Market Focus - DBS Bank

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Singapore Market Focus

Market Focus Refer to important disclosures at the end of this report

DBS Group Research . Equity

13 Oct 2017 STI : 3,303.09

Jacking up gains 

Recent interest pick-up in O&M sector can continue on rig market recovery and higher oil prices



Brent to average at c.US$60pbl in 2018, charts point to US$75pbl by 2H18



Prefer big cap rigbuilders



POSH or nothing for OSVs

Focus shifting to mid-expansion-phase sector outperformers. Investors’ focus is turning towards sectors that could outperform during the mid-expansion phase of the economic recovery. Tell-tale signs are recent outperformance of the yards (capital goods) and construction sector from mid-September. O&M stocks turned up a month ago. The positive trend can continue with signs of the rig market thawing, supported by higher oil prices. Revival in rig market transactions. Yards are lifted by the strong uptick in rig transactions in recent months, that is typically a positive indicator of stronger demand prospects. SembCorp Marine’s latest sale of nine jackup rigs to Borr Drilling for US$1.3bn is further evidence of a rig market recovery.

Analyst Yeo Kee Yan CMT +65 6682 3706 Janice Chua +65 6682 3692 [email protected] [email protected] Pei Hwa HO +65 6682 3714 Suvro SARKAR +65 8189 3144 [email protected] [email protected] Glenn Ng +65 6682 2657, [email protected] Key Indices FS STI Index FS Small Cap Index SGD Curncy Daily Volume (m) Daily Turnover (S$m) Daily Turnover (US$m) Market Key Data (%) 2016 2017F 2018F (x) 2016 2017F 2018F

Prefer big cap rigbuilders. SembCorp Marine is our preferred proxy. It is the most sensitive to higher oil prices. A potential merger among the Singapore yards is an added catalyst for the stock. SembCorp Industries could benefit from a rerating of its utility business if any rationalisation of the three Singapore yards transforms it into a pure utility play. POSH or nothing for OSVs. The OSV market is decidedly off the bottom. While many of its peers are debt laden, POSH will be a survivor that is poised to ride the upswing. It has no bonds outstanding. Undrawn bank lines provide more than sufficient capex cover and working capital. Its strong parentage with high ownership of c.82% by majority shareholder Kuok (Singapore) Ltd makes it a potential privatisation candidate.

ed: TH / sa:AS, PY

% Chng 0.7% 0.1% 4.3%

EPS Gth (3.8) 13.1 6.0 PER 18.2 16.1 15.2

Div Yield 3.4 3.8 3.6 EV/EBITDA 16.5 14.9 14.5

Source: Bloomberg Finance L.P.

STOCKS 12-mth Price

Brent to average at c.US$60pbl in 2018, charts point to US$75pbl high. Fundamentally, we think Brent will average closer to US$60pbl next year with OPEC supply side cap and faster inventory draw downs. Technically, we see Brent heading to US$65pbl first, followed by US$75pbl by 2H18. Key support is at US$52.5pbl.

Current 3,303.09 413.79 1.41 2,493 1,032 732

Keppel Corporation* Sembcorp Industries Sembcorp Marine PACC Offshore

Mkt Cap Target Price

Performance (%)

S$

US$m

S$

3 mth

12 mth

Rating

6.79 3.18 1.85 0.34

9,102 4,196 2,851 455

7.60 4.00 2.30 0.41

6.8 2.6 12.2 17.2

25.5 22.3 37.7 1.5

BUY BUY BUY BUY

Source: DBS Bank, Bloomberg Finance L.P., Closing price as of 12 Oct 2017 YTD Relative Performance

Source: DBS Bank, Bloomberg Finance L.P.

Market Focus The Pumping Has Begun

Sector outperformers shifting from early- to mid-expansion phase  “Late contraction to early expansion” sector outperformers have done well YTD Banks, properties (example of consumer discretionary) & technology sectors.

Typical sector outperformers in various economic phases Economic Phase

Sector Outperformers

Examples

Financials Late Consumer discretionary contraction (e.g. residential property) Technology

 Focus shifting further to “early expansion to middle expansion sector” outperformers – While banks, properties and technology sectors may still ride on the positive momentum, interest is shifting to Industrials, transportation, construction, capital goods.

Early Expansion

 Industrial sector super performer is Yangzijiang (+80% YTD).

Middle Expansion

 Mixed outcome for industrial transportation sector – China Aviation Oil (+19% YTD), SATS (-4% YTD), SIA Engineering (-5.6% YTD).  Construction sector has started to outperform – Tuan Sing (+17%), Lian Beng (+10%), YongNam, Chip Eng Seng (+18%) since mid-September.

UOB, OCBC CityDev, UOL, etc. Sunningdale, Hi-P, Venture

Industrials

Yangzijiang

Transportation

CAO, SATS, SIA Eng

Construction

Tuan Sing, Lian Beng, CES

Capital Goods

SembCorp Marine

Basic Materials

Midas

Late Expansion

Commodities & Energy

Olam

Consumer staples

Dairy Farm, Sheng Siong

Early contraction

Services

ComfortDelgro, Jumbo, Katrina

Utilities & telco

SingTel, M1, Starhub

Source: DBS Bank

FTSE ST Indices relative performance

 O&G sector (capital goods) has come alive! - O&G Index +8.2% since mid-September, led by SembCorp Marine (+16%).

Rig market is recovering Signs of rig market recovery

 Strong uptick in rig transactions in past sixhere] months is typically a positive [Type text indicator of stronger demand prospects. [Type text here] Positive on yards, selective(North on OSV  Recent new entrants Drilling and Borr Drilling), rumours of Aker Group comeback, China Merchants hunting for distressed operators. Strategy [Type text here]Marine’s latest sale of nine  SembCorp jackup rigs to Borr Drilling for US$1.3bn is further evidence of a rig market recovery.

Source: DBS Bank

Rig sales volume picking up 30 1

25 20

15

15

13

10

5 0

14

14

11 7 2 1 1 0 0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 10

4

4

7

3

Offshore drilling rig unit sales

2

2

Transocean rig sale to Borr Drilling

Hercules Rig sales

Source: DBS Bank

Page 2

Market Focus The Pumping Has Begun Oil market rebalancing has been achieved - Brent crude to average closer to US$60pbl in 2018  Supply side cap - OPEC signals production cut agreement could extend beyond March 2018. OPEC secretary general says OPEC members and other producers may have to take some "extraordinary measures" to ensure market in long term balance.  US Inventory drawdown - Pace of inventory declines in 2017 is faster y-o-y. Unlike the last two years where year end inventory was higher than the starting number, US inventory levels are already down 14mmbbls nett till September and can only decline further hereon heading into winter months.

Oil price could average closer to US$60pbl next year 140 120 100 80 60 40

DBS forecast for Brent: 2017 avg - US$50-55/bbl 2018 avg - US$55-60/bbl

20 0

Brent

WTI

Source: DBS Bank

Brent crude heading for US$75pbl on the charts  Elliot wave count so far – (i) Bear market ended in January 2016 at US$28pbl (ii) One-year rally (January 2016 to January 2017) from US$28pbl to US$57pbl is Wave A (iii) 6-month correction (January 2017 to June 2017) from US$57pbl down to US$45pbl is Wave B.  Positive move triggered in September 2017 - Rise above US$52.8pbl in early September is a positive sign that Wave C rally has started.

Wave-C rally may lift Brent to US$75pbl

Source: DBS Bank

 Wave-C objective US$75pbl in 2H18 –This is using Fibonacci extension technique. Resistance along the way at c.US$65.5pbl (38.2% upward retracement). Key support at USD52.5pbl – More sideways between USD45-53pbl in the event of its failure

Page 3

Market Focus The Pumping Has Begun Prefer big cap rigbuilders

It’s POSH or nothing for OSVs

SembCorp Marine. Among the three yards, it is the most sensitive to oil price fluctuations and should react most positively if Brent indeed heads to US$65pbl or even US$75pbl by 2H18. Its recent sale of nine jackup rigs to Borr Drillling for c.US$1.3bn is testament to the rig market recovery. The sale improves its net gearing by 0.25x and eliminates a key overhang. A potential merger among the Singapore yards can be an added catalyst for the stock.

The OSV market is decidedly off the bottom. Offshore working rig count has rebounded, mirrored by rising OSV utilisation. POSH will be a survivor that is poised to ride the upswing. It has no bonds outstanding, and has undrawn bank lines that provide more than sufficient cover for capex and working capital, positive OCF YTD in FY17, and strong parentage with high ownership of c.82% by majority shareholder Kuok (Singapore) Ltd, which makes it a potential privatisation candidate.

SembCorp Industries’ 2017 profit is affected by startup losses at its SembcorpGayatri Power Ltd power plant and the “income loss” in China of c.S$40m following the expiry of its YangCheng power plant at the end of 2016. The marine division’s new orders should recover to c.S$2bn this year from the dismal S$320m last year. SCI could benefit from a re-rating of its utility business if any rationalisation of the three Singapore yards transforms it into a pure utility play.

Meanwhile, we see positive earnings momentum in 2H17/1H18 owing to the deployment of Semisubmersible Accommodation Vessel (SSAV) POSH Arcadia on the Shell Prelude FLNG project and deployment of six more newbuild OSVs to long-term contracts in the Middle East. POSH is trading at 0.7x P/BV but it has made the largest impairments (c.32% of fleet value) vs. peers, so its equity base is more eroded. Thus, P/BV valuation looks inflated vs. peers, but is not.

Singapore yards and POSH Company

Price 11 Oct 2017

12 mth Target Price

Target Return

Mkt Cap (S$m)

Div PER PER EPS EPS Yield 17 18 Growth Growth 17 (x) (x) 17 (%) 18 (%) (%)

6.73 1.84 3.12 0.35

2.30 4.00 0.41

25% 28% 17%

12,200 3,845 5,568 635

15.5 26.6 14.7 nm

Keppel Corporation* SembCorp Marine SembCorp Industries POSH

14.0 25.6 13.1 nm

-10.2 83.4 -3.8 nm

11.1 3.8 11.9 nm

3.1 1.4 2.2 -

Net Debt P/BV 16 / Equity (x) 17 na 0.9 0.9 1.2

1.0 1.5 0.8 0.7

Source: DBS Bank *based on bloomberg estimates Technical characteristics Price 11 Oct 2017 Brent 56.94 Keppel Corporation* 6.73 SembCorp Marine 1.84 SembCorp Industries 3.12 POSH 0.35 Company

Exponential moving averages 15D 65D 200D 56.38 53.94 52.15 6.61 6.46 6.36 1.76 1.68 1.66 3.04 3.04 3.05 0.34 0.32 0.32

Major fibonacci retracement levels 26.3% 38.2% 50% 51.0 65.5 77.0 6.40 7.44 8.28 2.22 2.83 3.33 2.97 3.45 3.85 0.49 0.62 0.73

Source: DBS Bank *based on bloomberg estimates

Page 4

Market Focus The Pumping Has Begun

GDP & inflation forecast

Policy & exchange rate forecasts

Market prices

Page 5

Market Focus The Pumping Has Begun FTSE ST Financials 1,000

FTSE ST Real Estate Holdigs

ST Financials

FTSE ST REITs

ST Real Estate Holdings

950

950

900

820

900

850

800

800

850

780

750

800

760

700

750

740

650

700

600

720

650

550

700

600 Oct-16

Jan-17

500 Oct-16

12 mt h:

24.5%

Y T D:

22.3%

3.3%

1 Wk :

1.3%

1 mt h:

Apr-17

Jul-17

Oct-17

12 mt h:

900

Jan-17

Apr-17

Jul-17

30.2%

Y T D:

30.1%

3.7%

1 Wk :

2.3%

1 mt h:

FTSE ST Telecommunications

ST REITs

840

680 Oct-16

Oct-17

12 mt h: 1 mt h:

FTSE ST Consumer Goods

ST Telecommuications

Jan-17

Apr-17

Jul-17

Oct-17

6.9%

Y T D:

14.9%

0.5%

1 Wk :

0.7%

FTSE ST Consumer Services 850

ST Consumer Goods

ST Consumer Services

240

800

800 210

700

600 Oct-16 12 mt h: 1 mt h:

750

Jan-17

Apr-17

Jul-17

Oct-17

26.6%

Y T D:

6.1%

6.1%

1 Wk :

1.3%

Shanghai Composite Index 3,500

180 Oct-16 12 mt h:

Jan-17

Apr-17

Jul-17

Oct-17

22.6%

Y T D:

17.0%

3.3%

1 Wk :

1.3%

1 mt h:

700 Oct-16

29,000

Jul-17

Oct-17

- 3.1%

Y T D:

0.1%

1 mt h:

0.4%

1 Wk :

0.6%

Nikkei Index 21,000

Hang Seng

27,000

3,250

Apr-17

12 mt h:

Hang Seng Index

Shanghai Comp

Jan-17

Nikkei 225

19,000

25,000 3,000

17,000 23,000

2,750 Oct-16 12 mt h: 1 mt h:

Jan-17

Apr-17

Jul-17

Oct-17

10.5%

Y T D:

9.1%

0.3%

1 WH:

1.1%

FTSE100 (UKX Index) 7,700

21,000 Oct-16 12 mt h: 1 mt h:

Jan-17

Apr-17

Jul-17

Oct-17

20.8%

Y T D:

29.4%

1.8%

1 Wk :

0.3%

2,600

FTSE 100

Jul-17

Oct-17

23.1%

Y T D:

9.6%

1 mt h:

7.2%

1 Wk :

1.6%

NASDAQ Index 7,000

SPX 500

2,400

Nasdaq

6,000

7,100

5,500

6,900

2,200

5,000

6,700

1 mt h:

Apr-17

6,500

7,300

12 mt h:

Jan-17

12 mt h:

S&P500 (SPX Index)

7,500

6,500 Oct-16

15,000 Oct-16

4,500 Jan-17

Apr-17

Jul-17

Oct-17

6.9%

Y T D:

5.8%

1.9%

1 Wk :

0.6%

2,000 Oct-16 12 mt h: 1 mt h:

Jan-17

Apr-17

Jul-17

Oct-17

19.4%

Y T D:

13.9%

2.5%

1 Wk :

0.0%

4,000 Oct-16

Jan-17

Apr-17

Jul-17

Oct-17

12 mt h:

25.6%

Y T D:

22.4%

1 mt h:

2.5%

1 Wk :

0.1%

Source: Datastream, Bloomberg Finance L.P., DBS Bank

Page 6

Market Focus The Pumping Has Begun Brent Crude Oil US$/barrel 65

Palm Oil US$/ton 800

Brent Crude Oil

Soya Oil US$/Ib 0.38

Palm Oil

60

750

0.36

55

700

0.34

50

650

0.32

45

600

0.30

40

550

0.28

35 Oct-16

500 Oct-16

12 mt h: 1 mt h:

Jan-17

Apr-17

Jul-17

Oct-17

7.2%

Y T D:

- 0.6%

4.0%

1 Wk :

0.5%

12 mt h: 1 mt h:

Copper

Jan-17

Apr-17

Jul-17

Oct-17

Jan-17

Apr-17

Jul-17

Oct-17

0.0%

Y T D:

- 11.3%

12 mt h:

- 3.0%

Y T D:

- 3.0%

1 Wk :

- 0.8%

1 mt h:

- 5.9%

1 Wk :

0.0%

Gold

US$/MT 12,000

Copper

0.26 Oct-16

- 3.0%

Steel

US$/MT 6,200

Soya Oil

US$/Ounce 1,400

Nickel

Gold

1,350

5,800

11,000

5,400

10,000

1,250

5,000

9,000

1,200

4,600

8,000

4,200 Oct-16

7,000 Oct-16

1,300

12 mt h: 1 mt h:

Jan-17

Apr-17

Jul-17

Oct-17

41.0%

Y T D:

22.3%

1.3%

1 Wk :

4.4%

1,150 1,100

12 mt h: 1 mt h:

USD/SGD

Jan-17

Apr-17

Jul-17

Oct-17

6.6%

Y T D:

11.0%

- 4.0%

1 Wk :

5.1%

1,050 Oct-16

1.45

Jul-17

Oct-17

2.5%

Y T D:

11.3%

1 mt h:

- 4.3%

1 Wk :

1.1%

Euro/USD usd/J PY

120.00

usd/SGD

Apr-17

12 mt h:

USD/JPY

1.50

Jan-17

1.25

115.00

1.20

110.00

1.15

105.00

1.10

100.00

1.05

Euro/USD

1.40

1.35 1.30 Oct-16 12 mt h: 1 mt h:

Jan-17

Apr-17

Jul-17

Oct-17

- 1.8%

Y T D:

- 6.4%

0.9%

1 Wk :

- 0.5%

95.00 Oct-16 12 mt h: 1 mt h:

USD/RMB

Jan-17

Apr-17

Jul-17

Oct-17

1.00 Oct-16

Y T D:

- 3.8%

12 mt h:

7.3%

Y T D:

12.8%

- 0.2%

1 mt h:

- 1.5%

1 Wk :

0.9%

AUD/SGD sgd/RMB

1.10

4.95

1.08

6.80

4.90

1.06

6.70

4.85

1.04

6.60

4.80

1.02

6.50

4.75

1.00

Jan-17

12 mt h:

- 2.0%

Y T D:

- 5.1%

1.5%

1 Wk :

- 0.9%

1 mt h:

Apr-17

Jul-17

Oct-17

4.70 Oct-16 12 mt h: 1 mt h:

Oct-17

1 Wk :

6.90

6.40 Oct-16

Jul-17

4.3%

5.00

usd/RMB

Apr-17

8.7%

SGD/RMB

7.00

Jan-17

Jan-17

Apr-17

Jul-17

Oct-17

0.98 Oct-16

aud/SGD

Jan-17

Apr-17

Jul-17

Oct-17

- 0.4%

Y T D:

1.1%

12 mt h:

1.4%

Y T D:

1.2%

0.3%

1 Wk :

- 0.5%

1 mt h:

- 2.4%

1 Wk :

- 1.5%

Source: Datastream, Bloomberg Finance L.P., DBS Bank

Page 7

Market Focus The Pumping Has Begun At A Glance Currencies

Announced Dividends and Capital Issues Last Close

SG$/US$ Yen/US$ US$/Euro AUS$/US$ Pound/US$

6 6 5 5 5

% Chg 1 wk

1.36

Pt s chg 1w k (0.0)

112.38

0.3

(0.3)

(0.3)

0.85

0.0

0.8

1.28

0.0

0.1

1.32

0.0

0.4

Last Close

Pt s chg 1w k

% Chg 1 wk

Other Important Indicators

Gold

5

1289.79

14.8

1.2

Crude Oil

5

50.92

0.5

1.0

US$ Yield 10-year

5

0.0

1.6

2.36

Important Dates (Singapore) Eve nt Non-oil Domestic Exports SA MoM Non-oil Domestic Exports YoY Electronic Exports YoY Automobile COE Open Bid Cat A Automobile COE Open Bid Cat B Automobile COE Open Bid Cat E CPI Core YoY CPI YoY CPI NSA MoM Industrial Production YoY Industrial Production SA MoM Unemployment rate SA URA Private Home Prices QoQ Credit Card Billings SGD Credit Card Bad Debts SGD Money Supply M2 YoY Money Supply M1 YoY Bank Loans and Advances YoY Purchasing Managers Index Electronics Sector Index Nikkei Singapore PMI Foreign Reserves Automobile COE Open Bid Cat A Automobile COE Open Bid Cat B Automobile COE Open Bid Cat E Retail Sales SA MoM Retail Sales YoY Retail Sales Ex Auto YoY Non-oil Domestic Exports SA MoM Non-oil Domestic Exports YoY Electronic Exports YoY GDP YoY GDP SAAR QoQ Automobile COE Open Bid Cat A Automobile COE Open Bid Cat B Automobile COE Open Bid Cat E CPI Core YoY CPI YoY CPI NSA MoM Industrial Production YoY Industrial Production SA MoM Credit Card Billings SGD Credit Card Bad Debts SGD Money Supply M2 YoY Money Supply M1 YoY Bank Loans and Advances YoY

Pe riod Sep Sep Sep Oct Oct Oct Sep Sep Sep Sep Sep 3Q 3Q F Sep Sep Sep Sep Sep Oct Oct Oct Oct Nov Nov Nov Sep Sep Sep Oct Oct Oct 3Q F 3Q F Nov-22 Nov-22 Nov-22 Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct

Da te 16-Oct-17 16-Oct-17 16-Oct-17 18-Oct-17 18-Oct-17 18-Oct-17 23-Oct-17 23-Oct-17 23-Oct-17 26-Oct-17 26-Oct-17 27-Oct-17 27-Oct-17 30-Oct-17 30-Oct-17 30-Oct-17 30-Oct-17 30-Oct-17 02-Nov-17 02-Nov-17 02-Nov-17 07-Nov-17 08-Nov-17 08-Nov-17 08-Nov-17 10-Nov-17 10-Nov-17 10-Nov-17 16-Nov-17 16-Nov-17 16-Nov-17 20-Nov-17 20-Nov-17 22-Nov-17 22-Nov-17 22-Nov-17 23-Nov-17 23-Nov-17 23-Nov-17 24-Nov-17 24-Nov-17 29-Nov-17 29-Nov-17 29-Nov-17 30-Nov-17 30-Nov-17

Company KOH BROTHERS ECO ENGG LIMITED

T y pe

DUTY FREE INTERNATIONALLIMITED KARIN TECHNOLOGY HLDGS LIMITED RYOBI KISO HOLDINGS LTD. K1 V ENTURES LIMITED ELLIPSIZ LTD ELLIPSIZ LTD GL LIMITED GUOCOLAND LIMITED SIN GHEE HUAT CORPORATION LTD. CORDLIFE GROUP LIMITED PCI LIMITED PCI LIMITED SPINDEX INDUSTRIES LIMITED CHUAN HUP HOLDINGS LIMITED CHUAN HUP HOLDINGS LIMITED NOEL GIFTS INTERNATIONAL LTD NOEL GIFTS INTERNATIONAL LTD SILV ERLAKE AXIS LTD SILV ERLAKE AXIS LTD HUPSTEEL LTD HUPSTEEL LTD LTC CORPORATION LIMITED MICRO-MECHANICS (HOLDINGS) LTD MICRO-MECHANICS (HOLDINGS) LTD TAI SIN ELECTRIC LIMITED WING TAI HLDGS LTD WING TAI HLDGS LTD HEALTH MANAGEMENT INTL LTD LION ASIAPAC LTD LUM CHANG HOLDINGS LIMITED AV I-TECH ELECTRONICS LIMITED AV I-TECH ELECTRONICS LIMITED PEC LTD. PEC LTD. SUNRIGHT LTD TTJ HOLDINGS LIMITED KHONG GUAN LIMITED SINGAPORE PRESS HLDGS LTD SINGAPORE PRESS HLDGS LTD

DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND DIV IDEND

RIGHTS

Part iculars 2RS5OS1WT1RS OFFER OF 2 FOR 5 @ SGD 0.055 SGD 0.005 ONE-TIER TAX HKD 0.098 SGD 0.004 ONE-TIER TAX SGD 0.065 ONE-TIER TAX SGD 0.045 ONE-TIER TAX SGD 0.02 ONE-TIER TAX SGD 0.022 SGD 0.07 ONE-TIER TAX SGD 0.002 ONE-TIER TAX SGD 0.005 ONE-TIER TAX SGD 0.005 ONE-TIER TAX SGD 0.03 ONE-TIER TAX SGD 0.03 ONE-TIER TAX SGD 0.02 ONE-TIER TAX SGD 0.01 ONE-TIER TAX SGD 0.007 ONE-TIER TAX SGD 0.003 ONE-TIER TAX SGD 0.01 ONE-TIER TAX SGD 0.003 ONE-TIER TAX SGD 0.01 ONE-TIER TAX SGD 0.01 ONE-TIER TAX SGD 0.01 ONE-TIER TAX SGD 0.01 ONE-TIER TAX SGD 0.04 ONE-TIER TAX SGD 0.016 ONE-TIER TAX SGD 0.03 ONE-TIER TAX SGD 0.03 ONE-TIER TAX MYR 0.01 ONE-TIER TAX SGD 0.005 ONE-TIER TAX SGD 0.012 ONE-TIER TAX SGD 0.008 ONE-TIER TAX SGD 0.01 ONE-TIER TAX SGD 0.005 ONE-TIER TAX SGD 0.02 ONE-TIER TAX SGD 0.003 ONE-TIER TAX SGD 0.007 ONE-TIER TAX SGD 0.03 ONE-TIER TAX SGD 0.06 ONE-TIER TAX SGD 0.03 ONE-TIER TAX

Ex Dat e

Paid/ Pay able

16-Oct-17 17-Oct-17 24-Oct-17 24-Oct-17 25-Oct-17 26-Oct-17 26-Oct-17 26-Oct-17 26-Oct-17 26-Oct-17 31-Oct-17 31-Oct-17 31-Oct-17 31-Oct-17 02-Nov-17 02-Nov-17 02-Nov-17 02-Nov-17 02-Nov-17 02-Nov-17 03-Nov-17 03-Nov-17 03-Nov-17 03-Nov-17 03-Nov-17 03-Nov-17 03-Nov-17 03-Nov-17 06-Nov-17 06-Nov-17 07-Nov-17 13-Nov-17 13-Nov-17 13-Nov-17 13-Nov-17 21-Nov-17 04-Dec-17 05-Dec-17 06-Dec-17 06-Dec-17

02-Nov-17 16-Nov-17 08-Nov-17 08-Nov-17 21-Nov-17 21-Nov-17 20-Nov-17 21-Nov-17 15-Nov-17 17-Nov-17 13-Nov-17 13-Nov-17 16-Nov-17 17-Nov-17 17-Nov-17 14-Nov-17 14-Nov-17 17-Nov-17 17-Nov-17 15-Nov-17 15-Nov-17 22-Nov-17 17-Nov-17 17-Nov-17 14-Nov-17 23-Nov-17 23-Nov-17 17-Nov-17 21-Nov-17 23-Nov-17 29-Nov-17 29-Nov-17 29-Nov-17 29-Nov-17 08-Dec-17 20-Dec-17 15-Dec-17 22-Dec-17 22-Dec-17

Upcoming IPOs NIL

Recent IPO Trading Name Samurai 2K Aerosol Kimly Ltd Unusual Ltd Aoxin Q & M Dental Group Sanli Environment World Class Global Shopper360 Limited HRNET Group Y V entures Group NetLink NBN Trust Union Gas Holdings Aspen Group Holdings APAC Realty

Closing Price IPO Pricing 12.10.17 0.20 0.965 0.25 0.375 0.20 0.530 0.20 0.225 0.23 0.300 0.26 0.245 0.29 0.270 0.90 0.800 0.22 0.240 0.81 0.820 0.25 0.240 0.23 0.225 0.66 0.850

Sect or Chemicals Travel & Leisure Media Health Care Equipment & Services Environmental Real Estate Investment & Services Media Support Services E-Commerce Software & Computer Services Utilities Real Estate Investment & Services Real Estate Investment & Services

List ing Shares IPO M k t Dat e Of f ered Cap 16/01/2017 100 20 20/03/2017 1,158 289 10/04/2017 643 129 26/04/2017 372 74 08/06/2017 269 60 15/06/2017 916 238 30/06/2017 114 33 16/06/2017 1,011 910 11/07/2017 200 44 19/07/2017 3,897 3,157 21/07/2017 200 50 28/07/2017 867 199 28/09/2017 355 234

Source: Bloomberg Finance L.P.

Page 8

Market Focus The Pumping Has Begun

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

Share price appreciation + dividends Completed Date: 13 Oct 2017 10:33:12 (SGT) Dissemination Date: 13 Oct 2017 12:27:56 (SGT) Sources for all charts and tables are DBS Bank unless otherwise specified. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report. This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned schedule or frequency for updating research publication relating to any issuer. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein. Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report.

Page 9

Market Focus The Pumping Has Begun

DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making. ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group. COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), DBSV HK or their subsidiaries and/or other affiliates have a proprietary position in Keppel Corporation, Sembcorp Industries, Sembcorp Marine, UOB, OCBC, City Developments, UOL Group, Venture Corporation, Yangzijiang Corporation, SATS, Midas Holdings, Sheng Siong Group, ComfortDelgro, SingTel, M1, StarHub recommended in this report as of 29 Sep 2017. 2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report. 3.

DBS Bank Ltd, DBS HK, DBSVS, DBSV HK, their subsidiaries and/or other affiliates have a net long position exceeding 0.5% of the total issued share capital in ComfortDelgro recommended in this report as of 29 Sep 2017.

4.

DBS Bank Ltd, DBS HK, DBSVS, DBSVUSA, DBSV HK, their subsidiaries and/or other affiliates beneficially own a total of 1% of any class of common equity securities of ComfortDelgro as of 29 Sep 2017.

Compensation for investment banking services: 5. DBS Bank Ltd, DBS HK, DBSVS, DBSV HK, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for investment banking services from Sembcorp Industries, Midas Holdings, Olam International, SingTel, StarHub as of 29 Sep 2017. 6.

DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for Sembcorp Industries, Midas Holdings, Olam International, SingTel, StarHub in the past 12 months, as of 29 Sep 2017.

7.

DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.

1

An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.

2

Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

Page 10

Market Focus The Pumping Has Begun Directorship/trustee interests: 8.

Danny Teoh Leong Kay, a member of DBS Group Holdings Board of Directors, is a Director of Keppel Corporation as of 29 Sep 2017.

9.

Euleen Goh Yiu Kiang, a member of DBS Group Holdings Board of Directors, is a Non-Exec Director / Chairman of SATS as of 29 Sep 2017.

10. Nihal Vijaya Devadas Kaviratne CBE, a member of DBS Group Holdings Board of Directors, is a Director of Olam International as of 29 Sep 2017. 11. Nihal Vijaya Devadas Kaviratne CBE, a member of DBS Group Holdings Board of Directors, is a Director of Starhub as of 29 Sep 2017. Disclosure of previous investment recommendation produced: 12. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.

Page 11

Market Focus The Pumping Has Begun RESTRICTIONS ON DISTRIBUTION This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or General located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Australia

This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”). DBS holds Australian Financial Services Licence no. 475946. DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. DBSVS is regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong

This report has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at [email protected] Indonesia

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

Malaysia

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

Wong Ming Tek, Executive Director, ADBSR Singapore

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

Thailand

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

Page 12

Market Focus The Pumping Has Begun United Kingdom

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

Dubai International Financial Centre

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

United Arab Emirates

This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent.

United States

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

Other jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

Page 13

Market Focus The Pumping Has Begun DBS Regional Research Offices HONG KONG DBS Vickers (Hong Kong) Ltd Contact: Paul Yong 18th Floor Man Yee Building 68 Des Voeux Road Central Central, Hong Kong Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Participant of the Stock Exchange of Hong Kong

MALAYSIA AllianceDBS Research Sdn Bhd Contact: Wong Ming Tek (128540 U) 19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia. Tel.: 603 2604 3333 Fax: 603 2604 3921 e-mail: [email protected]

INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: Maynard Priajaya Arif DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: 62 21 3003 4900 Fax: 6221 3003 4943 e-mail: [email protected]

THAILAND DBS Vickers Securities (Thailand) Co Ltd Contact: Chanpen Sirithanarattanakul 989 Siam Piwat Tower Building, 9th, 14th-15th Floor Rama 1 Road, Pathumwan, Bangkok Thailand 10330 Tel. 66 2 657 7831 Fax: 66 2 658 1269 e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand

SINGAPORE DBS Bank Ltd Contact: Janice Chua 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Company Regn. No. 196800306E

Page 14

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Market Focus - DBS Bank

Singapore Market Focus Market Focus Refer to important disclosures at the end of this report DBS Group Research . Equity 13 Oct 2017 STI : 3,303.09...

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