OSK DMG - Market Outlook For The Year

Strategy, 2 January 2015
Strategy - Singapore
Overweight
Go Against The Flow
1
Terence Wong CFA, +65 6232 3896
terence.wong@sg.oskgroup.com
Consumer
James Koh, +65 6232 3839
james.koh@sg.oskgroup.com
Juliana Cai. +65 6232 3871
juliana.cai@sg.oskgroup.com
We are expecting the Singapore market to post a rebound after two

disappointing years. While the tight labour market and the lack of
productivity improvement will continue to be a drag on the economy,
we see bright spots that are expected to lift the STI by 11% to 3,720, its
highest level since 2007.
Healthcare
Arshath Mohamed, +65 6232 3897
arshath.mohd@sg.oskgroup.com
Offshore & Marine
Lee Yue Jer CFA, +65 6232 3898
yuejer.lee@sg.oskgroup.com
Jesalyn Wong, +65 6232 3872
jesalyn.wong@sg.oskgroup.com
Property & REITs
Ong Kian Lin, +65 6232 3895
kianlin.ong@sg.oskgroup.com
Ivan Looi, +65 6232 3841
ivan.looi@sg.oskgroup.com
Technology
Jarick Seet, +65 6232 3891
jarick.seet@sg.oskgroup.com
Transport/Materials & Mining
Shekhar Jaiswal, +65 6232 3894
shekhar.jaiswal@sg.oskgroup.com
Go contrarian. We believe in investing where most fear to tread, namely

the offshore & marine and property sectors. The free-fall in oil prices will
continue to grapple the market, although we believe that prices will
recover some time before the middle of the year. This ought to set the
stage for a rebound in the offshore & marine sector. As for property, the
physical market is likely to remain subdued, leading to a fall in residential
prices by up to 10%, in our view. We expect some cooling measures to
be lifted in 2H15, which should see interest returning to this segment.
Head for mid caps. For the past two years, we have advocated for
investors to do selected stock picking in the small cap space, which have
paid-off handsomely. This year, given the slump in many prominent mid
caps, we believe that this segment is the sweet spot to be in.
STI target of 3,720 based on 15x FY15F P/E. This is driven by: i) the
expected positive returns from bellwether sectors, ii) productivity in
Singapore turning around, and iii) attractive valuations.
Our Top Picks. The majority of our top BUYs are mid caps, namely
CWT (CWT SP, BUY, TP: SGD2.00), Ezion (EZI SP, BUY, TP:
SGD2.65), M1 (M1 SP, BUY, TP: SGD4.40), Nam Cheong (NCL SP,
BUY, TP: SGD0.61) and OSIM International (OSIM) (OSIM SP, BUY,
TP: SGD2.30). For the large caps, we like DBS (DBS SP, BUY, TP:
SGD22.60) and Keppel Land (KPLD SP, BUY, TP: SGD3.88), while
BreadTalk (BREAD SP, BUY, TP: SGD1.90), Centurion Corp (Centurion)
(CENT SP, BUY, TP: SGD0.83), Giken Sakata (GSS SP, BUY, TP:
SGD0.61) and IPS Securex (IPSS SP, BUY, TP: SGD1.26) get our vote
in the small cap space. Top SELLs include Parkson Retail Asia (PRA
SP, SELL, TP: SGD0.65) and Silverlake Axis (SILV SP, SELL, TP:
SGD1.03).
Small Cap Situationals

Goh Han Peng, +65 6232 3893
hanpeng.goh@sg.oskgroup.com
Banks/Plantation/Telecommunications
Regional Teams
See important disclosures at the end of this report
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2 January 2015
Table of Contents
What now 2015?
STI Target
Sector & Stock Picks
Talking Points
Sector Outlook
Banks
Consumer
10
Construction & Engineering
12
Healthcare Services
14
Land Transportation
16
Oil & Gas
18
Plantation
21
Property
23
REITs
25
Technology
27
Telecommunications
29
Stock Picks
Top BUY
BreadTalk Group
31
CapitaCommercial Trust
35
Centurion Corporation
39
CWT
43
DBS Holdings
47
Ezion Holdings
51
Giken Sakata
55
IPS Securex
59
Keppel Land
63
M1 Ltd
67
Nam Cheong
71
OSIM
75
Top SELL
Parkson Retail Asia
79
Silverlake Axis
83
2 January 2015
2014 has been a little less exciting than I thought. I had expected the Singapore
market to make a comeback in 2014 after a lacklustre 2013, given its reasonable
valuations and the fact that it is the safest house in the neighbourhood. But it was
not to be. While the STI year-end target of 3,480 was not very much off the mark,
the general market has been largely listless, contradicting my earlier thoughts that it
was going to be boring no more.
The best performers in 2014 were the REITs, which made a comeback from a poor
showing in 2013 as interest rates remained low. The banking sector was the next
best performer. It was in play in the recent months, as the market speculated that
the US Federal Reserve (US Fed) was going to lift rates due to a strengthening
economy.
As for the worst performers, basic materials, which count aluminium and steel
manufacturers as constituents, saw another awful outing, slumping by over 30% for
the second year running. It is joined by the oil & gas (O&G) sectors 32% dive, with
the bulk of the fall coming in the last two months due to the sharp dive in oil prices.
Figure 1: Sector returns 2014 (%)
10.0
1.1
4.0
0.7
7.2
6.1
2.1
0.0
-4.0
-10.0
-1.9
-2.1
-6.4
-11.5
-20.0
-30.0
-32.2
-31.7
-35.6
-40.0
Straits Times Index STI

FTSE ST SMALL CAP INDEX
FTSE ST CHINA INDEX
FTSE ST HEALTH CARE INDX
FTSE ST REAL ESTATE INDX
FTSE ST TECHNOLOGY INDEX
FTSE ST BASIC MATERIALS
FTSE
FTSE
FTSE
FTSE
FTSE
FTSE
FTSE
ST
ST
ST
ST
ST
ST
ST
MID CAP INDEX

Catalist Index
CONSUMER GOODS
Oil & Gas Index
RE INVEST TRUST
UTILITIES INDEX
FINANCIALS
Source: OSK-DMG
What now 2015?

I am once again staking my bets on Singapore in 2015 due to:
i.
ii.
iii.
iv.
v.
Bellwethers expected to do well, which should comfortably lift the

index. We believe that the bank, property and offshore & marine sectors,
all of which are index heavyweights, will outperform in 2015.
Corporates getting used to labour pains. The lack of growth arising from
a stem in foreign labour has been one of the markets bugbears since
2011. The Government has been focusing on a quality growth through
productivity drive. While productivity growth is still going to be sub-par,
businesses are increasingly grappling with an increase in business costs
arising from a labour shortage. Moreover, we expect rentals to tame down,
which bodes well for domestic businesses.
Playing catch-up with regional peers. Regional markets have surged
ahead over the past few years as investors were happy hunting for growth.
In 2015, as a result of a host of macroeconomic worries, there will be a
flight to safety.
Positive sentiments from the Golden Jubilee. Singapore will be
th
celebrating its 50 birthday, and there will likely be something meaningful
for citizens during the Budget (Feb 2015) and National Day Rally (Aug
2015).
Attractive valuations. See next section.
2 January 2015
STI target
The STI is now trading at 13.3x P/E and 1.4x P/BV. This is attractive vis--vis
regional peers as well as the indexs historical trading band. We believe that given
the reasons indicated in the last section, the STI has the capacity to rise to 3,720,
based on 15x FY15F P/E (the average it has been trading at ex-2009).
Figure 2: STI vs Regional Peers
Country
Benchmark index
P/E (x)
P/BV (x)
Dividend yield (%)
Singapore
STI
13.3
1.4
3.3
Hong Kong
Hang Seng
9.7
1.3
3.9
Indonesia
JCI
19.7
2.6
Malaysia
KLCI
15.3
3.3
Thailand
SET
16.5
2.1
3.1
Source: Bloomberg
Figure 3: Forward P/E band

19.5
17.5
15.5
13.5
11.5
9.5
7.5
11-Jan-08
11-Jan-09
11-Jan-10
Forward P/E
11-Jan-11
+1SD
11-Jan-12
-1SD
11-Jan-13
11-Jan-14
Average
Source: Bloomberg
Figure 4: Forward P/BV band

2.15
1.95
1.75
1.55
1.35
1.15
0.95
0.75
11-Jan-08
11-Jan-09
11-Jan-10
Forward P/BV
11-Jan-11
+1SD
11-Jan-12
-1SD
11-Jan-13
11-Jan-14
Average
Source: Bloomberg
2 January 2015
Sector & Stock Picks

Figure 5: Sector Overview
Sector
View
Comment
Call
Least Preferred
Call
Banks
Overweight
Buy
UOB
Neutral
Consumer
Overweight
The impending US interest rate normalization will underpin a multi-year DBS

NIM recovery, albeit on a gradual basis.
ASEAN growth story intact while we are still wary of SingaporeBreadTalk
focused players due to weak spending environment and labour crunch
Buy
Parkson Retail Asia
Sell
Construction
Overweight
Lian Beng
Buy
Healthcare
Neutral
Still very underappreciated sector. More jobs as a result of the

upcoming elections.
The much touted medical tourism sector is facing some headwinds.
Cordlife
Buy
Raffles Medical
Neutral
Benefits from the new cost-plus model seem to be pretty much priced
in.
Stocks slumped big time on the back of collapse in oil prices. We
expect oil prices to improve in 2015, setting the stage for a rebound in
the sector.
Property market will worsen next year as supply shoots up while the
cooling measures continue to bite. We expect residential prices to fall
6-10%. Government is likely to reverse some of the cooling measures
in 2H15, which bodes well for stocks.
Resilient in 1H15, but will be volatile in 2H15 over jitters of interest rate
hike in the US.
Stock selection is key in this sector. We prefer the small niche
players over the prominent names like Venture and Silverlake.
Sector is expected to grow at pedestrian pace of ~5%, but dividend
yields of 4-5% remains a draw.
ComfortDelgro
Neutral SMRT
Neutral
Ezion
Buy
Vard
Sell
Keppel Land
Buy
CDL
Neutral
CapitaCommercial Trust Buy
Cache
Neutral
Hi-P International
Buy
Silverlake
Sell
M1
Buy
StarHub
Neutral
Land Transport Underweight

Oil & gas
Overweight
Property
Neutral
REITs
Neutral
Technology
Neutral
Telecoms
Neutral
Most Preferred
Source: OSK-DMG
Figure 6: Top BUYS 2015

Stocks
Rec
Target
(SGD)
Market Cap
(SGDm)
P/E
P/B
Dividend Yield
ROE
2014
2015
2014
2015
2014
2015
2014
2015
Large Caps
DBS
BUY
21.00
46,578
11.5
10.0
1.2
1.2
3.4
3.7
11.7
11.9
Keppel Land
BUY
3.88
5,214
12.3
11.7
0.7
0.7
3.0
7.1
6.0
6.2
CWT
BUY
2.00
1,014
7.4
6.9
1.3
1.1
2.1
2.7
18.9
17.5
Ezion
BUY
2.65
2,382
6.4
4.3
1.1
0.9
0.1
0.1
24.6
22.5
M1
BUY
4.40
3,368
19.1
17.0
8.3
8.2
5.8
5.8
43.4
48.6
Nam Cheong
BUY
0.61
709
5.5
4.4
1.5
1.2
4.6
5.7
29.5
29.5
OSIM
BUY
2.30
1,813
16.3
15.4
3.6
3.2
3.0
3.1
21.9
21.8
Breadtalk
BUY
1.90
410
28.6
23.9
4.0
3.6
1.3
1.5
14.5
15.8
Centurion
BUY
0.83
387
13.3
10.1
1.2
1.1
0.8
0.8
14.0
11.0
Giken Sakata
BUY
0.65
138
34.6
3.2
5.5
1.8
0.0
6.3
17.4
75.9
IPS Securex
BUY
1.26
55
25.1
6.2
6.2
3.0
0.0
1.5
19.8
63.8
Mid Caps
Small Caps
Source: OSK-DMG estimates

Closing Price: 11 December 2014
Key risks
Some of the key risks we see:
i.
ii.
An unstable Russia. The weak oil prices have caused a dive in the RUB,
which could lead to a collapse of the financial system. Another risk is that
Russia may need to distract its people from the financial calamity through a
war, conveniently through Ukraine.
US growth weakens. A lot of hope has been pinned on the US saving the
world from a major downturn. If its economy hits a brick wall, it will be bad
news for the world.
2 January 2015
Talking Points 2015

There will be a few tough questions that the markets will need to tackle, chief of
which are oil prices and the property market in Singapore. I believe both will play out
to the benefit of the Singapore equity market.
Oil Prices rebound in 2H15

Oil has been hit big time, slumping some 40% within a 2-month period on
oversupply fears. It did not help that the Organisation of Petroleum Exporting
Countries (OPEC) decided to keep its target output unchanged at 30m barrels per
day (mmbpd). With no more near-term catalysts, we believe that we are seeing the
last leg down for oil prices. Oil demand is still growing, albeit at a slower clip.
According to offshore & marine analyst Lee Yue Jer, with the best shales already
tapped, and natural decline rates being much higher than conventional oil, both
OPEC supply and shale producers have a place in a future 1-2 years out from today
at higher prices. Production will eventually fall with cuts by either OPEC at the
cartels 5 Jun 2015 meeting or by US shale producers. This should contribute to
stabilising the oil price before a rebound by mid-year. This bodes well for the
offshore & marine plays under our coverage, which should be strong outperformers
in 2015. We like Ezion and Nam Cheong.
But even with a pickup in oil prices, the average prices are set to be lower than a
year ago, which should benefit the stock market in general and backs our overall
positive stance. Transport companies (we are underweight the sector) and
manufacturers will be the biggest beneficiaries of lower oil prices. There is also a
greater propensity to spend, which will benefit the retailers.
Property (some) cooling measures to go

The property market was very dreadful in 2014, particularly on the volume front.
Only 8,716 units were sold in the first 11 months of 2014, less than half of 2013,
representing the lowest point since 2008. The number of units that will be shooting
out and the rising vacancy rates will be issues that the property sector will have
to contend with.
Figure 7: Property index vs sales volume
Source: Bloomberg, OSK-DMG
The property market is expected to get worse, with our analyst Ong Kian Lin
believing that residential prices will likely slide by 6-10% in 2015. This drop is
actually good news for the properties in the longer term. The Government has
maintained through 2014 that the prices are still high and sees no reason to lift the
property measures. I believe that some of the measures will be lifted by the National
Day Rally in Aug 2015. The Government mentioned previously that the draconian
measures are temporary for citizens but structural for foreigners. Lifting the
measures will be one way to convince citizens that there is a pronounced difference
with non-citizens, which was a major issue in the last General Election (GE) in 2011.
The removal of some of the property measures will lend a boost to property stocks
in the second half of the year. Till then, REITs will likely outperform property stocks.
We like CapitaCommercial Trust (CCT SP, BUY, TP: SGD1.80) in the REIT space,
while CapitaLand (CAPL SP, BUY, TP SGD3.88) and Keppel Land are our picks in
the property sector. Given the big discounts to RNAV, property stocks do present
better long-term opportunities.
2 January 2015
Elections money is on the final quarter of 2015

Prime Minister Lee Hsien Loong said recently that the GE might not be when
everybody is expecting it. I will nevertheless hazard a guess (disclaimer: my track
record on predicting the elections is little patchier than my stock calls).
The elections do not have to be called till Jan 2017, but I think that it will be early.
This seems to be a consensus view, but just how early? I think it will be happen in
4Q15 as the ground should be sweet after celebrations and special events to
th
commemorate Singapores 50 birthday. It should be after the National Day Rally in
Aug 2015, which is typically a platform to rally the nation and showcase the
Governments blueprint for the future. Given that this Golden Jubilee is a special
year for the nation, I believe the Government will be a little more generous when
compared to the past few years. The elections will also be more likely towards year
end as the calendar for the Government looks a lot lighter after Aug 2015 following
the celebrations and the South-East Asian (SEA) Games after a 22-year absence
in Jun 2015.
If the opposition plays the by-election strategy like it did prior to GE 2011 and allow
the Peoples Action Party (PAP) to return as the Government on nomination day, the
STI will likely see a short-term rally. But, given the new-found confidence by the
opposition, especially the Workers Party, the by-election card will unlikely be played.
Companies involved in the public works like ISOTeam (ISO SP, BUY, TP: SGD0.75)
will be the most direct beneficiaries. As a company dealing in the landscaping and
painting of Housing and Development Board (HDB) units and other government
buildings, contracts for ISOTeam should flow in the months leading up to the
elections. Over a longer term, the construction sector should be one of those with a
multi-year growth story, given all the major works that were announced in the past
two National Day Rallies, ie Changi Airport Terminal 5, the rejuvenation of Jurong
and Paya Lebar, and a new live, work, play city in Tanjong Pagar. This should
benefit the likes of Pan-United Corp (PAN SP, NR) Singapores largest ready
mixed concrete supplier and Lian Beng (LBG SP, BUY, TP: SGD0.75), one of the
nations biggest contractors.
Banks
Overweight (from Neutral)

Macro
Risks
NIM Recovery To Brighten Earnings Prospects
Growth
Value
2
2
We upgrade our sector rating to OVERWEIGHT from Neutral. US

interest rate normalisation would underpin a multi-year NIM recovery
for SG Banks, albeit on a gradual basis. This provides headroom for
revision in FY15F-16F earnings. DBS is our Top Pick as it offers the
best leverage to rising US rates. We raise OCBC to BUY (from Neutral)
as we believe dilution from rights issue has been priced in while its
integration with OCBC-Wing Hang is progressing well.
Singapore Research +65 6533 0781
More subdued earnings growth for 2015. After better-than-expected

core earnings growth of 14.7% for 2014F, Singapores three listed banks
(SG Banks) are projected to improve 2015 net profit at a more moderate
11.7%. Banks bottomline growth would be tempered by the sluggish
Singapore property market, softer topline growth in key ASEAN
operations and potential headwinds from major economies.
Prospects of NIM recovery provide headroom for earnings upgrade.
Still, there is room for upward revision in our estimates as banks net
interest margins (NIM) would expand, aided by the normalisation of US
interest rates, with the first hike expected in 2H15. But we believe NIM
recovery would be gradual given: i) the uneven global economic outlook
for 2015; ii) uncertainty in timing and quantum of rate hikes; and iii)
funding cost pressures as system liquidity tightens. We will review our
earnings forecasts once there is greater certainty of a rate hike. Our
sensitivity analysis points to DBS being the biggest beneficiary with a 1213% uplift in net profit from a 100bps rise in short-term interest rates.
Loan growth moderates, asset quality concerns linger. We expect
loan growth to moderate to 9% in 2015F (2014F: +13.5%) due to the
c.40% drop in Singapore mortgage approvals and weak external
environment. SG Banks gross non-performing loan (NPL) ratio is
forecast to be relatively stable at 0.93% (2014F: 0.92%) while credit cost
stays at 20bps in 2015. Hoewver, the recent plunge in crude oil prices
could exert pressure on asset quality. Meanwhile, non-interest income
growth is projected at a modest 5% as rising bond yields would likely cap
trading opportunities. On the flipside, banks have kept the duration of
their securities portfolios short and this should keep marked-to-market
losses manageable.
Upgrade sector to OVERWEIGHT, DBS Top Pick. SG Banks are up
13% YTD (11 Dec 2014), outperforming the FTSE STIs 4.8% rise. With
US interest rate normalisation expected to be a key theme in 2015, we
believe SG Banks would be a sector of focus for investors. We upgrade
the sector to OVERWEIGHT from Neutral. DBS is our Top Pick as it
offers the best leverage to rising interest rates. Our Gordon Growth
Model (GGM)-based TP is raised to SGD22.60 (from SGD21.00) after
factoring in higher ROE and lower WACC. We have also raised our
recommendation on OCBC to BUY (from Neutral) with a higher TP of
SGD11.70 (from SGD10.55) with 6% upward revision in earnings for
more positive contributions from OCBC-Wing Hang, lifting ROE
assumptions to 12.9% (from 11.9%).
research@sg.oskgroup.com
P/E (x)
P/B (x)
Yield (%)
Com pany Nam e

DBS Group Holdings
Price
SGD19.80
Target
SGD22.60
Dec-15F
11.1
Dec-15F
1.2
Dec-15F
3.4
Oversea-Chinese Banking Corp
SGD10.48
SGD11.70
10.4
1.3
3.5
BUY
United Overseas Bank Ltd
SGD24.55
SGD25.40
11.8
1.3
3.3
NEUTRAL
Rating
BUY
Banks
2 January 2015
Figure 1: NIMs bottomed in 2Q13
3M SIBOR
3M USD LIBOR
Fed Fund Target Rate
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
Source: Company data, Bloomberg, OSK-DMG
Figure 3: Loan growth to moderate in 2015
Figure 4: Singapore private property index on the decline
(SGD'bn)
800
DBS
OCBC
UOB
250
% YoY (RHS)
30%
26.7%
200
700
25%
600
18.5%
17.5%
500
13.5%
12.5%
300
9.1%
7.7%
20%
150
15%
100
10%
200
5%
1.9%
0%
2012
2013
2014F 2015F
OCBC
UOB
Figure 6: Impairment charges to remain manageable
2.37%
7,000
6,000
5,000
1.67%
1.60%
4,000
1.22% 1.19%
3,000
1.03%
0.92% 0.93%
2,000
1,000
2.5%
2.3%
2.1%
1.9%
1.7%
1.5%
1.3%
1.1%
0.9%
0.7%
0.5%
DBS
OCBC
UOB
2,500
90
84
71
80
70
2,000
60
50
41
1,500
40
32
23
1,000
26
Figure 8: Capital position healthy (Sep 2015)

CET-1
% YoY (RHS)
10,500
30.0%
26.0%
20.7%
25.0%
18.1%
11.8%
6,500
Tier-1
Total CAR
18%
17.0%
15.6%
16%
15.5%
20.0%
8,500
5.4%
15.0%
4.9%
10.0%
14%
30
10
Figure 7: Softer non-interest income growth in 2015

Non-II
20
20
12,500
21
500
(SGDm)
(bps)
Credit cost (RHS)
3,000
2015F
2014F
2013
2012
2011
2010
2009
2008
(SGDm)
GIL Ratio (RHS)
2015F
DBS
2014F
(SGDm)
8,000
2013
Figure 5: Modest rise in gross impaired loans
2012
2011
2011
2010
2010
2009
2008
2008
2009
100
50
1Q90
4Q90
3Q91
2Q92
1Q93
4Q93
3Q94
2Q95
1Q96
4Q96
3Q97
2Q98
1Q99
4Q99
3Q00
2Q01
1Q02
4Q02
3Q03
2Q04
1Q05
4Q05
3Q06
2Q07
1Q08
4Q08
3Q09
2Q10
1Q11
4Q11
3Q12
2Q13
1Q14
4Q14
400
Aug-14
Feb-13
Nov-13
Aug-11
May-12
Feb-10
Nov-10
Aug-08
May-09
Feb-07
Nov-07
Aug-05
May-06
Feb-04
Nov-04
Aug-02
May-03
Feb-01
Aug-99
Nov-01
UOB
2.6%
2.5%
2.4%
2.3%
2.2%
2.1%
2.0%
1.9%
1.8%
1.7%
1.6%
May-00
OCBC
Net Interest Margins
DBS
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
4Q03
2Q04
4Q04
2Q05
4Q05
2Q06
4Q06
2Q07
4Q07
2Q08
4Q08
2Q09
4Q09
2Q10
4Q10
2Q11
4Q11
2Q12
4Q12
2Q13
4Q13
2Q14
3M SGD SIBOR
3M SGD SIBOR
Figure 2: SGD SIBOR tracks movements in Fed Fund rate
13.4%
14.0%
13.2%
12%
5.0%
4,500
0.0%
2,500
-5.0%
-5.4%
8%
2015F
2014F
2013
2012
2011
2010
-10.0%
2009
500
10%
6%
DBS
OCBC
UOB
CONSUMER
Overweight (Maintained)
Macro
Risks
Spend Wisely
Growth
Value
2
ASEAN modern vs traditional grocery retail
%
93.8
83.5
92.3
58.6
72.4
73.1
29.5
56.3
96.0
70.5
70.1
43.7
41.4
27.6
Modern Grocery Retailers
Singapore
Philippines
Myanmar
Malaysia
Traditional Grocery Retailers
Source: Euromonitor
Vietnam
4.0
7.7
Laos
16.5
Indonesia
Cambodia
6.2
26.9
Thailand
29.9
Brunei
100
90
80
70
60
50
40
30
20
10
0
Overall, we are OVERWEIGHT on the Singapore consumer sector. We

believe the structural growth trends in ASEAN will remain intact and
Title:
companies with favorable
exposure will benefit. Within Singapore, we
Source:
are cognizant of earnings risk due to the weak spending environment,
Please fill in the
values above
to have commodity
them entered in your
report and more
but this may be balanced
against
lower
costs
benign rentals. Our Top Buy for 2015 is BreadTalk, and we believe its
mass market offerings will likely continue to thrive in this environment.
Singapore consumer confidence index

100
90
80
70
60
50
40
30
20
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Source: MasterCard Asia Pacific Consumer Confidence

*100 being most optimistic and 0 being most pessimistic.
Structural growth story remains in ASEAN. Most of the consumer

companies listed in Singapore have regional exposure, especially in
ASEAN, an increasingly integrated economic bloc of >600m population.
We expect structural growth trends to persist in 2015, particular in lessdeveloped markets like Vietnam, Indonesia and the Philippines, which
we coin the VIP markets.
Discretionary spending at risk. On the other hand, we expect
discretionary spending to be at risk in Singapore, Malaysia and Thailand,
where household debt levels are at record highs. Many companies
exposed to these markets have already reported negative same-store
sales growth (SSSG), and we expect this trend to deteriorate further into
2015. In Singapore, the dour property market will affect consumer
sentiment, spilling over into lower dollars spent.
High operating expenses in Singapore. Higher labour costs, resulting
from the tightening foreign worker quota will continue weighing down on
profitability. On a brighter note, lower commodity prices could bring some
respite while rental reversions (rent typically makes up around 15-20% of
sales for Singapore retailers) may be more benign going forward.
Consumer staples preferred. Given the current environment, we prefer
consumer staples, which will benefit from more resilient earnings growth.
Our Top Pick in the Singapore market is BreadTalk (BREAD SP), as we
believe the companys mass market offering will continue to thrive in
2015. Similarly, Sheng Siongs (SSG SP) earnings are defensive in
nature, as consumers seek to down-trade in a weak environment. Dairy
Farm (DFI SP) and Petra Foods (PETRA SP) will likely benefit from
favourable regional exposure. On a bottom-up basis, we believe OSIMs
share price collapse post-3Q14 results presents a buying opportunity.
We have SELLs on Parkson Retail Asia (PRA SP) and Super Group
(SUPER SP).
P/E (x)
Yield (%)
Target
SGD1.90
Dec-15F
23.9
Dec-15F
3.6
Dec-15F
1.5
Rating
BUY
Dairy Farm
USD9.26
USD11.20
21.9
7.2
2.5
BUY
Kingsmen Creatives
SGD0.93
SGD1.05
8.9
1.7
4.5
BUY
Juliana Cai +65 6232 3871
OSIM International
SGD2.10
SGD2.30
16.0
3.3
2.9
BUY
Parkson Retail Asia Ltd
SGD0.82
SGD0.65
16.5
2.2
3.6
SELL
Petra Foods
SGD3.72
SGD4.25
27.0
4.9
1.7
BUY
Sheng Siong Group
SGD0.67
SGD0.74
18.5
4.1
4.3
BUY
Super Group
SGD1.12
SGD0.90
18.8
2.4
2.7
SELL
Com pany Nam e

BreadTalk Group
P/B (x)
Price
SGD1.45
James Koh +65 6232 3839
Source: Company data, OSK-DMG
10
Consumer
2 January 2015
Focus Charts Singapore Consumer Sector

Figure 1: 9M14 YoY % growth in recurring net profit for our
coverage universe, mostly flattish
(%)
30
Figure 2: 9M YoY% growth in sales for our coverage universe

growth in sales not enough to counter higher costs
(%)
25
Title:
Source:
19.9
21.0
20
20
Please fill in the values above to have them entered in your report
2.6
1.1
11.6
9.4
10
-2.5
-10
-14.0
-20
5.9
3.9
1.2
-30
-1.5
-5
-33.7
-4.4
Parkson Retail
OSIM
Kingsmen
Dairy Farm
BreadTalk
Super
Sheng Siong
Petra Foods
-10
Parkson Retail
OSIM
BreadTalk
Dairy Farm
Kingsmen
-40
Super
0.6
15
Sheng Siong
3.8
Petra Foods
10
Source: OSK-DMG compilation
Source: OSK-DMG compilation
Figure 3: Household debt levels in ASEAN polar opposites

for different ASEAN markets
Figure 4: Singapores household debt has risen significantly

since 2008
(%)
76
100
Title:
Source:
87
90
82
80
74
75
70
Please fill in the values above to have them entered in y
72
60
70
50
40
68
30
20
13
66
10
6
64
0
Malaysia
Thailand
Singapore
Vietnam
2008
Indonesia Philippines
2009
2010
2011
Source: Moodys Investors Service
Source: CEIC
Figure 5: Singapore property prices have started to decline
Figure 6: Singapore consumer confidence

100
250
2013
Title:
Source:
90
80
200
2012
70
150
60
50
100
40
30
50
Source: URA property price index
2013Q1
2011Q1
2009Q1
2007Q1
2005Q1
2003Q1
2001Q1
1999Q1
1997Q1
1995Q1
1993Q1
1991Q1
1989Q1
1987Q1
1985Q1
1983Q1
1981Q1
1979Q1
1977Q1
1975Q1
20
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Source: MasterCard Asia Pacific Consumer Confidence

*100 being most optimistic and 0 being most pessimistic.
11
Construction
Overweight (Maintained)
Macro
Risks
Short-Term Pain For Long-Term Gain
Growth
Value
2
While demand continues to be robust, the cost environment has been
challenging in terms of levies and quotas on foreign workers, and the
mandatory use of productive technologies. Maintain OVERWEIGHT with
Lian Beng as Top Pick. Construction players will likely see cost savings
fruition in the mid-term post investing in productive technologies like
precast and prefabrication plants.
Construction demand outlook still remains fairly strong.

Construction activity in Singapore, a key support pillar of the countrys
real GDP growth, is expected to stay healthy in 2015. The Building and
Construction Authority (BCA) estimates construction demand in
2015/2016 to average SGD31bn-38bn and SGD25bn-34bn annually,
with public sector projects to contribute c.60% of total demand.
Restructuring in progress for productivity gains. Construction
companies will continue to face headwinds in terms of a rising cost
environment. In the latest budget, the Singapore Government has
undertaken concrete measures to encourage productivity in the
construction sector, such as mandating the use of productive
technologies and prefabrication in public and private sector projects. On
the other hand, levies and quota for foreign workers continue to be
elevated and restrictive. The former adds on to higher investment and
operating costs while the latter adds on to operating costs. The
investment in productive technologies is likely to only bear fruit in
reducing operating costs in the longer run.
Top Pick is Lian Beng (LBG SP, BUY, TP: SGD1.17). Lian Beng is our
preferred pick in terms of value and its diversity in businesses. Apart
from delivering in execution on its bread and butter construction
business, the company has diversified into property development and
upstream granite, asphalt premix and ready-mixed concrete supply. Its
recent share buybacks should also lend support to its share price.
P/E (x)
P/B (x)
Yield (%)
Dec-15F
Dec-15F
Dec-15F
SGD0.35
11.6
2.0
1.4
BUY
SGD0.52
SGD0.77
8.0
1.7
1.9
BUY
Lian Beng
SGD0.67
SGD1.17
na
na
Yongnam Holdings
SGD0.20
SGD0.29
17.5
0.8
Com pany Nam e
Price
Target
Hafary Holdings
SGD0.22
ISOTeam
Rating
BUY
2.5
BUY
12
Construction
2 January 2015
Reference Exhibits
Remains robust with BCA estimating
construction demand in 2014 and 2015/2016
to average SGD31bn-38bn and SGD25bn34bn.
Figure 1: Construction demand (construction contracts awarded)

SGDbn
40
35.68
35.84
35.49
35
30.76
30
27.56
24.46
25
20
16.80
15
10
22.52
9.44
10.29
2003
2004
11.46
5
0
2005
2006
2007
2008
2009
2010
Construction Contracts Awarded
2011
2012
2013
Average - 23.66
Source: BCA
Cement prices are now at SGD97.2/tonne, up

11% since 2010's low
Figure 2: Cement prices - up 11% since 2010's low

140
120
100
80
60
40
20
Jul-14
Feb-14
Apr-13
Sep-13
Jun-12
Nov-12
Jan-12
Aug-11
Oct-10
Mar-11
May-10
Jul-09
Dec-09
Feb-09
Apr-08
Sep-08
Jun-07
Nov-07
Jan-07
Aug-06
Oct-05
Mar-06
May-05
Jul-04
Dec-04
Feb-04
Source: BCA
Figure 3: Foreign worker levies applicable to work permit holders in the construction industry in Singapore
Sector
Dependency ceiling
Worker category
Monthly levy rate (SGD)
Construction
One local full-time worker to seven

foreign workers
Higher skilled & on MYE
300
Basic skilled & on MYE
550
Higher skilled & exempted from MYE
700
Basic skilled & exempted from MYE
950
Note: MYE = man-year entitlement

Source: Ministry of Manpower
13
Healthcare Services
Neutral
Macro
Risks
Slowdown In Medical Tourism Is The Key Concern
Growth
Value
We believe Singapores healthcare sector might experience almost

flattish growth in 2015. While the aging population does create
significant opportunities for the healthcare industry, we believe its
impact will be offset by slowdown in medical tourism. We are NEUTRAL
on the sector with the only BUY recommendation on Cordlife, which we
like for its rapidly growing business within the Asian region.
Aging population taking centre stage. The median age of Singapores

resident population increased to 39.3 years in 2014 from 38.9 in 2013.
Assuming the current trend continues, by 2050, 38% of Singapores
population will be aged over 60. This key trend will keep the healthcare
services sector ticking over the coming years. Singapore has also
witnessed increasing affluence over the years. With the public sector
being stretched, it gives private players like Raffles Medical (RFMD SP,
TP: SGD4.05) to benefit from the aging population trend. As well to
counter the rise in incidences of chronic diseases, Singapore will spend
more on preventive cares, which include regular health check-ups,
leading to higher spending on healthcare services within the country.
Medical tourists to look for cheaper destinations. Singapore has
witnessed a slowdown in tourists in 2014 (8M14: -3.3% vs 8M13).
Singapores medical tourism has also been shrinking mainly due to
increased competition from Malaysia and Thailand. Costs of medical
treatment in Malaysia and Thailand are relatively lower compared to that
in Singapore. Indonesian citizens made up about 58% of Singapores
total medical receipt in 2012. During our recent visit to Indonesia with
First REIT (FIRT SP, NR), which owns hospitals managed by Siloam
Hospitals, we noted that the gap between quality of healthcare services
offered in Singapore and Indonesia is closing quite rapidly. This, along
with lower costs, may result in slower medical tourist arrivals into
Singapore, thereby dragging the growth in Singapores healthcare
services industry.
We like Cordlife (CLGL SP, BUY, TP: SGD1.55) for its rapid growth
and unique business model. Despite a NEUTRAL rating on healthcare
services, we prefer exposure to Cordlife for its unique business and rapid
expansion across the Asian markets. The company provides storage
services for cord blood and cord tissues. In FY13, Cordlife ventured into
new markets, namely India, Indonesia and the Philippines. In less than
two years, India accounts for a significant portion of its new client
additions. We are bullish on the companys growth potential in its
aforementioned new markets, which have very low industry penetration
rates. Among other healthcare stocks, we are NEUTRAL on Raffles
Medical for its muted growth outlook.
Arshath Mohamed +65 6232 3897

arshath.mohamed@sg.oskgroup.com
Shekhar Jaiswal +65 6232 3894

Com pany Nam e
Price
Target
P/E (x)
P/B (x)
Yield (%)
Dec-15F
Dec-15F
Dec-15F
Rating
Cordlife Group
SGD0.92
SGD1.55
14.6
1.6
2.8
BUY
Raffles Medical Group
SGD3.89
SGD4.05
28.1
3.9
1.2
NEUTRAL
14
Healthcare Services
2 January 2015
Figure 1: Singapores population in the 65 years and above
age group
450.0
11.0%
400.0
10.5%
Figure 2: Singapore age distribution by 2030
10.0%
350.0
9.5%
300.0
9.0%
250.0
8.5%
200.0
8.0%
2011 2012 2013
Population - 65 & above (%)
2007 2008 2009 2010

Population - 65 & above ('000)
Source: SIngStat
Source: US Census Survey
Figure 3: ost of different medical treatments in the region
Figure 4: Number of JCI accredited hospitals in the region
2005
2011
2012
2014
Singapore
20
22
22
Malaysia
13
Thailand
15
39
37
Philippines
na
na
na
18
Indonesia
Source: RHB
Source: RHB
Figure 5: Cordlifes revenue, EBIT and recurring net profit
70
Figure 6: Raffle Medicals revenue, EBIT and recurring net

profit
Title:
Source:
450.0
400.0
60
350.0
50
300.0
40
250.0
30
200.0
150.0
20
100.0
10
50.0
FY14
Revenue (SGD m)
FY15F
EBIT (SGD m)
FY16F
Net prof it (recurring) (SGD m)
Source: Company, RHB
2013
Revenue (SGD m)
Net profit (without exceptionals) (SGD m)
2014F
2015F
Operating Income (SGD m)
Source: Company, RHB
15
Land Transportation
Underweight
Macro
Risks
Hoping For Too Much, Too Early
Growth
Value
ComfortDelGro and SMRT 1-year price

performance
150
140
130
ComfortDelGros and SMRTs share prices have re-rated in 2014, aided

by the announcement of Singapores new cost-plus bus operating
model and improvements in their respective operations. We believe
clarity on the terms of the new model and likely timeline for the new rail
financing framework are the catalysts for further re-rating.
ComfortDelGros cheaper valuation, favourable margin mix and balance
sheet strength make it our choice.
120
110
100
90
80
Dec-13
Feb-14
Apr-14
Comf ortDelGro (CD SP)
Jun-14
Aug-14
Oct-14
SMRT Corp (MRT SP)
Benefits from new cost-plus operating model already seem priced

in. The Singapore Government announced the new cost-plus bus
contracting model in 2014. Both public bus operators, ComfortDelGro
(CD SP, TAKE PROFIT, TP: SGD2.66) and SMRT (MRT SP, NEUTRAL,
TP: SGD1.50), are struggling with their domestic bus operations on a
standalone basis and are in need of this new model. However, its
benefits will be gradual in nature and we do not expect them to materially
change the earnings growth trajectory of both companies. Moreover, the
sharp rise in the share prices of both companies, we believe, was partly
aided by the announcement of the new bus operating model.
Implementation of new rail financing framework may not be all
positive for SMRT. SMRT has submitted a proposal to the Land
Transport Authority (LTA) in early April for a sustainable rail framework
that was asset light in nature. The discussions between SMRT and the
LTA are currently ongoing and we do not expect an early implementation
of the revised rail financing framework. However, we would like to
reiterate that the implantation of a new framework may only strengthen
SMRTs balance strength, as expenses will simply be transferred to
licensing charges from depreciation. While a cost-plus model similar to
the new bus operating model will be a positive for SMRT, we believe it is
unlikely to be permitted.
ComfortDelGro remains our preferred exposure in an Underweightrated land transport sector. Although SMRT has witnessed strong
improvement in business operations and profitability over the past few
quarters, uncertainty over the time frame and details of the new rail
financing framework will likely limit the upside to its price performance.
We prefer exposure to ComfortDelGro for its overseas business
exposure, favourable margins mix and balance sheet strength, which
could lead to an earnings accretive acquisition in the near term.
Moreover, at 19x FY15F P/E, ComfortDelGro trades at a much cheaper
valuation when compared with SMRT.
Company Name

Price
Target
P/E (x)
P/B (x)
Yield (%)
Dec-15F
Dec-15F
Dec-15F
Rating
ComfortDelGro
SGD2.60
SGD2.66
18.7
2.3
2.9 TAKE PROFIT
SMRT Corp
SGD1.59
SGD1.50
25.9
2.7
1.8
NEUTRAL
16
Transportation
2 January 2015
Figure 1: ComfortDelGro - bus segment revenue and

contributions
550
Figure 2: ComfortDelGro - bus segment EBIT and EBIT

margins
52%
51%51%
51%51%
10%
51%
500
50%
49%50%
450
50%
49%
49%
48%
48%
48%
48%
49%
400
49%
300
1Q12
3Q12
1Q13
Bus revenue (SGD m)
10%
9%
Please fill in8%
the values above
8%to have them entered in y
8% 8% 8%
7%
7%
40
9%
9%
9%
8%
6%
30
6%
20
4%
46%
10
2%
45%
48%
350
3Q11
50
12%
10%
49%
47%
1Q11
Title:
10%
Source:
60
3Q13
1Q14
0%
3Q14
1Q11
3Q11
Bus contribution (%)
1Q12
3Q12
1Q13
Bus EBIT (SGD m)
3Q13
1Q14
3Q14
Bus EBIT margin (%)
Source: Company data
Figure 3: SMRT - MRT segment revenue and contributions
Figure 4: MRT - MRT segment EBIT and EBIT margins
180
57%
160
140
53%
54% 54% 54%
55%
30
17% 16%
55%
54%
54%
54% 54%
55%
53% 53% 53%
120
53%
25
Title:
17%Source:
18%
20
51%
15
49%
10
18%
16%
16%
13%
53%
20%
100

14%
12%
10%
10%
80
8%
60
5%
3%
40
47%
2%
20
1% 0% 1%
1%
45%
0%
1QFY12 3QFY12 1QFY13 3QFY13 1QFY14 3QFY14 1QFY15
MRT contribution (%)
MRT EBIT (SGD m)
MRT EBIT margin (%)
Figure 5: ComfortDelGro - 1-year forward P/Es
Figure 6: SMRT - 1-year forward P/Es
24.0
45.0
22.0
40.0
Title:
Source:
35.0
20.0
4%
2%
1QFY12 3QFY12 1QFY13 3QFY13 1QFY14 3QFY14 1QFY15

MRT revenue (SGD m)
6%
30.0
18.0
25.0
16.0
20.0
14.0
15.0
12.0
10.0
10.0
8.0
Jan-08 Jan-09
P/E
+1 std=16.8
5.0
Jan-10
Jan-11 Jan-12
Avg. P/E=14.5
-2 std=10
Jan-13
Jan-14
-1 std=12.3
+2 std=19
Apr-09
P/E
Apr-10
Apr-11
Avg. P/E=21.9
Apr-12
Apr-13
-1 std=10.9
Apr-14
+1 std=32.9
17
Offshore & Marine
Overweight
Macro
Risks
Sunshine After The Rain
Growth
Value
Sector stocks have collapsed 38% on average, in line with Brent crudes
c.45% fall. Yet, growth prospects remain strong for those on fixed
contracts/stable long-term economics. Our large-cap Top Pick is Ezion,
with Nam Cheong and Giken Sakata as mid-/small-cap picks. Pacific
Radiance and Marco Polo Marine are likely to deliver strong alphas too.
Top SELL is Vard on its deepwater exposure and cancellation risks.
Lee Yue Jer, CFA +65 6232 3898
Saudi-shale showdown. Stocks have been hammered by Saudi

Arabias refusal to cut output despite excess supply as it seeks to slow
US shale production growth. This is a short-term gambit. 10 of 12
Organisation of the Petroleum Exporting Countries (OPEC) members are
in fiscal deficits and default risks in shale producers have spiked.
Production cuts by either/both should occur soon and we expect 2015
crude oil prices to rebound towards USD80/barrel (bbl).
Growth prospects undiminished. In a subdued price environment,
P/Es may not re-rate but earnings growth can still drive stock price. We
like firms with long-term charters Ezion (EZI SP, BUY, TP: SGD2.65)
and Pacific Radiance (PACRA SP, BUY, TP: SGD1.55) and those with
solid industry positions and business economics, ie Nam Cheong (NCL
SP, BUY, TP: SGD0.61), Giken (Giken) Sakata (GSS SP, BUY, TP:
SGD0.65) and Marco Polo Marine (MPM) (MPM SP, BUY, TP:
SGD0.60). Shallow-water operations focus is a must for downside risk
protection. Across our coverage, average year-ahead net profit growth is
40%. Giken and MPM take top spots.
After the crash? We find 10-year correlations for large-caps Keppel
(KEP SP, BUY, TP: SGD12.60) and Sembcorp Marine (SembMarine)
(SMM SP, NEUTRAL, TP: SGD3.80) to oil price at 0.82 and 0.85, rising
to 0.93 and 0.96 in the last six months respectively. Nam Cheong has
had negative 0.42 correlations since listing, rising to 0.44 when oil prices
began sliding. Prices should stabilise soon and a breakdown of the
recent positive correlation should occur as company fundamentals get
re-priced into valuations again.
Industry capex cuts likely to fall on deepwater. Of the 92m barrels of
oil produced globally, c.70% is onshore, c.20% in shallow water, and
c.10% in deepwater. In the 1980s recession, oil demand fell by only
10%. Hence, shallow-water is now the new onshore, ie recession-proof.
Capex cuts will hit deepwater much harder. We are most negative on
Vard (VARD SP, SELL, TP: SGD0.57) and its mostly deepwater-focused
orderbook, and PACC Offshore (POSH, NR) and Ezra (EZRA SP,
NEUTRAL, TP: SGD0.82) who have significant deepwater exposures.
Maintain OVERWEIGHT. The recent sector underperformance has set
the stage for a strong rebound in 2015. Stocks have priced in realistic
bear case scenarios and some have overshot to even below worst case
intrinsic values. Recoveries to even bear case valuations ought to
generate significant alphas.
Jesalyn Wong +65 6232 3872

Com pany Nam e
Price
Target
P/E (x)
P/B (x)
Yield (%)
Dec-15F
Dec-15F
Dec-15F
Rating
Ezion Holdings
SGD1.06
SGD2.65
4.3
0.9
0.1
BUY
Giken Sakata
SGD0.27
SGD0.65
2.1
1.3
9.5
BUY
Keppel Corp
SGD8.10
SGD12.60
9.0
1.3
5.9
BUY
Nam Cheong
SGD0.31
SGD0.61
4.4
1.1
5.7
BUY
Pacific Radiance
SGD0.77
SGD1.55
5.2
0.8
3.9
BUY
Vard Holdings
SGD0.62
SGD0.57
10.3
1.0
2.9
SELL
18
1
1
Offshore & Marine

2 January 2015
Key Charts
Figure 1: Average decline of 38% from peaks in the past six months
Yangzijiang
-4%
XMH
-15%
Mencast
-18%
SembIndustries
-23%
Giken
-25%
Keppel
-26%
MPM
-27%
SembMarine
-30%
Ausgroup
-33%
-38%
Mermaid
-38%
NamCheong
MTQ
-42%
Ezion
-43%
Vard
-46%
PacificRadiance
-50%
Rex
-51%
Swissco
-52%
Vallianz
-53%
Posh
-55%
Ezra
-56%
RHPetrogas
-64%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
Figure 2: Current year P/Es

Giken Sakata
Nam Cheong
Marco Polo Marine
Pacif ic Radiance
Ezion
MTQ
Yangzijiang Shipbuilding
Mencast
Vard
Sembcorp Industries
Keppel Corp
SembMarine
XMH Holdings
Ezra
AusGroup
Figure 3: Current year earnings growth

AusGroup
2.7
5.8
6.0
6.1
6.4
6.5
7.2
RH Petrogas
2.0
4.0
6.0
N.A.
N.A.
Mencast
Ezra
80%
Please fill in the values above to have78%

them entered in y
Nam Cheong
61%
XMH Holdings
8.4
8.6
9.5
10.0
10.6
10.9
12.1
12.8
0.0
Title:
Source:
8.0
Source: OSK-DMG
10.0
12.0
36%
Ezion
35%
Marco Polo Marine
32%
Pacif ic Radiance
26%
Keppel Corp
13%
0%
SembMarine
MTQ
Vard
14.0
-4%
-13%
-19%
-40% -20%
0%
20% 40% 60% 80% 100%
Source: OSK-DMG
19
Offshore & Marine

2 January 2015
Figure 4: Year-ahead P/Es

RH Petrogas
Giken Sakata
Marco Polo Marine
Ezion
Nam Cheong
Pacif ic Radiance
MTQ
Ezra
Mencast
XMH Holdings
AusGroup
Sembcorp Industries
SembMarine
Vard
Keppel Corp
Figure 5: Year-ahead earnings growth
3.0
4.3
4.7
5.0
5.8
6.3
6.4
6.5
7.9
8.3
8.5
9.6
9.6
9.9
0.0
2.0
4.0
6.0
8.0
10.0
Title:
Source:
Giken Sakata
Marco Polo Marine
AusGroup
Ezion
Ezra
MTQ
Vard
Mencast
Nam Cheong
XMH Holdings
SembMarine
Pacif ic Radiance
Keppel Corp
RH Petrogas
N.A.
0.9
12.0
Source: OSK-DMG
-50%
167%
101%
69%
Please fill in56%

the values above to have them entered in y
41%
33%
30%
29%
26%
21%
18%
15%
12%
1%
-3%
0%
50%
100%
150%
200%
Source: OSK-DMG
Figure 6: Summary of Singapore's offshore & marine coverage

Mkt Cap
Company
Ticker
SGDm
P/E (x)
Last price Rating
TP
P/B (x)
Yield (%)
ROE (%)
Pros-1 Pros-2
Hist Pros-1 Pros-2
14,950 SGD 8.210 BUY

12.60
KEP SP Equity
Sembcorp Industries SCI SP Equity 7,604 SGD 4.290 NEUTRAL 5.10
Dec
12.0
10.0
9.9
1.7
1.6
1.5
5.1
5.1
15.9
15.0
Dec
10.2
9.5
8.5
1.7
1.5
1.4
3.6
4.1
15.0
15.6
Sembcorp Marine
SMM SP Equity6,017 SGD 2.900 NEUTRAL 3.80

4,503 SGD 1.180 BUY
1.68
YZJSGD SP Equity
Dec
13.7
10.6
9.6
2.8
2.6
2.3
3.9
4.1
19.0
20.3
Dec
6.8
7.2
6.4
1.2
1.0
0.9
4.4
4.4
18.1
16.1
EZI SP Equity 1,697 SGD 1.080 BUY

VARD SP Equity732 SGD 0.625 SELL
2.65
Dec
7.6
6.4
4.3
1.4
1.2
0.9
0.1
0.1
24.6
22.5
0.58
Dec
11.8
8.6
9.6
1.1
1.1
1.0
2.1
2.7
7.6
9.1
NCL SP Equity 639 SGD 0.305 BUY

555 SGD 0.750 BUY
PACRA SP Equity
0.61
Dec
9.5
5.8
4.7
2.0
1.6
1.3
4.2
5.3
29.5
29.5
17.5
Keppel Corp
Yangzijiang
Ezion
Vard
Nam Cheong
Pacific Radiance
Ezra
Mencast
RH Petrogas
Ausgroup
MTQ
Giken Sakata
XMH Holdings
Marco Polo Marine
Hist Pros-1 Pros-2
Pros-1 Pros-2
FYE
1.55
Dec
9.9
6.1
5.0
1.5
1.3
1.1
2.5
2.9
17.6
EZRA SP EQUITY529 SGD 0.534 NEUTRAL 0.85

357 SGD 0.270 BUY
0.62
MCAST SP Equity
Aug
21.0
12.1
6.3
0.6
0.6
0.5
1.8
1.8
5.1
6.6
Dec
14.4
8.4
6.5
1.5
1.6
1.4
7.3
5.2
18.7
20.4
0.50
RHP SP Equity 253 SGD 0.335 BUY
AUSG SP Equity230 SGD 0.305 NEUTRAL 0.36
Dec
23.2
N.A.
N.A.
1.1
1.2
1.2
N.A.
N.A.
-13.3
-2.2
Jun
N.A
12.8
8.3
1.1
1.0
0.9
1.3
2.0
6.7
9.4
MTQ SP Equity 162 SGD 1.050 BUY

GSS SP Equity 128 SGD 0.265 BUY
1.77
Mar
8.1
6.5
5.8
1.5
1.4
1.2
3.4
4.2
15.2
17.7
0.65
Aug
37.0
2.7
0.9
5.9
1.9
0.9
5.8
15.5
75.9
78.9
XMH SP Equity 124 SGD 0.285 BUY

MPM SP Equity 91 SGD 0.440 BUY
0.42
Apr
12.2
10.9
7.9
2.3
2.0
1.5
4.5
5.3
24.1
23.2
0.60
Sep
8.9
6.0
3.0
0.6
0.6
0.5
0.0
3.0
8.7
15.5
Source: OSK-DMG
Note: Pros-1 and Pros-2 refer to prospective one- and two-year-ahead periods, based on financial year-end periods.
20
Sector Update, 2 January 2015
Plantation
Overweight
Macro
Risks
Action Only In 2H2015
Growth
Value
2
We believe the key catalyst for palm oil prices in 2015 is weather since
food demand growth remains muted and non-mandatory biodiesel
usage slows due to a decline in crude oil prices. Nevertheless, in 2H15,
when production starts to suffer from the 12-month impact of the dry
weather in 2014, the sector could turn bullish again. While we maintain
our NEUTRAL call on the regional sector, we like the SGX-listed
planters on valuation grounds.
With weather being the only potential driver going into 2015, being
bullish on the sector is a risky proposition. Nevertheless, weather is
traditionally the single biggest driver for agriculture prices and by itself
is sufficient to result in sustained upswing in prices. We view the
upside from this as too significant to ignore. Even if the El Nino weather
phenomenon currently at the alert level fails to materialise, it is
unlikely to dent sector sentiment. This is because the market has been
ignoring the development of El Nino after its earlier failure to develop. In
any case, damage to 2015 production has already been done by 2H14s
dryness in Kalimantan.
Demand growth will remain lacklustre, much like 2014, and especially
from China where edible oil imports have slowed due to the availability of
soybean as well as slower economic growth. We believe palm oil supply
growth in 2015 will be even slower than in 2014 due to the adverse
weather effects. In 1Q, production in Sumatra and West Malaysia will
suffer from the extreme dryness in 1Q14 while 2H will see the impact of
the dryness that occurred in a large part of Kalimantan in 2H14.
Crude oil price weakness is a drag on prices, at least psychologically.
Biodiesel margins are now close to zero, hence, non-mandatory usage
will be curtailed. However, if Brent crude does not fall significantly further
from here, mandatory usage will continue on. Indonesias biodiesel
usage should increase significantly in 2015 from this years dismal 1.6m
tonnes, hence, mitigating the slowdown in non-mandatory usage.
Indonesias mandatory usage requires at least 3m tonnes per year.
Average CPO price. With the YTD average CPO price at
MYR2,434/tonne, our full-year average of MYR2,400 remains on track.
We expect prices to strengthen next year, averaging MYR2,500/tonne.
2015 unlikely to be a quiet year for the sector. While interest in the
sector remains thin, we believe the worst is over for the sector and
downside is limited. Investors with long investment horizons could start
buying. Most excitement may take place in 2H when production starts to
suffer from the 12-month impact of this years dry weather. We believe
the impact could be significant, given that 3Q is a high-crop quarter.
OVERWEIGHT on SGX-planters. We remain OVERWEIGHT on the
SGX plantation stocks, mainly on valuation grounds, while our regional
sector call remains a NEUTRAL. Bumitama Agri (BAL SP, BUY, TP:
SGD1.48) is our Top Pick, while we also find value in First Resources
(FR SP, BUY, TP: SGD2.36).

Com pany Nam e
Price
Target
P/E (x)
P/B (x)
Yield (%)
Dec-15F
Dec-15F
Dec-15F
-
Rating
Bumitama Agri Ltd
SGD1.03
SGD1.48
10.7
2.0
First Resources
SGD1.82
SGD2.36
11.6
1.8
2.6
BUY
BUY
Golden Agri
SGD0.46
SGD0.50
13.9
0.5
1.6
NEUTRAL
21
Plantation
2 January 2015
Figure 1: Palm oil trades at USD71/tonne discount to soybean

oil
1,600
1,400
500
175
450
165
400
1,200
350
300
1,000
250
800
Figure 2: Palm oil/gasoil spread narrowed to USD1.30/barrel

(bbl)
200
155
Please fill in the values above to have them entered

20.0 in your r
135
10.0
125
-10.0
150
115
400
100
105
50
95
85
-50
75
Jul-11 Dec-11 May12
Premium, USD (RHS)
Soyoil, USD (LHS)
30.0
145
600
200
40.0
Title:
Source:
-20.0
-30.0
CPO, USD (LHS)
-40.0
Oct-12 Mar-13 Aug-13 Jan-14 Jun-14 Nov-14
Gasoil (LHS)
CPO (LHS)
Brent crude (LHS)
Biodiesel margin (RHS)
Source: OSK-DMG, Bloomberg
Figure 3: Clear signs of warming sub-sea temperature points

to El Nino gaining traction
Figure 4: Southern Oscillation Index is already in El Nino

territory
Source: Australian Bureau of Meteorology
Figure 5: China's YTD edible oil imports down 15.1% YoY,

palm down 10.9%
8,000
100%
7,000
90%
80%
Figure 6: India's 10M edible oil import up 9.2%, palm down

7.6%
12,000.0
90%
Title:
Source:
10,000.0
80%

70% in your re
6,000
70%
8,000.0
5,000
60%
4,000
50%
3,000
40%
30%
60%
50%
6,000.0
40%
4,000.0
30%
2,000
20%
1,000
20%
2,000.0
10%
10%
0%
YTD YTD YTD YTD YTD YTD YTD YTD YTD YTD
CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14
China's vegetable oil import
Source: China's Customs
China's palm oil import
Palm's market share, %
0%
YTD
CY07
YTD
CY08
India's edible oil import
YTD
CY09
YTD
CY10
YTD
CY11
India's palm oil import
YTD
CY12
YTD
CY13
YTD
CY14
Palm oil's market share
Source: India's Customs
22
Real Estate
Neutral
Macro
Risks
Three-Party Catch-22 Situation To Persist
Growth
Value
2
Rental pulsebeat:
2Q/3Q14
SGD psf/mth/Index QoQ (%) YoY (%)
Office Grade A
Retail Orchard Rd
10.60
34.20
3.4
0.0
11.0
3.3
5.50
1.9
3.8
2.15
(2.2)
(2.3)
Warehouse median rent

Residential median rent
2.05
3.74
0.0
(1.1)
(1.3)
(2.2)
SRX Rental Index (Sep)
124.3
(0.2)
(5.3)
Biz Park (City Fringe)

Multi-user factory (B1)
median rent
We believe the three-party Catch-22 situation amongst homebuyers,

authorities and developers will persist, resulting in a 6-10% annual drop
in island wide residential property prices in 2014-15. Our Top Picks are
still diversified developers such as Keppel Land and CapitaLand.
Homebuyers perspective. Homebuyers are holding back in

anticipation of the surge in physical completions in 2015-16 (46,000
private homes to be completed over the next two years) and prospective
price declines.
Authorities perspective. From the authorities perspective, it will be

difficult to justify any easing of cooling measures without a significant
drop in property prices, when prices in general are only slightly off their
peaks in 3Q13 (down 3.9%). Already, deputy prime minister Tharman
Shanmugaratnam stated that there is some distance to go in achieving
a meaningful correction. He added that if meaningful reversal is not
attained after each upswing, property prices will outpace household
incomes in the long run, a scenario that is best avoided.
Developers perspective. Developers have incurred high land costs

but do not want to launch any new project with poor buyers response
and henceforth generate adverse publicity, which is detrimental to the
future sales progress of the development. They also cannot afford to
lower prices substantially because of their high cost base, as well as an
implicit responsibility to hold up property values for existing customers;
especially those that have purchased units in another recent
development in the same vicinity. It thus makes sense for developers to
drag out the launches, hoping that at some point, the authorities will
ease some of the cooling measures or that economic recovery will catch
up and spur buyers demand. It is this impasse that is slowing down
transaction volumes and impeding sales progress. Without an external
trigger, prices are likely to still be artificially held-up and we see this as
the main risk for protracting any potential easing of the cooling measures
or property prices.
Source: OSK-DMG, URA, HDB, CBRE
Price pulsebeat:
2Q/3Q14
Office Grade A
Retail Orchard Rd
SGD psf/Index
2,750
7,200
QoQ (%) YoY (%)

0.0
12.2
0.0
2.9
Multi-user factory (B1)
637
(1.8)
3.4
Warehouse median
URA Residential PPI
HDB Resale
SRPI Price Index
(Sep)
857
207.9
192.5
168.7
3.2
(0.7)
(1.6)
(0.3)
(11.3)
(3.9)
(6.0)
(4.6)
Source: OSK-DMG, URA, HDB, CBRE
Residential price & rental indices (4Q98 = 100)

250
207.9
200
160.6
150
100
50
4Q98
3Q99
2Q00
1Q01
4Q01
3Q02
2Q03
1Q04
4Q04
3Q05
2Q06
1Q07
4Q07
3Q08
2Q09
1Q10
4Q10
3Q11
2Q12
1Q13
4Q13
3Q14
Residential Price Index
Residential Rental Index
Source: URA
Ong Kian Lin +65 6232 3895

Goh Han Peng +65 6232 3893

hanpeng.goh@sg.oskgroup.com
Lifeless property market. We project new homes sales (including

executive condominiums (ECs)) to hit 7,000-9,500 units in 2015. On the
back of expectations for slightly extended dovish monetary policies, we
project the ASP for residential property to drop 6-10% per annum in
2014-2015 (Urban Redevelopment Authoritys (URA) Property Price
Index (PPI) is down 3.9% YoY). We think the continued weakness in the
housing development boards (HDB) resale market (down 6.0% YoY) will
negatively impact the wealth effect, reducing upgraders demand for
mass market private homes. On the other hand, drastic declines (>20%
per annum) appear unlikely. This is because the Government holds the
wildcard to reverse some of its cooling measures should prices take a
turn for the worse. Our Top Picks are still diversified developers such as
Keppel Land (KPLD SP, BUY, TP:SGD3.88) and CapitaLand (CAPL SP,
BUY, TP: SGD3.54).
Com pany Nam e

CapitaLand
City Developments
Price
Target
P/E (x)
P/B (x)
Yield (%)
Dec-15F
Dec-15F
Dec-15F
SGD3.54
19.3
0.8
BUY
SGD10.00
SGD9.47
15.8
1.1
NEUTRAL
BUY
Ivan Looi +65 6232 3841
Keppel Land
SGD3.36
SGD3.88
11.7
0.7
Oxley Holdings
SGD0.52
SGD0.91
9.9
2.3
Sinarmas Land
SGD0.59
SGD1.01
16.8
1.7
Rating
SGD3.33
BUY
0.9
BUY
23
Real Estate
2 January 2015
Singapore Charts At a Glance

Figure 1: Residential supply-demand dynamics
Figure 2: Office supply-demand dynamics (Downtown core)

4.5
10.0%
50,000
100
Title:
Source:
(Net absorption 0.73m sq ft from 1993-2013)
4.0
Average vacancy rate: 6.8%
95
3.0
2.5
30,000
90
2.0
6.0%
1.5
20,000
Average net absorption: 8,927 units
4.0%
0.5
10,000
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
>2018F
0.0
0
85
1.0
(0.5)
2.0%
(1.0)
80
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
2016F
2017F
Number of units
3.5
8.0%
40,000
(1.5)
70
[LHS] Net supply
[LHS] Net absorption
Net Supply ('m sqf t)
[LHS] Average absorption
[RHS] Vacancy rate (%)
Occupancy (%) [RHS]
Net Absorption ('m sqf t)
Source: URA, CBRE, OSK-DMG
Figure 3: Retail supply-demand (Outside Central Region)
Figure 4: Factory supply-demand (Island wide)

(m sq ft)
(%)
(m sq ft)
98
96
100
98
Please fill in the values above to have them entered in your re
15
96
95
94
(Net absorption 0.26m sq ft

from 1993-2013)
93
10
94
92
92
90
0
90
89
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
2016F
2017F
91
Net new supply (m sq f t)
(5)
Net absorption (m sq f t)
Net supplyl (m sq f t)
Figure 5: Business park supply-demand (Island wide)
Figure 6: Warehouse supply-demand (Island wide)

(%)
100
Net absoprtion 0.7m sq ft from 2003-2013
90
2.0
80
70
1.5
1.0
0.5
Occupancy (%) [RHS]

2016F
2015F
2014F
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
10
9
8
(%)
Title:
Net absoprtion
Source:2.4m sq ft from 1993-2013
96
94

92in your re
90
88
60
50
40
30
82
80
78
20
(0.5)
(m sq ft)
10
0
86
84
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
2016F
2017F
(m sq ft)
2003
Occupancy rate (%) [RHS]
2.5
88
86
Occupancy (%) [RHS]
0.0
(%)
Title:
Net absoprtion 7.1m sq ftSource:
from 1993-2013
20
97
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014F
2015F
2016F
2017F
1.5
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
(0.1)
(0.2)
(0.3)
75
Occupancy (%) [RHS]

24
REITS
Neutral
Macro
Risks
All Remains Well For Now
Growth
Value
2
S-REITs segmental performance
1D
(%)
Office:
Retail:
Industrial:
Hospitality:
Healthcare:
S-REITs:
STI:
Outperf.
0.5
2D
(%)
3D
(%)
5D
(%)
1M 3M
(%) (%)
(0.5) (1.0) (1.9) 1.8
0.4
0.2
0.0
0.7
0.1
0.1
(0.0)
0.1
1.5
1.3
0.8
0.5
0.0
0.6
0.6
(0.2) 1.5
(0.2) (0.6) 1.3
(0.2) (0.6) 1.5

0.1
(0.8) 1.2
(0.1) (0.6) (0.3)
0.2
0.9
0.7 17.2
(1.9) 14.6
(6.5)
4.0 10.9
(0.2) 10.0
(11.3)
7.7
(0.6)
6.2
(13.0)
3.2
(0.2)
2.2
(17.5)
0.7
2.2
0.3
22
May
2013
(0.6)
(0.9) (0.9)
(0.2) 0.9
1.7
6M 12M MTD YTD

(%) (%) (%) (%)
(0.8)
1.1
2.7 10.8
1.7
8.3
(11.9)
(0.1)
1.4 10.6
(0.6)
9.0
(11.2)
(0.3)
0.8
6.8
(0.8)
5.0
(3.8)
0.2
0.6
3.9
0.2
4.1
(7.4)
Going into 2015, we believe that the average sector yields are likely to
be range-bound between 5.9% and 6.5% from 6.1% currently. The
market has likely priced in a progressive and gradual lift-off in interest
rates from mid 2015. For 1H15, we do not expect a major block that may
derail the low-interest rate environment. Low DPU growth may persist,
but we do not expect significant downside risk to property prices in
1H15, especially in the office and retail subsectors.
Blue denotes best-performing; Red denotes worst-performing

Source: Bloomberg
S-REITs segmental spreads

(bps)
800
700
600
0.86
0.74
0.82
458
477
0.96
0.80
500
400
362
332
341
3.14
2.76
300
2.75
2.44
3.65
200
100
219
219
219
1.08
0.91
219
1.41
Three key trends:
219
0.96
1.14
0
Office
Risk-f ree
Retail
Healthcare
Yield Spreads
Adj. Beta
Hospitality
Industrial
Cost of Borriwng (%)
P/B
Source: Bloomberg
Most geared S-REITs

50%
45.7%
45%
42.1%
41.7%
39.8%
40%
38.2%
38.0%
37.7%
35%
30%
25%
20%
15%
10%
MAGIC
MCT
ASHT
OUTCT
FHT
KREIT
0%
VIT
5%
Source: Companies
*All prices as of morning 8 Dec 2014
Key rates and forex

3-mth SIBOR (%):
10-yr SG Gov yield (%):
USDSGD exchange:
0.45
2.19
1.3227
Not a house of straws. 9M14 results for the S-REITs in our coverage
were in line with our estimates. Rental reversions were mostly positive
while occupancy rates were relatively stable across all segments. On a
relative basis, the outlook for the office segment remains the brightest
given the 2-year supply shortage in the central business district (CBD).
Retail sales continued to soften on underwhelming demand, rising mall
and e-commerce competition as well as slowing tourist arrivals. Hotel
room rates remain under pressure from the exodus of Chinese visitors
and an abundant supply expected over the next three years. The
industrial segment appears to be most at risk, with rental and property
prices already on the verge of a decline.
i) Rental reversions may moderate. Most REITs registered single-digit
rental reversions vs mid- to low-teens in 2013, suggesting that rentals
are probably reaching a peak. The expected addition to supply over the
next few years is also putting a cap on landlords bargaining power in
raising rental rates.
ii) Net property income (NPI) margins continue to deteriorate. The
effects of the labour crunch stemming from a tighter policy on foreign
labour quotas continue to be felt by high-touch and foreign workerdependent sectors, particularly hospitality, retail and industrial.
iii) Still macro-driven. Following the end of quantitative easing (QE) in
October by the US Federal Reserve (the Fed), all eyes are on the pace
and timing of the eventual increase of the US federal fund rate, which
would affect S-REITs share price performance.
NEUTRAL. The office sub-sector remains our preferred segment,
followed by retail and hospitality. The industrial REITs remain the most at
risk of NAV depreciation. For exposure, we recommend
CapitaCommercial Trust (CCT SP, BUY, TP: SGD1.85), Suntec Real
Estate Investment Trust (SUNTEC SP, BUY, TP:SGD2.00) and
CapitaMall Trust (CT SP, BUY, TP:SGD2.10) in our sequence of
preference.
Company Name
Price
Target
P/E (x)
P/B (x)
Yield (%)
Dec-15F
Dec-15F
Dec-15F
Rating
Ascendas REIT
SGD2.35
SGD2.50
14.0
1.1
6.5
BUY
Cache Logistics Trust
SGD1.16
SGD1.21
13.7
1.2
7.8
NEUTRAL
CapitaCommercial Trust
SGD1.70
SGD1.85
32.9
1.0
5.1
BUY
CapitaMall Trust
SGD2.00
SGD2.10
15.1
1.1
5.7
BUY
Ong Kian Lin +65 6232 3895
CDL Hospitality Trusts
SGD1.74
SGD1.78
13.9
1.0
6.4
NEUTRAL
Keppel REIT
SGD1.21
SGD1.18
15.7
0.9
6.4
NEUTRAL
Mapletree Logistics Trust
SGD1.17
SGD1.22
8.6
1.1
6.7
NEUTRAL
OUE Hospitality Trust
SGD0.91
SGD0.97
13.8
1.0
7.4
BUY
Ivan Looi +65 6232 3841
Starhill Global REIT
SGD0.80
SGD0.91
15.5
0.9
6.4
BUY
Suntec Real Estate Investment Trust SGD1.91
SGD2.00
17.4
0.9
4.4
BUY
Source: Bloomberg
25
REITS
2 January 2015
S-REITs: Key Charts At a Glance

Figure 1: Segmental performance
1D
(%)
Office:
Retail:
Industrial:
Hospitality:
Healthcare:
S-REITs:
STI:
Outperf.
2D
(%)
0.5
3D
(%)
5D
(%)
Figure 2: S-REITs segmental spreads (bps)
1M 3M
(%) (%)
(0.5) (1.0) (1.9) 1.8
0.4
0.2
0.7
0.1
0.1
(0.0)
1.5
1.3
0.5
0.0
0.6
0.6
0.0
(0.2) 1.5
(0.2) (0.6) 1.3

0.1
0.8
1.7
0.1
0.2
(bps)
800
700
0.9
0.7 17.2
(1.9) 14.6
(6.5)
4.0 10.9
(0.2) 10.0
(11.3)
600
7.7
(0.6)
6.2
(13.0)
500
3.2
(0.2)
2.2
(17.5)
(0.9) (0.9)
0.7
2.2
(0.8) 1.2
(0.1) (0.6) (0.3)
22
May
2013
(0.6)
(0.2) 0.9
(0.2) (0.6) 1.5
6M 12M MTD YTD

(%) (%) (%) (%)
(0.8)
1.1
2.7 10.8
1.7
8.3
(11.9)
(0.1)
1.4 10.6
(0.6)
9.0
(11.2)
(0.3)
0.8
6.8
(0.8)
5.0
(3.8)
0.2
0.6
3.9
0.2
4.1
(7.4)
0.3
400
0.86
362
458
477
341
3.14
2.76
300
0.82
0.96
0.80
332
0.74
2.75
2.44
3.65
200
100
219
219
219
1.08
0.91
219
219
0.96
1.41
1.14
0
Office
Risk-f ree
Retail
Healthcare
Yield Spreads
Adj. Beta
Figure 3: Aggregate debt profile (S-REITs)
Figure 4: Gearing of S-REITs
(SGD m)
23,086
20,000
44%
Avg. term to maturity: 5.52 yrs

Sector Gearing: 36%
15,000
50%
50%
45%
45%
40%
40%
35%
30%
25%
5,000
3,236
658
Debt maturing [LHS]
14%
9%
FY 2018
FY 2017
FY 2016
FY 2015
1%
11%
4,456
6%
FY 2014
13%
6,011
20%
7,482
> FY2019
6,851
FY 2019
10,000
35%
30%
Title:
Source:
Please fill in the values above to have them entered in your re
15%
20%
10%
15%
5%
10%
0%
5%
0%
Source: Companies
Source: Companies
Figure 5: W.A term to maturity of S-REITs
Figure 6: Most geared S-REITs

6.5 yrs
2.0
42.1%
40%
35%
30%
25%
20%
Some S-REITs have informed OSK-DMG that they conducted post-refinancing after
our initial cut-off on 30 Sep (3Q14). Figures reflect amendments. Source: Companies
0%
MAGIC
5%
MCT
0.0
LMRT
Soilbuild
CRCT
SSREIT
CDLHT
Cambridge
FCT
MAGIC
AAREIT
MCT
OUECT
ASHT
FEHT
MLT
VIT
KREIT
OUEHT
Starhill
MIT
Suntec
ART
Plif e
CCT
SPH REIT
AREIT
CACHE
FCOT
IREIT
CMT
FHT
Saizen
10%
ASHT
15%
1.0
OUTCT
3.0
45%
Title:
Source:
41.7%
39.8%
Please fill in the values38.2%
above to have
them entered
38.0%
37.7% in your re
FHT
4.0
45.7%
KREIT
5.0
50%
VIT
6.0
2.0 yrs
2.0 yrs
2.2 yrs
2.3 yrs
2.4 yrs
2.5 yrs
2.5 yrs
2.7 yrs
2.9 yrs
3.1 yrs
3.2 yrs
3.3 yrs
3.3 yrs
3.3 yrs
3.4 yrs
3.5 yrs
3.6 yrs
3.6 yrs
3.8 yrs
3.9 yrs
3.9 yrs
3.9 yrs
4.0 yrs
4.0 yrs
4.0 yrs
4.2 yrs
4.3 yrs
4.7 yrs
4.7 yrs
4.7 yrs
7.0
P/B
25%
% of total debt [RHS]
(yrs)
Cost of Borriwng (%)
VIT
KREIT
FHT
OUTCT
ASHT
MCT
MAGIC
FCOT
SSREIT
Saizen
ART
SUNTEC
CACHE
PLIFE
CMT
Cambridge
MLT
IREIT
MIT
FIRT
OUEHT
AREIT
AAREIT
Fortune
FEHT
CRCT
Soilbuild
CCT
CDLHT
FCT
SGREIT
LMRT
SPH REIT
25,000
Industrial
45.7%
42.1%
41.7%
39.8%
38.2%
38.0%
37.7%
37.1%
37.0%
37.0%
36.4%
35.5%
35.0%
34.6%
34.1%
33.9%
33.3%
33.1%
33.1%
32.9%
32.7%
32.6%
32.2%
31.1%
30.9%
30.8%
30.8%
30.2%
30.2%
29.3%
29.1%
28.3%
26.0%
Hospitality
Source: OSK-DMG, Companies
26
Technology
NEUTRAL
Macro
Risks
Picking The Cream Of The Crop
Growth
Value
2
Jarick Seet +65 6232 3891
Terence Wong CFA +65 6232 3896

We have downgraded the Singapore technology sector to NEUTRAL

from Overweight, as we expect macroeconomic conditions to only
strengthen slightly in 2015. We remain bullish on Singapores tech
stocks in niche markets and fields. However, we are less optimistic on
Singapore's tech heavyweights, who are still in the midst of recovering
from their clients mergers. Our Top Picks for the sector are IPS
Securex and Hi-P - we expect 2015 to be a stellar year for both of them.
Slightly stronger Global IT Spending in 2015. According to Gartner,

global IT spending is expected to increase 3.7% to USD3.9trn, as
compared with a 2.1% growth in 2014. The devices market segment and
enterprise software segment are expected to be the leading performers,
growing 5.8% and 7.3% respectively in 2015.
Companies in niche fields to excel. We expect IPS Securex (IPSS SP,
BUY, TP: SGD1.26), who is in a niche field like the national defence and
security business, to benefit from regional governments boosting their
defence and military budgets, due to growing political instability and
ongoing disputes. On the other hand, we also like Hi-P (HIP SP, BUY,
TP: SGD0.87), an integrated contract manufacturing service provider
who is undergoing a potentially huge turnaround after being impacted by
a worldwide shift in demand for smartphones. We expect key catalysts
such as Xiaomi, YotaPhone and its other new projects to substantiate a
turnaround in 2015.
2015 set to be a stellar year for our Top Buys. Looking forward, we
think that 2015 could potentially be a stellar year for our Top Picks in the
Singapore technology space, with Pepperball to potentially be the game
changer for IPS Securex. We also believe that Xiaomi and other new
projects could steer a key turnaround in Hi-P's earnings. In addition, we
are also positive on Trek 2000's (TREK SP, BUY, TP: SGD0.61)
wireless Flucard deal with Rely/Mattel to catapult Trek's earnings to a
much higher level. Overall, we remain bullish on Singapores tech stocks
in niche markets and fields. However, we are less positive on
Singapores tech heavyweights who are still in the midst of recovering
from their clients mergers. As a result, we have downgraded the
technology sector to NEUTRAL (from Overweight) for 2015.
Com pany Nam e
Price
Target
P/E (x)
P/B (x)
Yield (%)
Dec-13
Dec-13
Dec-13
Global Testing
SGD0.09
SGD0.17
66.6
0.6
Hi-P International
SGD0.72
SGD0.87
92.3
1.0
IPS Securex Holdings
SGD0.68
SGD1.26
27.2
9.0
Nera Telecommunications Ltd
SGD0.77
SGD0.83
16.0
Riverstone Holdings Ltd
SGD0.96
SGD1.15
Silverlake Axis
SGD1.27
SGD1.03
Trek 2000 International Ltd
SGD0.37
Venture Corp Ltd
SGD7.73
Rating
BUY
2.8
BUY
4.2
7.8
NEUTRAL
15.8
2.8
2.7
BUY
33.0
12.2
2.6
SELL
SGD0.61
289.3
2.1
0.7
BUY
SGD7.50
16.2
1.2
6.5
NEUTRAL
BUY
27
Technology
2 January 2015
Figure 1: Global IT spending forecast (USD trn)

4.5
4.0
3.5
3.0
1.7
1.6
1.6
1.5
0.9
1.0
1.0
1.0
0.3
0.1
0.3
0.1
0.3
0.1
0.7
0.7
0.7
2013
2014
2015
2.5
2.0
0.5
0.0
Devices
Data Center Systems
Enterprise Software
IT Services
Telecom Services
Source: Gartner Research
Figure 2: Worldwide semiconductor capital spending forecast (USD bn)

80.0
14%
70.0
11%
60.0
50.0
64.5
12%
74.3
70.1
9%
69.6
67.2
10%
8%
57.8
7%
40.0
6%
4%
4%
2%
30.0
0%
20.0
-2%
-2%
10.0
-4%
-4%
0.0
-6%
2013
2014
2015
2016
Semiconductor Capital Spending
2017
2018
Growth (%)
Figure 3: Wafer-level manufacturing equipment forecast (USD bn)

45.0
38.7
37.6
35.6
33.8
35.0
30.0
20%
41.4
18%
40.0
15%
11%
28.8
9%
25.0
10%
7%
5%
20.0
15.0
0%
10.0
0.0
-5%
-5%
5.0
-9%
2013
-10%
2014
2015
2016
Wafer-Level Manufacturing Equipment
2017
2018
Growth (%)
28
Telecommunications
Neutral
Macro
Risks
Giving Less For More
Growth
Value
2
We believe 2015 will pan out as another NEUTRAL year for the telco
sector due to the normalisation of US interest rates, competitive
headwinds and regulatory-centric developments. While we expect
earnings downside to be mitigated by the data monetisation efforts by
the telcos, sector earnings growth at 5-6% for 2015/2016 does not look
particularly attractive with dividend yields (4-5%) as the silver lining.
Our preferred picks are M1 and SingTel.

research@sg.oskgroup.,com
Chugging along. We expect industry mobile revenue to grow at a slightly

stronger 3-4% in 2015 vs a projected 2-3% in 2014 as the telcos ramp up
efforts to better monetise surging data traffic. Although more than half of
postpaid subscribers (subs) (59% as at 3Q14) have migrated to tiered
data plans, with a rising number breaching their data caps, industry
postpaid ARPUs fell 3-4% YoY in 9M14 due to the structural pressure on
roaming, prepaid revenue weakness and stronger take up of dataonly/shared SIMs. The new ruling on SIM card ownership (effective Apr
2014) contributed to the estimated 10-12% YoY decline in industry
prepaid revenue for 2Q/3Q14.
Headwinds remain for fixed broadband (FBB). We expect the pressure
on FBB revenue to persist due to price competition and consumers
upgrading to fiber broadband from ADSL (Asynchronous Digital
Subscriber Lines) services. Both SingTel (ST SP, NEUTRAL, TP:
SGD3.93) and StarHub (STH SP, NEUTRAL, TP: SGD4.20) posted 716% YoY declines in their 9M14 FBB revenues as ARPUs slipped to new
lows. Fiber subscriber growth numbers rose 54% YoY over the same
period, supported by better provisioning levels and few tactical campaigns
by the telcos. We expect the growth of fiber broadband services to be
catalysed by incentives laid out during the Budget to defray the cost of
setting up fiber infrastructure in apartments and buildings.
Fourth operator conundrum. The telcos are bracing for the possibility
that the Infocomm Development Authority (IDA) may award a full mobile
license to a new fourth operator, which would further intensify
competition in the market. We think it would be most difficult for a new
entrant to compete in the mobile space given the already entrenched
market share and services of the incumbent operators and steep
investments required to roll out a greenfield network. We note there were
no new takers for the 1.8GHz spectrum put up for auction in 2013
(eventually re-allocated to SingTel, StarHub and M1 (M1 SP, BUY, TP:
SGD4.40)) while mobile virtual network operators (MVNO) have had a
poor track record in the past.
Maintain NEUTRAL on sector- preferred picks are M1 & SingTel.
Although we expect earnings downside for the sector to be supported by
the telcos data monetisation efforts and the tight rein on subscriber
acquisition cost (SAC), we think sentiment on the sector may be capped
by the ongoing normalisation of interest rates in the US, competitive
headwinds and regulatory developments. We prefer telcos offering: i)
reasonable earnings growth, ii) sustainable dividend yields and iii) having
some strategic advantage. Our preferred picks are M1 and SingTel.
P/E (x)
P/B (x)
Com pany Nam e

M1
Price
SGD3.60
Target
SGD4.40
Dec-15F
17.0
Dec-15F
8.2
Yield (%)
Dec-15F
5.8
Rating
BUY
SingTel
SGD3.98
SGD3.93
15.7
2.4
4.2
NEUTRAL
StarHub
SGD4.10
SGD4.20
16.4
36.8
4.9
NEUTRAL
29
Telecommunications
2 January 2015
Figure 1: YoY growth in mobile revenue
Figure 2: % of postpaid subs on tiered data plans
10.0%
8.0%
60%
Title:
Source:
50%
Please fill in the values above to have them entered in you
6.0%
40%
4.0%
30%
2.0%
0.0%
61%
59%
57%
59%
20%
17%
-2.0%
10%
16%
16%
14%
-4.0%
0%
SingTel
Singtel Spore
Starhub
StarHub
4Q12
M1
M1
Average
3Q14
Source: OSK-DMG
Source: OSK-DMG
Figure 3: FBB revenue remains under pressure
Figure 4: Mobile revenue share of the telcos

60%
50%
40%
30%
20%
10%
Singtel Spore
Starhub
Source: OSK-DMG
Source: OSK-DMG
Figure 5: Telcos mobile EBITDA margin trend
Figure 6: Fiber broadband net addition

Title:
Source:
36%
34%
M1
Launch of
the iPhone 5
Please fill in the values above to have them entered in you
32%
30%
28%
Launch of
the iPhone
5s/5c
26%
24%
22%
SingTel Spore
Starhub
Source: OSK-DMG
M1
Source: OSK-DMG
30
Company Update, 2 January 2015
BreadTalk Group (BREAD SP)
Buy (Maintained)
Consumer Non-cyclical - Food & Beverage Products

Market Cap: USD311m
Target Price:
Price:
SGD1.90
SGD1.45
Macro
Risks
Baking Higher Profitability
Growth
Value
Breadtalk Group (BREAD SP)

Relative to Straits Times Index (RHS)
1.60
170
1.50
160
1.40
150
1.30
140
1.20
130
1.10
120
1.00
110
0.90
100
0.80
5
5
4
4
3
3
2
2
1
1
90
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Source: Bloomberg
Avg Turnover (SGD/USD)

Cons. Upside (%)
Upside (%)
52-wk Price low/high (SGD)
Free float (%)
Share outstanding (m)
Shareholders (%)
George Quek
Katherine Lee
Primacy Investment
0.26m/0.20m
31.0
31.0
0.89 - 1.49
36
282
34.0
18.6
11.0
Expanding the food atrium division. Going forward, we expect this

division, which currently contributes about 25% of group profit to be an
important pillar of growth. BreadTalk has store expansion plans,
especially in China, where this concept is still relatively new but popular.
The company is targeting 100 food courts in the medium-term (63
currently). YTD, this division has been a strong performer, with positive
same-store sales growth (SSSG) across all markets.
Thailand to bring more cheer. As part of BreadTalks joint-venture (JV)
agreement signed in Aug 2014 with substantial shareholder Minor
International (Minor) (MINT TB, BUY, TP: THB40.00), we expect this 5050 JV to significantly expand the number of bakeries in Thailand. The
eventual goal is 100-150 outlets (23 currently). Minor will be involved in
day-to-day operations and its domestic expertise is expected to be
invaluable. In the future, we believe this collaboration could possibly
extend further into restaurants and food courts.
Streamlining businesses. Singapore has been a challenging market
this year, due to higher operating expenses from labour and rent. We
expect store expansion to be moderate and opportunistic going forward.
Write-offs (estimated at SGD2m) have already been taken at underperforming RamenPlay outlets this year. We expect this business to be
streamlined going forward, in concert with a rebranding exercise.
Focusing on the bottomline, maintain BUY. Over the last decade,
BreadTalk has been aggressively opening new stores, which have often
weighed down on its bottomline in the form of depreciation. We expect
the focus going forward to be on increasing margins rather than revenue.
We moderate our FY15-16 estimates by 7-8% but maintain our BUY call
with a SGD1.90 TP, based on 7.5x FY15F EV/EBITDA.
Share Performance (%)

YTD
1m
3m
6m
12m
61.1
5.5
5.1
5.1
64.8
Forecasts and Valuations
56.1
Total turnover (SGDm)
Dec-12
Dec-13
Dec-14F
Dec-15F
447
537
600
681
789
Reported net profit (SGDm)
12.0
13.6
14.3
17.1
20.6
Recurring net profit (SGDm)
12.0
13.6
14.3
17.1
20.6
3.5
13.3
5.1
19.5
20.8
Recurring EPS (SGD)
0.04
0.05
0.05
0.06
0.07
DPS (SGD)
0.01
0.02
0.02
0.02
0.03
Recurring P/E (x)
33.9
30.0
28.6
23.9
19.8
P/B (x)
4.94
4.34
3.98
3.60
3.22
P/CF (x)
7.50
5.67
8.10
4.85
4.66
Dividend Yield (%)
0.9
1.2
1.3
1.5
1.8
EV/EBITDA (x)
8.95
8.01
7.46
6.10
5.05
Return on average equity (%)
15.0
15.4
14.5
15.8
17.2
Net debt to equity (%)
35.3
85.7
104.5
57.3
33.9
0.0
0.0
0.0
Absolute
Relative
56.1
4.5
5.8
4.0
Shariah compliant
James Koh +65 6232 3839

Recurring net profit growth (%)
Our vs consensus EPS (adjusted) (%)
.
2
0
.
3
0
0
.
2
0
0
We believe BreadTalks diversified offerings and mass market prices .
0
will continue to thrive despite the weak spending environment. The 0
stock remains under-valued, trading at just 6x FY15F EV/EBITDA and 0
we reiterate our BUY call. In our recent discussions with the company,
we are happy with its more moderate store expansion strategy going
forward, which we believe will boost bottomline margins.
Dec-13
Vol m
Price Close
Dec-16F
31

2 January 2015
Financial Exhibits
Profit & Loss (SGDm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover
447
537
600
681
789
Cost of sales
(206)
(252)
(285)
(323)
(375)
Gross profit
241
285
315
358
414
Gen & admin expenses
(53)
(64)
(66)
(74)
(83)
(181)
(210)
(239)
(271)
(314)
Other operating costs
10
12
15
18
18
Operating profit
19
23
26
30
35
Operating EBITDA
50
62
72
81
93
(30)
(39)
(46)
(50)
(57)
Selling expenses
Depreciation of fixed assets
Dec-16F
Amortisation of intangible assets
(1)
(0)
(1)
(1)
(1)
Operating EBIT
19
23
26
30
35
Net income from investments
Interest income
Interest expense
(1)
(3)
(4)
(4)
(3)
Pre-tax profit
19
22
24
29
35
Taxation
(6)
(6)
(7)
(8)
(10)
Minority interests
(2)
(3)
(3)
(4)
(4)
Profit after tax & minorities
12
14
14
17
21
Reported net profit
12
14
14
17
21
Recurring net profit
12
14
14
17
21
Cash flow (SGDm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Operating profit
19
23
26
30
35
Depreciation & amortisation
31
39
46
50
58
Change in working capital
17
(11)
14
Other operating cash flow
59
81
60
94
(1)
(3)
(4)
(4)
(3)
(10)
Operating cash flow

Interest received
Interest paid
5
99
Tax paid
(5)
(8)
(8)
(8)
Cash flow from operations
54
72
50
84
88
(93)
(106)
(68)
(32)
(56)
Capex
Other new investments
Other investing cash flow
Cash flow from investing activities
(0)
(0)
(1)
(36)
(18)
(8)
(1)
-
(129)
(125)
(76)
(32)
Dividends paid
(6)
(4)
(5)
(6)
Shares repurchased
(0)
(1)
(56)
(7)
Proceeds from issue of shares
(4)
Increase in debt
79
57
26
(35)
Other financing cash flow
(0)
(1)
(1)
Cash flow from financing activities
70
55
20
(41)
(27)
Cash at beginning of period
87
64
79
74
85
Total cash generated
(5)
(5)
11
Implied cash at end of period
82
67
74
85
90
(20)
32

2 January 2015
Financial Exhibits
Balance Sheet (SGDm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
64
79
74
85
90
10
11
12
14
Accounts receivable
44
51
66
65
76
Other current assets
10
11
126
150
159
172
191
Total cash and equivalents

Inventories
Total current assets

Total investments
Tangible fixed assets
157
226
248
230
228
Intangible assets
Total other assets
60
77
85
85
85
Total non-current assets
230
318
349
331
329
Total assets
356
468
508
502
520
Short-term debt
46
30
60
50
40
Accounts payable
91
103
106
120
139
Other current liabilities

Total current liabilities
Total long-term debt
Other liabilities
Total non-current liabilities
Total liabilities
69
80
79
79
80
206
213
245
250
259
51
138
135
110
100
13
12
13
13
59
151
147
123
113
265
364
392
372
373
Other reserves
83
94
103
114
127
Shareholders' equity
83
94
103
114
127
10
13
16
20
91
104
116
130
147
356
468
508
502
520
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
22.3
19.9
11.8
13.5
15.9
Operating profit growth (%)
9.6
23.1
11.3
18.5
17.0
Net profit growth (%)
3.5
13.3
5.1
19.5
20.8
EPS growth (%)
3.6
13.2
5.0
19.4
20.8
Bv per share growth (%)
5.7
13.6
9.2
10.6
11.7
Operating margin (%)
4.2
4.3
4.3
4.4
4.5
Net profit margin (%)
2.7
2.5
2.4
2.5
2.6
Return on average assets (%)
3.9
3.3
2.9
3.4
4.0
15.0
15.4
14.5
15.8
17.2
35.3
85.7
104.5
57.3
33.9
DPS
0.01
0.02
0.02
0.02
0.03
Recurrent cash flow per share
0.19
0.26
0.18
0.30
0.31
Minority interests
Total equity
Total liabilities & equity
Key Ratios (SGD)

Revenue growth (%)
33

2 January 2015
SWOT Analysis
Strong brand equity and has first-mover advantage
for several concepts
F&B is a highly
competitive
industry
Multiple business formats enable it to have bargaining

power over landlords
New retail
concepts by
competitors may
change
consumer
preferences
Invaluable experience in food & beverage (F&B) retail
Food safety
scandals may
damage its
reputation
Artisan bread
concept
catching on in
ASEAN and
China
Food retail is a
fast-growing
industry in
China
Franchisee
model allows it
to grow its
presence faster
Highly dependent on creative drive of key personnel,

founder George Quek
Constant capex investments to expand its presence
Subject to rental cost increases
P/E (x) vs EPS growth
P/BV (x) vs ROAE
10
6%
3%
0%
P/E (x) (lhs)
EPS growth (rhs)
16%
15%
15%
14%
13%
P/B (x) (lhs)
Jan-16
9%
17%
Jan-15
13%
15
Jan-14
20
18%
Jan-13
16%
Jan-12
25
Jan-16
19%
Jan-15
30
Jan-14
22%
Jan-13
25%
35
Jan-12
40
Return on average equity (rhs)
Company Profile
BreadTalk operates bakery, food, and restaurant businesses in Asia and the Middle East. It operates through three segments: i)
bakeries, ii) food courts, and iii) restaurants. As at 31 Dec 2013, the company operates 737 owned and franchised outlets, 41
restaurants and 58 food courts under the BreadTalk, Toast Box, Thye Moh Chan, Food Republic, RamenPlay, The Icing Room, Din Tai
Fung, and Carls Jr brands. BreadTalk was founded in 2000.
34
CapitaCommercial Trust (CCT SP)
Buy (Maintained)
Property - REITS
Market Cap: USD3,802m
Target Price:
Price:
SGD1.85
SGD1.70
Macro
Risks
Poised To Benefit From Rental Uplift
Growth
Value

Price Close
1.75
116
1.70
114
1.65
112
1.60
109
1.55
107
1.50
105
1.45
103
1.40
100
1.35
98
1.30
35
96
0
0
.
2
0
0
CCT achieved 40% pre-commitments for CapitaGreen, with Cargill .
0
taking up additional space. Maintain BUY with a SGD1.85 TP. The trust 0
needs another 75,000 sqf before reaching its targeted 50% pre- 0
commitments by year-end. Anchor tenant GIC (5% contribution to gross
rental income) will be renewing its leases at Capital Tower in 2015.
Significant rental reversions are also expected by management.
30
25
20
10
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Vol m
15
5
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Capital Limited
CBRE Clarion Securities
LaSalle Investment
Management
11.6m/9.06m
1.2
6.2
1.39 - 1.73
65
2,945
40.0
5.9
1.9

YTD
1m
3m
6m
12m
Absolute
16.9
1.8
1.2
2.1
20.6
Relative
12.1
1.0
2.0
1.2
12.1
Shariah compliant
.
2
0
.
2
CapitaGreen achieves 40% pre-commitment (2Q14: 23%).

CapitaCommercial Trust (CCT) secured leases for an additional 114,500
sqf at CapitaGreen, clocking in a total of 279,500 sqf in leasing
commitments. The new leases include additional space take-up by
Cargill Inc as well as new tenants from the banking, insurance and
financial services; real estate; and food & beverage (F&B) sectors. CCT
is in advanced negotiations for another 75,000 sqf, ie on target to
achieve its 50% leasing target by year-end. We expect the new tenants
to be signing up at rentals north of SGD10-11 psf/month vis--vis lossleader Cargill who contracted for 51,000 sqf in 1Q14 at a likely rental of
SGD9-10 psf/month.
Our view. As one of two major prime office developments the other
being the 527,000sqf South Beach Development in Singapores central
business district (CBD) due to be completed this year and next, we
expect CapitaGreen to be fully occupied by end-2015. We also expect
higher rentals of SGD11-12 psf/month, which were progressively signed
in 4Q14-2015. CCT is poised to benefit from higher office spot rental as
it has one of the most favourable lease expiry profiles among office
REITs, ie around 44% of office leases by monthly gross rental income
are expiring in 2015-2016.
Sponsor acquisition is its catalyst. We see potential acquisition from
its sponsor in the near term as catalyst to the counter, ie acquiring the
remaining 60% stake in CapitaGreen.
Maintain BUY with a DDM-derived TP of SGD1.85. This is premised
on cost of equity (CoE) of 6.8% and terminal growth of 2%, which implies
a 14.2% total return upside.
Dec-12
Dec-13 Dec-14F Dec-15F Dec-16F
376
387
256
277
284
Net property income (SGDm)
296
297
195
210
214
369
370
136
156
160
Total distributable income (SGDm)
229
234
229
237
268
0.08
0.08
0.08
0.09
0.09
DPS (SGD)
DPS growth (%)
6.9
1.3
0.7
7.0
3.8
Ong Kian Lin +65 6232 3895
Recurring P/E (x)
13.1
13.2
36.4
32.9
33.0
P/B (x)
1.03
1.00
1.02
1.04
1.04
Dividend Yield (%)
4.7
4.8
4.8
5.1
5.3
Ivan Looi +65 6232 3841
8.0
7.7
2.8
3.2
3.2
5.4
5.2
2.0
2.5
2.6
3.46
4.12
3.91
4.73
4.82
35
Interest coverage ratio (x)


2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Total turnover
376
387
256
277
284
Property operating expenses
(80)
(90)
(61)
(67)
(69)
Net property income
296
297
195
210
214
Management fees
(20)
(21)
(16)
(17)
(17)
(5)
(3)
(2)
(2)
Trust expenses
Operating EBIT
271
272
(0)
176
(0)
191
(1)
(2)
195
(1)
(1)
Operating EBITDA
271
272
177
192
195
174
162
Interest income
Interest expense
(78)
(66)
(45)
(40)
(40)
Other non-recurring income
Pre-tax profit
369
370
136
156
160
369
370
136
156
160
Reported net profit
369
370
136
156
160
(141)
(136)
92
80
108
229
234
229
237
268
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
271
272
176
191
195
12
(0)
22
14
83
100
107
Operating cash flow
301
298
260
293
303
301
298
260
293
303
Capex
(60)
(82)
(20)
(20)
(20)
(449)
1,948
(0)
13
54
Adjustment for distributable income

Total distributable income
Cash flow (SGDm)

Operating profit

(501)
(79)
Dividends paid
(219)
(231)
Increase in debt
(14)
(23)

(233)
(254)
(16)
(3)
(189)
(220)
(231)
(10)
(5)
(7)
(754)
(222)
(49)
1,982
(0)
(953)
104
(447)
(288)
577
140
93
82
(433)
(36)
1,289
(170)
13
144
104
1,393
(77)
95
36

2 January 2015
Financial Exhibits
Accounts receivable
Total investments
Total other assets
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
140
104
93
82
62
23
15
15
16
17
163
118
108
98
79
6,826
7,090
6,117
6,130
6,144
14
10
6,840
7,100
6,124
6,132
6,146
Total assets
7,003
7,218
6,233
6,231
6,225
Short-term debt
53
Accounts payable
87
97
82
82
18
18
20
22
24
157
116
102
564
106
2,022
2,061
1,252
602
1,062
109
129
40
42
44
2,131
2,190
1,292
644
1,106
Total liabilities
2,288
2,306
1,393
1,208
1,211
Share capital
4,715
4,913
4,840
5,023
5,014
4,715
4,913
4,840
5,023
5,014
Total equity
4,715
4,913
4,840
5,023
5,014
7,003
7,218
6,233
6,231
6,225

Other liabilities
460
82
Key Ratios (SGD)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Revenue growth (%)
4.0
3.0
(34.0)
8.4
2.3
(19.2)
0.3
(63.2)
14.7
2.5
EPS growth (%)
(19.5)
(0.5)
(63.5)
11.3
(0.4)
3.4
2.9
(1.8)
(1.9)
(0.4)
98.2
95.7
53.4
56.4
56.5
5.4
5.2
2.0
2.5
2.6
8.0
7.7
2.8
3.2
3.2
41.0
39.8
23.9
19.5
19.9
DPS
0.08
0.08
0.08
0.09
0.09
0.11
0.10
0.09
0.10
0.10
37

2 January 2015
SWOT Analysis
Progressive leasing of CapitaGreen, which benefits
from rising office rentals.
Exacerbated
Singapore office
space reduction
by financial
institutions
Strong balance sheet with ample debt headroom for

growth
Property price
correction
following fasterthan-expected
interest rate
hike
Further yieldaccretive
acquisitions or
redevelopment
projects
(Golden shoe,
Car Park etc).
Option to
acquire the
remaining 60%
stake in
CapitaGreen in
2015-2017.
Better-thanexpected office
rentals pick-up.
Pure Singapore play. No geographic diversification.
P/BV (x) vs ROAE
40
20%
35
9%
30
-3%
25
-14%
20
-25%
15
-36%
4%
P/B (x) (lhs)
Jan-16
Jan-15
Jan-14
2%
Jan-13
Jan-12
Jan-16
-70%
Jan-15
Jan-14
Jan-13
-59%
Jan-12
-48%
5%
EPS growth (rhs)
7%
10
P/E (x) (lhs)
9%
0%
Company Profile
CapitaCommercial Trust (CCT) is a property trust company that invests in commercial real estate properties.
38
Centurion Corp (CENT SP)
Buy (Maintained)
Industrial - Industrial Services

Market Cap: USD297m
Target Price:
Price:
SGD0.83
SGD0.52
Macro
Risks
The Accommodation Specialist
Growth
Value

0.80
152
0.75
143
0.70
135
0.65
126
0.60
117
0.55
108
0.50
100
0.45
91
0.40
100
90
80
70
60
50
40
30
20
10
82
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Centurion Properties Pte Ltd
Peng Kwang Teo
ThinkPac Limited
0.44m/0.34m
51.9
61.2
0.48 - 0.78
29
750
55.4
7.0
6.0

YTD
1m
3m
6m
12m
Absolute
(4.6)
(4.6)
(8.9)
(24.8)
(2.8)
Relative
(9.4)
(5.4)
(8.0)
(25.7)
(11.2)
Positive government regulatory changes. As of 1 May 2015, nonMalaysian work permit holders from the marine and process sectors can
no longer rent a HDB flat or room(s), as the Government intends to
house these workers in purpose-built dormitories and approved workers
quarters with facilities that better cater to their needs. In addition, the
Urban Redevelopment Authority (URA) has also put a stop to the
construction of new workers dormitory or adding more workers in
existing dormitories in industrial areas which are near strategic
industries. These changes are positive to Centurion as it benefits from a
low-cost structure due to an early-mover advantage.
A 7,900 bed workers dormitory. Centurion (51%) and Lian Beng
(49%), have been selected by the Association of Process Industry
(ASPRI) in a tender to develop a workers accommodation and training
centre strategically located in Jalan Papan, Singapore, with convenient
access to Jurong Island. This dormitory will have a capacity of 7,900
beds on a 23-year land lease to specially cater to workers from the
process industry. The total cost involved is estimated to be about
SGD200m, with the development scheduled to be completed by mid2016.
Maintain BUY, with a slightly lowered DCF backed SGD0.83 TP.
Centurions expansion plans in Singapore and Malaysia are on track,
with Woodlands to be operational by 3Q15, providing the next leg of
growth. Due to its aggressive expansion plans, we expect strong NPAT
growth of 34.8% in FY15 and 19.1% in FY16. Overall occupancy rates in
Singapore and Malaysia remain above 95% and 90% respectively while
rental rates average around SGD285 and MYR100 per bed per month.
We remain bullish on Centurion. Maintain BUY with a SGD0.83 TP.
Dec-12
Dec-13
Dec-14F
Dec-15F
65
66
84
101
121
9.1
92.2
43.6
38.2
45.9
9.5
18.8
29.0
38.2
47.4
98.5
54.1
31.6
24.1
0.01
0.02
0.04
0.05
0.06
0.003
0.006
0.004
0.004
0.004
Shariah compliant
Recurring EPS (SGD)

DPS (SGD)
na
Dec-16F
Recurring P/E (x)
41.0
20.7
13.4
10.2
8.2
P/B (x)
3.67
1.33
1.18
1.06
0.95
P/CF (x)
11.0
13.3
7.0
7.0
5.8
0.6
1.2
0.8
0.8
0.8
15.6
17.8
16.5
14.7
12.3
8.8
46.2
14.0
11.0
11.8
31.8
48.4
109.9
118.3
106.0
(14.6)
(8.1)
0.0
Dividend Yield (%)
EV/EBITDA (x)
.
1
0
.
3
0
0
.
2
0
0
Formally known as SM Summit, Centurion is the largest listed dormitory .
0
operator in Singapore via an RTO in 2011. Maintain BUY and SGD0.83 0
TP. Its portfolio is set to expand to 61,000 beds by FY16. We believe the 0
recent oversupply fears have been overhyped, and expect Centurion to
continue to outperform, proving doubters wrong. The companys
expansion plans in both Singapore and Malaysia are on track.
Dec-13
Vol m
Price Close
39

2 January 2015
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Total turnover
65
66
84
101
121
Cost of sales
(39)
(32)
(30)
(34)
(40)
Gross profit
26
35
54
67
81
(11)
(12)
(15)
(17)
(20)
(2)
(2)
(1)
(2)
(2)
15
22
40
51
62
67

Selling expenses
Operating profit
Operating EBITDA
28
30
46
56
(13)
(8)
(6)
(5)
(5)
Operating EBIT
15
22
40
51
62
(0)
Interest expense
(2)
(3)
(11)
(13)
(13)
73
Exceptional income - net
14
Pre-tax profit
13
96
49
45
56
Taxation
(3)
(4)
(5)
(7)
(9)
Minority interests
(0)
(1)
92
44
38
46
Reported net profit
92
44
38
46
19
29
38
47
Cash flow (SGDm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Operating profit
15
22
40
51
62
13
(5)
20
39
33
61
62
76
Operating cash flow

Tax paid
(3)
(4)
(5)
(7)
(9)
35
29
56
55
67
Capex
(21)
(114)
(249)
(109)
(53)
(41)
(6)
(14)
(61)
(120)
(263)
(109)
(53)
Dividends paid
(2)
(3)
(7)
(3)
(3)
Increase in debt
34
111
(4)
(12)
28
96
39
41
Forex effects
(0)
(1)
41
45
181
68
(12)
(11)
166
53
(9)
44
(41)
(2)
(9)
5
-
40

2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
41
44
14
11
14
17
20
11
11
11
11
59
68
30
31
38
130
425
694
804
856

Inventories
Accounts receivable
Total investments
13
(2)
(1)
(0)
Intangible assets
22
17
12
Total other assets
165
448
704
809
857
Total assets
224
516
734
840
895
Short-term debt
13
17
17
17
17
Accounts payable
26
26
24
27
33
45
50
48
52
57
63
169
350
418
423
69
173
354
422
427
114
223
403
473
484
89
89
89
89
89
191
229
265
309
Other liabilities
Total liabilities
Share capital
Retained earnings reserve
Other reserves
Minority interests
15
12
12
12
12
106
293
331
366
411
Total equity
110
293
331
366
411
224
516
734
840
895
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
117.1
1.8
26.0
20.1
20.8
Key Ratios (SGD)

Revenue growth (%)
na
46.1
81.8
29.2
20.6
na
908.2
(52.6)
(12.4)
20.2
EPS growth (%)
na
908.2
(52.6)
(12.4)
20.2
(24.6)
175.8
13.1
10.6
12.1
22.9
32.9
47.5
51.1
51.0
14.0
138.7
52.1
38.0
37.8
4.7
24.9
7.0
4.9
5.3
8.8
46.2
14.0
11.0
11.8

DPS
31.8
48.4
109.9
118.3
106.0
0.003
0.006
0.004
0.004
0.004
0.05
0.04
0.07
0.07
0.09
41

2 January 2015
SWOT Analysis
Very experienced team in managing dormitories
Changes in
government
regulations and
policies
Aggressive expansion plan focused on high-margin

projects
Steady operating cash flow and cash generation
Aggressive
competition
among land
tenders
Majority of the dormitories are permanent
Exchange rate
fluctuations
Further
expansion into
other parts of
Malaysia
Recession and
an economic
slowdown may
have an
adverse impact
especially on
the construction
sector
Further student
accommodation
acquisitions in
other parts of
Australia and in
the UK
Expanding its
dormitory
operations
locally
Its optical disk segment drags down gross margins

and profit
Its Tuas dormitory lease will expire in Apr 2017 and
the renewal cost is expected to be higher
Low dividends
P/BV (x) vs ROAE
200
5000%
50%
180
4400%
41%
160
3800%
140
3200%
33%
120
2600%
24%
100
2000%
15%
80
1400%
6%
60
800%
-3%
P/E (x) (lhs)
EPS growth (rhs)
P/B (x) (lhs)
Jan-16
Jan-15
-20%
Jan-14
Jan-13
-1000%
Jan-12
Jan-16
-11%
Jan-15
Jan-14
-400%
Jan-13
200%
20
Jan-12
40
Company Profile
Centurion Corporation is the only listed dormitory operator in Singapore. Upon completion of upgrading and development works, the
groups accommodation portfolio will grow to a total of about 54,000 beds. It has also recently ventured into the student accommodation
business via the acquisition of RMIT Village.
42
CWT Limited (CWT SP)
Buy (Maintained)
Transport - Logistics
Market Cap: USD716m
Target Price:
Price:
SGD2.00
SGD1.57
Macro
Risks
Undervalued Commodity Trader
Growth
Value
CWT (CWT SP)

1.90
137
1.80
131
1.70
124
1.60
118
1.50
111
1.40
105
1.30
98
1.20
5
5
4
4
3
3
2
2
1
1
92
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
0.78m/0.60m
26.1
27.8
1.27 - 1.83
39
610
Sr. management & related

Transamerica Investment
Fidelity International
60.7
0.7
0.7
Growth in commodity volume may boost revenue. Revenue from

commodity marketing business is highly scalable as traded volumes are
small compared with its global peers. CWT, which trades base metal
concentrates, naphtha and diesel, is looking to grow its naphtha volume
and add gasoline and fuel oil to its existing energy products portfolio. It
also intends to grow copper concentrates volume to 2m tonnes by 2015
from 1.2m tonnes in 2013. This growth in commodity trading volume
should boost revenue growth over the next 1-2 years.
New warehouse space may boost margin. Warehouses are the key
growth driver for CWTs high-margin logistics business segment. It owns
3.2m sqf of warehouse space in Singapore and two warehouses will be
added to its portfolio by end-2014, which could boost its Singapore
warehouse space by 40%. As we expect rental rates to remain stable,
the addition of new warehouse space should help boost CWTs overall
GP margin to 2.38% in 2016 from an estimated 2.22% in 2014.
Debt remains manageable. Commodity marketing business requires
high working capital to grow. Commodities traded by CWT are funded by
trade facilities, which are self-liquidating in nature, instead of using
revolving credit facilities. Excluding such trade facilities worth SGD697m,
CWTs 3Q14 net debt-to-equity stood at 23%.
Undemanding valuations. Our Sep 2015 SGD2.00 TP is based on a 9x
1-year forward P/E. CWT is trading at a 50-60% discount to 2015 P/Es of
its logistics and commodity trading peers, which are trading at 18x and
14x respectively. We assess the value of CWTs Singapore warehouse
space at SGD565m, which accounts for 60% of its market cap. This
implies a low single-digit valuation for the rest of its businesses.

YTD
1m
3m
6m
12m
Absolute
15.5
(4.6)
(11.1)
(12.1)
21.3
Relative
10.7
(5.4)
(10.2)
(13.0)
12.9

Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
5,397
9,097
16,291
17,782
18,877
108
106
135
145
158
87
96
134
145
158
57.0
10.3
40.3
8.1
8.6
Recurring EPS (SGD)
0.14
0.16
0.22
0.24
0.26
DPS (SGD)
0.03
0.03
0.04
0.05
0.05
Recurring P/E (x)
10.8
9.8
7.0
6.5
6.0
P/B (x)
1.61
1.42
1.22
1.06
0.92
P/CF (x)
Dividend Yield (%)
na
na
4.23
na
6.54
1.6
1.9
2.2
2.9
EV/EBITDA (x)
11.2
17.8
10.9
10.1
8.8
20.4
17.1
18.9
17.5
16.5
60.4
159.5
134.0
127.1
103.9
17.6
5.0
19.3
43
3.1
.
2
0
.
2
0
0
.
3
0
0
CWT has a profitable logistics business, highly scalable commodity .
0
trading business and proven growth track record, with 30% profit CAGR 0
over 2009-2013. Maintain BUY with SGD2.00 TP. Growth in commodity 0
marketing volume should boost its revenue, while its new warehouse
space in Singapore may lift high-margin logistics business revenue and
support profit growth. At a 6.5x 2015 P/E, CWT is trading near its 5-year
low valuation and at a 50-60% discount to its peers 2015 P/Es.
Dec-13
Vol m
Price Close

2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover
5,397
9,097
16,291
17,782
18,877
Cost of sales
(5,143)
(8,805)
(15,930)
(17,367)
(18,428)
Gross profit
Dec-16F
254
292
362
415
450
(153)
(168)
(179)
(219)
(247)
18
(6)
(5)
(9)
(9)
Operating profit
118
118
177
187
193
Operating EBITDA
114
112
181
207
228
(25)
(25)
(31)
(34)
(35)
28
31
27
14
118
118
177
187
193
10
12
12
17
Other recurring income
(10)
(9)
(9)
15
14
12
19
26

Operating EBIT
Interest income
(0)
Interest expense
(23)
(33)
(39)
(43)
(46)
Pre-tax profit
118
116
153
166
180
(18)
Taxation
(9)
(8)
(14)
(17)
Minority interests
(1)
(2)
(3)
(4)
(5)
108
106
135
145
158
Reported net profit
108
106
135
145
158
87
96
134
145
158
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
118
118
177
187
193
20
35
(203)
(74)
Cash flow (SGDm)

Operating profit
Operating cash flow
Tax paid
(4)
(7)
(273)
(484)
149
(21)
(7)
(180)
(379)
(95)
236
162
(8)
(8)
(14)
(17)
(18)
(188)
(387)
222
(9)
144
(60)
(179)
(114)
(40)
(20)
47
11
(12)
19
26
(13)
(168)
(126)
(21)
Dividends paid
(15)
(18)
(21)
(27)
(29)

Capex
Increase in debt
65
506
(82)
350
(28)
63
59
(43)
(46)
22
551
(43)
280
(75)
212
295
197
249
499
250
75
(179)
(4)
52
Forex effects
261
(94)
(1)
295
197
249
(0)
499
(0)
573
44

2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
295
197
249
499
573
Inventories
338
825
668
772
821
Accounts receivable
921
2,151
2,385
2,813
2,992

Total investments
37
106
122
122
122
1,590
3,280
3,424
4,207
4,508
51
58
61
61
61
314
495
574
580
565
Intangible assets
131
128
134
124
115
Total other assets
129
92
149
149
149
624
773
919
915
890
2,215
4,052
4,343
5,122
5,399
Short-term debt
580
1,116
871
1,221
1,221
Accounts payable
705
1,828
2,098
2,429
2,582
69
130
75
51
41
1,354
3,074
3,044
3,700
3,843
448
Total assets

86
177
448
448
Other liabilities
159
114
53
53
53
245
291
501
501
501
Total liabilities
1,600
3,365
3,545
4,201
4,345
Share capital
174
174
174
174
174
408
485
596
714
843
583
660
770
888
1,017
28
28
Minority interests
Other equity
Total equity
33
-
32
-
37
-
615
687
798
921
1,054
2,215
4,052
4,343
5,122
5,399
Key Ratios (SGD)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Revenue growth (%)
109.2
68.6
79.1
9.2
6.2
113.7
0.4
49.7
5.7
3.1
88.9
(1.8)
27.7
7.2
8.6
EPS growth (%)
87.3
(1.8)
27.7
7.2
8.6
22.4
13.2
16.8
15.3
14.5
2.2
1.3
1.1
1.1
1.0
2.0
1.2
0.8
0.8
0.8
5.7
3.4
3.2
3.1
3.0
20.4
17.1
18.9
17.5
16.5
60.4
159.5
134.0
127.1
103.9
DPS
0.03
0.03
0.04
0.05
0.05
(0.31)
(0.64)
0.37
(0.01)
0.24

45

2 January 2015
SWOT Analysis
Proven earnings growth track record
Sudden spikes
in freight rates
could hurt
margins
Stable income from the logistics business

Highly scalable and fast-growing commodity
marketing business with consistent earnings delivery
Increased
competition in
freight and
commodity
logistics
business
Experienced management team
Well-placed to
capitalise on
growing intraAsia trade
Decline in
warehouse
property prices
or rental yields
Commodity
marketing
volume is small
compared with
global
commodity
traders involved
in similar
commodities
Supply
disruptions in
commodities
traded
Diversification
of commodities
traded
Susceptible to economic downturns, which could

result in lower global trade volume
Fast-growing commodity marketing business has
large working capital requirements
P/BV (x) vs ROAE
-35%
-58%
-80%
P/E (x) (lhs)
EPS growth (rhs)
15%
10%
5%
0%
P/B (x) (lhs)
Jan-16
-13%
20%
Jan-15
Jan-14
10%
25%
Jan-13
33%
Jan-12
10
Jan-16
55%
Jan-15
12
Jan-14
78%
Jan-13
100%
14
Jan-12
16
Company Profile
CWT Limited (CWT) is a supply chain engineering company, which offers a holistic approach to logistics solutions backed by packaging
expertise, engineering and channel management/financial capabilities. The company has 44 years of logistics heritage with more than
150 offices worldwide. It is the largest owner of warehousing space in Singapore and through its global freight forwarding network, it
services niche sectors. With the acquisition of MRI Trading in 2011, CWT has also diversified into controlling and managing commodity
supply chains (commodity marketing segment).
46
DBS (DBS SP)
Buy (Maintained)
Financial Services - Banks

Target Price:
Price:
SGD22.60
SGD19.80
Macro
Risks
NIM Recovery To Support Price Outperformance
Growth
Value
DBS (DBS SP)

Price Close
21.0
116
20.0
112
19.0
108
18.0
104
17.0
99
16.0
95
15.0
12
91
8
6
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Vol m
68.3m/52.7m
9.6
14.1
15.7 - 20.6
70
2,573
29.2

YTD
1m
3m
6m
12m
Absolute
15.8
1.9
7.7
16.3
19.6
Relative
11.0
1.1
8.6
15.4
11.2
Core earnings to grow 11% in FY15F. We forecast for 11% FY15 core
net profit growth (FY14F: +12%), mainly on stable net interest margin
(NIM), 9.4% loan growth (FY14F: +10.2%) and 12% fee income growth.
Impairment charges are expected to be benign (+3%), having
recognised residual impaired loans from India in FY14 while its
Singapore mortgage book remains healthy. Operating expenses are
expected to rise 6% (FY14F: +9%).
Room for upgrade. We see upside risk to our FY15F-16F earnings, as
we have yet to factor in NIM recovery that will come from US interest
rate normalisation from 2H15, albeit gradually. Our sensitivity analysis
suggests a 12-13% boost to DBS earnings from a 100bps rise in interest
rates. It benefits from having a high c.75% SGD current account, savings
account (CASA) ratio and a loans book largely pegged to floating rates.
Asset quality solid. DBS mortgages are primarily Housing and

Development Board (HDB) and owner-occupied loans. It has not been
impacted by impaired housing loans like its peers. Greater China loans
(total loans: 36%) are well managed with low 0.6% gross non-performing
loan (NPL) ratio (Sep 2014). Overall, asset quality is expected to remain
resilient in 2015, notwithstanding the expected interest rate rise.
Reiterate BUY with a SGD22.60 TP. DBS share price rose 15.8% YTD
(11 Dec 2014), matched by United Overseas Banks (UOB SP,
NEUTRAL, TP: SGD25.40) 15.6% gain but better than Oversea-Chinese
Bankings (OCBC SP, BUY, TP: SGD11.70) 5.7% rise. We believe DBS
could outperform peers and the market in 2015, given its broad-based
revenue growth, healthy asset quality and positive impact from rising US
rates from 2H15. Reiterate BUY with higher GGM-based SGD22.60 TP
(from SGD21.00) that implies 1.45x 2015F P/BV (+1SD historical mean).
We raised TP after factoring in higher 11.6% ROE assumptions (from
11.1%) and lower WACC of 9% (from 9.1%). Key downside risks to our
view will come from sharper-than-expected slowdown in China and
major economies, and potential deferment of US interest rate hikes.
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Temasek
Shariah compliant

Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Net interest income (SGDm)
5,285
5,569
6,184
6,635
7,170
3,809
3,672
4,127
4,353
4,885
25.5
(3.6)
12.4
5.5
12.2
3,359
3,501
3,927
4,353
4,885
Recurring EPS (SGD)
1.41
1.43
1.61
1.78
2.00
DPS (SGD)
0.56
0.58
0.62
0.68
0.72
Recurring P/E (x)
14.1
13.8
12.3
11.1
9.9
P/B (x)
1.52
1.41
1.34
1.24
1.15

Dividend Yield (%)
2.8
2.9
3.1
3.4
3.6
12.6
11.1
11.7
11.6
12.1
1.1
1.0
.
2
0
.
3
0
0
.
2
0
0
We expect DBS to post healthy 11% core earnings growth in FY15F .
0
despite moderating loan and non-interest income growth. Reiterate BUY 0
with a SGD22.60 TP. Still, we envision upside risk to our forecasts as 0
US interest rate normalisation from 2H15 may see NIM recover in 20152016. Among Singapore banks, it has the best leverage to rising shortterm rates due to a large SGD CASA deposits base.
10
1.0
1.0
1.0
(2.3)
(0.2)
(1.9)
47
DBS (DBS SP)

2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Interest income
7,621
7,986
8,890
9,530
10,350
Interest expense
(2,336)
(2,417)
(2,706)
(2,895)
(3,180)
Net interest income
5,285
5,569
6,184
6,635
7,170
Non interest income
2,779
3,358
3,427
3,730
4,136
Total other income
2,779
3,358
3,427
3,730
4,136
Total operating income
8,064
8,927
9,611
10,365
11,306
(3,614)
(3,918)
(4,280)
(4,550)
(4,870)
4,450
5,009
5,331
5,815
6,436
(3,614)
(3,918)
(4,280)
(4,550)
(4,870)
4,450
5,009
5,331
5,815
6,436
Total costs x depn & amortn

Operating EBITDA
Total costs
Operating profit
Total provision charges
Post-provision operating profit
(417)
4,033
(770)
4,239
(619)
4,712
Income from associates
124
79
85
Non recurring items
450
171
200
4,607
4,489
4,997
Pre-tax profit
Taxation
Profit after tax
Minority interests
(588)
4,019
(210)
(615)
3,874
(202)
(725)
4,272
(145)
(638)
(648)
5,177
5,788
95
105
5,272
5,893
(764)
4,508
(155)
(843)
5,050
(165)
3,809
3,672
4,127
4,353
4,885
Reported net profit
3,809
3,672
4,127
4,353
4,885
3,359
3,501
3,927
4,353
4,885
Balance Sheet Employment
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Net cust loans/assets (%)
59.6
61.9
63.6
65.1
66.2
Net earning assets / assets (%)
83.3
83.3
83.1
83.4
83.6
Non-earning assets/assets (%)
16.7
16.7
16.9
16.6
16.4
Net cust loans/cust deposits (%)
83.1
85.0
86.0
86.4
87.0
9.0
8.5
8.4
8.4
8.6
Equity / gross cust loans (%)
14.8
13.6
13.0
12.8
12.8
Equity & provns / gross cust loans (%)
16.4
15.0
14.4
14.2
14.1
Asset risk weighting (%)
61.0
69.8
70.0
69.5
69.0
Liquid funds / cust deposits (%)
33.0
29.4
26.3
24.4
22.9
Prov. charge / cust loans (%)
0.2
0.3
0.2
0.2
0.2
Provision charge / avg assets (%)
0.1
0.2
0.1
0.1
0.1
Total write-off / avg cust loans (%)
0.1
Total write offs / average assets (%)
0.0
Reported NPLs / net cust loans (%)
1.2
1.2
0.9
1.0
1.0
SP chg / avg cust loans (%)
(0.1)
0.0
0.0
(0.1)
(0.0)
GP charge / average cust loans (%)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
Total provn chg / avg cust loans (%)
(0.2)
(0.1)
(0.1)
(0.2)
(0.1)
Reported NPLs / gross cust loans (%)
1.2
1.1
0.9
1.0
0.9
Total provisions / gross cust loans (%)
1.5
1.4
1.3
1.4
1.4
126.0
122.4
146.7
145.9
145.5
Equity / assets (%)
Total provisions / reported NPLs (%)

48
DBS (DBS SP)

2 January 2015
Financial Exhibits
Total gross loans
Other interest earning assets
Total gross IEAs
Total provisions
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
213,828
252,181
278,000
304,000
330,000
83,604
86,040
83,750
84,600
85,800
297,432
338,221
361,750
388,600
415,800
(3,309)
(3,527)
(3,740)
(4,260)
(4,540)
Net loans to customers
210,519
248,654
274,260
299,740
325,460
Total net IEAs
294,123
334,694
358,010
384,340
411,260
Total investments
1,236
1,166
1,350
1,380
1,380
1,442
1,449
980
1,010
1,060
Intangible assets
4,802
4,802
4,802
4,802
4,802
51,430
59,897
65,850
69,100
73,300
Other assets
Total non-IEAs
58,910
67,314
72,982
76,292
80,542
Total assets
353,033
402,008
430,992
460,632
491,802
Broad deposits
268,815
305,937
332,800
361,000
388,900
19,259
28,659
30,544
32,330
34,300
288,074
334,596
363,344
393,330
423,200
Other non-interest bearing liabilities
28,961
29,726
28,017
24,931
23,058
Total non-IBLs
28,961
29,726
28,017
24,931
23,058
Total liabilities
317,035
364,322
391,361
418,261
446,258
Other interest-bearing liabilities

Total IBLs
Share capital
2,441
2,441
2,441
2,441
2,441
Other reserves
29,296
31,792
33,731
36,470
39,644
31,737
34,233
36,171
38,911
42,084
4,261
3,453
3,460
3,460
3,460
35,998
37,686
39,631
42,371
45,544
353,033
402,008
430,992
460,632
491,802
Minority interests
Total equity
Key Ratios
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Cust deposit growth (%)
15.7
15.3
9.1
8.7
7.9
Broad deposit growth (%)
9.0
13.8
8.8
8.5
7.7
Growth in IBLs (%)
9.8
16.1
8.6
8.3
7.6
Return on IEAs (%)
2.6
2.5
2.5
2.5
2.6
Cost of funds (%)
0.8
0.8
0.8
0.8
0.8
Net interest spread (%)
1.7
1.7
1.8
1.8
1.8
Net interest margin (%)
1.8
1.8
1.8
1.8
1.8
Interest return on average assets (%)
1.5
1.5
1.5
1.5
1.5
12.6
11.1
11.7
11.6
12.1

EPS growth (%)
1.1
1.0
1.0
1.0
1.0
22.1
(5.6)
12.2
5.4
12.2
5.9
7.5
5.6
7.6
8.1
2.8
12.6
6.4
9.1
10.7
49
DBS (DBS SP)

2 January 2015
SWOT Analysis
Singapores largest bank
Volatile global
economic
conditions
Strong deposit franchise

Stronger presence relative to peers in the North Asian
region.
Rising financing
cost could exert
pressure on
highly leveraged
retail and small
and medium
enterprise
(SME)
borrowers.
Sustained NIM
recovery over
the next three
years led by the
US Federal
Reserves
interest rate
normalisation
process
Management
remains positive
on Indonesia,
which still offers
strong growth
opportunities.
Lags behind peers in terms of South-East Asian

presence
Relatively weaker consumer presence.
P/BV (x) vs ROAE
16
80%
13%
14
69%
13%
12
58%
12%
12%
12%
11%
11%
10
46%
35%
10%
P/E (x) (lhs)
EPS growth (rhs)
P/B (x) (lhs)
Jan-16
-10%
Jan-15
10%
Jan-14
Jan-13
1%
Jan-12
11%
Jan-16
Jan-15
13%
Jan-14
Jan-13
24%
Jan-12
Company Profile
DBS is the largest Singapore bank by assets. It also has significant operations in HK and China.
50
Ezion Holdings (EZI SP)
Buy (Maintained)
Energy & Petrochemicals - Oil & Gas Services

Target Price:
Price:
SGD2.65
SGD1.06
Macro
Risks
Worst Case Scenario Priced In
Growth
Value

101
1.70
90
1.50
78
1.30
66
1.10
55
0.90
90
80
70
60
50
40
30
20
10
43
Aug-14
Jun-14
Oct-14
1.90
Apr-14
113
Feb-14
2.10
Dec-13
Vol m
Price Close
19.2m/14.9m
106.6
150
1.06 - 2.03
70
1,578
14.2
7.6
7.0
Oil price has minimal impact on fixed charters. Ezions contract

durations are generally 3-7 years stretching up to 2022. Only five units
are up for renewal in each of FY15/FY16 vis--vis its fleet size of 34/37
units in those years. The sharp selloff in Ezions shares tracks the oil
price plunge, with the market possibly thinking that contract cancellations
and/or renegotiations are likely in a low oil-price environment.
11% upside even in a draconian worst case scenario. In a worst-case
scenario, we mark down all existing charter rates by 10%, ie factoring in
half its charters being renegotiated down by 20% or three cancelled
contracts with no redeployments for over a year. In this scenario, FY15
EPS falls by 18.6% from current projections (still +27% YoY). We also
assume zero new contracts and apply a mere 6x P/E multiple on the
lowered EPS, arriving at a SGD1.18 worst-case TP (11% upside).
Low oil prices likely temporary. Low oil prices are forcing higher cost
US shale producers, ie >USD50/barrel (bbl), to cut capex and
production. Coupled with the high natural decline rate in shale
production, global oil supply and demand should approach equilibrium in
2Q15. The oil price plunge may also not reflect fundamentals
speculators are highly active in the oil futures market and may have
pushed prices beyond long-term sustainable levels as deepwater
marginal costs of USD40-80/bbl form the fundamental floor in our view.
An oil price rebound will catalyse a sharp re-rating across the sector.
Maintain BUY with SGD2.65 TP for strong locked-in growth. Ezion
remains one of our Top Picks for its 56% FY15F growth with strong
contract coverage over the next three years. Note that It won its first
liftboat contract when oil was c.USD70/bbl its business model does not
require USD100/bbl oil and is viable at lower crude prices. Maintain BUY
with a SGD2.65 TP based on 12x blended FY14F/15F P/E.
YTD
1m
3m
6m
12m
Absolute
(42.7)
(28.6)
(42.2)
(40.8)
(41.9)
Relative
(47.5)
(29.7)
(41.4)
(41.6)
(50.4)
Total turnover (USDm)
Shariah compliant
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
159
282
410
612
684
Reported net profit (USDm)
79
160
230
296
339
Recurring net profit (USDm)
65
141
190
296
339
38.4
115.0
35.2
55.9
14.5

Recurring EPS (USD)

DPS (USD)
0.08
0.11
0.13
0.19
0.21
0.001
0.001
0.001
0.001
0.001
Recurring P/E (x)
10.7
7.2
6.4
4.3
3.8
P/B (x)
2.33
1.36
1.10
0.87
0.70
P/CF (x)
8.07
7.01
3.69
3.08
2.65
Dividend Yield (%)
0.1
0.1
0.1
0.1
0.1
EV/EBITDA (x)
12.1
10.6
7.3
4.7
3.3
21.8
27.7
24.6
22.5
20.7
75.5
115.0
92.6
70.4
32.5
(8.2)
3.1
(0.6)
.
2
0
.
3
0
0
.
3
0
0
Ezions price has plunged below our worst case scenario, where we .
0
assume a 10% charter rate cut across its fleet and zero new contracts. 0
Maintain BUY with a SGD2.65TP for locked-in 56% growth in FY15F at 0
merely 4.3x P/E. This is because oil prices have probably plunged
below fundamentally-justifiable levels, and a rebound will catalyse a
sharp re-rating for the stock and across the sector.
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Chew Thiam Keng
GuoLine Capital
Franklin Resources
51

2 January 2015
Financial Exhibits
Profit & Loss (USDm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover
159
282
410
612
684
Cost of sales
(88)
(149)
(209)
(306)
(338)
306
345
Gross profit
Operating profit
Operating EBITDA
71
133
201
(14)
(14)
(14)
57
119
187
Dec-16F
(3)
303
(4)
341
74
165
291
456
512
(17)
(45)
(104)
(152)
(171)
Operating EBIT
57
119
187
303
341
17
31
37
36
34
Interest income
14
Interest expense
(8)
(12)
(31)
(34)
(33)
13
20
40
Pre-tax profit
83
163
241
Taxation
Minority interests
(4)
(3)
79
Preferred dividends
160
313
356
(3)
238
(8)
304
(8)
(9)
347
(8)
(8)
Reported net profit
79
160
230
296
339
65
141
190
296
339
Cash flow (USDm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Operating profit
57
119
187
303
341
17
45
104
152
171
19
(5)
27
(2)
40

Operating cash flow
Interest received
Interest paid
Dividends received
(6)
-
93
158
358
450
14
(7)
(13)
(31)
(34)
(33)
Tax paid
(2)
(2)
86
144
332
415
(806)
(345)
Capex
(2)
-
(3)
510
(8)
(9)
482
(663)
(709)
(1)
(40)
10
15
(654)
(734)
(806)
(345)
(1)
(1)
(2)
(2)

Dividends paid
108
Increase in debt
(2)
87
227
572
676
315
(50)
(49)
(41)
(134)
638
628
540
(52)
(51)
63
135
166
231
249
70
38
18
431
(6)
Forex effects
135
167
65
-
231
249
681
52

2 January 2015
Financial Exhibits
Balance Sheet (USDm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
135
166
231
249
681
Accounts receivable
57
107
112
168
187
80
107
107
107
107
273
380
450
524
975
Total investments
132
199
236
272
306
794
1,464
2,166
2,359
2,188
925
1,663
2,402
2,631
2,494
1,198
2,043
2,852
3,154
3,468
Short-term debt
77
223
280
270
260
Accounts payable
33
69
101
151
169
47
84
84
84
84
158
376
465
505
513
475
863
1,121
1,081
1,042
12
487
866
1,124
1,084
1,045
Total liabilities
645
1,243
1,590
1,590
1,558
Share capital
260
346
540
540
540
195
357
626
928
1,273
455
703
1,165
1,467
1,812
Minority interests
Total assets
Other liabilities
Other equity
Total equity
98
(0)
(0)
(0)
(0)
98
98
98
98
553
800
1,263
1,565
1,910
1,198
2,043
2,852
3,154
3,468
Key Ratios (USD)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Revenue growth (%)
48.4
77.7
45.3
49.4
11.7
38.2
108.5
57.1
62.0
12.4
35.7
103.4
43.5
28.8
14.5
EPS growth (%)
12.4
40.5
18.3
23.4
14.5
33.2
70.7
24.4
25.9
23.5
36.0
42.3
45.7
49.6
49.9
49.7
56.9
56.2
48.4
49.7
9.5
9.9
9.4
9.9
10.2
21.8
27.7
24.6
22.5
20.7
75.5
115.0
92.6
70.4
32.5
0.001
0.001
0.001
0.001
0.001
0.10
0.12
0.22
0.26
0.31
DPS
53

2 January 2015
SWOT Analysis
Strong track record with national oil companies and
oil majors in the deployment of liftboats and service
rigs globally
New players
entering the
liftboat and
service rig
business due to
potentially
lucrative returns
Experienced in working on projects that are subject to

strict environmental protection rules
As liftboats are
not an essential
asset, this may
dampen fullscale adoption
Increased
awareness of
safety
requirements
for maintenance
could lead to
more liftboat
and service rig
deployment
opportunities
Plenty of room
to grow charters
due to limited
deployment in
Asian waters
High net gearing in balance sheet constrains its

ability to fund new projects without raising net equity
or issuing perpetual securities
Limited chartering experience outside South-East
Asia, it has to seek third-party operators
P/BV (x) vs ROAE
12
45%
30%
10
38%
26%
21%
17%
13%
9%
4%
0%
0%
P/E (x) (lhs)
EPS growth (rhs)
Jan-13
P/B (x) (lhs)
Jan-16
Jan-15
8%
Jan-14
Jan-12
15%
Jan-16
Jan-15
23%
Jan-14
Jan-13
30%
Jan-12
Company Profile
Ezion is involved in the provision of offshore and marine logistics and owns one of the largest liftboat fleets in the world.
54
Giken Sakata (GSS SP)
Buy (Maintained)
Energy & Petrochemicals - Exploration & Production

Market Cap: USD95.4m
Target Price:
Price:
SGD0.65
SGD0.27
Macro
Risks
Insensitive To Oil Price Fluctuations
Growth
Value

0.45
900
0.40
800
0.35
700
0.30
600
0.25
500
0.20
400
0.15
300
0.10
200
0.05
100
0.00
80
70
60
50
40
30
20
10
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Roots Capital Asia Ltd
Java Petral Energy
Immunity to oil prices. Giken Sakatas (Giken) oil sale price is based
on 70% multiplied by the state purchase budget price at IDR9,000/USD,
revised annually. This state purchase budget price is currently set at
USD105/barrel (bbl). The next revision is likely to be in Oct 2015, after
the 2016 Budget is presented to the Indonesian parliament in Aug 2015.
This gives Giken 10 months of oil price immunity going forward.
State purchase price less volatile than oil futures market. In the past
three years when oil prices fluctuated between USD100-120/bbl, the
state purchase price was held steady at USD105/bbl. In a similar
fashion, while we expect a downward adjustment of this purchase price
next year, it is likely to stay within the USD70-90/bbl range. At
USD70/bbl, adjusting for the current exchange rate of IDR12,400/USD,
Gikens sale price would only fall 9%. At USD80/bbl, the sale price is 5%
higher and we expect Pertamina to maintain the current terms. In other
words, Giken is insensitive to oil prices for at least the next 22 months.
0.84m/0.65m
1,066.7
144
0.03 - 0.39
74
473
Production surging as more drilling rigs work the fields. Gikens

latest production update reveals that it produced 1,070 barrels of oil per
day (bopd) in Nov 2014, up from 880bopd in August and 670bopd in
June this year. All existing production is in the Dandangilo-WonocoloTungkul field (DWT), with one rig working now. Next year, the company
will likely have at least three more rigs working in its other three fields,
which we expect will accelerate this already-high production growth rate.
16.1
16.1
Upcoming Qualified Persons Report (QPR) is the near term

catalyst. The QPR for the Kawengan and Trembul fields should be out
in 1Q15, with a full valuation performed. Giken is currently only trading at
the NPV of its DWT field, and we expect the QPR to highlight the value
of the newer fields. Maintain BUY with a DCF-based TP of SGD0.65.

YTD
1m
3m
6m
12m
Absolute
356.9
(7.0)
(17.2)
(25.4)
430.0
Relative
351.9
(8.0)
(16.5)
(26.5)
421.3
Shariah compliant
Aug-12
Aug-13
Aug-14
Aug-15F
90
127
69
126
285
0.4
0.5
2.1
32.6
87.1
0.4


na
Aug-16F
0.5
2.1
32.6
87.1
24.0
357.1
1486.8
166.7
Recurring EPS (SGD)
0.00
0.00
0.01
0.08
0.22
DPS (SGD)
0.00
0.00
0.00
0.02
0.04
Recurring P/E (x)
96.0
77.4
34.6
3.2
1.2
P/B (x)
4.53
4.16
5.47
1.77
0.84
P/CF (x)
12.3
12.0
0.0
0.0
0.0
Dividend Yield (%)

EV/EBITDA (x)
na
1.4
0.6
6.3
16.7
14.5
16.1
18.5
1.0
0.2
4.9
5.6
17.4
75.9
78.9
2.1
net cash
.
2
0
.
3
0
0
.
3
0
0
Giken is in a favourable position its oil sale price is fixed till about Oct .
0
2015 and thereafter is still likely to remain unchanged. Maintain BUY 0
with a DCF-based SGD0.65 TP. Even if the Indonesian purchase price is 0
reset to USD70/bbl from USD105/bbl today, it will only result in a 9%
lower price for Giken. Our central case is for at least 22 months of oil
price immunity. Meanwhile, production has surged to >1,000bopd, 60%
higher from five months ago.
Dec-13
Vol m
Price Close
net cash
net cash
0.0
net cash
0.0
55

2 January 2015
Financial Exhibits
Aug-12
Aug-13
Aug-14
Aug-15F
Aug-16F
Total turnover
90
127
69
126
285
Cost of sales
(81)
(117)
(57)
(40)
(57)
Gross profit
12
85
228
(3)
(4)
(4)
Selling expenses
(5)
(6)
(6)
Operating profit
Operating EBITDA
85
228
236
95
(2)
(1)
(1)
(10)
Operating EBIT
85
Interest expense
(0)
(0)
(0)
85
228
Taxation
(0)
(0)
(0)
(21)
(57)
Minority interests
(0)
(0)
(0)
(31)
(84)
33
87
Reported net profit
33
87
33
87
Pre-tax profit
(9)
228
-
Cash flow (SGDm)
Aug-12
Aug-13
Aug-14
Aug-15F
Aug-16F
Operating profit
85
228
10
(5)
(15)
Operating cash flow
(1)
97
221
Interest received
Interest paid
(0)
(0)
(0)
Tax paid
(0)
(0)
(0)
(21)
(57)
(1)
75
164
(1)
(1)
(1)
(0)
(34)
(1)
(1)
(34)

Capex
(1)
Dividends paid
(1)
(0)
(34)
23
(34)
Increase in debt
(1)
(1)
(3)
(0)
(1)
(1)
(0)
(16)
(50)
(2)
(2)
(117)
43
(0)
(1)
86
Forex effects
(0)
(0)
(0)
90
13
56
56

2 January 2015
Financial Exhibits
Aug-12
Aug-13
Aug-14
Aug-15F
Aug-16F
43
124
Inventories
16
12
14
11
26
Accounts receivable
25
21
24
55
153
11
36
Intangible assets
23
23
Total other assets

Total assets
39
64
26
29
94
217
15
12
20
17
13

30
Short-term debt
Accounts payable
Other liabilities
Total liabilities
22
18
13
Share capital
21
21
26
49
49
(14)
(13)
(11)
22
101
15
71
150
Minority interests
16
Other equity
Total equity
58
-
16
87
208
30
26
29
94
217
Aug-12
Aug-13
Aug-14
Aug-15F
Aug-16F
129.3
41.6
(45.6)
81.9
127.1
0.0
(18.0)
264.6
3398.8
166.7
0.0
24.0
357.1
1486.8
166.7
EPS growth (%)
0.0
24.0
123.8
982.2
166.7
8.9
8.8
(23.9)
208.7
112.1
0.9
0.5
3.5
68.0
79.8
0.4
0.4
3.0
26.0
30.5
1.4
1.6
7.5
53.1
55.9
4.9
5.6
17.4
75.9
78.9
2.1
(19.0)
(28.4)
(49.9)
(59.6)
DPS
0.00
0.00
0.00
0.02
0.04
0.02
0.02
(0.00)
0.19
0.42

Key Ratios (SGD)

Revenue growth (%)
57

2 January 2015
SWOT Analysis
Negligible exploration risk
Possible
downwards
adjustment in oil
sales price by
Pertamina after
annual
parliamentary
Budget approval
Superior economics yield high NPV/bbl

Scalable model with low capital requirements
Indonesia has
thousands of
old wells for
which Cepu
Sakti Energy
(CSE) can sign
contracts
Limited seismic data for most fields

Short track record for its key operating subsidiary,
CSE
P/BV (x) vs ROAE
480%
60
360%
40
240%
20
120%
P/E (x) (lhs)
EPS growth (rhs)
0%
60%
45%
30%
15%
0%
P/B (x) (lhs)
Jan-16
600%
80
75%
Jan-15
100
Jan-14
720%
90%
Jan-13
840%
120
Jan-12
140
Jan-16
960%
Jan-15
160
Jan-14
1080%
Jan-13
1200%
180
Jan-12
200
Company Profile
Giken Sakata owns 51% of Cepu Sakti Pte Ltd, an oil & gas (O&G) player focusing on the old well programme in Indonesia.
58
IPS Securex Holdings (IPSS SP)
Buy (Maintained)
Technology - Technology
Market Cap: USD42.0m
Target Price:
Price:
SGD1.26
SGD0.68
Macro
Risks
Unique Gem Banking On Political Instability
Growth
Value

Price Close
224
0.72
197
0.62
171
0.52
144
0.42
117
0.32
91
0.222
2
2
1
1
1
1
1
64
Vol m
0.82
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
Source: Bloomberg
0.15m/0.11m
85.3
85.3
0.28 - 0.75
14
81.0
57.6
15.6
7.4
PepperBall a potential game changer. As pepper spray has the

limitation of being a short-range weapon, we expect IPS Securexs (IPS)
PepperBall product which has been trialled and tested by the US
Government to replace pepper spray and become the key enforcer in
riots going forward. We estimate that a deal for IPS PepperBall
launchers could be valued at USD30m or more per country. In addition,
the constant supply of PepperBalls, which could be used for training,
may add an estimated USD5m per year per country to IPS recurring
revenue stream. We expect PepperBall to significantly contribute to and
lift group earnings, with the full impact expected from FY16 onwards.
Healthy orderbook of SGD26.5m. As of 28 Nov 2014, its orderbook
was at a robust SGD26.5m with 32.5% from security solutions and
67.5% from its recurring maintenance and leasing business. The size of
its current orderbook almost doubles its FY14 revenue. We also expect
orders to surge further in FY15 in view of potential contract wins from
SMRT Corp (MRT SP, NEUTRAL, TP: SGD1.50) as well as the sale of
new products it secured for distribution.
Maintain BUY with a TP of SGD1.26. As the homeland security industry
has high barriers of entry due to high security clearance and the
requirement of proven track record, IPS is in a unique position to benefit
from the increase in regional governments defence budgets due to
political instability and rising national security concerns. With high 2-year
(FY14-16) expected revenue and NPAT CAGRs of 116% and 161%
respectively, we maintain our BUY call on IPS. Our valuation is based on
a 50% discount to its local peer average of 14x FY15F P/E which puts
our TP at SGD1.26, implying a 7x FY16F P/E.

YTD
1m
3m
6m
12m
Absolute
112%
30.9
61.8
n/a
n/a
Relative
109%
29.8
62.3
n/a
n/a
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
4.2
9.5
12.4
34.4
57.9
(0.2)
1.7
1.1
8.5
14.4
(0.2)
1.7
2.0
8.5
14.4
18.2
319.6
68.7
Shariah compliant
(246.7)
na
Recurring EPS (SGD)
(0.00)
0.02
0.03
0.11
0.18
DPS (SGD)
0.000
0.000
0.000
0.010
0.010
Recurring P/E (x)
P/B (x)
29.7
25.1
6.2
3.8
38.7
16.8
6.2
3.0
1.7
P/CF (x)
110
25
Dividend Yield (%)
0.0
0.0
0.0
EV/EBITDA (x)
na
na
na
1.5
1.5
25.5
30.7
3.7
1.5
(22.1)
79.0
19.8
63.8
56.9
net cash
net cash
net cash
net cash
0.0
net cash
0.0
.
2
0
.
3
0
0
.
3
0
0
IPS is one of Singapores leading providers of integrated security .
0
solutions. Maintain BUY with a SGD1.26 TP (7x FY16F P/E). As political 0
instability grows around the region, ongoing disputes in certain 0
countries and increasing national security concerns have led to
Governments in the region boosting their defence budgets, which puts
IPS in an advantageous position. We expect PepperBall to be the game
changer for IPS.

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
IPS Technologies Pte Ltd
Ching Song Lim
Khoon Lim Goh
59

2 January 2015
Financial Exhibits
Jun-12
Jun-13
Jun-14
Jun-15F
Total turnover
12
34
58
Cost of sales
(2)
(5)
(6)
(21)
(35)
Gross profit
Jun-16F
14
23
(2)
(2)
(5)
(3)
(6)
(0)
(0)
(0)
(0)
(0)
Operating profit
(0)
10
17
Operating EBITDA
(0)
11
18
(0)
(0)
(0)
(0)
(0)
Operating EBIT
(0)
10
17

Interest expense
(0)
(0)
(0)
(1)
Pre-tax profit
(0)
10
(0)
(0)
(2)
(3)
(0)
14
Reported net profit
(0)
14
(0)
14
Taxation
17
Cash flow (SGDm)
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
(0)
10
17
(2)
(0)
(0)
(0)
(0)
Operating profit
Operating cash flow

Interest received
Interest paid
Tax paid
0
-
0
-
12
0
18
-
(2)
(3)
(0)
10
15
Capex
(1)
(0)
(1)
(1)
(1)
(1)
(0)
(1)
(1)
(1)
Dividends paid
Increase in debt
(1)
4
(1)
(0)
(1)
(1)
15
(1)
-
(0)
(0)
Forex effects
(0)
(0)
11
15
13
28
60

2 January 2015
Financial Exhibits
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
15
28
Inventories
Accounts receivable
17
28
11
33
57
Total other assets
Total assets
14
36
62
17
29
18
29
0
Accounts payable
Other liabilities
Total liabilities
18
30
Share capital
(1)
23
18
32
Total equity
18
32
14
36
62
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
(14.9)
126.5
31.2
176.5
68.2
Key Ratios (SGD)

Revenue growth (%)
(456.3)
na
(25.5)
700.9
68.7
(246.7)
na
(35.2)
664.8
68.7
EPS growth (%)
(246.7)
na
(35.2)
635.4
62.5
53.8
130.6
171.8
107.5
73.4
(6.0)
18.1
10.3
29.8
29.9
(5.7)
18.1
9.0
24.8
24.8
(8.0)
44.3
12.0
33.9
29.4
(22.1)
79.0
19.8
63.8
56.9
(29.7)
(48.3)
(54.9)
(81.8)
(88.2)
DPS
0.000
0.000
0.000
0.010
0.010
0.01
0.03
(0.00)
0.13
0.18

61

2 January 2015
SWOT Analysis
Experienced management team
Suppliers
turning into
competitors
Sole distribution agreement with suppliers in the AsiaPacific region
USD weakening
Close relationship with suppliers and dealers
Defence budget
cuts
Established track record
PepperBall
opens up a
huge potential
market
Increase in
government
defence and
military
spending
Comanufacturing
its suppliers
products
Does not manufacture or own the rights to its
products
Highly reliant on its suppliers and distributors
P/BV (x) vs ROAE
58%
120
1000%
30
44%
100
750%
25
30%
80
500%
20
16%
60
250%
15
2%
40
0%
10
-12%
20
-250%
-26%
-500%
-40%
P/E (x) (lhs)
EPS growth (rhs)
P/B (x) (lhs)
Jan-16
35
Jan-15
1250%
Jan-14
72%
140
Jan-13
40
Jan-12
1500%
Jan-16
86%
160
Jan-15
100%
45
Jan-14
50
1750%
Jan-13
2000%
180
Jan-12
200
Company Profile
IPS Securex is one of Singapore's one-stop leading providers of security products and integrated security solutions to commercial
entities, government bodies and agencies in the Asia-Pacific. It carries over 100 types of security products, with distribution rights for
some products spanning coverage of 10 countries in the Asia-Pacific.
62
Keppel Land (KPLD SP)
Buy (Maintained)
Property - Real Estate

Target Price:
Price:
SGD3.88
SGD3.37
Macro
Risks
Value Drivers Remain Intact
Growth
Value

103
3.50
101
3.40
99
3.30
97
3.20
95
3.10
93
3.00
8
7
6
5
4
3
2
1
91
Aug-14
Jun-14
Oct-14
3.60
Apr-14
105
Feb-14
3.70
Dec-13
Vol m
Price Close
0
0
.
2
0
0
Keppel Land sold 1,420 homes in China in 9M14 (3Q14: 360 units) vs .
0
3,100 units (3Q13: 490 units) a year ago. Maintain BUY and RNAV- 0
derived SGD3.88 TP. We expect demand from upgraders and first- 0
timers to be sustained for the rest of the year on the recent relaxation of
mortgage rules and easing credit in China. The recent rates loosening
in China should also support property prices.
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Keppel Corp Ltd
Matthews International
Blackrock
6.36m/4.95m
33.5
15.0
3.10 - 3.64
45
1,545
54.6
2.4
0.9

YTD
1m
3m
6m
Absolute
0.9
1.2
(2.9)
(0.9)
12m
1.8
Relative
(2.6)
3.2
(2.4)
(1.5)
(4.2)
Shariah compliant
Ong Kian Lin +65 6232 3895

Ivan Looi +65 6232 3841

.
2
0
.
2
Highline Residences and The Glades are 28% and 32% sold
respectively. YTD, Keppel Land sold about 280 residential units in
Singapore (total units sold YTD Sep 2013: ~310 units), of which about
half were from Highline Residences. According to the Urban
Redevelopment Authority of Singapore (URA), ASPs for Highline
Residences and The Glades are SGD1,830psf/SGD1,458psf
respectively (see Figures 3-6). Outside Singapore, the company sold
about 1,600 residential units, of which about 1,420 units were in China.
Sales were mostly from The Botanica (Chengdu), Stamford City
(Jiangyin), Central Park City (Wuxi), The Springdale (Shanghai) and The
Seasons Park (Tianjin Eco-City). Keppel Land expects the recent
relaxation of mortgage rules and easing credit in China to boost demand
from first-time homebuyers and upgraders.
Good reputation and strong balance sheet. Keppel Land is the largest
China residential player by proportion amongst Singapores developers.
It also has a strong balance sheet with sizeable cash in hand for future
development projects in growth cities in Asia such as Indonesia and
Vietnam. In Singapore, the residential market has just entered the early
phase of a downturn. As long as low interest rates prevail, cooling
measures are unlikely to be removed unless prices go into a tailspin.
Our view. In FY15, we expect Keppel Land to maintain its focus on
growing its operations in China. In our view, demand from upgraders and
first-timers can be sustained. The divestment of Marina Bay Financial
Centre 3 (MBFC 3) may also contribute an estimated net gain of
SGD95.5m and SGD658.9m in proceeds upon completion sometime in
Dec 2014, according to our estimates. Going forward, it will continue to
focus on Singapore, China, Indonesia and Vietnam. At a 0.54x P/RNAV,
we maintain that the stocks valuation is undemanding. Maintain BUY
with a RNAV-derived TP of SGD3.88.
Dec-12
Dec-13 Dec-14F Dec-15F Dec-16F
939
1,461
1,375
1,631
1,695
838
886
422
444
509
489
437
422
444
509
58.3
(10.5)
(3.5)
5.2
14.7
Recurring EPS (SGD)
0.32
0.28
0.27
0.29
0.33
DPS (SGD)
0.09
0.13
0.10
0.24
0.10
Recurring P/E (x)
10.6
11.9
12.3
11.7
10.2
P/B (x)
0.84
0.74
0.74
0.71
0.68
2.6
3.9
3.0
7.1
3.0
14.3
13.5
6.0
6.2
6.8
7.8
7.0
3.1
3.3
3.7
22.1
38.3
37.6
34.4
29.1
Dividend Yield (%)
63

2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover
939
1,461
1,375
1,631
1,695
Cost of sales
(625)
(1,047)
(1,093)
(1,136)
Gross profit
314
414
461
538
(99)
(139)
(110)
(128)
(93)
Operating profit
215
275
350
411
467
Operating EBITDA
226
290
366
426
481
(11)
(15)
(16)
(15)
(14)
Operating EBIT
215
275
350
411
467
185
(915)
Dec-16F
559
374
227
202
171
Interest income
40
31
37
34
34
Interest expense
(40)
(28)
(37)
(37)
(37)
399
496
Pre-tax profit
987
Taxation
(0)
1,001
(0)
553
578
649
(117)
(122)
(97)
(100)
(104)
Minority interests
(27)
(18)
(31)
(30)
(23)
838
886
422
444
509
Reported net profit
838
886
422
444
509
489
437
422
444
509
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
215
275
350
411
467
11
15
16
15
14
Cash flow (SGDm)

Operating profit
(831)
(1,592)
(852)
230
24
(42)
(65)
(150)
(74)
(85)
Operating cash flow
(647)
(1,367)
(636)
581
420
(647)
(1,367)
(636)
581
420
Capex
(37)
(88)
362
(13)
(13)

Dividends paid
Increase in debt
(53)
103
217
659
108
116
828
(65)
49
(134)
(202)
(154)
(371)
(154)
511
1,055
(28)
86
352
940
1,942
1,597
(172)

(1)
(193)
(50)

(1)
(345)
1,597
(311)
1,285
(86)
(240)
1,285
(48)
1,237
(261)
(0)
(631)
1,238
(115)
1,123
(291)
(446)
1,123
23
1,146
64

2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
1,597
1,285
1,238
1,123
1,146
366
394
567
521
486
4,422
6,447
6,297
6,244
5,991
6,385
8,126
8,102
7,888
7,623
Total investments
4,011
4,609
4,368
4,710
4,948
Total other assets
1,065
1,087
1,109
1,101
1,094
5,076
5,696
5,477
5,811
6,042
11,461
13,823
13,578
13,699
13,665

Inventories
Total assets
Short-term debt
Accounts payable
715
283
339
369
373
1,459
1,786
1,705
1,808
1,710
142
157
289
292
306
2,315
2,226
2,333
2,469
2,389
2,349
3,870
3,728
3,438
3,143
151
241
2,499
4,111
3,728
3,438
3,143
Total liabilities
4,814
6,337
6,061
5,907
5,532
Share capital
2,393
2,398
2,398
2,398
2,398
3,776
4,591
4,643
4,932
5,287
6,169
6,989
7,041
7,331
7,686
477
496
476
462
448
6,646
7,486
7,517
7,793
8,133
11,461
13,823
13,578
13,699
13,665
Dec-16F
Other liabilities
Minority interests
Total equity
Key Ratios (SGD)
Dec-12
Dec-13
Dec-14F
Dec-15F
Revenue growth (%)
(1.1)
55.6
(5.9)
18.6
4.0
15.2
27.7
27.5
17.2
13.6
(39.0)
5.7
(52.3)
5.2
14.7
EPS growth (%)
(39.0)
5.7
(52.3)
5.2
14.7
10.7
13.3
0.7
4.1
4.8
22.9
18.8
25.5
25.2
27.5
89.3
60.6
30.7
27.2
30.0
7.8
7.0
3.1
3.3
3.7
14.3
13.5
6.0
6.2
6.8
22.1
38.3
37.6
34.4
29.1
(0.42)
(0.89)
(0.41)
0.38
0.27

65

2 January 2015
SWOT Analysis
Strong balance sheet & lower risks vs domestic peers
Prolonged property
price declines
following worst than
expected interest
rate hike
Bulk of its landbank from the legacy plots at the

Keppel Bay area has low holding costs.
Continued expansion into China justified by doubling
of homes sold in 2013 vs 2012. Ability to monetise its
China residential inventory could let it sustain core
ROEs
Worsening global
economic outlook
On the lookout for

more
opportunities to
beef up
commercial
exposure,
particularly in
China
More tie-ups with
China Vanke at
the project level
will be welcome if
they are RNAVaccretive
Largest China residential player by proportion

amongst Singapore developers
Singapores residential market has just entered the
early phase of a downturn. As long as low interest
rates prevail, cooling measures are unlikely to be
removed unless prices go into a tailspin
P/BV (x) vs ROAE
14
20%
12
16%
14%
13%
-3%
11%
-14%
10%
8%
9%
10
8
-37%
5%
3%
2%
0%
P/E (x) (lhs)
EPS growth (rhs)
Jan-13
Jan-16
Jan-15
-60%
Jan-14
Jan-13
-49%
Jan-12
P/B (x) (lhs)
Jan-16
6%
Jan-15
Jan-14
-26%
Jan-12
Company Profile
Keppel Land Limited is the property arm of the Keppel Group. The company focuses on a two-pronged strategy of property
development for sale and property fund management. Its portfolio of properties includes commercial buildings, residential
developments, mixed-use properties and large-scale townships.
66
M1 (M1 SP)
Buy (Maintained)
Communications - Telecommunications
Target Price:
Price:
SGD4.40
SGD3.60
Macro
Risks
Upwardly Mobile
Growth
Value
M1 (M1 SP)
Price Close
3.90
113
3.80
111
3.70
109
3.60
106
3.50
104
3.40
102
3.30
100
3.20
97
3.103
95
0
0
.
2
0
0
M1 remains our Top Pick for exposure to the local telco sector in 2015. .
0
Maintain BUY and DCF-based SGD4.40 TP (WACC: 7%).We expect it to 0
sustain its above average industry mobile revenue growth from more 0
postpaid subscribers tiering-up and paying more for data on 4G. There
is also a possibility that management may declare a special dividend
with net debt/EBITDA improving to 0.6x in FY15F on lower capex.
3
2
2
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Vol m
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Axiata Group
Temasek Holdings
SPH Multimedia
2.98m/2.31m
4.4
22.2
3.17 - 3.83
37
931
28.6
19.3
13.5
.
1
0
.
1
Stronger revenue growth in FY15/FY16. We expect M1 to maintain its

higher than industry mobile revenue growth for FY15/FY16, supported by
a bigger proportion of postpaid subscribers moving to tiered data plans
and more subscribers exceeding the bundled data allowances. After
raising the prices of its postpaid plans in September (following the launch
of the iPhone 6), M1 will impose a 4G surcharge of SGD10.70/month for
subscribers continuing with their existing contracts from 1 Jan 2015. We
believe this will prompt more postpaid subscribers to re-contract to the
new 4G plans, which offer bigger data bundles and does away with the
surcharge.
A diet richer in fibre. M1s fibre subscriber addition was relatively
steady at 4,000-5,000/quarter (total 3Q14 subscribers: 98,000) over the
past three quarters while stiff price competition in the fixed broadband
segment compressed the broadband ARPUs of its larger peers, resulting
in the 7-16% erosion in their broadband revenues in 9M14. M1s fixed
network revenue (where fibre broadband revenue is parked) grew 15%
YoY between 3Q13 and 3Q14. We expect fixed network revenue
contribution to rise to 9-10% in FY15/FY16 from 7% in FY14.
Capital management potential. We believe there is scope for
management to dish out a special dividend, given the anticipated decline
in M1s capex intensity in FY15 and its underleveraged balance sheet,
with net debt/EBITDA falling to 0.6x in FY15F from 0.7x in FY14F.
BUY. Investors should remain invested with the added share price
catalyst coming from a higher than expected dividend payout. Key
downside risks are: i) weaker-than-expected margins, and ii) strongerthan-expected competition.

Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
1,077
1,008
1,087
1,179
1,287
147
160
171
192
212
147
160
171
192
212
(10.7)
9.3
6.5
12.7
10.1
Recurring EPS (SGD)
0.16
0.18
0.19
0.21
0.23
DPS (SGD)
0.15
0.21
0.21
0.21
0.21
Recurring P/E (x)
22.3
20.4
19.1
17.0
15.4
P/B (x)
9.38
8.27
8.34
8.16
7.64
P/CF (x)
11.9
10.8
11.9
11.1
10.0
4.1
5.8
5.8
5.8
5.8
EV/EBITDA (x)
11.9
11.3
10.8
9.8
9.2
43.7
43.1
43.4
48.6
51.1
74.6
49.4
61.2
56.0
41.5
(1.0)
5.9
11.1
YTD
1m
3m
6m
12m
Absolute
Relative

Shar
Dividend Yield (%)

67
M1 (M1 SP)
2 January 2015
Financial Exhibits
M1s revenue traction should improve further
in FY15/FY16 as more subscribers recontract on to tiered data plans

Total turnover
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
1,077
1,008
1,087
1,179
1,287
Cost of sales
(130)
(140)
(152)
Gross profit
947
868
935
(54)
(49)
(60)
(65)
Selling expenses
(22)
(25)
(25)
(26)
(32)
(682)
(599)
(642)
(694)
(747)
Operating profit
188
196
208
235
257
Operating EBITDA
288
297
313
344
364
(99)
(101)
(105)
(109)
(107)
Operating EBIT
257
(159)
1,020
(180)
1,106
(71)
188
196
208
235
Interest income
Interest expense
(6)
(5)
(4)
(4)
(4)
Pre-tax profit
184
193
205
231
Taxation
(37)
(33)
(35)
(39)
255
(43)
147
160
171
192
212
Reported net profit
147
160
171
192
212
147
160
171
192
212
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
188
196
208
235
257
99
101
105
109
107
23
(1)
(7)
11
(3)
(3)
(2)
Operating cash flow
301
331
309
333
Tax paid
(27)
(30)
(35)
(39)
(43)
275
301
274
294
326
(123)
(125)
(130)
(90)
(90)
M1s capex should start to taper off in FY15
Cash flow (SGDm)

Operating profit
Capex
369
(122)
(122)
(130)
(90)
(90)
Dividends paid
(132)
(136)
(189)
(189)
(189)

Increase in debt
130
24
(152)
(25)
(154)
(137)
12
(0)
12
(189)
(189)
(189)
12
55
10
26
43
(44)
16
47
54
10
26
72
68
M1 (M1 SP)
2 January 2015
Financial Exhibits
There is capital management upside given
that M1 remains underleveraged with FY15
net debt/EBITDA projected at 0.6x
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
12
55
10
26
72
Inventories
33
29
39
40
46
180
145
185
200
219
Accounts receivable
21
21
21
21
21
246
249
255
288
358
Total investments
13
14
14
14
14
630
649
679
665
653
Intangible assets
86
74
74
74
74
Total other assets
729
737
767
753
741
Total assets
975
987
1,022
1,040
1,098
Short-term debt
272
Accounts payable
188
181
219
229
260
65
54
54
54
54
524
235
273
283
314
250
250
250
250
Other liabilities
103
107
107
107
107
103
357
357
357
357
Total liabilities
627
592
630
640
670
Share capital
156
180
180
180
180
187
215
212
221
249
392
400
428
Other reserves
348
395
Total equity
348
395
392
400
428
975
987
1,022
1,040
1,098
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
1.1
(6.4)
7.9
8.4
9.1
(6.6)
3.9
6.4
12.8
9.3
(10.7)
9.3
6.5
12.7
10.1
EPS growth (%)
(11.1)
9.3
6.5
12.7
10.1
8.0
13.4
(0.8)
2.2
6.9
17.5
19.4
19.1
19.9
20.0
13.6
15.9
15.7
16.3
16.5
15.0
16.3
17.0
18.7
19.8
43.7
43.1
43.4
48.6
51.1
74.6
49.4
61.2
56.0
41.5
DPS
0.15
0.21
0.21
0.21
0.21
0.30
0.33
0.30
0.32
0.36
M1s net gearing position remains

manageable at 0.6x for FY15
Key Ratios (SGD)

Revenue growth (%)
69
M1 (M1 SP)
2 January 2015
SWOT Analysis
M1 is the largest beneficiary of the next
A challenger brand offering good value propositions
generation fiber network given additional

revenue streams
Competition from
larger peers which
have stronger
quad play offerings
Strong parent and shareholder in Axiata (AXIATA MK,

NEUTRAL, TP: MYR7.20)
No legacy broadband revenues to cannibalise
Competition from
Tier -2 fibre
broadband
providers
Potential entry of a
fourth mobile
player into the
market
New revenue
streams from
the NGN
Better data
monetization
opportunities
with tiered data
plans
Content
carriage ruling
levels the
playing field
Bundling
opportunities
across multiple
services
Prepaid and roaming revenue pressure

Aggressive handset subsidies
P/BV (x) vs ROAE
3%
10
-3%
P/E (x) (lhs)
Jan-16
Jan-15
-15%
Jan-14
Jan-13
-9%
Jan-12
51%
49%
46%
43%
41%
38%
EPS growth (rhs)
P/B (x) (lhs)
Jan-16
15
10
Jan-15
9%
54%
Jan-14
20
12
Jan-13
15%
Jan-12
25
Company Profile
M1 is the smallest mobile operator in Singapore, majority owned by Axiata.
70
Nam Cheong (NCL SP)
Buy (Maintained)
Energy & Petrochemicals - Oil & Gas Services

Market Cap: USD487m
Target Price:
Price:
SGD0.61
SGD0.31
Macro
Risks
Uncertainty Benefits Build-To-Stock Model
Growth
Value
Nam Cheong (NCL SP)

Price Close
0.51
170
0.46
154
0.41
138
0.36
122
0.31
106
0.26
70
90
50
40
20
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
10
Dec-13
Vol m
30
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
SK Tiong Enterprise Sdn Bhd
Hung Yung Enterprise Sdn Bhd
Su Kouk Tiong
3.57m/2.78m
77.4
100.0
0.29 - 0.50
42
2,096
27.3
15.2
7.8
Shallow water operations to proceed in a recession-proof segment.

Shallow water operations have all-in costs of USD30-50/barrel (bbl),
which still offer healthy margins with oil today at USD60/bbl. This
segment remains recession-proof as 90% of the worlds oil is produced
onshore and in shallow water.
Cashflow certainty in contracts benefits build-to-stock model. In this
uncertain environment, owners may prefer securing vessel charter
contracts before ordering vessels. Since most charter contracts
commence within six to nine months whereas vessel construction
requires 14-24 months, a build-to-stock model like Nam Cheongs should
benefit in the current market environment.
Bear case scenario priced in. Even if we assume a 10% gross margin
for 2015 (half the 20% for FY14F), Nam Cheong would still be healthily
profitable with a MYR160m bottomline, and the implied P/E based on the
current price is 10.6x. Even in the financial crisis of 2008, its shipbuilding
margin was 14.6%, and at this margin the implied FY15F P/E is 6.4x.
The stock has overreacted and priced in a drastic bear-case scenario.
Negative correlation with oil prices before crash. Interestingly, Nam
Cheongs stock had been displaying negative-0.42 correlation with oil
prices since IPO up till Jun 2014. When oil prices started sliding, the
correlation flipped to +0.44. We expect this positive correlation to break
down, driven by the companys strong earnings growth, after the oil
market stabilises. With the stock currently trading at merely 4.4x FY15F
P/E and at 5-6% yield, we expect a sharp rebound next year. Maintain
BUY with a SGD0.61 TP based on 9x blended FY14/15F P/E.

Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Total turnover (MYRm)
877
1,257
1,866
2,455
2,969
Reported net profit (MYRm)
137
206
311
391
452
Recurring net profit (MYRm)
137
193
311
391
452
46.6
41.6
60.6
25.9
15.6
Recurring EPS (MYR)
0.07
0.09
0.15
0.19
0.22
DPS (MYR)
0.01
0.03
0.04
0.05
0.06
Recurring P/E (x)
11.4
8.8
5.5
4.4
3.8
P/B (x)
2.62
1.82
1.46
1.15
0.93
P/CF (x)
21.1
YTD
1m
3m
6m
12m
Absolute
(3.2)
(25.6)
(33.7)
(19.7)
7.0
Relative
(8.0)
(26.4)
(32.8)
(20.6)
(1.4)
Shariah compliant
7.0
11.8
1.6
3.2
4.6
5.7
8.0
EV/EBITDA (x)
12.4
10.3
7.2
5.2
4.5
25.6
26.9
29.5
29.5
27.2
39.4
52.1
55.5
34.6
27.1
1.0
19.9
29.1
Dividend Yield (%)
na
na
.
2
0
.
3
0
0
.
3
0
0
Even as oil prices have plunged 50%, they are still at a level where .
0
shallow water operations remain highly profitable. Maintain BUY with a 0
SGD0.61 TP, based on 9x blended FY14/15F P/E. Nam Cheongs 0
business model is tailored for todays conditions where vessel owners
may refrain from purchasing vessels before securing contracts. The
company remains fundamentally strong with the stock pricing in a
drastic bear-case scenario.
60
71
Nam Cheong (NCL SP)

2 January 2015
Financial Exhibits
Profit & Loss (MYRm)
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover
877
1,257
1,866
2,455
2,969
Cost of sales
(688)
(993)
(1,484)
(1,954)
(2,394)
Gross profit
189
264
382
501
576
(50)
(66)
(68)
(88)
(101)
Operating profit
139
199
314
414
475
Operating EBITDA
144
212
329
430
493
(13)
(15)
(17)
(18)
139
199
314
414
475
10
10
19
20
20
(8)
(11)
(22)
(40)
(39)

Operating EBIT
(6)
Interest expense
Pre-tax profit
139
Taxation
13
(2)
212
Dec-16F
318
404
467
(14)
(6)
(8)
(12)
(1)
(1)
Minority interests
137
206
311
391
452
(1)
Reported net profit
137
206
311
391
452
137
193
311
391
452
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
139
199
314
414
475
13
15
17
18
(60)
(419)
(362)
(164)
(326)
Cash flow (MYRm)

Operating profit
10
10
26
30
30
Operating cash flow
95
(197)
(6)
296
198
(39)
Interest paid
(17)
(34)
(22)
(40)
Tax paid
(5)
(0)
(8)
(12)
(14)
74
(231)
(37)
244
145
Capex
(36)
(45)
(30)
(31)
(8)
(81)
(6)
(117)
(45)
(30)
(31)
Dividends paid
(9)
(26)
(79)
(79)
(98)
119
Increase in debt
145
401
459

(4)
(1)
(0)
50
-
(150)
-
132
493
380
(29)
27
216
362
660
846
199
145
298
186
(134)
Forex effects
(12)
215
5
366
(248)
660
846
712
72
Nam Cheong (NCL SP)

2 January 2015
Financial Exhibits
Balance Sheet (MYRm)
Dec-12
Dec-13
Dec-14F
Dec-15F
216
362
660
846
712
Inventories
454
751
1,017
1,070
1,312
Accounts receivable
452
635
920
1,211
1,464
29
51
51
51
51
1,151
1,799
2,648
3,178
3,539
145
290
320
333
346
17
90
90
90
90
161
380
410
423
436
Total other assets

Total assets
Dec-16F
1,313
2,179
3,058
3,601
3,975
Short-term debt
155
242
701
751
601
Accounts payable
257
381
569
749
918
413
628
1,275
1,505
1,524
294
609
609
609
609
13
307
613
613
613
613
Total liabilities
720
1,241
1,888
2,118
2,137
Share capital
370
488
488
488
488
231
411
643
956
1,310
Other liabilities
Other reserves
(9)
39
39
39
39
938
1,170
1,483
1,837
592
939
1,170
1,483
1,838
1,313
2,179
3,058
3,601
3,975
592
Minority interests
Other equity
Total equity
Key Ratios (MYR)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Revenue growth (%)
44.6
43.5
48.4
31.6
21.0
36.7
43.5
57.9
31.7
14.9
46.6
50.5
51.0
25.9
15.6
EPS growth (%)
46.6
37.7
50.2
26.0
15.6
24.9
44.1
24.8
26.7
23.9
15.8
15.8
16.8
16.8
16.0
15.6
16.4
16.6
15.9
15.2
12.0
11.8
11.9
11.7
11.9
25.6
26.9
29.5
29.5
27.2
39.4
52.1
55.5
34.6
27.1
DPS
0.01
0.03
0.04
0.05
0.06
0.04
(0.11)
(0.02)
0.12
0.07
73
Nam Cheong (NCL SP)

2 January 2015
SWOT Analysis
The worlds largest offshore supply vessel (OSV)
builder by vessels delivered
New
competition
from Chinas
merchant vessel
builders
Partnerships with yards make for an asset-light and

capacity-flexible model, helping it to weather lean
times
The letter of authorisation system in Malaysia
protects Nam Cheongs key market
ASEAN
countries are
rapidly boosting
exploration and
production
(E&P) capex
The industry is
currently in a
major upswing
due to massive
rig orders
The companys build-to-stock model is deemed risky

by investors, although this is mitigated by its record
orders on hand, asset-light strategy and dominant
industry position in Malaysia
P/BV (x) vs ROAE
25%
24%
20%
16%
7%
15%
-2%
10%
-11%
-20%
5%
0%
P/B (x) (lhs)
Jan-16
30%
Jan-15
10
Jan-14
33%
EPS growth (rhs)
35%
Jan-13
12
P/E (x) (lhs)
Jan-12
42%
Jan-16
14
Jan-15
51%
Jan-14
16
Jan-13
60%
Jan-12
18
Company Profile
Nam Cheong (NCL) is the largest OSV builder in the world with a 12% share of the global shallow-water OSV market. It specialises in
building small-mid anchor handling tug supply (AHTS), platform supply vessels (PSVs), workboats and accommodation barges. It also
operates a fleet of standby vessels and a number of OSVs in conjunction with its partners.
74
OSIM International (OSIM SP)
Buy (Maintained)
Consumer Non-cyclical - Household & Personal Products

Target Price:
Price:
SGD2.30
*SGD2.10
Macro
Risks
Muted Spending Environment
Growth
Value

Price Close
3.10
129
2.90
120
2.70
112
2.50
103
2.30
94
2.10
85
1.90
77
1.70
68
1.50
35
59
0
0
.
2
0
0
We expect the discretionary spending environment to remain muted in .
0
OSIMs core markets in 2015 and reduce our profit estimates 0
accordingly. Maintain BUY, with a lower SGD2.30 TP (from SGD2.75). 0
Nonetheless, we believe the company remains well-positioned for
growth when the market picks up, given its market leadership position
and solid balance sheet for potential acquisitions.
30
25
Spending environment remains weak. In 2015, we expect the

discretionary spending environment in 2015 to remain muted in OSIM
Internationals (OSIM) core markets. Chinas anti-corruption drive does
not affect OSIM directly, but the overall lower spending and tourism will
put pressure on sales growth within Mainland China and Hong Kong.
These markets together account for around 35-40% of group revenue.
Similarly in South-East Asia, the quiet property market in Singapore and
impending goods and services tax (GST) implementation in Malaysia will
weigh down on discretionary retail spending.
20
10
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
5
Dec-13
Vol m
15
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Ron Sim
Capital Group
Franklin Resources
7.53m/5.84m
90.5
9.5
1.69 - 2.90
35
723
62.1
3.3
3.1

YTD
1m
3m
6m
12m
Absolute
(8.7)
16.7
(19.6)
(20.5)
(9.5)
Relative
(13.5)
15.9
(18.7)
(21.4)
(17.9)
New digital marketing strategy. In conjunction with a new massage

chair in early 2015, we expect management to roll out a new digital
marketing strategy. Given the increasing importance of online media/ecommerce, we welcome this evolution from OSIMs previously
successful marketing campaigns, which were more focused on
traditional media and celebrity endorsements.
TWG Tea Co loses appeal in Hong Kong. In Dec 2014, subsidiary
TWG Tea Co lost in the Hong Kong Court of Appeal against an early
ruling that its abbreviation infringed upon an existing logo. Management
has not decided whether to pursue the matter further at the Court of
Final Appeal or change the logo to another registered trademark,
TeaWG, in Hong Kong. Notwithstanding this, TWG Tea Cos other
expansion plans remain on track.
Reducing our estimates, but Maintain BUY. We reduce our FY14
estimates by 8% to account for a weaker 4Q and FY15F-16F by 12-15%.
Our TP of SGD2.30 (from SGD2.75) is now pegged to 15x ex-cash
FY15F, in line with regional peers. The company still has a solid balance
sheet, with net cash of SGD237m.
*Osims share price has fallen 7% since 11 Dec 2014 and is now justified as a BUY call.
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
602
648
686
739
817
87
97
93
102
113
87
101
93
102
113
25.9
15.8
(7.6)
9.3
11.1
Recurring EPS (SGD)
0.12
0.14
0.12
0.13
0.15
DPS (SGD)
0.06
0.06
0.06
0.06
0.07
Recurring P/E (x)
17.6
15.1
16.9
16.0
14.4
P/B (x)
7.78
5.60
3.72
3.31
2.97
P/CF (x)
14.9
14.5
15.8
13.0
11.5
2.9
2.9
2.9
2.9
3.5
EV/EBITDA (x)
10.8
10.0
9.6
8.7
7.4
48.1
41.7
26.3
21.9
21.8
James Koh +65 6232 3839

Dividend Yield (%)

.
2
0
.
3
net cash net cash net cash net cash net cash
(19.8)
(27.0)
(28.1)
75

2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Total turnover
602
648
686
739
817
Cost of sales
(181)
(193)
(202)
(218)
(241)
Gross profit
Dec-16F
421
455
484
521
576
(111)
(124)
(148)
(160)
(175)
(195)
(204)
(219)
(234)
(258)
Operating profit
115
127
117
127
142
Operating EBITDA
127
140
138
151
169
(11)
(11)
(12)
(15)
(17)
(1)
(2)
(9)
(9)

Operating EBIT
(9)
115
127
117
127
142
Interest income
Interest expense
(6)
(6)
(2)
(3)
(3)
Pre-tax profit
115
125
(4)
121
134
150
Taxation
(35)
(28)
(28)
(29)
(31)
Minority interests
(0)
(0)
(1)
87
97
93
102
113
Reported net profit
87
97
93
102
113
87
101
93
102
113
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
115
127
117
127
142
11
14
22
24
27
(16)
(9)
(3)
Cash flow (SGDm)

Operating profit
Operating cash flow

Interest received
Interest paid
2
-
131
135
125
152
171
8
(6)
(6)
(2)
(3)
(3)
Tax paid
(25)
(29)
(29)
(31)
(35)
103
105
99
125
142
Capex
(12)
(11)
(30)
(25)
(25)
(5)
(4)
(5)
(5)
(19)
11
(1)
(2)
(1)
(35)
(4)
(31)
(32)
(31)
Dividends paid
(36)
(36)
(47)
(48)
(57)
(14)
(7)
119
Increase in debt
(0)
32
(4)
(2)
(0)
(0)
(55)
(41)
105
(48)
(57)
194
202
267
440
485
13
59
173
Forex effects
(5)
202
267
45
54
440
485
539
76

2 January 2015
Financial Exhibits
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
222
291
464
510
564
Inventories
54
73
80
83
86
Accounts receivable
69
54
58
65
72
344
418
602
659
722
Total investments
86
47
50
58
66
21
25
43
53
61
Intangible assets
20
190
182
173
165
126
262
275
284
291
Total assets
471
680
877
943
1,013
Short-term debt
25
155
20
20
20
Accounts payable
97
102
97
107
119
25
41
45
45
45
147
297
162
172
184
117
167
167
167
39
39
39
39
124
39
206
206
206
Total liabilities
271
336
368
378
390
Share capital
196
271
437
491
547
196
271
437
491
547
73
72
74
Other liabilities
Minority interests
Other equity
(0)
76
-
Total equity
200
344
509
564
623
471
680
877
943
1,013
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
8.7
7.6
5.9
7.8
10.5
14.9
9.8
(7.9)
8.9
12.1
25.9
12.1
(4.5)
9.3
11.1
EPS growth (%)
17.0
12.9
(7.6)
5.7
11.1
19.6
39.0
50.3
12.3
11.5
19.2
19.6
17.0
17.2
17.4
14.4
15.1
13.6
13.8
13.8
19.3
16.9
12.0
11.2
11.6
48.1
41.7
26.3
21.9
21.8
(39.9)
(39.6)
(54.4)
(57.3)
(60.5)
DPS
0.06
0.06
0.06
0.06
0.07
0.14
0.15
0.13
0.16
0.18
Key Ratios (SGD)

Revenue growth (%)
77

2 January 2015
SWOT Analysis
Strong brand equity
Technological
breakthroughs
by competitors
Invaluable retail know-how

Control over the entire value chain
Poor economic
conditions
hampering
discretionary
purchases
New entrants to
the business
Higher
penetration of
massage
chairs,
especially in
China
Growing TWG
into a leading
brand in Asia
Growth of
Chinas nutrition
business
Highly dependent on founder Ron Sim as a driving

force
Technology is still unable to fully replicate human
massage
Subject to rental cost escalations
P/BV (x) vs ROAE
8%
10
2%
P/E (x) (lhs)
EPS growth (rhs)
Jan-16
Jan-15
Jan-14
Jan-13
-4%
Jan-12
-10%
48%
42%
36%
30%
24%
18%
12%
6%
0%
P/B (x) (lhs)
Jan-16
15
54%
Jan-15
14%
60%
Jan-14
20
10
Jan-13
20%
Jan-12
25
Company Profile
OSIM is a leading lifestyle company in Asia, with a strong stable of brands that includes OSIM, GNC, RichLife and TWG Tea.
Approximately 75% of sales are derived from OSIM, which is the undisputed number one brand for massage chairs in its core markets
like China, Hong Kong, Taiwan, Malaysia and Singapore. The company was established by current CEO Ron Sim in the 1980s. In total,
it has more than 855 outlets in Asia.
78
Parkson Retail Asia (PRA SP)
Sell (Maintained)
Consumer Cyclical - Retail

Market Cap: USD423m
Target Price:
Price:
SGD0.65
SGD0.82
Macro
Risks
Challenging Retail Outlook
Growth
Value

Price Close
1.05
106
1.00
100
0.95
93
0.90
87
0.85
80
0.80
74
0.75
67
0.70
4
61
0
0
.
1
0
0
Consumer confidence remains low in Malaysia, which is Parksons .
0
biggest market. Maintain SELL and our SGD0.65 TP (20.7% downside). 0
We expect discretionary spending to tighten further in department 0
stores like Parkson. The upcoming GST implementation in Apr 2015 will
likely have a net negative effect on sales. While the retailer has a strong
balance sheet and more flexible business model to ride this out, we
expect profit to worsen before picking up.
3
2
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Vol m
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Parkson Holdings
0.09m/0.07m
56.1
-20.7
0.74 - 1.01
32
677
67.6

Absolute
Relative
Discretionary spending to tighten further in Malaysia. This is

Parkson Retail Asias (Parkson) biggest market, contributing more than
70% of sales. We expect discretionary spending to tighten further in
department stores like Parkson. While the GST implementation on 1 Apr
2015 may induce some forward buying in 1QCY2015, the overall net
effect is likely to be negative, against a backdrop of rising cost of living
and high household debt.
Competition in Vietnam intensifying. In Vietnam, competition is
intensifying, with Parksons stores in both key cities Ho Chi Minh and
Hanoi slipping into negative same-store sales growth (SSSG) in
1QFY15(Jun). This is despite the structural growth opportunities in the
country. Robinson Department Store (ROBINS TB, NEUTRAL, TP:
THB57.75) is expected to open a new store in the former in Dec 2014.
We believe Parkson may need to retool its Vietnam stores to better cater
to local consumers.
Gestation of new stores in Indonesia. While Indonesias SSSG
remains healthy (up 6% in recent 1QFY15), the gestation costs of new
stores may continue to weigh on profit. Excluding a writeback of expired
loyalty points, we estimate the overall country PBT to be negative. With
45,382 sq m of new space (currently 136,000 sq m) in Indonesia coming
on stream over the next two years, this should negatively impact
Parksons near-term profit, in our view.
Strong balance sheet, but we maintain SELL. Our TP of SGD0.65 is
pegged to a 15x FY15F P/E, a discount to its regional peers 18x. With a
net cash position of SGD190m (including the recent sale of Odel), we
think the company is financially strong to ride out this difficult period.
However, we expect profit to worsen before getting better.
YTD
1m
3m
6m
12m
(15.5)
(6.8)
1.9
(6.8)
(19.6)
(27.3)
(20.3)
(7.4)
2.5
(7.6)
.
2
0
.
2
Jun-14
Jun-15F
Jun-16F
447
432
444
469
Jun-17F
519
36.4
31.7
31.3
35.9
40.8
36.4
31.7
31.3
35.9
40.8
(17.6)
(12.9)
(1.1)
14.5
13.7
Recurring EPS (SGD)
0.05
0.05
0.05
0.05
0.06
DPS (SGD)
0.03
0.05
0.03
0.03
0.04
Recurring P/E (x)
15.3
17.5
17.7
15.5
13.6
P/B (x)
2.17
2.32
2.22
2.10
1.98
P/CF (x)
11.1
10.0
9.9
7.6
7.4
Dividend Yield (%)
3.3
6.5
3.4
3.9
4.4
5.77
6.76
6.42
5.23
4.29
14.8
12.8
12.8
13.9
15.0
Shariah compliant
Jun-13
James Koh +65 6232 3839

EV/EBITDA (x)
net cash net cash net cash net cash net cash
(31.0)
(23.2)
(12.7)
79

2 January 2015
Financial Exhibits
Jun-13
Jun-14
Jun-15F
Jun-16F
Total turnover
447
432
444
469
519
Cost of sales
(182)
(167)
(173)
(188)
(208)
Gross profit
Jun-17F
265
265
271
282
312
(121)
(124)
(129)
(139)
(154)
Selling expenses
(48)
(50)
(51)
(54)
(60)
(50)
(52)
(55)
(48)
(50)
Operating profit
46
40
35
41
48
Operating EBITDA
66
60
58
67
77
(20)
(20)
(23)
(26)
(29)
46
40

Operating EBIT
35
-
41
-
48
-
Interest income
Interest expense
(0)
(1)
(1)
(1)
(1)
Pre-tax profit
53
47
43
50
58
(17)
Taxation
10
(15)
(14)
(13)
(15)
Minority interests
(2)
(1)
36
32
31
36
41
Reported net profit
36
32
31
36
41
36
32
31
36
41
Cash flow (SGDm)
Jun-13
Jun-14
Jun-15F
Jun-16F
Jun-17F
Operating profit
46
40
35
41
48
20
20
23
26
29
(4)
(12)
(11)
(5)
(2)
(9)
Operating cash flow
50
56
56
73
75
50
56
56
73
75
(17)
(38)
(30)
(30)
(30)
Capex
(0)
(3)
(28)
(0)
27
(45)
(38)
(5)
(30)
(30)
Dividends paid
(20)
(39)
(17)
(21)
(24)
(0)
Increase in debt
(0)
(19)
(39)
(17)
(21)
(24)
190
177
151
184
206
(14)
(21)
33
22
21
176
156
184
206
228
80

2 January 2015
Financial Exhibits
Jun-13
Jun-14
Jun-15F
Jun-16F
Jun-17F
177
151
184
206
228
Inventories
58
64
62
64
71
Accounts receivable
29
24
24
26
28
273
247
279
301
334
Total investments
48
45
20
20
20
85
98
105
109
110
Intangible assets
Total other assets
24
25
25
25
25
165
173
156
160
161
Total assets
438
420
434
461
494
Accounts payable
148
143
145
157
174
25
28
28
28
28
172
171
173
185
202
Other liabilities
Total liabilities
180
180
182
194
211
Other reserves
255
239
250
264
280
255
239
250
264
280
(0)
(0)
(0)

Minority interests
Other equity
Total equity
258
240
253
267
284
438
420
434
461
494
Jun-13
Jun-14
Jun-15F
Jun-16F
Jun-17F
1.0
(3.3)
2.7
5.7
10.6
(19.6)
(14.5)
(11.0)
17.1
16.7
(17.6)
(12.9)
(1.1)
14.5
13.7
EPS growth (%)
(20.8)
(12.9)
(1.1)
14.5
13.7
7.4
(6.5)
4.8
5.5
6.1
10.4
9.2
7.9
8.8
9.3
8.1
7.3
7.1
7.6
7.9
8.5
7.4
7.3
8.0
8.5
14.8
12.8
12.8
13.9
15.0
Key Ratios (SGD)

Revenue growth (%)
(68.6)
(62.9)
(72.8)
(77.3)
(80.3)
DPS
0.03
0.05
0.03
0.03
0.04
0.07
0.08
0.08
0.11
0.11
81

2 January 2015
SWOT Analysis
Enjoys a leading market position in Malaysia and
Vietnam
Increasing
competition in
Indonesia
Has a track record in making early entry into

emerging markets
Political risks in
some of the
emerging
markets
Weakening
currencies in the
region
Opened its first

store in
Myanmar in
FY13
Its foray into
Cambodia
High operating leverage business in which margins

are vulnerable to slowing sales momentum
P/BV (x) vs ROAE
-7%
-12%
-16%
-21%
-25%
P/E (x) (lhs)
EPS growth (rhs)
13%
10%
7%
3%
0%
P/B (x) (lhs)
Jan-17
-3%
17%
Jan-16
10
Jan-15
2%
20%
Jan-14
7%
12
Jan-13
14
Jan-17
11%
Jan-16
16
Jan-15
16%
Jan-14
20%
18
Jan-13
20
Company Profile
Parkson Retail Asia is a South-East Asia-based department store operator with stores (including a supermarket) across
Malaysia, Vietnam, Indonesia, Myanmar and soon Cambodia. The stores offer a wide range of branded products.
82
Silverlake Axis (SILV SP)
Sell (Maintained)
Technology - Software & Services

Target Price:
Price:
SGD1.03
SGD1.27
Macro
Risks
Valuations a Tad Too Rich
Growth
Value

Price Close
1.40
149
1.30
139
1.20
129
1.10
119
1.00
109
0.90
99
0.80
89
0.70
30
79
0
0
.
2
0
0
Silverlakes 1Q15 (Jun) revenue rose 15% YoY to MYR116.3m while its .
0
NPAT grew 17% YoY to MYR59.7m, in line with our estimates. Maintain 0
SELL with a SGD1.03 TP, pegged to a peer average of 21x CY14 P/E 0
(18.6% downside). We find the current price level (representing
valuations of 27x FY15 P/E) a tad too rich, especially when its NPAT
growth has slowed to around 13-15% per year from 20-40%. Its peers
are also trading at a much lower average of 21x CY14 P/E.
25
20
15
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Vol m
10
5
Source: Bloomberg

Cons. Upside (%)
Upside (%)
Free float (%)
Shareholders (%)
Peng Ooi Goh
2.29m/1.79m
-3.1
-18.6
0.84 - 1.36
24
2,245
67.6
.
1
0
.
2
Bigger peers are trading at much lower valuations. Silverlakes peers

who are much larger in size are trading at much lower valuations, on an
average of 21x CY14 P/E and a 1.4x CY14 PEG, as compared with
Silverlake, which is trading at a premium of 27.5x and 1.9x respectively.
NPAT growth momentum slowing. Previously, Silverlake grew at an
average of 29.2% NPAT CAGR from FY11 to FY14. Going forward,
management is only guiding stable growth of about 15% per year, which
is at a much slower pace. We feel that the current valuations may be too
rich for Silverlake, especially when its growth is not as rapid as before.
Execution risks and unclear orderbook. Despite its good track record
on execution, execution risks still persist, especially in the North Asia
segment, which will likely be the key to its future growth. In addition,
there are uncertainties regarding its orderbook the company has not
announced new contract wins for quite some time, despite management
saying it has a 15-month backlog of contracts to tap on.
Major upcoming deals already priced in. We expect massive deals
from bank mergers, eg OCBC-WingHang and CIMB-RHB-MBSB to only
show their impact from FY16 onwards. In addition, the positive impact
from these deals is likely to be already priced in. With future growth
slowing to about 15% a year, its rich valuations vs its peers, coupled with
potential execution risks, have led us to maintain our SELL call. We
ascribe Silverlake a TP of SGD1.03, pegged to peer average of 21x
CY14 P/E.

Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
Total turnover (MYRm)
400
399
501
537
598
Reported net profit (MYRm)
162
196
249
285
318
Recurring net profit (MYRm)
162
196
249
285
318
40.8
20.8
27.0
14.5
11.5
Recurring EPS (MYR)
0.08
0.09
0.11
0.13
0.14
DPS (MYR)
0.05
0.08
0.10
0.11
0.11
Recurring P/E (x)
43.5
36.4
30.3
26.5
23.8
P/B (x)
23.7
12.1
12.2
11.5
10.4
P/CF (x)
49.8
38.6
26.9
34.9
24.7
1.4
2.3
3.0
3.3
3.3
28.5
27.2
22.3
19.9
17.8
YTD
1m
3m
6m
12m
Absolute
53.4
3.8
19.5
50.0
57.0
Relative
49.6
1.9
19.6
48.9
53.6
Shariah compliant
Dividend Yield (%)
EV/EBITDA (x)
63.6
net cash
44.3
41.3
net cash
net cash
44.9
net cash
5.8
46.1
net cash
18.0
83

2 January 2015
Profit & Loss (MYRm)
Jun-12
Jun-13
Jun-14
Jun-15F
Total turnover
400
399
501
537
598
Cost of sales
(183)
(145)
(194)
(183)
(203)
Gross profit
217
254
307
354
395
(33)
(35)
(41)
(44)
(48)
(8)
(10)
(7)
(8)
Operating profit
178
210
Operating EBITDA
189
219
Selling expenses
Jun-16F
(9)
267
303
338
281
315
350
(2)
(1)
(2)
(2)
(2)
(9)
(7)
(12)
(11)
(11)
Operating EBIT
178
210
267
303
338
Interest income
Interest expense
(0)
(1)
(3)
(0)
(0)
Pre-tax profit
180
213
274
313
349
Taxation
(18)
(17)
(25)
(28)
(31)
Minority interests
(0)
(0)
162
196
249
285
318
Reported net profit
162
196
249
285
318
162
196
249
285
318
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
178
210
267
303
338
11
14
13
12
(38)
(21)
26
(72)
(14)
(0)
Cash flow (MYRm)

Operating profit
Operating cash flow
154
203
304
245
337
Interest received
Interest paid
(0)
Dividends received
(3)
(0)
-
(1)
-
(0)
-
(0)
-
Tax paid
(16)
(18)
(23)
(28)
(31)
142
184
280
216
305
Capex
(2)
(3)
(6)
(34)
(83)
(106)
(36)
(86)
(112)
(1)
(1)
Dividends paid
(78)
(149)
(224)
(247)
(247)
(3)
61
180
Shares repurchased
(4)
Increase in debt
(0)
22
(23)
(1)
(1)
(1)
(82)
(247)
(247)
(247)
201
73
98
311
233
24
213
(79)
(32)
98
312
233
114

Forex effects
(4)
57
201
258
84

2 January 2015
Financial Exhibits
Balance Sheet (MYRm)
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
98
362
350
318
375
39
22
50
55
122
101
103
136
152
Inventories
Accounts receivable
29
36
42
42
42
253
539
516
546
623
Total investments
64
67
74
82
91
11
10
13
13
12
Intangible assets
71
127
162
153
146
Total other assets
147
205
250
250
250
Total assets
400
744
767
795
874
10
Accounts payable
22
42
63
53
59
58
52
51
50
51
81
103
115
104
111
15
19
37
33
33
33
Short-term debt

Other liabilities
22
52
35
35
35
Total liabilities
103
156
150
140
146
Share capital
151
157
157
157
157
259
307
332
370
441
(112)
124
127
127
127
298
588
616
654
725
Minority interests
Other equity
(0)
(0)
(0)
Total equity
298
588
616
656
727
400
744
767
795
874
Other reserves
Key Ratios (MYR)
Jun-12
Jun-13
Jun-14
Jun-15F
Jun-16F
Revenue growth (%)
31.0
(0.4)
25.6
7.3
11.3
25.2
18.2
26.9
13.3
11.7
40.8
20.8
27.0
14.5
11.5
EPS growth (%)
41.0
19.7
19.9
14.5
11.5
39.9
95.8
(1.1)
6.2
10.8
44.5
52.8
53.3
56.4
56.5
40.6
49.2
49.7
53.1
53.2
45.1
34.3
33.0
36.5
38.1
63.6
44.3
41.3
44.9
46.1
(31.6)
(57.4)
(56.1)
(47.9)
(51.0)
DPS
0.05
0.08
0.10
0.11
0.11
0.07
0.09
0.12
0.10
0.14
85

2 January 2015
SWOT Analysis
A leader in a niche market
Competitive
pricing from
Indian software
Long-term earnings visibility with a 55-60% recurring

revenue
Competition in
credit card
processing
services from
US-based FIS
Solid financial health
Regional M&A
activities among
financial
institutions
spurring IT
spending
Underpenetrated
market in North
Asia
Dependent on IT spending of financial institutions

Rich valuations
P/BV (x) vs ROAE
20
47%
30
30%
15
35%
20
20%
10
23%
10
10%
12%
0%
0%
P/E (x) (lhs)
EPS growth (rhs)
P/B (x) (lhs)
Jan-16
40%
Jan-15
40
Jan-14
58%
Jan-13
25
Jan-12
50%
Jan-16
50
Jan-15
70%
Jan-14
30
Jan-13
60%
Jan-12
60
Company Profile
Asias leading software services and solutions provider that specialises in providing end-to-end core banking system to banks and other
financial institutions.
86
RHB Guide
to Investment
DMG
& Partners
ResearchRatings
Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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OSK DMG - Market Outlook For The Year

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Strategy, 2 January 2015

Go Against The Flow

We are expecting the Singapore market to post a rebound after two

Go contrarian. We believe in investing where most fear to tread, namely

Small Cap Situationals

See important disclosures at the end of this report

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Sector & Stock Picks

Construction & Engineering

Oil & Gas

See important disclosures at the end of this report

Parkson Retail Asia

Straits Times Index STI

MID CAP INDEX

What now 2015?

See important disclosures at the end of this report

Bellwethers expected to do well, which should comfortably lift the

Dividend yield (%)

Figure 3: Forward P/E band

Figure 4: Forward P/BV band

See important disclosures at the end of this report

Sector & Stock Picks

The impending US interest rate normalization will underpin a multi-year DBS

Parkson Retail Asia

Still very underappreciated sector. More jobs as a result of the

CapitaCommercial Trust Buy

Land Transport Underweight

Figure 6: Top BUYS 2015

Source: OSK-DMG estimates

See important disclosures at the end of this report

Talking Points 2015

Oil Prices rebound in 2H15

Property (some) cooling measures to go

Source: Bloomberg, OSK-DMG

Elections money is on the final quarter of 2015

See important disclosures at the end of this report

Strategy, 2 January 2015

Overweight (from Neutral)

NIM Recovery To Brighten Earnings Prospects

We upgrade our sector rating to OVERWEIGHT from Neutral. US

Singapore Research +65 6533 0781

More subdued earnings growth for 2015. After better-than-expected

See important disclosures at the end of this report

Com pany Nam e

Oversea-Chinese Banking Corp

United Overseas Bank Ltd

Source: Bloomberg, OSK-DMG

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Fed Fund Target Rate

Source: Company data, Bloomberg, OSK-DMG

Source: Company data, Bloomberg, OSK-DMG

Figure 3: Loan growth to moderate in 2015

Figure 4: Singapore private property index on the decline

Source: Company data, Bloomberg, OSK-DMG

Figure 6: Impairment charges to remain manageable

Figure 8: Capital position healthy (Sep 2015)

Figure 7: Softer non-interest income growth in 2015

Source: Company data, Bloomberg, OSK-DMG

Source: Company data, Bloomberg, OSK-DMG

Credit cost (RHS)

GIL Ratio (RHS)

Figure 5: Modest rise in gross impaired loans

Source: Company data, Bloomberg, OSK-DMG