2013-01-07 T03=SG (DBS Vickers) (SG) Small Mid Caps Strategy_ Small stocks, big growth

www.dbsvickers.com Refer to important disclosures at the end of this report ed: OY / sa: JC

STI : 3,224.80

Analyst TAN Ai Teng +65 6398 7967 [email protected]

LING Lee Keng +65 6398 7970 [email protected]

STOCKS

Source: DBS Vickers

DBS Group Research . Equity 7 Jan 2013

Singapore Market Focus

Small Mid Caps Strategy

Small stocks, big growth • Stronger growth should spur small-mid cap

(SMCs) to outperform

• Pick exposure to external markets; ride on China’s rebound

• O&M interests continue to cascade and centre around smaller caps

• Top picks: Tat Hong, China Merchant, Sound Global, Ezion, Jaya

SMC to grow 13% vs 9% for large caps (LC). Singapore SMCs and the DBSV SMC universe have both outperformed the FSSTI’s 20% gain in 2012, rising 31% and 39% respectively. But, as SMC’s earnings growth is projected to outpace LC at 13% to 9%, we see SMCs having more legs to run and would continue to beat the STI, which consensus expects to have a <10% return.

Bank on external growth. Singapore is expected to lag behind the rest of Asean with little growth and high inflation this year. We prefer companies with external growth, particularly those leveraged on Asean. Our picks are Petra Food, Super Group, Tiger Airways and Tat Hong, which generate >50% of their sales from non-Singapore markets, whereas Bumitama sells globally. Although 70% of Cordlife’s sales are domestic, cord blood banking offers a stable pool of recurring income. Although CDL Hospitality draws 80% of its income domestically, these are mainly supported by overseas tourists to Singapore. We expect the re-rating on Super to continue and have raised its TP to $3.51.

Ride on China’s recovery. With no sign of recovery in exports to major economies like the US and Europe, China looks set to accelerate other engines of growth namely investment and consumption. Our infrastructure picks Sound Global and United Envirotech are poised to benefit from China’s will to improve environmental protection. We believe Midas will continue to re-rate along with the revival of China’s high speed railway programme. Our proxies to a rebound in China’s consumption are PCRT (retail) and China Merchant (traffic flow).

Small mid cap O&M to remain in favour. We expect a continuation of robust exploration and production activities for the oil & gas sector. Hence, stay invested in OSVs players like Ezion, Jaya, Nam Cheong and ASL Marine.

Price Mkt Cap Target

Price

Performance (%)

S$ US$m S$ 3 mth 12 mth Rating

Top picks Tat Hong 1.38 636 1.70 4.2 56.3 BUY China Merchants Hldgs (Pacific) 0.82 480 1.20

12.3 32.3 BUY

Sound Global Limited 0.62 647 0.90 18.3 15.0 BUY Ezion Holdings 1.71 1,246 2.12 31.2 152.6 BUY Jaya Holdings 0.67 418 0.85 15.7 40.0 BUY Other stock picks Asean growth exposure Bumitama Agri 1.08 1,548 1.25 3.9 N.A BUY CDL Hospitality Trusts 1.93 1,525 2.11 (7.2) 22.2 BUY Far East Hospitality Trust 0.985 1,294 1.09 (6.6) N.A BUY Cordlife Group Ltd 0.56 105 0.65 (3.5) N.A NOT Petra Food 3.49 1,740 3.97 45.4 88.7 BUY Super Group Ltd 3.23 1,469 3.51 38.0 136.6 BUY Tiger Airways Holdings 0.74 492 0.95 (2.7) 13.1 BUY China Come Back Midas Holdings 0.46 452 0.50 5.8 30.0 BUY Perennial China Retail Trust 0.59 544 0.84 17.0 21.9 BUY United Envirotech 0.52 201 0.69 47.1 68.9 BUY More Legs to O&M ASL Marine 0.68 234 0.90 0.0 33.3 BUY Nam Cheong Ltd 0.27 414 0.30 17.8 96.3 BUY

[email protected] FooSuan Yee 05/23/14 06:06:25 AM IMC INVESTMENTS PTE. LTD.

Market Focus


Page 2

Table of Contents SMC outperformed in 2012 3

2013: Asia leads global, China leads Asia 4

Theme #1: Asean growth exposure 5

Theme #2: China comeback 8

Theme #3: More legs to O&M 9

Key data for stock pick 10

Stock Profiles

Tat Hong 12

China Merchants Hldgs (Pacific) 14

Sound Global Limited 16

Ezion Holdings 18

Jaya Holdings 20

Bumitama Agri 22

CDL Hospitality Trusts 24

Far East Hospitality Trust 26

Cordlife Group Ltd 28

Petra Food 30

Super Group Ltd 32

Tiger Airways Holdings 34

Midas Holdings 36

Perennial China Retail Trust 38

United Envirotech 40

ASL Marine 42

Nam Cheong Ltd 44

Analysts

TAN Ai Teng +65 6398 7967 [email protected] LING Lee Keng +65 6398 7970 [email protected]


Market Focus


Page 3

SMC outperformed in 2012 2012 was plagued by a slew of negative events. Key issues affecting the market were the European crisis and the slowdown in the major global economies - US, China and Europe. The ECB’s second long-term refinancing operation (LTRO) in February spurred the market higher but worries about the Eurozone debt crisis and a slowdown in global economies continued to haunt investors. By June, the market was back to where it started. Valuations have fallen to attractive levels and the market staged an oversold rebound subsequently. Back home, the risk of our economy falling into recession and the high inflation environment continue to affect market sentiment. Against this backdrop, the small-mid caps (SMC) indices – FTSE mid cap (FSTM) and FTSE Small Cap (FSTS) managed to outperform the larger-cap STI, gained 31.7% and 30.7% for 2012 respectively, vs 19.7% for the STI. DBSV SMC index has also done well, +38.7% for 2012. In terms of stocks, a handful of the SMC stocks surged a few fold YTD. At the top of the list were Myanmar plays like Interra Resources, Yoma Strategic and Aussino Group. Other top performers in our coverage list include O&M plays that we highlighted in our previous SMC report like Ezion, Nam Cheong and AusGroup. Our other picks like Wing Tai, Silverlake Axis and Midas also did well, up about 20% since their inclusion. Index performance

Relative performance

SMC still trades at a discount to large caps despite outperformance SMC stocks are still trading at a 10% discount to large caps despite their outperformance, albeit at a lower discount rate of about 20% for the past two years. Current P/E for DBSV SMCs is 14.3x, vs 15.1x for their large caps peers. FY12F earnings for SMCs, however, are expected to register slight negative growth of 0.5% vs 3.7% growth for the LC, mainly due to weak earnings from the Basic Materials, Consumer Services and Oil and Gas sectors. The Basic Materials sector was mainly dragged down by Midas, due to lack of contract wins but the stock should re-rate once contracts start to flow in again for the group. We expect Midas to turn around soon. Tiger Airways is another turnaround stock and is expected to lead the Consumer Services sector to a strong growth of 162% for FY13F. Meanwhile, the Oil and Gas sector was affected by STX OSV, on lesser contract wins and margins squeeze. Valuation gap

Source: DBS Vickers Earnings growth

-50

-40

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-10

0

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2005 2006 2007 2008 2009 2010 2011 2012

PE (%)

95

100

105

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115

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145

STI Index FSTM Index FSTS Index DBSV Small Mid Cap

-4

0

4

8

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16

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24

2009A 2010A 2011A 2012F 2013F 2014F

(%)

Small/Mid Cap Big Cap

Closed as at 31.12.12

1 mth (%) 30.11.12

3 mths (%) 30.9.12 YTD (%)

IndexSTI 3,167 3.2 3.6 19.7FTSE Mid Cap 773 2.8 4.7 31.7FTSE Small Cap 521 6.4 4.3 30.7

Source: Bloomberg Source: DBS Vickers


Market Focus


Page 4

Growth and valuation: LCs vs SMCs

Source: DBS Vickers 2013: Asia leads global, China leads Asia 2013 in general is likely to present a more stable financial environment than 2012, amid an easing Euro crisis, improving visibility in China, and a modestly recovering US economy. Our chief economist expects 2% growth in the US and a further mild contraction in the Eurozone in 2013. Asia, thus, will continue to lead growth, just like in the past four years where growth is self-generated and not dependent on the US or the Eurozone. As long as these other major economies do not collapse, Asia’s acceleration will come from China. We are looking at growth returning to 9% in China and 6% in Asia-10. The Chinese economy has probably bottomed in 3Q12 and China’s acceleration in fixed asset investment will certainly be

able to help lift global growth, and urbanisation is the new strategy to spearhead investment Growth coming from Asia

2012F 2013F 2014F 2012F 2013F 2014F

Basic Materials 182.2 17.3 11.0 -92% 955% 57%

Consumer Goods 14.1 13.0 11.5 -5% 8% 13%

Consumer Services 45.1 17.2 14.7 nm 162% 17%

Financials 15.0 15.3 15.0 12% -2% 2%

Health Care 15.9 13.4 13.8 26% 19% -3%

Industrials 13.3 11.1 9.8 -2% 20% 13%

Oil & Gas 10.0 9.0 7.6 -26% 11% 18%

Real Estate 11.0 11.2 9.4 -24% -2% 19%

REITS 17.6 15.6 15.5 21% 12% 1%

Technology 14.4 13.1 12.1 3% 10% 9%

Telecommunications 14.6 14.5 13.8 2% 1% 5%

Small/Mid Cap Tota l 14.7 13.0 11.9 -0.5% 12.9% 9.7%

Consumer Goods 14.4 11.8 10.4 -29% 22% 14%

Consumer Services 22.6 19.5 17.3 -11% 16% 13%

Financials 24.5 21.7 20.2 -7% 13% 8%

Health Care 38.7 33.4 28.3 209% 16% 18%

Industrials 14.9 13.2 12.3 14% 13% 7%

Real Estate 20.7 19.1 16.1 1% 9% 18%

REITS 21.1 19.4 18.2 -1% 8% 7%

Telecommunications 14.7 14.1 13.8 1% 4% 2%

Banking 12.0 11.7 10.7 13% 3% 10%

Large Cap 15.9 14.6 13.4 3.7% 8.6% 9.5%

DBSV Coverage 15.7 14.4 13.1 3.1% 9.3% 9.5%

Earnings GrowthPE (x)


Market Focus


Page 5

Theme #1: Asean growth exposure Notwithstanding robust expansion in Asia, growth in Singapore is expected to remain below potential on account of structural weaknesses. Singapore’s economic woes include the tightening in foreign labour inflows, strong S$ leading to falling export competitiveness, high COE premiums and high rentals; all of which imply that Singapore will continue to underperform its potential as well as against the regional peers. Overall, we expect Singapore GDP growth to register 3.2% in 2013, from

1.6% in 2012. Inflation is likely to stay sticky at 4% next year, still two times higher than historical average. Therefore, companies here, in particular the smaller SMCs, are faced with higher cost pressures and risks of lower margins. To seek growth, we suggest picking companies with a diversified earnings base, in particular one that is leveraged for growth in other Asean countries. Except for Singapore, other Asean economies are projected to grow in excess of 5%.

GDP growth and inflation growth projections


Market Focus


Page 6

Companies with exposure to Asean include CDL Hospitality Trust, Petra Food, Super Group, Bumitama, Tiger Airways, Tat Hong and Cordlife. Estimated revenue exposure by geography

Company Singapore Asean North Asia

Others Remark

Cordlife 72% -

26% - Though the bulk of the revenue is generated from Singapore, cord blood banking offers a stable pool of recurring income, with >50% of its customers on an annual payment scheme.

Petra Food 4% 30% 6% 60% Exposure to the domestic market is minimal. Petra has an estimated 55% market share of the Indonesia’s chocolate confectionery market and a 10% market share of the Philippines’ market.

Bumitama n.a. n.a. n.a. n.a. Bumitama sells its CPO to refineries in Indonesia which is in turn sold globally.

Tiger Airways n.a. n.a. n.a. 50% Its Australian operation contributes about 50% to total revenue; the rest are from its Singapore operation

Tat Hong 10% 35% 10% 55% About half of its revenue is from Australia and the balance from Asia

Super 11% 63% 20% 6% The bulk of its revenue are from Asia

CDL Hospitality

- 50% 18% 32% About 85% of its customers are from Asia, of which about half is from China, Indonesia and India

Source: DBSV estimates CDL Trust We just upgraded CDL Hospitality Trust (CDREIT) to Buy post a surprise sale-and-leaseback transaction of Angsana Velavaru Maldives from Banyan Tree Holdings. In our view, the deal poses more upside in the medium term, underpinned by the robust growth outlook of the Maldives hospitality market and put the trust back to growth path. We raised our numbers by c3.2-3.7% post this acquisition. Far East H-Trust Far East Hospitality Trust (Far East H-Trust) is a pure play into Singapore Hospitality sector with an industry leading position. It offers investors exciting exposure to Singapore’s growing hospitality sector. It has a reputable sponsor (part of Far East Organization), with a visible pipeline. Super Group Super enjoys extensive exposure in Asean with interests in consumer staple markets of Thailand, Myanmar, and Malaysia. It is also exposed to the Philippines and Indonesia through JV partners. We estimate that Super derives c.65% of its revenues in Asean markets outside of Singapore. We now anticipate a slightly better outlook in FY13F as raw material prices have performed more favourably than our price

assumptions in 4Q12. We believe margins will expand in FY13F, and now position the stock at a higher valuation of 20x, in line with the sector, which has re-rated due to a lower cost outlook in FY13F. Petra Food Petra Food is an interesting play on Indonesia’s growth. With the disposal of its Cocoa Ingredients business, Petra will now focus purely on the branded chocolate confectionery business. With an estimated 55% share of the Indonesian market, Petra offers investors an exposure into Indonesia’s consumption growth. The group also has a 10% market share of the chocolate confectionery market in the Philippines. Bumitama Bumitama is our top pick for the sector. We believe the stock is undervalued considering its strong growth outlook. Bumitama remains the best-in-class with CPO production growth of 29% p.a. over the next three years. We expect the group to book FY12F-15F earnings CAGR of 17%, despite expectations of flat CPO prices.


Market Focus


Page 7

Tiger Airways Tiger has been reporting improving operations data in recent months, with the potential of an earnings turnaround in 3Q-FY13. Growth at Tiger Singapore will be key to restoring profitability in the near term. With growth expecting to return to 9% in China and 6% in Asia-10, Tiger is well positioned to ride on this trend, with its portfolio of airlines in Singapore, the Philippines and Indonesia. Tat Hong Tat Hong is one of the largest crane distribution/rental companies in the world. We are positive on fleet utilisation and rental rates going forward, supported by robust crane demand in contrast to the tight crane supply situation in the market. Cordlife A market leader in cord blood banking, Cordlife offers stable recurring income as >50% of its customers are on an annual payment scheme. An increasing penetration rate and awareness of cord blood banking are expected to drive growth. Catalysts would include potential acquisitions in Indonesia, India and the Philippines. The stock also offers an attractive dividend yield of about 4%.


Market Focus


Page 8

Theme #2: China comeback The Chinese economy has probably bottomed out in 3Q12. Our China/Hong Kong economist is looking at growth returning to 9%. China’s acceleration in fixed asset investment will certainly be able to help lift global growth, and urbanisation is the new strategy to spearhead investment. China’s investment efficiency is higher than any other country in Asia, except for Singapore (chart below). Its incremental capital-output ratio (ICOR) is among the highest. The chart below show the inverse of ICOR, so lower is better. Overall, China is expected to lead growth in Asia. More recent macro data are pointing towards a recovery in China. The current recovery is assisted by re-stocking, translating into improving PMI readings. On the consumption front, retail sales have remained steady. In terms of stock picks, potential beneficiaries of a recovery in the Chinese economy and/or government spending are Midas, Sound Global, United Envirotech, PCRT China GDP growth

China efficiency of investment

Chin

China fixed asset investment growth % YoY

10

15

20

25

30

35

40

45

05 06 07 08 09 10 11 12

FAI YTD FAI YTD new construction

(%)

Source: Datastream, DBS FAI major sector weights vs % YoY growth

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35

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share of total FAI (L) %YoY (R)

(%) %YoY

Source: Datastream, DBS


Market Focus


Page 9

Midas Midas is poised for a turnaround. The group has enhanced both its capacity and capabilities during this lull period. Winning more orders from wider sources should boost the group’s earnings prospects. Impending high speed train orders from China’s MOR could be a catalyst for re-rating. Sound Global A pacesetter in China’s water industry, SGL is well-positioned to benefit from China’s growing awareness in environmental protection. In particular, we see huge potential from rural developments for SGL as this market is largely underpenetrated and only about 1% of sewage in the rural areas is treated. While SGL continues to garner EPC contracts for municipal and expansion/upgrade of existing wastewater treatment plants in matured cities, the company will maintain its pursuit for BOT and O&M projects to build a recurring earnings base. SGL’s earnings and growth is backed by a record orderbook of >Rmb3bn. We are confident the company is able to maintain earnings growth in the region of 20%. Post the last contract announcement, we have raised FY13/14F earnings to account for expected revenue recognition. Our TP of S$0.90 remains intact. Maintain BUY. United Envirotech We recently initiated coverage on United Envirotech (UENV) with a TP of S$0.70. As one of the leading membrane-based water and wastewater treatment companies in China, UENV should be a key beneficiary of Chian’s rapid growth in the environmental protection sector, with earnings CAGR in excess of 40% from FY2013-FY2015. More importantly, we noted that >60% of profits will be coming from long-term recurring treatment income following a series of acquisitions of operating water plants in China. By FY14Mar, UENV would have a total processing capacity of 1.18m m3/day to generate S$25m or 60% of group PATMI. This treatment income is recurring for the life of the water concessions (30 years). In addition, UENV has a potential upside from higher utilisation rates and Phase 2 expansion or acquisitions. Our sum-of-parts TP is based on 10x PE for EPC and DCF valuation (8.6% WACC) for treatment. We have also assumed full dilution of the S$136.2m convertible bond to Kholberg Kravis Roberts & Co (KKR).

Perennial China Retail Trust PCRT is a pure China retail play with a high dividend yield. There are plenty of drivers from the portfolio ramp up and new investments. We see FY13 as an earnings inflexion point with new contributions from the Perennial Jihua Mall Foshan development. China Merchant Driven by its recent toll road acquisitions, as well as the expected bounce in the Chinese economy, CMP will more than double its core earnings from HK$261m in 2010 to HK$54m in 2014 (EPS CAGR of 24%). CMP is also in a strong position to continue growing, by looking at more toll road assets, either from its parent or third-parties. CMP currently trades at 0.9x FY12 P/B, and just 9.3x fully diluted FY13 PE whilst offering an attractive yield of nearly 7%. Our target price of S$1.20 is based on DCF, adjusted to S$1.13 if all the CBs were converted. Theme #3: More legs to O&M Offshore orders were buoyant in 2012, on robust sector fundamentals. firm rig utilisation and day rates, supported by improving demand/supply dynamics. We still expect a robust outlook for oil & gas E&P activities to continue in 2013. The subsea market is expected to register robust growth in the future, backed by an increase in the development of oil and gas fields in deeper waters/harsher environments, coupled with aging offshore oil and gas infrastructure, which require regular repair/maintenance, especially on the back of increasingly stringent requirements on operational safety. OSVs players like Ezion, Nam Cheong, ASL Marine and Jaya are the key beneficiaries. Ezion We are impressed with Ezion’s rapid and successful expansion into new geographical markets (Gulf of Mexico, North Sea, Southeast Asia), its growing traction with major oil companies (Pemex, Maersk Oil, Pertamina, Petronas), and scaling up the value chain (time charters from bareboat). Ezion’s robust FY12 order wins are expected to support FY11-14 EPS CAGR of 41%. We like Ezion for its strong execution and earnings delivery, high earnings visibility, solid earnings growth and undemanding valuations. We see potential catalysts from more contract wins.


Market Focus


Page 10

Nam Cheong Nam Cheong is on track for strong growth, backed by healthy recurrent demand for OSVs both in Malaysia and overseas. FY12 is now a record year for Nam Cheong with 21 vessels sold during the year. It has now also sold more than half of its 19 vessel build-to-stock models for FY13. Its order book was close to record level of RM1.5bn in end-2012, and should drive healthy earnings growth in FY13/14. We expect more order flows from Petronas-linked projects in Malaysia in 1H FY13, as activity on the ground picks up steam. Nam Cheong is in a sweet spot as it is the largest builder of OSV vessels for Malaysian waters. We remain comfortable with our projection of close to 30% earnings CAGR over FY11-13.

Jaya We see Jaya as a recovery play as the group has repositioned itself as a services provider to the offshore energy sector. We believe Jaya’s earnings troughed in FY12 and project FY12-14F EPS CAGR of 54%, driven primarily by the Offshore Support division on a larger fleet, improved day rates, and better margins. With a clearer focus and less volatile earnings, we believe Jaya now offers a more attractive investment opportunity.

Key data for stock pick

Per share data based on full conversion of CBs; PATMI growth of 156% and 75% for FY13F and FY14F respectively Source: DBS Vickers

Mkt Pric e Ta rge t EPS EPS Pric e / Div Ne t De bt/ 6 mth a vgCa p (S$) Pri c e % Gth (%) Gth (%) PE (x) PE (x) BV (x) Yld (%) Equi ty da i ly va lue

Compa ny (S$m) 04-Ja n (S$) Ups ide Rc md 13F 14F 13F 14F 12F 13F 11A (S$,000)

Ase a n growth e xposure1 Bumitama 1,889.3 1.08 1.25 16 Buy 8.2 29.5 13.9 12.4 3.91 0.0 0.50 2,635 2 CDL Hospitality 1,884.2 1.95 2.11 8 Buy 3.2 3.5 16.4 15.8 1.22 6.1 0.26 3,705 3 Cordlife 130.3 0.56 0.65 16 NR 28.0 12.0 14.7 13.1 1.83 3.4 cash 1,600 4 Far East H-Trust 1,587.9 0.99 1.09 10 Buy 20.2 7.3 18.5 17.9 1.06 5.9 0.31 6,389 5 Petra 2,187.9 3.58 3.97 11 Buy 4.8 27.4 31.5 24.7 5.48 1.6 1.81 761 6 Super 1,767.4 3.17 3.51 11 Buy 50.6 27.8 18.1 15.9 4.35 2.8 cash 1,341 7 Tat Hong 777.3 1.37 1.70 24 Buy 13.0 15.8 9.6 8.3 1.27 1.8 0.62 946 8 Tiger 595.0 0.73 0.95 31 Buy nm 36.4 12.7 9.3 1.70 0.0 1.27 1,417

Ch ina come ba ck9 China Merchants 596.1 0.83 1.20 44 Buy 44.4 0.5 8.3 7.3 0.97 6.6 0.55 91 10 Midas 547.9 0.45 0.50 11 Buy 954.7 56.8 18.5 11.8 0.95 1.1 0.18 3,915 11 PCRT 666.5 0.59 0.84 44 Buy nm nm 111.0 59.5 0.82 7.0 0.27 896 12 Sound Global 832.1 0.65 0.90 39 Buy 9.8 13.4 9.4 8.3 1.87 2.1 cash 735 13 United Envirotech * 246.6 0.52 0.69 35 Buy 149.2 8.3 8.7 7.2 1.25 1.6 0.86 526

More le gs to O&M14 ASL Marine 289.1 0.69 0.90 31 Buy 52.1 22.9 5.9 4.8 0.82 3.4 0.52 107 15 Ezion 1,532.5 1.71 2.12 24 Buy 77.2 40.3 10.7 7.6 3.09 0.1 0.87 10,665 16 Jaya 512.1 0.67 0.85 28 Buy (61.3) 86.4 11.9 9.3 0.85 0.0 0.09 368 17 Nam Cheong 507.0 0.27 0.30 14 Buy 34.0 26.1 8.1 7.4 2.16 1.3 0.35 2,121


Market Focus


Page 11

Stock Profile


Page 12


Bloomberg: TAT SP | Reuters: TAT.SI

BUY S$1.375 STI : 3,224.80 Price Target : 12-month S$ 1.70 Potential Catalyst: Higher utilisation and rental rates DBSV vs Consensus: Higher on more regional developments Analyst Alfie YEO +65 6398 7957 [email protected] HO Pei Hwa +65 6398 7968 [email protected]

Price Relative

53

73

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213

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Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Relative IndexS$

Tat Hong (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Mar (S$ m) 2011A 2012A 2013F 2014F

Turnover 584 720 895 963 EBITDA 116 151 205 214 Pre-tax Profit 41 58 105 116 Net Profit 26 42 72 81 Net Pft (Pre Ex.) 26 46 72 81 EPS (S cts) 4.6 7.4 12.6 14.2 EPS Pre Ex. (S cts) 4.6 8.0 12.6 14.2 EPS Gth (%) (33) 63 69 13 EPS Gth Pre Ex (%) (33) 76 57 13 Diluted EPS (S cts) 4.6 7.4 12.6 14.2 Net DPS (S cts) 1.5 2.5 2.5 2.5 BV Per Share (S cts) 91.1 97.7 107.7 119.4 PE (X) 30.2 18.5 10.9 9.7 PE Pre Ex. (X) 30.2 17.2 10.9 9.7 P/Cash Flow (X) nm 7.5 13.0 8.2 EV/EBITDA (X) 10.2 8.0 6.1 5.7 Net Div Yield (%) 1.1 1.8 1.8 1.8 P/Book Value (X) 1.5 1.4 1.3 1.2 Net Debt/Equity (X) 0.6 0.6 0.6 0.5 ROAE (%) 5.1 7.9 12.2 12.5 Earnings Rev (%): - - Consensus EPS (S cts): 12.3 14.1 Other Broker Recs: B: 8 S: 0 H: 0 ICB Industry : Industrials ICB Sector: Industrial Engineering Principal Business: Heavy equipment distributor and crane rental company.

Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 567 Mkt. Cap (S$m/US$m) 780 / 636 Major Shareholders Chew Cheng & Sons (%) 44.7 Ng Chwee Cheng (%) 9.8 Free Float (%) 45.5 Avg. Daily Vol.(‘000) 517


Tat Hong

Positive on tight crane supply

One of the largest crane distribution/rental companies in the world

Positive on fleet utilisation and rates on tight crane supply cranes

Maintain BUY, TP S$1.70

One of the largest crane distribution/rental companies in the world. Tat Hong (TAT) is one of the world's largest crane companies in the world. In June 2011, International Cranes & Specialized Transport magazine's IC50 Ranking positioned TAT first in terms of fleet size of crawler cranes and eighth in terms of aggregate tonne-metres.

Expect better utilisation, rental rates. Both crawler and tower crane rental utilisation rates improved (+4.6 ppt to 72.5%/+9ppt to 79.7%, respectively) on increased construction activities across Asean, Hong Kong and mining/resource activities in Australia. We are positive on fleet utilisation and rental rates going forward, supported by robust crane demand in contrast to the tight crane supply situation in the market. Regional construction projects and oil & gas projects in Australia remain buoyant, while limited production capacity of crane manufacturers will ensure that crane rental demand continues to outstrip crane supply. Hence, we remain optimistic on TAT’s fleet utilisation and rental rates going forward.

Maintain BUY, TP S$1.70. TAT currently trades at 10.9x FY14F PE. Our valuation of the stock based on 12x FY14F earnings is S$1.70. P/BV multiple is also attractive at 1.3x against an ROE of 12.2%. Maintain BUY for 26% upside



Tat Hong

Page 13

Income Statement (S$ m) Balance Sheet (S$ m)

FY Mar 2011A 2012A 2013F 2014F FY Mar 2011A 2012A 2013F 2014F

Turnover 584 720 895 963 Net Fixed Assets 624 765 766 728 Cost of Goods Sold (376) (457) (557) (602) Invts in Associates & JVs 67 66 76 86 Gross Profit 209 263 337 361 Other LT Assets 56 56 56 56 Other Opng (Exp)/Inc (151) (182) (220) (233) Cash & ST Invts 62 77 43 85 Operating Profit 57 81 117 128 Inventory 201 234 298 321 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 145 185 224 241 Associates & JV Inc 1 1 10 10 Other Current Assets 0 0 0 0 Net Interest (Exp)/Inc (17) (21) (22) (23) Total Assets 1,154 1,383 1,463 1,517 Exceptional Gain/(Loss) 0 (3) 0 0 Pre-tax Profit 41 58 105 116 ST Debt 165 174 174 174 Tax (9) (22) (24) (25) Other Current Liab 157 309 323 301 Minority Interest (6) 6 (9) (9) LT Debt 245 282 282 282 Preference Dividend 0 0 0 0 Other LT Liabilities 16 20 20 20 Net Profit 26 42 72 81 Shareholder’s Equity 519 556 614 680 Net Profit before Except. 26 46 72 81 Minority Interests 53 42 51 60 EBITDA 116 151 205 214 Total Cap. & Liab. 1,154 1,383 1,463 1,517 Sales Gth (%) 17.9 23.2 24.3 7.7 Non-Cash Wkg. Capital 189 110 199 261 EBITDA Gth (%) (4.1) 29.9 35.5 4.6 Net Cash/(Debt) (348) (379) (413) (371) Opg Profit Gth (%) (20.7) 41.4 44.3 9.9 Net Profit Gth (%) (32.8) 62.8 69.4 13.0 Effective Tax Rate (%) 21.9 37.1 23.3 22.0 Cash Flow Statement (S$ m) Rates & Ratio

FY Mar 2011A 2012A 2013F 2014F FY Mar 2011A 2012A 2013F 2014F

Pre-Tax Profit 41 58 105 116 Gross Margins (%) 35.7 36.5 37.7 37.5 Dep. & Amort. 59 70 79 77 Opg Profit Margin (%) 9.8 11.2 13.1 13.3 Tax Paid (9) (12) (11) (24) Net Profit Margin (%) 4.4 5.9 8.0 8.4 Assoc. & JV Inc/(loss) (1) (1) (10) (10) ROAE (%) 5.1 7.9 12.2 12.5 Chg in Wkg.Cap. (112) (41) (103) (63) ROA (%) 2.4 3.3 5.0 5.4 Other Operating CF 20 31 0 0 ROCE (%) 4.8 4.9 8.1 8.5 Net Operating CF (2) 104 60 95 Div Payout Ratio (%) 32.9 33.7 19.9 17.6 Capital Exp.(net) (52) (82) (80) (39) Net Interest Cover (x) 3.3 3.8 5.3 5.6 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.5 0.6 0.6 0.6 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 80.6 83.7 83.3 88.0 Div from Assoc & JV 1 2 0 0 Creditors Turn (avg days) 189.0 210.5 227.1 199.0 Other Investing CF (3) 4 0 0 Inventory Turn (avg days) 231.1 204.7 202.8 214.9 Net Investing CF (54) (76) (80) (39) Current Ratio (x) 1.3 1.0 1.1 1.4 Div Paid (14) (9) (14) (14) Quick Ratio (x) 0.6 0.5 0.5 0.7 Chg in Gross Debt 120 11 0 0 Net Debt/Equity (X) 0.6 0.6 0.6 0.5 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 0.7 0.7 0.7 0.5 Other Financing CF (62) (16) 0 0 Capex to Debt (%) 12.7 18.0 17.4 8.4 Net Financing CF 44 (13) (14) (14) Z-Score (X) 1.5 1.6 1.9 2.1 Currency Adjustments (1) 0 0 0 N. Cash/(Debt)PS (S cts) (61.0) (66.6) (72.5) (65.0) Chg in Cash (14) 15 (34) 42 Opg CFPS (S cts) 19.4 25.5 28.6 27.8 Free CFPS (S cts) (9.5) 3.8 (3.4) 9.9 Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions

FY Mar 3Q2012 4Q2012 1Q2013 2Q2013 FY Mar 2011A 2012A 2013F 2014F

Turnover 196 182 215 216 Revenues (S$ m) Cost of Goods Sold (129) (110) (131) (136) Equipment Sales 272 339 375 374 Gross Profit 67 72 84 80 Crane Rental 185 225 338 383 Other Oper. (Exp)/Inc (44) (53) (54) (52) General Equipment Rental 70 97 106 120 Operating Profit 23 18 31 28 Tower Crane Rental 57 59 75 86 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 0 1 2 3 Total 584 720 895 963 Net Interest (Exp)/Inc (6) (4) (6) (6) Exceptional Gain/(Loss) 0 (3) 0 0 Key Assumptions Pre-tax Profit 18 11 26 25 Crawler average fleet size 539.9 595.8 759.2 770.0 Tax (4) (9) (7) (5) Crawler utilisation (%) 61.6 67.3 74.1 77.0 Minority Interest (1) 9 (2) (2) Tower average fleet size 653.3 712.0 784.2 790.0 Net Profit 13 11 17 17 Tower utilisation (%) 72.7 66.1 74.7 75.0 Net profit bef Except. 13 14 17 17 EBITDA 42 39 51 51 Sales Gth (%) 7.0 (7.3) 18.3 0.3 EBITDA Gth (%) 0.5 (6.4) 30.3 (1.1) Opg Profit Gth (%) (5.5) (22.6) 69.3 (8.6) Net Profit Gth (%) 2.7 (13.7) 48.9 4.0 Gross Margins (%) 34.4 39.4 39.2 37.2 Opg Profit Margins (%) 12.0 10.0 14.3 13.0 Net Profit Margins (%) 6.6 6.1 7.7 8.0 Source: Company, DBS Vickers


Page 14

www.dbsvickers.com Refer to important disclosures at the end of this report ed: JS / sa: JC

Bloomberg: CMH SP | Reuters: CAEP.SI

BUY S$0.82 STI : 3,224.80 Price Target : 12-Month S$ 1.20 Potential Catalyst: Earnings execution; more acquisitions DBSV vs Consensus: We are only major broker to cover the stock Analyst Paul YONG CFA +65 6398 7951 [email protected]

Price Relative

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Relative IndexS$

China Merchants Hldgs (Pacific) (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (HK$ m) 2011A 2012F 2013F 2014F

Turnover 847 1,548 1,984 2,129 EBITDA 736 1,298 1,664 1,789 Pre-tax Profit 538 1,158 1,035 1,032 Net Profit 314 722 579 574 Net Pft (Pre Ex.) 314 453 501 574 EPS (S cts) 6.9 15.9 11.6 11.5 EPS Pre Ex. (S cts) 6.9 10.0 10.0 11.5 EPS Gth (%) 20 130 (27) (1) EPS Gth Pre Ex (%) 43 44 1 14 Diluted EPS (S cts) 5.9 8.5 9.4 10.7 Net DPS (S cts) 5.4 5.5 5.5 6.0 BV Per Share (S cts) 77.2 86.1 99.3 104.8 PE (X) 11.9 5.2 7.1 7.2 PE Pre Ex. (X) 11.9 8.3 8.2 7.2 P/Cash Flow (X) 9.7 9.1 3.0 3.8 EV/EBITDA (X) 10.7 7.8 7.1 6.2 Net Div Yield (%) 6.5 6.7 6.7 7.3 P/Book Value (X) 1.1 1.0 0.8 0.8 Net Debt/Equity (X) 0.3 0.5 0.7 0.5 ROAE (%) 7.7 16.4 11.6 10.4 Earnings Rev (%): - - - Consensus EPS (S cts): 5.0 5.2 8.7 Other Broker Recs: B: 1 S: 0 H: 0 ICB Industry : Industrials ICB Sector: Industrial Transportation Principal Business: Owns and operates toll roads in various provinces in China.


At A Glance Issued Capital (m shrs) 718 Mkt. Cap (S$m/US$m) 592 / 483 Major Shareholders China Merchants (%) 82.6 Free Float (%) 17.4 Avg. Daily Vol.(‘000) 142


China Merchants Hldgs (Pacific)

Good yield with acquisitions-driven earnings growth

CMP has acquired 3 quality expressways in the last 18 months and has transformed into a quality, China pure expressway play

More acquisitions could be on the way as the Group scales up and builds its track record

CMP commitment to pay at least S 5.5cts annual dividend provides firm dividend yield of c. 7%

Maintain BUY, with TP of S$1.20

CMP has successfully restructured itself. Since mid-2011, CMP has bought three expressways in China totaling 238km, whilst disposing off a Class II highway (for a gain) and its non-core property business. These transactions transform CMP into a pure PRC expressway list co, and one of the few with toll roads assets in multiple provinces. Bright outlook driven by China economic growth and acquisitions. Driven by its recent toll road acquisitions, as well as the expected firm bounce in the Chinese economy, CMP will more than double its core earnings from HK$261m in 2010 to HK$54m in 2014 (EPS CAGR of 24%). CMP is also in a strong position to continue growing, by looking at more toll road assets, either from its parent or third-parties. Compelling valuations as the stock is trading below book and offering a yield of c. 7%; BUY. CMP is trading at 0.9x FY12 P/B, and just 9.3x fully diluted FY13 PE whilst offering an attractive yield of nearly 7%. Our target price of S$1.20 is based on DCF, adjusted to S$1.13 if all the CBs were converted.



China Merchants Hldgs (Pacific)

Page 15

Income Statement (HK$ m) Balance Sheet (HK$ m)

FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Turnover 847 1,548 1,984 2,129 Net Fixed Assets 176 168 312 294 Cost of Goods Sold (464) (671) (934) (987) Invts in Associates & JVs 2,165 1,882 1,882 1,882 Gross Profit 383 877 1,051 1,142 Other LT Assets 7,081 9,449 11,636 11,209 Other Opng (Exp)/Inc (53) (85) (56) (57) Cash & ST Invts 1,505 1,979 2,296 2,639 Operating Profit 331 792 995 1,085 Inventory 0 0 0 0 Other Non Opg (Exp)/Inc 17 17 19 19 Debtors 211 30 0 0 Associates & JV Inc 252 220 227 236 Other Current Assets 389 389 0 0 Net Interest (Exp)/Inc (62) (141) (284) (308) Total Assets 11,528 13,899 16,127 16,025 Exceptional Gain/(Loss) 0 270 78 0 Pre-tax Profit 538 1,158 1,035 1,032 ST Debt 664 2,136 1,844 1,744 Tax (97) (163) (178) (171) Other Current Liab 1,320 504 462 462 Minority Interest (122) (266) (271) (281) LT Debt 2,519 3,757 5,607 5,307 Preference Dividend (6) (6) (6) (6) Other LT Liabilities 365 365 365 365 Net Profit 314 722 579 574 Shareholder’s Equity 4,171 4,649 5,360 5,659 Net Profit before Except. 314 453 501 574 Minority Interests 2,488 2,488 2,488 2,488 EBITDA 736 1,298 1,664 1,789 Total Cap. & Liab. 11,528 13,899 16,127 16,025 Sales Gth (%) 548.9 82.7 28.1 7.3 Non-Cash Wkg. Capital (719) (85) (462) (462) EBITDA Gth (%) 200.1 76.3 28.2 7.5 Net Cash/(Debt) (1,678) (3,913) (5,155) (4,412) Opg Profit Gth (%) (4,454.8) 139.4 25.7 9.0 Net Profit Gth (%) 20.0 130.4 (19.8) (1.0) Effective Tax Rate (%) 18.0 14.1 17.2 16.6 Cash Flow Statement (HK$ m) Rates & Ratio


Pre-Tax Profit 538 1,158 1,035 1,032 Gross Margins (%) 45.3 56.6 53.0 53.6 Dep. & Amort. 136 269 424 449 Opg Profit Margin (%) 39.0 51.1 50.2 51.0 Tax Paid (14) (163) (178) (171) Net Profit Margin (%) 37.0 46.7 29.2 26.9 Assoc. & JV Inc/(loss) (252) (220) (227) (236) ROAE (%) 7.7 16.4 11.6 10.4 Chg in Wkg.Cap. (22) (635) 310 0 ROA (%) 4.0 5.7 3.9 3.6 Other Operating CF 0 0 0 0 ROCE (%) 3.8 5.8 5.7 5.8 Net Operating CF 386 410 1,364 1,074 Div Payout Ratio (%) 78.1 34.6 47.5 52.4 Capital Exp.(net) (9) (2) (4) (4) Net Interest Cover (x) 5.3 5.6 3.5 3.5 Other Invts.(net) (1,567) (1,086) (832) 0 Asset Turnover (x) 0.1 0.1 0.1 0.1 Invts in Assoc. & JV 107 282 0 0 Debtors Turn (avg days) 50.2 28.4 2.8 N/A Div from Assoc & JV 275 220 227 236 Creditors Turn (avg days) 506.2 408.4 15.0 N/A Other Investing CF 0 0 0 0 Inventory Turn (avg days) N/A N/A N/A N/A Net Investing CF (1,193) (586) (610) 232 Current Ratio (x) 1.1 0.9 1.0 1.2 Div Paid (318) (517) (528) (563) Quick Ratio (x) 0.9 0.8 1.0 1.2 Chg in Gross Debt 1,317 1,086 (292) (400) Net Debt/Equity (X) 0.3 0.5 0.7 0.5 Capital Issues 0 0 382 0 Net Debt/Equity ex MI (X) 0.4 0.8 1.0 0.8 Other Financing CF 0 0 0 0 Capex to Debt (%) 0.3 0.0 0.1 0.1 Net Financing CF 1,000 568 (437) (963) Z-Score (X) 0.7 0.8 0.9 1.0 Currency Adjustments 30 0 0 0 N. Cash/(Debt)PS (HK cts) (233.6) (544.7) (651.6) (557.7) Chg in Cash 223 392 317 343 Opg CFPS (HK cts) 56.8 145.4 133.3 135.7 Free CFPS (HK cts) 52.5 56.7 171.9 135.2 Quarterly / Interim Income Statement (HK$ m) Segmental Breakdown / Key Assumptions

FY Dec 4Q2011 1Q2012 2Q2012 3Q2012 FY Dec 2011A 2012F 2013F 2014F

Turnover 425 370 394 419 Revenues (HK$ m) Cost of Goods Sold (268) (153) (170) (206) Yongtaiwen E'way 687 1,428 1,457 1,501 Gross Profit 157 217 224 213 Ningbo-Beilun Port E'way 0 0 434 469 Other Oper. (Exp)/Inc (43) (13) (13) (28) Jiurui E'way 0 0 93 160 Operating Profit 115 205 210 185 Others* 161 120 0 0 Other Non Opg (Exp)/Inc 4 4 4 4 Total 847 1,548 1,984 2,129 Associates & JV Inc 58 55 52 61 Net Interest (Exp)/Inc (35) (36) (32) (30) EBIT (HK$ m) Exceptional Gain/(Loss) N/A N/A N/A N/A Yongtaiwen E'way 380 760 775 802 Pre-tax Profit 142 228 235 220 Ningbo-Beilun Port E'way 0 0 178 198 Tax (37) (49) (52) (56) Jiurui E'way 0 0 53 94 Minority Interest (51) (67) (73) (64) Others* (49) 32 (11) (9) Net Profit 54 112 110 100 Total 380 760 1,006 1,094 Net profit bef Except. 54 112 110 100 EBITDA 142 228 235 220 EBIT Margins (%) Yongtaiwen E'way 55.3 53.2 53.2 53.5 Sales Gth (%) 9.0 (12.9) 6.4 6.3 Ningbo-Beilun Port E'way 41.0 42.2 EBITDA Gth (%) (48.3) 61.2 2.9 (6.2) Jiurui E'way 56.5 58.8 Opg Profit Gth (%) (49.8) 78.5 2.8 (12.2) Others* N/A 26.6 N/A N/A Net Profit Gth (%) (64.3) 109.4 (1.8) (9.2) Total 44.8 49.1 50.7 51.4 Gross Margins (%) 37.0 58.7 56.8 50.8 Opg Profit Margins (%) 27.0 55.3 53.4 44.1 *Includes prop devpt Net Profit Margins (%) 12.6 30.3 28.0 23.9 Source: Company, DBS Vickers


Page 16


Bloomberg: SGL SP | Reuters: SOGL.SI

BUY S$0.615 STI : 3,224.80 Price Target: 12-Month S$ 0.90 Potential Catalyst: Faster than expected profit recognition DBSV vs Consensus: Below consensus Analyst TAN Ai Teng +65 6398 7967 [email protected]

Price Relative

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Relative IndexS$

Sound Global Limited (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (RMB m) 2011A 2012F 2013F 2014F

Turnover 2,288 2,816 3,359 3,745 EBITDA 616 733 842 932 Pre-tax Profit 481 567 628 711 Net Profit 414 491 540 612 Net Pft (Pre Ex.) 414 491 540 612 EPS (S cts) 5.3 6.3 6.9 7.8 EPS Pre Ex. (S cts) 5.3 6.3 6.9 7.8 EPS Gth (%) 43 19 10 13 EPS Gth Pre Ex (%) 43 19 10 13 Diluted EPS (S cts) 5.3 6.3 6.9 7.8 Net DPS (S cts) 1.1 1.3 1.4 9.4 BV Per Share (S cts) 29.2 34.4 40.1 46.5 PE (X) 11.7 9.9 9.0 7.9 PE Pre Ex. (X) 11.7 9.9 9.0 7.9 P/Cash Flow (X) nm nm 10.5 8.7 EV/EBITDA (X) 5.8 6.2 5.4 4.7 Net Div Yield (%) 1.7 2.0 2.2 15.1 P/Book Value (X) 2.1 1.8 1.5 1.3 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 19.6 19.7 18.5 18.0 Earnings Rev (%): - 4.1 23.1 Consensus EPS (S cts): 6.6 7.3 8.0 Other Broker Recs: B: 6 S: 0 H: 0 ICB Industry : Utilities ICB Sector: Gas; Water & Multiutilities Principal Business: Epure is a turnkey water and wastewater treatment solution provider in the PRC


At A Glance Issued Capital (m shrs) 1,290 Mkt. Cap (S$m/US$m) 797 / 650 Major Shareholders Yibo Wen (%) 45.4 International Finance Corp (%) 8.1 Norges Bank (%) 6.0 Free Float (%) 40.5 Avg. Daily Vol.(‘000) 1,048


Sound Global Limited

Growing awareness in environment protection Ample growth opportunities in China,

particularly from rural areas

Orderbook of >Rmb3bn offers good earnings and growth visibility

Maintain BUY, TP of S$0.90

A pacesetter in China’s water industry. SGL was ranked by China Water, an authoritative website on China’s water sector, as the top engineering company in 2010 and one of the most influential local water groups in the PRC in 2008-2011. It is the first listed water company to secure a demonstration project for the comprehensive development of sewage treatment in rural China. We see huge potential from rural developments for SGL as this market is largely underpenetrated and only about 1% of sewage in the rural areas is treated. Hence, there are ample opportunities from this market segment. Orderbook at a record high of Rmb3bn. SGL has announced Rmb2.5bn of new contracts in 2012, higher than our initial projection of Rmb1.7bn. Including the Rmb2bn BT contract won towards end of Dec, we estimated that SGL’s current backlog is in excess of Rmb3bn. Going forward, SGL will continue to seek out BOT and O&M projects. EPC jobs are likely to be municipal and more expansion/upgrade in nature. Overseas, management aims to make further progress in markets such as Saudi Arabia, Indonesia, Philippines, Sri Lanka and India. Growth prospects still promising, Maintain Buy. Post the last contract announcement, we raised FY13/14F earnings to account for expected revenue recognition. Our TP ofS$0.90 remains intact. Maintain BUY.



Sound Global Limited

Page 17

Income Statement (RMB m) Balance Sheet (RMB m)


Turnover 2,288 2,816 3,359 3,745 Net Fixed Assets 48 49 50 51 Cost of Goods Sold (1,566) (1,960) (2,352) (2,624) Invts in Associates & JVs 0 0 0 0 Gross Profit 722 856 1,007 1,121 Other LT Assets 1,207 1,807 2,207 2,507 Other Opng (Exp)/Inc (133) (128) (169) (192) Cash & ST Invts 2,131 2,324 2,347 2,558 Operating Profit 589 729 838 928 Inventory 22 27 32 35 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 1,120 1,564 1,866 2,080 Associates & JV Inc 0 0 0 0 Other Current Assets 429 729 729 729 Net Interest (Exp)/Inc (108) (162) (211) (217) Total Assets 4,956 6,499 7,230 7,960 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 481 567 628 711 ST Debt 312 312 312 312 Tax (67) (75) (88) (100) Other Current Liab 1,752 1,762 1,992 2,158 Minority Interest 0 0 0 0 LT Debt 540 1,664 1,724 1,784 Preference Dividend 0 0 0 0 Other LT Liabilities 47 47 47 47 Net Profit 414 491 540 612 Shareholder’s Equity 2,294 2,703 3,144 3,648 Net Profit before Except. 414 491 540 612 Minority Interests 11 11 11 11 EBITDA 616 733 842 932 Total Cap. & Liab. 4,956 6,499 7,230 7,960 Sales Gth (%) 29.6 23.1 19.3 11.5 Non-Cash Wkg. Capital (182) 558 635 686 EBITDA Gth (%) 51.6 19.0 15.0 10.7 Net Cash/(Debt) 1,279 347 311 462 Opg Profit Gth (%) 54.9 23.6 15.1 10.8 Net Profit Gth (%) 43.1 18.8 9.8 13.4 Effective Tax Rate (%) 14.0 13.3 14.0 14.0 Cash Flow Statement (RMB m) Rates & Ratio


Pre-Tax Profit 481 567 628 711 Gross Margins (%) 31.6 30.4 30.0 29.9 Dep. & Amort. 11 0 0 1 Opg Profit Margin (%) 25.8 25.9 25.0 24.8 Tax Paid (35) (55) (75) (88) Net Profit Margin (%) 18.1 17.5 16.1 16.3 Assoc. & JV Inc/(loss) 0 0 0 0 ROAE (%) 19.6 19.7 18.5 18.0 Chg in Wkg.Cap. (810) (760) (90) (64) ROA (%) 8.9 8.6 7.9 8.1 Other Operating CF 108 0 0 0 ROCE (%) 15.3 15.9 14.5 14.5 Net Operating CF (245) (248) 463 561 Div Payout Ratio (%) 20.0 20.0 20.0 120.0 Capital Exp.(net) (5) (1) (1) (1) Net Interest Cover (x) 5.4 4.5 4.0 4.3 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.5 0.5 0.5 0.5 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 153.9 174.0 186.4 192.3 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 208.4 186.4 192.0 197.9 Other Investing CF 262 (600) (400) (300) Inventory Turn (avg days) 4.0 4.5 4.5 4.7 Net Investing CF 257 (601) (401) (301) Current Ratio (x) 1.8 2.2 2.2 2.2 Div Paid (67) (83) (98) (108) Quick Ratio (x) 1.6 1.9 1.8 1.9 Chg in Gross Debt 198 1,124 60 60 Net Debt/Equity (X) CASH CASH CASH CASH Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) CASH CASH CASH CASH Other Financing CF (88) 0 0 0 Capex to Debt (%) 0.6 0.1 0.1 0.1 Net Financing CF 43 1,041 (38) (48) Z-Score (X) 2.5 2.3 2.3 2.3 Currency Adjustments (9) 0 0 0 N. Cash/(Debt)PS (RMB cts) 82.8 22.5 20.1 29.9 Chg in Cash 47 192 23 212 Opg CFPS (RMB cts) 36.6 33.1 35.8 40.5 Free CFPS (RMB cts) (16.2) (16.1) 29.9 36.3 Quarterly / Interim Income Statement (RMB m) Segmental Breakdown / Key Assumptions


Turnover 601 443 741 779 Revenues (RMB m) Cost of Goods Sold (426) (308) (525) (530) Municipal Wastewater 2,170 2,579 2,992 3,146 Gross Profit 175 135 216 248 Industrial product 58 139 206 302 Other Oper. (Exp)/Inc (31) (17) (46) (28) O&M 60 98 161 297 Operating Profit 144 118 171 221 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 0 0 0 0 Total 2,288 2,816 3,359 3,745 Net Interest (Exp)/Inc (29) (30) (33) (47) Exceptional Gain/(Loss) 0 0 0 0 Key Assumptions Pre-tax Profit 115 89 137 174 New order win 1,700.0 1,700.0 1,500.0 0.0 Tax (8) (12) (20) (22) Gross margin 30.4 30.4 30.0 29.9 Minority Interest 0 0 0 0 Net Profit 107 77 117 152 Net profit bef Except. 107 77 117 152 EBITDA 145 119 173 225 Sales Gth (%) (4.0) (26.3) 67.2 5.1 EBITDA Gth (%) (22.5) (17.7) 44.8 30.0 Opg Profit Gth (%) (21.7) (17.7) 44.3 29.3 Net Profit Gth (%) (18.7) (28.4) 52.8 29.7 Gross Margins (%) 29.1 30.4 29.2 31.9 Opg Profit Margins (%) 23.9 26.7 23.0 28.4 Net Profit Margins (%) 17.8 17.3 15.8 19.5 Source: Company, DBS Vickers


Page 18

www.dbsvickers.com Refer to important disclosures at the end of this report ed: SGC / sa: JC

Bloomberg: EZI SP | Reuters: EZHL.SI

BUY S$1.705 STI : 3,224.80 Price Target : 12-Month S$ 2.12 (Prev S$1.82) Potential Catalyst: Contract wins DBSV vs Consensus: In line Analyst Jeremy THIA CFA +65 6398 7974 [email protected]

Price Relative

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Relative IndexS$

Ezion Holdings (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (US$ m) 2011A 2012F 2013F 2014F

Revenue 107 152 373 442 EBITDA 61 90 212 219 Pre-tax Profit 61 84 136 190 Net Profit 58 80 129 178

Net Pft (Pre-Ex, aft pref div)* 48 67 121 170

EPS (S cts) 10.0 10.8 17.0 23.5 EPS (Pre Ex, aft pref div)*. (S cts)

8.2 9.0 16.0 22.5

EPS Gth (%) 45 8 58 38 EPS Gth (Pre Ex, aft pref div)* (%)

48 11 77 40

Net DPS (S cts) 0.1 0.1 0.1 0.1 BV Per Share (S cts) 39.2 55.4 69.8 92.2 PE (X) 17.2 15.9 10.1 7.3

PE (Pre Ex, aft pref div)* (X) 21.0 19.0 10.7 7.6

P/Cash Flow (X) 28.9 20.9 10.0 9.2 EV/EBITDA (X) 18.6 20.8 9.6 9.1 Net Div Yield (%) 0.1 0.1 0.1 0.1 P/Book Value (X) 4.4 3.1 2.5 1.9 Net Debt/Equity (X) 0.4 0.9 0.9 0.7 ROAE (%) 29.2 25.0 25.9 27.7 Earnings Rev (%): - - - Consensus EPS (S cts): 8.9 16.8 23.0 Other Broker Recs: B: 10 S: 1 H: 0 ICB Industry : Oil & Gas ICB Sector: Oil Equipment; Services & Dist Principal Business: Ezion Holdings specialises in marine logistics and support services to the offshore oil and gas industries.


At A Glance Issued Capital (m shrs) 896 Mkt. Cap (S$m/US$m) 1,535 / 1,252 Major Shareholders Thiam Keng Chew (%) 17.6 Franklin Resources (%) 7.7 Havenport Asset Mgmt (%) 6.3 Free Float (%) 68.4 Avg. Daily Vol.(‘000) 8,967


Ezion Holdings

Rally has legs

Strategic shareholders will enable Ezion to capture still-robust demand

Strong FY12 order wins to support solid sequential earnings growth and FY11-14 EPS CAGR of 41%

Maintain BUY, TP lifted to S$2.12

Still has legs. The recent introduction of strategic shareholders, Mr Tan Boy Tee and EDB Investments, has not only provided Ezion with additional funds, but also allows it to leverage on these shareholders’ vast experience and business networks. Indeed, Ezion could also tap on Mr. Tan to co-fund future projects via 50/50 JV structures to enable it to continue to capture robust market demand for its liftboats and service rigs without stressing its balance sheet with more debt.

Strong FY12 order wins support FY11-14 EPS CAGR of

41%. Ezion has secured US$1.4bn worth of contract in FY12, vs. US$495m in FY11. As these projects kick in progressively, they will support our projection of steady sequential earnings growth over the next eight quarters leading to a strong FY11-14F EPS CAGR of 41%. There is upside to our numbers from more potential contract wins.

Maintain BUY, TP raised to S$2.12. We are impressed with Ezion’s rapid and successful expansion into new geographical markets (Gulf of Mexico, North Sea, Southeast Asia), its growing traction with major oil companies (Pemex, Maersk Oil, Pertamina, Petronas), and scaling up the value chain (time charters from bareboat). We continue to like Ezion for its strong execution and earnings delivery, and solid earnings growth. We see catalysts from more potential contract wins ahead, and raise our TP to S$2.12, as we roll forward to 11x blended FY13/14 PE, supported by its high earnings visibility.



Ezion Holdings

Page 19

Income Statement (US$ m) Balance Sheet (US$ m)


Turnover 107 152 373 442 Net Fixed Assets 271 890 1,075 1,182 Cost of Goods Sold (52) (77) (191) (197) Invts in Associates & JVs 71 109 131 154 Gross Profit 55 75 182 244 Other LT Assets 1 1 1 1 Other Opng (Exp)/Inc (14) (14) (41) (49) Cash & ST Invts 63 138 168 190 Operating Profit 42 61 141 196 Inventory 0 0 0 0 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 32 43 106 126 Associates & JV Inc 10 15 22 23 Other Current Assets 32 32 32 32 Net Interest (Exp)/Inc (1) (5) (27) (29) Total Assets 470 1,214 1,513 1,685 Exceptional Gain/(Loss) 11 13 0 0 Pre-tax Profit 61 84 136 190 ST Debt 39 39 39 39 Tax (3) (4) (7) (12) Other Current Liab 42 48 84 90 Minority Interest 0 0 0 0 LT Debt 118 576 720 715 Net Profit 58 80 129 178 Other LT Liabilities 2 2 2 2 Net Profit before Except. 48 67 129 178 Shareholder’s Equity 229 508 629 798 Preference Dividend 0 0 (8) (8) Minority Interests 40 40 40 40 Net Pft Pre-Ex, aft pref div 48 67 121 170 Total Cap. & Liab. 470 1,214 1,513 1,685 EBITDA 61 90 212 219 Non-Cash Wkg. Capital 22 27 55 68 Sales Gth (%) (8.7) 41.8 145.8 18.5 Net Cash/(Debt) (95) (478) (591) (565) EBITDA Gth (%) 30.9 48.6 134.2 3.4 Opg Profit Gth (%) 36.3 46.6 131.0 38.9 Net Profit Gth (%) 44.6 37.2 61.9 37.9 Effective Tax Rate (%) 4.7 5.3 5.1 6.3 Cash Flow Statement (US$ m) Rates & Ratio


Pre-Tax Profit 61 84 136 190 Gross Margins (%) 51.7 49.5 48.8 55.3 Dep. & Amort. 10 14 49 0 Opg Profit Margin (%) 38.9 40.2 37.8 44.3 Tax Paid (1) (4) (4) (7) Net Profit Margin (%) 54.3 52.6 34.6 40.3 Assoc. & JV Inc/(loss) (10) (15) (22) (23) ROAE (%) 29.2 25.0 25.9 27.7 Chg in Wkg.Cap. (20) (6) (30) (18) ROA (%) 13.4 9.5 8.9 10.6 Other Operating CF (6) (13) 0 0 ROCE (%) 10.3 7.2 10.3 12.1 Net Operating CF 35 61 129 141 Div Payout Ratio (%) 0.9 0.9 0.6 0.4 Capital Exp.(net) (58) (621) (235) (106) Net Interest Cover (x) 61.1 12.6 5.3 6.7 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.2 0.2 0.3 0.3 Invts in Assoc. & JV (15) (23) 0 0 Debtors Turn (avg days) 117.0 90.9 73.4 96.2 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 245.0 166.2 123.0 120.3 Other Investing CF 3 0 0 0 Inventory Turn (avg days) 3.2 N/A N/A N/A Net Investing CF (70) (644) (235) (106) Current Ratio (x) 1.6 2.4 2.5 2.7 Div Paid (1) (1) (1) (1) Quick Ratio (x) 1.2 2.1 2.2 2.4 Chg in Gross Debt 29 458 143 (5) Net Debt/Equity (X) 0.4 0.9 0.9 0.7 Capital Issues 0 101 0 0 Net Debt/Equity ex MI (X) 0.4 0.9 0.9 0.7 Other Financing CF (5) 100 (8) (8) Capex to Debt (%) 36.6 100.8 30.9 14.1 Net Financing CF 23 658 135 (13) Z-Score (X) 2.1 1.7 1.8 2.1 Currency Adjustments 0 0 0 0 N. Cash/(Debt)PS (US cts.) (13.2) (52.8) (63.6) (60.8) Chg in Cash (12) 75 29 22 Opg CFPS (US cts.) 7.6 7.3 17.1 17.2 Free CFPS (US cts.) (3.3) (61.9) (11.3) 3.8 Quarterly / Interim Income Statement (US$ m) Segmental Breakdown / Key Assumptions


Turnover 27 31 37 39 Revenues (US$ m) Cost of Goods Sold (14) (17) (20) (20) Offshore Logistics Support 65 71 138 131 Gross Profit 13 14 17 19 Liftboats & jackup rigs 42 81 234 311 Other Oper. (Exp)/Inc (3) (2) (3) (4) Others 0 0 0 0 Operating Profit 10 12 14 15 Total 107 152 373 442 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 2 4 3 4 Net Interest (Exp)/Inc 0 0 0 (1) Operating profit (US$ m) Exceptional Gain/(Loss) 0 0 13 0 Offshore Logistics Support 24 23 37 38 Pre-tax Profit 11 15 29 18 Liftboats & jackup rigs 26 38 103 157 Tax (1) (1) (1) (1) Others (8) 0 0 0 Minority Interest 0 0 0 0 Total 42 61 141 196 Net Profit 10 14 28 16 Net profit bef Except. 11 14 15 16 Preference Dividend 0 0 0 0 Operating profit Margins Net Pft Pre-Ex, aft pref div 11 14 15 16 Offshore Logistics Support 37.1 31.9 27.1 29.4 EBITDA 15 18 19 23 Liftboats & jackup rigs 61.4 47.5 44.1 50.6 Others NM NM NM NM Sales Gth (%) (14.5) 12.1 21.5 4.0 Total 38.9 40.2 37.8 44.3 EBITDA Gth (%) (10.8) 26.0 2.6 20.2 Opg Profit Gth (%) (18.0) 20.2 18.2 7.6 Net Profit Gth (%) (19.0) 34.2 99.8 (42.8) Key Assumptions Gross Margins (%) 48.1 44.4 45.9 48.2 Est avg day rate: Offshore 7,777.0 9,780.7 20,183.2 20,183.2 Opg Profit Margins (%) 35.5 38.1 37.0 38.3 Est utilisation: Offshore 79.8 78.7 78.7 78.7 Net Profit Margins (%) 38.5 46.1 75.7 41.7 Est avg day rate: Liftboats 45,516.2 47,755.7 48,551.8 49,427.7 Est utilisation: Liftboats (%) 95.0 97.2 98.1 98.1 Source: Company, DBS Vickers


Page 20


Bloomberg: JAYA SP | Reuters: JAYA.SI

BUY S$0.665 STI : 3,224.80 Price Target : 12-month S$ 0.85 Potential Catalyst: Earnings recovery; new orders; resumption of dividend payout DBSV vs Consensus: NA Analyst Jeremy THIA CFA +65 6398 7974 [email protected]

Price Relative

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83

103

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143

163

183

203

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Relative IndexS$

Jaya Holdings (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Jun (US$ m) 2011A 2012A 2013F 2014F

Turnover 99 82 198 144 EBITDA 90 48 72 85 Pre-tax Profit 82 47 38 48 Net Profit 65 44 36 45 Net Pft (Pre Ex.) 49 19 35 45 EPS (S cts) 10.3 7.0 5.7 7.2 EPS Pre Ex. (S cts) 7.8 3.0 5.6 7.2 EPS Gth (%) (12) (33) (18) 25 EPS Gth Pre Ex (%) (44) (61) 86 27 Diluted EPS (S cts) 10.3 7.0 5.7 7.2 Net DPS (S cts) 0.0 0.0 0.0 0.0 BV Per Share (S cts) 72.0 79.2 84.9 92.0 PE (X) 6.5 9.6 11.7 9.3 PE Pre Ex. (X) 8.6 22.2 11.9 9.3 P/Cash Flow (X) 9.0 2.8 5.2 4.3 EV/EBITDA (X) 5.5 9.6 7.5 6.3 Net Div Yield (%) 0.0 0.0 0.0 0.0 P/Book Value (X) 0.9 0.8 0.8 0.7 Net Debt/Equity (X) 0.2 0.1 0.2 0.2 ROAE (%) 16.4 9.2 7.0 8.1 Earnings Rev (%): - - Consensus EPS (S cts): 14.7 11.0 Other Broker Recs: B: 1 S: 0 H: 1 ICB Industry : Industrials ICB Sector: Industrial Engineering Principal Business: Owning & chartering of offshore support vessels operating in the offshore oil and gas, marine construction, mining & harbour tug operations. Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 770 Mkt. Cap (S$m/US$m) 514 / 420 Major Shareholders Nautical Offshore (%) 54.8 Fidelity Mgmt & Research (%) 9.5 Cheyne Capital (%) 5.0 Free Float (%) 30.7 Avg. Daily Vol.(‘000) 957


Jaya Holdings

A new chapter of growth

Clearer direction with repositioned businesses

Strategic alliance with IHC a potential game changer

Earnings have troughed; projecting FY12-14 EPS CAGR of 54%

A recovery play with potential dividend kicker; re-instate coverage with BUY, +45% to TP of S$0.85

Repositioned businesses provide clearer direction. Jaya has repositioned itself as a services provider to the offshore energy sector. Its core focus on chartering ensures a higher level of recurring income, while a move away from speculative shipbuilding would reduce earnings volatility.

Strategic alliance with IHC Merwede - a potential game

changer. This could see both parties collaborating to build IHC’s high specification offshore vessels at Jaya’s yards. Securing such orders would propel Jaya up the value chain and enable it to leapfrog its regional competitors. Indeed, recent media reports indicate that IHC-Jaya is in talks with several parties for potentially seven to 10 orders worth EUR70-150m each.

Projecting robust earnings recovery from FY12’s trough.

We believe Jaya’s earnings troughed in FY12 as the group transitioned to its new business model. Despite fewer expected vessel sales/disposals, we project FY12-14F EPS CAGR of 54%, driven primarily by the Offshore Support division on a larger fleet, improved day rates, and better margins. There is upside potential to our numbers as we have not assumed new vessel orders. BUY, TP S$0.85; a recovery play with potential dividend

kicker. With a clearer focus and less volatile earnings, we believe Jaya now offers a more attractive investment opportunity. We see a potential re-rating of the stock towards its book value on a strong 86% recovery in FY13 earnings. The potential award of high-value newbuild orders and resumption of dividend payments following the refinancing of its scheme debt are likely catalysts. We re-instate coverage on Jaya with BUY and TP of S$0.85, pegged to 1.0x FY13 P/BV.



Jaya Holdings

Page 21


FY Jun 2011A 2012A 2013F 2014F FY Jun 2011A 2012A 2013F 2014F

Turnover 99 82 198 144 Net Fixed Assets 314 420 547 615 Cost of Goods Sold (69) (57) (149) (85) Invts in Associates & JVs 6 0 0 0 Gross Profit 30 26 49 59 Other LT Assets 0 0 0 0 Other Opng (Exp)/Inc 30 0 (5) (5) Cash & ST Invts 187 200 32 34 Operating Profit 60 26 44 54 Inventory 222 167 165 151 Other Non Opg (Exp)/Inc 9 (1) 0 0 Debtors 33 17 40 26 Associates & JV Inc 1 (1) 0 0 Other Current Assets 30 20 20 20 Net Interest (Exp)/Inc (3) (2) (6) (6) Total Assets 791 825 804 847 Exceptional Gain/(Loss) 16 25 1 0 Pre-tax Profit 82 47 38 48 ST Debt 12 50 25 25 Tax (17) (3) (2) (3) Other Current Liab 80 80 119 117 Minority Interest 0 0 0 0 LT Debt 246 196 125 125 Preference Dividend 0 0 0 0 Other LT Liabilities 0 0 0 0 Net Profit 65 44 36 45 Shareholder’s Equity 453 498 534 579 Net Profit before Except. 49 19 35 45 Minority Interests 0 0 0 0 EBITDA 90 48 72 85 Total Cap. & Liab. 791 825 804 847 Sales Gth (%) (61.0) (16.9) 141.0 (27.4) Non-Cash Wkg. Capital 204 124 106 81 EBITDA Gth (%) (24.4) (46.0) 47.5 19.4 Net Cash/(Debt) (71) (46) (119) (117) Opg Profit Gth (%) (41.6) (56.9) 69.1 24.2 Net Profit Gth (%) (11.8) (32.6) (17.7) 24.9 Effective Tax Rate (%) 21.1 6.9 6.3 6.5 Cash Flow Statement (US$ m) Rates & Ratio

FY Jun 2011A 2012A 2013F 2014F FY Jun 2011A 2012A 2013F 2014F

Pre-Tax Profit 82 47 38 48 Gross Margins (%) 30.1 31.1 24.7 40.8 Dep. & Amort. 20 24 28 31 Opg Profit Margin (%) 60.4 31.3 22.0 37.6 Tax Paid (10) (4) (12) (2) Net Profit Margin (%) 65.8 53.3 18.2 31.3 Assoc. & JV Inc/(loss) (1) 1 0 0 ROAE (%) 16.4 9.2 7.0 8.1 Chg in Wkg.Cap. 17 116 28 24 ROA (%) 8.6 5.4 4.4 5.5 Other Operating CF (61) (31) (2) (3) ROCE (%) 7.2 3.3 5.7 7.1 Net Operating CF 47 152 80 98 Div Payout Ratio (%) 0.0 0.0 0.0 0.0 Capital Exp.(net) (5) (129) (153) (96) Net Interest Cover (x) 18.8 12.0 7.6 9.2 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.1 0.1 0.2 0.2 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 135.4 111.3 52.3 83.4 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 274.2 482.5 224.7 661.3 Other Investing CF 2 9 0 0 Inventory Turn (avg days) 1,541.4 2,184.8 500.2 1,073.7 Net Investing CF (3) (119) (153) (96) Current Ratio (x) 5.1 3.1 1.8 1.6 Div Paid 0 0 0 0 Quick Ratio (x) 2.4 1.7 0.5 0.4 Chg in Gross Debt 0 (12) (96) 0 Net Debt/Equity (X) 0.2 0.1 0.2 0.2 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 0.2 0.1 0.2 0.2 Other Financing CF (6) (8) 0 0 Capex to Debt (%) 2.1 52.3 101.8 63.9 Net Financing CF (6) (19) (96) 0 Z-Score (X) 1.7 1.6 1.8 1.8 Currency Adjustments 0 0 0 0 N. Cash/(Debt)PS (US cts.) (9.2) (5.9) (15.4) (15.1) Chg in Cash 37 14 (169) 2 Opg CFPS (US cts.) 3.9 4.8 6.7 9.6 Free CFPS (US cts.) 5.4 3.0 (9.4) 0.3 Quarterly / Interim Income Statement (US$ m) Segmental Breakdown / Key Assumptions

FY Jun 2Q2012 3Q2012 4Q2012 1Q2013 FY Jun 2011A 2012A 2013F 2014F

Turnover 14 16 23 39 Revenues (US$ m) Cost of Goods Sold (12) (9) (15) (27) Offshore Support Services 52 70 102 129 Gross Profit 2 7 8 12 Offshore Engineering Services 47 13 96 15 Other Oper. (Exp)/Inc (2) (2) 5 (1) Others 0 0 0 0 Operating Profit 0 5 13 11 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 0 0 0 0 Total 99 82 198 144 Net Interest (Exp)/Inc (1) 0 0 (1) Exceptional Gain/(Loss) 3 1 22 1 Key Assumptions Pre-tax Profit 2 6 35 10 Size of charter fleet 23.0 28.0 31.0 35.0 Tax (1) (2) 0 0 Avg day rate (US$) 10,214 9,704.9 12,046.0 12,250.0 Minority Interest 0 0 0 0 Ann. utilisation rate (%) 61.0 70.0 82.3 88.0 Net Profit 1 4 34 10 No. of vessels disposed/year 5.0 4.0 1.0 1.0 Net profit bef Except. (2) 3 13 9 No. of vessels sold per year 3.0 1.0 3.0 1.0 EBITDA 6 12 19 16 Sales Gth (%) (50.2) 14.3 43.6 66.0 EBITDA Gth (%) (48.6) 93.9 68.8 (15.5) Opg Profit Gth (%) (95.1) 1,442.0 157.6 (20.7) Net Profit Gth (%) (79.1) 276.6 812.4 (70.5) Gross Margins (%) 14.1 42.3 34.8 31.1 Opg Profit Margins (%) 2.4 32.0 57.3 27.4 Net Profit Margins (%) 7.0 23.2 147.3 26.2 Source: Company, DBS Vickers


Page 22


Bloomberg: BAL SP | Reuters: BUMI.SI

BUY S$1.08 STI : 3,224.80 Price Target : 12-Month S$ 1.25 Potential Catalyst: CPO price recovery, better-than-expected results, more land bank acquisitions DBSV vs Consensus: Lower FY13F and FY14F earnings due to lower CPO price projections Analyst Ben SANTOSO +65 6398 7976 [email protected]

Price Relative

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109

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Apr-12 Jul-12 Oct-12

Relative IndexS$

Bumitama Agri (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (Rpbn) 2011A 2012F 2013F 2014F

Turnover 2,805 3,740 4,501 4,732 EBITDA 1,380 1,573 1,970 2,194 Pre-tax Profit 1,190 1,309 1,693 1,906 Net Profit 762 824 1,068 1,201 Net Pft (Pre Ex.) 762 824 1,068 1,201 Net Pft (ex. BA gains) 632 824 1,068 1,201 EPS (S cts) 5.5 6.0 7.7 8.7 EPS Pre Ex. (S cts) 5.5 6.0 7.7 8.7 EPS Gth (%) (15) 8 29 12 EPS Gth Pre Ex (%) (15) 8 29 12 Diluted EPS (S cts) 5.5 6.0 7.7 8.7 Net DPS (S cts) 0.0 0.0 0.0 0.0 BV Per Share (S cts) 19.4 27.5 35.2 43.9 PE (X) 19.7 18.2 14.1 12.5 PE Pre Ex. (X) 19.7 18.2 14.1 12.5 P/Cash Flow (X) 15.4 13.8 10.0 9.2 EV/EBITDA (X) 12.5 11.1 8.8 7.8 Net Div Yield (%) 0.0 0.0 0.0 0.0 P/Book Value (X) 5.6 3.9 3.1 2.5 Net Debt/Equity (X) 0.7 0.5 0.3 0.2 ROAE (%) 32.5 25.4 24.6 21.9 Earnings Rev (%): - - - Consensus EPS (S cts): 5.7 8.0 9.5 Other Broker Recs: B: 4 S: 0 H: 2 ICB Industry : Consumer Goods ICB Sector: Food Producers Principal Business: A fast-growing Indonesian oil palm planter with estates in Riau, Central & West Kalimantan. The group sells Crude Palm Oil (CPO) and Palm Kernel (PK). Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 1,758 Mkt. Cap (S$bn/US$m) 1,906 / 1,554 Major Shareholders Fortune Holdings (%) 52.6 Oakridge Investments (%) 30.4 Free Float (%) 16.9 Avg. Daily Vol.(‘000) 1,808


Bumitama Agri

Our upstream pick • An Indonesian oil palm planter in a strong growth

phase, with FY12F-15F earnings CAGR of 24%

• Plantable reserves of c.63k ha to support expansion to FY15F, while net gearing to decline to 19% by FY14F

• PEG ratio of 0.57x undervalues Bumitama relative to its growth outlook

• BUY for 16% upside to S$1.25 TP

An earnings growth story. Bumitama has been aggressively planting/acquiring estates since 2004. The group is expected to increase its own planted area to slightly over 100k ha by end 2012 – around 50% of which is immature. Bumitama is poised to deliver 24% FFB output and 17% earnings CAGR between FY12F and FY15F – despite declining CPO price expectations. The group’s share of outside FFB processed is also due to decline from 33% in FY12F to 10% in FY15F. This should help to improve its EBITDA margins to 47% in FY15F from 42% in FY12F. Strong financial position. Given its strong own FFB volume growth, Bumitama will have a strong earnings outlook and cash flow over the next three years. Its financial position is likewise expected to strengthen with net gearing declining to 19% by FY14F from 55% in FY12F. This will allow the group to utilise its plantable reserves of 63k ha to further boost its earnings in the medium-term and provide financial flexibility to potentially add to its land bank. Undemanding value for growth. We peg Bumitama’s TP at S$1.25/share, based on DCF valuation (WACC: 13.5%, Rf: 6.0%, Rm: 14.2%, beta: 1.1, TG: 3%). This implies FY13F PE of 14.1x. Compared to its three-year earnings CAGR of 24%, Bumitama’s FY13F PEG ratio is estimated to be only 0.57x, which we believe is undemanding relative to peers. Our BUY rating on the counter is premised on 16% upside to a TP of S$1.25.



Bumitama Agri

Page 23

Income Statement (Rpbn) Balance Sheet (Rpbn) FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Turnover 2,805 3,740 4,501 4,732 Net Fixed Assets 1,170 1,454 1,761 1,983 Cost of Goods Sold (1,566) (2,039) (2,395) (2,415) Invts in Associates & JVs 0 99 99 99 Gross Profit 1,240 1,701 2,106 2,317 Other LT Assets 4,674 5,592 6,254 6,923 Other Opng (Exp)/Inc (194) (243) (290) (309) Cash & ST Invts 270 863 629 555 Operating Profit 1,046 1,457 1,816 2,008 Inventory 263 226 266 268 Other Non Opg (Exp)/Inc 238 (7) 2 (2) Debtors 52 92 110 116 Associates & JV Inc 0 0 0 0 Other Current Assets 77 77 77 77 Net Interest (Exp)/Inc (94) (141) (125) (100) Total Assets 6,507 8,404 9,197 10,022 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 1,190 1,309 1,693 1,906 ST Debt 1,626 550 605 582 Tax (297) (322) (414) (468) Other Current Liab 771 725 827 815 Minority Interest (131) (163) (211) (237) LT Debt 692 2,414 1,747 1,142 Preference Dividend 0 0 0 0 Other LT Liabilities 493 504 529 556 Net Profit 762 824 1,068 1,201 Shareholder’s Equity 2,681 3,804 4,872 6,073 Net Profit before Except. 762 824 1,068 1,201 Minority Interests 244 407 618 855 Net Pft (ex. BA gains) 632 824 1,068 1,201 Total Cap. & Liab. 6,507 8,404 9,197 10,022 EBITDA 1,380 1,573 1,970 2,194 Sales Gth (%) 43.1 33.3 20.4 5.1 Non-Cash Wkg. Capital (378) (330) (373) (354) EBITDA Gth (%) (9.5) 14.0 25.2 11.4 Net Cash/(Debt) (2,047) (2,100) (1,722) (1,169) Opg Profit Gth (%) 85.1 39.3 24.6 10.6 Net Profit Gth (%) (14.6) 8.2 29.5 12.5 Effective Tax Rate (%) 25.0 24.6 24.5 24.6 Cash Flow Statement (Rpbn) Rates & Ratio FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Pre-Tax Profit 1,190 1,309 1,693 1,906 Gross Margins (%) 44.2 45.5 46.8 49.0 Dep. & Amort. 95 122 152 188 Opg Profit Margin (%) 37.3 39.0 40.3 42.4 Tax Paid (297) (322) (414) (468) Net Profit Margin (%) 27.2 22.0 23.7 25.4 Assoc. & JV Inc/(loss) 0 0 0 0 ROAE (%) 32.5 25.4 24.6 21.9 Chg in Wkg.Cap. 173 (48) 43 (19) ROA (%) 12.6 11.1 12.1 12.5 Other Operating CF (186) 23 24 26 ROCE (%) 14.5 16.4 17.1 17.2 Net Operating CF 972 1,085 1,498 1,632 Div Payout Ratio (%) 0.0 0.0 0.0 0.0 Capital Exp.(net) (858) (1,046) (1,120) (1,079) Net Interest Cover (x) 11.1 10.3 14.5 20.1 Other Invts.(net) 0 (233) 0 0 Asset Turnover (x) 0.5 0.5 0.5 0.5 Invts in Assoc. & JV 0 (1) 0 0 Debtors Turn (avg days) 5.1 7.0 8.2 8.7 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 89.5 82.4 76.3 79.4 Other Investing CF 10 (46) 0 0 Inventory Turn (avg days) 52.0 46.6 40.0 43.7 Net Investing CF (848) (1,325) (1,120) (1,079) Current Ratio (x) 0.3 1.0 0.8 0.7 Div Paid 0 0 0 0 Quick Ratio (x) 0.1 0.7 0.5 0.5 Chg in Gross Debt (42) 633 (611) (628) Net Debt/Equity (X) 0.7 0.5 0.3 0.2 Capital Issues (88) 200 0 0 Net Debt/Equity ex MI (X) 0.8 0.6 0.4 0.2 Other Financing CF (87,092) 778 817 858 Capex to Debt (%) 37.0 35.3 47.6 62.6 Net Financing CF (217,076) 833,296 (610,671) (627,280) Z-Score (X) NA 3.7 4.1 4.7 Currency Adjustments (393) 0 0 0 N. Cash/(Debt)PS (Rp) (1,165) (1,195) (980) (665) Chg in Cash (92,937) 592,761 (233,533) (74,170) Opg CFPS (Rp) 455 644 828 940 Free CFPS (Rp) 65 22 215 315 Quarterly / Interim Income Statement (Rpbn) Segmental Breakdown / Key Assumptions FY Dec 1Q2012 2Q2012 3Q2012 FY Dec 2011A 2012F 2013F 2014F

Turnover 854 829 846 Revenues (Rp m) Cost of Goods Sold (461) (508) (487) CPO 2,526 3,409 4,109 4,317 Gross Profit 394 321 360 PK 279 331 393 415 Other Oper. (Exp)/Inc (76) (45) (60) Operating Profit 317 275 299 Other Non Opg (Exp)/Inc (19) 31 (12) Associates & JV Inc 0 0 0 Total 2,805 3,740 4,501 4,732 Net Interest (Exp)/Inc (27) (24) (15) Key Assumptions Exceptional Gain/(Loss) 0 0 0 CPO price (RM/MT) 3,274 3,020 2,940 2,920 Pre-tax Profit 272 282 272 Own mature oil palm 41,084 51,532 64,769 78,372 Tax (68) (61) (70) CPO sales volume (MT) 335,409 451,645 547,618 586,315 Minority Interest (15) (30) (24) Palm kernel sales vol. (MT) 62,418 85,326 103,457 110,768 Net Profit 189 192 178 Avg. USD/IDR rate 8,757 9,370 9,250 8,975 Net profit bef Except. 189 192 178 EBITDA 318 327 304 Sales Gth (%) N/A (3.0) 2.1 EBITDA Gth (%) N/A 2.7 (6.8) Opg Profit Gth (%) N/A (13.3) 8.7 Net Profit Gth (%) N/A 1.3 (7.1) Gross Margins (%) 46.1 38.7 42.5 Opg Profit Margins (%) 37.1 33.2 35.4 Net Profit Margins (%) 22.1 23.1 21.0 Source: Company, DBS Vickers


Page 24


Bloomberg: CDREIT SP | Reuters: CDLT.SI

BUY S$1.93 STI : 3,224.80 (Upgrade from HOLD) Price Target : 12-Month S$ 2.11 (Prev S$ 2.01) Potential Catalyst: Acquisitions / stronger than expected results DBSV vs Consensus: Slighter higher as we factor in acquistion Analyst Derek TAN +65 6398 7966 [email protected] LOCK Mun Yee +65 6398 7972 [email protected]

Price Relative

59

79

99

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139

159

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Relative IndexS$

CDL Hospitality Trusts (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (S$ m) 2011A 2012F 2013F 2014F

Gross Revenue 141 150 163 170 Net Property Inc 135 140 152 159 Total Return 176 111 118 123 Distribution Inc 118 120 128 134 EPU (S cts) 10.7 11.5 12.2 12.6 EPU Gth (%) 14 7 6 4 DPU (S cts) 11.1 11.5 12.2 12.6 DPU Gth (%) 8 4 6 4 NAV per shr (S cts) 160.9 160.0 159.1 158.1 PE (X) 18.0 16.8 15.9 15.3 Distribution Yield (%) 5.7 5.9 6.3 6.5P/NAV (x) 1.2 1.2 1.2 1.2Aggregate Leverage (%) 26.3 26.2 29.3 29.2 ROAE (%) 6.9 7.1 7.6 8.0 Distn. Inc Chng (%): (0.4) 2.4 2.8 Consensus DPU (S cts): 11.4 11.9 12.2 Other Broker Recs: B: 6 S: 4 H: 9 ICB Industry : Financials ICB Sector: Real Estate Investment Trust Principal Business: CDL REIT is a stapled security consisting of hospitality trust with portfolio of hotel assets in Singapore and a business trust Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 969 Mkt. Cap (S$m/US$m) 1,884 / 1,535 Major Shareholders Hospitality Holdings Pte Ltd (%) 32.4 Aberdeen Asset Management (%) 6.7 Cohen & Steers Inc (%) 5.0 Free Float (%) 51.0 Avg. Daily Vol.(‘000) 2,169

Industry Focus

CDL Hospitality Trusts

Hitting the right notes

• Opportunistic venture into Maldives

• Merits of the deal outweighs potential risks

• Upgrade to BUY, TP raised to S$2.11

Opportunistic venture into Maldives. CDL Hospitality Trust (CDREIT) announced that it is entering into a sale-and-leaseback of Angsana Velavaru Maldives from Banyan Tree Holdings. While this is different from its current portfolio of largely city-hotels, we believe that the merits of this deal overweigh potential risks.

Merits of the deal with more upside in the medium term. Firstly, it gives CDREIT exposure into the robust growth of the Maldives hospitality market, supported by growing popularity from Chinese tourists, which now account for close to 25% of total visitors to Maldives. Secondly, we see the synergistic collaboration with Banyan Tree Holdings as positive for both parties : (i) the 10-year lease with vendor, one of the leading resort global operators, offers operational visibility for the property; (ii) rental payments pegged to gross operating profits and incentives motivates the operator to achieve the highest possible returns for the property; and (iii) downside protection with a minimum rent and reserve of US$6.0m, implying a return of at least 7.0% (vs its reported proforma FY12F initial yield of 9.6%), which we believe is attractive. Lastly, there is potential to develop more water villas (not factored in yet) at the site with new guidelines from the authorities.

Upgrade to BUY, TP raised to TP S$2.11 based on DDM. Incorporating this new acquisition, our numbers are raised by 3.2-3.7% and gearing is likely to remain at a more efficient 29% and thus our TP is raised to S$2.11. While share price of CDREIT has underperformed the S-REIT sector of late given worries of slowing RevPAR growth from Singapore, we see the acquisition of Angsana Velavaru as a means of putting the trust back onto a growth path. Upgrade to BUY.


Industry Focus

CDL Hospitality Trusts

Page 25

Statement of Total Return (S$ m) Balance Sheet (S$ m) FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Gross revenue 141 150 163 170 Investment Properties 2,030 2,040 2,128 2,131 Property expenses (6) (10) (11) (11) Other LT Assets 0 0 0 0 Net Property Income 135 140 152 159 Cash & ST Invts 70 74 77 76 Other Operating expenses (14) (14) (15) (15) Inventory 0 0 0 0 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 18 18 19 20 Net Interest (Exp)/Inc (13) (14) (18) (19) Other Current Assets 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 Total Assets 2,118 2,131 2,224 2,228 Net Income 108 112 120 125 Tax (5) (2) (2) (2) ST Debt 0 0 0 0 Minority Interest 0 0 0 0 Other Current Liabilities 24 37 42 45 Preference Dividend 0 0 0 0 LT Debt 535 535 623 623 Net Income After Tax 103 111 118 123 Other LT Liabilities 12 12 12 12 Total Return 176 111 118 123 Unit holders’ funds 1,547 1,547 1,547 1,547 Non-tax deductible Items 15 10 10 11 Minority Interests 0 0 0 0 Net Inc available for Dist. 118 120 128 134 Total Funds & Liabilities 2,118 2,131 2,224 2,228 Revenue Gth (%) 15.4 6.3 8.7 4.5 Non-Cash Wkg. Capital (6) (19) (22) (25) N Property Inc Gth (%) 17.5 3.7 8.7 4.5 Net Cash/(Debt) (465) (461) (546) (546) Net Inc Gth (%) 22.0 7.3 6.6 4.5 Dist. Payout Ratio (%) 90.0 92.0 92.0 92.0 Cash Flow Statement (S$ m) Rates & Ratio FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Pre-Tax Income 108 112 120 125 Net Prop Inc Margins (%) 95.8 93.5 93.5 93.5 Dep. & Amort. 0 0 0 0 Net Income Margins (%) 73.1 73.7 72.3 72.3 Tax Paid 0 0 0 0 Dist to revenue (%) 83.7 80.2 78.6 78.6 Associates &JV Inc/(Loss) 0 0 0 0 Managers & Trustee’s fees 10.2 9.4 9.2 9.1 Chg in Wkg.Cap. 0 12 1 1 to sales (%) Other Operating CF 23 0 0 0 ROAE (%) 6.9 7.1 7.6 8.0 Net Operating CF 131 124 121 126 ROA (%) 5.2 5.2 5.4 5.5 Net Invt in Properties (166) (10) (88) (3) ROCE (%) 5.9 5.9 6.3 6.5 Other Invts (net) 0 0 0 0 Int. Cover (x) 9.2 9.2 7.8 7.7 Invts in Assoc. & JV 0 0 0 0 Current Ratio (x) 3.7 2.5 2.3 2.1 Div from Assoc. & JVs 0 0 0 0 Quick ratio (x) 3.7 2.5 2.3 2.1 Other Investing CF 0 0 0 0 Aggregate Leverage (%) 26.3 26.2 29.3 29.2 Net Investing CF (166) (10) (88) (3) Z-Score (X) 2.4 2.5 2.5 2.5 Distribution Paid (102) (111) (118) (123) Operating CFPS (S cts) 13.7 11.7 12.3 12.8 Chg in Gross Debt 153 0 88 0 Free CFPS (S cts) (3.7) 11.8 3.4 12.6 New units issued 0 0 0 0 Other Financing CF (13) 0 0 0 Net Financing CF 38 (111) (30) (123) Currency Adjustments 0 0 0 0 Chg in Cash 3 4 3 0 Quarterly / Interim Income Statement (S$ m) P/Book Value (x) FY Dec 4Q2011 1Q2012 2Q2012 3Q2012

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2009 2010 2011 2012

Gross revenue 38 38 37 36 Property expenses (2) (2) (3) (3) Net Property Income 36 36 34 34 Other Operating expenses (5) (4) (4) (3) Other Non Opg (Exp)/Inc 0 0 0 0 Net Interest (Exp)/Inc (3) (4) (5) (4) Exceptional Gain/(Loss) 0 0 0 0 Net Income 28 29 26 26 Tax (4) 0 0 0 Minority Interest 0 0 (2) 0 Net Income after Tax 24 29 24 26 Total Return 0 0 0 0 Non-tax deductible Items (69) 1 7 3 Net Inc available for Dist. 28 30 31 29 Revenue Gth (%) 4 2 (5) (1) N Property Inc Gth (%) 4 1 (5) (1) Net Inc Gth (%) (10) 18 (15) 9 Net Prop Inc Margin (%) 93.9 93.8 93.1 93.0 Dist. Payout Ratio (%) 0.0 0.0 0.0 0.0 Source: Company, DBS Vickers


Page 26


Bloomberg: FEHT SP | Reuters: FAEH.SI

BUY S$0.985 STI : 3,224.80 Price Target : 12-Month S$ 1.09 Potential Catalyst: Acquisitions DBSV vs Consensus: In line Analyst Derek TAN CPA +65 6398 7966 [email protected]

Price Relative

89

109

129

149

169

189

209

0.8

0.9

0.9

1.0

1.0

1.1

1.1

1.2

1.2

Aug-12 Nov-12

Relative IndexS$

Far East Hospitality Trust (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (S$ m) 2011A 2012F 2013F 2014F

Gross Revenue 104 118 126 132 Net Property Inc 95 108 115 121 Total Return 66 80 86 89 Distribution Inc 76 88 95 99 EPU (S cts) 4.1 5.0 5.3 5.5 EPU Gth (%) N/A 20 7 3 DPU (S cts) 4.7 5.5 5.9 6.0 DPU Gth (%) N/A 17 7 3 NAV per shr (S cts) 93.1 93.1 92.7 91.9 PE (X) 23.8 19.8 18.4 17.8 Distribution Yield (%) 4.8 5.6 6.0 6.1P/NAV (x) 1.1 1.1 1.1 1.1Aggregate Leverage (%) 30.2 30.7 31.1 31.1 ROAE (%) 8.9 5.3 5.7 6.0 Distn. Inc Chng (%): - - - Consensus DPU (S cts): 4.7 6.0 6.2 Other Broker Recs: B: 2 S: 0 H: 4 ICB Industry : Financials ICB Sector: Real Estate Investment Trusts Principal Business: Far East Hospitality Trust is a REIT with a primary focus in investing in hospitality and hospitality related assets located in Singapore. Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 1,604 Mkt. Cap (S$m/US$m) 1,580 / 1,289 Major Shareholders Golden Development (%) 13.9 Golden Landmark (%) 12.0 Far East Organization (%) 11.4 Free Float (%) 62.7 Avg. Daily Vol.(‘000) 3,801


Far East Hospitality Trust

The one to be reckoned with

• Pure play into Singapore Hospitality sector with an industry leading position

• Reputable sponsor with a visible pipeline

• Near-term acquisitions catalyst, BUY, TP S$1.09 An industry leader with attractive earnings growth potential. Far East Hospitality Trust (Far East H-Trust) offers investors exciting exposure to Singapore’s growing hospitality sector. A sizeable initial portfolio of 11 hotels and serviced residences, with 2,531 room/ unit keys valued at close to S$2.1bn, will make the trust one of the largest single owner of hotels and serviced residences in Singapore. In terms of organic growth prospects, it is one of the strongest amongst peers coming from (i) operational ramp-up of the newly-completed Oasia Hotel; (ii) phased completions of various refurbishment programs instituted by the sponsor and the manager over the next two years. Reputable sponsor backing with a visible pipeline. The sponsor is part of Far East Organization (FEO), a household name in the property development and hospitality sector in Singapore. Apart from being able to tap the sponsor’s valuable experience in the hospitality business, the sponsor has also given a ROFR to Far East H-Trust to acquire up to an initial pipeline of seven hotels/serviced residences which could potentially grow keys under its ownership by close to 49.1%. Acquisition catalyst in the near term, BUY, TP S$1.09. FEHT signed an MOU regarding the proposed acquisition of Rendezvous Grand Singapore Hotel, a prime downtown hotel. While no financials are shared at this point, we expect this acquisition to be accretive to the trust when completed and should result in further upside surprise to our numbers.



Far East Hospitality Trust

Page 27

Statement of Total Return (S$ m) Balance Sheet (S$ m) FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Gross revenue 104 118 126 132 Investment Properties 2,140 2,146 2,158 2,162 Property expenses (10) (10) (11) (11) Other LT Assets 0 0 0 0 Net Property Income 95 108 115 121 Cash & ST Invts 5 6 6 7 Other Operating expenses (12) (11) (13) (13) Inventory 0 0 0 0 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 0 6 6 7 Net Interest (Exp)/Inc (16) (16) (17) (18) Other Current Assets 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 Total Assets 2,145 2,157 2,170 2,176 Net Income 66 80 86 89 Tax 0 0 0 0 ST Debt 0 0 0 0 Minority Interest 0 0 0 0 Other Current Liabilities 5 5 5 6 Preference Dividend 0 0 0 0 LT Debt 647 659 672 672 Net Income After Tax 66 80 86 89 Other LT Liabilities 0 0 0 0 Total Return 66 80 86 89 Unit holders’ funds 1,493 1,493 1,493 1,498 Non-tax deductible Items 9 9 9 9 Minority Interests 0 0 0 0 Net Inc available for Dist. 76 88 95 99 Total Funds & Liabilities 2,145 2,157 2,170 2,176 Revenue Gth (%) N/A 12.9 6.6 4.9 Non-Cash Wkg. Capital (5) 1 1 1 N Property Inc Gth (%) N/A 13.7 6.8 5.0 Net Cash/(Debt) (642) (653) (666) (665) Net Inc Gth (%) N/A 20.2 7.5 4.2 Dist. Payout Ratio (%) 100.0 100.0 100.0 95.0 Cash Flow Statement (S$ m) Rates & Ratio FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Pre-Tax Income 66 80 86 89 Net Prop Inc Margins (%) 90.7 91.4 91.5 91.6 Dep. & Amort. 0 0 0 0 Net Income Margins (%) 63.6 67.7 68.3 67.9 Tax Paid 0 0 0 0 Dist to revenue (%) 72.5 75.0 75.4 74.8 Associates &JV Inc/(Loss) 0 0 0 0 Managers & Trustee’s fees 11.3 9.7 10.0 9.7 Chg in Wkg.Cap. 1 (5) 0 0 to sales (%) Other Operating CF 8 9 9 9 ROAE (%) 8.9 5.3 5.7 6.0 Net Operating CF 75 83 95 98 ROA (%) 6.2 3.7 4.0 4.1 Net Invt in Properties (2,149) (6) (13) (4) ROCE (%) 7.8 4.5 4.8 5.0 Other Invts (net) 0 0 0 0 Int. Cover (x) 5.0 5.8 6.2 5.9 Invts in Assoc. & JV 0 0 0 0 Current Ratio (x) 1.1 2.3 2.2 2.3 Div from Assoc. & JVs 0 0 0 0 Quick ratio (x) 1.1 2.3 2.2 2.3 Other Investing CF 0 0 0 0 Aggregate Leverage (%) 30.2 30.7 31.1 31.1 Net Investing CF (2,149) (6) (13) (4) Operating CFPS (S cts) 4.7 5.5 5.9 6.1 Distribution Paid (76) (88) (95) (94) Free CFPS (S cts) (129.3) 4.8 5.1 5.8 Chg in Gross Debt 662 12 13 0 New units issued 1,493 0 0 0 Other Financing CF 0 0 0 0 Net Financing CF 2,079 (76) (82) (94) Currency Adjustments 0 0 0 0 Chg in Cash 5 1 0 1 P/Book Value (x)

0.9

1.0

1.0

1.1

1.1

1.2

1.2

Aug-12 Nov-12

Source: Company, DBS Vickers


Page 28


Bloomberg: CLGL SP | Reuters: CORD.SI

NOT RATED S$0.555 STI : 3,224.80 Price Target : 12-Month S$ 0.65 Potential Catalyst: Acquisitions in Indonesia, India and Philippines DBSV vs Consensus: Below consensus Analyst LING Lee Keng +65 6398 7970 [email protected] Andy SIM CFA +65 6398 7969 [email protected]

Price Relative

82

102

122

142

162

182

202

222

0.4

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0.5

0.6

0.6

0.7

0.7

0.8

0.8

Mar-12 Jun-12 Sep-12 Dec-12

Relative IndexS$

Cordlife Group Ltd (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Jun (S$ m) 2012A 2013F 2014F 2015F

Turnover 29 32 35 41 EBITDA 7 10 11 13 Pre-tax Profit 8 10 12 13 Net Profit 7 9 10 11 Net Pft (Pre Ex.) 7 9 10 11 EPS (S cts) 3.0 3.8 4.3 4.9 EPS Pre Ex. (S cts) 3.0 3.8 4.3 4.9 EPS Gth (%) (47) 28 12 15 EPS Gth Pre Ex (%) (47) 28 12 15 Diluted EPS (S cts) 3.0 3.8 4.3 4.9 Net DPS (S cts) 2.0 1.9 2.1 2.5 BV Per Share (S cts) 30.6 32.5 34.6 37.1 PE (X) 18.6 14.6 13.0 11.3 PE Pre Ex. (X) 18.6 14.6 13.0 11.3 P/Cash Flow (X) 21.4 18.7 17.2 14.1 EV/EBITDA (X) 16.8 11.6 10.2 8.6 Net Div Yield (%) 3.6 3.4 3.8 4.4 P/Book Value (X) 1.8 1.7 1.6 1.5 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 12.4 12.1 12.7 13.7 Earnings Rev (%): - - - Consensus EPS (S cts): 4.8 4.3 4.9 Other Broker Recs: B: 1 S: 0 H: 1 ICB Industry : Consumer Services ICB Sector: General Retailers Principal Business: Provides cord blood banking services in Singapore and Hong Kong. Its services include the collection, processing, testing, cryopreservation and storage of umbilical cord blood at birth. Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 232 Mkt. Cap (S$m/US$m) 129 / 105 Major Shareholders China Stem Cells East Co Ltd (%) 10.5 Lau Wai Chi Stellan (%) 9.4 Coop International Pte Ltd (%) 8.8 Free Float (%) 64.1 Avg. Daily Vol.(‘000) 1,703


Cordlife Group Ltd

Stable recurring income

• Larger of only two private cord blood banks in Singapore; among the top 3 in Hong Kong

• Increasing penetration rate and awareness of cord blood banking to drive growth

• Stable recurring income; potential acquisitions in Indonesia, India and Philippines

• Fair value of S$0.65 offers 17% potential upside Market leader in cord blood banking. Cordlife provides cord blood banking services in Singapore and Hong Kong. Its services include the collection, processing, testing, cryopreservation and storage of umbilical cord blood at birth. It also provides umbilical cord tissue banking services in Hong Kong. Increasing penetration rate and awareness of cord blood banking to drive growth. According to the group’s IPO prospectus, the penetration level in Singapore is expected to rise to 38% by 2015, from 24% in 2010. In Hong Kong and China, the penetration rate is expected to deepen to 20.6% and 5% in 2015, from 11.5% and 2% respectively in 2000. Stable recurring income, acquisitions to boost revenue. The bulk of its revenue is recurring, as >50% of its customers are on an annual payment scheme. Cordlife’s target acquisition markets include Indonesia, India and the Philippines. Fair value S$0.65. The stock current trades at 14.0x FY13F PE. We believe a target PE of 16x based on a slight (<10%) discount to blended forward PE of its peers is reasonable, given its shorter trading history. This translates to a fair value of S$0.65, which offers potential upside of 20% from the current share price.



Cordlife Group Ltd

Page 29

Income Statement (S$ m) Balance Sheet (S$ m) FY Jun 2012A 2013F 2014F 2015F FY Jun 2012A 2013F 2014F 2015F

Turnover 29 32 35 41 Net Fixed Assets 6 6 7 7 Cost of Goods Sold (9) (10) (11) (12) Invts in Associates & JVs 18 20 22 24 Gross Profit 20 22 25 29 Other LT Assets 38 38 39 41 Other Opng (Exp)/Inc (16) (15) (17) (19) Cash & ST Invts 19 20 20 21 Operating Profit 4 7 8 10 Inventory 0 0 1 1 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 9 9 11 12 Associates & JV Inc 2 2 2 2 Other Current Assets 1 1 1 2 Net Interest (Exp)/Inc 2 2 2 2 Total Assets 90 95 101 107 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 8 10 12 13 ST Debt 0 0 0 0 Tax (1) (2) (2) (2) Other Current Liab 8 8 9 10 Minority Interest 0 0 0 0 LT Debt 2 2 2 2 Preference Dividend 0 0 0 0 Other LT Liabilities 8 8 8 9 Net Profit 7 9 10 11 Shareholder’s Equity 71 76 81 86 Net Profit before Except. 7 9 10 11 Minority Interests 0 0 0 0 EBITDA 7 10 11 13 Total Cap. & Liab. 90 95 101 107 Sales Gth (%) 12.1 10.0 12.0 14.2 Non-Cash Wkg. Capital 2 3 3 5 EBITDA Gth (%) (29.2) 42.8 13.9 17.1 Net Cash/(Debt) 16 18 18 19 Opg Profit Gth (%) (44.1) 72.3 18.0 21.5 Net Profit Gth (%) (18.3) 28.0 12.0 15.1 Effective Tax Rate (%) 11.0 15.2 15.2 15.2 Cash Flow Statement (S$ m) Rates & Ratio FY Jun 2012A 2013F 2014F 2015F FY Jun 2012A 2013F 2014F 2015F

Pre-Tax Profit 8 10 12 13 Gross Margins (%) 69.6 70.0 70.1 70.6 Dep. & Amort. 1 1 1 1 Opg Profit Margin (%) 14.0 22.0 23.1 24.6 Tax Paid (2) (1) (2) (2) Net Profit Margin (%) 24.1 28.0 28.0 28.2 Assoc. & JV Inc/(loss) (2) (2) (2) (2) ROAE (%) 12.4 12.1 12.7 13.7 Chg in Wkg.Cap. (1) (1) (1) (1) ROA (%) 9.5 9.6 10.1 11.0 Other Operating CF 2 0 0 0 ROCE (%) 5.5 7.0 7.8 8.9 Net Operating CF 6 7 7 9 Div Payout Ratio (%) 67.2 50.0 50.0 50.0 Capital Exp.(net) (2) (1) (1) (1) Net Interest Cover (x) NM NM NM NM Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.4 0.3 0.4 0.4 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 97.5 104.0 103.1 102.1 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 112.8 110.7 101.9 102.7 Other Investing CF (18) 0 (2) (2) Inventory Turn (avg days) 14.4 17.9 17.7 17.6 Net Investing CF (20) (1) (3) (3) Current Ratio (x) 3.5 3.7 3.6 3.6 Div Paid (5) (4) (5) (6) Quick Ratio (x) 3.3 3.5 3.4 3.4 Chg in Gross Debt 2 0 0 0 Net Debt/Equity (X) CASH CASH CASH CASH Capital Issues 26 0 0 0 Net Debt/Equity ex MI (X) CASH CASH CASH CASH Other Financing CF 0 0 0 0 Capex to Debt (%) 93.6 38.9 38.9 38.9 Net Financing CF 23 (4) (5) (6) Z-Score (X) NA 5.1 5.1 NA Currency Adjustments 0 0 0 0 N. Cash/(Debt)PS (S cts) 7.0 7.7 7.7 8.1 Chg in Cash 9 1 0 1 Opg CFPS (S cts) 2.9 3.4 3.7 4.5 Free CFPS (S cts) 1.6 2.5 2.8 3.5 Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions FY Jun 3Q2012 4Q2012 1Q2013 FY Jun 2012A 2013F 2014F 2015F

Turnover 7 7 8 Revenues (S$ m) Cost of Goods Sold (2) (2) (3) North Asia 7 8 9 10 Gross Profit 5 5 6 South Asia 22 24 27 30 Other Oper. (Exp)/Inc (4) (3) (3) Operating Profit 1 2 3 Other Non Opg (Exp)/Inc 0 0 0 Associates & JV Inc 0 0 0 Total 29 32 35 41 Net Interest (Exp)/Inc 0 1 1 Pretax profit (S$ m) Exceptional Gain/(Loss) 0 0 0 North Asia 2 2 3 3 Pre-tax Profit 1 2 3 South Asia 6 8 9 10 Tax 0 0 0 Minority Interest 0 0 0 Net Profit 1 2 3 Net profit bef Except. N/A N/A N/A Total 8 10 12 13 EBITDA 1 2 3 Pretax profit Margins (%) North Asia 29.0 30.0 30.0 31.0 Sales Gth (%) N/A 8.2 9.8 South Asia 25.8 34.0 34.0 34.0 EBITDA Gth (%) N/A 134.4 44.4 Opg Profit Gth (%) N/A 157.5 52.6 Net Profit Gth (%) N/A 177.9 21.1 Gross Margins (%) 69.3 70.0 69.0 Total 26.6 33.0 33.0 33.3 Opg Profit Margins (%) 10.0 23.7 33.0 Key Assumptions Net Profit Margins (%) 12.0 30.9 34.1 Revenue Growth North Asia 10% 10% 12% 15% South Asia 13% 10% 12% 14% Source: Company, DBS Vickers


Page 30


Bloomberg: PETRA SP | Reuters: PEFO.SI

BUY S$3.49 STI : 3,224.80 Price Target : 12-month S$ 3.97 (Prev S$ 3.97) Potential Catalyst: M&As, special cash distributions/ dividens DBSV vs Consensus: Below consensus Analyst Andy SIM CFA +65 6398 7969 [email protected]

Price Relative

78

178

278

378

478

578

0.3

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1.3

1.8

2.3

2.8

3.3

3.8


Relative IndexS$

Petra Food (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (US$ m) 2011A 2012F 2013F 2014F

Turnover 1,702 1,642 1,766 1,906 EBITDA 131 126 133 156 Pre-tax Profit 79 71 74 94 Net Profit 61 54 57 73 Net Pft (Pre Ex.) 61 54 57 73 EPS (S cts) 12.2 10.9 11.4 14.6 EPS Pre Ex. (S cts) 12.2 10.9 11.4 14.6 EPS Gth (%) 36 (10) 5 27 EPS Gth Pre Ex (%) 36 (10) 5 27 Diluted EPS (S cts) 12.2 10.9 11.4 14.6 Net DPS (S cts) 4.8 5.3 5.8 6.4 BV Per Share (S cts) 59.5 65.6 71.7 80.5 PE (X) 28.8 32.2 30.7 24.1 PE Pre Ex. (X) 28.8 32.2 30.7 24.1 P/Cash Flow (X) 17.2 nm 12.4 26.6 EV/EBITDA (X) 17.2 18.6 16.9 14.4 Net Div Yield (%) 1.4 1.5 1.6 1.8 P/Book Value (X) 5.9 5.3 4.9 4.4 Net Debt/Equity (X) 1.7 1.8 1.4 1.2 ROAE (%) 20.5 17.4 16.6 19.1 Earnings Rev (%): - - - Consensus EPS (S cts): 12.3 16.9 15.1 Other Broker Recs: B: 3 S: 0 H: 2 ICB Industry : Consumer Goods ICB Sector: Food Producers Principal Business: Petra Foods manufactures and markets industrial cocoa ingredients and consumer chocolate confectioneries in the region. Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 611 Mkt. Cap (S$m/US$m) 2,143 / 1,748 Major Shareholders Berlian Enterprises Ltd (%) 50.5 Tiger Global (%) 6.4 Aberdeen Asset Management

5.8

Free Float (%) 32.3 Avg. Daily Vol.(‘000) 307


Petra Food

Sweet prospects An interesting play on Indonesia’s growth

Stock to re-rate with a focus on Branded Consumer segment, stronger balance sheet with 60 Scts/share cash

Pure leading confectionery player in Indonesia is a key attraction for global players

Maintain BUY, TP: S$3.97

An interesting play on Indonesia’s growth. Post the proposed disposal of the Group’s Cocoa Ingredients to Barry Callebaut (for US$950m), Petra will be focused purely on the branded chocolate confectionery business. With an estimated 55% market share of the Indonesian market, Petra offers investors an exposure into Indonesia’s consumption growth. The group also has a 10% market share of the Philippines chocolate confectionery market. We are projecting a topline CAGR (FY11-14F) of c.15% for its Branded Consumer (BC) division.

Strong balance sheet to pursue growth, increase

dividends. The group has entered into a conditional sales and purchase agreement to dispose its CI division to Barry Callebaut. The cash proceeds would be substantially utilised to pare down existing debt (FY12F net gearing of 1.8x), leaving a balance of US$300m net cash (60 Scts/share). The cash would be used to further its BC business and/or distributed to shareholders, providing a catalyst to share price.

Sweet prospects, BUY TP: S$3.97. The CI division has been a drag on the group’s overall performance due to industry headwinds. We view the disposal as a positive move, and we are positive on the development for Petra in the longer term. We expect it to re-rate as a pure consumer play with a leading market position in Indonesia, and growing presence in regional markets. Longer term, we believe Petra could be an attractive target for global chocolate confectionery players. Our sum-of-parts based TP remains at S$3.97. Maintain BUY.



Petra Food

Page 31



Turnover 1,702 1,642 1,766 1,906 Net Fixed Assets 280 302 296 288 Cost of Goods Sold (1,462) (1,406) (1,515) (1,622) Invts in Associates & JVs 3 3 3 3 Gross Profit 240 236 251 284 Other LT Assets 48 48 48 48 Other Opng (Exp)/Inc (134) (138) (149) (161) Cash & ST Invts 19 29 38 50 Operating Profit 106 98 102 123 Inventory 478 547 491 529 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 162 164 177 191 Associates & JV Inc 0 0 0 0 Other Current Assets 56 56 56 56 Net Interest (Exp)/Inc (27) (27) (28) (28) Total Assets 1,047 1,150 1,109 1,166 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 79 71 74 94 ST Debt 374 324 324 324 Tax (18) (16) (17) (22) Other Current Liab 213 185 193 206 Minority Interest 0 0 0 0 LT Debt 147 297 217 217 Preference Dividend 0 0 0 0 Other LT Liabilities 17 17 17 17 Net Profit 61 54 57 73 Shareholder’s Equity 297 327 358 401 Net Profit before Except. 61 54 57 73 Minority Interests 0 0 0 0 EBITDA 131 126 133 156 Total Cap. & Liab. 1,047 1,150 1,109 1,166 Sales Gth (%) 8.7 (3.5) 7.6 7.9 Non-Cash Wkg. Capital 484 582 530 570 EBITDA Gth (%) 21.2 (3.8) 6.0 16.9 Net Cash/(Debt) (502) (592) (503) (491) Opg Profit Gth (%) 25.8 (7.3) 4.2 20.4 Net Profit Gth (%) 36.2 (10.3) 4.8 27.4 Effective Tax Rate (%) 23.2 23.2 23.2 23.2 Cash Flow Statement (US$ m) Rates & Ratio


Pre-Tax Profit 79 71 74 94 Gross Margins (%) 14.1 14.4 14.2 14.9 Dep. & Amort. 25 28 31 33 Opg Profit Margin (%) 6.2 6.0 5.8 6.4 Tax Paid (22) (4) (16) (17) Net Profit Margin (%) 3.6 3.3 3.2 3.8 Assoc. & JV Inc/(loss) 0 0 0 0 ROAE (%) 20.5 17.4 16.6 19.1 Chg in Wkg.Cap. (1) (111) 51 (45) ROA (%) 5.8 4.9 5.0 6.4 Other Operating CF 22 0 0 0 ROCE (%) 9.6 8.4 8.3 10.1 Net Operating CF 102 (16) 140 66 Div Payout Ratio (%) 39.7 48.4 50.5 43.8 Capital Exp.(net) (52) (50) (25) (25) Net Interest Cover (x) 3.9 3.6 3.6 4.3 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 1.6 1.5 1.6 1.7 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 35.1 36.3 35.2 35.2 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 32.9 30.9 24.7 24.8 Other Investing CF 0 0 0 0 Inventory Turn (avg days) 123.1 135.8 127.6 117.2 Net Investing CF (51) (50) (25) (25) Current Ratio (x) 1.2 1.6 1.5 1.6 Div Paid (22) (24) (26) (29) Quick Ratio (x) 0.3 0.4 0.4 0.5 Chg in Gross Debt (25) 100 (80) 0 Net Debt/Equity (X) 1.7 1.8 1.4 1.2 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 1.7 1.8 1.4 1.2 Other Financing CF (27) 0 0 0 Capex to Debt (%) 9.9 8.0 4.6 4.6 Net Financing CF (74) 76 (106) (29) Z-Score (X) 3.0 3.5 3.8 4.0 Currency Adjustments 0 0 0 0 N. Cash/(Debt)PS (US cts.) (82.1) (96.9) (82.3) (80.4) Chg in Cash (24) 10 9 12 Opg CFPS (US cts.) 16.8 15.5 14.6 18.1 Free CFPS (US cts.) 8.2 (10.8) 18.9 6.7 Quarterly / Interim Income Statement (US$ m) Segmental Breakdown / Key Assumptions


Turnover 406 403 378 360 Revenues (US$ m) Cost of Goods Sold (344) (339) (319) (303) Cocoa Ingredients 1,276 1,153 1,205 1,259 Gross Profit 61 64 59 57 Branded Consumer 426 489 561 647 Other Oper. (Exp)/Inc (32) (36) (31) (35) Operating Profit 30 28 28 22 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 0 0 0 0 Total 1,702 1,642 1,766 1,906 Net Interest (Exp)/Inc (6) (7) (7) (8) EBITDA (US$ m) Exceptional Gain/(Loss) 0 0 0 0 Cocoa Ingredients 66 42 40 53 Pre-tax Profit 23 22 21 15 Branded Consumer 63 84 93 103 Tax (5) (6) (5) (4) Minority Interest 0 0 0 0 Net Profit 18 16 16 10 Net profit bef Except. 18 16 16 10 Total 130 126 133 156 EBITDA 36 35 34 29 EBITDA Margins (%) Cocoa Ingredients 5.2 3.7 3.4 4.2 Sales Gth (%) (5.9) (0.8) (6.1) (4.8) Branded Consumer 14.9 17.1 16.6 15.9 EBITDA Gth (%) 14.1 (2.6) (1.8) (15.6) Opg Profit Gth (%) 18.4 (3.7) (2.9) (19.3) Net Profit Gth (%) 33.1 (11.0) (2.8) (34.7) Gross Margins (%) 15.1 15.9 15.6 15.9 Total 7.6 7.7 7.6 8.2 Opg Profit Margins (%) 7.3 7.1 7.3 6.2 Key Assumptions Net Profit Margins (%) 4.5 4.1 4.2 2.9 Bean Grinding Utilisation 91.0 88.0 88.0 88.0 EBITDA per mt of sales 250.0 150.0 140.0 179.0 BC vol growth (%) 22.0 15.0 15.0 15.0 BC ASP growth (%) 6.0 6.0 5.0 5.0 BC gross margins 31.6 33.0 33.5 33.5 Source: Company, DBS Vickers


Page 32


Bloomberg: SUPER SP | Reuters: SPGP.SI

BUY S$3.23 STI : 3,224.80 Price Target : 12-Month S$ 3.51 (Prev S$ 2.95) Potential Catalyst: Margin expansion, volume sales growt DBSV vs Consensus: Above on higher margins Analyst Alfie YEO +65 6398 7957 [email protected] Andy SIM CFA +65 6398 7969 [email protected]

Price Relative

73

123

173

223

273

323

373

423

473

523

0.3

0.8

1.3

1.8

2.3

2.8

3.3


Relative IndexS$

Super Group Ltd (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (S$ m) 2011A 2012F 2013F 2014F

Turnover 441 499 572 666 EBITDA 65 96 121 136 Pre-tax Profit 70 91 114 130 Net Profit 62 79 98 111 Net Pft (Pre Ex.) 51 76 98 111 EPS (S cts) 11.1 14.2 17.5 19.9 EPS Pre Ex. (S cts) 9.1 13.7 17.5 19.9 EPS Gth (%) 6 28 23 14 EPS Gth Pre Ex (%) 8 51 28 14 Diluted EPS (S cts) 11.1 14.2 17.5 19.9 Net DPS (S cts) 5.8 7.1 8.8 10.0 BV Per Share (S cts) 65.8 72.9 81.7 91.6 PE (X) 29.1 22.7 18.4 16.2 PE Pre Ex. (X) 35.5 23.6 18.4 16.2 P/Cash Flow (X) 30.6 20.6 20.0 18.8 EV/EBITDA (X) 25.9 17.8 14.3 12.4 Net Div Yield (%) 1.8 2.2 2.7 3.1 P/Book Value (X) 4.9 4.4 4.0 3.5 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 17.8 20.5 22.7 23.0 Earnings Rev (%): - 1.0 - Consensus EPS (S cts): 13.1 15.5 17.5 Other Broker Recs: B: 6 S: 0 H: 3 ICB Industry : Consumer Goods ICB Sector: Food Producers Principal Business: Manufacturer distributor and brand owner of instant beverages and convenience food


At A Glance Issued Capital (m shrs) 558 Mkt. Cap (S$m/US$m) 1,801 / 1,469 Major Shareholders Lay Hoon Teo (%) 12.1 Kee Bock Teo (%) 11.7 YHS Invest Pte Ltd (%) 11.7 Free Float (%) 30.8 Avg. Daily Vol.(‘000) 777


Super Group Ltd

More reasons to be upbeat • Slightly more positive outlook in FY13F

• Will fire on all cylinders in FY13F, more aggressive valuations justified.

• Reiterate BUY with higher TP of S$3.51

Slightly more positive on FY13F. We turn more positive on Super’s prospects in 2013 as we believe Super could marginally outperform our profit estimates in FY13F. 1) Raw material prices in 4Q12 averaged 7% lower than our assumptions which we believe will cause margins to outperform yet again. This has led us to believe that margins will be more favourable in the next 6-9 months as management locks in cheaper raw material prices in FY13F. Our estimates determine that raw material prices have declined 11% on average in 2012. 2) We believe Super’s ingredient business could gain further traction on higher volume sales in 4Q12 as customer base and orders increase. This could provide upside to our FY13F earnings estimate.

Will fire on all cylinders, leading to further re-rating. FY13F earnings growth of 23% is underpinned by better margins from Branded Consumer division and volume sales growth from its Ingredients business. Super now trades at 18.4x FY13F PE, above the current valuation peg of 17x. Regional peers have re-rated to 20x FY13F over the past quarter due to a more positive cost outlook in 2013. In line with higher peers’ average valuation, and with Super strengthening its foothold in the fast growing North Asian markets – we expect contributions to rise from 20% in 2011 to 26% in FY13F- we revise our PE target from 17x to 20x for Super.

Reiterate Buy at higher TP of S$3.51. Our new TP for Super now stands at S$3.51 based on 20x FY13F PE. Reiterate BUY.



Super Group Ltd

Page 33

Income Statement (S$ m) Balance Sheet (S$ m) FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Turnover 441 499 572 666 Net Fixed Assets 166 224 262 265 Cost of Goods Sold (299) (321) (354) (415) Invts in Associates & JVs 16 17 18 18 Gross Profit 142 178 218 250 Other LT Assets 14 14 14 14 Other Opng (Exp)/Inc (65) (89) (104) (121) Cash & ST Invts 125 106 103 133 Operating Profit 77 89 114 129 Inventory 93 87 97 114 Other Non Opg (Exp)/Inc (18) (2) 0 0 Debtors 78 84 96 112 Associates & JV Inc 1 1 0 0 Other Current Assets 11 11 11 11 Net Interest (Exp)/Inc 0 0 0 0 Total Assets 502 544 601 667 Exceptional Gain/(Loss) 11 3 0 0 Pre-tax Profit 70 91 114 130 ST Debt 2 2 2 2 Tax (6) (9) (13) (14) Other Current Liab 110 109 112 119 Minority Interest (2) (3) (4) (5) LT Debt 0 0 0 0 Preference Dividend 0 0 0 0 Other LT Liabilities 9 9 9 9 Net Profit 62 79 98 111 Shareholder’s Equity 367 407 455 511 Net Profit before Except. 51 76 98 111 Minority Interests 15 19 23 27 EBITDA 65 96 121 136 Total Cap. & Liab. 502 544 601 667 Sales Gth (%) 25.3 13.2 14.6 16.4 Non-Cash Wkg. Capital 72 74 92 118 EBITDA Gth (%) 1.9 46.8 25.5 12.9 Net Cash/(Debt) 123 105 101 132 Opg Profit Gth (%) 23.3 16.2 27.4 13.7 Net Profit Gth (%) 6.1 28.0 23.3 13.5 Effective Tax Rate (%) 9.0 9.6 11.0 11.0 Cash Flow Statement (S$ m) Rates & Ratio FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Pre-Tax Profit 70 91 114 130 Gross Margins (%) 32.2 35.6 38.0 37.6 Dep. & Amort. 7 8 7 7 Opg Profit Margin (%) 17.4 17.9 19.9 19.4 Tax Paid (4) (9) (13) (14) Net Profit Margin (%) 14.0 15.9 17.1 16.7 Assoc. & JV Inc/(loss) (1) (1) 0 0 ROAE (%) 17.8 20.5 22.7 23.0 Chg in Wkg.Cap. (7) (2) (18) (26) ROA (%) 13.0 15.1 17.1 17.5 Other Operating CF (6) 0 0 0 ROCE (%) 18.7 19.5 21.9 22.2 Net Operating CF 59 87 90 96 Div Payout Ratio (%) 52.2 50.0 50.0 50.0 Capital Exp.(net) (73) (66) (44) (10) Net Interest Cover (x) NM NM NM NM Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.9 1.0 1.0 1.0 Invts in Assoc. & JV 23 0 0 0 Debtors Turn (avg days) 61.6 59.3 57.6 57.2 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 39.8 40.6 37.9 36.9 Other Investing CF 4 0 0 0 Inventory Turn (avg days) 101.7 105.0 96.7 94.2 Net Investing CF (47) (66) (44) (10) Current Ratio (x) 2.7 2.6 2.7 3.1 Div Paid (31) (40) (49) (55) Quick Ratio (x) 1.8 1.7 1.8 2.0 Chg in Gross Debt (1) 0 0 0 Net Debt/Equity (X) CASH CASH CASH CASH Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) CASH CASH CASH CASH Other Financing CF 0 0 0 0 Capex to Debt (%) 4,324.0 3,905.3 2,615.4 591.7 Net Financing CF (33) (40) (49) (55) Z-Score (X) 6.8 11.4 11.3 11.0 Currency Adjustments 1 0 0 0 N. Cash/(Debt)PS (S cts) 22.0 18.8 18.2 23.6 Chg in Cash (19) (18) (3) 30 Opg CFPS (S cts) 11.8 16.0 19.4 21.8 Free CFPS (S cts) (2.5) 3.8 8.2 15.4 Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions FY Dec 4Q2011 1Q2012 2Q2012 3Q2012 FY Dec 2011A 2012F 2013F 2014F

Turnover 121 122 112 130 Revenues (S$ m) Cost of Goods Sold (81) (80) (72) (83) Singapore 102 127 143 166 Gross Profit 39 41 40 47 South East Asia 248 289 332 386 Other Oper. (Exp)/Inc (24) (21) (20) (23) East Asia 91 82 97 113 Operating Profit 15 20 20 24 Other Non Opg (Exp)/Inc 0 0 (1) (1) Associates & JV Inc 0 0 0 1 Total 441 499 572 666 Net Interest (Exp)/Inc 0 0 0 0 Segment results (S$ m) Exceptional Gain/(Loss) 11 0 0 2 Singapore 11 45 63 70 Pre-tax Profit 25 21 19 26 South East Asia 37 32 36 42 Tax (1) (2) (1) (3) East Asia 29 12 14 16 Minority Interest (1) (1) (1) (1) Net Profit 23 18 18 23 Net profit bef Except. 12 17 17 20 Total 77 89 114 129 EBITDA 16 22 21 26 Segment results Margins Singapore 10.4 35.6 44.1 42.3 Sales Gth (%) 12.7 0.8 (7.9) 16.1 South East Asia 15.0 11.0 11.0 11.0 EBITDA Gth (%) 3.5 35.8 (5.6) 26.3 East Asia 31.7 14.5 14.5 14.5 Opg Profit Gth (%) 38.1 36.8 (3.1) 25.0 Net Profit Gth (%) 91.2 (24.1) (0.9) 29.0 Gross Margins (%) 32.5 33.9 35.7 36.1 Total 17.4 17.9 19.9 19.4 Opg Profit Margins (%) 12.2 16.6 17.4 18.8 Key Assumptions Net Profit Margins (%) 19.3 14.5 15.6 17.4 Consumer goods 318.6 360.1 422.7 492.0 Ingredients 122.4 139.0 149.2 173.5 Total 441.0 499.1 571.9 665.5 Source: Company, DBS Vickers


Page 34


Bloomberg: TGR SP | Reuters: TAHL.SI

BUY S$0.735 STI : 3,224.80 Price Target : 12-Month S$ 0.95 (Prev S$ 0.95) Potential Catalyst: Earnings turnaround, Tiger Australia stake sale DBSV vs Consensus: Slighlty more bullish on profitability Analyst Suvro SARKAR +65 6398 7973 [email protected] Paul YONG CFA +65 6398 7951 [email protected]

Price Relative

41

61

81

101

121

141

161

181

201

221

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

Jan-10 Jan-11 Jan-12

Relative IndexS$

Tiger Airways Holdings (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Mar (S$ m) 2012F 2013F 2014F 2015F

Turnover 618 851 625 680 EBITDA (52) 31 107 128 Pre-tax Profit (101) 104 55 75 Net Profit (104) 103 47 64 Net Pft (Pre Ex.) (95) (17) 47 64 EPS (S cts) (15.8) 12.5 5.7 7.8 EPS Pre Ex. (S cts) (14.3) (2.1) 5.7 7.8 EPS Gth (%) (313) (179) (54) 36 EPS Gth Pre Ex (%) (386) (85) (370) 36 Diluted EPS (S cts) (15.8) 12.5 5.7 7.8 Net DPS (S cts) 0.0 0.0 0.0 0.0 BV Per Share (S cts) 30.3 42.7 48.4 56.2 PE (X) nm 5.9 12.9 9.5 PE Pre Ex. (X) nm nm 12.9 9.5 P/Cash Flow (X) nm 3.7 21.2 6.0 EV/EBITDA (X) nm 34.1 10.9 8.3 Net Div Yield (%) 0.0 0.0 0.0 0.0 P/Book Value (X) 2.4 1.7 1.5 1.3 Net Debt/Equity (X) 1.7 1.3 1.4 1.0 ROAE (%) (47.1) 34.2 12.5 14.9 Earnings Rev (%): - - - Consensus EPS (S cts): 1.1 4.7 6.9 Other Broker Recs: B: 5 S: 9 H: 2 ICB Industry : Consumer Services ICB Sector: Travel & Leisure Principal Business: Low cost airline in Singapore and Australia


At A Glance Issued Capital (m shrs) 821 Mkt. Cap (S$m/US$m) 603 / 492 Major Shareholders Singapore Airlines (%) 33.1 Temasek Holdings (%) 8.1 Free Float (%) 35.1 Avg. Daily Vol.(‘000) 1,760


Tiger Airways Holdings

Well-positioned for growth

Improving operating data in recent months, potential of earnings turnaround in 3Q-FY13

Growth at Tiger Singapore will be key to restoring profitability in near term

Leveraged to rebound in Asian growth

Maintain BUY with TP S$0.95

Tiger Singapore has been having steady success in growing its traffic. With the introduction of new routes and increased frequencies to popular destinations, Tiger Singapore’s traffic has been growing at 30%+ y-o-y in the last two months, while maintaining robust load factors of close to 85%. This demonstrates the group’s renewed growth push in its more profitable Singapore operations, given that Tiger Australia operations have stabilised now. The robust operating data in recent months augurs well for Tiger Singapore's profitability in the peak season quarter (3Q-FY13) and beyond. As Asian skies get busier. Our investment outlook is lifted by a more positive outlook for Asian growth, driven by a rebound in China, which is enough in itself to drive faster growth in Asia. We are looking at growth returning to 9% in China and 6% in Asia-10, which should help boost air traffic in the region. With more Intra-Asian FTAs being announced and the ASEAN open skies policy expected to be implemented In 2015, Singapore should emerge as a key regional hub, and Tiger is well positioned to ride on this trend, with its portfolio of airlines in Singapore, the Philippines and Indonesia. Potential turnaround in the works. The group recently announced the proposed divestment of a 60% stake in Tiger Australia to Virgin Australia, which we view as a positive move to tackle the challenging competitive landscape in the Australian domestic sector. However, this transaction is subject to shareholder and regulator approvals. It might take a while to fruition. Meanwhile, we continue to look forward to a turnaround in earnings for Tiger Airways group in the coming quarters. Maintain BUY with S$0.95 TP.



Tiger Airways Holdings

Page 35


FY Mar 2012F 2013F 2014F 2015F FY Mar 2012F 2013F 2014F 2015F

Turnover 618 851 625 680 Net Fixed Assets 832 988 1,094 1,052 Cost of Goods Sold (702) (853) (566) (605) Invts in Associates & JVs 0 0 7 18 Gross Profit (83) (2) 59 74 Other LT Assets 39 39 39 39 Other Opng (Exp)/Inc 0 0 0 0 Cash & ST Invts 169 188 119 168 Operating Profit (83) (2) 59 74 Inventory 24 33 24 26 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 3 4 3 3 Associates & JV Inc 0 (3) 7 11 Other Current Assets 5 5 5 5 Net Interest (Exp)/Inc (8) (10) (11) (11) Total Assets 1,072 1,257 1,291 1,311 Exceptional Gain/(Loss) (10) 120 0 0 Pre-tax Profit (101) 104 55 75 ST Debt 205 205 205 155 Tax (4) (2) (8) (11) Other Current Liab 201 233 171 177 Minority Interest 0 0 0 0 LT Debt 379 429 479 479 Preference Dividend 0 0 0 0 Other LT Liabilities 38 38 38 38 Net Profit (104) 103 47 64 Shareholder’s Equity 248 351 398 462 Net Profit before Except. (95) (17) 47 64 Minority Interests 0 0 0 0 EBITDA (52) 31 107 128 Total Cap. & Liab. 1,072 1,257 1,291 1,311 Sales Gth (%) (0.6) 37.6 (26.5) 8.7 Non-Cash Wkg. Capital (169) (191) (138) (142) EBITDA Gth (%) (186.9) (159.2) 248.2 19.8 Net Cash/(Debt) (415) (446) (565) (466) Opg Profit Gth (%) (276.6) (97.2) (2,584.0) 26.8 Net Profit Gth (%) (361.5) (198.4) (54.4) 36.4 Effective Tax Rate (%) N/A 1.8 14.9 14.5 Cash Flow Statement (S$ m) Rates & Ratio

FY Mar 2012F 2013F 2014F 2015F FY Mar 2012F 2013F 2014F 2015F

Pre-Tax Profit (101) 104 55 75 Gross Margins (%) (13.5) (0.3) 9.4 11.0 Dep. & Amort. 31 36 42 43 Opg Profit Margin (%) (13.5) (0.3) 9.4 11.0 Tax Paid (1) (3) (2) (8) Net Profit Margin (%) (16.9) 12.1 7.5 9.4 Assoc. & JV Inc/(loss) 0 3 (7) (11) ROAE (%) (47.1) 34.2 12.5 14.9 Chg in Wkg.Cap. (42) 23 (59) 1 ROA (%) (10.1) 8.8 3.7 4.9 Other Operating CF 0 0 0 1 ROCE (%) (10.1) (0.2) 4.7 5.6 Net Operating CF (112) 164 28 101 Div Payout Ratio (%) N/A 0.0 0.0 0.0 Capital Exp.(net) (123) (192) (147) (1) Net Interest Cover (x) (11.0) (0.2) 5.5 7.0 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.6 0.7 0.5 0.5 Invts in Assoc. & JV 0 (3) 0 0 Debtors Turn (avg days) 1.8 1.3 1.8 1.5 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 61.1 52.8 69.4 49.9 Other Investing CF (6) 0 0 0 Inventory Turn (avg days) 12.3 12.7 19.9 16.4 Net Investing CF (129) (195) (147) (1) Current Ratio (x) 0.5 0.5 0.4 0.6 Div Paid 0 0 0 0 Quick Ratio (x) 0.4 0.4 0.3 0.5 Chg in Gross Debt 43 50 50 (50) Net Debt/Equity (X) 1.7 1.3 1.4 1.0 Capital Issues 155 0 0 0 Net Debt/Equity ex MI (X) 1.7 1.3 1.4 1.0 Other Financing CF 1 2 3 4 Capex to Debt (%) 21.1 30.2 21.6 0.2 Net Financing CF 186 50 50 (50) Z-Score (X) 0.2 0.8 0.8 NA Currency Adjustments 0 0 0 0 N. Cash/(Debt)PS (S cts) (50.6) (54.3) (68.8) (56.8) Chg in Cash (55) 19 (69) 50 Opg CFPS (S cts) (10.6) 17.2 10.7 12.1 Free CFPS (S cts) (35.7) (3.4) (14.5) 12.1 Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions

FY Mar 3Q2012 4Q2012 1Q2013 2Q2013 FY Mar 2012F 2013F 2014F 2015F

Turnover 168 161 181 197 Revenues (S$ m) Cost of Goods Sold (181) (178) (193) (208) Passenger Revenue 500 686 504 547 Gross Profit (13) (17) (12) (12) Ancillary Revenue 118 165 122 132 Other Oper. (Exp)/Inc 0 0 0 0 Operating Profit (13) (17) (12) (12) Total 618 851 625 680 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 0 0 0 (4) Key Assumptions Net Interest (Exp)/Inc (2) (2) (2) (2) No of Aircraft (YE) 35.0 43.0 50.0 57.0 Exceptional Gain/(Loss) (2) 0 1 1 RPK (m) 8,494.0 10,737.0 12,852.6 13,717.5 Pre-tax Profit (17) (19) (13) (17) PLF (%) 81.3 84.1 85.8 84.2 Tax 0 3 (1) (2) Yield (Scts) 7.3 7.9 8.1 8.3 Minority Interest 0 0 0 0 CASK (Scts) 6.8 6.7 6.6 6.5 Net Profit (17) (16) (14) (18) Net profit bef Except. (15) (16) (14) (19) EBITDA (5) (9) (4) (7) Sales Gth (%) 53.2 (4.4) 12.5 8.5 EBITDA Gth (%) (85.1) 87.1 (60.2) 94.3 Opg Profit Gth (%) (68.5) 32.3 (31.2) (2.5) Net Profit Gth (%) (65.1) (5.8) (16.5) 33.6 Gross Margins (%) (7.7) (10.6) (6.5) (5.8) Opg Profit Margins (%) (7.7) (10.6) (6.5) (5.8) Net Profit Margins (%) (10.4) (10.2) (7.6) (9.3) Source: Company, DBS Vickers


Page 36


Bloomberg: MIDAS SP | Reuters: MIDA.SI

BUY S$0.455 STI : 3,224.80 Price Target : 12-Month S$ 0.50 Potential Catalyst: Contract wins DBSV vs Consensus: We have lower FY13 but higher FY14 estimates than consensus, as we believe Midas should see a strong turnaround, but only from 2H13 onwards. Analyst Paul YONG CFA +65 6398 7951 [email protected]

rice Relative

32

52

72

92

112

132

152

172

192

212

0.2

0.4

0.6

0.8

1.0

1.2


Relative IndexS$

Midas Holdings (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (RMB m) 2011A 2012F 2013F 2014F

Turnover 1,081 881 1,181 1,511 EBITDA 346 226 401 548 Pre-tax Profit 225 34 188 296 Net Profit 187 14 151 236 Net Pft (Pre Ex.) 187 14 151 236 EPS (S cts) 3.0 0.2 2.4 3.8 EPS Pre Ex. (S cts) 3.0 0.2 2.4 3.8 EPS Gth (%) (33) (92) 955 57 EPS Gth Pre Ex (%) (33) (92) 955 57 Diluted EPS (S cts) 3.0 0.2 2.4 3.8 Net DPS (S cts) 0.9 0.5 0.5 1.0 BV Per Share (S cts) 48.0 47.3 49.3 52.6 PE (X) 15.1 198.0 18.8 12.0 PE Pre Ex. (X) 15.1 198.0 18.8 12.0 P/Cash Flow (X) nm 37.3 10.0 5.0 EV/EBITDA (X) 9.4 16.4 10.6 8.6 Net Div Yield (%) 2.0 1.1 1.1 2.2 P/Book Value (X) 1.0 1.0 0.9 0.9 Net Debt/Equity (X) 0.1 0.2 0.3 0.5 ROAE (%) 6.4 0.5 5.0 7.5 Earnings Rev (%): (76.7) (8.4) (1.8) Consensus EPS (S cts): 0.3 2.3 3.1 Other Broker Recs: B: 5 S: 2 H: 2 ICB Industry : Basic Materials ICB Sector: Industrial Metals Principal Business: Manufactures Aluminium Alloy extrusion products and Polyethylene Pipes. It also has a joint venture which manufactures train cars. Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 1,218 Mkt. Cap (S$m/US$m) 557 / 454 Major Shareholders Chen Wei Ping (%) 10.8 Chew Hwa Kwang, Patrick (%) 10.0 JP Morgan Chase (%) 7.0 Free Float (%) 72.2 Avg. Daily Vol.(‘000) 7,835


Midas Holdings

Poised for a turnaround

Midas has enhanced both its capacity and capabilities during this lull period

Winning more orders from wider sources should boost the group’s earnings prospects

Impending high speed train orders from China’s MOR could be a catalyst for re-rating

Maintain BUY with TP S$0.50 (1x FY13 P/B) Enhanced capacity and capabilities. Whilst orders have been slow in coming through to Midas, it has been enhancing both its production capacity and capabilities, in addition to diversifying its product range. Jilin Midas now has an aluminium extrusion production capacity of 50,000 tonnes per annum and can fabricate a complete range of train parts, including for export. More contracts to flow in, and boost profitability in 2013 and 2014. We expect Midas to comfortably win orders of c.Rmb1bn from metro, export and the non-rail segments (power and other extrusion products) over the next 12 months, while high-speed train orders will depend on how soon the Ministry of Railway (MoR) makes its purchases. If the MoR does order 400 train sets, as people in the industry expect, we project that Midas could win c.Rmb1bn worth of high-speed train orders for delivery over the next two to three years. Meanwhile, associate Nanjing Puzhen should also see an earnings turnaround on its strong Rmb8.5bn order book. BUY for 2013 turnaround story, TP S$0.50. Midas is currently trading at 0.8x FY13 P/B, which we see as attractive for a turnaround story. We believe the stock should re-rate as contracts start to flow in once again for the group. Our TP is based on 1x FY13 P/B.



Midas Holdings

Page 37

Income Statement (RMB m) Balance Sheet (RMB m)


Turnover 1,081 881 1,181 1,511 Net Fixed Assets 2,174 2,517 3,203 4,056 Cost of Goods Sold (719) (612) (796) (1,017) Invts in Associates & JVs 193 168 201 253 Gross Profit 362 269 385 494 Other LT Assets 27 27 27 27 Other Opng (Exp)/Inc (106) (127) (142) (155) Cash & ST Invts 661 913 557 482 Operating Profit 256 142 242 339 Inventory 478 507 485 497 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 698 797 777 621 Associates & JV Inc 8 (24) 33 51 Other Current Assets 70 70 70 70 Net Interest (Exp)/Inc (39) (84) (88) (95) Total Assets 4,301 5,000 5,320 6,006 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 225 34 188 296 ST Debt 910 910 910 910 Tax (38) (20) (39) (61) Other Current Liab 232 290 291 373 Minority Interest 0 1 1 2 LT Debt 183 583 783 1,183 Preference Dividend 0 0 0 0 Other LT Liabilities 2 2 2 2 Net Profit 187 14 151 236 Shareholder’s Equity 2,974 2,930 3,051 3,257 Net Profit before Except. 187 14 151 236 Minority Interests 0 285 283 281 EBITDA 346 226 401 548 Total Cap. & Liab. 4,301 5,000 5,320 6,006 Sales Gth (%) 4.9 (18.5) 34.0 27.9 Non-Cash Wkg. Capital 1,014 1,084 1,041 816 EBITDA Gth (%) (2.8) (34.8) 77.4 36.7 Net Cash/(Debt) (432) (580) (1,136) (1,611) Opg Profit Gth (%) (1.6) (44.3) 70.2 39.8 Net Profit Gth (%) (22.2) (92.4) 954.7 56.8 Effective Tax Rate (%) 16.9 60.1 20.6 20.7 Cash Flow Statement (RMB m) Rates & Ratio


Pre-Tax Profit 225 34 188 296 Gross Margins (%) 33.5 30.5 32.6 32.7 Dep. & Amort. 82 108 125 158 Opg Profit Margin (%) 23.7 16.2 20.5 22.4 Tax Paid (74) (20) (39) (61) Net Profit Margin (%) 17.3 1.6 12.8 15.6 Assoc. & JV Inc/(loss) (8) 24 (33) (51) ROAE (%) 6.4 0.5 5.0 7.5 Chg in Wkg.Cap. (423) (70) 43 226 ROA (%) 4.7 0.3 2.9 4.2 Other Operating CF 1 0 0 0 ROCE (%) 5.6 1.3 4.0 5.0 Net Operating CF (197) 76 284 567 Div Payout Ratio (%) 30.9 212.8 20.2 25.7 Capital Exp.(net) (741) (451) (811) (1,011) Net Interest Cover (x) 6.6 1.7 2.8 3.6 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.3 0.2 0.2 0.3 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 204.3 309.5 243.1 168.8 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 120.6 188.8 157.9 140.9 Other Investing CF (10) 0 0 0 Inventory Turn (avg days) 191.6 356.6 269.8 208.5 Net Investing CF (750) (451) (811) (1,011) Current Ratio (x) 1.7 1.9 1.6 1.3 Div Paid (60) (58) (30) (30) Quick Ratio (x) 1.2 1.4 1.1 0.9 Chg in Gross Debt 415 400 200 400 Net Debt/Equity (X) 0.1 0.2 0.3 0.5 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 0.1 0.2 0.4 0.5 Other Financing CF 0 285 0 0 Capex to Debt (%) 67.8 30.2 47.9 48.3 Net Financing CF 355 628 170 370 Z-Score (X) 2.2 1.5 1.5 1.3 Currency Adjustments 0 0 0 0 N. Cash/(Debt)PS (RMB cts) (35.5) (47.6) (93.3) (132.3) Chg in Cash (592) 253 (357) (74) Opg CFPS (RMB cts) 18.6 12.0 19.8 28.0 Free CFPS (RMB cts) (77.0) (30.8) (43.2) (36.5) Quarterly / Interim Income Statement (RMB m) Segmental Breakdown / Key Assumptions


Turnover 211 230 220 203 Revenues (RMB m) Cost of Goods Sold (146) (163) (151) (139) Aluminium Alloy + 1,039 840 1,140 1,470 Gross Profit 65 68 69 64 Polyethylene Pipe 41 41 41 41 Other Oper. (Exp)/Inc (32) (30) (27) (34) Agency & Procurement 0 0 0 0 Operating Profit 34 38 42 30 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 2 (5) (14) (7) Total 1,081 881 1,181 1,511 Net Interest (Exp)/Inc (16) (14) (20) (25) Gross Profit (RMB m) Exceptional Gain/(Loss) 0 0 0 0 Aluminium Alloy + 353 260 376 485 Pre-tax Profit 20 20 8 (2) Polyethylene Pipe 9 9 9 9 Tax 17 (5) (7) (5) Agency & Procurement 0 0 0 0 Minority Interest 0 0 0 0 Net Profit 37 15 2 (6) Net profit bef Except. 37 15 2 (6) Total 362 269 385 494 EBITDA 63 59 54 51 Gross Profit Margins (%) Aluminium Alloy + 34.0 31.0 33.0 33.0 Sales Gth (%) (18.6) 9.2 (4.6) (7.8) Polyethylene Pipe 22.0 21.0 21.0 21.0 EBITDA Gth (%) (17.5) (5.6) (9.4) (4.5) Agency & Procurement N/A N/A N/A N/A Opg Profit Gth (%) (43.4) 14.0 10.9 (29.2) Net Profit Gth (%) 33.8 (58.5) (89.5) (483.8) Gross Margins (%) 30.9 29.5 31.5 31.5 Total 33.5 30.5 32.6 32.7 Opg Profit Margins (%) 15.9 16.6 19.3 14.8 Key Assumptions Net Profit Margins (%) 17.4 6.6 0.7 (3.0) Aluminium Capacity (tonnes) 45,000.0 50,000.0 50,000.0 60,000.0 Al Utilisation Rate (%) 55.0 45.0 55.0 60.0 Al Gross Margin (%) 34.0 31.0 33.0 33.0 NPRT Revenue (RMB) 2,007.8 1,500.0 2,925.0 3,150.0 NPRT Net Margin (%) 1.3 (5.0) 3.5 5.0 Source: Company, DBS Vickers


Page 38


Bloomberg: PCRT SP | Reuters: PCRT.SI

BUY S$0.585 STI : 3,224.80 Price Target : 12-Month S$ 0.84 Potential Catalyst: Improvement in operating earnings, realisation of NAV DBSV vs Consensus: Above Analyst LOCK Mun Yee +65 6398 7972 [email protected]

Price Relative

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Relative IndexS$

Perennial China Retail Trust (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Dec (S$ m) 2011A 2012F 2013F 2014F

Gross Revenue 0 0 10 24 Net Property Inc 0 0 8 15 Total Return 6 (3) 6 11 Distribution Inc 1 3 12 17 EPU (S cts) 0.5 (0.3) 0.5 1.0 EPU Gth (%) N/A (157) (271) 86 DPU (S cts) 2.4 3.9 4.1 4.3 DPU Gth (%) N/A 66 5 6 NAV per shr (S cts) 70.7 71.1 71.1 71.1 PE (X) 109.1 nm 111.0 59.5 Distribution Yield (%) 4.0 6.7 7.0 7.4P/NAV (x) 0.8 0.8 0.8 0.8Aggregate Leverage (%) 9.0 27.0 39.9 48.3 ROAE (%) 1.5 (0.4) 0.7 1.4 Distn. Inc Chng (%): - - - Consensus DPU (S cts): 3.9 3.3 3.8 Other Broker Recs: B: 2 S: 1 H: 1 ICB Industry : Financials ICB Sector: Real Estate Investment Trusts Principal Business: PCRT is Singapore’s first pure play PRC retail development business trust with an initial portfolio of 5 properties in Shenyang, Chengdu and Foshan Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 1,139 Mkt. Cap (S$m/US$m) 666 / 544 Major Shareholders Khoon Hong Kuok (%) 17.2 Din Hwa Chen (%) 11.8 Asdes Acquistion (%) 10.8 Free Float (%) 42.9 Avg. Daily Vol.(‘000) 1,983


Perennial China Retail Trust

Shopping for growth

Pure China retail play with high dividend yield

Plentiful drivers from portfolio ramp up and new investments

Maintain Buy with TP S$0.84 Pure China retail play. Perennial China Retail Trust (PCRT) is a pure play into the retail consumption growth in China through its malls in Shenyang, Chengdu and Foshan. It offers investors attractive dividend yields of 7.2-7.7% as well as the potential for NAV realisation as the development assets are completed. This is likely to close the gap between stock price and our RNAV estimate. Ramping up portfolio performance. We see FY13 as an earnings inflexion point with new contributions from the Perennial Jihua Mall Foshan development. The mall is more than 50% pre-leased with international retailers as well as key supermarket and cinema tenants. Furthermore, we believe there is upside to book NAV of S$0.68/unit towards our revalued asset backing when the mall is completed in 1QFY13. In the medium term,the completion of the Perennial Qingyang Mall in Chengdu by 2QFY14 will provide another driver to earnings and book NAV. Meanwhile, the gradual ramp up of the Shenyang Shopping Mall (70% occupied currently) and the AEIs at Red Star Macalline Furniture Mall as well as the Shenyang Office component should pick up during this ‘Earn Out’ period. Meanwhile, new investments into the Perennial Dongzhan Mall and Beijing Tongzhou projects should bear fruit in the medium to long term. Retain Buy call. We maintain our Buy call on PCRT with a RNAV-backed TP of S$0.84. The stock is trading at c0.8x P/Bk NAV and close to replacement level for the initial portfolio. With a remaining Rmb342m of ‘Earn Out Support’, there is clear visibility on distributions during this period of operational ramp up.



Perennial China Retail Trust

Page 39

Statement of Total Return (S$ m) Balance Sheet (S$ m)


Gross revenue 0 0 10 24 Investment Properties 0 175 364 523 Property expenses 0 0 (2) (8) Other LT Assets 764 819 834 861 Net Property Income 0 0 8 15 Cash & ST Invts 138 117 129 141 Other Operating expenses (5) (6) (7) (9) Inventory 0 0 0 0 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 19 19 19 19 Net Interest (Exp)/Inc (1) (2) (7) (17) Other Current Assets 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 Total Assets 921 1,129 1,347 1,545 Net Income 6 (3) 9 16 Tax 0 0 (3) (5) ST Debt 0 0 0 0 Minority Interest 0 0 0 0 Other Current Liabilities 53 53 56 58 Preference Dividend 0 0 0 0 LT Debt 69 269 479 669 Net Income After Tax 6 (3) 6 11 Other LT Liabilities 6 6 6 6 Total Return 6 (3) 6 11 Unit holders’ funds 793 801 806 812 Non-tax deductible Items (5) 6 6 6 Minority Interests 0 0 0 0 Net Inc available for Dist. 1 3 12 17 Total Funds & Liabilities 921 1,129 1,347 1,545 Revenue Gth (%) N/A N/A N/A 134.2 Non-Cash Wkg. Capital (34) (34) (37) (39) N Property Inc Gth (%) N/A N/A N/A 99.7 Net Cash/(Debt) 69 (152) (350) (527) Net Inc Gth (%) N/A (158.1) (272.0) 87.8 Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 Cash Flow Statement (S$ m) Rates & Ratio


Pre-Tax Income 6 44 46 49 Net Prop Inc Margins (%) N/A N/A 75.7 64.5 Dep. & Amort. 0 5 5 7 Net Income Margins (%) N/A N/A 58.8 47.2 Tax Paid 0 0 (3) (5) Dist to revenue (%) N/A N/A 116.4 73.2 Associates &JV Inc/(Loss) (12) (5) (16) (27) Managers & Trustee’s fees N/A N/A 72.4 36.2 Chg in Wkg.Cap. 6 0 0 0 to sales (%) Other Operating CF 4 0 0 0 ROAE (%) 1.5 (0.4) 0.7 1.4 Net Operating CF 4 45 33 24 ROA (%) 1.3 (0.3) 0.5 0.8 Net Invt in Properties 0 (175) (189) (159) ROCE (%) (1.1) (0.6) 0.0 0.3 Other Invts (net) 0 0 0 0 Int. Cover (x) (4.5) (4.1) 0.0 0.4 Invts in Assoc. & JV (660) (50) 0 0 Current Ratio (x) 3.0 2.6 2.7 2.8 Div from Assoc. & JVs 0 0 0 0 Quick ratio (x) 3.0 2.6 2.7 2.8 Other Investing CF (19) 0 0 0 Aggregate Leverage (%) 9.0 27.0 39.9 48.3 Net Investing CF (680) (225) (189) (159) Z-Score (X) 0.0 0.0 0.8 0.7 Distribution Paid 0 (44) (46) (49) Operating CFPS (S cts) (0.2) 4.0 2.9 2.1 Chg in Gross Debt 73 200 210 190 Free CFPS (S cts) 0.3 (11.6) (13.8) (11.8) New units issued 776 3 5 6 Other Financing CF (77) 0 0 0 Net Financing CF 773 159 168 147 Currency Adjustments 0 0 0 0 Chg in Cash 97 (21) 12 12 Quarterly / Interim Income Statement (S$ m) P/Book Value (x)

FY Dec 4Q2011 1Q2012 2Q2012 3Q2012

0.5

0.6

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0.7

0.8

0.8

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0.9

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Jun-11 Nov-11 Apr-12 Sep-12

Gross revenue 0 0 0 0 Property expenses 0 0 (1) 0 Net Property Income 0 0 (1) 0 Other Operating expenses (3) 1 (1) (1) Other Non Opg (Exp)/Inc 0 0 5 0 Net Interest (Exp)/Inc 0 0 (1) (2) Exceptional Gain/(Loss) 0 0 0 0 Net Income 8 2 4 (2) Tax 0 0 0 0 Minority Interest 0 0 0 0 Net Income after Tax 8 2 4 (2) Total Return 8 2 4 (2) Non-tax deductible Items 0 0 0 0 Net Inc available for Dist. 0 0 0 0 Revenue Gth (%) N/A N/A N/A N/A N Property Inc Gth (%) N/A N/A N/A (80) Net Inc Gth (%) (1,088) (77) 136 (147) Net Prop Inc Margin (%) N/A N/A N/A N/A Dist. Payout Ratio (%) 0.0 0.0 0.0 0.0 Source: Company, DBS Vickers


Page 40


Bloomberg: UENV SP | Reuters: UNIT.SI

BUY S$0.515 STI : 3,224.80 Price Target : 12-Month S$ 0.69* (S$0.92**) Potential Catalyst: Higher plant utilizations, expansion, acquisitions * based on fully dilution of convertible bonds into 302m shares ** based on existing share cap Analyst TAN Ai Teng +65 6398 7967 [email protected]

Price Relative

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2008 2010 2011 2012

United Environment (LHS) Relative STI Index (RHS)

Relative IndexS$

Forecasts and Valuation FY Mar (S$ m) 2012A 2013F 2014F 2015F

Turnover 85 150 164 209 EBITDA 21 49 68 81 Pre-tax Profit 14 36 63 76 Net Profit 10 27 47 57 Net Pft (Pre Ex.) 10 27 47 57 EPS (S cts) 2.2 5.5 5.9 7.2 EPS Pre Ex. (S cts) 2.2 5.5 5.9 7.2 EPS Gth (%) (35) 149 8 21 EPS Gth Pre Ex (%) (35) 149 8 21 Diluted EPS (S cts) 2.2 5.5 5.9 7.2 Net DPS (S cts) 0.3 0.7 0.8 1.0 BV Per Share (S cts) 37.3 41.1 45.3 51.4 PE (X) 23.5 9.4 8.7 7.2 PE Pre Ex. (X) 23.5 9.4 8.7 7.2 P/Cash Flow (X) 50.8 7.7 9.6 7.5 EV/EBITDA (X) 15.7 8.6 7.1 5.4 Net Div Yield (%) 0.6 1.5 1.6 1.9 P/Book Value (X) 1.4 1.3 1.1 1.0 Net Debt/Equity (X) 0.5 0.9 0.2 0.1 ROAE (%) 6.6 14.1 16.8 14.8 Earnings Rev (%): - - - Consensus EPS (S cts): 4.8 5.9 - Other Broker Recs: B: 1 S: 0 H: 0 ICB Industry : Utilities ICB Sector: Gas; Water & Multiutilities Principal Business: Key membrane bio-reactor supplier inAsia. Also owns a growing portfolio of water assets in China.


At A Glance Issued Capital (m shrs) 479 Mkt. Cap (S$m/US$m) 247 / 201 Major Shareholders Yu Cheng Lin (%) 18.1 Ching Wah Goh (%) 17.8 Oei Hong Leong Peter (%) 17.6 Free Float (%) 46.5 Avg. Daily Vol.(‘000) 1,819


United Envirotech

Stable flow of recurring income

Initiate coverage with BUY, +41% to fully diluted TP of S$0.69

Expect earnings breakthrough as recurring

income streams gather momentum

Attractive at 8x/7xPE for 75%/21% PATMI

growth in FY14F/15F, industry averages 13x

Potential upside from acquisitions & expansion;

CB dilution can be potential overhang

>60% of profits coming from long-term recurring

treatment income. United Envirotech (UENV), a membrane-based wastewater treatment company, has been shifting to a stable, recurring and more profitable earnings profile with the acquisition of operating water plants in China. By FY14Mar, UENV would have a total processing capacity of 1.18m m3/day to generate S$25m or 60% of group PATMI. This treatment income is recurring for the life of the water concessions (30 yrs). Key beneficiary of China’s rapid growth in environmental

protection. Besides treatment services, UENV should continue to win engineering and construction (EPC) contracts given the growing demand for membrane-based water treatment plants in China to meet stricter discharge limits, which old plants are not equipped to process. We believe UENV can maintain ~Rmb400m of new EPC orders over the next two years.

Earnings CAGR of 46% from FY13F-FY15F. UENV has potential upside from higher utilisation rates. Besides, we have not incorporated the Phase 2 expansion or acquisitions. BUY, TP S$0.69. Our sum-of-parts TP is based on 10x PE for EPC and DCF valuation (8.6% WACC) for treatment. We have also assumed full dilution of the S$136.2m convertible bond to Kholberg Kravis Roberts & Co (KKR).



United Envirotech

Page 41


FY Mar 2012A 2013F 2014F 2015F FY Mar 2012A 2013F 2014F 2015F

Turnover 85 150 164 209 Net Fixed Assets 19 32 35 39 Cost of Goods Sold (47) (90) (81) (108) Invts in Associates & JVs 16 19 22 25 Gross Profit 38 60 83 101 Other LT Assets 161 261 311 311 Other Opng (Exp)/Inc (21) (17) (21) (25) Cash & ST Invts 89 28 30 91 Operating Profit 18 43 62 76 Inventory 0 1 1 1 Other Non Opg (Exp)/Inc 1 1 1 1 Debtors 40 60 66 83 Associates & JV Inc 1 3 3 3 Other Current Assets 75 75 75 75 Net Interest (Exp)/Inc (5) (11) (3) (4) Total Assets 401 476 539 626 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 14 36 63 76 ST Debt 14 14 14 14 Tax (4) (9) (16) (19) Other Current Liab 42 69 71 89 Minority Interest 0 0 0 0 LT Debt 162 187 90 110 Preference Dividend 0 0 0 0 Other LT Liabilities 5 5 5 5 Net Profit 10 27 47 57 Shareholder’s Equity 178 201 359 408 Net Profit before Except. 10 27 47 57 Minority Interests 0 0 0 0 EBITDA 21 49 68 81 Total Cap. & Liab. 401 476 539 626 Sales Gth (%) 9.4 75.6 9.8 26.9 Non-Cash Wkg. Capital 73 67 70 71 EBITDA Gth (%) 5.4 133.0 37.8 19.9 Net Cash/(Debt) (87) (173) (74) (33) Opg Profit Gth (%) 28.8 144.4 44.9 22.3 Net Profit Gth (%) (34.6) 155.8 75.2 20.9 Effective Tax Rate (%) 25.3 25.3 25.3 25.3 Cash Flow Statement (S$ m) Rates & Ratio

FY Mar 2012A 2013F 2014F 2015F FY Mar 2012A 2013F 2014F 2015F

Pre-Tax Profit 14 36 63 76 Gross Margins (%) 44.8 39.7 50.5 48.3 Dep. & Amort. 2 2 2 1 Opg Profit Margin (%) 20.6 28.7 37.8 36.5 Tax Paid (1) (4) (9) (16) Net Profit Margin (%) 12.3 17.9 28.6 27.2 Assoc. & JV Inc/(loss) (1) (3) (3) (3) ROAE (%) 6.6 14.1 16.8 14.8 Chg in Wkg.Cap. (19) 1 (10) (4) ROA (%) 3.4 6.1 9.2 9.7 Other Operating CF 10 0 0 0 ROCE (%) 4.7 8.4 10.6 11.3 Net Operating CF 5 33 43 55 Div Payout Ratio (%) 13.7 13.7 13.7 13.7 Capital Exp.(net) (7) (15) (5) (5) Net Interest Cover (x) 3.2 3.9 19.2 19.3 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.3 0.3 0.3 0.4 Invts in Assoc. & JV (20) 0 0 0 Debtors Turn (avg days) 140.3 121.4 139.5 130.5 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 144.9 144.2 200.1 166.2 Other Investing CF (75) (100) (50) 0 Inventory Turn (avg days) 4.3 2.9 4.0 3.3 Net Investing CF (102) (115) (55) (5) Current Ratio (x) 3.7 2.0 2.0 2.4 Div Paid (1) (4) (6) (8) Quick Ratio (x) 2.3 1.1 1.1 1.7 Chg in Gross Debt 5 25 (97) 20 Net Debt/Equity (X) 0.5 0.9 0.2 0.1 Capital Issues 0 0 117 0 Net Debt/Equity ex MI (X) 0.5 0.9 0.2 0.1 Other Financing CF 136 0 0 0 Capex to Debt (%) 4.0 7.5 4.8 4.0 Net Financing CF 139 21 14 12 Z-Score (X) 0.0 0.0 0.0 NA Currency Adjustments 0 0 0 0 N. Cash/(Debt)PS (S cts) (18.1) (35.2) (9.4) (4.1) Chg in Cash 42 (61) 1 62 Opg CFPS (S cts) 5.0 6.4 6.6 7.4 Free CFPS (S cts) (0.4) 3.6 4.7 6.3 Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions

FY Mar 3Q2012 4Q2012 1Q2013 2Q2013 FY Mar 2012A 2013F 2014F 2015F

Turnover 20 19 32 54 Revenues (S$ m) Cost of Goods Sold (12) (8) (18) (35) EPC 62 113 80 113 Gross Profit 8 11 14 19 Treatment 23 37 84 96 Other Oper. (Exp)/Inc (5) (6) (6) (7) Others N/A N/A N/A N/A Operating Profit 3 5 9 12 Other Non Opg (Exp)/Inc 2 (1) 0 0 Associates & JV Inc 1 (1) 1 1 Total 85 150 164 209 Net Interest (Exp)/Inc (3) (1) (3) (3) EBIT (S$ m) Exceptional Gain/(Loss) 0 0 0 0 EPC 8 28 20 28 Pre-tax Profit 3 2 7 10 Treatment 12 15 42 48 Tax (1) (1) (1) (1) Others (2) 0 0 0 Minority Interest 0 0 0 0 Net Profit 2 1 6 8 Net profit bef Except. 2 1 6 8 Total 18 43 62 76 EBITDA 6 5 10 13 EBIT Margins (%) EPC 13.0 25.0 25.0 25.0 Sales Gth (%) (20.1) (4.9) 67.3 68.2 Treatment 51.2 40.0 50.0 50.0 EBITDA Gth (%) 3.9 (22.5) 122.5 31.6 Others N/A N/A N/A N/A Opg Profit Gth (%) (38.1) 86.2 58.5 36.8 Net Profit Gth (%) (49.2) (29.0) 339.4 42.2 Gross Margins (%) 40.0 59.3 44.5 35.7 Total 20.6 28.7 37.8 36.5 Opg Profit Margins (%) 14.5 28.3 26.8 21.8 Key Assumptions Net Profit Margins (%) 9.4 7.0 18.4 15.5 EPC order win 280.0 420.0 400.0 400.0 Source: Company, DBS Vickers


Page 42

www.dbsvickers.com Refer to important disclosures at the end of this report sa: JC

Bloomberg: ASL SP | Reuters: ASLM.SI

BUY S$0.68 STI : 3,224.80 Price Target : 12-Month S$ 0.90 Potential Catalyst: Order wins DBSV vs Consensus: Above Analyst Jeremy THIA CFA +65 6398 7974 [email protected]

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Relative IndexS$

ASL Marine Holdings (LHS) Relative STI INDEX (RHS) Forecasts and Valuation FY Jun (S$ m) 2011A 2012A 2013F 2014F

Turnover 363 391 525 659 EBITDA 83 84 104 121 Pre-tax Profit 38 37 58 72 Net Profit 32 32 49 60 Net Pft (Pre Ex.) 32 32 49 60 EPS (S cts) 7.6 7.7 11.7 14.3 EPS Pre Ex. (S cts) 7.6 7.7 11.7 14.3 EPS Gth (%) (14) 1 52 23 EPS Gth Pre Ex (%) (14) 1 52 23 Diluted EPS (S cts) 7.6 7.7 11.7 14.3 Net DPS (S cts) 1.5 1.5 2.3 2.8 BV Per Share (S cts) 79.6 83.9 93.3 104.8 PE (X) 9.0 8.9 5.8 4.7 PE Pre Ex. (X) 9.0 8.9 5.8 4.7 P/Cash Flow (X) 8.3 3.8 4.3 3.3 EV/EBITDA (X) 6.1 5.8 4.7 3.7 Net Div Yield (%) 2.2 2.2 3.4 4.2 P/Book Value (X) 0.9 0.8 0.7 0.6 Net Debt/Equity (X) 0.6 0.5 0.5 0.3 ROAE (%) 9.8 9.4 13.2 14.5 Earnings Rev (%): - - Consensus EPS (S cts): 8.4 10.0 Other Broker Recs: B: 4 S: 0 H: 1 ICB Industry : Industrials ICB Sector: Industrial Engineering Principal Business: ASL Marine Holdings Ltd is an integrated marine services company. Their core businesses are shipbuilding, shiprepair and chartering. Source of all data: Company, DBS Vickers, Bloomberg

At A Glance Issued Capital (m shrs) 422 Mkt. Cap (S$m/US$m) 287 / 234 Major Shareholders Ang Kok Tian (%) 13.7 Ang Ah Nui (%) 13.1 Ang Kok Eng (%) 11.5 Free Float (%) 42.3 Avg. Daily Vol.(‘000) 159


ASL Marine Holdings

Strong orderbook

• Small acquisition to move ASL up the value chain, build on its niche in dredgers

• Strong order book for FY13F/FY14F, focus on OSV

• Maintain BUY, TP S$0.90; valuations compelling

Moving up the value chain. ASL has recently acquired Vosta LMG, an established international dredging engineering and contracting company for EUR5.1m. The successful acquisition and integration of Vosta LMG would allow ASL to further build on its niche of constructing dredgers. However, the near- to medium-term financial impact remains unclear, given that this company was loss-making for the 12 months ended June 2012.

Strong order book for FY13F/FY14F, focus on OSV in O&G for earnings turnaround. Orderbook remains healthy at S$573m for 37 vessels as of end 1Q13. With a book-to-bill of 1.4x, this will underpin earnings growth for FY13, with upside to 2014 forecasts from margin improvement. Demand for offshore support vessels continues to be healthy, supported by improved E&P activities for the Indonesia, Australia, and North Sea markets. ASL is also chartering its OSV fleet for longer contract terms with long term charter contracts of S$54m. Plans to grow its chartering fleet – 188 vessels currently, with 28 new vessels on order for FY13F and FY14F will underpin growth

Maintain BUY, TP S$0.90. Our TP of S$0.90, pegged to 7x FY13 PE for its shipbuilding and chartering business and 10x for ship repair. Current valuations are compelling, with ASL trading at 5.8x/4.7x FY13/14 PE, and a mere 0.8x FY12 P/BV, against a FY12-14 recurring EPS CAGR of 37% and FY13/14 ROAE of 13-14%. Maintain BUY on ASL for its strong earnings recovery, good execution, strong earnings visibility on healthy shipbuilding orderbook and a resurging ship repair business.



ASL Marine Holdings

Page 43

Income Statement (S$ m) Balance Sheet (S$ m) FY Jun 2011A 2012A 2013F 2014F FY Jun 2011A 2012A 2013F 2014F

Turnover 363 391 525 659 Net Fixed Assets 493 509 533 527 Cost of Goods Sold (314) (334) (441) (561) Invts in Associates & JVs 1 1 2 2 Gross Profit 50 57 84 98 Other LT Assets 4 4 4 4 Other Opng (Exp)/Inc (2) (10) (16) (15) Cash & ST Invts 50 95 113 158 Operating Profit 47 47 68 83 Inventory 13 11 16 21 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 117 147 210 264 Associates & JV Inc (1) 0 0 1 Other Current Assets 101 86 131 164 Net Interest (Exp)/Inc (9) (10) (11) (11) Total Assets 779 854 1,009 1,140 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 38 37 58 72 ST Debt 103 111 131 131 Tax (5) (5) (7) (9) Other Current Liab 165 198 291 371 Minority Interest (1) 0 (2) (3) LT Debt 156 175 175 175 Preference Dividend 0 0 0 0 Other LT Liabilities 10 8 8 8 Net Profit 32 32 49 60 Shareholder’s Equity 336 354 394 442 Net Profit before Except. 32 32 49 60 Minority Interests 9 9 11 13 EBITDA 83 84 104 121 Total Cap. & Liab. 779 854 1,009 1,139 Sales Gth (%) (22.5) 7.7 34.1 25.6 Non-Cash Wkg. Capital 67 47 66 78 EBITDA Gth (%) (4.5) 1.7 24.0 15.6 Net Cash/(Debt) (209) (190) (193) (147) Opg Profit Gth (%) (16.4) (1.0) 45.4 22.1 Net Profit Gth (%) (14.4) 1.3 52.1 22.9 Effective Tax Rate (%) 12.2 12.7 12.7 13.0 Cash Flow Statement (S$ m) Rates & Ratio FY Jun 2011A 2012A 2013F 2014F FY Jun 2011A 2012A 2013F 2014F

Pre-Tax Profit 38 37 58 72 Gross Margins (%) 13.7 14.5 16.0 14.9 Dep. & Amort. 36 37 36 37 Opg Profit Margin (%) 13.0 12.0 13.0 12.6 Tax Paid (8) (6) (7) (7) Net Profit Margin (%) 8.8 8.3 9.4 9.2 Assoc. & JV Inc/(loss) 1 0 0 (1) ROAE (%) 9.8 9.4 13.2 14.5 Chg in Wkg.Cap. (30) (1) (20) (14) ROA (%) 4.2 4.0 5.3 5.6 Other Operating CF (2) 9 0 0 ROCE (%) 7.2 6.4 8.7 9.7 Net Operating CF 34 76 67 87 Div Payout Ratio (%) 19.7 19.7 19.7 19.7 Capital Exp.(net) (94) (52) (60) (30) Net Interest Cover (x) 5.4 4.6 6.4 7.3 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.5 0.5 0.6 0.6 Invts in Assoc. & JV 0 (1) 0 0 Debtors Turn (avg days) 113.6 123.5 124.3 131.1 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 175.8 175.0 160.0 161.8 Other Investing CF 9 19 0 0 Inventory Turn (avg days) 16.9 14.4 12.2 12.9 Net Investing CF (85) (34) (60) (30) Current Ratio (x) 1.0 1.1 1.1 1.2 Div Paid (9) (6) (10) (12) Quick Ratio (x) 0.6 0.8 0.8 0.8 Chg in Gross Debt 32 23 20 0 Net Debt/Equity (X) 0.6 0.5 0.5 0.3 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 0.6 0.5 0.5 0.3 Other Financing CF (10) (11) 0 0 Capex to Debt (%) 36.4 18.4 19.7 9.8 Net Financing CF 13 5 10 (12) Z-Score (X) 1.5 1.3 1.4 1.5 Currency Adjustments (1) 0 0 0 N. Cash/(Debt)PS (S cts) (49.6) (45.0) (45.7) (34.9) Chg in Cash (39) 47 17 46 Opg CFPS (S cts) 15.3 18.3 20.5 24.0 Free CFPS (S cts) (14.2) 5.5 1.6 13.6 Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions FY Jun 2Q2012 3Q2012 4Q2012 1Q2013 FY Jun 2011A 2012A 2013F 2014F

Turnover 77 114 117 89 Revenues (S$ m) Cost of Goods Sold (64) (98) (99) (67) Shipbuilding 216 224 350 487 Gross Profit 13 16 18 22 Shiprepair & other svcs 82 89 90 88 Other Oper. (Exp)/Inc (1) (6) (7) (8) Charter & rental svcs 66 78 85 84 Operating Profit 12 10 11 14 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 0 0 0 0 Total 363 391 525 659 Net Interest (Exp)/Inc (3) (3) (2) (2) Gross Profit (S$ m) Exceptional Gain/(Loss) 0 0 0 0 Shipbuilding 18 24 42 58 Pre-tax Profit 9 8 9 11 Shiprepair & other svcs 16 14 19 18 Tax (1) 0 (2) (2) Charter & rental svcs 16 19 24 22 Minority Interest (1) 0 0 0 Net Profit 8 8 8 10 Net profit bef Except. 8 8 8 10 Total 50 57 84 98 EBITDA 21 20 20 22 Gross Profit Margins (%) Shipbuilding 8.2 10.6 11.9 12.0 Sales Gth (%) (6.9) 47.1 2.8 (23.9) Shiprepair & other svcs 19.7 16.0 20.9 20.5 EBITDA Gth (%) (9.2) (7.0) 3.3 10.2 Charter & rental svcs 23.9 24.2 27.9 26.0 Opg Profit Gth (%) (7.4) (12.3) 9.0 21.3 Net Profit Gth (%) (10.6) 4.8 4.2 18.6 Gross Margins (%) 17.3 14.0 15.3 24.8 Total 13.7 14.5 16.0 14.9 Opg Profit Margins (%) 15.4 9.2 9.7 15.5 Key Assumptions Net Profit Margins (%) 9.8 7.0 7.1 11.0 Shipbuilding order wins 198.7 454.5 250.0 300.0 Fleet utilisation (%) 66.0 67.0 70.2 72.0 Source: Company, DBS Vickers


Page 44


Bloomberg: NCL SP | Reuters: NMCG.SI

BUY S$0.265 STI : 3,224.80 Price Target : 12-Month S$ 0.30 Potential Catalyst: Stronger earnings ahead DBSV vs Consensus: Largely in line with consensus Analyst Suvro SARKAR +65 6398 7973 [email protected]

Price Relative

40

60

80

100

120

0.00

0.10

0.20

0.30

May-11 Nov-11 May-12 Nov-12Nam Cheong Ltd (LHS) Relative STI Index (RHS)

Relative IndexS$

Forecasts and Valuation FY Dec (RM m) 2011A 2012F 2013F 2014F

Turnover 606 885 1,294 1,384 EBITDA 113 152 192 210 Pre-tax Profit 101 136 171 187 Net Profit 93 125 157 172 Net Pft (Pre Ex.) 93 125 157 172 EPS (S cts) 2.0 2.6 3.3 3.6 EPS Pre Ex. (S cts) 2.0 2.6 3.3 3.6 EPS Gth (%) (52) 34 26 9 EPS Gth Pre Ex (%) (52) 34 26 9 Diluted EPS (S cts) 2.0 2.6 3.3 3.6 Net DPS (S cts) 0.2 0.3 0.3 0.4 BV Per Share (S cts) 10.0 12.4 15.4 18.7 PE (X) 13.5 10.1 8.0 7.3 PE Pre Ex. (X) 13.5 10.1 8.0 7.3 P/Cash Flow (X) 33.7 10.9 nm 9.6 EV/EBITDA (X) 13.8 9.6 8.6 7.4 Net Div Yield (%) 0.7 1.0 1.3 1.4 P/Book Value (X) 2.7 2.2 1.7 1.4 Net Debt/Equity (X) 0.6 0.4 0.5 0.3 ROAE (%) 20.8 23.5 24.0 21.4 Earnings Rev (%): - - - Consensus EPS (S cts): 2.9 3.5 3.9 Other Broker Recs: B: 7 S: 0 H: 0 ICB Industry : Industrials ICB Sector: Construction & Materials Principal Business: Leading Malaysian builder of offshort support vessels


At A Glance Issued Capital (m shrs) 1,913 Mkt. Cap (S$m/US$m) 510 / 416 Major Shareholders SK Tiong Enterprise Sdn (%) 30.0 Hung Yung Enterprise Sdn (%) 16.7 Su Kouk Tiong (%) 8.6 Free Float (%) 44.7 Avg. Daily Vol.(‘000) 10,351


Nam Cheong Ltd

On track for strong growth

Secured a record number of vessel sale contracts in FY12, backed by healthy recurrent demand for OSVs in Malaysia and overseas

Expectations for robust earnings ahead should help re-rate stock

Maintain BUY with TP of S$0.30

FY12 has been a record year for vessel sales. With the last set of three vessels (2 AHTS + 1 PSV) sold in December, FY12 is now a record year for Nam Cheong, with 21 vessels sold during the year. It has now also sold more than half of its 19 vessel build-to-stock models for FY13, so the crystal ball has been accurate so far. Its order book was close to the record level of RM1.5bn in end-2012, and should drive healthy earnings growth in FY13/14.

Steady industry fundamentals support growth outlook.

We expect more order flows from Petronas-linked projects in Malaysia in 1H FY13, as activity on the ground picks up steam. Nam Cheong is the largest builder of OSV vessels for Malaysian waters, and with Petronas committed to its offshore capex plans over the next five years in a bid to increase production levels; Nam Cheong remains in a sweet spot. Nam Cheong has also extended its geographical reach to new markets like West Africa, which offer good potential in for the future.

Look forward to record earnings. We believe Nam Cheong’s FY14 newbuild programme will be larger than in FY13, in line with the still robust outlook for oil & gas E&P activities. The S$110m funds raised through its recent medium-term notes issuance will also help support growth. We remain comfortable with our projection of close to 30% earnings CAGR over FY11-13. Maintain BUY with TP of S$0.30, pegged to 9x FY13 earnings.



Nam Cheong Ltd

Page 45

Income Statement (RM m) Balance Sheet (RM m)


Turnover 606 885 1,294 1,384 Net Fixed Assets 128 128 127 136 Cost of Goods Sold (468) (701) (1,046) (1,116) Invts in Associates & JVs 0 0 0 0 Gross Profit 138 183 249 268 Other LT Assets 9 9 9 9 Other Opng (Exp)/Inc (33) (41) (67) (69) Cash & ST Invts 27 90 3 97 Operating Profit 105 142 182 199 Inventory 193 208 344 353 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 79 145 220 235 Associates & JV Inc 2 0 0 0 Other Current Assets 526 586 765 813 Net Interest (Exp)/Inc (5) (7) (11) (12) Total Assets 961 1,167 1,468 1,643 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 101 136 171 187 ST Debt 302 272 372 372 Tax (8) (11) (14) (15) Other Current Liab 153 276 335 356 Minority Interest 0 0 0 0 LT Debt 23 23 23 23 Preference Dividend 0 0 0 0 Other LT Liabilities 9 9 9 9 Net Profit 93 125 157 172 Shareholder’s Equity 474 586 728 883 Net Profit before Except. 93 125 157 172 Minority Interests 0 0 0 0 EBITDA 113 152 192 210 Total Cap. & Liab. 961 1,167 1,468 1,643 Sales Gth (%) (20.0) 45.9 46.3 6.9 Non-Cash Wkg. Capital 646 664 993 1,045 EBITDA Gth (%) (16.8) 34.8 26.4 9.3 Net Cash/(Debt) (299) (205) (392) (298) Opg Profit Gth (%) (19.0) 35.7 27.7 9.6 Net Profit Gth (%) (22.0) 34.0 26.1 9.4 Effective Tax Rate (%) 8.0 8.0 8.0 8.0 Cash Flow Statement (RM m) Rates & Ratio


Pre-Tax Profit 101 136 171 187 Gross Margins (%) 22.7 20.7 19.2 19.4 Dep. & Amort. 6 10 11 11 Opg Profit Margin (%) 17.3 16.1 14.0 14.4 Tax Paid (9) (1) (11) (14) Net Profit Margin (%) 15.4 14.1 12.2 12.4 Assoc. & JV Inc/(loss) (2) 0 0 0 ROAE (%) 20.8 23.5 24.0 21.4 Chg in Wkg.Cap. (52) (29) (332) (53) ROA (%) 9.6 11.7 11.9 11.1 Other Operating CF (8) 0 0 0 ROCE (%) 11.9 15.4 16.5 15.1 Net Operating CF 37 116 (161) 131 Div Payout Ratio (%) 10.1 10.1 10.1 10.1 Capital Exp.(net) (7) (10) (10) (20) Net Interest Cover (x) 21.1 21.8 17.3 16.8 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.6 0.8 1.0 0.9 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 53.2 46.4 51.5 60.0 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 114.4 90.2 90.1 96.8 Other Investing CF 0 0 0 0 Inventory Turn (avg days) 173.5 106.0 97.3 115.0 Net Investing CF (7) (10) (10) (20) Current Ratio (x) 1.8 1.9 1.9 2.1 Div Paid 0 (13) (16) (17) Quick Ratio (x) 0.2 0.4 0.3 0.5 Chg in Gross Debt (59) (30) 100 0 Net Debt/Equity (X) 0.6 0.4 0.5 0.3 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 0.6 0.4 0.5 0.3 Other Financing CF 4 0 0 0 Capex to Debt (%) 2.1 3.4 2.5 5.1 Net Financing CF (55) (43) 84 (17) Z-Score (X) 2.9 3.1 3.1 3.2 Currency Adjustments 2 0 0 0 N. Cash/(Debt)PS (sen) (15.6) (10.7) (20.5) (15.6) Chg in Cash (22) 64 (87) 94 Opg CFPS (sen) 4.7 7.6 8.9 9.6 Free CFPS (sen) 1.6 5.6 (8.9) 5.8 Quarterly / Interim Income Statement (RM m) Segmental Breakdown / Key Assumptions


Turnover 140 206 150 142 Revenues (RM m) Cost of Goods Sold (106) (159) (120) (103) Shipbuilding 565 839 1,249 1,336 Gross Profit 33 46 30 39 Chartering 42 46 46 48 Other Oper. (Exp)/Inc (7) (10) (6) (4) Operating Profit 26 37 24 35 Total 606 885 1,294 1,384 Other Non Opg (Exp)/Inc 0 0 0 0 Gross profit (RM m) Associates & JV Inc 2 0 0 0 Shipbuilding 105 147 212 230 Net Interest (Exp)/Inc (1) (1) (1) (1) Chartering 33 37 37 38 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 26 35 23 34 Total 138 183 249 268 Tax 1 (2) 0 (2) Gross profit Margins (%) Minority Interest 0 0 0 0 Shipbuilding 18.6 17.5 17.0 17.2 Net Profit 26 33 22 32 Chartering 78.8 80.0 80.0 80.0 Net profit bef Except. 26 33 22 32 EBITDA 29 38 25 38 Total 22.7 20.7 19.2 19.4 Sales Gth (%) (44.5) 47.4 (27.1) (5.3) Key Assumptions EBITDA Gth (%) (47.5) 31.6 (33.8) 50.9 # AHTS sold 9.0 13.0 5.0 8.0 Opg Profit Gth (%) (52.3) 43.1 (35.2) 47.5 # PSV sold 0.0 4.0 10.0 9.0 Net Profit Gth (%) (43.6) 26.0 (32.4) 40.4 # AWB sold 2.0 1.0 2.0 2.0 Gross Margins (%) 23.7 22.6 19.7 27.3 # Others sold 2.0 0.0 0.0 0.0 Opg Profit Margins (%) 18.4 17.8 15.9 24.7 Net Profit Margins (%) 18.9 16.2 15.0 22.2 Source: Company, DBS Vickers


Market Focus


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DBSV 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 DBS Vickers Research is available on the following electronic platforms: DBS Vickers (www.dbsvresearch.com); Thomson (www.thomson.com/financial); Factset (www.factset.com); Reuters (www.rbr.reuters.com); Capital IQ (www.capitaliq.com) and Bloomberg (DBSR GO). For access, please contact your DBSV salesperson. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Vickers Research (Singapore) Pte Ltd ("DBSVR"), a direct wholly-owned subsidiary of DBS Vickers Securities (Singapore) Pte Ltd ("DBSVS") and an indirect wholly-owned subsidiary of DBS Vickers Securities Holdings Pte Ltd ("DBSVH"). This report is intended for clients of DBSV Group 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 DBSVR. It is being distributed in the United States by DBSV US, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBS Vickers Securities (USA) Inc (“DBSVUSA”) directly and not its affiliate. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBSVR, DBSVS, and/or DBSVH) 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. DBSVR 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. DBSVH is a wholly-owned subsidiary of DBS Bank Ltd. DBS Bank Ltd 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. DBSVR, DBSVS, DBS Bank Ltd and their associates, their directors, and/or employees 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. 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 DBSVR, DBSVS and/or DBSVH (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) 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. 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, nor has it participated in any investment banking transaction as a manager or co-manager 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. ANALYST CERTIFICATION The research analyst 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 also certifies that no part of his/her


Market Focus


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compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 7 Jan 2013, the analyst and his / her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities, directorships and trustee positions). COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Vickers Securities (Singapore) Pte Ltd and its subsidiaries do not have a proprietary position in the company mentioned as of 3 Jan 2013

2. DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc ("DBSVUSA"), a U.S.-registered broker-dealer, beneficially own a total of 1% or more of any class of common equity securities of the Far East Hospitality Trust, Perennial China Retail Trust, CDL HT as of 7 Jan 2013.

3. Compensation for investment banking services:

i. DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA have received compensation, within the past 12 months, and within the next 3 months receive or intends to seek compensation for investment banking services from the Bumitama Agri, Ezion Holdings, Far East Hospitality Trust, Perennial China Retail Trust, Nam Cheong, Petra Food, Tiger Airways, Yoma Strategic, China Merchant, Wing Tai.

ii. DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager 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.

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2013-01-07 T03=SG (DBS Vickers) (SG) Small Mid Caps Strategy_ Small stocks, big growth