Singapore Company Guide

ARA Asset Management

Version 4

Refer to important disclosures at the end of this report

| Bloomberg: ARA SP | Reuters: ARAM.SI

DBS Group Research . Equity

3 Aug 2016

BUY

Delivering as promised
Positioned to grow, BUY. Flushed with proceeds from the
recent rights issue, ARA Asset Management (ARA) is well
positioned to capture AUM through the launch of new fund
products with capital partners. We expect ARA to grow AUM
by S$2bn per annum. In addition, its staple of REITs under
management has more than S$5bn in acquisition capacity
which can be utilised to acquire and grow its AUM. We
maintain our BUY call and TP of S$1.76. It currently trades at
15x FY17E PE, at the lower end of historical range, and implied
EV/AUM multiple of 4.2%, below -1SD of its historical range.

Last Traded Price: S$1.32 (STI : 2,856.67)

Price Target 12-mth : S$1.76 (33% upside)
Potential Catalyst: New funds
Where we differ: We project S$2bn in AUM per annum
Analyst
Rachel TAN +65 6682 3713 racheltanlr@dbs.com
Derek TAN +65 6682 3716 derektan@dbs.com

Whats New

1H16 NP +9% y-o-y from higher fees and

distribution income

Obtained US$500m additional capital for CIP and

established ARA-ShinYoung REIT No.2

S$0.8bn increase in AUM; on track to meet target

Price Relative
S$

Relative Index

1H16 results recorded strong growth; obtained US$500m

additional capital for CIP. ARA reported 9% y-o-y increase in
1H16 net profit to S$39m, in line at 47% of our FY16E
estimates, mainly led by higher management fees (+10%) and
distribution income (+67%). ARA obtained US$500m
additional capital for CIP and established its 2nd ARAShinYoung REIT, growing its AUM by S$0.8bn, on track to
meet annual target of S$2bn.

2.1
207

1.9

187
1.7
167
1.5

147

1.3

127

1.1
0.9
Aug-12

107

Aug-13

Aug-14

ARA Asset Management (LHS)

Forecasts and Valuation

FY Dec (S$ m)
Revenue
EBITDA
Pre-tax Profit
Net Profit
Net Pft (Pre Ex.)
Net Pft Gth (Pre-ex) (%)
EPS (S cts)
EPS Pre Ex. (S cts)
EPS Gth Pre Ex (%)
Diluted EPS (S cts)
Net DPS (S cts)
BV Per Share (S cts)
PE (X)
PE Pre Ex. (X)
P/Cash Flow (X)
EV/EBITDA (X)
Net Div Yield (%)
P/Book Value (X)
Net Debt/Equity (X)
ROAE (%)

Aug-15

87
Aug-16

Relative STI INDEX (RHS)

2015A
156
102
95.5
78.1
78.1
(10.8)
8.96
8.96
(11)
8.96
5.00
59.8
14.7
14.7
50.0
10.4
3.8
2.2
CASH
18.1

Earnings Rev (%):

Consensus EPS (S cts):
Other Broker Recs:

2016F
165
102
101
82.6
82.6
5.8
8.28
8.28
(8)
8.28
5.00
55.5
15.9
15.9
16.8
12.2
3.8
2.4
CASH
15.4

2017F
174
106
105
86.2
86.2
4.4
8.65
8.65
4
8.65
5.00
59.1
15.3
15.3
16.2
11.9
3.8
2.2
CASH
15.1

2018F
192
115
115
94.1
94.1
9.1
9.44
9.44
9
9.44
5.00
63.5
14.0
14.0
15.1
11.0
3.8
2.1
CASH
15.4

8.30
B: 2

8.60
S: 0

8.80
H: 0

Source of all data on this page: Company, DBS Bank, Bloomberg

Finance L.P

ASIAN INSIGHTS
ed: TH / sa:YM

Country desk strategy in target markets of China, South Korea

and Australia. We are positive about the groups focus on
establishing a Country Desk Strategy. Apart from deepening
its local expertise and gaining access to deals, we believe that
it gives them the ability to cement relationships with brokers,
corporates and capital partners. In addition, we believe that
ARA stands ready to capture demand from onshore investors
looking to invest outside of their home country.
Valuation:
We maintain our BUY call but raise our TP to S$1.76 based on
(i) 18x PE on its FY16F recurring fee income; and (ii) market
price of its REITs and capital committed to its private funds.
Key Risks to Our View:
Execution risk. Given pre-determined timeframes for most of
its private funds, assuming a prolonged downturn, ARAs
funds could be divesting in a down-cycle.
At A Glance
Issued Capital (m shrs)
Mkt. Cap (S$m/US$m)
Major Shareholders (%)
Straits Trading
Hwee Chiang Lim
Franklin Resources
Free Float (%)
3m Avg. Daily Val (US$m)
ICB Industry : Financials / General Financial

997
1,316 / 981
20.1
18.9
11.0
32.6
0.47

VICKERS SECURITIES

Company Guide
ARA Asset Management

WHATS NEW
Delivering as promised
1H16 NP recorded strong growth from higher
management fees and distribution income. ARA reported
a 9% y-o-y increase in net profit to S$39m in 1H16, in line at
47% of our FY16E estimates. Adjusted net profit (ex-one off
gains) grew 7% to S$37m. The strong growth was led by a
10% increase in revenue mainly led by higher management
fees (+10%) and distribution income (+67%), offset by higher
operating expenses (+7%) and lower share of profits of
associates and JV (-59%) as there were acquisition fees from
Hui Xian REIT and higher income contribution from Cache
Property management were recorded in 1H15.
Strong management fee growth (+10%) was contributed
from all three areas: i) 4% y-o-y increase in REIT base
management fees following Suntec REITs acquisition of three
floors of strata office space at Suntec Tower Two and Caches
acquisition of three properties in Australia in 4Q15, ii) 38% yo-y increase in Portfolio management fees from CIP
(acquisition of two commercial properties in 4Q15), launch of
ARA Harmony Fund III and V and contribution from PIP, and
iii) 11% increase in real estate management fees mainly led
by AEI at Suntec City and CIP (two additional commercial
properties).
Operating margins improved y-o-y by 1.8ppt to 59%.

Additional US$500m of capital commitment (CIP) and

established 2nd ARA-ShinYoung REIT. On 1 July 2016, CIP
obtained additional capital commitment of US$500m,
enlarging its total capital to US$1.3bn. Management believes
the new capital could be deployed within the next 6-8
months. In July, ARA also established its 2nd ARA-ShinYoung
REIT (ARA-ShinYoung REIT No. 2) of KRW64bn (S$77m),
making a total of KRW107bn (S$129m).

S$0.8bn increase in AUM, on track to meet annual

target of S$2bn. ARA successfully increased its AUM by
S$0.8bn (including CIPs additional capital commitment and
ARA-ShinYoung REIT No. 2), on track to meet its annual
target of S$2bn.

Targets to establish PIP 2 and MIP 2 next year.

Management expects to fully deploy the funds in PIP and MIP
by end of this year and targets to establish PIP 2 and MIP 2
next year.

We maintain our BUY rating, TP of S$1.76. We believe

that ARA is well positioned to capture AUM through the
launch of new fund products with capital partners, post the
recent rights issue, to meet its longer-term target of reaching
S$40bn in AUM by 2020 by growing AUM by S$2bn per
annum. ARA currently trades at 15x FY17E PE, at the lower
end of its historical range, and implied EV/AUM multiple of
4.2%, below -1SD of its historical range.

Quarterly / Interim Income Statement (S$m)

FY Dec
Revenue
Other Oper. (Exp)/Inc
Operating Profit
Other Non Opg (Exp)/Inc

2Q2015

1Q2016

2Q2016

% chg yoy

% chg qoq

36.8

41.4

40.3

9.4

(2.8)

(16.2)

(16.9)

(16.4)

1.1

(3.0)

20.6

24.5

23.9

16.0

(2.6)

0.0

0.0

0.0

nm

nm

Associates & JV Inc

2.35

1.26

1.05

(55.5)

(17.1)

Net Interest (Exp)/Inc

(2.8)

(2.0)

(0.8)

70.7

58.3

0.0

0.0

0.0

nm

nm

Pre-tax Profit

20.2

23.8

24.1

19.6

1.2

Tax

(3.3)

(3.8)

(3.9)

18.2

2.0

Exceptional Gain/(Loss)

Minority Interest

(0.5)

(0.7)

(0.9)

106.9

36.1

Net Profit

16.4

19.4

19.3

17.5

(0.2)

Net profit bef Except.

16.4

19.4

19.3

17.5

(0.2)

EBITDA

23.0

25.8

24.9

8.6

(3.3)

Opg Profit Margins

55.9

59.2

59.3

Net Profit Margins

44.7

46.7

48.0

Margins (%)

Source of all data: Company, DBS Bank

ASIAN INSIGHTS
Page 2

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Company Guide
ARA Asset Management
AUM

CRITICAL DATA POINTS TO WATCH

34.3

32

30

Earnings Drivers:
Steady income stream from REITs/private funds. ARA is
estimated to derive c.55% of its revenues from management
fees (base fees, performance fees and acquisition fees) from its
REITs. Fees from its Private Funds and other property
management arm contribute the remaining 45%. Fee revenues
from its REITs, private funds are mainly recurring in nature and
offer strong income visibility to investors.

29.4

Country desk strategy in target markets of China, South Korea

and Australia. ARA has put in place experienced real estate
professionals as heads of its various key markets (China, Korea,
Australia, Malaysia, Japan, India/GCC) in which the group is
keen to deepen its real estate expertise through localisation and
thus gain further assess to deal flows in the respective markets.
Therefore, a combination of local real estate expertise and
insights, coupled with ARA's extensive reach to global capital
partners, will allow the group to remain nimble, anticipate
trends and capitalise on any opportunities that may arise. We
understand that the group is focusing on the China, South
Korea and Australia markets in the immediate term.

2017F

2018F

26.4

19.6
14.7
9.8
4.9
0.0
2014A

2015A

2016F

Operating Margins
0.6

0.61

0.61

0.61

0.6

2014A

2015A

2016F

2017F

2018F

0.62
0.50
0.37
0.25
0.12
0.00

Revenue Growth (S$m)

250.0

S$'m

Others

Private Funds

REITs

200.0
150.0
100.0
50.0
0.0
FY13

In 2016, we expect ARA to continue growing AUM either

through new funds or acquisition of properties by its REITs. We
target AUM growth of S$2bn per annum.

34

24.5

Multiple private fund launches to boost income. 2015 was a

busy year for ARA, as its managed REITs continued to grow
AUM, offering a steady source of recurring income and growth.
The group continues to expand its reach across new
geographies with the launch of its third private REIT in Korea
(ARA Shinyoung REIT, with an AUM of KRW43bn).
In the private funds business, ARA has (i) raised new
commitments for ARA Harmony Fund III which will invest in a
portfolio of commercial properties in Malaysia worth
MYR1.7bn, acquired from ADF1. ARA Harmony Fund III is
expected to have a fund life of five years after which the
investors will look to exit their investments, (ii) Harmony Fund V
which will undertake the development of Park Mall, (iii)
launched a new US$325m fund (PIP) via a separate account
backed by an Asian-based sovereign wealth fund, which adds
further credibility to the groups standing in the private equity
funds business, (iv) received additional capital commitments of
US$317.6m in new commitments (second reload), bringing total
commitments to US$800m. This is expected to contribute to the
groups earnings in 2016 onwards.

34

FY14

FY15

FY16F

FY17F

FY18F

17F

18F

Profit Growth (S$m)

100.0

S$ 'm

90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
13

14

15

16F

Sum of the parts (SOTP valuation)

F16F PATMI
Multiple
Stake in listed REITs
Stake in private funds
Fee Mgmt Business
S$74m
18x
Total Equity Value
Net Cash/(debt)
Less: Undrawn capital
(PE Funds)
Sum of the parts
Shares
Value / share

S$'m
176.8
284.6
1,324.3
1,785.8
62.6
(96.3)
1,752.1
997.3
1.76

Source: Company, DBS Bank

ASIAN INSIGHTS

VICKERS SECURITIES
Page 3

Company Guide
ARA Asset Management

Balance Sheet:
Conservative gearing. The group is expected to maintain a
leverage ratio of less than 10% over FY16-17. These loans are
largely taken to finance strategic stakes in the various private
equity funds and strategic units of the REITs that are held by the
group.

Leverage & Asset Turnover (x)

0.5
0.14
0.5

0.12
0.10

0.4

0.08

0.4

0.06
0.3
0.04

Capital to fund growth initiatives. Post raising new capital to

fund growth initiatives, ARA has close to S$100m in cash which
can be deployed towards other growth opportunities (seed
capital for existing funds or new funds) that the manager is
currently reviewing. ARA announced that as at 1Q16, the group
had invested close to S$200m as seed capital in its various
funds, with an unrealised gain of US$21.7m, implying a return
in the low- to mid-teens.

0.3

0.02
0.00

0.2
2014A

2015A

2016F

2017F

Gross Debt to Equity (LHS)

2018F

Asset Turnover (RHS)

ROE (%)
25.0%
20.0%
15.0%

Share Price Drivers:

Launch of new funds. A key driver of earnings growth will be
the launch of new private funds/REITs which will add to the
recurring income for the group. Management expects to be
able to deliver an estimated S$2bn in terms of AUM growth per
annum either from its private fund platform or REITs. Not priced
in is the potential performance fees derived from the complete
divestment of ADF1 which is expected to give a one-time boost
to earnings in FY16.
M&A to diversify and expand its real estate capability. Another
avenue for growth is through mergers and acquisitions (M&A)
of smaller asset managers in the region, which when executed
upon, will provide access and scale to existing and new markets
of the groups focus. ARA bought into a Korean-based asset
manager back in 2014 and is looking at potential deals in Japan
and Australia.

10.0%
5.0%
0.0%
2014A

2015A

2016F

2017F

2018F

Forward PE Band (x)

22.9

(x)

20.9

+2sd:20.7x

18.9

+1sd:18.9x

16.9

Avg:17.1x

14.9

1sd:15.3x
2sd:13.5x

12.9
10.9
Aug-12

Aug-13

Aug-14

Aug-15

Aug-16

PB Band (x)
(x)

Key Risks:
Reliance on key personnel. John Lim, founder of the group, is
instrumental in the running and management and has over
time built up a strong rapport with key global-based capital
partners in ARA private funds. He is also one of the largest
shareholders of the company. To minimise the perception of
key man risk for the group, ARA has over time built up and
empowered a credible management team to make key
strategic directions for the group.

7.3

+2sd:6.83x
6.3

+1sd:5.51x

5.3
4.3

Avg:4.18x

3.3

1sd:2.85x
2.3
1.3
Aug-12

2sd:1.53x
Aug-13

Aug-14

Aug-15

Aug-16

Source: Company, DBS Bank

Company Background
ARA Asset Management Limited (ARA) is a real estate fund
management company that focuses on the management of
public-listed real estate investment trusts. The group generates
income by earning a percentage of the value of the assets it
manages. ARA had S$29.8bn of assets under its management
as of 31 December 2015.

ASIAN INSIGHTS
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Company Guide
ARA Asset Management

Key Assumptions
FY Dec
AUM
Operating Margins

Segmental Breakdown
FY Dec
Revenues (S$m)
REIT
Private real estate Funds
Others
Total
Income Statement (S$m)
FY Dec
Revenue
Other Opng (Exp)/Inc
Operating Profit
Other Non Opg (Exp)/Inc
Associates & JV Inc
Net Interest (Exp)/Inc
Exceptional Gain/(Loss)
Pre-tax Profit
Tax
Minority Interest
Preference Dividend
Net Profit
Net Profit before Except.
EBITDA
Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Net Profit Gth (Pre-ex) (%)
Margins & Ratio
Opg Profit Margin (%)
Net Profit Margin (%)
ROAE (%)
ROA (%)
ROCE (%)
Div Payout Ratio (%)
Net Interest Cover (x)

2014A

2015A

2016F

2017F

2018F

26.4
0.60

30.0
0.61

32.0
0.61

34.0
0.61

34.0
0.60

2014A

2015A

2016F

2017F

2018F

100
48.4
24.6
173

98.2
42.8
15.0
156

98.5
53.8
12.7
165

99.7
61.2
12.7
174

103
76.2
12.7
192

2014A

2015A

2016F

2017F

2018F

173
(70.7)
102
0.0
4.31
(3.1)
0.0
104
(12.9)
(3.2)
0.0
87.5
87.5
107

156
(61.5)
94.5
0.0
7.47
(6.6)
0.0
95.5
(14.1)
(3.3)
0.0
78.1
78.1
102

165
(70.1)
95.0
0.0
6.73
(0.6)
0.0
101
(15.2)
(3.4)
0.0
82.6
82.6
102

174
(74.4)
99.3
0.0
6.74
(0.6)
0.0
105
(15.8)
(3.4)
0.0
86.2
86.2
106

192
(83.5)
109
0.0
6.74
(0.6)
0.0
115
(17.2)
(3.5)
0.0
94.1
94.1
115

23.3
15.0
15.2
17.9

(9.8)
(4.4)
(7.7)
(10.8)

5.8
(0.3)
0.5
5.8

5.2
4.3
4.6
4.4

10.6
8.8
9.4
9.1

59.2
50.6
28.3
22.6
25.8
49.7
33.1

60.6
50.0
18.1
15.5
17.4
55.8
14.4

57.5
50.1
15.4
13.9
14.4
60.4
167.6

57.2
49.7
15.1
13.7
14.1
57.8
175.3

56.6
49.0
15.4
13.9
14.3
53.0
191.7

Steady returns from

Managed REITs

Mainly from dividends

from its stakes in the
REITs

Source: Company, DBS Bank

ASIAN INSIGHTS

VICKERS SECURITIES
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Company Guide
ARA Asset Management

Quarterly / Interim Income Statement (S$m)

FY Dec
2Q2015
3Q2015
Revenue
Other Oper. (Exp)/Inc
Operating Profit
Other Non Opg (Exp)/Inc
Associates & JV Inc
Net Interest (Exp)/Inc
Exceptional Gain/(Loss)
Pre-tax Profit
Tax
Minority Interest
Net Profit
Net profit bef Except.
EBITDA

4Q2015

1Q2016

2Q2016

36.8
(16.2)
20.6
0.0
2.35
(2.8)
0.0
20.2
(3.3)
(0.5)
16.4
16.4
23.0

38.2
(14.5)
23.8
0.0
0.70
(3.3)
0.0
21.2
(3.5)
(0.5)
17.1
17.1
24.5

46.2
(15.3)
30.9
0.0
1.16
(1.2)
0.0
30.8
(3.8)
(1.4)
25.6
25.6
32.0

41.4
(16.9)
24.5
0.0
1.26
(2.0)
0.0
23.8
(3.8)
(0.7)
19.4
19.4
25.8

40.3
(16.4)
23.9
0.0
1.05
(0.8)
0.0
24.1
(3.9)
(0.9)
19.3
19.3
24.9

(2.3)
(9.6)
(7.0)
(13.3)

3.9
6.6
15.4
3.9

20.7
30.8
29.8
49.6

(10.2)
(19.4)
(20.5)
(24.3)

(2.8)
(3.3)
(2.6)
(0.2)

100.0
55.9
44.7

100.0
62.1
44.7

100.0
66.8
55.4

100.0
59.2
46.7

100.0
59.3
48.0

Balance Sheet (S$m)

FY Dec

2014A

2015A

2016F

2017F

2018F

Net Fixed Assets

Invts in Associates & JVs
Other LT Assets
Cash & ST Invts
Inventory
Debtors
Other Current Assets
Total Assets

1.77
6.01
274
108
0.0
38.5
0.0
428

2.11
16.2
405
110
0.0
47.8
0.0
581

2.11
16.2
455
95.5
0.0
43.0
0.0
611

2.11
16.2
505
83.7
0.0
45.2
0.0
652

2.11
16.2
555
78.0
0.0
50.0
0.0
701

ST Debt
Creditor
Other Current Liab
LT Debt
Other LT Liabilities
Shareholders Equity
Minority Interests
Total Cap. & Liab.

34.2
32.7
11.1
0.16
1.32
341
6.99
428

0.05
25.0
12.4
14.1
1.95
520
7.30
581

0.05
16.4
15.2
14.1
1.95
553
10.6
611

0.05
16.4
15.8
14.1
1.95
589
14.1
652

0.05
16.4
17.2
14.1
1.95
634
17.5
701

(5.4)
73.5
76.0
N/A
N/A
0.4
1.9
1.9
CASH
CASH
0.0
11.0

10.5
96.1
100.9
N/A
N/A
0.3
4.2
4.2
CASH
CASH
0.0
14.8

11.3
81.3
100.4
N/A
N/A
0.3
4.4
4.4
CASH
CASH
0.0
18.5

12.9
69.5
92.6
N/A
N/A
0.3
4.0
4.0
CASH
CASH
0.0
18.3

16.3
63.8
90.4
N/A
N/A
0.3
3.8
3.8
CASH
CASH
0.0
17.9

Growth
Revenue Gth (%)
EBITDA Gth (%)
Opg Profit Gth (%)
Net Profit Gth (Pre-ex) (%)
Margins
Gross Margins (%)
Opg Profit Margins (%)
Net Profit Margins (%)

Non-Cash Wkg. Capital

Net Cash/(Debt)
Debtors Turn (avg days)
Creditors Turn (avg days)
Inventory Turn (avg days)
Asset Turnover (x)
Current Ratio (x)
Quick Ratio (x)
Net Debt/Equity (X)
Net Debt/Equity ex MI (X)
Capex to Debt (%)
Z-Score (X)

Net cash position

Source: Company, DBS Bank

ASIAN INSIGHTS
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Company Guide
ARA Asset Management

Cash Flow Statement (S$m)

FY Dec
Pre-Tax Profit
Dep. & Amort.
Tax Paid
Assoc. & JV Inc/(loss)
Chg in Wkg.Cap.
Other Operating CF
Net Operating CF
Capital Exp.(net)
Other Invts.(net)
Invts in Assoc. & JV
Div from Assoc & JV
Other Investing CF
Net Investing CF
Div Paid
Chg in Gross Debt
Capital Issues
Other Financing CF
Net Financing CF
Currency Adjustments
Chg in Cash
Opg CFPS (S cts)
Free CFPS (S cts)

2014A

2015A

2016F

2017F

2018F

104
0.0
(10.1)
(4.3)
1.52
11.4
102
0.0
(37.9)
0.0
2.22
0.0
(35.7)
(43.8)
3.12
0.0
(0.8)
(41.4)
0.33
25.4
11.6
11.7

95.5
0.0
(11.1)
(7.5)
(17.1)
(36.8)
23.0
0.0
(88.5)
0.0
(5.3)
0.0
(93.8)
(45.2)
(20.2)
151
(2.6)
82.7
0.49
12.3
4.60
2.64

101
0.0
(12.4)
(6.7)
(3.7)
0.0
78.4
0.0
(50.0)
0.0
6.73
0.0
(43.3)
(49.9)
0.0
0.0
0.0
(49.9)
0.0
(14.8)
8.23
7.86

105
0.0
(15.2)
(6.7)
(2.2)
0.0
81.3
0.0
(50.0)
0.0
6.74
0.0
(43.3)
(49.9)
0.0
0.0
0.0
(49.9)
0.0
(11.8)
8.38
8.15

115
0.0
(15.8)
(6.7)
(4.8)
0.0
87.5
0.0
(50.0)
0.0
6.74
0.0
(43.3)
(49.9)
0.0
0.0
0.0
(49.9)
0.0
(5.7)
9.25
8.77

Capital deployed for its

private funds

Source: Company, DBS Bank

Target Price & Ratings History

S$
1.66
1.56

1.46

6
2

1.36

1.26

Closing Price

12-mth
Target
Price

S.No.

Date

Rating

1:

11 Aug 15

1.60

1.78

BUY

2:

15 Sep 15

1.35

1.79

BUY

3:

05 Feb 16

1.08

1.57

BUY

4:

04 May 16

1.19

1.57

BUY

5:

31 May 16

1.40

1.57

BUY

6:

13 Jun 16

1.40

1.76

BUY

1.16
1.06

3
0.96
Aug-15

Dec-15

Apr-16

Aug-16

Note : Share price and Target price are adjusted for corporate actions.

Source: DBS Bank

Analyst: Rachel TAN

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VICKERS SECURITIES
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Company Guide
ARA Asset Management

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

Completed Date: 3 Aug 2016 07:17:42
Dissemination Date: 3 Aug 2016 08:41:49
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd,
its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated
in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,
the DBS Group)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to
change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard
to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of
addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal
or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of
profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This
document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or
persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group may have
positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and
other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it
may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no
obligation to update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned
schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED
UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a)
(b)

such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.
DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research
department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction
in the past twelve months and does not engage in market-making.

ASIAN INSIGHTS
Page 8

VICKERS SECURITIES

Company Guide
ARA Asset Management

ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in the report. The DBS Group has
procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of
research reports. As of 3 Aug 2016, the analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold
interests in the securities recommended in this report (interest includes direct or indirect ownership of securities). The research analyst(s)
responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and
procedures are in place to ensure that confidential information held by either the research or investment banking function is handled
appropriately.
COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1.

DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates do not have a proprietary
position in the securities recommended in this report as of 30 Jun 2016.

2.

DBS Bank Ltd does not market make in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.

Compensation for investment banking services:

3.

DBS Bank Ltd, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for
investment banking services from ARA Asset Management as of 30 Jun 2016.

4.

DBS Bank Ltd, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for
ARA Asset Management in the past 12 months, as of 30 Jun 2016.
DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a
manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further
information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document
should contact DBSVUSA exclusively.

RESTRICTIONS ON DISTRIBUTION
General

This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.

Australia

This report is being distributed in Australia by DBS Bank Ltd. (DBS) or DBS Vickers Securities (Singapore) Pte Ltd (DBSVS),
both of which are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act
2001 (CA) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulated by the Monetary
Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended
only for wholesale investors within the meaning of the CA.

Hong Kong

This report is being distributed in Hong Kong by or on behalf of, and is attributable to DBS Vickers (Hong Kong) Limited
which is licensed and regulated by the Hong Kong Securities and Futures Commission and/or by DBS Bank (Hong Kong)
Limited which is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission. Where this
publication relates to a research report, unless otherwise stated in the research report(s), DBS Bank (Hong Kong) Limited is not
the issuer of the research report(s). This publication including any research report(s) is/are distributed on the express
understanding that, whilst the information contained within is believed to be reliable, the information has not been
independently verified by DBS Bank (Hong Kong) Limited. This report is intended for distribution in Hong Kong only to
professional investors (as defined in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any
rules promulgated thereunder.)
For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at 65 6682 3712.

Indonesia

This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.

Malaysia

This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that
ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and
associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of
them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to
perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have
received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other
services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

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VICKERS SECURITIES
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Company Guide
ARA Asset Management

Singapore

This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,
or in connection with the report.

Thailand

This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only
intended for institutional clients only and no other person may act upon it.

United Kingdom

This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore.
This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised and
regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and
associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any
form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at
persons having professional experience in matters relating to investments. Any investment activity following from this
communication will only be engaged in with such persons. Persons who do not have professional experience in matters
relating to investments should not rely on this communication.

Dubai

This research report is being distributed in The Dubai International Financial Centre (DIFC) by DBS Bank Ltd., (DIFC Branch)
rd
having its office at PO Box 506538, 3 Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC),
Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This
research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon
it.

United States

This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s) named on
this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research
analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company,
public appearances and trading securities held by a research analyst. This report is being distributed in the United States by
DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional
Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may
authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should
contact DBSVUSA directly and not its affiliate.

Other jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
DBS Bank Ltd
12 Marina Boulevard, Marina Bay Financial Centre Tower 3
Singapore 018982
Tel. 65-6878 8888
e-mail: equityresearch@dbs.com
Company Regn. No. 196800306E

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VICKERS SECURITIES