0 (35.0) 0.0 0.0 0.0 (3.5) 0.0 (3.5)
0.0 0.0 (5.5) (54.6) (30.0) 0.0 0.0 0.0 (30.0) 0.0 0.0 0.0 (4.5) 0.0 (4.5)
Key Drivers
(US$) Volumes Moved (% Change) Rates Charged (% Change) Acquisitions (m) Dec-11A -5.2% 33.4% N/A Dec-12F -5.7% -12.2% N/A Dec-13F 3.1% 3.1% N/A Dec-14F 27.2% 2.0% N/A
125
Ind Goods & Services SINGAPORE

November 28, 2012
Midas Holdings
MIDAS SP / MIDA.SI Current S$0.38 S$0.53 S$0.53 41.2%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$373.8m
S$456.6m
US$3.64m
S$4.46m
78.9%
1,218 m shares

Glimmers of light in the dark

Look past the poor operating figures in 2012 and potentially in 1H13. The high-speed railway order outlook is increasingly positive and one cannot ignore the potential of a re-rating when orders return.
Having gleaned important experience from the 18-month high-speed order drought, management has set its sights on the metro/international segments and on providing aluminium profiles for the shipping, auto and aviation industries. Midass strong balance sheet and thick credit lines should support capex and opex. Maintain Outperform and target price, still based on 15.5x CY14 EPS (10% discount to 5-year forward average).
Kenneth Ng, CFA

Financing not an issue

Midas, together with its JV partner Jilin Kaitong, will be constructing a US$300m facility over 2013 and 2014. Despite entering a capital-intensive phase, management assured investors that a cash call in the near term will not be likely. Midass existing gearing of 0.2x provides sufficient debt headroom for capex requirements. The JV entity, Jilin Midas Light Alloy, will be taking on long-term project financing for its new facility construction, which will be on a non-recourse basis. In addition, Midas has secured a credit line of Rmb1bn from three major Chinese banks to support its working capital in the event the financing woes of the railway industry persist in 2013.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Chen Wei Ping Patrick Chew Capital Research 1M -8.1 -9.6 3M 9.8 8.7 12M -0.3 13.6 % held 10.8 10.0 9.9
Order outlook positive

Despite an 18-month drought in high-speed railway orders, Midas has been able to support the order book run-down with Chinese and international metro contracts. Midas is tendering for Rmb550m worth of metro and international contracts, which could come in the next two quarters. In addition, tenders for high-speed contracts are beginning to thaw, according to guidance from CSR. Assuming the guidance is true, we expect Midas to bag high-speed orders worth Rmb350m-420m in the coming quarters. Compare this to the Rmb324m of metro contracts that Midas has won YTD and its Rmb500m order book.
Financial Summary
Revenue (Rmbm) Operating EBITDA (Rmbm) Net Profit (Rmbm) Core EPS (Rmb) Core EPS Growth FD Core P/E (x) DPS (Rmb) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)
|
Position for contract wins

Midas is an order book company and its share price will react positively to contract wins. With its increasingly positive order outlook, we think that a re-rating is likely. Midas is trading at 10.7x CY14 EPS vs. Chinese peers 14x average.
0.45 0.40 0.35 0.30 0.25 Vol m 0.20 80 60 40 20

Nov-11
Price Close
132 120 108 96 84 72
Feb-12
May-12
Aug-12
Source: Bloomberg

0.28
0.38 0.43
Current
|
Target
0.53
Dec-10A 1,030 305.3 240.8 0.23 14% 8.2 0.010 0.52% 3.89 NA (20.1%) 0.81 10.8%
Dec-11A 1,081 321.5 187.4 0.15 (34%) 12.4 0.015 0.79% 7.82 NA 12.9% 0.78 6.4%
Dec-12F 848 239.9 4.4 0.00 (98%) 527.3 0.020 1.05% 13.26 NA 35.2% 0.78 0.1% 0% 0.23
Dec-13F 1,259 410.5 160.2 0.13 3531% 14.5 0.030 1.57% 9.46 NA 56.2% 0.75 5.3% 0% 1.11
Dec-14F 1,562 497.5 208.0 0.17 30% 11.2 0.030 1.57% 8.59 12.15 65.1% 0.71 6.5% (0%) 1.02
Midas Holdings
November 28, 2012
Profit & Loss

(Rmbm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit
|
Balance Sheet
Dec-11A 1,081 362 322 (82) 239 (39) 8 17 225 0 225 (38) 187 0 0 Dec-12F 848 263 240 (110) 130 (85) (32) 10 23 0 23 (19) 3 1 0 Dec-13F 1,259 420 410 (130) 280 (84) 12 5 214 0 214 (53) 160 0 0 Dec-14F 1,562 504 498 (140) 358 (103) 18 5 277 0 277 (69) 208 0 0 (Rmbm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Dec-11A 711 698 478 20 1,907 1,938 429 0 27 2,394 910 232 0 1,142 183 0 183 2 1,327 2,974 0 2,974
Dec-12F 471 813 534 32 1,851 2,483 429 0 27 2,938 919 290 0 1,210 600 0 600 2 1,812 2,978 (1) 2,977
Dec-13F 76 1,035 555 32 1,698 3,032 429 0 27 3,487 831 241 0 1,072 997 0 997 2 2,071 3,116 (1) 3,115
Dec-14F 156 856 689 31 1,731 3,526 429 0 27 3,981 703 128 0 832 1,592 0 1,592 2 2,426 3,287 (1) 3,286
187 187 187
4 4 4
160 160 160
208 208 208
Cash Flow
(Rmbm) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing
|
Key Ratios
Dec-11A 322 (423) Dec-12F 240 (113) Dec-13F 410 (291) Dec-14F 498 (68) Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (Rmb) BVPS (Rmb) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
|
(0) (7) (74) (183) (601) 1 (115) (35) (750) 415 0 0 (60) 0 355
109 (77) (19) 140 (654) 0 0 16 (638) 436 0 0 (24) 0 412
67 (78) (53) 54 (679) 0 0 16 (663) 312 0 0 (37) 0 275
85 (102) (69) 343 (634) 0 0 16 (618) 466 0 0 (37) 0 430
Dec-11A 4.9% 5.3% 29.7% (0.31) 2.44 6.18 16.9% 32% 204.3 169.8 106.8 9.8% 6.30%
Dec-12F (21.5%) (25.4%) 28.3% (0.86) 2.45 1.53 85.0% 552% 326.0 316.6 163.4 3.5% 3.03%
Dec-13F 48.4% 71.1% 32.6% (1.44) 2.56 3.35 25.0% 23% 267.9 237.0 115.7 6.2% 5.94%
Dec-14F 24.1% 21.2% 31.9% (1.76) 2.70 3.47 25.0% 18% 220.9 214.7 63.8 6.4% 6.79%
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) Unit raw mat ASP (%chg,main) Unit raw mat ASP (%chg,2ndary)
|
Dec-11A -12.9% 13.1% 50.0% N/A N/A N/A N/A N/A
Dec-12F 0.0% -17.9% 39.0% N/A N/A N/A N/A N/A
Dec-13F -2.0% 53.8% 50.0% N/A N/A N/A N/A N/A
Dec-14F 4.0% 20.0% 60.0% N/A N/A N/A N/A N/A
127
Container Shipping SINGAPORE

November 27, 2012
Neptune Orient Lines

NOL SP / NEPS.SI Current S$1.11 S$1.12 S$1.12 0.9%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,351m
S$2,872m
US$8.04m
S$9.87m
30.0%
2,583 m shares
CIMB Analyst Raymond Yap CFA

T (60) 3 20849769 E raymond.yap@cimb.com
Another challenging year ahead

NOLs 9M12 core net loss of US$241m suggests that it will not turn in a full-year core net profit as 4Q is seasonally weaker. We expect 2013 to be equally challenging for the industry due to deliveries of new and larger ships.
After the 3Q results, we downgraded the stock from Neutral to Underperform. Our target price is based on 1x P/BV, slightly above its 10-year mean. Derating catalysts include a tougher-than-expected 2013 due to huge overcapacity. Container rates have already started to fall in recent weeks due to growing supply and weak demand. For 3Q12, NOL experienced a 3% qoq softening in Europe rates and an 8% fall in intra-Asia rates, with the latter hit by faltering Middle East rates. Only the Americas saw rates rising, by 2% qoq. Rate weakness is likely to continue in the seasonally slow 4Q. We are forecasting continuing core losses in 2013, albeit lower than in 2012, due to intense competition on the major trade lanes. Many of NOL's competitors will take delivery of new ships including Maersk's 18,000 teu ships.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings 1M -3.6 -5.1 3M -1.5 -2.6 12M -3.5 10.4 % held 67.4
Return to the black

NOL reported a core net profit of US$50m in 3Q, returning to the black after six straight quarters of losses. This was attributed to the rate hikes that took place early in the year for the Asia-Europe (AE) and Transpacific (TP) trade routes. NOL has also recently embarked on a cost-saving drive, aiming to save US$500m in 2012. So far, the company is on track to achieve that goal, having wrung US$360m cost savings in 9M12.
Expanding its fleet

NOL is expected to take in a total of 21 new vessels in 2013, more than double the 10 vessels it received in 2012. The 2013 deliveries comprise ten 14,000 teu ships, nine 9,000 teu ships and two 8,100 teu ships. NOL aims to build a modern and cost-competitive fleet, and plans to return up to 29 chartered-in vessels in 4Q12-2014.
Rate weakness showing
1.60 1.50 1.40 1.30 1.20 1.10 1.00 Vol m 0.90 80 60 40 20

Nov-11
Price Close
136 129 122 115 107 100 93 86
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 9,422 817.3 460.9 0.18 na 4.68 0.035 3.89% 2.85 3.22 12% 0.73 15.1% Dec-11A 9,211 (103.7) (478.2) -0.18 (201%) NA 0.00% NA NA 80% 0.90 (15.8%) Dec-12F 9,404 149.8 (318.9) -0.09 (48%) NA 0.00% 36.16 10.81 140% 1.03 (9.8%) (0%) 1.29 Dec-13F 9,784 286.1 44.9 -0.06 (37%) NA 0.003 0.37% 21.06 12.00 163% 1.01 (6.6%) 0% 0.21 Dec-14F 10,559 677.9 215.5 0.08 na 10.89 0.00% 8.87 5.58 149% 0.93 8.9% 0% 0.60
Feb-12
May-12
Aug-12
Source: Bloomberg

1.11 1.03 1.50
Current
1.12
Target
Neptune Orient Lines

November 27, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 9,211 687 -104 -295 -399 -17 9 -3 -410 -19 -429 -45 -474 -4 0 Dec-12F 9,404 942 150 -311 -161 -37 5 10 -184 -80 -264 -50 -314 -5 0 Dec-13F 9,784 1,100 286 -354 -67 -49 10 10 -96 196 100 -50 50 -5 0 Dec-14F 10,559 1,524 678 -377 301 -51 10 10 270 0 270 -50 220 -5 0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 228 1,046 327 165 1,766 4,790 246 160 0 5,196 422 1,274 429 2,126 1,932 252 2,184 0 4,310 2,601 51 2,652 Dec-12F 418 1,068 325 165 1,975 5,580 251 160 0 5,992 422 1,266 429 2,117 3,259 252 3,511 0 5,629 2,282 56 2,338 Dec-13F 563 1,111 333 165 2,173 6,206 261 160 0 6,627 422 1,300 429 2,151 4,020 252 4,272 0 6,423 2,316 61 2,377 Dec-14F 944 1,199 347 165 2,655 6,355 271 160 0 6,787 422 1,352 429 2,203 4,389 252 4,641 0 6,844 2,531 66 2,597
-478 -459 -459
-319 -239 -239
45 -151 -151
215 215 215
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A -104 -4 Dec-12F 150 -28 Dec-13F 286 -18 Dec-14F 678 -49
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (2.2%) (113%) (1.13%) -0.82 1.01 -12.20 (10.5%) 0.0% 42.16 12.22 52.42 (9.0%) (8.0%) Dec-12F 2.1% N/A 1.59% -1.26 0.88 -3.56 (18.9%) 0.0% 41.13 14.10 54.95 (2.8%) (2.8%) Dec-13F 4.0% 91% 2.92% -1.50 0.90 -1.11 50.0% (8.6%) 40.63 13.83 53.92 (1.0%) (0.9%) Dec-14F 7.9% 137% 6.42% -1.50 0.98 4.34 18.5% 0.0% 39.92 13.74 53.56 4.0% 4.5%
-42 12 -26 -164 -1,482 14 0 -27 -1,495 995 0 0 -97 12 910
27 -27 -50 72 -1,182 0 0 0 -1,182 1,327 0 0 0 -27 1,300
39 -39 -50 218 -1,087 304 0 0 -783 761 0 0 -11 -39 711
41 -41 -50 579 -526 0 0 0 -526 368 0 0 0 -41 328
Key Drivers
Average Revenue (US$/FEU) Average Revenue (US$/TEU) Liner rates (yoy chg. %) Cargo Carried (m FEU) Cargo carried (FEU, yoy chg. %) Cargo Carried (m TEU) Cargo carried (TEU, yoy chg. %) Fleet Size (no. Of Vessels) No. Of Container Ships Dec-11A 2,500.5 1,250.3 -10.3% 2.98 5.2% 0.10 -77.9% 144.0 144 Dec-12F 2,528.2 1,264.1 1.1% 3.00 0.8% 0.02 -85.5% 154.0 154 Dec-13F 2,512.1 1,256.1 -0.6% 3.15 5.0% 0.10 559.3% 167.0 167 Dec-14F 2,603.7 1,301.8 3.6% 3.31 5.0% 0.10 0.0% 176.0 176
129

November 27, 2012
Noble Group
NOBL SP / NOBG.SI Current S$1.09 S$1.45 S$1.45 33.2%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$5,787m
S$7,076m
US$45.74m
S$56.27m
50.0%
6,389 m shares

Negatives priced in
Contrary to consensus expectations of a profit recovery, Nobles 3Q12 disappointed. Although there is a risk that earnings shocks could be the new norm, we believe the negatives have been priced in.
Poor results, coupled with Vice Chairman Harry Bangas stake sale, have sent the stock to a 52-week low. Against low expectations and low institutional ownership, any positives from improved sentiment or economic data could spur a re-rating. Maintain Outperform with EPS and target price (10.1x CY14 P/E, 0.5SD below its 5-year mean) intact.
Management buybacks a signal of confidence

Shortly after its disappointing results, Vice Chairman Harry Banga trimmed his stake from 5.7% to 2.2%, triggering fears about the companys fundamentals. But beyond the poor timing, we do not see this as a red flag. Chairman Richard Elman and CEO Yusuf Alireza have since stepped in with share purchases, signalling confidence in the groups fundamentals.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Noble Temple CIC 1M -16.4 -18.1 3M -11.2 -12.5 12M -10.3 3.3 % held 21.6 14.7
Earnings disappointments not over

Noble failed to leverage improved operating conditions in 3Q12, turning in a lacklustre set of results even as its global peers generally reported better agri-earnings. We suspect poor proprietary trading positions in corn and soybean could have been the culprits. Managements comments suggest that headwinds could persist in 4Q12, with earnings visibility remaining low.
Bargain-hunting opportunity
We view its share-price weakness as a buying opportunity. The stock has fallen below -1SD of its P/BV band and is under-owned by institutional investors. Against low expectations, incrementally positive economic data and improvements in sentiment could spark a re-rating, we believe.
1.60 1.50 1.40 1.30 1.20 1.10 1.00 Vol m 0.90 400 300 200 100
Nov-11
Price Close
138 129 121 112 104 95 87 78
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 56,696 1,171 605.6 0.09 8.9% 10.49 0.025 2.82% 8.87 7.61 102% 1.35 14.8% Dec-11A 80,732 1,114 431.3 0.05 (39.7%) 17.79 0.017 1.89% 9.34 NA 87% 1.08 6.9% Dec-12F 91,010 1,076 482.8 0.07 34.5% 12.95 0.019 2.09% 7.91 2.92 48% 1.02 8.2% 0% 0.96 Dec-13F 97,379 1,199 676.6 0.10 50.4% 8.55 0.026 2.93% 6.96 21.62 41% 0.93 11.4% 0% 1.06 Dec-14F 104,293 1,347 794.6 0.12 17.4% 7.28 0.031 3.44% 6.12 20.81 36% 0.85 12.2% (0%) 1.03
Feb-12
May-12
Aug-12
Source: Bloomberg

1.09 1.03 1.53
Current
Target
1.45
Noble Group
November 27, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 80,732 1,480 1,114 (230) 884 (366) (15) 0 503 0 503 (64) 440 (8) 0 Dec-12F 91,010 1,456 1,076 (224) 852 (360) (8) 0 483 0 483 (5) 478 5 0 Dec-13F 97,379 1,655 1,199 (157) 1,042 (235) (8) 0 799 0 799 (120) 679 (2) 0 Dec-14F 104,293 1,877 1,347 (169) 1,179 (233) (8) 0 938 0 938 (141) 797 (3) 0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 1,549 2,706 2,852 8,113 15,218 2,556 0 833 1,223 4,612 655 7,535 529 8,719 5,470 352 5,821 0 14,540 5,283 7 5,290 Dec-12F 3,418 3,276 3,185 7,399 17,279 2,732 0 833 1,214 4,779 655 9,851 70 10,576 5,470 352 5,821 0 16,397 5,658 3 5,661 Dec-13F 3,565 3,506 3,408 7,917 18,396 2,975 0 833 1,206 5,014 655 10,530 185 11,370 5,470 352 5,821 0 17,191 6,214 5 6,219 Dec-14F 3,674 3,755 3,650 8,479 19,558 3,206 0 833 1,198 5,238 655 11,266 206 12,127 5,470 352 5,821 0 17,948 6,839 8 6,847
431 320 320
483 446 446
677 677 677
795 795 795
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 1,114 (15) 1,425 Dec-12F 1,076 (8) (507) Dec-13F 1,199 (8) (291) Dec-14F 1,347 (8) (317)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 42.4% (4.9%) 1.38% (0.72) 0.83 2.41 12.6% 25.0% 10.78 15.70 31.41 7.7% 8.1% Dec-12F 12.7% (3.4%) 1.18% (0.42) 0.87 2.36 1.0% 25.0% 12.03 12.34 35.53 6.9% 7.3% Dec-13F 7.0% 11.4% 1.23% (0.39) 0.96 4.43 15.0% 25.0% 12.71 12.57 38.86 9.9% 8.6% Dec-14F 7.1% 12.4% 1.29% (0.38) 1.05 5.06 15.0% 25.0% 12.70 12.58 38.84 10.7% 9.3%
317 (366) (155) 2,320 (472) (872) (141) (1,485) (887) 753 (183) (455) (772)
8 (360) 0 209 (400) 0 2,168 1,768 0 0 (108) 0 (108)
8 (235) (5) 667 (400) 0 0 (400) 0 0 (121) 0 (121)
8 (233) (120) 678 (400) 0 0 (400) 0 0 (169) 0 (169)
Key Drivers
(US$) Volumes Moved (% Change) Rates Charged (% Change) Acquisitions (m) Dec-11A 2.1% 19.2% N/A Dec-12F 19.5% 7.3% N/A Dec-13F 5.1% 2.5% N/A Dec-14F 4.4% 2.0% N/A
131
Banks SINGAPORE
November 28, 2012
OCBC
OCBC SP / OCBC.SI Current S$9.21 S$10.63 S$10.63 15.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$25,860m
S$31,591m
US$23.20m
S$28.50m
65.0%
3,437 m shares

Not bad beneath the froth

Despite its low quality earnings, which beat estimates in 3Q12, we think that OCBC deserves credit for its efforts to grow wealth management and trade/loans fee income. NIM also narrowed the least in 3Q. Capital is now buffed up with proceeds from non-core sale.
We maintain our FY12-14 estimates and GGM-based target price (r: 9.65%; g: 4.4%; ROE: 11.5%; 1.4x CY13 P/BV). Maintain Neutral; OCBC is our second-preferred bank. Loan growth has been lacklustre in 2012, a mere 3.4% YTD as opportunities for Rmb offshore financing dry up. Management has lowered loan growth guidance to low-to-mid single-digit for 2013. Coupled with NIM margin pressure, we think that NII growth will still be slow come FY13. The higher-than-expected 3Q12 earnings, largely due to stronger-than-expected marked-to-market gains from insurance, are also not sustainable. In view of the recent outperformance in the bond market vs. the equity market, we think that the scope for further upward revaluation of GEs AFS bond portfolio will be limited.
Daniel Lau
Share price info

Share price perf. (%) Relative Absolute Major shareholders Lee family 1M 1.8 0.3 3M 1.2 0.1 12M 4.2 18.1 % held 25.8
Positive fee income and provisioning trends

Apart from DBS, OCBC has also made good on its promise to grow non-interest income. Insurance provides a good quarter now and then. Growth in wealth management and trade- and loan-related fees chugged along nicely in recent quarters. The Bank of Singapore (BOS) continues to enjoy strong AUM growth, leveraging OCBCs reputation as the worlds safest bank. While we see near-term wealth management headwinds from volatile markets, we think the longer-term outlook for BOS remains rosy. OCBC has also targeted SME and corporate accounts in Indonesia and Malaysia, which, if successful, should drive trade- and loan-related fees. Credit costs in coming quarters should be stable as asset quality is still benign.
Valuations are fair

OCBC is currently trading at 1.16x CY13 P/BV. As OCBC mulls over the deployment of proceeds from the FNN/APB sale, a potential M&A-driven earnings boost cannot be discounted. A sound investment could act as a share price catalyst. Current valuations have already priced in a no-growth year in 2013 so M&A will be the main surprise.
The not-so-good in 3Q12

10.1 9.6 9.1 8.6 8.1 Vol m 7.6 15 10 5
Nov-11 Source: Bloomberg Feb-12 May-12 Aug-12
Price Close
109 107 104 102 99 97
Financial Summary
|

7.83
9.21 9.58
Current
|
Target
10.63
Dec-10A 2,947 2,378 5,325 (134.0) 2,253 0.69 21.0% 13.13 30.00 326% 6.23 1.48 11.3%
Dec-11A 3,410 2,251 5,661 (221.0) 2,312 0.68 (2.0%) 13.38 30.00 326% 6.57 1.40 10.5%
Dec-12F 3,766 4,083 7,849 (270.1) 3,956 0.81 19.7% 11.23 34.00 369% 7.38 1.25 11.6% 0% 1.09
Dec-13F 3,969 2,881 6,850 (346.5) 2,759 0.80 (1.1%) 11.48 35.00 380% 7.83 1.18 10.6% 0% 1.04
Dec-14F 4,253 3,001 7,254 (277.9) 3,000 0.87 8.7% 10.55 38.00 413% 8.32 1.11 10.8% 0% 1.05
OCBC
November 28, 2012
Profit & Loss

|
Balance Sheet
Dec-11A 3,410 2,251 5,661 (2,430) 3,231 (221) 3,010 7 3,017 (61) 2,956 0 2,956 (477) Dec-12F 3,766 4,083 7,849 (2,656) 5,193 (270) 4,923 29 4,952 (61) 4,891 0 4,891 (680) Dec-13F 3,969 2,881 6,850 (2,946) 3,905 (347) 3,558 30 3,588 (61) 3,527 0 3,527 (563) Dec-14F 4,253 3,001 7,254 (3,119) 4,135 (278) 3,857 30 3,887 (61) 3,826 0 3,826 (610) (S$m) Total Gross Loans Liquid Assets & Investments (Current) Other Interest Earning Assets Total Gross Interest Earning Assets Total Provisions/Loan Loss Reserve Total Net Interest Earning Assets Intangible Assets Other Non-Interest Earning Assets Total Non-Interest Earning Assets Cash And Marketable Securities Long-term Investments Total Assets Customer Interest-Bearing Liabilities Bank Deposits Interest Bearing Liabilities: Others Total Interest-Bearing Liabilities Bank's Liabilities Under Acceptances Total Non-Interest Bearing Liabilities Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Dec-11A 160,640 35,728 196,368 1,532 197,900 3,947 63,014 66,961 12,897 0 277,758 154,555 21,653 21,009 197,217 0 55,151 252,368 22,571 2,819 25,390
Dec-12F 168,956 35,993 204,949 1,802 206,751 3,886 63,109 66,995 13,577 0 287,323 160,428 22,303 21,009 203,740 0 55,151 258,891 25,358 3,074 28,432
Dec-13F 181,934 36,263 218,198 2,149 220,346 3,825 63,089 66,914 14,770 0 302,030 173,262 22,414 21,009 216,685 0 55,151 271,836 26,914 3,280 30,194
Dec-14F 193,825 36,539 230,364 2,427 232,791 3,765 63,069 66,833 18,289 0 317,913 187,123 22,526 21,009 230,658 0 55,151 285,809 28,608 3,496 32,104
2,479 (167) 0 0 2,312 2,280
4,211 (255) 0 0 3,956 2,788
2,964 (206) 0 0 2,759 2,759
3,216 (216) 0 0 3,000 3,000

|
Key Ratios
|
Dec-11A 6.3% 5.2% 2.6% 60.2% 1.12% 2.91% 1.79% 2.21% 2.86% 6.84% 1.35% 16.1% 44.6%
Dec-12F 38.7% 60.7% 65.5% 48.0% 1.13% 2.78% 1.66% 2.35% 2.74% 5.20% 1.33% 13.9% 29.5%
Dec-13F (12.7%) (24.8%) (27.9%) 57.9% 1.16% 2.80% 1.64% 2.29% 2.68% 8.87% 1.35% 16.0% 43.6%
Dec-14F 5.9% 5.9% 8.5% 58.6% 1.16% 2.84% 1.68% 2.27% 2.65% 6.72% 1.37% 16.0% 43.5%
Key Drivers
|
Dec-11A 27.5% 1.9% -5.3% 42.9% 0.9% 130.7% 0.9% 15.1% 25.3% 86.4% 0.9% 14.4%
Dec-12F 5.9% 1.7% 81.4% 33.8% 0.9% 144.7% 1.0% 16.8% 3.8% 88.2% 0.9% 6.2%
Dec-13F 8.9% 1.7% -29.4% 43.0% 1.1% 128.9% 1.0% 16.4% 8.0% 89.1% 1.1% 5.8%
Dec-14F 7.4% 1.8% 4.2% 43.0% 1.3% 116.1% 1.0% 16.4% 8.0% 88.7% 1.3% 6.2%
133

November 29, 2012
Olam International
OLAM SP / OLAM.SI Current S$1.50 S$1.59 S$1.59 6.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,930m
S$3,585m
US$26.18m
S$32.15m
40.6%
2,442 m shares

Valuation support
Olam has rebuffed Muddy Waters allegations in a detailed 45-page response. In our view, the explanations were satisfactory and should clear any misunderstanding caused by Muddy Waters accusations.
We have upgraded our rating from Trading Sell to Neutral, believing that the worst of this saga is over. The stock should find valuation support at book value. Our target price is based on CY13 NAV. Our earnings forecasts are unchanged. financials, much of which has since been clarified. Perhaps a positive takeaway from this saga is greater clarity into its acquisitions, details of which were previously scant. The group has shared qualitative and quantitative insights into its acquisitions, including Crown Flour Mills, Queensland Cotton, SK Foods, NZFSU and the Gabon urea fertiliser project. A number of them have shown improved operating metrics since being acquired.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Kewalram Temasek 1M -22.2 -23.7 3M -23.7 -24.6 12M -47.4 -35.6 % held 20.0 16.0
Accusations addressed
Olam has issued a rebuttal against Muddy Waters allegations. The main issues surrounding its solvency, aggressive accounting of net profit, acquisitions and capital expenditure were addressed. Management further reassured us that its bankers and counterparties remain committed. Olam will post a more comprehensive report in due course.
Worst is over
The worst is over, but sentiment could remain subdued as investors remain cautious. We would turn positive when the stock falls closer to its Sep 12 book value of S$1.35. Biological assets comprise roughly 19% of NAV.
Greater clarity on acquisitions

We think this saga could have arisen from a misinterpretation of Olams
Price Close 2.8 2.3 1.8 1.3 150 100 50

Nov-11 Source: Bloomberg Mar-12 Jun-12
Vol m
118 109 101 92 83 74 66 57 48
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Jun-11A 15,803 918 429.8 0.14 21.9% 12.52 0.024 1.58% 11.02 NA 248% 1.49 15.0% Jun-12A 17,094 967 370.9 0.11 (22.5%) 15.77 0.051 3.42% 11.37 NA 181% 1.08 9.1% Jun-13F 18,775 1,070 403.7 0.17 50.5% 10.52 0.041 2.76% 11.43 NA 189% 0.99 11.4% 0% 0.98 Jun-14F 20,919 1,192 463.8 0.19 14.9% 9.15 0.047 3.17% 10.84 NA 188% 0.90 11.9% 0% 0.90 Jun-15F 23,333 1,353 607.1 0.25 30.9% 6.99 0.062 4.14% 9.48 18.59 168% 0.81 14.2% 0% 0.94
Sep-12

1.50 1.50 2.76
Current
1.59
Target
Olam International
November 29, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Assoc. Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Jun-12A 17,094 3,227 967 (129) 838 (438) 37 0 438 0 438 (34) 404 (33) Jun-13F 18,775 3,473 1,070 (194) 876 (412) 0 0 464 0 464 (60) 404 0 Jun-14F 20,919 3,891 1,192 (223) 969 (436) 0 0 533 0 533 (69) 464 0 Jun-15F 23,333 4,340 1,353 (220) 1,134 (436) 0 0 698 0 698 (91) 607 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Jun-12A 1,111 2,563 4,410 1,302 9,386 2,621 1,114 660 47 4,442 3,148 1,134 1,483 5,765 4,341 0 4,341 194 10,300 3,406 122 3,528 Jun-13F 235 2,653 4,600 1,302 8,789 3,427 1,114 660 47 5,248 3,148 1,224 1,299 5,672 4,341 0 4,341 194 10,207 3,708 122 3,831 Jun-14F 76 2,851 5,021 1,302 9,250 3,903 1,114 660 47 5,725 3,148 1,362 1,317 5,827 4,775 0 4,775 194 10,796 4,056 122 4,178 Jun-15F 153 3,180 5,367 1,302 10,002 3,784 1,114 660 47 5,605 3,148 1,519 1,336 6,004 4,775 0 4,775 194 10,973 4,512 122 4,634
371 257 257
404 404 404
464 464 464
607 607 607
Cash Flow
(S$m) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Jun-12A 967 (37) (307) Jun-13F 1,070 0 (373) Jun-14F 1,192 0 (464) Jun-15F 1,353 0 (498)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Jun-12A 8.2% 5.3% 5.66% (2.61) 1.39 1.92 7.8% 33.7% 34.18 105.5 29.42 9.5% 8.3% Jun-13F 9.8% 10.7% 5.70% (2.97) 1.52 2.13 13.0% 25.0% 31.95 107.5 28.12 8.1% 7.7% Jun-14F 11.4% 11.4% 5.70% (3.21) 1.66 2.22 13.0% 25.0% 31.17 103.1 27.72 7.9% 8.1% Jun-15F 11.5% 13.5% 5.80% (3.18) 1.85 2.60 13.0% 25.0% 31.15 99.8 27.69 8.5% 9.1%
(35) (351) (48) 187 (875) 10 (366) (18) (1,248) 734 674 (125) 0 1,284
0 (412) (60) 225 (1,000) 0 0 0 (1,000) 0 0 (101) 0 (101)
0 (436) (69) 224 (700) 0 0 0 (700) 434 0 (116) 0 318
0 (436) (91) 328 (100) 0 0 0 (100) 0 0 (152) 0 (152)
Key Drivers
(S$) Volumes Moved (% Change) Rates Charged (% Change) Acquisitions (m) Jun-12A 26.3% -14.4% N/A Jun-13F 11.6% -1.5% N/A Jun-14F 12.1% -0.6% N/A Jun-15F 12.2% -0.6% N/A
135
Retail SINGAPORE
November 28, 2012
Parkson Retail Asia

PRA SP / PRAL.SI Current S$1.33 S$1.75 S$1.75 31.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$737.4m
S$900.8m
US$0.85m
S$1.05m
25.0%
650.4 m shares
CIMB Analyst Gloria Tsuen, CFA, CMT

T 852 2532 1129 E gloria.tsuen@cimb.com
And then there were five

This regional department store operator continues to expand its footprint, having just entered Sri Lanka and set for Myanmar. The recent macro-driven setback in Vietnam was disappointing but Malaysia and Indonesia have stayed largely on track.
We rate PRA an Outperform and our price target is based on 19x CY14 EPS, in line with the stocks historical average range. Catalysts include improving earnings growth for the rest of FY13 and into FY14 as one-time expense headwinds in 1Q dissipate and growth continues outside Vietnam.
Chris Wong
T (852) 25321128 E chris.c.wong@cimb.com
but performance should improve from thereon

We think 1Q will likely mark the weakest quarter in FY13 and earnings growth should improve from negative in 1Q to 13-14% for the next couple of quarters and from single-digits in FY13 to high teens in FY14.
Share price info

Share price perf. (%) Relative Absolute Major shareholders PKS.MK PT Mitra Samaya JPM Chase 1M -6.8 -8.3 3M -13.4 -14.5 12M 0.8 14.7 % held 67.6 7.4 7.0
Most recent quarter was mixed

PRAs 1Q was a disappointment due to (i) a soft economy in Vietnam that will take time to improve, and (ii) non-operational costs, such as deal-related expenses in Sri Lanka and e-commerce set-up in Malaysia. Malaysia (78% of total sales) and Indonesia (12%) have continued to chug along, however, as domestic consumption has remained strong, especially in Malaysia, helped by the upcoming elections and as PRA continues to upgrade its stores and merchandise mix.
Staying on track with regional expansion

PRA entered Sri Lanka this fall via a 45% equity stake acquisition in Odel, which has been delivering strong mid-teens SSSG. Although small at just ~2% of annual profits, Sri Lanka should serve as a launch pad for long-term expansion into the Indian subcontinent. PRA is also in a 70/30 JV with Mr Serge Puns associate companies (incl. Yoma) and opening its first store in Myanmar next March. We continue to like PRAs regional rollout and will accumulate the stock on weakness.
1.60 1.50 1.40 1.30 1.20 Vol m 1.10 40 30 20 10

Nov-11
Price Close
130 127 123 120 116 113 109 106 102 99 95
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Jun-11A 367.3 64.8 35.01 0.061 55.4% 21.66 0.095 7.11% 10.84 16.1 (74.9%) 6.44 27.8% Jun-12A 442.3 78.5 45.47 0.072 17.5% 17.68 0.00% 8.28 33.8 (79.0%) 3.64 26.0% Jun-13F 483.3 81.3 48.89 0.072 0.0% 18.06 0.029 2.17% 8.75 127.0 (66.7%) 3.41 19.5% (0%) 0.88 Jun-14F 540.2 95.4 58.13 0.086 18.9% 15.50 0.034 2.58% 7.45 23.8 (64.6%) 3.04 20.8% 0% 0.85 Jun-15F 603.7 110.7 67.57 0.100 16.3% 13.33 0.040 3.00% 6.21 18.3 (64.2%) 2.70 21.5% (0%) 0.91
Feb-12
May-12
Aug-12
Source: Bloomberg

1.33 1.15 1.58
Current
Target
1.75
Parkson Retail Asia

November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Jun-12A 442.3 269.1 78.5 (18.7) 59.8 4.9 0.0 0.0 64.6 (2.1) 62.6 (17.8) 44.8 0.7 Jun-13F 483.3 297.5 81.3 (20.4) 60.8 5.5 1.0 0.0 67.3 0.0 67.3 (19.2) 48.1 0.8 Jun-14F 540.2 338.4 95.4 (22.1) 73.2 5.9 1.1 0.0 80.2 0.0 80.2 (22.9) 57.4 0.8 Jun-15F 603.7 383.2 110.7 (24.8) 86.0 6.2 1.3 0.0 93.4 0.0 93.4 (26.6) 66.8 0.8
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Jun-12A 190.3 29.9 58.2 5.4 283.9 79.5 0.1 7.5 45.0 132.1 0.1 145.0 23.2 168.3 0.0 7.0 7.0 0.0 175.3 237.8 3.0 240.8 Jun-13F 177.7 34.2 63.6 6.7 282.3 104.1 0.1 7.4 64.0 175.6 0.1 158.4 25.4 183.9 0.0 7.7 7.7 0.0 191.6 264.2 2.2 266.3 Jun-14F 192.3 39.9 71.1 8.6 311.8 121.9 0.1 7.3 70.4 199.8 0.1 177.1 28.4 205.6 0.0 8.6 8.6 0.0 214.1 296.0 1.4 297.5 Jun-15F 214.5 46.5 79.5 10.8 351.3 137.2 0.1 7.2 77.6 222.2 0.1 197.9 31.7 229.7 0.0 9.6 9.6 0.0 239.3 333.6 0.7 334.2
45.5 46.9 46.9
48.9 48.9 48.9
58.1 58.1 58.1
67.6 67.6 67.6
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Jun-12A 78.5 (4.0) Jun-13F 81.3 1.4 Jun-14F 95.4 2.2 Jun-15F 110.7 1.8
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Jun-12A 20.4% 21.1% 17.7% 0.29 0.37 127.7 28.4% 0% 21.89 116.4 283.6 135% 35.3% Jun-13F 9.3% 3.5% 16.8% 0.26 0.39 304.2 28.5% 40% 23.57 119.7 295.3 88% 26.2% Jun-14F 11.8% 17.3% 17.7% 0.28 0.44 732.1 28.5% 40% 24.38 121.9 300.7 63% 28.1% Jun-15F 11.7% 16.1% 18.3% 0.32 0.49 859.5 28.5% 40% 25.48 124.7 307.6 63% 29.2%
(0.6) (0.5) (19.7) 53.7 (28.5) 0.1 0.0 (0.7) (29.1) (0.0) 72.4 0.0 0.0 72.4
4.5 (0.2) (19.1) 67.8 (45.0) 0.0 0.0 (15.9) (60.9) 0.0 0.0 (19.6) 0.0 (19.6)
4.6 (0.1) (22.8) 79.3 (40.0) 0.0 0.0 (1.5) (41.5) 0.0 0.0 (23.3) 0.0 (23.2)
4.9 (0.1) (26.6) 90.8 (40.0) 0.0 0.0 (1.5) (41.5) 0.0 0.0 (27.0) 0.0 (27.0)
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) No. of POS (main prod/serv) SSS grth (%, main prod/serv) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) No. of POS (2ndary prod/serv) SSS grth (%, 2ndary prrod/serv) Jun-12A N/A N/A 54 9.2% N/A N/A N/A N/A Jun-13F N/A N/A 61 7.0% N/A N/A N/A N/A Jun-14F N/A N/A 69 7.5% N/A N/A N/A N/A Jun-15F N/A N/A 77 7.5% N/A N/A N/A N/A
137
REIT SINGAPORE
November 27, 2012
Parkway Life REIT

PREIT SP / PWLR.SI Current S$2.13 S$2.28 S$2.28 6.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,054m
S$1,289m
US$1.07m
S$1.31m
64.2%
605.0 m shares

Inflation hedge
Downside protection and CPI-pegged rents provide two characteristics particularly desirable in the current environment: an inflation hedge and DPU resilience. Valuations have consistently reached new highs. We have turned cautious with dividend yields at 4.5% and 1.4x P/BV.
We maintain our estimates and DDM-based target price (6.7% discount rate). We remain Neutral. Larger-than-expected acquisitions are the key potential rerating catalyst. assets with quality assets with growth potential. Growth of its Japan exposure has largely been acquisition-led. As a longer-term strategy, this asset-recycling initiative will maintain the organic growth of the Japan portfolio consistently through the next few years without overextending concentration in one market.
Tan Siew Ling

Share price info

Share price perf. (%) Relative Absolute Major shareholders Parkway Holdings Bank of New York Symphony International Holdings 1M 4.4 2.9 3M 10.9 9.8 12M 4.8 18.7 % held 35.8 10.7 6.4
Acquisitions in 2013
We continue to anticipate acquisition of hospitals in Malaysia from either third parties or its sponsor. Assets are priced at bite-sized amounts of S$10m-30m each. The REIT has S$229m debt headroom to 45% gearing but also the flexibility for mixed funding of any acquisitions. With reliability of partner operator as a key criterion, we expect quality acquisitions on a larger scale when negotiations make further headway. S$150m acquisitions have been factored in for 2013.
Premium valuations
Managements strong track record in delivering consistent growth lends the REIT further credibility. Management prudence ensures that the REIT understands a market before entering when the right opportunity comes along. Another positive is the preference for less structured transactions. That said, we think that yields have compressed to levels that reflect this premium, along with organic and acquisition growth, with the latter already being anticipated by the market for some time. Earlier or larger-than-expected acquisitions could be rerating catalysts.
Long-term strategy intact

Having achieved optimum size for its Japan portfolio, management will continue to manage its 33 Japan assets by collaborating with operators, replacing non-core or more mature
2.30 2.20 2.10 2.00 1.90 1.80 1.70 Vol m 1.60 6 4 2

Nov-11
Price Close
117 112 107 102 97 92 87 82
Financial Summary
Feb-12
May-12
Aug-12
Source: Bloomberg

1.71
2.13 2.19
Current
Target
2.28
Parkway Life REIT

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 87.8 0.0 87.8 (7.5) 80.3 0.0 (7.7) (2.8) 0.0 69.8 0.0 69.8 (8.8) 0.0 0.0 46.5 107.5 (5.5) 0.0 0.0 102.0 58.1 Dec-12F 95.4 0.0 95.4 (7.7) 87.6 0.0 (8.9) (2.6) 0.0 76.1 0.0 76.1 (8.9) 0.0 0.0 0.0 67.2 (5.9) 0.0 0.0 61.4 61.0 Dec-13F 104.6 0.0 104.6 (8.5) 96.1 0.0 (9.1) (2.8) 0.0 84.3 0.0 84.3 (14.0) 0.0 0.0 0.0 70.2 (7.7) 0.0 0.0 62.6 65.7 Dec-14F 113.1 0.0 113.1 (9.2) 103.8 0.0 (9.5) (2.8) 0.0 91.6 0.0 91.6 (14.0) 0.0 0.0 0.0 77.6 (8.7) 0.0 0.0 68.9 72.0
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-11A 1,384 0 1 1,385 36 0 8 0 45 13 6 2 21 489 24 513 896 0 896 Dec-12F 1,493 0 0 1,493 35 0 8 0 43 15 6 2 23 596 20 615 899 0 899 Dec-13F 1,595 0 0 1,595 35 0 8 0 43 16 6 2 24 696 20 715 899 0 899 Dec-14F 1,597 0 0 1,597 34 0 8 0 43 17 6 2 25 696 20 715 899 0 899
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 107.5 8.8 0.3 (3.7) (46.1) 66.8 (1.6) (10.2) 0.0 (11.8) 5.0 0.0 (57.5) (8.3) (60.8) (5.8) 55.1 51.8 Dec-12F 67.2 8.9 1.9 (5.9) 0.1 72.2 (3.5) (106.5) 0.0 (109.9) 106.5 0.0 (61.0) (8.9) 36.5 (1.2) (37.7) 59.8 Dec-13F 70.2 14.0 1.4 (7.7) 0.0 78.0 1.5 (100.0) 0.0 (98.5) 100.0 0.0 (65.7) (14.0) 20.3 (0.2) (20.5) 65.5 Dec-14F 77.6 14.0 1.3 (8.7) 0.0 84.2 1.5 0.0 0.0 1.5 0.0 0.0 (72.0) (14.0) (86.1) (0.3) 85.8 71.7
Key Ratios
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-11A N/A N/A N/A 2,265 100.0% 1,384.0 N/A Dec-12F N/A N/A N/A 2,265 100.0% 1,493.5 N/A Dec-13F N/A N/A N/A 2,265 100.0% 1,595.1 N/A Dec-14F N/A N/A N/A 2,265 100.0% 1,596.7 N/A
139
REIT SINGAPORE
November 28, 2012
Perennial China Retail Trust

PCRT SP / PCRT.SI Current S$0.49 S$0.59 S$0.59 21.2%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$452.1m
S$552.3m
US$0.64m
S$0.78m
51.0%
1,122 m shares

Improvements ahead
After a difficult 2012, management expects operational improvements in 1Q13 for operational malls. The recent restructuring of its Xian pipeline asset provides certainty of acquisitions and NAV growth down the road. We look forward to revaluations in 2013, lowering gearing.
Execution is key and we look for leasing improvements and stronger earnings from completed malls. No change to our estimates or target price (30% discount to RNAV). Maintain Outperform with earnings delivery as stock catalyst. We look forward to improvements next year, as earnings from malls have picked up since 2Q12. Its Foshan mall will also commence operations in 1Q13 and is on track for 80-90% occupancy. We expect higher yields on cost than for the Shenyang mall. On completion of four of its seven assets from two last year, we expect some revaluation gains, pushing down its gearing and lifting NAV. Rental contributions should strengthen, sustaining its dividends when earn-out tapers off in 2014. In the meantime, 8-9% yields are supported by its cash buffer.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Kuok Khoon Hong (deemed) Din Hwa Chen 1M 1.5 0 3M 5.4 4.3 12M -6.2 7.7 % held 16.9 12.0
Difficult 2012
Due to delays in the completion of its Shenyang mall and home-purchase restrictions in China, management was a distance behind its projected earnings during IPO. 2012 has been a difficult year as the trust mitigated bumps along the way by negotiating for compensatory earn-out and restructuring its furniture mall to lower its reliance on furniture tenants. Management warns that its Shenyang malls could face challenging conditions in the next few quarters. 2012 was also the year when a local partner sold his shares to Mr Kuok Khoon Hong and a new funding vehicle was created with additional S$500m capital.
Balance sheet in control

High finance costs are our main grouse, taking a bite out of earnings as the company pays down progress payments. In the recent restructuring of its Xian acquisition, a consortium led by CEO Mr Pua/Mr Kuok stepped in as its new sponsor. This could be the beginning of a new trend. We like the greater alignment of interest, providing certainty of back-loaded payments, giving time for earnings to ramp up and leeway for capital management.
Improvements and stronger malls
0.60 0.55 0.50 0.45 Vol m 0.40 20 15 10 5

Nov-11
Price Close
116 109 101 94 86
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x)
|
Feb-12
May-12
Aug-12
Source: Bloomberg

0.49 0.45 0.58
Dec-11A 0.00 0.00 5.96 1.40 (0.002) 0% NA 0.024 4.80% 7.5% 0.71 0.69
Current
|
Target
0.59
Dec-12F 0.00 0.00 (5.31) 0.36 (0.005) 137% NA 0.039 7.90% 31.9% 0.61 0.80 (0.72%) 0% 1.57
Dec-13F 6.19 3.71 10.43 18.18 0.009 na 53.10 0.038 7.85% 42.9% 0.64 0.76 1.47% 0% 1.15
Dec-14F 21.48 12.89 19.14 28.21 0.017 82% 29.16 0.043 8.76% 52.1% 0.61 0.80 2.67% 0% 0.88
Perennial China Retail Trust

November 28, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit
|
Balance Sheet
Dec-12F 0.00 0.00 0.00 0.00 0.00 0.00 (3.50) (0.27) (2.58) (6.35) 0.00 (6.35) (4.82) 6.17 0.00 0.00 (5.00) (0.31) 0.00 0.00 (5.31) 0.36 Dec-13F 6.19 0.00 6.19 (2.47) 3.71 0.00 (5.74) (0.34) (2.58) (4.95) 0.00 (4.95) (6.54) 23.07 0.00 0.00 11.59 (1.15) 0.00 0.00 10.43 18.18 Dec-14F 21.48 0.00 21.48 (8.59) 12.89 0.00 (7.12) (0.42) (2.58) 2.77 0.00 2.77 (6.40) 23.97 0.00 0.00 20.34 (1.20) 0.00 0.00 19.14 28.21 (S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity
|
Dec-12F 891 0 0 891 204 0 19 0 224 28 89 43 160 266 0 266 688 0 0 688
Dec-13F 1,150 0 0 1,150 222 0 19 0 241 28 149 35 212 448 0 448 731 0 0 731
Dec-14F 1,399 0 0 1,399 179 0 19 0 198 28 208 35 271 625 0 625 701 0 0 701
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity
|
Key Ratios
Dec-12F (5.0) (1.3) 0.0 (0.1) 3.4 (3.1) 0.0 (197.6) 18.4 (179.2) 286.5 0.0 (1.4) (11.3) 273.8 91.5 (182.2) 99.4 Dec-13F 11.6 (16.5) 0.0 (1.2) 5.5 (0.6) 0.0 (256.0) 28.3 (227.6) 241.9 0.0 (0.4) (66.1) 175.4 (52.8) (228.1) 7.1 Dec-14F 20.3 (17.6) 0.0 (1.2) 6.8 8.4 0.0 (246.2) 19.9 (226.4) 235.6 0.0 (9.1) (17.3) 209.2 (8.7) (217.7) 11.2 Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets
|
Dec-12F N/A N/A N/A 64.6% (1.29) (6.17%) (822%) 1.40 1.40 1.28 (91.5%) (0.52%)
Dec-13F N/A N/A 60.0% (0.7%) (0.74) 9.96% 418% 1.14 1.14 1.05 12.4% 0.83%
Dec-14F 247% 247% 60.0% 11.6% 0.41 5.89% 257% 0.73 0.73 0.66 6.0% 1.28%
RNAV RNAV (S$m) 604 1,048 1,652 (462) (236) 954 1,125 0.85 Discount to RNAV 30% % of GAV 37% 63% 100%
Key Drivers
|
Completed properties Properties under construction GAV Less: FY14 net debt (incl any off b/s debt) Less: purchase/capex costs (undiscounted) RNAV Fully-diluted no. of shares (m) RNAV per share (S$)
Dec-12F N/A N/A N/A 3,060 60.0% N/A N/A
Dec-13F N/A N/A N/A 3,570 82.0% N/A N/A
Dec-14F N/A N/A N/A 5,551 85.0% N/A N/A
Target Price
0.59
141

November 27, 2012
Petra Foods
PETRA SP / PEFO.SI Current S$2.80 S$1.92 S$1.92 -31.3%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,400m
S$1,711m
US$0.25m
S$0.30m
37.0%
611.2 m shares

Not-so-sweet prospects
Petras cocoa-processing margins are under threat from an overcapacity of grinding facilities in Indonesia. Margins have just started to crack. We expect worse to come as more new capacity is introduced over the next two years.
The stock has been buoyed by M&A euphoria over consumer-related stocks, masking its weakening fundamentals. But we caution that de-rating could be pronounced once the euphoria dies down. Maintain Underperform, with no changes to EPS and target price (16x CY14 P/E, 8-year mean).
Face-off with the big boys

We expect Petras cocoa-ingredient margins to decline in 2013. Overcapacity had wiped out half of its processing margins in 3Q12. Margins could fall further when more capacity comes on stream over the next two years. Furthermore, competition could be fiercer as Petra will no longer be competing with small domestic processors but global giants like ADM and Cargill, which have the advantages of scale and pricing.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Chuang family Tiger Global Aberdeen Asset Management 1M 3.7 2.2 3M 20.2 19.1 12M 50.8 64.7 % held 50.5 6.4 5.8
Competition from new grinders

We believe an influx of new cocoa-grinding capacity in Indonesia over 2012-14 will stiffen competition and eat into the margins of processors. There has been a flurry of downstream investments in Indonesia from domestic and international players following an imposition of export taxes on cocoa beans, aimed at encouraging value-added downstream production. We expect Indonesias grinding capacity to more than double by 2014, tipping the industry into a state of oversupply.
When the euphoria fades

Petras shares have been buoyed by M&A euphoria following a spate of corporate activity involving F&N, APB and Cerebos. Petra may not follow in those footsteps as management remains dedicated to developing its branded consumer business as part of diversification. Beyond the short-lived sentiment boost, Petras poor fundamentals could lead to its de-rating once the euphoria fades.
2.9 2.7 2.5 2.3 2.1 1.9 1.7 Vol m 1.5 4 3 2 1

Nov-11
Price Close
162 152 142 132 122 112 102 92
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 1,566 107.7 44.47 0.07 56.2% 29.44 0.030 1.29% 16.52 NA 172% 4.76 17.7% Dec-11A 1,702 130.0 60.59 0.10 36.2% 23.10 0.039 1.69% 14.60 53.05 169% 4.72 20.5% Dec-12F 1,665 127.0 53.84 0.09 (11.1%) 25.99 0.035 1.53% 14.61 21.22 140% 4.27 17.2% 0% 0.96 Dec-13F 1,710 132.4 55.98 0.09 4.0% 25.00 0.037 1.62% 13.82 29.48 120% 3.87 16.2% 0% 0.92 Dec-14F 1,762 141.3 61.27 0.10 9.5% 22.84 0.040 1.75% 12.75 26.78 101% 3.50 16.1% 0% 0.85
Feb-12
May-12
Aug-12
Source: Bloomberg

1.70
2.80 2.82
Current
1.92
Target
Petra Foods
November 27, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 1,702 240 130 (24) 106 (27) 0 0 79 0 79 (18) 60 0 0 Dec-12F 1,665 243 127 (30) 97 (26) 0 0 71 0 71 (17) 54 0 0 Dec-13F 1,710 250 132 (33) 100 (26) 0 0 74 0 74 (18) 56 0 0 Dec-14F 1,762 261 141 (35) 107 (26) 0 0 81 0 81 (19) 61 0 0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 19.1 162.5 477.9 55.9 715.4 280.4 3.3 21.0 27.2 331.8 374.4 195.6 16.9 586.9 146.7 16.7 163.4 0.0 750.3 296.6 0.3 296.9 Dec-12F 62.5 183.1 416.2 55.9 717.8 300.3 3.3 21.0 27.2 351.8 374.4 186.5 16.9 577.9 146.7 16.7 163.4 0.0 741.3 327.9 0.3 328.2 Dec-13F 88.0 188.1 427.4 55.9 759.4 297.6 3.3 21.0 27.2 349.1 374.4 191.5 16.9 582.9 146.7 16.7 163.4 0.0 746.3 361.9 0.3 362.2 Dec-14F 116.7 193.8 440.6 55.9 807.0 293.0 3.3 21.0 27.2 344.5 374.4 196.8 16.9 588.1 146.7 16.7 163.4 0.0 751.6 399.6 0.3 400.0
61 61 61
54 54 54
56 56 56
61 61 61
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 130.0 (0.4) (1.0) Dec-12F 127.0 0.0 32.0 Dec-13F 132.4 0.0 (11.2) Dec-14F 141.3 0.0 (13.6)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 8.7% 20.7% 7.64% (0.82) 0.49 3.86 23.2% 39.1% 35.11 121.0 46.66 10.8% 12.7% Dec-12F (2.2%) (2.3%) 7.63% (0.75) 0.54 3.72 24.0% 39.7% 37.99 115.1 49.19 9.9% 11.6% Dec-13F 2.7% 4.3% 7.74% (0.71) 0.59 3.83 24.0% 40.4% 39.62 105.5 47.27 10.3% 11.5% Dec-14F 3.1% 6.7% 8.02% (0.66) 0.65 4.09 24.0% 39.9% 39.55 105.5 47.21 10.9% 11.8%
22.8 (27.4) (22.3) 101.7 (52.4) 0.0 0.0 1.0 (51.3) (24.0) 0.0 0.0 (21.8) (27.4) (73.2)
0.0 (26.1) (17.0) 115.9 (50.0) 0.0 0.0 0.0 (50.0) 0.0 0.0 0.0 (22.5) 0.0 (22.5)
0.0 (26.1) (17.7) 77.5 (30.0) 0.0 0.0 0.0 (30.0) 0.0 0.0 0.0 (22.0) 0.0 (22.0)
0.0 (26.1) (19.3) 82.3 (30.0) 0.0 0.0 0.0 (30.0) 0.0 0.0 0.0 (23.5) 0.0 (23.5)
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) ASP (% chg, tertiary prod/serv) Unit sales grth (%,tertiary prod/serv) Util. rate (%, tertiary prod/serv) Unit raw mat ASP (%chg,main) Total Export Sales Growth (%) Export Sales/total Sales (%) Dec-11A N/A 5.6% N/A N/A 16.1% N/A N/A N/A N/A N/A N/A N/A Dec-12F N/A 1.9% N/A N/A 12.0% N/A N/A N/A N/A N/A N/A N/A Dec-13F N/A 0.0% N/A N/A 10.0% N/A N/A N/A N/A N/A N/A N/A Dec-14F N/A 0.0% N/A N/A 10.0% N/A N/A N/A N/A N/A N/A N/A
143
Hospitals SINGAPORE
November 28, 2012
Raffles Medical Group

RFMD SP / RAFG.SI Current S$2.43 S$3.52 S$3.52 44.9%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,083m
S$1,323m
US$0.67m
S$0.82m
45.0%
534.3 m shares

Steadfast till the end

A few forces favour group-practice healthcare operators in Singapore, including long waiting lists at public hospitals and foreign patients choice of Singapore as a destination for their medical needs.
All these are expected to spur demand for private-sector medical services in the country. We expect further catalysts from operating efficiencies and expanded operations. Our target price is intact at 22x CY14 P/E (mid-cycle valuations). Outperform with catalysts from rate hike and expansion of operational beds. costs) rather than stagnating revenue. The group was merely keeping pace with industry-wide salary increments and staff recruitment to meet its business expansion in 2013. Staff from Singapore Prisons will be redeployed in 2013 to other parts of the group as well as new clinics and services to be launched in 2013. This suggests a slowdown in new hiring, which could reverse its continuous salary increases. Operating efficiencies should follow.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Raffles Medical Holdings Dr Loo Choon Yong 1M -1.7 -3.2 3M 1.1 0 12M 0.2 14.1 % held 33.6 9.8
Bideford still on for 2013

Applications for a change of use of the commercial podium at its 30 Bideford Road premises for medical clinics have not been successful. Management is working with the authorities to amend plans and accommodate the latters concerns with a resubmission of application expected shortly. We continue to believe that clinical operations will commence sometime in the later part of 1H13, if not early 2H13.
Rate readjustments to lift earnings

Readjustments in its inpatient billings should help RFMD catch up on rates, albeit gradually initially (5-10% in 2013). This provides scope for the company to close its pricing gap with its competitors. RFMD is still a laggard stock in this sector; although it has one of the strongest balance sheets among peers in the region. ROEs have also been strong. Maintain Outperform.
Expect operating efficiencies in 2013

2012 profit growth was slowed down by a jump in costs (particularly staff
2.7 2.6 2.5 2.4 2.3 2.2 2.1 2.0 3 2 2 1 1

Nov-11
Price Close
114 110 107 103 100 96 93 89
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 239.1 60.0 45.27 0.09 18.9% 27.93 0.035 1.44% 19.69 24.63 (29.5%) 4.44 16.9% Dec-11A 272.8 66.8 50.40 0.10 10.2% 25.28 0.040 1.65% 18.67 NA (8.4%) 3.86 16.2% Dec-12F 329.6 75.5 54.61 0.10 7.6% 23.52 0.040 1.65% 16.64 12.71 (7.8%) 3.52 15.6% 0% 1.04 Dec-13F 409.4 94.5 65.59 0.12 20.1% 19.65 0.040 1.65% 13.19 66.79 (10.3%) 3.14 16.9% 0% 1.06 Dec-14F 482.7 115.2 82.79 0.16 26.2% 15.57 0.040 1.65% 10.54 26.12 (15.9%) 2.73 18.8% 0% 1.13
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

2.43 2.06 2.62
Current
Target
3.52
Raffles Medical Group

November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 272.8 272.8 66.8 (7.2) 59.5 (0.1) 0.0 0.0 59.4 0.0 59.4 (8.8) 50.6 (0.2) 0.0 Dec-12F 329.6 329.6 75.5 (8.0) 67.5 (0.6) 0.0 0.0 66.9 0.0 66.9 (12.0) 54.8 (0.2) 0.0 Dec-13F 409.4 409.4 94.5 (13.9) 80.6 (0.3) 0.0 0.0 80.3 0.0 80.3 (14.4) 65.8 (0.2) 0.0 Dec-14F 482.7 482.7 115.2 (13.9) 101.3 (0.1) 0.0 0.0 101.2 0.0 101.2 (18.2) 83.0 (0.2) 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 49.7 31.9 5.1 0.0 86.7 141.9 0.0 0.3 199.7 341.9 5.5 59.8 11.1 76.3 16.0 1.6 17.6 0.0 93.9 334.0 0.7 334.7 Dec-12F 120.8 35.0 5.4 0.0 161.2 187.9 0.0 0.3 201.3 389.5 4.0 77.0 12.9 93.9 88.0 2.2 90.2 0.0 184.1 365.9 0.7 366.6 Dec-13F 104.4 43.5 5.7 0.0 153.6 228.0 0.0 0.3 204.7 433.1 4.0 95.6 15.3 114.9 58.0 3.0 61.0 0.0 175.9 410.1 0.7 410.8 Dec-14F 118.4 51.3 5.9 0.0 175.7 268.1 0.0 0.3 207.9 476.3 5.0 112.8 19.0 136.8 38.0 4.0 42.0 0.0 178.8 472.4 0.7 473.2
50.4 50.4 50.4
54.6 54.6 54.6
65.6 65.6 65.6
82.8 82.8 82.8
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 66.8 4.5 7.2 7.2 (0.3) (7.6) 77.8 (114.5) 0.2 0.0 (114.3) (1.1) 0.0 0.0 (8.8) (3.7) (13.6) Dec-12F 75.5 15.6 8.0 (4.6) (1.1) (8.8) 84.5 (54.0) 0.0 0.0 (54.0) 70.5 0.0 0.0 (21.4) 0.0 49.2 Dec-13F 94.5 12.3 13.9 (4.6) (0.7) (12.0) 103.3 (54.0) 0.0 0.0 (54.0) (30.0) 0.0 0.0 (21.4) 0.0 (51.4) Dec-14F 115.2 12.8 13.9 (4.6) (0.5) (14.4) 122.3 (54.0) 0.0 0.0 (54.0) (19.0) 0.0 0.0 (21.4) 0.0 (40.4)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 14.1% 11.3% 24.5% 0.05 0.63 236.2 14.8% 42.4% 38.75 N/A N/A 29.2% 17.9% Dec-12F 20.8% 13.1% 22.9% 0.05 0.69 62.5 18.0% 39.1% 37.14 N/A N/A 21.9% 16.7% Dec-13F 24.2% 25.2% 23.1% 0.08 0.77 110.7 18.0% 32.6% 35.02 N/A N/A 23.7% 17.4% Dec-14F 17.9% 21.9% 23.9% 0.14 0.89 205.3 18.0% 25.8% 35.86 N/A N/A 27.3% 20.6%
Key Drivers
No. Of Patient Admissions (m P.a.) Revenue Per Patient Bed (S$) Occupancy Rate Of Beds (%) Average Length Of Stay (days) Beds Opened (units) Bed Turnover A Year (x) % of fgn patients to patient load Dec-11A N/A N/A 65.0% N/A 220.0 N/A N/A Dec-12F N/A N/A 62.0% N/A 220.0 N/A N/A Dec-13F N/A N/A 65.0% N/A 250.0 N/A N/A Dec-14F N/A N/A 68.0% N/A 250.0 N/A N/A
145
Airports SINGAPORE
November 27, 2012
SATS Ltd
SATS SP / SIAT.SI Current S$2.77 S$2.82 S$2.82 1.7%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,515m
S$3,075m
US$2.11m
S$2.66m
56.0%
1,109 m shares

Margin recovery
The worst of margin pressures appears to be over for SATS. Higher airline-passenger volumes should support its organic growth, while TFKs turnaround would be an added booster.
Improved productivity has translated into margin stability, which in turn should be supportive of earnings in an environment of revenue growth. Dividend yields of 4.6% offer valuation support, we believe. Maintain Neutral, with no changes to EPS or target price (14.4x CY14 P/E, 8-year mean). volume growth (+10% YTD) would translate into profit growth.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings 1M 1.1 -0.4 3M 6.8 5.7 12M 19.9 33.8 % held 44.0
TFKs turnaround an additional boost

TFK had trebled its profits in 2Q13, with the help of revenue growth and margin expansion. Management sees near-term risks from strained Sino-Japanese relations but believes the impact on TFK should be minimal.
Margin stability
We expect ongoing cost management to stabilise SATSs margins, which had previously slipped on cost inflation. The automation of processes and initiatives to improve yields should bring costs under control, which means passenger
Dividend support
While earnings growth may not be overly exciting at a forecast 3-year EPS CAGR of 9%, SATS should be supported by decent 4.6% dividend yields.
Price Close 2.8 2.6 2.4 2.2 2.0 5 4 3 2 1

Vol m
131 127 123 119 115 112 108 104 100 96
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-11A 1,358 246.3 179.4 0.16 (2.2%) 17.71 0.17 6.14% 12.79 14.10 (7.4%) 2.02 11.9% Mar-12A 1,685 266.4 181.0 0.16 1.9% 17.35 0.26 9.39% 11.10 8.29 (19.4%) 2.03 12.1% Mar-13F 1,890 298.6 187.5 0.17 2.6% 16.90 0.12 4.27% 10.01 12.26 (18.7%) 2.18 12.9% (0%) 0.98 Mar-14F 1,975 319.9 210.8 0.19 12.4% 15.03 0.13 4.80% 9.14 16.33 (21.6%) 2.06 14.6% 0% 1.02 Mar-15F 2,063 334.3 228.0 0.21 8.2% 13.90 0.14 5.20% 8.58 15.53 (23.9%) 1.96 14.9% 0% 1.03
Aug-12

2.14
2.77 2.85
Current
Target
2.82
SATS Ltd
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Mar-12A 1,685 618 266 (97) 170 (0) 41 0 211 11 222 (37) 185 (4) 0 Mar-13F 1,890 692 299 (106) 192 (2) 45 0 236 0 236 (47) 188 (1) 0 Mar-14F 1,975 731 320 (101) 219 (2) 48 0 265 0 265 (53) 212 (1) 0 Mar-15F 2,063 763 334 (96) 238 (2) 50 0 286 0 286 (57) 229 (1) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Mar-12A 472 294 44 22 831 654 0 213 424 1,291 27 203 42 272 131 103 234 0 506 1,509 107 1,616 Mar-13F 441 283 57 22 804 617 0 213 470 1,299 27 283 42 353 131 103 234 0 587 1,409 108 1,516 Mar-14F 503 296 59 22 881 585 0 213 517 1,315 27 296 42 365 131 103 234 0 599 1,488 109 1,597 Mar-15F 559 310 62 22 953 558 0 213 567 1,338 27 310 42 379 131 103 234 0 613 1,569 110 1,678
181 183 183
187 187 187
211 211 211
228 228 228
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Mar-12A 266.4 (41.2) (67.9) (44.6) 95.6 (0.1) (40.3) 167.9 (64.3) 263.4 25.4 224.5 (10.3) 0.1 (188.4) (15.8) (214.4) Mar-13F 298.6 (45.3) 77.5 (63.1) 107.3 (2.1) (47.1) 325.8 (70.0) 0.0 1.3 (68.7) 1.5 (0.0) (288.3) 0.0 (286.8) Mar-14F 319.9 (47.6) (2.5) (55.2) 101.7 (2.1) (53.0) 261.3 (70.0) 0.0 1.3 (68.7) 1.5 0.0 (131.2) 0.0 (129.7) Mar-15F 334.3 (50.0) (2.7) (48.0) 96.9 (2.0) (57.3) 271.3 (70.0) 0.0 1.3 (68.7) 1.5 (0.0) (147.6) 0.0 (146.1)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Mar-12A 24.1% 8.2% 15.8% 0.28 1.36 1,697 16.5% 170% 64.81 17.67 83.8 8.4% 9.5% Mar-13F 12.1% 12.1% 15.8% 0.26 1.27 92 20.0% 70% 55.74 15.29 74.1 11.4% 11.2% Mar-14F 4.5% 7.1% 16.2% 0.31 1.34 107 20.0% 70% 53.57 17.01 85.0 13.6% 12.8% Mar-15F 4.5% 4.5% 16.2% 0.36 1.41 117 20.0% 70% 53.57 17.01 85.0 14.6% 13.3%
Key Drivers
(S$) Int'l Passenger Traffic Growth (%) Domestic Pax Traffic Growth (%) International Flight Traffic Growth (%) Domestic Flight Traffic Growth (%) Int'l Pax Service Charge Dom Pax Serv Charge Unit Meals Produced (% Change) Mar-12A N/A N/A 11.0% N/A N/A N/A 5.7% Mar-13F N/A N/A 10.0% N/A N/A N/A 8.0% Mar-14F N/A N/A 4.5% N/A N/A N/A 4.5% Mar-15F N/A N/A 4.5% N/A N/A N/A 4.5%
147
November 28, 2012
Sembcorp Industries
SCI SP / SCIL.SI Current S$4.98 S$6.26 S$6.26 25.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$7,281m
S$8,894m
US$12.02m
S$14.75m
50.0%
1,776 m shares

Change of tides
With utilities accounting for more than half of its business, we believe that SCI is able to counter the cyclicality of the marine business in the next two years given the healthy prospects from new projects in the pipeline.
We maintain our Outperform rating and SOP-based target price. Key catalysts include stronger international operations, mainly China, Vietnam and the Middle East.
Singapore to remain key earnings contributor

We forecast Singapore utilities to contribute about 65% of utilities earnings in FY13-14 despite the potential for lower power spread with the influx of new gencos and LNG supply. SCI will continue to enjoy competitive power margins, thanks to the low carrying costs of its largely depreciated assets and cogen efficiency relative to the other gencos.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings 1M -8.1 -9.6 3M -7.7 -8.8 12M 10.3 24.2 % held 49.5
More gas tricks in the hat

We believe that SCI could benefit from more opportunistic gas sales at good margins as it rides on the gas shortage in Singapore until the full commissioning of the LNG terminal in 2Q13. Gas imports from West Natuna are on field depletion basis with room for capacity adjustment, allowing SCI to import more to meet the strong demand. There could also be more gas available for sale during the cogen shutdown period from mid-Dec 12 to Jan 13 as Sembcogen is one of SCIs key customers for gas, which it uses to power its own cogeneration plant.
Cheap valuation for utilities

The valuation for SCI ex-marine, i.e. SCIs utilities business is not lofty, at 6.8x CY13 P/E vs. an average of 13x for regional power and gas peers. Upside could come from stronger-than-expected contributions from upcoming projects Woodchip Boiler 2 (2Q13), Banyan Cogen and a multi-utilities facility (4Q13), Andhra Pradesh plant (1H14) and desalination plant in Fujairah (2H14).
6.2 5.7 5.2 4.7 4.2 Vol m 3.7 15 10 5

Nov-11
Price Close
130 123 116 109 102 95
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 8,764 1,442 792.9 0.43 11.8% 11.59 0.19 3.86% 5.21 7.51 (37.5%) 2.33 21.5% Dec-11A 9,047 1,331 809.3 0.45 5.9% 10.97 0.20 3.92% 6.17 70.00 (18.2%) 2.15 20.4% Dec-12F 9,929 1,342 772.8 0.44 (4.2%) 11.46 0.19 3.87% 6.26 22.78 (15.3%) 1.93 17.8% 0% 1.05 Dec-13F 10,184 1,407 760.4 0.43 (1.6%) 11.63 0.19 3.81% 6.22 23.43 (11.9%) 1.75 15.8% 0% 0.95 Dec-14F 11,199 1,554 855.7 0.48 12.5% 10.34 0.21 4.29% 5.80 14.69 (12.1%) 1.58 16.1% 0% 0.96
Feb-12
May-12
Aug-12
Source: Bloomberg

4.98 3.91 5.76
6.26
Current Target
Sembcorp Industries
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 9,047 1,570 1,331 (235) 1,096 4 171 0 1,271 0 1,271 (125) 1,146 (337) 0 Dec-12F 9,929 1,723 1,342 (247) 1,096 16 179 0 1,291 0 1,291 (219) 1,071 (298) 0 Dec-13F 10,184 1,767 1,407 (259) 1,149 17 188 0 1,353 0 1,353 (230) 1,123 (363) 0 Dec-14F 11,199 1,943 1,554 (272) 1,282 18 197 0 1,497 0 1,497 (254) 1,242 (387) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 2,995 1,090 1,078 53 5,217 4,250 1,490 332 464 6,536 186 3,124 387 3,697 1,856 958 2,814 0 6,512 4,115 1,126 5,241 Dec-12F 3,163 1,192 1,192 53 5,600 5,022 1,602 332 464 7,419 186 3,475 337 3,998 2,056 958 3,014 0 7,013 4,581 1,425 6,006 Dec-13F 3,256 1,225 1,218 53 5,752 5,854 1,715 332 464 8,365 186 3,540 348 4,074 2,256 958 3,214 0 7,289 5,040 1,787 6,828 Dec-14F 3,579 1,345 1,342 53 6,319 6,822 1,715 332 464 9,333 186 3,906 372 4,464 2,456 958 3,414 0 7,879 5,600 2,174 7,774
809 809 809
773 773 773
760 760 760
856 856 856
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 1,331 (184) Dec-12F 1,342 137 Dec-13F 1,407 6 Dec-14F 1,554 122
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 3.23% (7.7%) 14.7% 0.54 2.32 16.70 9.8% 37.8% 37.91 48.67 122.8 34.5% 16.8% Dec-12F 9.75% 0.8% 13.5% 0.52 2.58 15.89 17.0% 39.0% 42.05 50.62 127.7 24.2% 15.2% Dec-13F 2.56% 4.9% 13.8% 0.46 2.84 15.86 17.0% 39.0% 43.30 52.24 131.2 21.5% 14.1% Dec-14F 9.97% 10.4% 13.9% 0.53 3.15 16.86 17.0% 39.0% 41.88 50.47 127.0 20.2% 14.0%
(91) 4 (125) 936 (1,052) 0 (198) 0 (1,249) 440 0 0 (623) 4 (179)
81 (53) (219) 1,287 (1,019) 0 (80) 0 (1,099) 200 0 0 (306) 16 (90)
149 17 (230) 1,348 (1,091) 0 (80) 0 (1,171) 200 0 0 (301) 17 (85)
13 18 (254) 1,451 (969) 0 (80) 0 (1,049) 200 0 0 (297) 18 (79)
Key Drivers
Rev. growth (%, main biz.) EBITDA mgns (%, main biz.) Rev. as % of total (main biz.) EBITDA as % of total (main biz.) Rev. growth (%, 2ndary biz.) EBITDA mgns (%, 2ndary biz.) Rev. as % of total (2ndary biz.) EBITDA as % of total (2ndary biz.) Rev. growth (%, tertiary biz.) EBITDA mgns (%, tertiary biz.) Rev.as % of total (tertiary biz.) EBITDA as % of total (tertiary biz.) Dec-11A 13.1% -3.2% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Dec-12F 13.6% -1.5% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Dec-13F 4.9% -0.5% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Dec-14F 3.6% 18.5% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
149

November 28, 2012
Sembcorp Marine
SMM SP / SCMN.SI Current S$4.40 S$5.01 S$5.01 13.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$7,519m
S$9,185m
US$19.55m
S$23.98m
37.2%
2,088 m shares

Needs more to beat expectations

Sembmarine would need to do more in order to outperform market expectations. Other than the need to replenish orders for its less-filled Singapore yards, it has to keep watchful eyes on its greenfield yard construction in Brazil.
Maintain Neutral and target price at 15x CY14 P/E (its 10-year average as well as mid-cycle O&M valuations). At 16x CY13 P/E, the stock is trading above its 10-year average, against declining earnings and margins. Still-strong order enquiries and oil prices are expected to limit its share-price downside.
New product, new yard in Brazil

We see risks of teething issues for Sembmarines greenfield yard in Brazil (expected to be competed in 2014), which could delay the delivery of its first few drillships for Sete Brasil. Cost overruns as a result of labour shortages and the learning curve for drillships could also hurt margins on top of low-margin expectations from Brazilian contracts.
Share price info

Share price perf. (%) Relative Absolute Major shareholders SembCorp Industries 1M -7.8 -9.3 3M -10.7 -11.8 12M 6.6 20.5 % held 61.0
Need to replenish order

We believe SMMs decision not to bid aggressively for jack-up rigs during the past rig rush (2010-11) could have resulted in a less-filled yard than KEPs. Hopes of securing more fast-track projects with higher margins have been largely dashed with only two such projects bagged from Gulf Drilling and Safin Gulf in 2012. Excluding Sete Brasils orders (S$7bn) with delivery stretched till 2019, we estimate Sembmarines order book at S$5bn, for execution by its Singapore yards.
S$4.5bn orders for 2013

Enquiries are still active and we forecast S$4.5bn of orders for 2013. These include an option from Sete Brasil of US$400m for FPSO topside integration. We believe delays faced by the Brazilian yard, EAS, could also lead to more rig contracts from Sete Brasil for Sembmarine, as a stop-gap measure by Petrobras.
6.0 5.5 5.0 4.5 4.0 3.5 100 80 60 40 20

Nov-11
Price Close
139 130 121 112 103 94
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 4,555 1,026 860.3 0.42 22.2% 10.56 0.36 8.12% 5.82 7 (108%) 3.52 38.4% Dec-11A 3,960 823 751.9 0.36 (12.7%) 12.13 0.25 5.69% 8.35 NA (78%) 3.77 30.0% Dec-12F 4,343 718 591.9 0.29 (21.1%) 15.40 0.17 3.90% 11.34 NA (23%) 3.47 23.5% 0% 1.07 Dec-13F 4,320 668 555.4 0.27 (6.2%) 16.39 0.16 3.66% 13.18 5,433 3% 3.20 20.3% 0% 0.86 Dec-14F 5,119 839 690.3 0.33 24.3% 13.19 0.20 4.55% 10.99 37 17% 2.92 23.1% 0% 0.89
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

4.40 3.69 5.43
5.01
Current Target
Sembcorp Marine
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 3,960 952 823 (86) 737 62 63 (2) 860 0 860 (91) 769 (17) 0 Dec-12F Dec-13F Dec-14F 4,343 4,320 5,119 853 812 990 718 668 839 (82) (83) (88) 636 585 751 37 33 30 58 61 63 0 0 0 731 679 844 0 0 0 731 679 844 (121) (112) (139) 610 (18) 0 567 (11) 0 704 (14) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 1,990 421 926 62 3,399 1,034 507 37 74 1,653 35 1,786 579 2,400 0 60 60 85 2,546 2,414 92 2,506 Dec-12F Dec-13F Dec-14F 1,275 954 894 483 480 569 1,448 1,440 1,706 62 62 62 3,267 2,936 3,232 1,803 2,688 3,369 565 626 689 37 37 37 74 74 74 2,479 3,425 4,169 235 435 635 1,758 473 2,467 400 60 460 85 3,012 2,624 110 2,734 1,749 464 2,649 600 60 660 85 3,394 2,846 121 2,967 2,071 492 3,198 800 60 860 85 4,143 3,122 136 3,258
752 752 752
592 592 592
555 555 555
690 690 690
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 823 (120) Dec-12F Dec-13F Dec-14F 718 668 839 (611) 1 (33)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (13.1%) (19.7%) 20.8% 0.94 1.17 295.9 10.6% 88% 26.46 101.8 196.0 (110%) 29.5% Dec-12F Dec-13F Dec-14F 9.7% (0.5%) 18.5% (12.8%) (6.9%) 25.5% 16.5% 15.5% 16.4% 0.31 (0.04) (0.26) 1.27 1.38 1.51 219.4 201.6 259.0 16.5% 16.5% 16.5% 77% 77% 77% 38.07 40.66 37.39 124.5 150.2 139.1 184.9 181.5 168.0 335% 35% 29% 22.2% 16.5% 17.7%
(308) 0 (170) 226 (438) 0 0 (39) (477) 27 0 0 (763) 62 (674)
84 0 (174) 18 (850) 0 0 (0) (850) 600 0 0 (519) 37 118
20 0 (121) 569 (969) 0 0 2 (967) 400 0 0 (355) 33 78
(65) 0 (112) 629 (769) 0 0 (16) (785) 400 0 0 (333) 30 97
Key Drivers
Outstanding Orderbook (S$m) Order Book Wins (S$m) Orderbook Depletion (S$m) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Dec-11A N/A 3,500.0 4,410.7 N/A N/A N/A Dec-12F Dec-13F Dec-14F N/A N/A N/A 10,240.0 4,500.0 4,500.0 4,342.7 4,320.5 5,119.3 N/A N/A N/A N/A N/A N/A N/A N/A N/A
151
Retail SINGAPORE
November 27, 2012
Sheng Siong Group

SSG SP / Shen.SI Current S$0.51 S$0.58 S$0.58 14.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$571.4m
S$698.7m
US$0.70m
S$0.87m
64.6%
1,384 m shares
CIMB Analyst Kenneth NG CFA

T 65 6210 8610 E kenneth.ng@cimb.com
Forging ahead
This nimble and battle-hardened local supermarket operator has emerged from price skirmishes at the start of the year to forge ahead with the opening of eight new stores in FY12. As these stores mature, FY13 could shape up to be a good year.
We expect the maturing of these stores to spur its earnings growth. Our estimates are tweaked on housekeeping matters. Maintain Outperform with our target price still at 18x forward P/E, a 20% discount to Dairy Farm on account of its lower profitability. Catalysts should include strong same-store-sales growth, in our view. suitable retail space, though store expansion could slow down
Lee Mou Hua

T 65 6210 8600 E mouhua.lee@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders SS Holdings Lim Hock Eng Lim Hock Leng 1M 5.8 4.1 3M 7.6 6.3 12M 12.7 26.3 % held 36.6 12.3 12.3
FY13 could be bumper year

We think FY13 could be a good year as the eight new stores that have been operating for less than a year will mature. These stores typically dont hit peak sales until their third year of operation. 3Q12 sales psf suggest good traffic, testifying to managements ability to execute. That said, store openings are likely to slow from FY12s breakneck speed as it was the result of Sheng Siong taking over competitors vacated space. Four new stores would be a more realistic figure for FY13.
Ripe for expansion

The current uncertain macro environment seems to be playing into Sheng Siongs hands: 1) consumers are more likely to trade down to cheaper goods; and 2) landlords are generally less demanding when negotiating leases. Management is delivering well on its intention to double its store network, expressed during IPO. There were 31 stores as at end-3Q12, up from just 23 a year ago. Management is not letting up in expansion and continues to source for
90% payouts
The business generates free cash flow as working capital is supplier-financed. A 90% payout would translate to a 5.3% CY13 yield.
0.55 0.50 0.45 0.40 0.35 Vol m 0.30 80 60 40 20

Nov-11
Price Close
121 114 107 100 93 86
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 628.4 37.04 42.64 0.030 18.6% 16.74 0.00% 13.83 11.74 (99.5%) 9.01 38.7% Dec-11A 578.4 37.18 27.26 0.022 (26.6%) 21.97 0.020 3.94% 12.94 NA (82.3%) 4.19 25.7% Dec-12F 642.6 42.13 40.85 0.023 5.3% 20.47 0.027 5.26% 12.57 12.43 (90.9%) 4.58 21.4% 0.486% 0.95 Dec-13F 723.2 53.17 39.76 0.029 23.3% 17.57 0.026 5.12% 10.48 17.96 (90.5%) 4.47 25.8% (0.053%) 1.06 Dec-14F 791.3 58.22 43.61 0.032 9.7% 16.02 0.028 5.62% 9.40 14.25 (94.2%) 4.35 27.5% 0.068% 1.09
Feb-12
May-12
Aug-12
Source: Bloomberg

0.38
0.51 0.51
Current
Target
0.58
Sheng Siong Group

November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 578.4 127.8 37.2 (6.2) 31.0 (0.1) 0.0 3.3 34.2 0.0 34.2 (7.0) 27.3 0.0 0.0 Dec-12F 642.6 140.0 42.1 (8.0) 34.1 0.8 0.0 4.1 39.0 10.4 49.4 (8.6) 40.8 0.0 0.0 Dec-13F 723.2 162.9 53.2 (8.8) 44.3 0.6 0.0 3.3 48.2 0.0 48.2 (8.4) 39.8 0.0 0.0 Dec-14F 791.3 178.8 58.2 (9.2) 49.0 0.6 0.0 3.3 52.9 0.0 52.9 (9.3) 43.6 0.0 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 122.1 7.0 36.4 3.6 169.1 72.1 0.0 0.0 (0.0) 72.1 0.0 83.4 8.4 91.8 0.0 0.0 0.0 1.1 92.9 148.3 0.0 148 3 Dec-12F 138.5 8.8 41.3 3.6 192.2 71.7 0.0 0.0 0.0 71.7 0.0 102.0 8.4 110.4 0.0 0.0 0.0 1.1 111.5 152.4 0.0 152 4 Dec-13F 141.6 9.9 46.1 3.6 201.1 74.6 0.0 0.0 0.0 74.6 0.0 109.9 8.4 118.3 0.0 0.0 0.0 1.1 119.4 156.4 0.0 156 4 Dec-14F 151.4 10.8 50.3 3.6 216.2 71.1 0.0 0.0 0.0 71.1 0.0 117.0 8.4 125.4 0.0 0.0 0.0 1.1 126.5 160.8 0.0 160 8
27.3 27.3 27.3
40.8 32.3 32.3
39.8 39.8 39.8
43.6 43.6 43.6
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 37.18 22.74 Dec-12F 42.13 11.87 Dec-13F 53.17 2.06 Dec-14F 58.22 1.93
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (8.0%) 0.4% 6.43% 0.10 0.12 492.4 20.3% 90% 3.68 25.45 53.35 2874% 26.3% Dec-12F 11.1% 13.3% 6.56% 0.10 0.11 N/A 17.4% 121% 4.49 28.30 55.42 104% 23.0% Dec-13F 12.5% 26.2% 7.35% 0.10 0.11 N/A 17.5% 90% 4.72 28.46 47.43 245% 28.9% Dec-14F 9.4% 9.5% 7.36% 0.11 0.12 N/A 17.5% 90% 4.79 28.72 47.87 256% 31.0%
(26.58) (0.06) (5.15) 28.12 (23.62) 0.00 0.00 (19.89) (43.51) (22.29) 78.12 0.00 (0.93) (3.25) 51.64
14.55 0.77 (8.58) 60.73 (7.63) 0.00 0.00 0.00 (7.63) 0.00 0.00 0.00 (36.74) (0.77) (37.52)
3.30 0.56 (8.43) 50.66 (11.75) 0.00 0.00 0.00 (11.75) 0.00 0.00 0.00 (35.80) (0.56) (36.36)
3.30 0.59 (9.25) 54.79 (5.75) 0.00 0.00 0.00 (5.75) 0.00 0.00 0.00 (39.24) (0.59) (39.82)
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) No. of POS (main prod/serv) SSS grth (%, main prod/serv) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) No. of POS (2ndary prod/serv) SSS grth (%, 2ndary prrod/serv) Dec-11A N/A -8.0% N/A 0.0% N/A N/A N/A N/A Dec-12F N/A 11.1% N/A 0.0% N/A N/A N/A N/A Dec-13F N/A 12.5% N/A 2.0% N/A N/A N/A N/A Dec-14F N/A 9.4% N/A 3.0% N/A N/A N/A N/A
153
Airport Services SINGAPORE

November 28, 2012
SIA Engineering
SIE SP / SIAE.SI Current S$4.29 S$4.70 S$4.70 9.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$3,872m
S$4,730m
US$0.79m
S$0.98m
19.0%
1,091 m shares

Most attractively valued Asian MRO

At 15x CY13 P/E, SIA Engineering is the most attractively valued Asian MRO provider. It also offers above-peers yields of above 5% and an 8% 2-year EPS CAGR.
Maintain Outperform. We keep our target price, still on blended P/E and DCF valuations. Catalysts could come from stronger-than-expected MRO demand. Risks could stem from translation losses from S$ appreciation. C1 (first two years of flying and C2 (subsequent two years).
Share price info

Share price perf. (%) Relative Absolute Major shareholders SIA 1M 4.6 3.1 3M 5.5 4.4 12M 9 22.9 % held 80.7
Better product mix for associates; JVs take a breather

2Q13 associate profit was up 29% yoy to S$22.6m, mainly from stronger contributions from SAESL (specialising in Rolls Royce engines), which enjoyed a better product mix of Trent 500 (A340), Trent 700 (A330), Trent 800 (B777) and Trent 900 (A380). Rolls Royce also improved its market share in recent years. However, this was offset by lower profits from JVs, -45% yoy to S$16.2m in 2Q13, affected by Eagle Services (specialising in Pratt & Whitney engines). High fuel costs had forced the early retirement of Pratt & Whitneys P&W4000 engines, whose market share shrank by 10-20%.
Heavier checks
SIA Engineerings hangars have been booked out thanks to more planned heavy checks (C2 and D) and expansion by Asia-Pac low-cost carriers. New fleets of aircraft acquired four years ago are gradually entering the phase of more intensive checks. In 1H13, there were 22 D checks and 49 C checks vs. eight D checks and 54 C checks in 1H12. The C checks in 1H13 included C2 checks for A380s which are heavier than normal D checks. To elaborate, a normal D check ranges from S$3m to S$5m while a normal C check offers S$1m in revenue though C2 checks for A380 could command about S$5m. The A380 checks (slightly different from normal checks) are categorised into
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-11A 1,107 177.1 258.5 0.24 8.81% 18.03 0.30 7.03% 20.94 27.08 (43.6%) 3.59 20.1%
Positive guidance
Management expects demand for its core businesses to be sustained in the near term, despite macro risks.
4.4 4.2 4.0 3.8 3.6 3.4 3.2 3 2 2 1 1

Nov-11
Price Close
115 110 105 100 95 90 85
Feb-12
May-12
Aug-12
Source: Bloomberg

3.34 4.29 4.29
4.70
Current Target
Mar-12A 1,170 170.6 269.1 0.25 3.33% 17.45 0.21 4.91% 22.32 45.64 (38.7%) 3.75 21.0%
Mar-13F 1,210 177.7 286.5 0.26 6.17% 16.43 0.22 5.17% 21.20 42.09 (37.4%) 3.59 22.3% 0% 1.02
Mar-14F 1,263 185.5 306.8 0.28 7.09% 15.35 0.24 5.54% 20.16 56.61 (33.8%) 3.43 22.9% 0% 1.05
Mar-15F 1,328 192.4 326.6 0.30 6.45% 14.42 0.25 5.90% 19.28 55.55 (30.2%) 3.27 23.2% 0% 1.04
Vol m
SIA Engineering
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Mar-12A 1,170 883 171 (40) 131 2 157 14 303 0 303 (31) 272 (3) 0 Mar-13F 1,210 951 178 (40) 138 2 173 14 325 0 325 (36) 290 (3) 0 Mar-14F 1,263 968 185 (42) 144 1 190 14 348 0 348 (38) 310 (3) 0 Mar-15F 1,328 1,011 192 (44) 149 0 209 14 371 0 371 (41) 330 (4) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Mar-12A 498 108 118 97 820 309 433 38 0 779 2 264 27 293 0 26 26 0 320 1,254 26 1,280 Mar-13F 502 112 117 97 828 309 484 38 0 831 1 258 36 295 0 25 25 0 320 1,310 29 1,339 Mar-14F 476 116 124 97 812 349 541 38 0 928 1 270 38 310 0 25 25 0 334 1,374 32 1,406 Mar-15F 446 122 131 97 796 389 604 38 0 1,031 1 284 41 326 0 26 26 0 352 1,439 35 1,475
269 269 269
287 287 287
307 307 307
327 327 327
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Mar-12A 170.6 (10.9) Mar-13F 177.7 (9.8) Mar-14F 185.5 1.9 Mar-15F 192.4 (0.1)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Mar-12A 5.7% (3.7%) 14.6% 0.45 1.14 N/A 10.3% 86% 33.35 143.3 318.5 29.7% 10.2% Mar-13F 3.4% 4.1% 14.7% 0.46 1.19 N/A 11.0% 85% 33.18 165.3 367.7 30.2% 10.6% Mar-14F 4.4% 4.4% 14.7% 0.43 1.25 N/A 11.0% 85% 32.93 149.0 326.8 31.5% 10.6% Mar-15F 5.2% 3.7% 14.5% 0.41 1.31 N/A 11.0% 85% 32.71 146.2 318.1 29.7% 10.3%
6.2 0.0 (34.9) 131.0 (28.8) 0.0 0.0 0.0 (28.8) 0.7 0.0 0.0 (327.4) 141.1 (185.6)
16.5 0.0 (31.1) 153.3 (40.0) 0.0 0.0 0.0 (40.0) (1.4) 0.0 0.0 (230.4) 122.3 (109.5)
(28.4) 0.0 (35.8) 123.2 (40.0) 0.0 0.0 0.0 (40.0) 0.0 0.0 0.0 (243.5) 134.3 (109.2)
(29.2) 0.0 (38.3) 124.8 (40.0) 0.0 0.0 0.0 (40.0) 0.0 0.0 0.0 (260.8) 146.2 (114.6)
Key Drivers
Rev. growth (%, main biz.) Rev. growth (%, 2ndary biz.) Mar-12A 4.5% 4.5% Mar-13F 4.5% 4.0% Mar-14F 5.0% 1.3% Mar-15F 5.0% 2.6%
155
IT Services SINGAPORE
November 28, 2012
Silverlake Axis Ltd

SILV SP / SLVX.SI Current S$0.47 S$0.59 S$0.59 25.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$824.8m
S$1,008m
US$0.18m
S$0.22m
20.6%
297.6 m shares
CIMB Analyst William Tng

T (65) 62108676 E william.tng@cimb.com
All that glitters is not gold, its Silverlake

We recently initiated coverage on Silverlake Axis, a leading core banking software vendor for top financial institutions in ASEAN. We believe the group is well-poised to take full advantage of its dominant position at a time when banks consolidation in the region is in vogue.
We retain our Outperform rating and DCF-based price target (COE 8.5%/LTG 0%), which translates into an implied CY14 P/E of 16.1x, around its FY08-12 average and in line with the average of its closest peers. Catalysts that could propel its stock price include strong quarterly results and contract win announcements. Apart from its strong pipeline of projects that extends to FY14, we also like Silverlake for its growing recurring income from maintenance and enhancement services. Given this, coupled with its low capex requirements, free cashflow is expected to be strong and should support its healthy dividend. The company also has a very robust balance sheet with negligible debt and low risk of doubtful receivables. Hence, financial risk for Silverlake is definitely low.
Renfred Tay
T (65) 62108692 E renfred.tay@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Goh Peng Ooi Ntasian Discovery M Fund ORKLA ASA 1M 4.8 3.3 3M 20.1 19 12M 57 70.9 % held 74.2 3.1 2.6
Banks consolidation in ASEAN good for Silverlake

As it is, Silverlake is already in a leading position in ASEAN. Based on rankings by Inntron, an independent industry consultant, Silverlake has been ranked first in Singapore, Malaysia, Indonesia and Vietnam and second in Thailand as a core banking software provider. With many of its customers driving the consolidation of banks in ASEAN, we believe Silverlake is in the best position to capitalise on this trend.
Customers in for the long haul

Silverlake has an economic moat that not many other companies enjoy and that is high customer switching costs. This allows Silverlake to constantly generate recurring income from its customers. Customers are also unlikely to change their IT backbones overnight for marginal cost savings due to the high switching costs.
Solid fundamentals
0.50 0.45 0.40 0.35 0.30 0.25 Vol m 0.20 60 40 20

Nov-11
Price Close
155 143 132 120 108 97 85
Financial Summary
Revenue (RMm) Net Profit (RMm) Core EPS (RM) Core EPS Growth FD Core P/E (x) Price To Sales (x) DPS (RM) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Jun-11A 305.4 115.3 0.06 96.3% 19.46 8.03 0.028 2.41% 15.17 17.78 (32.6%) 11.53 67.0% Jun-12A 400.0 162.3 0.08 29.2% 15.05 6.15 0.047 4.02% 12.23 23.29 (31.6%) 8.27 64.0% Jun-13F 416.3 179.1 0.08 8.4% 13.89 5.91 0.051 4.37% 11.08 14.52 (42.3%) 6.66 53.1% 0.99 Jun-14F 470.2 186.3 0.09 5.2% 13.19 5.23 0.053 4.55% 10.25 13.64 (50.6%) 5.54 45.8% 0.94 Jun-15F 528.5 210.6 0.10 13.0% 11.67 4.65 0.060 5.14% 8.85 12.14 (56.9%) 4.66 43.3% 1.01
Feb-12
May-12
Aug-12
Source: Bloomberg

0.28
0.47 0.48
Current
Target
0.59
Silverlake Axis Ltd

November 28, 2012
Profit & Loss

(RMm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Jun-12A 400.0 217.5 188.1 (10.8) 177.3 0.4 1.4 0.8 179.8 0.0 179.8 (17.6) 162.3 0.0 0.0 Jun-13F 416.3 237.2 202.1 (11.5) 190.5 0.8 (0.3) 6.2 197.3 0.0 197.3 (18.2) 179.1 0.0 0.0 Jun-14F 470.2 269.0 211.5 (10.2) 201.3 1.7 0.0 4.0 207.0 0.0 207.0 (20.7) 186.3 0.0 0.0 Jun-15F 528.5 303.4 236.5 (9.2) 227.3 2.7 0.0 4.0 234.0 0.0 234.0 (23.4) 210.6 0.0 0.0
Balance Sheet
(RMm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Jun-12A 97.6 153.2 2.6 253.5 10.7 64.5 70.8 0.9 146.9 1.0 66.6 24.5 92.1 2.5 2.2 4.7 6.0 102.8 297.6 0.0 297.6 Jun-13F 159.6 163.7 2.6 325.9 9.6 64.5 62.5 0.9 137.6 1.0 58.1 24.5 83.6 2.5 2.2 4.7 6.0 94.3 369.2 0.0 369.2 Jun-14F 228.0 181.3 2.6 411.9 9.0 64.5 55.4 0.9 129.8 1.0 61.9 24.5 87.4 2.5 2.2 4.7 6.0 98.1 443.8 0.0 443.8 Jun-15F 304.1 200.0 2.6 506.7 8.6 64.5 49.5 0.9 123.4 1.0 66.0 24.5 91.6 2.5 2.2 4.7 6.0 102.2 528.0 0.0 528.0
162.3 163.3 163.3
179.1 177.2 177.2
186.3 186.3 186.3
210.6 210.6 210.6
Cash Flow
(RMm) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Jun-12A 188.1 (2.1) (37.6) 2.1 1.5 2.0 0.4 (15.5) 138.9 (1.2) (0.5) (33.5) 2.3 (32.9) (0.4) 0.0 (3.1) (78.1) (0.5) (82.1) Jun-13F 202.1 0.0 (19.0) 0.0 0.2 6.0 0.8 (18.2) 171.8 (0.7) 0.0 0.0 (1.7) (2.4) 0.0 0.0 0.0 (107.5) 0.0 (107.5) Jun-14F 211.5 0.0 (13.9) 0.0 0.0 4.0 1.7 (20.7) 182.7 (0.8) 0.0 0.0 (1.7) (2.5) 0.0 0.0 0.0 (111.8) 0.0 (111.8) Jun-15F 236.5 0.0 (14.5) 0.0 0.0 4.0 2.7 (23.4) 205.2 (0.9) 0.0 0.0 (1.9) (2.8) 0.0 0.0 0.0 (126.3) 0.0 (126.3)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (RM) BVPS (RM) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Jun-12A 31.0% 23.5% 47.0% 0.04 0.14 666.9 9.8% 61.1% 111.3 50.84 238% 67.8% Jun-13F 4.1% 7.4% 48.5% 0.07 0.18 839.7 9.2% 60.0% 109.8 59.06 129% 55.9% Jun-14F 12.9% 4.7% 45.0% 0.11 0.21 831.3 10.0% 60.0% 106.2 47.75 128% 48.9% Jun-15F 12.4% 11.8% 44.7% 0.14 0.25 821.5 10.0% 60.0% 106.4 47.87 140% 46.5%
Key Drivers
ASP Change (%, Main Product) Unit sales growth (%, main prod) No. Of Lines (main Product) Rev per line (US$, main prod) ASP chg (%, 2ndary prod) Unit sales grth (%, 2ndary prod) No. Of Lines (secondary Product) Rev per line (US$, 2ndary prod) Jun-12A N/A 35.0% N/A N/A N/A 12.4% N/A N/A Jun-13F N/A 8.8% N/A N/A N/A 13.2% N/A N/A Jun-14F N/A 13.6% N/A N/A N/A 13.2% N/A N/A Jun-15F N/A 12.5% N/A N/A N/A 13.2% N/A N/A
157
Airlines SINGAPORE
November 28, 2012
Singapore Airlines
SIA SP / SIA.SI Current S$10.50 S$11.00 S$11.00 4.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$10,071m
S$12,303m
US$5.94m
S$7.29m
45.4%
1,856 m shares
CIMB Analyst Andrew Orchard

T (852) 25391331 E andrew.orchard@cimb.com
Struggling for lift-off

Although we believe that SIAs earnings have bottomed, we continue to worry that the company will still be dogged by competition. While SIA will attempt to use a more segmented strategy to gain market share, we think that it still lacks scale for this policy to be effective.
We maintain a Neutral rating on SIA as we think that competitive pressures will continue to weigh on its earnings. We leave our target price and estimates unchanged. Our CY14 target price is based on a trough multiple of 4.2x CY14 EV/EBITDAR. the travel market: full-service long-haul and regional, and low-cost long-haul and regional. While we are encouraged by SIAs direction, we believe that this strategy requires significantly larger scale to be successful. Management seems to agree with this view as both SilkAir (full-service regional) and Scoot (low-cost long haul) have order books which are more than double the size of their current fleets. Capex is thus expected to accelerate in each of the next five years.
Raymond Yap CFA

Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings 1M -0.2 -1.7 3M -1.1 -2.2 12M -9.4 4.5 % held 54.6
CY13 guidance is poor

SIA still projects a difficult operating environment in CY13. Passenger yield and load factor softness are likely to persist due to economic softness in Europe. The Group is likely to offset some of the weakness in utilisation by offering promotional fares, but this could cause yields to be compressed. Additionally, a large proportion of SIAs revenues are derived from outside Singapore, and further strength of the S$ against the US$ could adversely affect yields. SIA also believes that the cargo market will remain downbeat. As a result, it recently decided to park one of its 13 freighters to reduce costs.
Great brand, but not time to buy yet

Despite SIAs response to the tough environment, it remains under pressure from both the low-cost carriers and the Middle Eastern airlines. Its 0.9x P/BV valuation does not look especially attractive while the combination of slow earnings growth and high capex needed in the coming years may lower dividend payout ratios. This could discourage dividend-centric investors from buying heavily into SIA.
New strategy will take time

We believe SIA is looking to stave off competition by using a four-segment strategy that penetrates all areas of
Price Close 11.3 11.1 10.9 10.7 10.5 10.3 10.1 5 9.9 4 3 2 1
Nov-11 Feb-12 Source: Bloomberg May-12 Aug-12
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-11A 14,525 2,983 1,092 1.05 465% 10.04 0% 2.18 3.66 (39.9%) 0.89 9.10% Mar-12A 14,858 1,913 336 0.30 (72%) 35.76 0% 4.20 NA (32.2%) 0.98 2.62% Mar-13F 15,333 1,985 438 0.37 24% 28.94 0% 4.07 29.09 (30.9%) 0.96 3.36% 0.115% 1.01 Mar-14F 16,091 2,445 810 0.67 85% 15.68 0% 3.20 24.43 (30.5%) 0.93 6.04% 0.000% 1.08 Mar-15F 16,958 2,720 980 0.82 21% 12.95 0% 3.16 NA (23.3%) 0.90 7.10% 0.000% 1.06
Vol m

10.09
10.50 11.10
Current
Target
11.00
Singapore Airlines
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Mar-12A 14,858 4,108 1,913 -1,627 286 -24 49 142 469 -5 448 -51 397 -61 Mar-13F 15,333 4,274 1,985 -1,587 398 5 54 139 596 0 596 -94 501 -63 Mar-14F 16,091 4,671 2,445 -1,631 814 7 60 172 1,053 0 1,053 -179 874 -64 Mar-15F 16,958 5,060 2,720 -1,723 997 10 60 192 1,258 0 1,258 -214 1,044 -64
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Mar-12A 5,328 1,402 306 170 7,206 13,381 1,030 426 0 14,837 0 67 2,885 2,312 5,265 1,011 551 1,562 2,029 8,856 12,893 294 13,187 Mar-13F 5,219 1,568 411 234 7,431 13,285 1,164 462 0 14,911 0 62 2,992 2,277 5,331 990 531 1,521 1,985 8,837 13,184 321 13,505 Mar-14F 5,299 1,657 406 235 7,598 13,594 1,363 490 0 15,448 0 56 3,140 2,360 5,556 971 534 1,505 1,985 9,046 13,614 385 14,000 Mar-15F 4,359 1,708 391 234 6,692 14,731 1,563 518 0 16,812 0 38 3,082 2,450 5,570 954 537 1,491 1,985 9,045 14,010 449 14,459
0 336 355 355
0 438 439 439
0 810 810 810
0 980 980 980
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Mar-12A 1,913 -97 -5 -16 -18 -24 -51 1,703 -1,641 495 -623 189 -1,580 -961 -206 -1,631 -87 -2,884 Mar-13F 1,985 10 -200 -1 -14 5 -94 1,693 -1,718 228 189 65 -1,236 -21 -7 -228 -51 -307 Mar-14F 2,445 0 145 0 3 7 -179 2,421 -2,200 300 0 24 -1,876 -25 21 -400 -60 -464 Mar-15F 2,720 0 -3 0 3 10 -214 2,516 -3,100 300 0 24 -2,776 -35 21 -606 -60 -680
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Mar-12A 2.3% (35.9%) 12.9% 3.54 10.75 4.06 11.5% 435% 34.92 10.92 95.5 2.47% 2.01% Mar-13F 3.2% 3.8% 12.9% 3.47 10.99 8.41 15.8% 43% 35.35 11.84 97.0 3.20% 2.75% Mar-14F 4.9% 23.1% 15.2% 3.56 11.35 11.94 17.0% 49% 36.58 13.06 98.0 6.32% 5.30% Mar-15F 5.4% 11.3% 16.0% 2.81 11.68 15.14 17.0% 62% 36.21 12.23 95.4 7.60% 6.23%
159
Stockbroking & Exchanges SINGAPORE

November 28, 2012
Singapore Exchange
SGX SP / SGXL.SI Current S$6.70 S$7.26 S$7.26 8.3%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$5,862m
S$7,160m
US$8.87m
S$10.90m
76.0%
1,071 m shares

Not the right asset class

Global exchanges will face a volume glass ceiling as long as global recession concerns mount. Barring for the strong trading volumes seen earlier in 2012, ADVT has been anaemic and we think that this will persist going forward.
In view of weak trading volumes, we think that exchanges are not the right asset class to be in right now. That said, we appreciate SGXs efforts to diversify revenue sources away from trading activities and we are seeing early traction in initiatives. However, there are no catalysts in sight. Maintain Neutral, with an unchanged DDM-based target price (r: 9.5%, g: 4.5%). driver and will continue to bolster growth in 2013. We expect 82.1m derivatives contracts to be traded in FY2013 (+4.7% yoy).
Daniel Lau
Share price info

Share price perf. (%) Relative Absolute Major shareholders SEL Holdings 1M 0.2 -1.3 3M -2.5 -3.6 12M -2.2 11.7 % held 24.0
Diversification provides earnings support

While things do not appear rosy on the macro front, we must highlight managements efforts to diversify its revenue sources. Alternative sources such as market data provision, member and connectivity services and depository services have been holding up well, providing a strong earnings base despite the weak trading environment. Contributions from non-trading related sources have been climbing steadily over the years, from 28.8% of total revenue in FY08 to 36.5% in FY12.
Expecting volume glass ceiling

The much-anticipated QE3 fell short in boosting trading volumes for exchanges. The biggest threat to SGX or any other global exchange is further deferral of actual solutions to economic woes in the Western world. We expect anaemic trading activity to cap turnover velocity, posing downside risks to earnings and subsequently leading to further de-rating of valuation multiples. In FY2013, we expect average daily value traded (ADVT) to be around S$1,328m (+1% yoy). Derivatives clearing has been a strong growth
Valuations still unattractive

SGX currently trades at 21x CY14 EPS vs. its 25x mean. Crisis valuations can trough at 15.5x P/E. With the lack of price catalysts, SGXs Sharpe ratio does not form a compelling investment thesis at the moment.
Price Close 7.2 6.7 6.2 5.7 10 8 6 4 2

Vol m
111 109 107 105 103 101 99 97 95 93
Financial Summary
|
Aug-12

5.93
6.70 7.29
Current
|
Target
7.26
Jun-11A 660.7 409.4 294.9 0.29 (3.39%) 23.18 27.00 403% 15.60 22.26 (93.0%) 8.71 37.7%
Jun-12A 647.9 405.1 291.8 0.28 (2.32%) 23.79 27.00 403% 15.82 23.83 (91.7%) 8.61 36.4%
Jun-13F 663.7 414.7 312.8 0.29 3.68% 22.94 29.30 437% 15.47 23.41 (91.3%) 8.66 37.6% 0% 0.99
Jun-14F 694.4 440.9 335.0 0.31 7.09% 21.42 31.30 467% 14.53 21.83 (91.2%) 8.55 40.2% 0% 0.95
Jun-15F 713.8 453.5 345.9 0.32 3.26% 20.75 32.30 482% 14.12 21.34 (90.8%) 8.50 41.1% 0% 0.86
Singapore Exchange
November 28, 2012
Profit & Loss

|
Balance Sheet
Jun-12A 647.9 647.9 405.1 (41.2) 363.9 6.2 (2.7) 0.0 367.4 (12.1) 355.3 (63.5) 291.8 0.0 0.0 Jun-13F 663.7 663.7 414.7 (41.5) 373.1 6.5 (2.4) 0.0 377.2 0.0 377.2 (64.4) 312.8 0.0 0.0 Jun-14F 694.4 694.4 440.9 (41.5) 399.3 6.9 (2.2) 0.0 404.0 0.0 404.0 (69.0) 335.0 0.0 0.0 Jun-15F 713.8 713.8 453.5 (41.5) 411.9 7.2 (2.0) 0.0 417.2 0.0 417.2 (71.2) 345.9 0.0 0.0 (S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Jun-12A 764 779 0 35 1,578 145 6 0 0 151 0 796 78 874 0 7 7 16 896 833 0 833
Jun-13F 757 782 0 35 1,574 153 6 0 0 160 0 811 72 883 0 7 7 16 905 829 0 829
Jun-14F 766 818 0 35 1,619 162 6 0 0 168 0 848 77 926 0 7 7 16 948 839 0 839
Jun-15F 767 841 0 35 1,643 170 6 0 0 177 0 872 81 953 0 7 7 16 975 844 0 844
291.8 301.7 301.7
312.8 312.8 312.8
335.0 335.0 335.0
345.9 345.9 345.9
Cash Flow
|
Key Ratios
Jun-12A 405.1 (16.4) 0.0 21.9 (4.8) (56.6) 349.2 (50.4) 0.0 (1.3) 3.6 (48.0) 0.0 (4.3) 0.0 (288.3) 0.0 (292.7) Jun-13F 414.7 6.3 0.0 0.0 (6.5) (64.4) 350.0 (50.0) 0.0 0.0 6.5 (43.5) 0.0 0.0 0.0 (313.8) 0.0 (313.8) Jun-14F 440.9 6.9 0.0 0.0 (6.9) (69.0) 371.9 (50.0) 0.0 0.0 6.9 (43.1) 0.0 0.0 0.0 (335.3) 0.0 (335.3) Jun-15F 453.5 4.1 0.0 0.0 (7.2) (71.2) 379.1 (50.0) 0.0 0.0 7.2 (42.8) 0.0 0.0 0.0 (346.0) 0.0 (346.0) Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
|
Jun-12A (1.93%) (1.05%) 62.5% 0.71 0.78 N/A 17.9% 95% 487.6 N/A N/A 519% 43.9%
Jun-13F 2.43% 2.37% 62.5% 0.71 0.77 N/A 17.1% 100% 429.4 N/A N/A 436% 44.9%
Jun-14F 4.63% 6.32% 63.5% 0.71 0.78 N/A 17.1% 100% 420.5 N/A N/A 453% 47.8%
Jun-15F 2.79% 2.86% 63.5% 0.72 0.79 N/A 17.1% 100% 424.2 N/A N/A 459% 48.9%
Key Drivers
Total Traded Value (S$m) Trading Days In The Period Avg Daily Traded Value (S$m) Securities Clearing Fees (S$m) Effective Clearing Rate (%) Derivatives Contracts Traded (S$m) Derivatives Clearing Revenue (S$m) Avg Fees Per Contract (S$) Other Revenue (S$m)
|
Jun-12A 331,100 249 1,330 191.8 0.06% 78 168 2.14 289
Jun-13F 334,579 249 1,344 190.9 0.06% 82 175 2.13 298
Jun-14F 346,263 249 1,391 197.6 0.06% 89 189 2.13 308
Jun-15F 353,188 249 1,418 201.5 0.06% 93 200 2.15 312
161

November 27, 2012
Singapore Land
SL SP / SLND.SI Current S$6.79 S$8.44 S$8.44 24.4%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,291m
S$2,801m
US$0.38m
S$0.46m
30.0%
412.5 m shares

A more active year ahead

While management appears more cautious on office, rents have largely bottomed. This, along with low interest rates boosting asset values, are positives for the >S$5bn of investment properties (90% of GAV). A pick-up in capital deployment promises stronger development profits.
Recent JV bids with UOL for residential sites are encouraging. No change to RNAV/target price (40% discount to RNAV). Maintain Outperform with further accretive acquisitions as catalysts. with slow but steady interest in Trizon and Archipelago (SingLand/UOL JV) almost sold out. Capital deployment has been more active since Feb this year, starting with smaller wholly-owned projects, likely to be digested by the market with ease. This was followed by the Bright Hill Drive site acquired in Aug in a JV with UOL, leveraging off their expertise. Other UOL-SingLand JV tenders include Prince Charles Crescent and Bedok sites in Sep and Oct respectively. We expect further capital deployment going into 2013.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders UIC 1M 0.9 -0.6 3M 13.5 12.4 12M 5.9 19.8 % held 78.4
2013 looking good for investment properties

Rental income stabilised in 2012 and we understand that negative reversions for office portfolio have reached an end. We look forward to a stable investment properties segment going into 2013, further propped up by hotels with Pan Pacific reopened and management positivity on the retail and hospitality segments. We see asset values underpinned by a prolonged low interest rate environment, a positive with investment properties comprising >90% of gross asset value.
Limited downside, positives ahead

SingLand trades at a 52% discount to RNAV, close to the 2008 low of 56%. Discount to book is attractive, with asset values backed by stable rents and buoyed by low interest rates, limiting downside. More capital deployment and partnerships with UOL could catalyse the stock and further narrow the discount towards the historical average of 25-30%.
Strengthening residential segment, partnering UOL

Existing residential projects benefited from strong volumes sector-wide,
7.6 7.1 6.6 6.1 5.6 Vol m 5.1 6 4 2

Nov-11
Price Close
114 108 102 96 90 84
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 527.2 224.0 661.7 0.46 144% 14.70 0.20 2.95% 15.74 35.53 4.34% 0.68 4.97% Dec-11A 615.3 273.6 330.7 0.54 17% 12.61 0.20 2.95% 13.03 42.21 4.06% 0.64 5.22% Dec-12F 594.3 249.7 205.6 0.50 (7%) 13.62 0.20 2.95% 15.25 28.36 8.43% 0.62 4.62% 0% 0.99 Dec-13F 506.8 257.5 234.6 0.57 14% 11.94 0.20 2.95% 13.98 40.65 3.79% 0.60 5.12% 0% 1.15 Dec-14F 606.1 274.4 256.1 0.62 9% 10.93 0.20 2.95% 12.55 25.35 0.36% 0.58 5.40% 0% 1.20
Feb-12
May-12
Aug-12
Source: Bloomberg

5.33
6.79 7.13
Current
Target
8.44
Singapore Land
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 615.3 615.3 273.6 (15.2) 258.4 1.3 58.2 0.0 317.8 126.4 444.2 (62.6) 381.7 (50.9) 0.0 Dec-12F 594.3 594.3 249.7 (15.8) 233.9 0.7 53.6 0.0 288.3 0.0 288.3 (40.6) 247.7 (42.1) 0.0 Dec-13F 506.8 506.8 257.5 (14.6) 242.9 (0.2) 81.3 0.0 324.0 0.0 324.0 (45.6) 278.4 (43.7) 0.0 Dec-14F 606.1 606.1 274.4 (13.4) 260.9 0.7 91.2 0.0 352.8 0.0 352.8 (49.7) 303.1 (47.0) 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 66 40 1 424 531 369 5,111 0 0 5,480 237 212 41 490 30 543 573 0 1,063 4,384 564 4,948 Dec-12F 80 42 2 770 894 340 5,089 0 0 5,429 451 153 49 654 57 525 582 0 1,236 4,507 580 5,086 Dec-13F 63 36 1 697 798 312 5,031 0 0 5,344 233 131 42 406 30 447 477 0 883 4,659 599 5,258 Dec-14F 89 43 2 742 876 285 5,143 0 0 5,429 97 156 50 303 12 535 547 0 851 4,833 622 5,454
330.7 222.2 222.2
205.6 205.6 205.6
234.6 234.6 234.6
256.1 256.1 256.1
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 273.6 (9.7) Dec-12F 249.7 (400.0) Dec-13F 257.5 49.9 Dec-14F 274.4 (18.9)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 16.7% 22% 44.5% (0.49) 10.63 157.4 14.1% 40.4% 23.73 N/A N/A 44.3% 5.15% Dec-12F (3.4%) (9%) 42.0% (1.04) 10.93 153.1 14.1% 40.1% 25.42 N/A N/A 40.3% 4.37% Dec-13F (14.7%) 3% 50.8% (0.48) 11.30 83.3 14.1% 35.2% 28.24 N/A N/A 25.5% 4.42% Dec-14F 19.6% 7% 45.3% (0.05) 11.72 173.2 14.1% 32.2% 23.87 N/A N/A 29.9% 4.75%
118.2 (136.8) 1.3 (32.9) 213.7 (13.3) 0.0 0.0 (114.3) (127.5) (19.9) 0.0 0.0 (82.5) (2.9) (105.3)
0.0 0.0 0.7 17.3 (132.2) (13.3) 0.0 0.0 2.3 (11.0) 241.9 0.0 0.0 (82.5) (2.3) 157.2
0.0 0.0 (0.2) 18.0 325.1 (13.3) 0.0 0.0 2.7 (10.5) (245.7) 0.0 0.0 (82.5) (2.7) (331.0)
0.0 0.0 0.7 19.3 275.4 (13.3) 0.0 0.0 2.2 (11.1) (153.8) 0.0 0.0 (82.5) (2.2) (238.5)
RNAV Office Retail Hotel Residential Others GAV Add: Other investments Less: Net debt Add: Adjustment for MCH debt RNAV Fully-diluted share base RNAV per share (S$) Target price Disc to RNAV 40%
RNAV (S$m) 3,671 982 684 600 16 5,953 12 (256) 97 5,806 412 14.07 8.44
% of GAV 62% 17% 11% 10% 0% 100%
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%) Dec-11A N/A N/A N/A N/A 76.7% N/A N/A N/A 40.7% N/A N/A Dec-12F N/A N/A N/A N/A 76.0% N/A N/A N/A 42.2% N/A N/A Dec-13F N/A N/A N/A N/A 76.0% N/A N/A N/A 22.3% N/A N/A Dec-14F N/A N/A N/A N/A 76.0% N/A N/A N/A 31.8% N/A N/A
163
Newspaper SINGAPORE
November 27, 2012
Singapore Press Holdings

SPH SP / SPRM.SI Current S$4.09 S$4.39 S$4.39 7.4%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$5,338m
S$6,527m
US$9.72m
S$11.94m
90.0%
1,593 m shares

T (65) 6210 8610 E kenneth.ng@cimb.com
Dependable dividends
SPH offers attractive yields of 6%, underpinned by a dominant newspaper and magazine business and a robust property arm. Rising recurring earnings from its property arm and rental increases next year could augur higher FY13 dividends.
Our estimates housekeeping target price catalysts to rental-income growth. have been tweaked for matters. Our SOP is unchanged with come from stronger and ad-revenue rentals increased both at Paragon (+3.1% yoy) and Clementi Mall on the back of a full year of operations (+100.6%). We expect Paragons outperformance to continue from its good location and market positioning while Clementi Malls exposure to resilient suburban spending should spell further rental upside as yields mature.
Lee Mou Hua

T (65) 6210 8600 E mouhua.lee@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders DBSN Services Daiwa 1M 1.9 0.2 3M 3.8 2.5 12M -7.4 6.2 % held 3.6 1.1
Undented media dominance

SPHs near-monopoly of the newspaper and magazine business should limit major losses in ad revenue in any domestic economic slowdown. Its recently acquired exhibitions business that falls under other revenues could also help to cushion any drop in newspaper revenue. This dynamic had already played out in FY12 with other revenues increasing 13% yoy.
Balance-sheet strength
Following the success of Clementi Mall, SPH is attempting to repeat its feat by developing a similar-sized suburban mall, Seletar Mall, jointly with United Engineers. Expected completion is end-FY14. Management continues to be on the lookout for suburban retail assets to deploy SPHs S$372m of cash. Although retail sites remain widely sought after, a slowing economy could present suitable opportunities.
Property is the star

A continued robust property arm could augur higher dividends on a larger recurring earnings base. FY12
4.20 4.10 4.00 3.90 3.80 3.70 3.60 3.50 10 8 6 4 2

Nov-11
Price Close
106 102 99 95 92 88 85 81
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Aug-11A 1,251 525.6 379.9 0.24 (22.3%) 16.81 0.24 5.93% 13.73 16.26 31.2% 2.92 17.4% Aug-12A 1,273 512.9 362.0 0.23 (5.5%) 17.79 0.24 5.94% 14.45 NA 39.2% 2.90 16.4% Aug-13F 1,320 567.8 388.1 0.25 7.4% 16.57 0.24 5.96% 13.30 21.75 44.8% 2.90 17.5% 1.30% 1.02 Aug-14F 1,369 595.1 411.0 0.26 5.8% 15.66 0.26 6.31% 12.67 13.84 44.1% 2.90 18.6% 1.23% 1.05 Aug-15F 1,401 603.9 418.4 0.27 1.8% 15.38 0.26 6.42% 12.41 12.56 41.6% 2.90 18.9% 1.20% 1.08
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

3.62
4.09 4.12
Current
Target
4.39
Singapore Press Holdings

November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Aug-12A 1,273 1,273 513 (82) 431 8 (1) 0 443 0 438 (72) 366 (4) 0 Aug-13F 1,320 1,320 568 (83) 485 (19) 0 0 472 0 466 (74) 392 (4) 0 Aug-14F 1,369 1,369 595 (83) 512 (19) 0 0 500 0 494 (79) 415 (4) 0 Aug-15F 1,401 1,401 604 (83) 521 (19) 0 0 508 0 502 (80) 422 (4) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Aug-12A 372 184 27 409 993 363 476 134 2,092 3,064 3 279 82 364 1,280 41 1,321 47 1,732 2,242 83 2,325 Aug-13F 240 283 32 409 964 320 476 134 2,119 3,049 3 231 82 316 1,280 41 1,321 47 1,684 2,242 87 2,329 Aug-14F 256 293 33 409 991 277 476 134 2,147 3,034 3 239 82 324 1,280 41 1,321 47 1,693 2,242 90 2,333 Aug-15F 312 300 34 409 1,055 234 453 134 2,159 2,980 3 245 82 330 1,280 41 1,321 47 1,698 2,242 94 2,337
362 366 366
388 393 393
411 416 416
418 423 423
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Aug-12A 512.9 (584.4) Aug-13F 567.8 (151.3) Aug-14F 595.1 (3.1) Aug-15F 603.9 (2.0)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Aug-12A 1.75% (2.4%) 40.3% (0.57) 1.41 17.84 16.5% 105% 48.34 N/A N/A 16.4% 13.2% Aug-13F 3.72% 10.7% 43.0% (0.66) 1.41 11.25 16.0% 98% 64.57 N/A N/A 17.2% 14.1% Aug-14F 3.73% 4.8% 43.5% (0.65) 1.41 11.88 16.0% 99% 76.79 N/A N/A 17.4% 14.8% Aug-15F 2.30% 1.5% 43.1% (0.61) 1.41 12.08 16.0% 99% 77.32 N/A N/A 17.7% 15.1%
217.2 8.1 (82.5) 71.3 (27.5) (217.3) 0.0 0.0 (244.8) 134.0 0.0 0.0 (386.8) 398.1 145.3
43.6 (18.6) (74.5) 367.1 (67.6) 0.0 0.0 0.0 (67.6) 0.0 0.0 0.0 (388.1) (25.0) (413.1)
43.6 (18.6) (78.8) 538.1 (67.6) 0.0 0.0 0.0 (67.6) 0.0 0.0 0.0 (411.0) (25.0) (436.0)
55.4 (18.6) (80.2) 558.5 (51.8) 0.0 11.8 0.0 (40.0) 0.0 0.0 0.0 (418.4) (25.0) (443.4)
Key Drivers
Adex rev. grth (%, main newsppr) ASP (% chg, main newsppr) Circulation grth (%, main newsppr) Adex rev. grth (%, 2ndary newsppr) ASP (% chg, 2ndary newsppr) Circulation grth (%, 2ndary newsppr) Adex rev. grth (%, tertiary newsppr) ASP (% chg, tertiary ppr) Circulation grth (%, tertiary newsppr) Newsprint Cost (% Change) Aug-12A 2.0% N/A -1.0% N/A N/A N/A N/A N/A N/A 1.7% Aug-13F 3.0% N/A -0.5% N/A N/A N/A N/A N/A N/A 5.5% Aug-14F 5.0% N/A -0.5% N/A N/A N/A N/A N/A N/A 2.4% Aug-15F 3.0% N/A -0.5% N/A N/A N/A N/A N/A N/A 2.4%
165
Telco - Integrated SINGAPORE

November 28, 2012
SingTel
ST SP / STEL.SI Current S$3.17 S$3.22 S$3.22 1.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$41,373m
S$50,541m
US$69.22m
S$85.05m
43.6%
15,943 m shares
CIMB Analyst Kelvin Goh CFA

Call back later

We think SingTel's FY13 and FY14 prospects will continue to be depressed by stiff competition in Australia, regulatory uncertainties and competition in India and margin pressure in Singapore due to content costs and start-up losses of its new acquisitions.
Overall, we think SingTel is in transition in Singapore as it attempts to build up new growth drivers and acquire customers with the view of monetising them in the future. We maintain Underperform with an SOP-based target price of S$3.22. Switch to StarHub for its potential for higher dividends. mobile operators all reducing data quotas in their plans. VHA is yet to return to the market in a meaningful way. However, we believe competition for subscribers will remain intense. Although VHA's new CEO, Bill Morrow, has commented that he is unlikely to be aggressive on price, VHA will undoubtedly have to ramp up marketing efforts and promote heavily to improve brand perception and start growing its subscriber base again.
Alan Stuart
T (61) 2 96946071 E alan.stuart@cimb.com
Ian Martin
T (61) 3 96311018 E ian.martin@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Hldgs 1M 0.6 -0.9 3M -4.3 -5.4 12M -8.9 5 % held 54.3
Reinventing itself in Singapore

SingTel is looking to move up the value chain by acquiring companies in the adjacent space and building up its pay TV business. While the jury is still out on its ability to identify winners from among its acquisitions, SingTel's profits will be dragged by losses from these start-ups. Also, content and subscriber acquisition costs for its pay TV ambitions will bear down on its profits, in our view.
Bharti dogged by risks

We believe Bharti's ROIC could remain under pressure owing to: i) potential spectrum payouts (renewal, one-time fees, 900MHz auction, etc), ii) pricing pressure owing to regulatory interventions (such as cap on processing fees and likely ban on roaming charges), and iii) a potential rise in competitive intensity with the entry of Reliance Industries. Telkomsel is a bright spot in the SingTel portfolio, benefiting from benign competition, rapid take-up of data services and relatively benign competition.
Not quite out of the woods in Australia

Optus pointed towards a more rational pricing environment, which we have seen evidence of over the past 12 months with the key three
3.7 3.5 3.3 3.1 Vol m 2.9 600 400 200

Nov-11
Price Close
106 104 101 99 96 94 91 89 86
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Operating EBITDA Margin Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)
|
Feb-12
May-12
Aug-12
Source: Bloomberg

3.17 3.03 3.58
Current
|
3.22
Mar-11A 18,071 4,989 27.6% 3,825 0.24 (2.84%) 13.29 0.26 8.14% 11.04 15.72 18.7% 15.9%
Mar-12A 18,825 5,115 27.2% 3,761 0.23 (3.30%) 13.75 0.16 4.99% 11.34 11.39 31.8% 15.4%
Target
Mar-13F 18,315 5,030 27.5% 3,486 0.22 (5.19%) 14.50 0.15 4.83% 11.38 16.01 27.5% 14.6% 0% 0.94
Mar-14F 18,823 5,104 27.1% 3,707 0.23 6.34% 13.63 0.16 5.13% 11.00 14.64 21.8% 14.8% 0% 0.95
Mar-15F 19,397 5,260 27.1% 4,072 0.26 9.85% 12.41 0.18 5.64% 10.44 13.59 16.0% 15.4% 0% 0.97
SingTel
November 28, 2012
Profit & Loss

|
Balance Sheet
Mar-12A 18,825 10,599 5,115 (2,002) 3,113 (341) 2,005 104 4,881 86 4,967 (1,205) 3,762 (1) 0 Mar-13F 18,315 10,344 5,030 (2,107) 2,924 (324) 1,934 53 4,587 0 4,587 (1,100) 3,486 0 0 Mar-14F 18,823 10,592 5,104 (2,086) 3,017 (324) 2,133 53 4,880 0 4,880 (1,173) 3,707 0 0 Mar-15F 19,397 10,914 5,260 (2,089) 3,171 (324) 2,467 53 5,367 0 5,367 (1,294) 4,072 0 0 (S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Mar-12A 1,346 3,927 208 337 5,818 11,580 0 10,174 12,845 34,599 131 5,053 351 5,535 8,662 2,772 11,434 0 16,969 23,428 20 23,448
Mar-13F 2,090 3,821 202 337 6,449 11,818 0 10,174 13,485 35,477 131 4,897 351 5,379 8,662 3,470 12,132 0 17,511 24,395 20 24,415
Mar-14F 3,207 3,927 208 337 7,679 12,062 0 10,174 14,194 36,430 131 5,057 351 5,539 8,662 4,226 12,888 0 18,427 25,662 20 25,682
Mar-15F 4,438 4,046 214 337 9,035 12,290 0 10,174 15,095 37,558 131 5,211 351 5,693 8,662 5,080 13,742 0 19,434 27,139 20 27,159
3,761 3,676 3,676
3,486 3,486 3,486
3,707 3,707 3,707
4,072 4,072 4,072
Cash Flow
|
Key Ratios
Mar-12A 5,115 11 Mar-13F 5,030 (44) Mar-14F 5,104 49 Mar-15F 5,260 28 Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
|
1,376 (341) (451) 5,710 (2,249) 582 (903) (239) (2,809) 1,536 0 0 (4,112) (1,688) (4,264)
1,241 (324) (402) 5,501 (2,345) 0 0 0 (2,345) 0 0 0 (2,519) (271) (2,790)
1,371 (324) (417) 5,783 (2,331) 0 0 0 (2,331) 0 0 0 (2,440) (271) (2,711)
1,513 (324) (441) 6,036 (2,317) 0 0 0 (2,317) 0 0 0 (2,595) (271) (2,866)
Mar-12A 4.17% 2.53% 27.2% (0.47) 1.47 8.89 24.3% 69% 71.70 11.28 211.4 8.42% 9.78%
Mar-13F (2.71%) (1.66%) 27.5% (0.42) 1.53 8.31 24.0% 70% 77.20 9.40 227.8 7.21% 9.02%
Mar-14F 2.78% 1.47% 27.1% (0.35) 1.61 8.58 24.0% 70% 75.11 9.10 220.7 7.24% 9.00%
Mar-15F 3.05% 3.05% 27.1% (0.27) 1.70 9.01 24.1% 70% 75.02 9.09 220.9 7.41% 9.08%
Key Drivers
Group Mobile Subscribers (m) Group Fixed Voice Subscribers (m) Grp fixed brdband subscribers (m) Group Pay TV Subs (m) Group Mobile ARPU (US$/mth) Grp fixed voice ARPU (US$/mth) Grp fixed brdband ARPU (US$/mth) Group Pay TV ARPU (US$/mth)
|
Mar-12A 13.07 1.69 1.06 0.37 35.9 1.1 61 19.9
Mar-13F 13.54 1.64 1.08 0.40 36.3 1.1 61 20.9
Mar-14F 13.90 1.59 1.10 0.41 36.2 1.0 61 21.9
Mar-15F 14.24 1.55 1.11 0.42 36.0 1.0 61 23.0
167
Public Transportation SINGAPORE

November 27, 2012
SMRT Corporation
MRT SP / SMRT.SI Current S$1.69 S$1.78 S$1.78 5.3%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,102m
S$2,570m
US$0.74m
S$0.91m
38.0%
1,520 m shares

Bumpy ride
The appointment of a new CEO is a step in the right direction but SMRT will need to endure a period of subdued growth to get its house in order. Meanwhile, we remain cautious about the likely lower dividends and margin pressure.
SMRT remains an Underperform, with a potential derating driven by dividend cuts and earnings disappointments. We make no changes to our EPS forecasts or DCF-based target price (WACC: 6.9%). implying that margin pressure will persist.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Holdings Invesco 1M -0.3 -1.8 3M 3.5 2.4 12M -18.2 -4.3 % held 54.4 0.7
Dividend cuts?
We expect SMRT to slash its dividend payout ratio from 94% in FY3/12 to 60% in FY13 as cash conservation takes priority in preparation for its heavy capex. The group has slipped into a net debt position from net cash in previous years. Furthermore, its 1HFY13 dividend reaffirms our suspicion as the payout ratio was 33%, lower than last years 39%.
Cost pressure to persist

The benefits of higher ridership have not translated into earnings growth for SMRT. Instead, the group has been plagued by cost inflation arising from higher staff costs and repair and maintenance expenses, a trend that will not reverse in the near term. CEO Mr Desmond Kuek has highlighted asset upgrades and improvement of service reliability as his immediate priorities. These goals can only be achieved with higher operating expenses and capital expenditure,
Expensive
We prefer ComfortDelGro for exposure to Singapores land transport sector. SMRT is expensive at 17.5x CY13 P/E (7.8% 3-year EPS CAGR) vs. 13.6x P/E (9.2% EPS CAGR) for ComfortDelGro. Dividend yields are similar at 3.6%.
1.85 1.80 1.75 1.70 1.65 1.60 1.55 Vol m 1.50 6 4 2

Nov-11
Price Close
110 105 100 95 90 85 80 75
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Mar-11A 970 330.8 161.1 0.11 (1.2%) 15.92 0.085 5.03% 7.18 14.57 (15.8%) 3.21 20.5% Mar-12A 1,057 289.7 119.9 0.08 (25.7%) 21.41 0.075 4.41% 8.47 NA (5.7%) 3.25 15.1% Mar-13F 1,085 327.8 140.2 0.09 16.9% 18.32 0.055 3.27% 8.43 NA 31.2% 3.03 17.1% 0% 1.02 Mar-14F 1,141 352.5 147.7 0.10 5.4% 17.39 0.058 3.45% 7.71 18.15 24.7% 2.83 16.8% 0% 1.03 Mar-15F 1,192 367.3 158.4 0.10 7.2% 16.22 0.063 3.70% 7.19 14.07 15.2% 2.65 16.9% 0% 1.05
Feb-12
May-12
Aug-12
Source: Bloomberg

1.69 1.61 1.82
Current
Target
1.78
SMRT Corporation
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Mar-12A 1,057 240 290 (141) 149 (4) 3 0 147 0 147 (27) 120 0 0 Mar-13F 1,085 263 328 (156) 171 (7) 3 0 167 0 167 (27) 140 0 0 Mar-14F 1,141 276 352 (172) 180 (7) 3 0 176 0 176 (28) 148 0 0 Mar-15F 1,192 293 367 (175) 193 (7) 3 0 189 0 189 (30) 158 0 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Mar-12A 195 64 54 0 313 1,346 68 14 15 1,443 0 546 58 604 150 86 236 124 965 791 0 791 Mar-13F 36 65 57 0 158 1,690 71 24 15 1,800 0 535 65 600 300 86 386 124 1,110 847 0 847 Mar-14F 76 69 59 0 205 1,718 74 35 15 1,841 0 562 66 629 300 86 386 124 1,139 907 0 907 Mar-15F 153 72 62 0 287 1,713 77 45 15 1,849 0 588 68 656 300 86 386 124 1,166 970 0 970
120 120 120
140 140 140
148 148 148
158 158 158
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Mar-12A 289.7 10.5 Mar-13F 327.8 (14.9) Mar-14F 352.5 21.0 Mar-15F 367.3 19.4
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Mar-12A 9.03% (12.4%) 27.4% 0.03 0.52 24.10 18.4% 94.5% 22.31 24.01 182.4 14.9% 13.5% Mar-13F 2.67% 13.1% 30.2% (0.17) 0.56 19.04 16.0% 60.0% 21.80 24.44 239.9 16.0% 14.8% Mar-14F 5.09% 7.5% 30.9% (0.15) 0.60 20.02 16.0% 60.0% 21.47 24.46 231.8 12.0% 14.0% Mar-15F 4.47% 4.2% 30.8% (0.10) 0.64 21.41 16.0% 60.0% 21.53 24.64 233.5 12.6% 14.3%
14.3 (6.9) (43.4) 264.2 (234.6) 5.8 (7.2) 0.0 (236.0) (100.0) 0.4 0.0 (129.1) (6.1) (234.9)
3.6 (9.0) (20.2) 287.3 (500.0) 0.0 0.0 0.0 (500.0) 150.0 0.0 0.0 (84.1) (0.6) 65.3
3.7 (9.0) (26.7) 341.5 (200.0) 0.0 0.0 0.0 (200.0) 0.0 0.0 0.0 (88.6) (1.4) (90.0)
3.0 (9.0) (28.1) 352.6 (170.0) 0.0 0.0 0.0 (170.0) 0.0 0.0 0.0 (95.0) (1.4) (96.4)
Key Drivers
Avg fare/trip (%chg,main prod/serv) Ridership grth (%,main prod/serv) Avg fare/trip (%chg,2ndary prod/serv) Ridership grth (%,2ndary prod/serv) Mar-12A -0.2% 8.4% -1.3% 4.9% Mar-13F 0.0% 7.2% 0.0% 2.7% Mar-14F 0.0% 5.7% 0.0% 2.0% Mar-15F 0.0% 5.0% 0.0% 2.0%
169
November 28, 2012
ST Engineering
STE SP / STEG.SI Current S$3.53 S$3.97 S$3.97 12.4%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$8,892m
S$10,862m
US$5.22m
S$6.41m
37.8%
3,059 m shares

Quality stock
ST Engineering has the qualities of a good stock: S$670m net cash, 30% ROEs, 8% 3-year EPS CAGR, stronger orders and dividend yields of 5%. Contrast all this with peers, which are reeling from margin compression and earnings contractions.
Maintain Outperform and target price (blended valuations). We prefer ST Engineering to SIA Engineering in the MRO space, for its liquidity, global operations (to cushion S$ appreciation) and upside from M&As. Catalysts are stronger-than-expected margins from Aerospace and reduced competition among global MRO providers.
Electronics to grow on regional spending

We expect Electronics profits to grow 8-10% yoy in FY13 from milestone completion of mass transit system and satellite communications projects in Bangkok, Taiwan, and Singapore. Electronics orders had more than doubled to S$685m in 9M12. We believe urbanisation in Asian cities could spur more infrastructure spending, including on satellite network equipment.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Temasek Arbedeen Asset Management Capital Research Global Investor 1M 1.8 0.3 3M 6.5 5.4 12M 17.3 31.2 % held 50.8 6.0 5.5
Stronger MRO orders

9M12 new MRO contracts amounted to S$1.6bn, 95% of FY11 levels. We expect the division to end FY12 with about S$1.9bn of new orders. MRO order wins have been steady since 3Q10 (S$450m a quarter). We expect this run rate to continue on the back of a shortage of MRO providers in the US and STEs proven expertise. We forecast 15% yoy growth for MRO contracts in 2013, to S$2.2bn. Hangar visibility is strong with utilisation expected to touch 100% in the US and Singapore till mid-2013. Management is cautiously optimistic, despite volatility in the global economy.
MRO top pick

We prefer ST Engineering to SIA Engineering in the MRO space, for its liquidity, global operations (to cushion S$ appreciation) and upside from M&As. Catalysts are stronger-than-expected margin expansion for its Aerospace business and reduced competition among global MRO providers.
3.7 3.5 3.3 3.1 2.9 2.7 2.5 8 6 4 2

Nov-11
Price Close
125 120 115 110 105 100 95
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 5,984 758.7 491.0 0.16 9.89% 21.67 0.19 5.33% 13.17 31.00 (27.3%) 6.61 30.8% Dec-11A 5,993 775.0 527.5 0.17 6.57% 20.32 0.20 5.65% 12.98 21.17 (23.8%) 6.11 31.1% Dec-12F 6,545 833.5 567.9 0.19 7.28% 18.98 0.21 6.07% 11.74 17.02 (40.4%) 5.80 31.3% (0%) 1.00 Dec-13F 6,994 866.0 599.7 0.20 5.61% 18.01 0.23 6.41% 11.31 22.35 (39.3%) 5.54 31.5% 0% 1.00 Dec-14F 7,348 913.8 639.4 0.21 6.61% 16.89 0.24 6.83% 10.57 16.96 (44.0%) 5.27 32.0% 0% 1.00
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

3.53 2.63 3.61
3.97
Current Target
ST Engineering
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 5,993 4,728 775 (135) 640 (19) 35 0 655 0 655 (115) 541 (13) 0 Dec-12F 6,545 5,163 833 (138) 696 (24) 43 0 715 0 715 (132) 583 (15) 0 Dec-13F 6,994 5,517 866 (141) 725 (17) 46 0 754 0 754 (139) 615 (15) 0 Dec-14F 7,348 5,797 914 (143) 770 (17) 50 0 803 0 803 (149) 654 (15) 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 1,807 1,540 1,594 26 4,967 1,357 333 564 187 2,440 205 2,232 1,042 3,479 1,154 788 1,942 110 5,531 1,766 110 1,876 Dec-12F 2,058 1,559 1,674 26 5,318 1,419 336 564 187 2,506 101 2,571 1,023 3,694 1,154 880 2,034 110 5,838 1,860 125 1,985 Dec-13F 2,077 1,690 1,824 26 5,618 1,478 336 564 187 2,565 101 2,755 1,048 3,903 1,154 927 2,081 110 6,094 1,949 140 2,089 Dec-14F 2,225 1,733 1,898 26 5,883 1,535 337 564 187 2,623 101 2,890 1,069 4,060 1,154 978 2,133 110 6,302 2,049 155 2,203
527 527 527
568 568 568
600 600 600
639 639 639
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 775.0 (70.3) Dec-12F 833.5 (257.0) Dec-13F 866.0 79.9 Dec-14F 913.8 (31.2)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 0.14% 2.14% 12.9% 0.15 0.58 9.93 17.5% 89.8% 67.22 442.0 162.5 27.0% 21.1% Dec-12F 9.21% 7.54% 12.7% 0.26 0.61 12.01 18.4% 90.0% 66.93 432.8 149.3 29.1% 21.8% Dec-13F 6.86% 3.90% 12.4% 0.27 0.64 13.28 18.5% 90.0% 66.37 432.5 153.7 33.0% 22.4% Dec-14F 5.07% 5.53% 12.4% 0.32 0.67 14.10 18.5% 90.0% 67.48 437.9 153.3 32.7% 23.0%
98.0 0.0 (81.9) 720.8 (199.3) (34.3) 0.5 (233.1) 18.7 62.4 0.0 (450.3) (124.0) (493.2)
254.7 0.0 (141.4) 689.7 (200.0) (3.6) 251.3 47.7 (104.1) 0.0 0.0 (473.8) 91.8 (486.0)
(94.6) 0.0 (168.2) 683.1 (200.0) 0.3 (0.3) (200.0) 0.0 0.0 0.0 (511.1) 46.6 (464.5)
87.3 0.0 (131.6) 838.2 (200.0) (1.5) 0.1 (201.3) 0.0 0.0 0.0 (539.8) 51.7 (488.1)
Key Drivers
Rev. growth (%, main biz.) EBITDA mgns (%, main biz.) Rev. as % of total (main biz.) EBITDA as % of total (main biz.) Rev. growth (%, 2ndary biz.) EBITDA mgns (%, 2ndary biz.) Rev. as % of total (2ndary biz.) EBITDA as % of total (2ndary biz.) Rev. growth (%, tertiary biz.) EBITDA mgns (%, tertiary biz.) Rev.as % of total (tertiary biz.) EBITDA as % of total (tertiary biz.) Dec-11A 250.2% N/A N/A N/A -2.5% N/A N/A N/A N/A N/A N/A N/A Dec-12F 968.3% N/A N/A N/A 1.6% N/A N/A N/A N/A N/A N/A N/A Dec-13F 228.5% N/A N/A N/A 11.7% N/A N/A N/A N/A N/A N/A N/A Dec-14F 177.9% N/A N/A N/A 8.1% N/A N/A N/A N/A N/A N/A N/A
171
REIT SINGAPORE
November 27, 2012
Starhill Global REIT

SGREIT SP / STHL.SI Current S$0.75 S$0.83 S$0.83 10.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,192m
S$1,457m
US$1.12m
S$1.37m
70.5%
1,943 m shares

Awaiting the next catalyst

This years key positive is Wisma Atrias enhancements and reversions. Malaysias first H&M flagship store in Lot 10 was a smaller positive, offset by weaker China luxury demand. While the >40% of space on master/long leases limits downside, we see limited catalysts for 2013.
Toshin negotiations could result in lump sum compensation but a positive rental reversion has been factored in. No change to DPU estimates and DDM-based target price (7.9% discount rate). Maintain Neutral. A potential rerating catalyst is stronger reversions for the Toshin lease. appointed for the rent valuations and full disclosure of the previous seven reports is to be provided. Management sees this as a warning for future rent reviews. The rent review in dispute was from Jun 2011 and the rental adjustment will be based on current market rents. Any shortfall will be compensated through a lump sum payment. We expect positive rental reversions for the Toshin lease.
Tan Siew Ling

Share price info

Share price perf. (%) Relative Absolute Major shareholders YTL Corp Bhd AIA Co. Ltd Mackenzie Financial Corp 1M -3 -4.5 3M 1.1 0 12M 16.5 30.4 % held 28.7 10.0 3.1
Wisma starred in 2012

Completion of enhancements in 3Q12 at Wisma Atria led to higher shopper traffic and strong positive reversions. We expect 4Q12 to see a full quarter of stronger contributions. The H&M flagship store occupying 35k sf in Lot 10 in Malaysia was also a positive, drawing in shopper traffic. This was offset by the weaker mall in Chinas Chengdu as the retail mall landscape remains competitive amid softer demand for luxury goods. Tenant renovations since 1Q12 could improve the positioning going forward.
No clear catalyst
The luxury retail market could be a difficult market going forward in terms of retail demand and acquisitions. Yet, valuations are not overly demanding at 0.9x P/BV and 6-7% dividend yield. The 40% of space on master/long-leases limits downside. Its sponsors intention to expand in China is a mid- to long-term positive. We would turn positive on stronger-than-expected Toshin reversions and accretive acquisitions through ample debt headroom.
Look out for Toshin at Ngee Ann City

The Toshin master lease dispute is still pending. Three valuers have to be
0.85 0.80 0.75 0.70 0.65 0.60 0.55 0.50 10 8 6 4 2

Nov-11
Price Close
128 122 117 111 105 99 94 88
Financial Summary
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

0.56
0.75 0.80
Current
Target
0.83
Starhill Global REIT

November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 180.1 0.0 180.1 (36.5) 143.6 0.0 (13.9) (3.4) (0.1) 126.1 0.0 126.1 (33.6) 0.0 0.0 17.0 109.6 (5.2) 0.0 0.0 104.4 80.1 Dec-12F 187.9 0.0 187.9 (37.9) 150.0 0.0 (13.9) (3.4) 0.0 132.6 0.0 132.6 (34.2) 0.0 0.0 0.0 98.4 (5.5) 0.0 0.0 92.9 86.0 Dec-13F 203.7 0.0 203.7 (41.6) 162.1 0.0 (13.9) (3.4) 0.0 144.7 0.0 144.7 (34.1) 0.0 0.0 0.0 110.6 (6.2) 0.0 0.0 104.4 97.5 Dec-14F 207.0 0.0 207.0 (42.2) 164.8 0.0 (14.0) (3.4) 0.0 147.4 0.0 147.4 (34.1) 0.0 0.0 0.0 113.4 (6.4) 0.0 0.0 107.0 100.1
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-11A 2,710 11 8 2,728 108 0 3 0 111 43 28 31 101 838 48 887 1,678 0 173 1,851 Dec-12F 2,710 11 9 2,730 120 0 3 0 122 45 0 34 79 873 49 922 1,678 0 173 1,851 Dec-13F 2,710 11 10 2,731 125 0 3 0 127 49 0 35 83 873 52 925 1,678 0 173 1,851 Dec-14F 2,711 11 11 2,732 125 0 3 0 128 49 0 35 84 873 52 925 1,678 0 173 1,851
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 109.6 33.6 7.8 (2.5) (16.6) 131.8 (16.2) (1.6) 0.7 (17.1) 0.5 0.0 (90.1) (31.7) (121.2) (6.5) 115.4 84.3 Dec-12F 98.4 34.2 1.9 (5.5) 0.6 129.6 (0.3) (1.6) 0.7 (1.2) 15.5 0.0 (95.8) (36.5) (116.8) 11.6 129.1 109.7 Dec-13F 110.6 34.1 3.8 (6.2) 0.8 143.1 (0.3) (1.6) 0.8 (1.1) 0.0 0.0 (107.3) (29.7) (136.9) 5.1 142.7 107.9 Dec-14F 113.4 34.1 0.8 (6.4) 1.0 142.8 (0.3) (1.6) 0.8 (1.1) 0.0 0.0 (109.8) (31.5) (141.4) 0.3 142.5 107.6
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-11A 8.7% 10.1% 79.7% 5.5% 3.68 4.73% 76.7% 1.09 1.09 1.06 (300%) 3.71% Dec-12F 4.3% 4.5% 79.8% 7.5% 3.80 5.60% 92.6% 1.55 1.55 1.52 (240%) 3.27% Dec-13F 8.4% 8.1% 79.6% 13.3% 4.15 5.60% 93.4% 1.53 1.53 1.50 (244%) 3.66% Dec-14F 1.6% 1.7% 79.6% 2.6% 4.23 5.60% 93.5% 1.52 1.52 1.49 (235%) 3.74%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-11A 12.4 N/A N/A 1,652 95.6% N/A N/A Dec-12F 12.6 N/A N/A 1,660 96.5% N/A N/A Dec-13F 13.0 N/A N/A 1,660 96.6% N/A N/A Dec-14F 13.4 N/A N/A 1,660 96.6% N/A N/A
173
Telco - Integrated SINGAPORE

November 28, 2012
StarHub
STH SP / STAR.SI Current S$3.64 S$4.35 S$4.35 19.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$5,104m
S$6,244m
US$4.99m
S$6.12m
33.0%
1,716 m shares
CIMB Analyst Kelvin Goh, CFA

Time to sparkle
StarHub's strong FCFE and multi-year low net debt to EBITDA show that it is ripe for higher dividends while data monetisation will rise further as more users switch to its tiered plans. However, its pay TV dominance should wane over the long term as it faces SingTel's mioTV.
We are upbeat on StarHub for its potentially higher dividends and domestic-driven operations, comparing against SingTels. Despite high valuations, its dividend yields are attractive at 6-7% for FY13-14. StarHub is our top pick within the Singapore telco sector. We maintain Outperform and our DCF-based target price (WACC: 7.8%). new tiered plans launched in 3Q12. We think the migration from 3G to 4G will be faster than it was for 2G to 3G (~60% in three years) as there are currently more 4G-enabled handsets available in the market compared to previously. We believe that, with the new tiered plans, customers will eventually trade up from their bundled plans when they require more data. Indeed, there is significant room for improvement as StarHub revealed that only 20% of its users use more than 2GB/month while 99% of users use below 12GB/month.
Share price info

Share price perf. (%) Relative Absolute Major shareholders STT Comm Ltd NTT Communication Temasek Capital 1M 0.1 -1.4 3M 2.3 1.4 12M 13.3 25.1 % held 49.2 10.1 7.5
Ripe for higher dividends

While StarHub has yet to announce its FY13 policy, we expect it to raise its dividends by 20% to 24 Scts next year because 1) we project FCFE to rise from 23 Scts in FY12 to 25-30 Scts/share in FY13-14, and 2) 3Q12 net debt/EBITDA has fallen to only 0.4x, its lowest since 2Q06. We do not expect the government reallocation of 4G spectrum in early-2013 to hinder a higher payout as StarHub can fund the spectrum bid with proceeds from its recent S$220m bond issuance.
Pay TV race fires up

StarHub's pay TV dominance is expected to gradually erode in the long run, in our view, as competition is expected to intensify with SingTel beefing up its proposition. SingTel has quickly narrowed the content gap with StarHub. With a new line-up of >130 unique channels, SingTel is quickly catching up with StarHub's 178 channels, eating away the latters differentiation and dominance.
More money from data

We forecast data monetisation to accelerate in FY13 on the back of its
4.0 3.8 3.6 3.4 3.2 3.0 2.8 Vol m 2.6 15 10 5

Nov-11
Price Close
126 120 115 109 103 97 92 86
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Operating EBITDA Margin Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 2,238 613.6 27.4% 263.1 0.16 (14.9%) 22.80 0.20 5.49% 11.07 20.02 1052% 304% Dec-11A 2,311 676.0 29.3% 315.5 0.18 15.4% 19.78 0.20 5.49% 9.95 20.18 2138% 824% Dec-12F 2,390 718.2 30.1% 355.8 0.21 12.5% 17.57 0.20 5.49% 9.19 15.50 710% 991% 0% 1.03 Dec-13F 2,477 738.5 29.8% 387.8 0.22 8.5% 16.17 0.24 6.59% 8.99 11.81 980% 896% 0% 1.07 Dec-14F 2,629 791.0 30.1% 433.1 0.25 11.2% 14.54 0.24 6.59% 8.37 13.78 473% 814% 0% 1.14
Mar-12
Jun-12
Sep-12
Source: Bloomberg

2.73
3.64 3.86
Current
Target
4.35
StarHub
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 2,311 1,330 676 (278) 398 (18) 0 0 380 0 380 (64) 316 0 0 Dec-12F 2,390 1,387 718 (274) 444 (16) 0 0 429 0 429 (73) 356 0 0 Dec-13F 2,477 1,434 739 (256) 483 (15) 0 0 467 0 467 (79) 388 0 0 Dec-14F 2,629 1,526 791 (253) 538 (17) 0 0 522 0 522 (89) 433 0 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 179 301 37 17 535 762 0 424 3 1,188 75 448 380 903 588 210 797 0 1,701 23 0 23 Dec-12F 238 224 41 17 520 755 0 424 3 1,182 0 412 380 793 588 270 857 0 1,650 49 0 49 Dec-13F 372 269 43 17 700 747 0 424 3 1,174 0 429 398 827 738 270 1,007 0 1,834 37 0 37 Dec-14F 411 278 41 17 747 758 0 424 3 1,184 0 453 398 852 738 270 1,007 0 1,859 69 0 69
316 316 316
356 356 356
388 388 388
433 433 433
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 676.0 (20.6) 0.0 59.2 (18.4) 0.0 696.2 (246.5) 2.5 0.0 0.0 (244.0) (142.9) 0.0 0.0 (343.3) (24.3) (510.5) Dec-12F 718.2 37.8 15.7 0.0 (15.7) (14.6) 741.4 (262.9) 0.0 0.0 0.0 (262.9) (75.0) 14.7 0.0 (343.7) (15.7) (419.7) Dec-13F 738.5 (30.3) 15.4 0.0 (15.4) (79.4) 628.8 (247.7) 0.0 0.0 0.0 (247.7) 150.0 14.7 0.0 (396.8) (15.4) (247.5) Dec-14F 791.0 17.5 16.7 0.0 (16.7) (88.7) 719.8 (262.9) 0.0 0.0 0.0 (262.9) 0.0 14.7 0.0 (415.7) (16.7) (417.6)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 3.28% 10.2% 29.3% (0.28) 0.013 19.42 16.9% 109% 45.55 12.84 164.8 40.1% 51.8% Dec-12F 3.41% 6.2% 30.1% (0.20) 0.029 25.46 17.0% 97% 40.23 14.19 157.0 50.9% 67.5% Dec-13F 3.65% 2.8% 29.8% (0.21) 0.022 26.09 17.0% 107% 36.31 14.60 147.1 59.0% 68.8% Dec-14F 6.13% 7.1% 30.1% (0.19) 0.040 26.14 17.0% 96% 37.95 13.80 145.9 65.3% 68.6%
Key Drivers
Group Mobile Subscribers (m) Group Fixed Voice Subscribers (m) Grp fixed brdband subscribers (m) Group Pay TV Subs (m) Group Mobile ARPU (US$/mth) Grp fixed voice ARPU (US$/mth) Grp fixed brdband ARPU (US$/mth) Group Pay TV ARPU (US$/mth) Dec-11A 2.19 N/A 0.44 0.55 36.4 N/A 36 39.0 Dec-12F 2.33 N/A 0.46 0.55 35.0 N/A 36 39.6 Dec-13F 2.47 N/A 0.48 0.56 35.6 N/A 37 40.0 Dec-14F 2.59 N/A 0.50 0.57 35.9 N/A 37 40.0
175

November 28, 2012
STX OSV
SOH SP / STXO.SI Current S$1.36 S$1.47 S$1.47 8.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,314m
S$1,605m
US$9.61m
S$11.81m
49.3%
1,180 m shares

Uncertainty lingers
While margins are expected to revert back to their historical levels, we do not anticipate a sharp plunge in earnings in 2013. However, whether SOH would continue as a public-listed entity is a different proposition.
Maintain Neutral, EPS and target price, still based on blended valuations. We would revisit the stock upon greater certainty of its shareholding structure. market) and PSVs (many more coming on stream). Instead, SOH expects more subsea orders. Additionally, its new Brazilian yard (Promar) is 60% completed and could start taking orders in 2013. As order intake lags recognition rate, its yards could experience some under-utilisation in 2013. That said, the impact may not fully percolate down to margins, given the companys variable-cost structure.
Share price info

Share price perf. (%) Relative Absolute Major shareholders STX Europe AS Och-Ziff Capital Management 1M -11.6 -13.1 3M -8.5 -9.6 12M 10.3 24.2 % held 50.8 12.0
Similar performance expected in FY13

Though we expect EBITDA margins to trend down to 13% from an estimated 13.7% on flat revenue, we only anticipate a 5% yoy drop in earnings for FY13. Our margin expectations are at the higher end of managements guidance of 10-12%.
Stake sale clouds fundamentals

Though we see value in SOH for its market leadership, high-end capabilities and entrenchment in Brazil, we believe its share price could be flat in the near term as talk of a long-awaited stake sale by its Korean parent, STX Group, escalates. Recent M&A intelligence suggests that a deal with Italian cruise shipbuilder, Fincantieri, could be close to completion and we would not be surprised if a sale occurs in the range of S$1.50/share.
Order intake of NOK11bn lags revenue run rate

We expect SOH to book NOK11bn of orders in FY13. YTD, SOH has clinched about NOK9.4bn vs. our FY12 order target of NOK10bn. 9M12 order book was NOK16.4bn. In our view, its order intake is representative of the industrys mid-cycle, still faced with financing challenges and pockets of over-tonnage. Management itself sees low orders for its two core offerings: AHTS (erratic North Sea
Price Close 1.8 1.6 1.4 1.2 Vol m 1.0 80 60 40 20

154 147 141 134 127 121 114 107 101 94
Financial Summary
Revenue (KRm) Operating EBITDA (KRm) Net Profit (KRm) Core EPS (KR) Core EPS Growth FD Core P/E (x) DPS (KR) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 11,881 1,329 1,030 0.75 134% 8.11 0.13 2.0% 6.22 9.14 76.8% 3.14 48.1% Dec-11A 12,401 2,355 1,594 1.37 83% 4.43 0.69 10.9% 2.78 7.62 (12.0%) 2.13 55.0% Dec-12F 11,983 1,642 1,061 0.90 (34%) 7.03 1.04 16.4% 4.91 4.78 24.7% 2.23 30.9% (0%) 0.99 Dec-13F 12,108 1,574 1,008 0.85 (5%) 7.41 0.32 5.0% 4.99 5.99 17.0% 2.04 28.7% (0%) 0.98 Dec-14F 12,742 1,529 971 0.82 (4%) 7.69 0.32 5.0% 4.78 7.30 1.9% 1.75 24.5% 0% 0.95
Aug-12

1.36 1.13 1.79
Current
1.47
Target
STX OSV
November 28, 2012
Profit & Loss

(KRm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 12,401 4,804 2,355 (148) 2,207 31 10 0 2,248 (35) 2,213 (611) 1,602 (8) 0 Dec-12F 11,983 3,919 1,642 (144) 1,498 15 10 0 1,523 0 1,523 (457) 1,066 (5) 0 Dec-13F 12,108 3,874 1,574 (145) 1,429 15 10 0 1,454 0 1,454 (436) 1,018 (10) 0 Dec-14F 12,742 3,823 1,529 (153) 1,376 15 10 0 1,401 0 1,401 (420) 981 (10) 0
Balance Sheet
(KRm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 3,064 7,599 356 0 11,019 1,011 278 415 84 1,788 2,407 4,871 1,536 8,814 231 4 235 205 9,254 3,510 43 3 553 Dec-12F 3,404 7,880 492 0 11,777 1,257 288 415 84 2,044 3,968 4,596 1,374 9,938 276 4 280 205 10,423 3,350 48 3 398 Dec-13F 3,960 7,962 498 0 12,419 1,462 298 415 84 2,259 4,340 4,644 1,509 10,493 251 4 255 205 10,953 3,667 58 3 725 Dec-14F 4,610 8,379 524 0 13,513 1,459 308 415 84 2,266 4,566 4,887 1,656 11,110 126 4 130 205 11,445 4,266 68 4 334
1,594 1,619 1,619
1,061 1,061 1,061
1,008 1,008 1,008
971 971 971
Cash Flow
(KRm) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 2,355 (1,016) 269 25 (18) (406) 1,209 (120) (97) (4) 0 (221) (46) 0 0 (450) (279) (775) Dec-12F 1,642 569 0 0 15 (320) 1,906 (390) 0 0 0 (390) 45 0 0 (1,221) 0 (1,176) Dec-13F 1,574 337 0 0 15 (305) 1,621 (350) 0 0 0 (350) (25) 0 0 (690) 0 (715) Dec-14F 1,529 47 0 0 15 (294) 1,297 (150) 0 0 0 (150) (125) 0 0 (372) 0 (497)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (KR) BVPS (KR) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 4.38% 77% 19.0% 0.36 2.97 137.9 27.6% 50% 53.66 16.00 212.9 35.8% 32.8% Dec-12F (3.37%) (30%) 13.7% (0.71) 2.84 74.9 30.0% 115% 58.03 19.25 214.8 35.3% 21.7% Dec-13F 1.04% (4%) 13.0% (0.54) 3.11 71.4 30.0% 37% 59.69 21.95 204.8 24.7% 18.0% Dec-14F 5.24% (3%) 12.0% (0.07) 3.62 68.8 30.0% 38% 58.51 20.90 195.0 23.2% 16.0%
Key Drivers
Outstanding Orderbook (KRm) Order Book Wins (KRm) Orderbook Depletion (KRm) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Dec-11A Dec-12F 16,675.0 14,891.7 11,117.0 10,000.0 N/A N/A N/A N/A N/A N/A N/A N/A Dec-13F 14,484.2 11,000.0 N/A N/A N/A N/A Dec-14F 13,242.2 11,000.0 N/A N/A N/A N/A
177
Dry Bulk Shipping SINGAPORE

November 27, 2012
STX Pan Ocean

STX SP / STXP.SI Current S$4.00 S$0.84 S$0.84 -79.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$674.1m
S$823.4m
US$0.01m
S$0.01m
40.0%
205.9 m shares
CIMB Analyst Raymond Yap CFA

Unlucky number 8
STXPO suffered its eighth consecutive quarterly loss in 3Q12 when the bulk, container and tanker divisions were all in the red. We do not expect any turnaround in the near term as the shipping market remains weak due to overcapacity and bunker prices remain elevated.
We retain our Underperform call and target price, based on SOP. We remain bearish on the stock, with the key derating catalyst being the even tougher conditions expected for the shipping markets in 2013. STXPO's high gearing is also a big concern. Our top pick is Pacific Basin in the bulk space. losses on its chartered-in bulk fleet due to the high charter rates that the company entered into previously.
Share price info

Share price perf. (%) Relative Absolute Major shareholders STX Group Korea Development Bank 1M -13.2 -14.7 3M -4.1 -5.2 12M -51.9 -38 % held 34.0 15.0
New ships to enter the fleet
STXPO to remain in losses

We expect STXPO to remain in the red as dry bulk rates have fallen further in 4Q. While VLCC tanker rates have picked up and intra-Asia container rates remains largely flat vs 3Q12, the weak dry bulk sector will remain the main contributor to the group's losses. We have little visibility on the duration and cost of STXPOs loss-making chartered ships. In 2013-14, we expect STXPO to continue turning in losses, albeit smaller than in 2012. This is because we expect the dry bulk market to recover sometime towards end-2013. However, STXPO will still suffer
STXPO continues to expand its fleet despite challenging times. In 4Q12, it will take delivery of 11 ships, followed by 20 in 2013 and another nine in 2014. The saving grace is that 75% of its order book has been locked into long-term contracts of affreightment which are likely to enjoy small profits. Also, the remaining 10 unfinanced ships have attached COAs, making it easier to secure debt funding.
High net gearing

Net gearing is another concern, rising from 1.3x at end-2011 to 2.3x at end-2012 and set to top 3x in 2013. Because the group is loss-making, it is unable to generate the cash required to fund its massive capex. STXPO will have to raise debt or probably sell off some of its older vessels to raise the necessary cash.
11 9 7 5 3 Vol th 1 40 30 20 10
Nov-11
Price Close
160 144 128 112 96 80 64 48 32 16 0
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 5,593 173.2 69.9 0.19 na 16.99 0.076 2.31% 14.8 1.33 94% 0.32 1.9% Dec-11A 5,177 22.5 (19.4) -0.85 (543%) NA 0.060 1.84% 143.7 1.52 130% 0.32 (8.3%) Dec-12F 4,577 (102.2) (352.2) -1.71 100% NA 0.043 1.30% NA NA 230% 0.39 (18.4%) (0.000%) Dec-13F 4,666 43.7 (244.2) -1.19 (31%) NA 0.043 1.30% 121.3 9.82 322% 0.45 (15.2%) (0.001%) Dec-14F 5,018 138.5 (170.5) -0.83 (30%) NA 0.043 1.30% 41.0 3.15 393% 0.52 (12.2%) 0.000%
Feb-12
May-12
Aug-12
Source: Bloomberg

4.00 1.60 9.47
0.84
Current
Target
STX Pan Ocean

November 27, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 5,177 22 22 -134 -112 -56 -4 1 -170 156 -14 -5 -19 -1 0 Dec-12F 4,577 -102 -102 -161 -263 -93 -5 0 -361 0 -361 9 -352 0 0 Dec-13F 4,666 44 44 -164 -120 -107 -5 0 -233 0 -233 -12 -244 0 0 Dec-14F 5,018 138 138 -174 -36 -121 -5 0 -162 0 -162 -8 -171 0 0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 434 363 64 741 1,602 4,252 190 40 0 4,482 583 228 526 1,337 2,589 52 2,641 0 3,978 2,099 7 2,106 Dec-12F 103 321 58 741 1,223 5,191 184 40 0 5,416 750 207 526 1,483 3,359 52 3,411 0 4,894 1,738 7 1,745 Dec-13F 51 327 57 741 1,176 5,728 179 40 0 5,947 1,000 204 526 1,730 3,849 52 3,901 0 5,631 1,485 7 1,492 Dec-14F 130 352 60 741 1,283 5,903 174 40 0 6,118 1,200 216 526 1,942 4,094 52 4,146 0 6,088 1,306 7 1,313
-19 -176 -176
-352 -352 -352
-244 -244 -244
-171 -171 -171
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 22 241 Dec-12F -102 27 Dec-13F 44 -8 Dec-14F 138 -16
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (7.4%) (87%) 0.43% -13.30 10.19 -1.26 0.00% (7.3%) 21.53 3.71 13.05 (2.25%) (1.59%) Dec-12F (11.6%) (555%) (2.23%) -19.45 8.44 -2.41 0.00% (2.4%) 27.34 4.75 17.00 (4.58%) (4.43%) Dec-13F 1.9% N/A 0.94% -23.30 7.21 -1.07 0.00% (3.8%) 25.35 4.54 16.24 (1.75%) (1.89%) Dec-14F 7.5% 217% 2.76% -25.08 6.34 -0.28 0.00% (5.4%) 24.69 4.39 15.71 (0.48%) (0.47%)
210 -633 -1 -160 -1,000 180 0 815 -5 607 0 0 -18 -633 -44
125 -109 9 -50 -1,100 0 0 0 -1,100 937 0 0 -9 -109 819
117 -112 -12 29 -700 0 0 0 -700 740 0 0 -9 -112 619
132 -127 -8 119 -350 0 0 0 -350 445 0 0 -9 -127 309
Key Drivers
Average Baltic Dry Index Average Bulk Rate (US$/day) Bulk Rates (yoy Change %) Capacity (no. Of Calendar Days) Bulk Capacity (yoy Change %) Fleet Size (no. Of Vessels) No. Of Dry Bulk Ships Dec-11A Dec-12F Dec-13F 1,550.0 1,228.0 1,099.0 40,190.3 34,161.8 30,745.6 4.8% -15.0% -10.0% 112,603 111,873 124,283 -11.9% -0.6% 11.1% 341.0 402.0 420.0 280 333 348 Dec-14F 1,154.0 32,282.9 5.0% 128,480 3.4% 428.0 356
179
REIT SINGAPORE
November 27, 2012
Suntec REIT
SUN SP / SUNT.SI Current S$1.55 S$1.72 S$1.72 11.0%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,840m
S$3,473m
US$7.14m
S$8.73m
95.0%
2,231 m shares

Positives priced in
Valuations are undemanding at 0.8x P/BV, with downside from AEI disruption limited by Chijmes divestment proceeds. However, we believe that positives from its sturdy office portfolio and AEI delivery could be increasingly priced in, after its YTD outperformance.
No change to DPU estimates and DDM-based target price (discount rate of 7.5%). Maintain Neutral. We see rerating catalysts in increased visibility of accretion from acquisitions and earnings outperformance due to AEI. Suntec City office remained sturdy, anchored by 100% occupancy, unchanged from 2Q. Backed by the strong occupancy, renewal rents inched up to S$8.96 psf in 3Q (2Q: S$8.71psf) though leasing could have been mainly for smaller spaces. Rental reversions remain positive due to low expiring rents. With proactive leasing, lease expiries have been lowered to 1.6% of total office NLA for FY12 and 19.7% for FY13.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Perennial Investment Schroder Investment Asean Investment 1M -1.9 -3.4 3M 7.3 6.2 12M 22.8 36.7 % held 5.1 5.0 4.9
Suntec City Mall AEI

We expect rising pre-commitments at Phase 1 of Suntec City Malls asset enhancement. Downside should be limited by Chijmes divestment proceeds. Successful execution of Phase 1 of the AEI (completion expected in Apr 13) can help anchor expectations for the remaining phases. The mall has gone through one quarter of asset enhancement since its commencement in Jun with DPU flat qoq even without dipping into the Chijmes divestment proceeds. Pre-commitments have climbed higher to 71.2% (2Q: 58.5%), ahead of completion in 2Q13 while occupancy of areas unaffected by AEI remains a fairly healthy 98.2%.
Positives priced in?

Valuations are undemanding, with downside from AEI disruption limited by Chijmes divestment proceeds. However, we believe that positives from its sturdy office portfolio and AEI delivery could be increasingly priced in, after its YTD outperformance. Key risks are the potentially expensive acquisition of MBFC Phase 2 and equity fundraising though downside can be mitigated if older assets can be divested at good prices to part-fund the acquisition.
Sturdy office portfolio
1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0 25 20 15 10 5

Nov-11
Price Close
136 129 122 115 107 100 93 86
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-10A 249.5 193.1 385.7 182.5 0.07 265% 22.36 0.091 5.90% 38.4% 1.81 0.86 3.78% Dec-11A 270.3 193.4 631.8 220.7 0.11 56% 14.32 0.099 6.43% 37.5% 1.99 0.78 5.69% Dec-12F 267.7 172.9 165.4 209.8 0.07 (32%) 20.93 0.093 6.04% 36.8% 1.99 0.78 3.72% 0% 0.87 Dec-13F 276.6 180.9 140.0 208.7 0.06 (16%) 24.95 0.092 5.95% 38.1% 1.97 0.79 3.13% 0% 0.80 Dec-14F 291.2 190.1 151.3 218.9 0.07 7% 23.28 0.096 6.19% 38.9% 1.95 0.79 3.39% 0% 0.82
Vol m
Feb-12
May-12
Aug-12
Source: Bloomberg

1.08
1.55 1.63
Current
Target
1.72
Suntec REIT
November 27, 2012
Profit & Loss

(S$m) Rental Revenues Other Revenues Gross Property Revenue Total Property Expenses Net Property Income General And Admin. Expenses Management Fees Trustee's Fees Other Operating Expenses EBITDA Depreciation And Amortisation EBIT Net Interest Income Associates' Profit Other Income/(Expenses) Exceptional Items Pre-tax Profit Taxation Minority Interests Preferred Dividends Net Profit Distributable Profit Dec-11A 270.3 0.0 270.3 (76.9) 193.4 0.0 (36.1) (5.3) 0.0 152.0 (39.3) 112.7 (57.7) 141.7 47.7 396.2 640.6 (6.0) (2.8) 0.0 631.8 220.7 Dec-12F 267.7 0.0 267.7 (94.7) 172.9 0.0 (36.7) (5.4) 0.0 130.9 (27.2) 103.7 (50.8) 49.4 66.4 0.0 168.7 (3.3) 0.0 0.0 165.4 209.8 Dec-13F 276.6 0.0 276.6 (95.7) 180.9 0.0 (37.8) (5.5) 0.0 137.6 (17.3) 120.3 (57.7) 58.4 21.0 0.0 142.1 (2.1) 0.0 0.0 140.0 208.7 Dec-14F 291.2 0.0 291.2 (101.1) 190.1 0.0 (38.5) (5.6) 0.0 146.0 (15.6) 130.3 (60.4) 64.3 19.0 0.0 153.2 (1.9) 0.0 0.0 151.3 218.9
Balance Sheet
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-11A 641 (45) (10) (2) (366) 218 (3) (49) 25 (28) 113 (1) (211) (36) (137) 53 212 266 Dec-12F 169 (5) (1) (3) 30 190 (82) 226 12 157 (68) 0 (205) (51) (323) 24 367 228 Dec-13F 142 17 3 (2) 32 191 (157) 58 18 (81) 157 0 (209) (58) (109) 0 130 209 Dec-14F 153 12 4 (2) 32 200 (100) 64 12 (24) 100 0 (213) (60) (173) 3 196 216
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-11A 8.34% 0.2% 71.5% 8.9% 1.40 0.94% 35% 0.86 0.86 0.34 333% 8.92% Dec-12F (0.96%) (10.6%) 64.6% (6.1%) 1.46 1.96% 127% 0.47 0.47 0.42 84% 2.21% Dec-13F 3.34% 4.6% 65.4% (1.4%) 1.54 1.48% 149% 0.47 0.47 0.42 (625%) 1.85% Dec-14F 5.27% 5.1% 65.3% 4.0% 1.61 1.24% 145% 0.47 0.47 0.42 (673%) 1.97%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-11A 8.3 N/A N/A 3,498 99.0% N/A N/A Dec-12F 8.0 N/A N/A 3,493 98.5% N/A N/A Dec-13F 8.1 N/A N/A 3,493 92.4% N/A N/A Dec-14F 8.1 N/A N/A 3,493 92.4% N/A N/A
181

November 28, 2012
Super Group
SUPER SP / SPGP.SI Current S$3.15 S$3.27 S$3.27 3.9%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,438m
S$1,756m
US$1.21m
S$1.48m
24.8%
557.5 m shares

T 65 6210 8610 E kenneth.ng@cimb.com
Twin engines of growth

FY12 was the year the investment community took note of this home-grown F&B brand with market leadership in difficult-to-penetrate ASEAN markets. Both its business divisions should continue to profit from an expanding middle class in the region.
Super remains very much focused on its Branded Consumer business. Our target price is still at 20x forward P/E, a 20% discount to Nestle Malaysia in view of lower profitability. Maintain Outperform. We see catalysts from: 1) a re-branding exercise in 1Q13; and 2) stronger-than-expected sales growth. instant coffee market, six years after its initial foray. The biggest risk to its margins here is a spike in coffee prices.
Lee Mou Hua

T 65 6210 8600 E mouhua.lee@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders Te Lay Hoon Teo Bock Kee YHS investment PT 1M 26.5 25 3M 49.7 48.6 12M 100.4 114.3 % held 12.2 11.7 11.7
Ingredients
We believe this business will continue to be spurred by sales in China and Southeast Asia. Non-dairy creamer enjoys good growth in Chinas beverage industry due to its wide applications, in particular the production of milk tea. Further, this division allows Super to break into new markets and understand local tastes. This benefits product development in its Branded Consumer division.
Branded Consumer
We expect a re-branding exercise in early FY13 to boost its sales, in particular in mature markets like Singapore and Malaysia. This exercise looks to market Super as a premium brand and management hopes that this will allow Super to close its pricing gap with Nestle over time Sales in difficult-to-penetrate ASEAN markets continue to grow steadily while secondary markets like the Philippines have been coming to the fore with good double-digit sales growth in FY12. Super has climbed to the third spot in the Philippine
Valuation
Although its share price has rocketed, we believe further catalysts could come from 1) successful execution of re-branding exercise 2) stronger-than-expected sales growth.
3.6 3.1 2.6 2.1 1.6 Vol m 1.1 4 3 2 1

Nov-11
Price Close
214 186 158 130 102 74
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 351.8 62.8 58.35 0.09 23.0% 34.39 0.054 1.71% 24.77 NA (40.6%) 5.23 16.4% Dec-11A 441.0 68.8 62.13 0.10 5.4% 32.62 0.058 1.84% 23.72 NA (31.7%) 4.79 15.3% Dec-12F 509.8 101.6 78.58 0.13 39.6% 23.37 0.070 2.24% 16.11 NA (31.0%) 4.29 19.4% 0% 1.08 Dec-13F 609.6 104.9 83.84 0.15 11.6% 20.95 0.075 2.39% 15.51 NA (30.2%) 3.89 19.5% 0% 0.98 Dec-14F 731.7 115.4 93.09 0.17 11.0% 18.86 0.083 2.65% 14.05 NA (28.7%) 3.53 19.6% 0% 0.98
Feb-12
May-12
Aug-12
Source: Bloomberg

1.29
3.15 3.15
Current
Target
3.27
Super Group
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 441.0 142.1 68.8 (9.8) 59.0 (1.7) 0.5 3.0 60.8 9.6 70.4 (6.3) 64.1 (2.0) 0.0 Dec-12F 509.8 180.2 101.6 (15.4) 86.2 0.6 0.2 0.2 87.2 3.8 91.0 (9.0) 82.0 (3.4) 0.0 Dec-13F 609.6 208.7 104.9 (16.3) 88.6 1.3 1.0 4.9 95.8 0.0 95.8 (12.0) 83.8 0.0 0.0 Dec-14F 731.7 242.3 115.4 (17.2) 98.1 1.4 1.0 5.9 106.4 0.0 106.4 (13.3) 93.1 0.0 0.0
Balance Sheet
62.1 53.4 53.4
78.6 75.2 75.2
83.8 83.8 83.8
93.1 93.1 93.1
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 68.8 (6.7) Dec-12F 101.6 (22.4) Dec-13F 104.9 (32.1) Dec-14F 115.4 (39.5)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 25.3% 9.5% 15.6% 0.22 0.66 35 9.0% 61.6% 61.55 99.4 38.95 28.1% 16.0% Dec-12F 15.6% 47.6% 19.9% 0.24 0.73 2,971 9.9% 52.5% 64.64 104.3 41.33 28.2% 21.2% Dec-13F 19.6% 3.3% 17.2% 0.25 0.81 1,677 12.5% 50.0% 67.02 95.7 39.17 25.6% 19.9% Dec-14F 20.0% 10.0% 15.8% 0.26 0.89 1,857 12.5% 50.0% 66.91 95.5 39.11 25.4% 20.1%
5.2 (1.9) (6.4) 58.9 (73.1) 24.2 (1.3) (428.7) (478.9) (1.1) 0.0 0.0 (31.2) (94.6) (126.8)
4.9 (0.1) (9.0) 75.0 (25.0) 0.0 0.0 (449.6) (474.6) 0.0 0.0 0.0 (39.3) (118.5) (157.7)
7.3 (0.1) (12.0) 68.0 (17.0) 0.0 0.0 (483.5) (500.5) 0.0 0.0 0.0 (41.9) (114.7) (156.7)
8.3 (0.1) (13.3) 70.8 (18.0) 0.0 0.0 (531.0) (549.0) 0.0 0.0 0.0 (46.5) (122.4) (169.0)
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) ASP (% chg, tertiary prod/serv) Unit sales grth (%,tertiary prod/serv) Util. rate (%, tertiary prod/serv) Unit raw mat ASP (%chg,main) Total Export Sales Growth (%) Export Sales/total Sales (%) Dec-11A N/A 8.5% N/A N/A N/A N/A N/A 110.1% N/A N/A N/A N/A Dec-12F N/A 13.0% N/A N/A N/A N/A N/A 22.3% N/A N/A N/A N/A Dec-13F N/A 9.0% N/A N/A N/A N/A N/A 45.0% N/A N/A N/A N/A Dec-14F N/A 9.0% N/A N/A N/A N/A N/A 40.0% N/A N/A N/A N/A
183

November 28, 2012
Swiber Holdings
SWIB SP / SWBR.SI Current S$0.59 S$0.84 S$0.84 42.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$294.3m
S$359.6m
US$1.31m
S$1.61m
70.0%
505.4 m shares

T +65 6210 8664 E siewkhee.lim@cimb.com
Reaching critical mass

Backed by a US$1.4bn order book, Swiber is set to win over investors confidence with its improved execution.
Maintain Outperform, EPS and target price at 0.9x CY13 P/BV, its 4-year mean. Continued good execution should catalyse the stock, we believe. Swibers traditional markets such as ASEAN and India as well as growing traction in the Middle East and Latin America.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Yoke Min Pang UBS AG/ London Yeo Chee Neng 1M -1 -2.5 3M -1.4 -2.5 12M 1.8 15.7 % held 9.0 4.5 4.3
Reaching critical mass

With its fleet growing to 56 vessels, we project earnings growth of 12% for 2013. We expect steady execution, projecting improvements in its gross margins to 18% in 2013 from an estimated 16.5% this year.
Expect a stronger 4Q12

We expect lumpy order recognition in 4Q12 as Swiber executes projects in India, Myanmar and Mexico, potentially amounting to US$300m-350m. Better margins are also expected for projects in Myanmar and Mexico (about 18%).
Oder pipeline
Swibers order book has grown 27% CAGR through 2010-12 to US$1.4bn. We estimate that about 80% of its FY13 revenue is backed by secured orders. In 2012, it won about US$1.6bn of new contracts. We keep our order target of US$600m for 2013 and see projects coming from
Undemanding valuations
Swiber is trading at 7x forward P/E, more than 1 SD below its 5-year mean and 0.7x P/BV, roughly 0.5x SD below its 5-year mean.
0.80 0.70 0.60 0.50 0.40 50 40 30 20 10

Nov-11
Price Close
Vol m
143 137 131 124 118 112 106 99 93
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 470 53.5 37.30 0.022 (19%) 28.99 0% 13.23 5.93 86% 0.72 3.5% Dec-11A 654 106.2 32.07 0.060 170% 10.75 0% 9.35 NA 86% 0.68 8.7% Dec-12F 898 115.4 45.00 0.074 24% 8.45 0% 9.75 NA 103% 0.72 10.8% (0%) 1.19 Dec-13F 1,012 123.9 50.48 0.083 12% 7.39 0% 10.13 NA 112% 0.64 11.7% (0%) 0.96 Dec-14F 1,140 140.1 57.13 0.094 13% 6.53 0% 9.51 NA 113% 0.57 11.7% 0% 0.81
Feb-12
May-12
Aug-12
Source: Bloomberg

0.59 0.50 0.77
0.84
Current Target
Swiber Holdings
November 28, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A Dec-12F 654 898 113 148 106 115 (21) (25) 85 90 (20) (29) 2 12 0 0 68 74 2 5 69 79 (27) (19) 42 (10) 0 60 (15) 0 Dec-13F 1,012 181 124 (26) 98 (33) 7 0 72 0 72 (19) 53 (3) 0 Dec-14F 1,140 208 140 (29) 111 (37) 8 0 82 0 82 (22) 60 (3) 0
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A Dec-12F 116 93 407 864 80 14 11 0 615 971 553 678 110 123 0 0 103 149 767 949 337 337 259 13 609 228 12 240 9 858 359 164 524 655 23 1,015 328 12 340 9 1,364 407 149 557 Dec-13F 40 973 16 0 1,028 771 130 0 165 1,066 337 738 23 1,097 378 12 390 9 1,496 458 147 605 Dec-14F 18 1,096 17 0 1,132 843 138 0 183 1,164 337 831 27 1,194 428 12 440 9 1,643 515 144 659
32 30 30
45 41 41
50 50 50
57 57 57
Cash Flow
(US$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A Dec-12F 106.2 115.4 (7.9) 1.8 (60.1) 8.3 (22.0) 26.4 (157.2) (30.8) 28.6 (159.4) 111.6 0.0 0.0 0.0 0.0 111.6 16.0 (19.2) 0.7 (19.7) (8.6) 84.5 (150.0) (57.7) 0.0 (207.7) 100.0 0.0 0.0 0.0 0.0 100.0 Dec-13F 123.9 (28.2) (6.1) 1.2 (32.3) (18.9) 39.6 (120.0) (23.4) 0.0 (143.4) 50.0 0.0 0.0 0.0 0.0 50.0 Dec-14F 140.1 (31.7)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A Dec-12F 39.3% 37.3% 98.4% 8.8% 16.2% 12.8% (0.89) (0.94) 0.71 0.67 3.80 2.99 39.2% 24.0% 0% 0% 66.1 97.6 30.11 22.93 71.9 152.5 11.1% 8.5% 9.09% 7.89% Dec-13F 12.6% 7.3% 12.2% (1.12) 0.76 2.88 26.0% 0% 137.4 6.44 221.7 7.9% 7.70% Dec-14F 12.6% 13.1% 12.3% (1.23) 0.85 2.93 27.0% 0% 137.5 6.47 222.9 7.9% 8.12%
1.6 (36.4) (18.7) 55.0 (100.0) (26.4) 0.0 (126.4) 50.0 0.0 0.0 0.0 0.0 50.0
Key Drivers
Outstanding Orderbook (US$m) Order Book Wins (US$m) Orderbook Depletion (US$m) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Dec-11A Dec-12F N/A N/A N/A N/A 654.5 898.5 N/A N/A N/A N/A N/A N/A Dec-13F N/A N/A 1,012.1 N/A N/A N/A Dec-14F N/A N/A 1,139.7 N/A N/A N/A
185
Industrial Machinery SINGAPORE

November 28, 2012
Tat Hong Holdings

TAT SP / TAT.SI Current S$1.33 S$1.69 S$1.69 27.5%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$615.4m
S$751.8m
US$1.08m
S$1.33m
32.0%
519.0 m shares

Boom town Charlie!

Tat Hongs recent results were nothing short of exciting. The industrys crane rental supply crunch is apparently playing to TATs rental reversions. Its two rental divisions should be a good bet going into 2H13.
A stronger balance sheet should also better position the group for growth. Our estimates are intact, as are our target price (10x CY14 P/E, its 5-year average) and Outperform rating, with catalysts expected from strong Asian/Aussie operations. Utilisation in the tower-crane segment is already a high 80%. We believe 2013 will be even more remarkable when more tower cranes are deployed for new infrastructure projects in China. Its crawler crane rental division is expected to sustain its momentum as projects abound in key markets. Likewise, delayed projects in Australia will likely kick off in 2013. The industrys crane rental supply crunch will almost guarantee that TATs rental rates for all its crawler and mobile units surpass their FY08 peaks. Current rental rates are still 13-15% below peak.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Ng Family 1M 0 -1.5 3M 13.4 12.3 12M 68.9 82.8 % held 67.7
Boom town Down Under

Beyond ASEAN, Tat Hong has been benefitting from Australias reconstruction and rebuilding programmes. Through its Australian subsidiary, Tutt Bryant, Tat Hong has a leading position in three business areas in Australia: equipment distribution, crane hire and haulage and general plant and equipment hire. Meanwhile, its distribution division in Australia has newly-awarded exclusive distribution rights for a range of mobile crushers and screens. Australias resilient oil & gas and resource sectors should continue to fuel Tat Hongs growth.
Assets have more value than they appear

Its S$600m crane assets consistently produce around S$300m worth of rental income each year. The group has been accounting for its crane fleet and land purchases at costs. Both assets, especially the latter, have appreciated in value.
Crane rental to star again
Price Close 1.4 1.2 1.0 0.8 0.6 10 8 6 4 2

Vol m
182 172 162 152 142 132 122 112 102 92
Financial Summary
|
Aug-12

0.73
1.33 1.40
Current
|
Target
1.69
Mar-11A 584.2 100.1 25.96 0.05 (33%) 28.83 0.015 1.13% 8.48 4.36 32.0% 1.33 4.6%
Mar-12A 719.8 150.3 42.26 0.09 106% 14.00 0.015 1.13% 5.76 4.94 34.4% 1.24 9.1%
Mar-13F 810.5 175.3 72.33 0.14 46% 9.31 0.025 1.89% 5.50 87.81 42.9% 1.27 13.0% 0.00% 1.07
Mar-14F 901.1 194.1 85.59 0.15 8% 8.60 0.025 1.89% 5.00 8.03 32.5% 1.14 13.6% (0.63%) 1.04
Mar-15F 962.3 208.3 99.19 0.17 16% 7.67 0.035 2.64% 4.38 4.89 18.4% 1.02 14.1% (0.42%) 1.09
Tat Hong Holdings

November 28, 2012
Profit & Loss

|
Balance Sheet
Mar-12A 719.8 263.0 150.3 (69.6) 80.8 (13.7) 1.4 0.0 68.4 (10.4) 58.0 (21.5) 36.4 5.8 0.0 Mar-13F 810.5 306.1 175.3 (65.0) 110.3 (14.3) 3.5 0.0 99.5 (5.0) 94.5 (18.9) 75.6 (3.3) 0.0 Mar-14F 901.1 339.6 194.1 (69.0) 125.1 (18.8) 5.5 0.0 111.8 (3.0) 108.8 (19.6) 89.2 (3.6) 0.0 Mar-15F 962.3 351.9 208.3 (69.0) 139.3 (20.8) 5.0 0.0 123.5 (3.0) 120.5 (17.4) 103.2 (4.0) 0.0 (S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Mar-12A 76.8 184.8 234.2 0.0 495.8 765.5 65.7 49.7 6.4 887.3 0.0 298.1 184.5 482.6 282.4 1.7 284.2 18.1 784.9 556.4 41.8 598.2
Mar-13F 20.0 173.2 317.9 0.0 511.1 741.5 66.6 48.7 22.2 879.0 5.0 221.1 180.0 406.2 297.4 10.7 308.2 18.1 732.4 614.0 43.6 657.6
Mar-14F 62.8 192.6 338.4 0.0 593.8 703.5 66.6 48.7 6.9 825.7 10.0 184.6 174.0 368.6 290.5 10.7 301.2 18.1 688.0 684.9 45.8 730.6
Mar-15F 171.4 205.6 367.9 0.0 744.9 665.5 66.6 47.7 6.9 786.7 15.0 200.7 171.5 387.2 305.5 8.7 314.2 18.1 719.5 763.4 47.7 811.1
42.3 48.8 48.8
72.3 76.3 76.3
85.6 88.0 88.0
99.2 101.8 101.8
Cash Flow
|
Key Ratios
Mar-12A 150.3 (41.4) Mar-13F 175.3 (149.0) Mar-14F 194.1 (76.4) Mar-15F 208.3 (26.4) Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
|
2.2 (22.3) (12.0) 76.8 0.0 43.6 2.3 3.8 49.7 11.8 0.0 0.0 (8.5) 6.3 9.6
0.5 (24.3) (18.9) (16.4) 0.0 2.5 0.0 2.0 4.5 20.0 0.0 0.0 (14.7) (9.5) (4.2)
0.5 (28.8) (19.6) 69.7 0.0 2.5 0.0 2.0 4.5 20.0 0.0 0.0 (14.7) (9.5) (4.2)
1.5 (30.8) (17.4) 135.2 0.0 2.5 0.0 2.0 4.5 20.0 0.0 0.0 (20.6) (10.1) (10.7)
Mar-12A 23.2% 50.2% 20.9% (0.40) 1.07 3.60 37.1% 14.8% 83.97 174.3 179.2 11.5% 10.3%
Mar-13F 12.6% 16.6% 21.6% (0.48) 1.04 4.54 20.0% 19.0% 80.61 199.7 187.8 14.6% 12.8%
Mar-14F 11.2% 10.7% 21.5% (0.40) 1.16 4.34 18.0% 16.6% 74.08 213.3 131.9 13.9% 13.3%
Mar-15F 6.8% 7.3% 21.7% (0.25) 1.30 4.53 14.4% 20.2% 75.52 211.2 115.2 15.0% 13.6%
Key Drivers
ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) Unit raw mat ASP (%chg,main) Unit raw mat ASP (%chg,2ndary)
|
Mar-12A N/A 24.5% 70.0% N/A N/A N/A N/A N/A
Mar-13F N/A 22.0% 70.0% N/A N/A N/A N/A N/A
187
Airlines SINGAPORE
November 28, 2012
Tiger Airways
TGR SP / TAHL.SI Current S$0.71 S$0.83 S$0.83 17.1%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$477.0m
S$582.7m
US$1.22m
S$1.50m
45.0%
820.0 m shares

Giving more love to Asia

Having stabilised its operations in Singapore, Tiger is now turning its attention to newly-acquired associates in Asia. Its proposed 60% stake divestment in Tiger Australia to Virgin Australia is an effort to direct precious resources into higher-growth markets in Asia, we believe.
We think that recent developments should help boost Tigers longer-term growth potential. We also think that a successful stake sale in Tiger Australia should act as a major price catalyst. However, we continue to see headwinds from a capacity glut in Australia and stubbornly high oil prices. Maintain Neutral with an unchanged SOP-based target price. driving profitability through several developments. Tiger has signed a partnership with Scoot to provide connecting flights for Scoots passengers departing from Sydney and Gold Coast to its multiple destinations in SEA. Tiger is also providing connecting flights within its own route portfolio. In addition, we think that a successful stake sale in Tiger Australia should improve Tiger Australias competitive position down under, thereby lifting growth potential for the otherwise loss-making business.
Raymond Yap, CFA

T (603) 20849769 E raymond.yap@cimb.com
Share price info

Share price perf. (%) Relative Absolute Major shareholders SIA Capital Group 1M -2.6 -4.1 3M -1.6 -2.7 12M -1.2 12.7 % held 33.0 8.1
Turning around in 2012

2012 marked several wins for Tiger. CASA, Australias aviation regulator, lifted Tiger Australias flight restrictions. Tiger Singapore was also able to secure investments in Mandala in Indonesia and SEAIR in the Philippines, its first cubs after several failed attempts since 2007. Load factors and yields have been rather encouraging over the past year and quarterly losses have also narrowed since recording its largest ever loss in the Sep-11 quarter.
Near-term headwinds
Despite our favourable view for its longer-term growth potential, we continue to see near-term headwinds from poor yields and declining load factors in Australia, a result of the competition between Qantas and Virgin Australia. This should put a few more quarters between Tiger and breaking even. We anticipate price weakness on the back of further loss-making quarters. Therefore, we maintain Neutral.
The worst is over

Having emerged from its rut, management is now able to focus on
0.85 0.80 0.75 0.70 0.65 0.60 0.55 Vol m 0.50 60 40 20

Nov-11
Price Close
123 118 113 108 103 98 93 88
Financial Summary
|
Feb-12
May-12
Aug-12
Source: Bloomberg

0.60
0.71 0.82
Mar-11A 622.2 59.9 33.40 0.06 21% 12.54 0% 13.22 NA 185% 2.17 19.4%
Mar-12A 618.2 (52.0) (82.15) (0.12) (298%) NA 0% NA NA 170% 2.34 (37.1%)
Current
|
Target
0.83
Mar-13F 818.8 18.5 (29.83) (0.04) (69%) NA 0% 50.12 13.02 103% 1.73 (10.2%) (0%) (1.52)
Mar-14F 589.6 93.8 44.14 0.05 na 13.19 0% 9.76 NA 95% 1.21 10.8% 0% 0.83
Mar-15F 677.6 101.7 48.28 0.06 9% 12.06 0% 9.55 5.69 74% 1.10 9.6% (0%) 0.91
Tiger Airways
November 28, 2012
Profit & Loss

|
Balance Sheet
Mar-12A 618.2 618.2 (52.0) (31.3) (83.4) (17.3) 0.0 0.0 (100.7) 22.2 (78.5) (3.6) (82.1) 0.0 0.0 Mar-13F 818.8 818.8 18.5 (31.9) (13.4) (5.1) (4.2) 0.0 (22.7) (3.1) (25.7) (4.1) (29.8) 0.0 0.0 Mar-14F 589.6 589.6 93.8 (31.9) 61.9 (5.7) 120.7 0.0 176.9 (119.8) 57.1 (12.9) 0.0 44.1 0.0 0.0 Mar-15F 677.6 677.6 101.7 (37.0) 64.7 (6.3) 3.1 0.0 61.5 0.0 61.5 (13.2) 48.3 0.0 0.0 (S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Mar-12A 161 27 0 12 200 832 3 2 34 871 205 193 8 406 379 36 414 3 823 248 0 248
Mar-13F 183 36 0 12 231 793 49 0 97 939 132 259 10 401 398 36 433 0 834 336 0 336
Mar-14F 97 26 0 12 135 794 178 0 121 1,093 133 151 11 295 418 36 453 0 748 479 0 479
Mar-15F 181 30 0 12 223 884 83 0 116 1,083 134 157 11 303 439 36 474 1 778 528 0 528
(82.1) (82.1) (82.1)
(29.8) (29.8) (29.8)
44.1 44.1 44.1
48.3 48.3 48.3
Cash Flow
|
Key Ratios
Mar-12A (52.0) 0.0 (42.6) 13.7 0.6 8.8 (0.6) (72.1) (467.9) 344.8 (5.7) 0.0 (128.8) 43.5 155.3 0.0 0.0 (12.5) 186.3 Mar-13F 18.5 4.2 57.0 (30.4) 0.9 11.6 (4.1) 57.7 (581.9) 581.9 41.0 0.0 41.0 (54.0) 0.0 0.0 0.0 (11.6) (65.6) Mar-14F 93.8 (120.7) (97.5) (14.6) 1.2 12.9 (33.3) (158.2) (431.9) 431.9 (50.0) 0.0 (50.0) 20.7 0.0 0.0 0.0 (12.9) 7.8 Mar-15F 101.7 (3.1) 2.1 (12.8) 1.6 14.0 (13.2) 90.4 (487.0) 487.0 (10.0) 0.0 (10.0) 21.9 0.0 0.0 0.0 (14.0) 7.9 Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)
|
Mar-12A (0.6%) (187%) (8.4%) (0.52) 0.30 (10.98) (4.6%) 0% 1.80 N/A N/A (11.6%) (10.5%)
Mar-13F 32.5% N/A 2.3% (0.42) 0.41 (2.65) (15.9%) 0% 1.47 N/A N/A (1.6%) (1.6%)
Mar-14F (28.0%) 406% 15.9% (0.55) 0.58 10.89 22.7% 0% 2.14 N/A N/A 7.7% 6.5%
Mar-15F 14.9% 8% 15.0% (0.48) 0.64 10.32 21.5% 0% 1.68 N/A N/A 6.8% 6.1%
Key Drivers
Av. Seat Km (ASK, Yoy Chg %) Rev. Psg Km (RPK, Yoy Chg %) Passenger Load Factor (%) Pax yld per RPK (S$) Pax rev. per ASK (S$) Total Cost Per ATK (S$) Fuel Cost Per ATK (S$) Non-fuel Cost Per ATK (S$) Jet Fuel Price (US$/barrel) Fleet Size (no. Of Planes)
|
Mar-12A 9.0% 3.5% 81.3% 0.1 0.1 0.7 0.3 0.3 129.3 34
Mar-13F 27.8% 33.7% 85.0% 0.1 0.1 0.6 0.3 0.3 133.0 43
Mar-14F -30.0% -28.7% 86.6% 0.1 0.1 1.0 0.5 0.4 133.0 47
Mar-15F 11.9% 11.9% 86.6% 0.1 0.1 1.1 0.6 0.4 133.0 56
189

November 27, 2012
United Engineers
UEM SP / UTES.SI Current S$2.52 S$3.13 S$3.13 24.1%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$625.2m
S$764.4m
US$0.63m
S$0.78m
80.3%
284.2 m shares

Anchored by a strong portfolio

We like UEs portfolio of investment properties, now at >60% of gross asset value but strengthening further with Sengkang mall completion in 2014. Look forward to further positives from potential divestments and redevelopment of old assets, to top off steady 4% dividend yields.
Better balance sheet, stronger residential take-up and earnings recognitions will be seen in 2013/14. Management has not been sentimental about assets, which bodes well for its S$1.7bn of investment properties. Valuations are attractive at a 36% discount to book. Maintain Outperform and target price (35% discount to RNAV). management gains more clarity from the URA Master Plan.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Great Eastern Life Lee Foundation WBL Corporation 1M 1.5 0 3M 13.1 12 12M 15 28.9 % held 11.7 8.0 7.2
Stronger balance sheet in 2013/14

Cash collections from residential projects and contributions from UE BizHub East will strengthen cash flows in 2014. We expect capex commitments to be largely limited to orchardgateway. We estimate net gearing to dip to 30-40% from 3Q12s 0.77x (2Q12: 0.82x) once the asset is sold to OCBC, as agreed, and debt is pared down.
2012 a transition year

2012 was a weaker year for earnings due to lack of earnings recognition for residential projects, an accounting issue. This should correct going into 2013 as residential developments complete and recurring income strengthen when the Changi mixed development ramps up. This gives leeway for further plans ahead, including overseas expansion. Given managements track record, we do not rule out divestments. We continue to see redevelopment of UE Square as a possibility once
Attractive discount
We view the current discount to book as attractive, with book values to expand from the sale of orchardgateway, revaluations and full profit recognition from the Austville executive condominium. UE remains one of the cheapest developers. 100th-year interim dividends remain possible till Jul 13, on top of steady 4% dividend yields.
2.7 2.5 2.3 2.1 1.9 Vol m 1.7 4 3 2 1

Nov-11
Price Close
121 115 109 103 97 91
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 569 101.7 108.2 0.25 371% 9.68 0.10 4.01% 12.54 NA 73.2% 0.72 7.2% Dec-11A 1,187 316.4 269.5 0.82 229% 2.98 0.16 6.18% 5.00 4.36 71.1% 0.60 21.4% Dec-12F 543 83.3 40.9 0.14 (83%) 17.25 0.10 4.00% 22.06 18.82 88.1% 0.61 3.4% 0% 1.02 Dec-13F 834 163.6 72.0 0.25 75% 10.05 0.10 3.97% 10.84 4.25 76.9% 0.59 5.9% 0% 1.00 Dec-14F 1,158 254.2 108.1 0.38 50% 6.72 0.10 3.97% 4.74 1.22 35.4% 0.55 8.5% 0% 0.99
Feb-12
May-12
Aug-12
Source: Bloomberg

1.87
2.52 2.58
Current
Target
3.13
United Engineers
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 1,187 1,187 316 (11) 306 (8) 7 0 305 44 349 (59) 290 (21) 0 Dec-12F 543 543 83 (14) 69 (13) 6 0 62 0 62 (12) 50 (9) 0 Dec-13F 834 834 164 (42) 121 (16) 0 0 105 0 105 (21) 84 (12) 0 Dec-14F 1,158 1,158 254 (84) 171 (15) 2 0 158 0 158 (41) 117 (9) 0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 453 302 8 790 1,553 81 1,420 26 0 1,527 176 380 92 649 1,157 34 1,192 0 1,840 1,184 55 1,239 Dec-12F 445 89 3 706 1,244 300 1,521 26 0 1,848 619 223 53 896 929 16 945 0 1,841 1,196 55 1,252 Dec-13F 567 228 5 366 1,167 511 1,538 26 0 2,075 469 274 82 825 1,095 24 1,119 0 1,944 1,240 57 1,297 Dec-14F 1,114 317 7 306 1,745 658 942 26 0 1,626 475 381 44 900 1,109 35 1,144 0 2,044 1,319 8 1,327
269 225 225
41 41 41
72 72 72
108 108 108
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 316.4 (269.8) Dec-12F 83.3 104.4 Dec-13F 163.6 279.4 Dec-14F 254.2 37.4
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 108% 211% 26.7% (3.10) 4.17 30.01 16.8% 18.9% 69.5 N/A N/A 55.6% 13.9% Dec-12F (54%) (74%) 15.4% (3.83) 4.15 4.16 20.0% 70.5% 131.9 N/A N/A 7.8% 2.7% Dec-13F 54% 96% 19.6% (3.46) 4.30 6.26 20.0% 40.0% 69.5 N/A N/A 11.8% 4.4% Dec-14F 39% 55% 22.0% (1.63) 4.58 8.72 25.8% 26.6% 86.0 N/A N/A 18.1% 6.1%
44.0 (101.4) 0.0 (19.0) (29.6) (211.2) 0.0 0.0 1.5 (209.7) 393.4 0.7 0.0 (42.6) 74.4 425.9
(30.0) 0.0 (3.4) 154.4 (233.2) 0.0 0.0 (98.4) (331.6) 214.7 0.0 0.0 (28.8) (16.7) 169.3
(30.0) 0.0 (5.7) 407.3 (252.7) 0.0 0.0 0.0 (252.7) 15.6 0.0 0.0 (28.8) (19.4) (32.6)
(30.0) 0.0 (5.2) 256.5 (231.3) 0.0 0.0 550.0 318.7 19.7 0.0 0.0 (28.8) (19.6) (28.6)
RNAV RNAV (S$m) 1,664 118 767 124 17 2,690 (997) (24) (62) (34) 1,573 327 4.81 Discount to RNAV 35% % of GAV 62% 4% 29% 5% 1% 100%
Key Drivers
Investment Properties (completed) Est gross value of Sengkang mall Development GDV 68% stake in UEEC Other investments GAV Less: FY13 net debt (incl any off b/s debt) Less: Future commitments (Sengkang mall) Less adj: Related party projects (with UEEC) Less adj: Net cash at UEEC RNAV Fully-diluted no. of shares (m) RNAV per share (S$)
Target Price
3.13
191
Banks SINGAPORE
November 28, 2012
United Overseas Bank

UOB SP / UOBH.SI Current S$18.26 S$20.56 S$20.56 12.6%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$23,532m
S$28,747m
US$31.04m
S$38.11m
80.0%
1,574 m shares

Losing the margin advantage

UOB typically enjoys superior margins as it focuses on higher-yielding SME loans and steers away from lower-margin segments. This is proving increasingly difficult. Its margin superiority is likely to vanish with intensifying competition and low yields on investment securities.
UOB is our least preferred stock of the sector. Our GGM-based target price (r: 9.45%; g: 4.2%; ROE: 11.2%) values UOB at 1.32x CY13 P/BV. Maintain Underperform. Management hopes that competition on lending yields will let up with LDRs climbing across the region; that is possibly the only reprieve.
Daniel Lau
Share price info

Share price perf. (%) Relative Absolute Major shareholders Wee family Lien family 1M -0.2 -1.7 3M -6.5 -7.6 12M 9.7 23.6 % held 16.5 5.4
Margin pressure ahead

UOBs margin pressure intensified in 3Q and we think that its margin gap over peers is set for further narrowing. Deposit competition is unlikely to ease anytime soon as the impending implementation of Basel III is spurring banks to fight for sticky deposits. We think that UOB is likely to face more funding pressure given its reliance on fixed deposits and higher S$-LDR. CASA deposits form only 40% of its deposit base compared to 47% for OCBC and 60% for DBS. UOB will also face asset yield pressures. It was unable to maintain reinvestment yield on the liquidity freed up from the divestment of its European portfolio. On the lending side, DBS is aggressively encroaching on the SME space - the turf of UOB and OCBC - while lagged repricing of mortgages (for which UOB has a big book) is not helping either.
Positive non-interest income surprises less likely

Stronger non-interest income in 3Q12 was due to a one-off dividend windfall from associates and tail-end gains from the divestment of its EU portfolio. Contributions from other fee income sources were within expectations. We think that further positive surprises from trading and/or dividends are unlikely as UOB whittles down its EU exposure.
Asset quality deteriorates

UOB was the only bank that saw a jump in credit cost in 3Q12. While we appreciate UOBs pre-emptive move to downgrade a still-servicing loan, it brought UOBs coverage ratio to the lowest in the sector and we highlight this more as a negative for the sector as high coverage ratios amount for little when NPLs are as low as they are now.
21.0 20.0 19.0 18.0 17.0 16.0 15.0 Vol m 14.0 8 6 4 2

Nov-11
Price Close
122 118 115 111 108 104 101 97
Financial Summary
|
Feb-12
May-12
Aug-12
Source: Bloomberg

15.10
18.26 20.20
Dec-10A 3,532 2,268 5,800 (474.0) 2,696 1.78 39.7% 10.19 70.00 383% 12.53 1.46 15.0%
Dec-11A 3,678 2,020 5,699 (523.4) 2,327 1.49 (16.4%) 12.07 60.00 329% 13.23 1.38 11.7%
Current
|
Target
20.56
Dec-12F 3,922 2,514 6,436 (434.3) 2,725 1.73 16.3% 10.54 69.00 378% 14.41 1.27 12.5% 0% 1.05
Dec-13F 4,036 2,477 6,514 (465.2) 2,723 1.73 (0.1%) 10.55 75.00 411% 15.54 1.18 11.6% 0% 1.03
Dec-14F 4,318 2,601 6,919 (456.0) 2,928 1.86 7.5% 9.82 79.00 433% 16.76 1.09 11.5% (0%) 1.03
United Overseas Bank

November 28, 2012
Profit & Loss

|
Balance Sheet
Dec-11A 3,678 2,020 5,699 (2,450) 3,248 (523) 2,725 93 2,818 0 2,828 (10) 2,808 (467) Dec-12F 3,922 2,514 6,436 (2,724) 3,711 (434) 3,277 106 3,383 0 3,394 (10) 3,373 (627) Dec-13F 4,036 2,477 6,514 (2,780) 3,734 (465) 3,268 112 3,381 0 3,391 (10) 3,370 (627) Dec-14F 4,318 2,601 6,919 (2,947) 3,971 (456) 3,515 118 3,633 0 3,644 (10) 3,623 (674) (S$m) Total Gross Loans Liquid Assets & Investments (Current) Other Interest Earning Assets Total Gross Interest Earning Assets Total Provisions/Loan Loss Reserve Total Net Interest Earning Assets Intangible Assets Other Non-Interest Earning Assets Total Non-Interest Earning Assets Cash And Marketable Securities Long-term Investments Total Assets Customer Interest-Bearing Liabilities Bank Deposits Interest Bearing Liabilities: Others Total Interest-Bearing Liabilities Bank's Liabilities Under Acceptances Total Non-Interest Bearing Liabilities Total Liabilities Shareholders' Equity Minority Interests Total Equity
|
Dec-11A 156,754 32,588 189,342 3,207 192,549 4,196 13,425 17,621 26,786 0 236,957 169,460 19,750 13,516 202,726 0 11,087 213,813 22,967 177 23,144
Dec-12F 167,708 31,499 199,207 3,641 202,848 4,186 13,728 17,914 31,230 0 251,992 182,678 19,200 13,785 215,662 0 11,309 226,971 24,824 197 25,021
Dec-13F 181,324 32,129 213,453 4,106 217,559 4,175 14,041 18,216 30,457 0 266,233 194,186 19,872 13,820 227,878 0 11,535 239,413 26,602 218 26,820
Dec-14F 195,703 33,034 228,737 4,562 233,300 4,165 14,363 18,528 30,041 0 281,869 206,906 20,568 13,856 241,329 0 11,766 253,095 28,535 239 28,774
2,341 (14) 0 0 2,327 2,344
2,745 (20) 0 0 2,725 2,725
2,743 (21) 0 0 2,723 2,723
2,949 (21) 0 0 2,928 2,928

|
Key Ratios
|
Dec-11A (1.7%) (8.3%) (12.2%) 64.5% 1.05% 2.94% 1.89% 2.17% 3.06% 16.1% 1.63% 16.6% 40.2%
Dec-12F 12.9% 14.3% 20.1% 60.9% 1.11% 2.90% 1.79% 2.15% 2.80% 11.7% 1.60% 18.6% 39.5%
Dec-13F 1.2% 0.6% (0.1%) 62.0% 1.14% 2.89% 1.75% 2.08% 2.61% 12.5% 1.56% 18.6% 43.0%
Dec-14F 6.2% 6.4% 7.5% 62.4% 1.16% 2.90% 1.74% 2.09% 2.52% 11.5% 1.58% 18.6% 42.2%
Key Drivers
|
Dec-11A 26.1% 1.9% -10.9% 43.0% 1.4% 158.8% 1.5% 16.7% 19.1% 83.3% 1.5% 13.4%
Dec-12F 7.7% 1.8% 24.4% 42.3% 1.6% 147.7% 1.6% 16.7% 7.8% 83.3% 1.7% 13.8%
Dec-13F 8.9% 1.8% -1.5% 42.7% 1.8% 136.0% 1.6% 16.4% 6.3% 85.4% 1.9% 3.2%
Dec-14F 7.9% 1.8% 5.0% 42.6% 2.0% 128.0% 1.6% 16.2% 6.6% 86.6% 2.0% 6.2%
193

November 27, 2012
UOL Group
UOL SP / UTOS.SI Current S$5.56 S$6.55 S$6.55 17.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$3,499m
S$4,279m
US$4.03m
S$4.95m
50.0%
768.0 m shares

Building up asset base, more active in capital deployment

UOL has been quietly building its investment properties, which are set to account for larger portion of its returns. Capex will begin to bear fruit in FY13, with the group likely to put more capital to work. At 36% discount to RNAV, UOL is our top mid-cap pick.
The potential for a consolidated UOL-UIC-SL behemoth remains a longer-term theme. In the near term, we expect earnings growth from hotel completions and more investment initiatives to narrow its valuation discount. We maintain our Outperform call and target price, which remains based on a 25% discount to RNAV (including a 25% discount to UICs RNAV). completion of 1Km retail mall and 5 Shenton Way office block
Share price info

Share price perf. (%) Relative Absolute Major shareholders CY Wee and Co Pte United Overseas Bank 1M -1.8 -3.3 3M 6 4.9 12M 16.6 30.5 % held 12.4 10.0
Getting more active

In 2012, the group joined forces with SingLand to acquire a residential site at Bright Hill Drive. We believe that there will be more of such calculated initiatives in 2013 to replenish its depleting landbank. UOL has expressed interest in the Thomson Road White Site, which was released for tender on 4 Oct. The site is located just beside Novena Square and could prove synergistic for UOL if it is able to acquire it.
Building up a stable asset base

UOLs property portfolio is largely positioned in the commercial (31%), retail (20%) and hospitality (30%) segments, with residential now accounting for c.9% of its gross value. Its 82% exposure to Singapore makes it a key local property proxy. The group has quietly building up its investment property base with the new 363-room Parkroyal on Pickering Street and PanPac Serviced Suites on Beach Road set to open in 4Q12-1Q13. We expect contributions from these to underpin a 19% earnings growth in FY13. FY14-15 will be marked by the
6.1 5.6 5.1 4.6 4.1 Vol m 3.6 15 10 5
Nov-11 Source: Bloomberg Feb-12 May-12 Aug-12
Undervalued in the spider web

We believe that UOLs assets are undervalued under the cumbersome UOL/UIC/SL shareholding structure. In particular, stakes in the Marina hotels and asset values in UIC/SL appear to be heavily discounted. We estimate a c.S$9.50 SOP value assuming RNAV for UIC. The potential for a consolidated behemoth remains a longer-term theme.
Price Close
133 124 115 106 97 88
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 1,295 391.6 745.8 0.56 28.6% 9.97 0.15 2.70% 16.71 19.83 34.8% 0.90 9.6% Dec-11A 1,960 635.3 664.2 0.69 24.0% 8.05 0.15 2.70% 10.58 5.59 35.7% 0.84 10.8% Dec-12F 1,188 373.9 413.3 0.41 (40.5%) 13.52 0.09 1.63% 17.38 28.64 29.2% 0.79 6.0% 0% 1.14 Dec-13F 1,108 382.0 376.1 0.49 19.1% 11.35 0.11 1.94% 16.28 42.39 22.7% 0.75 6.8% 0% 0.99 Dec-14F 922 351.1 393.4 0.51 4.6% 10.85 0.11 2.03% 16.92 35.79 16.9% 0.71 6.7% 0% 1.05

3.87
5.56 5.97
Current
Target
6.55
UOL Group
November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 1,960 756 635 (45) 590 (35) 166 0 721 183 904 (122) 783 (119) 0 Dec-12F 1,188 458 374 (47) 327 (28) 119 0 418 98 516 (62) 454 (41) 0 Dec-13F 1,108 427 382 (46) 335 (27) 166 0 475 0 475 (57) 418 (42) 0 Dec-14F 922 356 351 (47) 305 (22) 208 0 490 0 490 (59) 431 (38) 0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 296 126 1 1,579 2,002 1,090 5,402 0 30 6,522 1,199 302 139 1,639 1,073 284 1,356 0 2,996 5,055 474 5 529 Dec-12F 343 98 1 1,594 2,035 1,093 5,511 0 18 6,622 1,091 326 163 1,579 976 198 1,174 0 2,753 5,399 506 5 905 Dec-13F 330 106 1 1,473 1,911 1,097 5,619 0 17 6,733 920 364 152 1,436 823 158 981 0 2,418 5,692 534 6 226 Dec-14F 337 88 1 1,137 1,563 1,100 5,787 0 14 6,901 762 202 126 1,090 682 132 813 0 1,903 5,999 562 6 561
664 531 531
413 316 316
376 376 376
393 393 393
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 635.3 412.9 Dec-12F 373.9 62.6 Dec-13F 382.0 139.5 Dec-14F 351.1 166.2
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 51.4% 62.2% 32.4% (2.57) 6.58 15.77 13.4% 23.9% 31.83 0.41 76.3 21.4% 7.84% Dec-12F (39.4%) (41.1%) 31.5% (2.24) 7.03 10.29 12.0% 22.0% 34.49 0.45 157.3 12.1% 4.20% Dec-13F (6.7%) 2.1% 34.5% (1.84) 7.41 10.82 12.0% 22.0% 33.58 0.35 184.9 12.8% 4.26% Dec-14F (16.8%) (8.1%) 38.1% (1.44) 7.81 11.65 12.0% 22.0% 38.54 0.37 182.5 12.3% 3.86%
(269.1) 306.5 (37.4) (49.0) 999.2 (460.9)
(142.2) 174.0 (31.8) (28.0) 408.6 (50.0)
(93.1) 124.1 (31.0) (25.7) 495.7 (50.0)
(139.2) 165.4 (26.1) (26.6) 490.7 (50.0)
78.8 (382.1) 146.9 0.0 (115.2) (37.4) (5.7)
(4.9) (54.9) (204.6) 0.0 (69.5) (31.8) (305.9)
(21.5) (71.5) (323.5) 0.0 (82.7) (31.0) (437.2)
(21.7) (71.7) (299.7) 0.0 (86.5) (26.1) (412.4)
RNAV Directly owned Commercial/Retail Hotels/SA Residential Other assets Through listed entities Pan Pac Hotels Group (PPAC) UOB UIC GAV Less: Net debt (incl capex and other adj) RNAV Fully-diluted share base RNAV per share (S$) Target price (S$) Disc 25%
RNAV (S$m) 2,776 907 723 15 1,087 770 1,836 8,114 (1,407) 6,706 768 8.73 6.55
% of GAV 34% 11% 9% 0% 13% 9% 23%
Key Drivers
195
Tech Manufacturing Services SINGAPORE

November 28, 2012
Venture Corporation
VMS SP / VENM.SI Current S$7.65 S$9.55 S$9.55 24.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,718m
S$2,099m
US$1.45m
S$1.77m
70.0%
274.3 m shares

A recovery year
We believe that the maiden 12-month contribution from Oclaro (which recently completed the acquisition of Opnext) will reignite its revenue and profit growth in FY13. Also, its strong FCF will continue to enable Venture to pay a sustainable dividend of 55 Scts, yielding 7%.
Our target price for Venture is based on 14x CY14 P/E, its 5-year average. We view the resumption of earnings growth as a catalyst. Maintain Outperform. We believe Venture will continue to put in more effort to improve its working capital management by reducing inventory turnover days as most components are no longer in shortage. Its target is to return to generating S$60m-80m cash from operations per quarter after netting off working capital requirements. This should further strengthen its net cash position, which stood at S$264m as at end-3Q12.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Aberdeen Asset Fidelity Sprucegrove Investment 1M -1.1 -2.6 3M 0.6 -0.5 12M 3.8 17.7 % held 21.1 8.5 8.1
New customer to contribute in 2013

According to Venture and our channel checks, maiden shipments to its new customer, Oclaro, should start in end-4Q12. Venture is working closely with Oclaro to kickstart more new projects as the latter has shut down most of its in-house manufacturing facilities. Venture has also started a new working relationship with VeriFone (which acquired one of Ventures main customers, Hypercom, in 2H11), shipping small volumes in 3Q12. It plans to collaborate more closely with VeriFone, which has a much wider product reach than Hypercom.
Sustainable dividend payment

Venture should not have any problem sustaining its dividend payment of at least 55 Scts given its good operating cashflows, healthy balance sheet and limited annual capex of about S$35m (excluding potential M&As). Based on our projections, the group should be able to generate an average of S$168m of positive FCF per annum over the next three years, sufficient to sustain a payout of S$151m or 55 Scts a share.
Strong cashflow in good and bad times
9.2 8.7 8.2 7.7 7.2 6.7 6.2 Vol m 5.7 2 1 1

Nov-11
Price Close
125 120 115 110 105 100 95 90
Financial Summary
Revenue (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) Price To Sales (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 2,676 188.1 0.69 15.8% 11.59 0.78 0.55 7.19% 7.90 74.10 (12.8%) 1.13 10.1% Dec-11A 2,432 156.5 0.57 (16.4%) 13.86 0.86 0.55 7.19% 9.07 17.33 (16.5%) 1.12 8.5% Dec-12F 2,432 139.5 0.51 (11.4%) 15.64 0.86 0.55 7.19% 9.95 13.67 (19.1%) 1.16 7.6% (0%) 0.97 Dec-13F 2,658 164.1 0.60 17.6% 13.29 0.79 0.55 7.19% 8.59 20.34 (16.7%) 1.18 9.2% 0% 0.97 Dec-14F 2,946 194.2 0.71 18.4% 11.23 0.71 0.55 7.19% 7.55 17.03 (15.4%) 1.16 10.9% (0%) 1.01
Feb-12
May-12
Aug-12
Source: Bloomberg

6.00
7.65 8.90
Current
Target
9.55
Venture Corporation
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 2,432 326 197 (47) 150 0 2 6 159 (1) 158 (1) 156 0 0 Dec-12F 2,432 290 176 (45) 131 4 4 3 141 0 141 (2) 139 1 0 Dec-13F 2,658 334 208 (45) 163 1 5 2 170 0 170 (7) 163 1 0 Dec-14F 2,946 378 239 (45) 194 1 5 2 202 0 202 (8) 194 1 0
Balance Sheet
(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 513 504 514 2 1,532 144 139 736 4 1,023 84 456 8 547 120 0 120 18 685 1,868 3 1,871 Dec-12F 514 525 442 0 1,481 157 114 713 4 988 50 457 7 514 120 0 120 29 663 1,803 3 1,806 Dec-13F 466 573 461 0 1,500 170 118 691 4 983 50 499 9 558 120 0 120 32 710 1,772 2 1,774 Dec-14F 448 635 513 0 1,596 183 124 668 4 978 50 553 10 613 120 0 120 35 768 1,805 1 1,806
157 157 157
140 140 140
164 164 164
194 194 194
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 197.2 (1.9) 39.6 Dec-12F 175.5 (4.0) 52.3 Dec-13F 208.4 (4.7) (25.5) Dec-14F 238.9 (5.4) (60.4)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (9.1%) (18.8%) 8.11% 1.13 6.81 84.5 0.80% 95% 75.28 88.95 59.30 10.0% 7.3% Dec-12F 0.0% (11.0%) 7.22% 1.26 6.57 78.6 1.58% 106% 73.80 81.61 57.57 9.1% 6.7% Dec-13F 9.3% 18.8% 7.84% 1.08 6.46 32.0 4.00% 88% 72.08 70.85 56.25 11.9% 8.5% Dec-14F 10.8% 14.6% 8.11% 1.01 6.58 38.0 4.00% 75% 71.61 69.23 56.05 13.9% 10.0%
19.3 0.3 (6.4) 248.0 (29.0) 0.7 (8.9) (85.8) (123.0) 0.9 1.3 0.0 (150.9) 88.7 (60.1)
9.5 4.1 (1.3) 236.0 (35.5) 1.5 (6.5) (1.7) (42.2) (34.3) 0.0 0.0 (150.8) (9.7) (194.8)
4.8 0.9 (2.2) 181.8 (35.5) 1.5 (6.5) (34.0) (74.5) 0.0 0.0 0.0 (150.8) (7.8) (158.6)
1.3 1.2 (6.8) 168.9 (35.5) 1.5 (6.5) (0.3) (40.8) 0.0 0.0 0.0 (150.8) (4.6) (155.5)
Key Drivers
ASP Change (%, Main Product) Unit sales growth (%, main prod) No. Of Lines (main Product) Rev per line (US$, main prod) ASP chg (%, 2ndary prod) Unit sales grth (%, 2ndary prod) No. Of Lines (secondary Product) Rev per line (US$, 2ndary prod) Dec-11A 0.0% -5.3% N/A N/A N/A N/A N/A N/A Dec-12F -2.0% 5.7% N/A N/A N/A N/A N/A N/A Dec-13F -1.0% 11.1% N/A N/A N/A N/A N/A N/A Dec-14F 0.0% 6.8% N/A N/A N/A N/A N/A N/A
197

November 27, 2012
Wheelock Properties (S)

WP SP / WPSL.SI Current S$1.84 S$2.00 S$2.00 8.7%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,801m
S$2,202m
US$0.46m
S$0.55m
20.0%
1,197 m shares

Lack of rerating catalysts

Recurring income from investment properties and yield-enhancing investments will provide steady earnings, but the development segment remains muted. We expect slower take-up at Ardmore Three, and focus to be on China project, likely only to be launched end-2013.
No change to RNAV and target price (pegged to 25% discount to RNAV). Maintain Neutral on the lack of catalysts. Nevertheless, a strong take-up at Ardmore Three and greater interest in the China project are potential rerating catalysts. Wheelock maintains a strong recurring income stream from investment properties. Assets will be fully operational by the end of the year and will likely see stronger occupancies. Investments in yield-enhancing instruments earlier in the year, likely fixed income in nature, further strengthened investment income.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Wheelock Properties 1M 2.6 1.1 3M 2.8 1.7 12M -1 12.9 % held 75.0
Weaker residential positioning

Given Wheelocks positioning in the high end market, 2012 was relatively weak, short of price cuts for Orchard View which moved inventory. Monthly rents at Scotts Square also dipped from S$5,850-7,200 in 2Q12 to S$5,000-6,500 in 3Q12. Ardmore Three was launched for a private preview in Sep. We understand that units have been priced at S$3,200psf, and expect slower sales at such levels given larger total quantum of S$5m6m. Public launch is currently under review. The China project could be a potential rerating catalyst but will likely be launched only in 4Q13.
Prudent, but lacking catalysts

We like managements prudence, but lack of opportunities for deployment of net cash and monetisation of inventory is an overhang. We reiterate the view that a privatisation is less compelling at current valuations. At 0.7x P/BV (vs. 0.4-0.5x in 2008/09), an offer at a 0.9x P/BV leaves about 25% upside for shareholders and 15% upside to estimated RNAV for the acquirer. Wheelock Properties Ltd was trading at 0.4x P/BV when taken private; the offer was accepted at almost 1x P/BV.
Stable recurring income
2.00 1.90 1.80 1.70 1.60 1.50 Vol m 1.40 8 6 4 2

Nov-11
Price Close
110 106 102 98 93 89 85
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 571.7 315.4 325.6 0.22 72.5% 8.26 0.060 3.26% 4.39 66.81 (28.9%) 0.78 10.1% Dec-11A 390.5 231.3 291.2 0.16 (28.2%) 11.50 0.060 3.26% 5.60 7.54 (31.3%) 0.76 6.7% Dec-12F 209.2 121.4 110.1 0.09 (42.5%) 20.00 0.060 3.26% 12.00 NA (25.4%) 0.75 3.8% 0% 0.86 Dec-13F 252.6 151.5 135.0 0.11 22.6% 16.31 0.060 3.26% 9.66 32.33 (24.6%) 0.73 4.6% 0% 0.92 Dec-14F 485.0 210.6 185.8 0.16 37.7% 11.85 0.060 3.26% 5.79 6.85 (31.6%) 0.71 6.1% 0% 1.11
Feb-12
May-12
Aug-12
Source: Bloomberg

1.50
1.84 1.93
Current
Target
2.00
Wheelock Properties (S)

November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 390.5 390.5 231.3 (0.3) 231.1 2.0 0.0 0.0 233.0 99.8 332.8 (41.6) 291.2 0.0 0.0 Dec-12F 209.2 209.2 121.4 (0.3) 121.1 6.9 0.0 0.0 128.0 0.0 128.0 (17.9) 110.1 0.0 0.0 Dec-13F 252.6 252.6 151.5 (0.3) 151.1 5.8 0.0 0.0 156.9 0.0 156.9 (22.0) 135.0 0.0 0.0 Dec-14F 485.0 485.0 210.6 (0.3) 210.3 5.8 0.0 0.0 216.1 0.0 216.1 (30.3) 185.8 0.0 0.0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 1,067 166 367 168 1,768 1 1,511 0 0 1,512 0 71 118 189 160 35 195 0 385 2,895 0 2,895 Dec-12F 892 46 748 11 1,697 1 1,487 0 0 1,488 0 23 63 86 147 19 166 0 252 2,934 0 2,934 Dec-13F 888 55 833 14 1,791 1 1,481 0 0 1,482 0 28 76 104 150 23 173 0 277 2,997 0 2,997 Dec-14F 1,138 106 749 27 2,019 1 1,489 0 0 1,490 0 53 146 199 156 44 199 0 399 3,111 0 3,111
291.2 191.4 191.4
110.1 110.1 110.1
135.0 135.0 135.0
185.8 185.8 185.8
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 231.3 35.0 Dec-12F 121.4 (207.8) Dec-13F 151.5 (79.6) Dec-14F 210.6 116.7
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (31.7%) (26.7%) 59.2% 0.76 2.42 N/A 12.5% 37.5% 125.3 N/A N/A 35.0% 7.9% Dec-12F (46.4%) (47.5%) 58.0% 0.62 2.45 N/A 14.0% 65.2% 185.0 N/A N/A 19.6% 4.2% Dec-13F 20.8% 24.8% 60.0% 0.62 2.50 N/A 14.0% 53.2% 73.1 N/A N/A 17.4% 5.0% Dec-14F 92.0% 39.1% 43.4% 0.82 2.60 N/A 14.0% 38.6% 60.8 N/A N/A 21.8% 6.7%
99.8 (154.7) 0.0 (26.4) 185.0 (0.3) 0.0 (28.5) 8.5 (20.3) 127.1 0.0 0.0 (71.8) (1.8) 53.5
0.0 0.0 (10.1) (96.5) (0.3) 0.0 0.0 6.9 6.6 (13.6) 0.0 0.0 (71.8) 0.0 (85.4)
0.0 0.0 (12.4) 59.5 (0.3) 0.0 0.0 5.8 5.5 3.2 0.0 0.0 (71.8) 0.0 (68.6)
0.0 0.0 (17.1) 310.3 (0.3) 0.0 0.0 5.8 5.4 5.7 0.0 0.0 (71.8) 0.0 (66.1)
RNAV RNAV (S$m) 1,215 895 342 2,452 739 3,191 1,197 2.67 Discount to RNAV 25% % of GAV 50% 37% 14% 100%
Key Drivers
Investment Properties PV of residential development GDV Share of listed AFS investments GAV Less: FY13 net debt (incl any off b/s debt) RNAV Fully-diluted no. of shares (m) RNAV per share (S$)
Target Price
2.00
199
November 29, 2012
Wilmar International
WIL SP / WLIL.SI Current S$3.15 S$3.90 S$3.52 23.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$16,467m
S$20,148m
US$30.54m
S$37.46m
29.5%
6,403 m shares

A refined plantation play

We are upgrading Wilmar from Neutral to Outperform as we expect the stock to be rerated on the back of its undemanding valuations and an improving crushing margin in 2013. The stock is trading at only 1.2x FY12 P/BV, a 40% discount to its 3-year average of 2.1x.
The companys recent share buybacks as well as share purchases by its major shareholders suggest that the share price may have bottomed. We prune our EPS forecasts for lower CPO price assumptions. However, we raise our target price to S$3.90 as we no longer apply a 10% discount to its SOP value given our more positive view on the group. Catalysts include stronger earnings and M&As. refining business through better refining margins. We understand that refineries are currently enjoying high utilisation rates and attractive raw material costs. Wilmar derives around 30% of its earnings from this division.
Share price info

Share price perf. (%) Relative Absolute Major shareholders PPB Group Archer Daniels Midland Kuok Khoon Hong 1M 1.5 0 3M -0.1 -1 12M -49.7 -37.9 % held 18.3 16.4 11.9
Earnings recovery story

We have cut our F12-14 earnings by 2-6% to reflect a 7-9% downgrade of our CPO price assumptions for 2012-14. Despite the earnings cut, we still project earnings jumps of 26% for FY13 and 12% for FY14, fuelled mainly by better contributions from its oilseeds and grains division as the group improves the timing of its purchases of feedstock and gets more meaningful earnings contributions from its rice and flour business. Its palm and laurics business may report lower refining margins due to rising competition but this will be offset by higher processing volume due to its expanded capacity. Also, its consumer products are set to benefit from lower feedstock costs. We expect these improvements to more than offset the lower CPO price and sugar prices.
Trading at 1.2x P/BV

Wilmars share price has fallen 37% over the past 12 months, underperforming the market by 50%. We believe that the poor share price showing is an overreaction to its poor earnings visibility. Its P/BV of 1.2x is at a steep discount to its 3-year average of 2.1x and does not price in the group's strong distribution channel and integrated business model.
Beneficiary of high palm oil stocks

The current high palm oil stock situation has shifted the bargaining power from planters to refiners. We believe that this will benefit Wilmar's
Price Close 6.2 5.7 5.2 4.7 4.2 3.7 3.2 100 2.7 80 60 40 20
Nov-11 Mar-12 Source: Bloomberg Jun-12 Sep-12
Financial Summary
Revenue (US$m) Operating EBITDA (US$m) Net Profit (US$m) Core EPS (US$) Core EPS Growth FD Core P/E (x) DPS (US$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 30,378 1,743 1,324 0.13 (48.9%) 19.86 0.042 1.65% 15.08 6.21 81.9% 1.39 7.3% Dec-11A 44,710 2,411 1,601 0.20 56.9% 12.66 0.049 1.89% 11.80 4.59 88.8% 1.23 10.3% Dec-12F 44,606 2,035 1,064 0.17 (18.3%) 15.69 0.033 1.29% 13.57 12.91 76.3% 1.16 7.7% (1.53%) 0.97 Dec-13F 49,976 2,377 1,338 0.21 25.8% 12.62 0.042 1.62% 12.14 NA 76.7% 1.08 9.1% (5.81%) 1.00 Dec-14F 54,059 2,651 1,502 0.23 12.2% 11.24 0.047 1.82% 10.86 51.10 70.9% 1.00 9.5% (2.13%) 1.00
Vol m

3.15 3.00 5.99
3.90
Current Target
Wilmar International
November 29, 2012
Profit & Loss

(US$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income/(Expense) Total Pretax Income/(Loss) from Assoc. Total Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 44,710 3,871 2,411 (478) 1,933 (302) 185 0 1,816 263 2,079 (379) 1,700 (99) 0 0 0 1,601 1,302 1,302 Dec-12F 44,606 3,862 2,035 (493) 1,543 (167) 130 0 1,505 0 1,505 (376) 1,129 (66) 0 0 0 1,064 1,064 1,064 Dec-13F 49,976 4,327 2,377 (501) 1,876 (118) 136 0 1,894 0 1,894 (473) 1,420 (82) 0 0 0 1,338 1,338 1,338 Dec-14F 54,059 4,680 2,651 (507) 2,143 (160) 143 0 2,126 0 2,126 (531) 1,594 (93) 0 0 0 1,502 1,502 1,502
Balance Sheet
(US$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 8,232 6,659 7,265 1,608 23,765 7,469 1,587 4,410 2,409 15,875 18,409 0 2,841 879 22,130 2,480 0 142 2,622 639 25,391 13,370 878 14,248 Dec-12F 9,312 5,953 7,248 1,608 24,121 7,976 1,717 4,410 2,409 16,512 18,409 0 2,919 879 22,207 2,480 0 142 2,622 639 25,469 14,221 944 15,165 Dec-13F 8,374 7,136 8,121 1,614 25,245 8,181 1,853 4,410 2,409 16,853 18,409 0 3,230 879 22,518 2,480 0 142 2,622 639 25,780 15,291 1,026 16,318 Dec-14F 8,404 7,661 8,784 1,625 26,475 8,171 1,996 4,410 2,409 16,986 18,409 0 3,299 879 22,588 2,480 0 142 2,622 639 25,849 16,493 1,119 17,612
Cash Flow
(US$m) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 2,411 18 22 0 0 119 (335) (269) 1,966 (1,554) 53 (174) 215 (1,460) 3,088 47 0 (309) 0 (2,221) 605 Dec-12F 2,035 0 801 0 0 0 (167) (376) 2,293 (1,000) 0 0 0 (1,000) 0 0 0 (213) 0 0 (213) Dec-13F 2,377 0 (1,456) 0 0 0 (118) (473) 330 (1,000) 0 0 0 (1,000) 0 0 0 (268) 0 (0) (268) Dec-14F 2,651 0 (629) 0 0 0 (160) (531) 1,330 (1,000) 0 0 0 (1,000) 0 0 0 (300) 0 (0) (300)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (US$) BVPS (US$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 47.2% 38.3% 5.39% (1.98) 2.09 3.52 18.2% 23.3% 27.03 62.57 14.11 8.66% 6.57% Dec-12F (0.2%) (15.6%) 4.56% (1.81) 2.22 2.95 25.0% 20.0% 30.49 65.19 15.71 5.91% 5.24% Dec-13F 12.0% 16.8% 4.76% (1.95) 2.39 3.59 25.0% 20.0% 30.72 61.44 15.53 7.27% 6.12% Dec-14F 8.2% 11.5% 4.90% (1.95) 2.58 4.10 25.0% 20.0% 30.72 62.48 15.77 7.72% 6.51%
Key Drivers
Planted Estates (ha) Mature Estates (ha) FFB Yield (tonnes/ha) FFB Output Growth (%) CPO Price (US$/tonne) Dec-11A 248,326 219,143 19.8 -3.9% 1,125 Dec-12F 256,326 231,684 18.5 10.5% 990 Dec-13F 264,326 240,850 19.5 6.3% 960 Dec-14F 272,326 244,211 20.2 5.4% 1,000
201

November 27, 2012
Wing Tai Holdings

WINGT SP / WTHS.SI Current S$1.72 S$2.00 S$2.00 16.8%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$1,098m
S$1,343m
US$1.40m
S$1.73m
47.5%
793.9 m shares

Reaping the rewards of 2012s efforts

We expect steady monetisation of launched inventory on the back of rebates, with the option to launch two high end projects on a pick-up in sentiment, while diversification into the mid-market segment boosts asset turnover. The stock has done well but we see further rerating.
We see potential for more restructuring benefits on top of decent development project volumes and a strong retail segment. Maintain Outperform with unchanged RNAV/target price (25% discount to RNAV). Strong take-up at launches and rerating of related entities are catalysts.
Donald Chua
Share price info

Share price perf. (%) Relative Absolute Major shareholders Wing Sun Winlyn Investment Ascend Capital 1M 2.4 0.9 3M 12.5 11.4 12M 44.9 58.8 % held 28.4 9.3 8.7
Diversification to the mid-market

The mid-market landbank now includes Foresque Residences, Tampines project and Prince Charles Crescent, which we estimate to comprise 60% of unsold attributable GFA. The Phase 2 launch of Foresque Residences saw keen interest, with overall take-up at 83% as of Oct. We also like the Tampines project for its high margins, and expect strong take-up on launch in 1Q13. A strong mid-market segment should tide over any weaknesses at the high-end.
High end sales will not worsen

Helios Residences has been selling steadily since earlier this year on the back of interest from local buyers and rebates. High end sales volumes have maintained their current momentum and we see leeway for further a pick up before attracting policy attention, a positive. We remain watchful for the remaining two Ardmore/Anderson sites, likely to be privately marketed or launched in a better market given higher breakeven, limited supply of high end landbank, and ability to command higher pricing on completion in 2013/14.
Rerating of related entities

The stock has done well following improved high end sales, but we expect strong mid-end volumes to drive share price further. Potential restructuring benefits top off volumes as Hong Kong associate shifts its focus to the property segment, with full ownership of its investment property portfolio. Wingtais 4% dividend yields are compelling.
2.0 1.8 1.6 1.4 1.2 1.0 Vol m 0.8 8 6 4 2

Nov-11
Price Close
159 146 132 119 106 92 79
Financial Summary
Total Net Revenues (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Jun-11A 649 216.3 311.2 0.32 75.6% 5.39 0.050 2.94% 10.20 37.70 31.9% 0.71 13.8% Jun-12A 695 65.4 242.2 0.19 (39.9%) 8.97 0.070 4.08% 28.94 2.77 16.6% 0.65 7.5% Jun-13F 1,001 308.9 216.3 0.27 43.2% 6.29 0.082 4.77% 5.17 3.31 2.5% 0.60 9.9% 0% 1.30 Jun-14F 848 245.1 169.2 0.21 (21.8%) 8.04 0.064 3.73% 4.79 4.13 (14.5%) 0.57 7.3% 0% 1.02 Jun-15F 733 205.6 152.4 0.19 (9.9%) 8.93 0.058 3.36% 4.69 4.00 (22.0%) 0.55 6.3% 0% 0.98
Feb-12
May-12
Aug-12
Source: Bloomberg

0.92
1.72 1.77
Current
Target
2.00
Wing Tai Holdings

November 27, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Jun-12A 695 695 65 (12) 53 (29) 172 0 196 104 300 (37) 263 (21) 0 Jun-13F 1,001 1,001 309 (13) 296 (25) 69 0 340 0 340 (65) 275 (59) 0 Jun-14F 848 848 245 (13) 233 (20) 53 0 266 0 266 (51) 216 (47) 0 Jun-15F 733 733 206 (12) 193 (10) 52 0 236 0 236 (45) 191 (39) 0
Balance Sheet
(S$m) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Jun-12A 849 83 1,114 77 2,123 197 1,610 0 0 1,807 26 230 84 339 1,200 120 1,320 0 1,660 2,107 164 2,270 Jun-13F 1,156 82 777 111 2,126 193 1,861 0 0 2,054 26 274 82 382 1,191 174 1,365 0 1,747 2,258 175 2,433 Jun-14F 1,397 70 463 94 2,023 190 1,821 0 0 2,011 22 232 70 324 1,003 147 1,150 0 1,474 2,376 184 2,561 Jun-15F 1,659 62 351 81 2,153 187 1,794 0 0 1,981 22 201 60 284 1,048 127 1,175 0 1,459 2,483 193 2,676
242 151 151
216 216 216
169 169 169
152 152 152
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital Straight Line Adjustment (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Jun-12A 65.4 296.2 Jun-13F 308.9 347.4 Jun-14F 245.1 288.4 Jun-15F 205.6 91.2
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Jun-12A 7.1% (70%) 9.4% (0.47) 2.65 1.44 12.3% 40.2% 77.97 N/A N/A 3.1% 1.82% Jun-13F 44.1% 372% 30.9% (0.08) 2.85 7.66 19.0% 30.0% 30.21 N/A N/A 21.2% 8.67% Jun-14F (15.3%) (21%) 28.9% 0.47 3.00 6.06 19.0% 30.0% 32.70 N/A N/A 23.9% 6.94% Jun-15F (13.6%) (16%) 28.0% 0.74 3.13 5.98 19.0% 30.0% 32.86 N/A N/A 31.1% 5.89%
103.9 (67.8) 0.0 (52.1) 345.7 (9.3) 0.0 0.0 107.0 97.7 46.5 0.0 0.0 (55.5) (92.9) (101.9)
0.0 0.0 (59.0) 597.3 (9.3) 0.0 0.0 (167.9) (177.2) (9.1) 0.0 0.0 (64.9) (38.6) (112.6)
0.0 0.0 (46.2) 487.3 (9.3) 0.0 0.0 43.7 34.4 (192.3) 0.0 0.0 (50.7) (38.3) (281.4)
0.0 0.0 (40.9) 255.9 (9.3) 0.0 0.0 47.6 38.3 46.0 0.0 0.0 (45.7) (32.3) (32.0)
RNAV RNAV (S$m) 453 538 592 132 1,715 372 33 2,120 794 2.67 Discount to RNAV 25% % of GAV 26% 31% 35% 8% 100%
Key Drivers
Unbooked Presales (m) (S$) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (S$) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%) Jun-12A N/A N/A N/A N/A N/A N/A N/A 5.5% 52.4% N/A N/A Jun-13F N/A N/A N/A N/A N/A N/A N/A 3.8% 66.9% N/A N/A Jun-14F N/A N/A N/A N/A N/A N/A N/A 4.5% 61.0% N/A N/A Jun-15F N/A N/A N/A N/A N/A N/A N/A 5.2% 54.9% N/A N/A
Investment properties PV of residential GDV Share of listed entities Other assets (Retail Ops and AFS Assets) GAV Less: FY13 net debt (incl off b/s debt) Adj for DNP debt not att. RNAV Fully diluted no. of shares (m) RNAV per share (S$)
Target price
2.00
203

November 28, 2012
Yangzijiang Shipbuilding
YZJ SP / YAZG.SI Current S$0.91 S$0.75 S$0.75 -17.1%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$2,839m
S$3,468m
US$8.20m
S$10.07m
38.0%
3,836 m shares

Dry season
YZJ is undoubtedly a good shipbuilding yard but it will not be spared from a bearish shipbuilding industry. Near-term risk-reward is not attractive against 15% earnings contractions for 2013-14.
Maintain Underperform and target price at 0.8x CY13 P/BV (30% discount to its last trough) in view of its limited earnings visibility. We expect a sharp earnings deterioration in FY13 as its order book dwindles and lower-margin projects are executed.
Cheap for a reason

There could be more consensus downgrades if YZJ fails to announce new orders by 1Q13. Its stock is cheap (6x CY13 P/E), mainly due to its earnings contractions and weak industry outlook.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Newyard Worldwide Lido Point Investment Hongkong Hengyua 1M -1.2 -2.7 3M -8.9 -10 12M -8.7 5.2 % held 24.2 14.0 10.8
Order miss
Order flow has been weak for YZJ at only 20% of its 2012 target of US$2bn in 9M12. This was mainly due to weak end-demand and stiff competition from shipbuilding yards in China and Korea. We believe that even the finalisation of 10,000 containerships by Seaspan at end-2012 may not be able to catalyse its stock as margins for these projects could be as low as 10%, less than half of what YZJ used to achieve. Order book now stands at US$3.6bn, a 23% drop from end-2011 levels.
Can offshore offer a miracle?

YZJ expects to announce two jack-up rigs by end-2012. Still, earnings contributions are only likely in 2014, and may not be material. We believe these units could be built on a speculative basis (with no firm charters). Even if YZJ is able to execute these projects profitably, we see limited demand for jack-ups in the short term as the jack-up rig rush has died down due to excessive ordering in 2010-11.
1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 100 80 60 40 20
Nov-11
Price Close
Vol m
152 143 135 126 117 108 100 91 82
Financial Summary
Revenue (Rmbm) Operating EBITDA (Rmbm) Net Profit (Rmbm) Core EPS (Rmb) Core EPS Growth FD Core P/E (x) DPS (Rmb) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 13,558 3,584 2,955 0.79 25.9% 5.77 0.21 4.66% 3.73 NA (32.9%) 1.78 36.4% Dec-11A 15,706 5,167 3,977 1.04 31.4% 4.39 0.26 5.70% 4.43 34.40 38.9% 1.36 34.7% Dec-12F 15,164 5,320 3,895 1.02 (2.0%) 4.54 0.25 5.51% 4.19 20.05 33.0% 1.11 27.0% 0% 1.08 Dec-13F 11,324 3,635 2,602 0.68 (33.2%) 6.79 0.17 3.68% 6.50 NA 37.5% 0.99 15.4% 0% 0.90 Dec-14F 7,741 3,286 2,399 0.63 (7.8%) 7.37 0.16 3.39% 6.71 10.69 26.7% 0.90 12.8% 0% 1.11
Feb-12
May-12
Aug-12
Source: Bloomberg

0.91 0.85 1.39
0.75
Current
Target
Yangzijiang Shipbuilding
November 28, 2012
Profit & Loss

(Rmbm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 15,706 4,863 5,167 (247) 4,920 25 53 0 4,998 0 4,998 (988) 4,010 (34) 0 Dec-12F 15,164 5,049 5,320 (260) 5,060 (220) (1) 0 4,839 0 4,839 (910) 3,929 (34) 0 Dec-13F 11,324 3,275 3,635 (273) 3,362 (120) 5 0 3,247 0 3,247 (611) 2,636 (34) 0 Dec-14F 7,741 2,833 3,286 (273) 3,013 (24) 7 0 2,996 0 2,996 (563) 2,432 (34) 0
Balance Sheet
(Rmbm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt Instruments - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity Dec-11A 3,152 7,595 1,654 11,940 24,341 3,822 587 0 4,988 9,398 6,044 11,015 17,059 2,447 517 2,963 0 20,022 12,974 743 13,717 Dec-12F 4,342 7,582 1,517 14,633 28,075 4,095 587 0 4,597 9,280 7,132 11,397 18,529 2,447 517 2,963 0 21,493 15,895 (34) 15,862 Dec-13F 2,184 6,228 1,207 15,394 25,014 4,356 705 0 3,892 8,953 6,419 6,771 13,190 2,447 517 2,963 0 16,153 17,847 (34) 17,813 Dec-14F 2,504 4,258 736 16,424 23,921 4,616 846 0 3,328 8,790 5,777 4,848 10,625 1,957 517 2,474 0 13,099 19,646 (34) 19,612
3,977 3,977 3,977
3,895 3,895 3,895
2,602 2,602 2,602
2,399 2,399 2,399
Cash Flow
(Rmbm) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 5,167 (10,585) Dec-12F 5,320 (2,697) Dec-13F 3,635 (3,424) Dec-14F 3,286 (463)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (Rmb) BVPS (Rmb) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A 15.8% 44.2% 32.9% (1.39) 3.38 39.5 19.8% 21.0% 90.5 49.33 94.6 61.6% 30.3% Dec-12F (3.5%) 3.0% 35.1% (1.37) 4.14 10.5 18.8% 20.8% 183.2 57.37 127.4 22.1% 22.3% Dec-13F (25.3%) (31.7%) 32.1% (1.74) 4.65 7.8 18.8% 20.8% 222.6 61.77 116.8 13.3% 14.1% Dec-14F (31.6%) (9.6%) 42.4% (1.36) 5.12 8.2 18.8% 20.8% 247.2 72.27 114.6 10.3% 12.4%
0 0 (661) (6,079) 0 0 (277) (400) (677) 7,264 (147) (20) (910) (821) 5,366
(220) 0 (988) 1,415 (533) 0 0 0 (533) 0 0 0 (974) 1,282 308
(120) 0 (910) (819) (533) 0 0 0 (533) 0 0 0 (651) (155) (805)
(24) 0 (611) 2,188 (533) 0 0 0 (533) 0 0 0 (600) (735) (1,335)
Key Drivers
Outstanding Orderbook (Rmbm) Order Book Wins (Rmbm) Orderbook Depletion (Rmbm) Average Day Rate Per Ship (US$) No. Of Ships (unit) Average Utilisation Rate (%) Dec-11A N/A 1,250.0 15,706 N/A N/A N/A Dec-12F N/A 1,200.0 15,164 N/A N/A N/A Dec-13F N/A 640.0 11,324 N/A N/A N/A Dec-14F N/A 640.0 7,741 N/A N/A N/A
205
Construction SINGAPORE
November 28, 2012
Yongnam Holdings
YNH SP / YNAM.SI Current S$0.23 S$0.33 S$0.33 43.7%
Conviction| |
SHORT TERM (3 MTH)
LONG TERM
Market Cap
Avg Daily Turnover
Free Float
US$237.7m
S$290.3m
US$0.26m
S$0.32m
85.0%
1,253 m shares

Engineering its path

Without the contribution of high-margin iconic projects, Yongnam had a disappointing year in 2012. That said, we expect the flow of orders to improve in FY13-14 as high-profile local and overseas projects are awarded.
The outlook for the infrastructural sector remains positive and prospects are still attractive with the group bidding for projects in Singapore and the region. We keep our target price (6x CY13 P/E, its 3-year mean) and maintain Outperform as the group has been consistent with its accretive projects win-rate. The current order book of S$442m is still strong as the group secured S$38.5m worth of contracts in 3Q12 alone, coupled with another S$27m in new job wins announced in 4Q12. This will flow through to its earnings in 2013. Yongnam should be able to meet our revised 2013 forecast as previously delayed projects are ramped up going into 4Q12 and 1Q13.
Share price info

Share price perf. (%) Relative Absolute Major shareholders Seow Family JPMorgan Chase 1M -4.6 -6.1 3M 3.3 2.2 12M -13.9 0 % held 13.9 4.9
Earnings in tandem with no. of high-profile projects

The drop in revenue in FY12 was not a surprise due to lower contributions from its structural steelworks (SS) division in most of 2012 following the completion of the higher-margin iconic projects the previous year. As a result, margins also suffered. That said, Yongnam continued to book decent contributions from its specialist civil engineering (SCE) projects to offset the revenue decline. Ongoing projects (including Jurong Island petrochemical plants) are key contributors going into 2013.
Outlook intact
The outlook for the infrastructural sector continues to be positive and prospects for Yongnam remain attractive with the group bidding for projects worth S$1.3bn in Singapore and the region, all expected to commence in early 2013. While we still believe in the groups ability to win more notable projects both in Singapore and overseas, we are also a little concerned that the current competitive bidding landscape may cap its share price in the short term. In addition, it is exploring opportunities to complement its existing business and is looking into possible tie-ups with European partners on wind turbine foundations.
Timing issue, not operational hiccup
0.27 0.26 0.25 0.24 0.23 0.22 0.21 Vol m 0.20 40 30 20 10

Nov-11
Price Close
110 106 101 97 93 89 84 80
Financial Summary
Revenue (S$m) Operating EBITDA (S$m) Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) Recurring ROE % Change In Core EPS Estimates CIMB/consensus EPS (x) Dec-10A 335.1 92.8 54.40 0.044 34.9% 5.20 0.007 2.83% 4.10 NA 41.5% 1.21 25.7% Dec-11A 332.7 99.1 63.38 0.051 15.3% 4.50 0.010 4.35% 3.53 50.29 22.1% 0.99 24.0% Dec-12F 290.0 76.8 42.52 0.034 (33.3%) 6.76 0.006 2.61% 3.81 5.07 1.5% 0.88 13.8% (0.000%) 0.92 Dec-13F 451.0 108.1 69.25 0.055 62.6% 4.17 0.006 2.61% 2.95 NA 7.8% 0.74 19.4% 0.000% 1.20 Dec-14F 468.3 108.9 75.45 0.060 8.8% 3.83 0.006 2.61% 2.37 5.53 (6.8%) 0.63 17.9% (0.000%) 1.22
Feb-12
May-12
Aug-12
Source: Bloomberg

0.23 0.22 0.26
Current
Target
0.33
Yongnam Holdings
November 28, 2012
Profit & Loss

(S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Total Financial Income / (Expense) Total Pretax Income / (Loss) from Associates Total Non-Operating Income / (Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends Foreign Exchange Gain / (Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit Dec-11A 332.7 103.6 99.1 (22.4) 76.6 (3.3) 1.9 0.0 75.2 0.0 75.2 (11.9) 63.4 0.0 0.0 Dec-12F 290.0 75.8 76.8 (24.0) 52.8 (2.8) 0.0 0.0 50.0 0.0 50.0 (7.5) 42.5 0.0 0.0 Dec-13F 451.0 121.5 108.1 (20.0) 88.1 (5.6) 4.0 0.0 86.6 0.0 86.6 (17.3) 69.3 0.0 0.0 Dec-14F 468.3 123.5 108.9 (20.0) 88.9 (5.7) 4.0 4.8 92.0 0.0 92.0 (16.6) 75.5 0.0 0.0
Balance Sheet
63.4 63.4 63.4
42.5 42.5 42.5
69.3 69.3 69.3
75.5 75.5 75.5
Cash Flow
(S$m) EBITDA Cash Flow from Investments & Associates Change In Working Capital (Incr) / Decr in Total Provisions Other Non-Cash (Income) / Expense Other Operating Cashflow Net Interest (Paid) / Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Dec-11A 99.1 (2.4) Dec-12F 76.8 17.7 Dec-13F 108.1 (89.7) Dec-14F 108.9 (11.2)
Key Ratios
Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) Dec-11A (0.7%) 6.8% 29.8% (0.051) 0.23 23.24 15.8% 19.8% 56.37 257.7 88.4 21.1% 20.8% Dec-12F (12.8%) (22.5%) 26.5% (0.004) 0.26 19.04 15.0% 17.7% 62.33 248.6 77.6 13.2% 13.3% Dec-13F 55.5% 40.8% 24.0% (0.024) 0.31 15.79 20.0% 10.9% 50.90 191.1 57.2 23.5% 19.8% Dec-14F 3.8% 0.7% 23.3% 0.025 0.36 15.56 18.0% 10.0% 58.89 226.6 60.0 19.3% 17.4%
(5.0) (3.3) 0.0 88.4 (65.6) 5.7 0.0 0.0 (59.9) (22.8) 1.5 0.0 (8.1) 0.0 (29.5)
1.6 (2.8) (7.5) 85.8 (20.0) 0.0 0.0 0.0 (20.0) (9.2) 0.0 0.0 (7.5) 0.0 (16.7)
0.0 (5.6) (17.3) (4.5) (20.0) 0.0 0.0 0.0 (20.0) 10.8 0.0 0.0 (7.5) 0.0 3.3
0.0 (5.7) (16.6) 75.5 (20.0) 0.0 0.0 0.0 (20.0) (3.2) 0.0 0.0 (7.6) 0.0 (10.7)
Key Drivers
(S$m) Outstanding Orderbook Orderbook Depletion Orderbook Replenishment ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) Dec-11A 628.1 N/A 233.1 N/A N/A N/A N/A N/A N/A Dec-12F 512.3 N/A 211.5 N/A N/A N/A N/A N/A N/A Dec-13F 462.5 N/A 224.2 N/A N/A N/A N/A N/A N/A Dec-14F 412.7 N/A 238.1 N/A N/A N/A N/A N/A N/A
207
Yongnam Holdings
November 28, 2012
208
Yongnam Holdings
November 28, 2012
Appendices
209
November 29, 2012
Figure 60: Singapore Valuation

Prices as at 27/11/12
BBG code Company name SIE SP SIA SP TGR SP CWT SP GGR SP IFAR SP MII SP NOBL SP OLAM SP WIL SP KEP SP SCI SP STE SP YNH SP DFI SP PRA SP SSG SP MINZ SP PETRA SP SUPER SP THBEV SP DBS SP OCBC SP SGX SP UOB SP BIG SP IHH SP RFMD SP Aviation SIA Engineering Singapore Airlines Tiger Airways Commodities CWT Limited Golden Agri-Resources Indofood Agri Resources Mewah International Noble Group Olam International Wilmar International Conglomerates Keppel Corporation Sembcorp Industries ST Engineering Construction and Materials Yongnam Holdings Consumer Discretionary Dairy Farm Int'l Parkson Retail Asia Sheng Siong Group Consumer Staples China Minzhong Food Petra Foods Super Group Thai Beverage Financial Services DBS Group OCBC Singapore Exchange United Overseas Bank Health Care Biosensors Int'l IHH Healthcare Raffles Medical Group
Closing Price 4.29 10.50 0.71 1.24 0.63 1.24 0.47 1.09 1.56 3.14 10.63 4.98 3.53 0.23 10.72 1.33 0.51 0.79 2.80 3.15 0.41 14.17 9.21 6.70 18.26 1.14 1.26 2.43
Target % up / price (down) 4.70 11.00 0.83 1.68 0.80 1.51 0.45 1.45 1.59 3.90 13.20 6.26 3.97 0.33 12.00 1.75 0.58 0.82 1.92 3.27 0.60 17.36 10.63 7.26 20.56 1.79 1.53 3.52 0.53 1.69 10% 5% 17% 36% 26% 23% -2% 33% 2% 24% 24% 26% 12% 44% 12% 32% 15% 5% -31% 4% 49% 23% 15% 8% 13% 57% 22% 45% 41% 28%
Recom. Outperform Neutral Neutral Outperform Outperform Outperform Underperform Outperform Trading Sell Outperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Neutral Underperform Outperform Outperform Outperform Neutral Neutral Underperform Outperform Outperform Outperform Outperform Outperform
Free Float (%) 19% 45% 45% 40% 50% 31% 36% 50% 41% 30% 60% 50% 38% 85% 22% 25% 65% 56% 45% 25% 33% 70% 65% 76% 80% 42% 31% 45% 79% 32%
Market Cap (US$m) 3,872 10,071 477 609 6,663 1,442 574 5,792 3,052 16,467 15,630 7,281 8,892 238 14,478 737 572 358 1,401 1,438 8,325 28,263 25,860 5,862 23,532 1,601 8,276 1,083 374 615
Month end Mar 12 Mar 12 Mar 12 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Jun 12 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Jun 12 Dec 11 Mar 12 Dec 11 Dec 11 Dec 11 Mar 12
Price/ BVPS (X) 2012 2013 2014 3.63x 0.96x 1.85x 1.31x 0.80x 1.01x 1.04x 1.02x 1.07x 1.16x 2.24x 1.93x 5.80x 0.88x 10.20x 3.52x 4.58x 0.56x 4.27x 4.29x 3.74x 1.09x 1.25x 8.64x 1.27x 1.75x 1.42x 3.51x 0.78x 1.26x 3.47x 0.93x 1.31x 1.16x 0.76x 0.93x 1.01x 0.93x 0.98x 1.08x 2.02x 1.75x 5.54x 0.74x 8.22x 3.21x 4.47x 0.46x 3.87x 3.89x 3.24x 1.03x 1.18x 8.61x 1.18x 1.83x 1.38x 3.13x 0.75x 1.17x 3.31x 0.91x 1.13x 1.02x 0.72x 0.85x 0.96x 0.85x 0.89x 1.00x 1.84x 1.58x 5.27x 0.64x 6.68x 2.86x 4.35x 0.39x 3.51x 3.53x 2.80x 0.98x 1.11x 8.53x 1.09x 1.79x 1.33x 2.73x 0.71x 1.07x
2-Yr ROAE (recurring) % P/E (Recurrent FD) (X) forward 2012 2013 2014 2012 2013 2014 EPS Cagr 22.1% 3.2% -16.3% 15.9% 5.2% 8.0% 3.2% 8.2% 10.4% 7.7% 25.0% 17.8% 31.3% 13.8% 51.7% 21.8% 20.1% 20.2% 17.2% 19.4% 26.1% 11.5% 11.6% 37.1% 12.5% 12.1% 2.9% 15.6% 0.1% 12.1% 22.7% 5.4% 6.8% 15.2% 5.8% 8.5% 4.0% 11.4% 11.7% 9.1% 18.3% 15.8% 31.5% 19.4% 47.3% 20.0% 25.8% 18.7% 16.2% 19.5% 28.8% 11.1% 10.6% 38.9% 11.6% 15.2% 4.8% 16.8% 5.3% 13.5% 23.1% 6.8% 9.8% 14.9% 6.6% 9.0% 5.3% 12.2% 13.1% 9.5% 16.7% 16.1% 32.0% 18.0% 44.6% 21.1% 27.5% 17.7% 16.1% 19.6% 28.8% 11.0% 10.8% 40.6% 11.5% 17.4% 5.7% 18.7% 16.6x 30.6x -12.6x 9.0x 15.1x 13.2x 33.1x 13.0x 13.1x 15.7x 9.5x 11.5x 19.0x 6.8x 22.0x 17.8x 20.6x 3.0x 26.0x 23.4x 15.2x 9.7x 11.2x 23.3x 10.5x 13.4x 54.9x nm 15.6x 17.7x 22.5x 8.1x 13.4x 11.3x 25.4x 8.6x 10.2x 12.6x 11.6x 11.6x 18.0x 4.2x 19.2x 16.7x 17.6x 2.7x 25.0x 20.9x 12.0x 9.5x 11.5x 22.2x 10.6x 11.8x 29.1x 19.6x 14.5x 8.7x 14.6x 13.5x 12.3x 7.3x 11.2x 9.9x 18.5x 7.3x 8.2x 11.2x 11.5x 10.3x 16.9x 3.8x 16.5x 14.3x 16.0x 2.4x 22.9x 18.9x 10.4x 9.1x 10.6x 21.1x 9.8x 10.4x 23.7x 15.6x 11.2x 7.8x 6.3% 12.5% N.A. 26.3% -9.4% -7.2% -25.0% 44.3% 19.6% 0.2% 4.3% -2.9% 6.2% 3.9% 14.0% 8.1% 11.8% 7.6% -3.9% 24.8% 33.4% 6.6% 8.0% 3.0% 7.3% 8.6% 80.2% 13.4% -7.5% 35.7%
Net Gearing Net Div Yield % FY12 FY13 2012 2013 -39% -32% 170% 43% 9% 5% 34% 48% 181% 76% 14% -15% -40% 2% -55% -79% -90% 15% 140% -31% 142% N.A> N.A> -84% N.A> -25% 5% -8% 35% 34% -37% -31% 103% 20% 9% 1% 35% 41% 189% 76% 12% -12% -39% 8% -67% -72% -90% 2% 120% -30% 117% N.A> N.A> -84% N.A> -45% 2% -10% 56% 43% 5.1% 4.2% 0.0% 2.0% 1.3% 0.0% 0.6% 2.1% 3.0% 1.3% 4.7% 3.9% 4.7% 2.6% 2.7% 1.1% 5.3% 0.0% 1.5% 2.2% 3.3% 4.7% 3.7% 4.2% 3.8% 0.0% 0.0% 1.7% 1.0% 1.8% 5.4% 2.8% 0.0% 2.0% 1.5% 0.0% 0.8% 2.9% 2.8% 1.6% 3.9% 3.8% 5.0% 2.6% 3.1% 2.4% 5.1% 0.0% 1.6% 2.4% 4.1% 4.3% 3.8% 4.5% 4.1% 0.0% 0.0% 1.7% 1.6% 1.9%
Industrial Goods and Services MIDAS SP Midas Holdings 0.38 TAT SP Tat Hong Holdings 1.33
6.5% 527.3x 14.2% 10.1x
210
November 29, 2012
Figure 61: Singapore Valuation - cont'd

BBG code Company name CD SP MRT SP SPH SP ASL SP COS SP CSE SP EZI SP EZRA SP MMT SP OTML SP SMM SP SOH SP SWIB SP YZJ SP ARA SP BS SP CAPL SP CMA SP CIT SP FNN SP GLP SP HOBEE SP KPLD SP OUE SP SL SP UEM SP UOL SP WP SP WINGT SP AREIT SP ART SP CACHE SP CCT SP CT SP CDREIT SP FCT SP FCOT SP KREIT SP Land Transport ComfortDelGro SMRT Corporation Media Singapore Press Holdings Oil Equipment and Services ASL Marine Cosco Corporation CSE Global Ezion Holdings Ezra Holdings Mermaid Maritime Otto Marine Sembcorp Marine STX OSV Swiber Holdings Yangzijiang Shipbuilding Property ARA Asset Management Bukit Sembawang Estates CapitaLand CapitaMalls Asia City Developments Fraser & Neave Global Logistic Properties Ho Bee Investments Keppel Land Overseas Union Enterprise Singapore Land United Engineers UOL Group Wheelock Properties (S) Wing Tai Holdings REITS Ascendas REIT Ascott Residence Trust Cache Logistics Trust Capitacommercial Trust CapitaMall Trust CDL Hospitality Trust Frasers Centrepoint Trust Frasers Commercial Trust Keppel REIT
Closing Price 1.68 1.69 4.09 0.64 0.90 0.80 1.40 1.04 0.32 0.08 4.40 1.36 0.59 0.91 1.63 5.77 3.46 1.91 11.52 9.42 2.63 1.60 3.47 2.59 6.79 2.52 5.56 1.84 1.72 2.38 1.29 1.20 1.60 2.07 1.92 1.98 1.24 1.22
Target % up / price (down) 1.76 1.78 4.39 0.85 0.88 1.06 1.68 1.55 0.44 0.07 5.01 1.47 0.84 0.75 1.81 6.45 4.02 1.99 10.80 9.85 2.93 1.93 4.00 3.38 8.44 3.13 6.55 2.00 2.00 2.68 1.38 1.36 1.69 2.23 2.15 2.18 1.37 1.26 5% 5% 7% 33% -2% 34% 20% 49% 41% -20% 14% 8% 42% -17% 12% 12% 16% 4% -6% 5% 12% 21% 15% 30% 24% 24% 18% 9% 17% 12% 7% 14% 6% 8% 12% 10% 11% 3%
Recom. Neutral Underperform Outperform Outperform Neutral Outperform Outperform Outperform Outperform Underperform Neutral Neutral Outperform Underperform Outperform Outperform Outperform Neutral Underperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Outperform Neutral Outperform Outperform Neutral Outperform Underperform Underperform Neutral Outperform Outperform Neutral
Free Float (%) 82% 38% 90% 37% 36% 86% 70% 64% 49% 51% 37% 28% 70% 38% 53% 41% 60% 30% 55% 59% 49% 24% 53% 33% 30% 80% 50% 20% 48% 81% 41% 88% 68% 70% 67% 38% 75% 23%
Market Cap (US$m) 2,879 2,104 5,343 221 1,650 336 988 833 202 190 7,519 1,314 294 2,839 1,022 1,223 12,040 6,079 8,575 11,103 10,241 912 4,386 1,929 2,293 626 3,502 1,802 1,099 4,359 1,203 687 3,712 5,645 1,519 1,331 654 2,628
Month end Dec 11 Mar 12 Aug 12 Jun 12 Dec 11 Dec 11 Dec 11 Aug 12 Sep 11 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Mar 12 Dec 11 Dec 11 Dec 11 Sep 11 Mar 12 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Jun 12 Mar 12 Dec 11 Dec 11 Dec 11 Dec 11 Dec 11 Sep 12 Sep 12 Dec 11
Price/ BVPS (X) 2012 2013 2014 1.73x 3.08x 2.90x 0.73x 1.48x 1.64x 1.93x 0.77x 0.49x 0.63x 3.47x 2.23x 0.72x 1.11x 5.57x 1.23x 0.95x 1.12x 1.51x 1.82x 1.21x 0.63x 0.90x 0.76x 0.62x 0.61x 0.79x 0.75x 0.62x 1.23x 0.92x 1.28x 0.99x 1.29x 1.20x 1.29x 0.81x 0.96x 1.63x 2.88x 2.90x 0.68x 1.42x 1.41x 1.60x 0.68x 0.47x 0.65x 3.20x 2.04x 0.65x 0.99x 5.53x 1.08x 0.93x 1.10x 1.42x 1.70x 1.16x 0.59x 0.86x 0.75x 0.60x 0.59x 0.75x 0.73x 0.59x 1.22x 0.94x 1.29x 0.99x 1.28x 1.20x 1.29x 0.83x 0.97x 1.53x 2.69x 2.90x 0.63x 1.36x 1.22x 1.25x 0.64x na 0.66x 2.92x 1.75x 0.57x 0.90x 5.46x 0.95x 0.89x 1.07x 1.31x 1.58x 1.04x 0.55x 0.82x 0.73x 0.58x 0.55x 0.71x 0.71x 0.56x 1.22x 0.96x 1.30x 0.99x 1.28x 1.20x 1.29x 0.84x 0.97x
2-Yr ROAE (recurring) % P/E (Recurrent FD) (X) forward 2012 2013 2014 2012 2013 2014 EPS Cagr 12.9% 16.6% 16.7% 8.9% 8.2% 21.7% 16.5% 5.4% 1.6% -19.4% 23.5% 30.9% 10.7% 27.0% 35.7% 16.4% 2.3% 3.7% 6.8% 8.5% 4.7% 8.0% 9.1% 3.3% 4.6% 3.4% 6.0% 3.8% 8.8% 7.7% 4.8% 8.2% 4.4% 5.8% 7.1% 7.0% 2.1% 3.7% 12.2% 16.9% 17.6% 10.1% 7.7% 22.2% 22.0% 7.5% 4.1% -3.4% 20.3% 28.7% 11.7% 15.4% 33.5% 16.8% 4.3% 4.0% 8.8% 10.4% 5.0% 6.5% 6.9% 3.8% 5.1% 5.9% 6.8% 4.6% 8.6% 7.5% 5.3% 8.4% 4.6% 6.0% 7.2% 7.2% 3.6% 4.2% 12.0% 16.9% 18.4% 10.1% 7.5% 21.9% 24.3% 8.3% na -2.7% 23.1% 24.5% 11.9% 12.8% 34.4% 14.8% 6.5% 4.7% 9.9% 10.7% 5.1% 8.2% 6.9% 4.7% 5.4% 8.5% 6.7% 6.1% 6.8% 7.7% 5.6% 9.0% 4.5% 6.5% 7.4% 7.4% 4.1% 4.6% 13.9x 19.0x 17.4x 8.5x 18.5x 8.3x 15.7x 16.6x 31.6x -2.8x 15.4x 7.0x 8.4x 4.5x 16.9x 8.0x 47.0x 31.5x 22.9x 22.1x 27.0x 8.3x 11.0x 24.0x 13.6x 17.2x 13.5x 20.0x 7.4x 16.3x 19.5x 15.7x 22.4x 22.6x 17.0x 18.9x 40.7x 26.2x 13.7x 17.6x 16.5x 7.0x 18.9x 6.8x 8.1x 10.6x 11.7x -19x 16.4x 7.4x 7.4x 6.8x 16.6x 6.8x 24.5x 27.4x 16.5x 17.0x 23.7x 9.4x 12.7x 19.7x 11.9x 10.0x 11.4x 16.3x 7.1x 16.2x 17.5x 15.3x 21.5x 21.3x 16.7x 17.9x 22.9x 22.9x 13.2x 16.5x 15.8x 6.4x 18.5x 6.0x 5.8x 8.7x na -24.3x 13.2x 7.7x 6.5x 7.4x 16.0x 6.8x 15.7x 22.9x 13.7x 15.3x 21.5x 7.0x 12.1x 15.7x 10.9x 6.7x 10.9x 11.8x 8.5x 15.8x 17.1x 14.4x 21.8x 19.7x 16.2x 17.5x 20.3x 21.0x 4.0% 6.0% 2.0% 18.4% -12.6% 47.2% 57.2% 37.1% N.A. -61.8% -14.0% -22.6% 20.6% -19.6% 2.7% 24.6% 37.9% 28.6% 4.9% 20.5% 33.1% -4.9% 23.3% -43.8% 2.8% -45.6% -15.8% -16.0% -2.2% 4.3% 6.8% 3.8% 6.6% 8.5% 2.7% 17.4% 52.3% 24.7%
Net Gearing Net Div Yield % FY12 FY13 2012 2013 4% -6% 39% 52% 65% 7% 94% 110% 11% 171% -23% 25% 103% 33% -41% -2% 46% 43% 30% 28% 31% 35% 23% 54% 8% 88% 29% -25% 17% 61% 58% 43% 43% 53% 30% 44% 22% 69% 2% 31% 45% 54% 57% -6% 99% 90% 5% 190% 3% 17% 113% 38% -41% 7% 45% 59% 22% 21% 33% 25% 14% 54% 4% 77% 23% -25% 2% 49% 61% 58% 45% 47% 31% 45% 41% 73% 3.6% 3.6% 5.9% 2.9% 2.4% 5.0% 0.1% 2.5% 0.0% 0.0% 5.0% 16.4% 0.0% 5.5% 3.1% 3.1% 1.3% 1.6% 1.3% 1.9% 1.4% 3.1% 2.9% 2.1% 2.9% 4.0% 1.6% 3.3% 4.4% 5.8% 6.8% 6.8% 5.0% 4.7% 6.0% 5.1% 5.7% 6.4% 3.6% 3.4% 6.1% 3.1% 2.4% 5.7% 0.1% 2.1% 0.0% 0.0% 4.7% 5.0% 2.7% 3.7% 3.1% 2.8% 2.3% 1.6% 1.5% 1.9% 1.4% 3.1% 2.6% 2.5% 2.9% 4.0% 1.9% 3.3% 4.2% 6.1% 7.2% 7.2% 5.1% 4.9% 6.1% 5.4% 6.5% 6.3%
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Figure 62: Singapore Valuation - cont'd

BBG code Company name MCT SP MINT SP MLT SP PREIT SP PCRT SP SGREIT SP SUN SP REITS - cont'd Mapletree Commercial Trust Mapletree Industrial Trust Mapletree Logistics Trust Parkway Life REIT Perennial China Retail Trust Starhill Global REIT Suntec REIT
Closing Price 1.21 1.38 1.10 2.13 0.49 0.75 1.55 1.86 1.30 1.11 4.00 0.50 0.25 0.28 0.81 0.47 7.65 2.70 3.17 3.63 2.77 0.32 1.24 1.28 3,012
Target % up / price (down) 1.39 1.50 1.21 2.28 0.59 0.83 1.72 2.10 1.29 1.12 0.84 0.56 0.29 0.27 0.74 0.59 9.55 2.96 3.22 4.35 2.82 0.48 1.20 1.41 15% 8% 11% 7% 21% 10% 11% 13% -1% 1% -79% 13% 18% -2% -9% 25% 25% 10% 2% 20% 2% 51% -3% 11%
Recom. Outperform Neutral Neutral Neutral Outperform Neutral Neutral Neutral Underperform Underperform Underperform Neutral Neutral Underperform Underperform Outperform Outperform Neutral Underperform Outperform Neutral Outperform Neutral Neutral
Free Float (%) 81% 70% 59% 64% 51% 71% 95% 58% 14% 30% 40% 25% 56% 37% 16% 21% 70% 39% 44% 33% 56% 20% 25% 30%
Market Cap (US$m) 1,853 1,841 2,175 1,055 452 1,193 2,843 809 586 2,351 674 221 102 94 580 825 1,718 2,018 41,373 5,098 2,517 2,448 12,396 862
Month end Mar 12 Mar 12 Mar 12 Dec 11 Dec 11 Dec 11 Dec 11 Jun 12 Dec 11 Dec 11 Dec 11 Jun 12 Dec 11 Dec 11 Dec 11 Jun 12 Dec 11 Dec 11 Mar 12 Dec 11 Mar 12 Dec 11 Dec 11 Dec 11
Price/ BVPS (X) 2012 2013 2014 1.27x 1.36x 1.21x 1.43x 0.80x 0.87x 0.78x 2.51x 1.65x 1.03x 0.39x 1.40x 1.25x 0.52x 1.17x 7.37x 1.16x 7.05x 2.09x 127x 2.14x 0.87x 1.66x 1.10x 1.28x 1.36x 1.21x 1.43x 0.76x 0.87x 0.79x 2.19x 1.50x 1.01x 0.45x 1.28x 1.16x 0.51x 1.10x 6.04x 1.18x 6.34x 1.99x 168x 2.09x 0.80x 1.52x 0.97x 1.28x 1.36x 1.21x 1.43x 0.80x 0.87x 0.79x 1.88x 1.37x 0.93x 0.52x 1.15x 1.06x 0.49x 1.04x 5.06x 1.16x 5.79x 1.89x 91.4x 1.98x 0.73x 1.38x 0.90x
2-Yr ROAE (recurring) % P/E (Recurrent FD) (X) forward 2012 2013 2014 2012 2013 2014 EPS Cagr 6.0% 8.5% 8.1% 6.8% -0.7% 5.5% 3.7% 17.6% 13.7% -9.8% -18.4% 18.6% 13.8% 1.5% 3.4% 57.9% 7.6% 45.4% 14.8% 992% 12.5% 7.3% 9.2% 5.9% 6.4% 8.6% 8.0% 7.0% 1.5% 6.2% 3.1% 19.1% 14.0% -6.6% -15.2% 18.4% 14.5% 6.1% 7.9% 49.1% 9.2% 45.2% 14.8% 896% 14.1% 8.2% 8.4% 9.9% 6.7% 8.9% 8.2% 7.7% 2.7% 6.4% 3.4% 20.1% 13.6% 8.9% -12.2% 21.0% 17.0% 7.9% 8.4% 44.5% 10.9% 42.3% 15.3% 815% 14.8% 8.7% 9.4% 6.0% 21.2x 16.2x 15.4x 21.0x -104x 15.7x 20.9x 17.4x 12.6x -9.8x -1.9x 7.6x 9.1x 35.0x 33.9x 14.4x 15.6x 16.1x 14.3x 17.5x 17.2x 12.9x 21.6x 19.4x 19.8x 15.8x 15.1x 20.6x 53.1x 14.0x 25.0x 15.4x 11.2x -15.5x -2.8x 7.3x 8.3x 8.4x 14.3x 13.5x 13.3x 14.8x 13.8x 16.1x 15.5x 10.7x 18.8x 10.4x 19.1x 15.3x 14.9x 18.7x 29.2x 13.6x 23.3x 12.6x 10.5x 10.9x -4.0x 5.8x 6.5x 6.3x 12.7x 12.4x 11.2x 14.3x 12.7x 14.5x 14.2x 9.3x 15.4x 15.5x 14.8% 5.2% 4.4% 4.0% N.A. 8.8% -24.2% 8.6% 3.5% -42.6% 17.9% -13.0% 15.2% 15.7% 27.8% 12.0% 2.1% 0.3% -0.6% 10.6% 8.8% 7.7% -11.3% 23.3%
Net Gearing Net Div Yield % FY12 FY13 2012 2013 60% 57% 52% 63% 24% 41% 57% 13% 65% 140% 230% 11% -10% 53% -1% -32% -19% 68% 32% 710% -19% 6% -33% 20% 61% 57% 56% 74% 63% 40% 61% 8% 63% 163% 322% 1% -10% 56% 15% -42% -17% 64% 27% 980% -19% 2% -41% 26% 5.0% 6.4% 6.5% 4.7% 7.9% 5.9% 6.0% 1.9% 2.5% 0.0% 1.3% 4.1% 6.5% 4.5% 0.8% 4.2% 7.2% 4.1% 4.9% 5.5% 5.6% 0.0% 0.8% 1.6% 5.3% 6.6% 6.7% 5.1% 7.8% 6.7% 5.9% 1.4% 2.8% 0.4% 1.3% 5.6% 6.5% 4.5% 3.1% 4.5% 7.2% 4.4% 5.1% 6.6% 4.7% 0.0% 0.8% 2.9%
Services GPACK SP Goodpack KPTT SP Keppel T&T NOL SP STX SP AMTK SP ARMS SP BWAY SP HIP SP SILV SP VMS SP M1 SP ST SP STH SP SATS SP Shipping Neptune Orient Lines STX Pan Ocean Technology Amtek Engineering Armstrong Industrial Broadway Industrial Hi-P International Silverlake Axis Ltd Venture Corporation Telecommunications M1 Limited SingTel StarHub Transport Infrastructure SATS Ltd
Travel and Leisure GENHK SP Genting Hong Kong GENS SP Genting Singapore HYF SP FSSTI Utilities Hyflux
Note: Calendarized data unless otherwise stated

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Distribution of stock ratings and investment banking clients for quarter ended on 31 October 2012 805 companies under coverage Rating Distribution (%) Outperform/Buy/Trading Buy Neutral Underperform/Sell/Trading Sell 55.6% 33.6% 10.9% Investment Banking clients (%) 6.1% 1.9% 4.8%
Recommendation Framework #1 *
Stock
OUTPERFORM: The stock's total return is expected to exceed a benchmark's total return by 5% or more over the next 12 months. NEUTRAL: The stock's total return is expected to be within +/-5% of a benchmark's total return. UNDERPERFORM: The stock's total return is expected to be below a benchmark's total return by 5% or more over the next 12 months. TRADING BUY: The stock's total return is expected to exceed a benchmark's total return by 5% or more over the next 3 months. TRADING SELL: The stock's total return is expected to be below a benchmark's total return by 5% or more over the next 3 months. relevant relevant relevant relevant relevant
Sector
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 12 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 3 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 3 months.
* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand, Jakarta Stock Exchange, Australian Securities Exchange, Korea Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. CIMB Research Pte Ltd (Co. Reg. No. 198701620M)
Recommendation Framework #2 **
Stock
OUTPERFORM: Expected positive total returns of 10% or more over the next 12 months. NEUTRAL: Expected total returns of between -10% and +10% over the next 12 months. UNDERPERFORM: Expected negative total returns of 10% or more over the next 12 months. TRADING BUY: Expected positive total returns of 10% or more over the next 3 months. TRADING SELL: Expected negative total returns of 10% or more over the next 3 months.
Sector
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +10% or better over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i) an equal number of stocks that are expected to have total returns of +10% (or better) or -10% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +10% to -10%; both over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -10% or worse over the next 12 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +10% or better over the next 3 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -10% or worse over the next 3 months.
** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.
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November 29, 2012
Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2011.
AAV not available, ADVANC - Excellent, AMATA - Very Good, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCH - Good, BEC - Very Good, BECL - Very Good, BGH - not available, BH - Very Good, BIGC - Very Good, BTS - Very Good, CCET - Good, CK - Very Good, CPALL - Very Good, CPF - Very Good, CPN Excellent, DELTA - Very Good, DTAC - Very Good, GLOBAL - not available, GLOW - Very Good, GRAMMY Excellent, HANA - Very Good, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH Very Good, ITD - Good, IVL - Very Good, JAS Very Good, KAMART not available, KBANK - Excellent, KK Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR - Very Good, MCOT - Excellent, MINT - Very Good, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - not available, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, RS Excellent, SC Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI - Very Good, SPALI - Very Good, STA - Very Good, STEC - Very Good, TCAP - Very Good, THAI - Very Good, THCOM Very Good, TICON Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Very Good, TUF - Very Good, WORK Good.
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Analysts Coverage
Kenneth NG, CFA (Head of Equity Research) +65 6210-8610 kenneth.ng@cimb.com Strategy Banking & Finance DBS Group Holdings Oversea-Chinese Banking Corporation Singapore Exchange United Overseas Bank Ltd Jonathan NG (Dy Head of Equity Research) +65 6210-8650 jonathan.ng@cimb.com Technology Amtek Engineering Ltd Armstrong Industrial Corp Broadway Industrial Group Hi-P International Venture Corporation Ltd Donald CHUA / Syn Yi LEE +65 6210-8606 donald.chua@cimb.com +65 6210-8685 synyi.lee@cimb.com Property Bukit Sembawang CapitaLand Ltd CapitaMalls Asia Ltd City Developments Ltd Fraser & Neave Ltd Global Logistic Properties Ho Bee Investment Keppel Land Overseas Union Enterprise Singapore Land Ltd UOL Group United Engineers Ltd Wheelock Properties (S) Ltd Wing Tai Holdings Ltd Property (REIT) Ascott Residence Trust Cache Logistics Trust Parkway Life REIT Perennial China Retail Trust Starhill Global REIT Siew Ling TAN +65 6210-8698 siewling.tan@cimb.com Property ARA Asset Management Property (REIT) Ascendas REIT Capitacommercial Trust CapitaMall Trust CDL Hospitality Trust Fraser Centrepoint Trust Fraser Commercial Trust Keppel Reit Mapletree Commercial Trust Mapletree Industrial Trust Mapletree Logistics Trust Suntec REIT
Singapore
Gary NG +65 6210-8699 gary.ng@cimb.com Healthcare Biosensors International IHH Healthcare Raffles Medical Industrial (Water Treatment) Hyflux Ltd Industrial Tat Hong Holdings Yongnam Holdings Ltd William TNG +65 6210-8676 william.tng@cimb.com Technology Silverlake Axis Ltd Kelvin GOH, CFA +60 (3) 2084 9699 kelvin.goh@cimb.com Telecommunications M1 Ltd Singapore Telecoms Ltd Starhub Ltd Raymond YAP, CFA +60 (3) 2084-9769 raymond.yap@cimb.com Transport & Logistics (Shipping) Neptune Orient Lines STX Pan Ocean Ivy NG, CFA +60 (3) 2084-9697 ivy.ng@cimb.com Plantations Golden Agri Indofood Agri Wilmar International Lucius CHONG +60 (3) 2084-9869 lucius.chong@cimb.com Gaming Genting Singapore Genting Hong Kong Gloria TSUEN +852 2532-1129 gloria.tsuen@cimb.com Retail Parkson Retail Asia Andrew ORCHARD + 852 2593-1331 andrew.orchard@cimb.com Transport & Logistics (Airlines & Aviation) Singapore Airlines
Siew Khee LIM +65 6210-8664 siewkhee.lim@cimb.com Conglomerates Keppel Corporation SembCorp Industries ST Engineering Ltd Offshore & Marine Cosco Corporation Ezra Holdings Ltd SembCorp Marine Ltd Swiber Holdings Yangzijiang Shipbuilding Transport & Logistics (Airlines & Aviation) SIA Engineering Company Zhi Bin YEO +65 6210-8669 zhibin.yeo@cimb.com Offshore & Marine ASL Marine Holdings Ltd Ezion Holdings Ltd Mermaid Maritime PCL Otto Marine Ltd STX OSV Oil Equipment and Services CSE Global PEC Ltd Rotary Engineering Retail Dairy Farm Int'l Wen Ching LEE +65 6210-8604 wenching.lee@cimb.com Commodities Mewah International Noble Group Ltd Olam International Petra Foods Transport ComfortDelgro Corporation SMRT Corporation Ltd SATS Ltd Daniel LAU +65 6210-8614 daniel.lau@cimb.com Commodities CWT Ltd Services (Logistics) Goodpack Ltd Keppel Tel & Trans Industrial Midas Holdings Ltd Transport & Logistics (Airlines & Aviation) Tiger Airways Holdings Ltd Mou Hua LEE +65 6210 8600 mouhua.lee@cimb.com Brewers Thai Beverage Food & Beverage China Minzhong Food Corp Super Group Media Singapore Press Holdings Retail Sheng Siong Group
Economics Research / Regional Strategy

Seng Wun SONG (Regional Economist) +65 6210-8602 sengwun.song@cimb.com Regional Economics Singapore, Hong Kong/China Chiou Yi CHANG (Regional Strategist) +65 6210-8693 chiouyi.chang@cimb.com Regional Strategy Dylan CHEANG (Regional Strategist) +65 6210-8609 dylan.cheang@cimb.com Regional Strategy
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Asia
Malaysia 10th Floor, Bangunan CIMB Jalan Semantan Damansara Heights 50490 Kuala Lumpur T: +60 (3) 2084 8888 F: +60 (3) 2084 8899 Thailand 44 CIMB, Thai Bank Building 24-25th Floor, Soi Langsuan Lumpini, Patumwan, Bangkok 10330 T: +66 (2) 657-9000 F: +66 (2) 657-9111 Sri Lanka Level 33, West Tower World Trade Center Echelon Square Colombo 01 Singapore 50 Raffles Place #19-00 Singapore Land Tower (S048623) T: +65 6225-1228 F: +65 6224-6906 Indonesia The Indonesia Stock Exchange Building Tower II, 20th Floor Jl. Jend. Sudirman, Kav. 52-53 Jakarta 12190 T: +62 (21) 515-1330 F: +62 (21) 515-1335 China Unit 802 AZIA Center 1233 Lujiazui Ring Road Pudong New District Shanghai 200120 T: +86 (21) 6194-0212 / +86 (21) 6194-0218 Philippines SB Equities, Inc, a strategic partner with CIMB Securities 18F Security Bank Centre 6776 Ayala Ave. Makati 0719 T: +63 (2) 891-1243 / +63 (2) 891-1258 F: +63 (2) 813-3349 India*
Hong Kong Units 7706-08, Level 77 International Commerce Centre 1 Austin Road West Kowloon T: +852 2868-0380 F: +852 2537-1928 Sri Lanka John Keells Stock Brokers (Pvt) Ltd, a strategic partner with CIMB Securities 130 Glennie Street Colombo 00200 T: +94 (0) 11 230 6271 F: +94 (0) 11 234 2068
Taiwan* * We are currently in the process of establishing offices in India, Korea and Taiwan
Korea*
Europe
United Kingdom (2719607) 27 Knightsbridge London, SW1X 7YB T: +44 (20) 7201-2199 F: +44 (20) 7201-2191
Americas
USA (52-1971703) 540 Madison Avenue 11th Floor, New York, N.Y. 10022 T: +1 (212) 616 8600 F: +1 (212) 616 8639
Australia
Sydney Level 29, Aurora Place 88 Phillip Street Sydney, NSW 2000 +61 2 9694 5000 Melbourne Level 32, 101 Collins St Melbourne, VIC 3000 +61 3 9631 1000
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Navigating Singapore 2013

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Navigating Singapore 2013

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NAVIGATING SINGAPORE

November 29, 2012

Company Briefs .......................................................................................................................... 37 Appendices ............................................................................................................................... 209

CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

MICA (P) 048/02/2012

November 29, 2012

SHORT TERM (3 MTH)

Step out of the comfort zone

Figure 1: Ratio of defensive stocks P/Es to cyclicals P/E (x)

Singapore Research Team

SOURCE: CIMB Research

Highlighted Companies CapitaLand

Four themes for 2013

Stocks that we love

KEY CHARTS The world has its problems, so does Singapore

Transport Currency exchange

These are reflected in -1SD valuations

16.0% 15.0% 14.0% Core ROE 13.0% 12.0%

11.0% 10.0% 9.0% 8.0%

and polarisation of valuation multiples

OVERWEIGHT Commodities Capital Goods Property

NEUTRAL Financials Telcos Transport

UNDERWEIGHT REITs Gaming

Step out of the comfort zone

Other favored stocks

Capitaland AREIT Starhub

GLP FCOT MCT

Keppel Corp ST Engineering

Wilmar Dairy Farm

CWT Tat Hong

SOURCE: CIMB, COMPANY REPORTS

Figure 2: CIMB top picks for 2013

SOURCE: CIMB Research

Step out of the comfort zone

1. EXECUTIVE SUMMARY 1.1 Downgrade Singapore to Neutral

1.2 Singapore has its own set of problems

1.3 Polarisation in valuation multiples & 2013 strategies

1.4 What are 2013s big risks?

2. CHALLENGES IN THIS ENVIRONMENT 2.1 Intermediate challenges are still daunting

2.2 Oil prices and interest rates

Figure 4: Exceptionally low interest rates to remain until 2015

5% dow n over 2013

SOURCES: CIMB, Bloomberg

SOURCES: CIMB, Bloomberg

2.3 Singapore has its share of headaches

Figure 6: Total CPF balance (S$bn)

OCR (units) RCR (units) CCR (units)

CPF Cash Balance

SOURCES: CIMB, URA

Figure 7: Money raised from Singapores debt markets (S$bn)

11.4 10 6.5 5 4.1 3.8 8.8 5.8 5.9

SOURCES: CIMB, Bloomberg

SOURCES: CIMB, Bloomberg

Figure 9: Singapores real interest rates are deeply negative

Figure 10: Wealth per household (S$'000)

SOURCES: CIMB, Bloomberg

SOURCES: CIMB Research, MAS

2.4 Coping with costlier labour

SOURCES: CIMB, Department of Statistics

Figure 13: Firmer wages and service costs in non-tradable sectors

-40000 1Q05 1Q06

GDP grow th (RHS) 1Q10 1Q11 1Q12

MAS Core Jan-12 Jul-12

SOURCES: CIMB, CEIC