LIM & TAN SECURITIES 16 COLLYER QUAY #15-00 INCOME @ RAFFLES SINGAPORE 049318 TEL: 65330595 www.limtan.com.sg RCB REG NO. 197301030W

DAILY REVIEW | 02 NOVEMBER 2015 FINANCIAL MARKETS

MAJOR MARKET INDICES CLOSE FSSTI

1D (%)

MTD (%)

YTD (%)

2998.35

-0.11

0.00

-10.90

17663.54

-0.52

0.00

-0.90

S&P 500

2079.36

-0.48

0.00

0.99

NASDAQ

5053.749

-0.40

0.00

6.71

FTSE (UK)

6361.09

-0.54

0.00

-3.12

Nikkei

19083.1

0.78

0.00

9.35

Hang Seng

22640.04

-0.79

0.00

-4.09

Shanghai Composite

3382.561

-0.14

0.00

4.57

15.07

3.15

0.00

-21.51

Dow Jones

VIX

SG MARKET SUMMARY Daily Market Value (S$'m)

1096.4

Daily Market Volume (mln)

1094.2

52-week STI High

3549.9

52-week STI Low

2740.4

KEY INTEREST RATES CLOSE

1D (%)

MTD (%)

YTD (%)

3 Mth SGD SIBOR

1.1

0.0

0.0

134.3

3 Mth Swap Offer Rate

1.4

0.3

15.0

92.9

SG 10 YR Bond Yield

2.5

3.2

-3.0

7.9

US 10 YR Bond Yield

2.1

-1.4

5.2

-1.3

As at 8.00am SG time

CLOSE

1D (%)

MTD (%)

YTD (%)

Dow Jones

17693.0

0.1

9.4

1.2

S&P 500

2084.0

0.0

9.2

2.5

NASDAQ

4666.0

0.1

12.1

10.9

US FUTURES

CLOSE

1D (%)

MTD (%)

YTD (%)

1141.6

0.0

0.0

-3.7 -12.5

Crude Oil

46.6

1.2

3.3

Baltic Dry

721.0

-1.0

0.0

-7.8

6630.0

0.1

-10.5

-22.0

Crude Palm Oil

IDEA OF THE DAY UOB’s ($20.33, up 0.29) earnings for 3Q15 decreased marginally by 1.0% yoy, but was up 12.6% qoq at $858 million, coming in about 5.3% above expecta ons. Total income was 5.8% higher at $2.09 billion, led by strong core income and one-off gains from sale of investment securi es. Net interest income grew 6.9% to $1.24 billion in 3Q15. Net interest margin increased 6 basis points to 1.77%, contributed mainly by improved loan yields as the loan por olio re-priced on rising interbank and swap offer rates. Fee and commission income grew 2.1% to $485 million, on higher contribu ons from credit card and wealth management income. Trading and investment income surged 20.6% to $310 million due to one-off gains from the sale of investment securi es, but partly offset by lower net trading income. Consequently, non-interest income for 3Q15 increased 4.2% to $850 million. Total expenses increased 13.0% to $904 million mainly on higher headcount and increased business volumes in support of franchise growth. Expense-to-income ra o was 43.4% in 3Q15. Total allowances were flat at $160 million. Gross loans grew 3.7% from a year ago and 0.4% quarter-on-quarter to $203 billion as at 30 September 2015. In constant currency terms, the underlying loan growth was 5.5% when compared to the same period last year. The Group’s liquidity posi on remained robust. Customer deposits rose 9.0% from a year ago and 1.3% over 2Q15 to $245 billion as at 30 September 2015, led mainly by growth in Singapore dollar deposits. The Group’s loan to deposit ra o was 81.6% with deposit growth outpacing loan growth in the quarter. The Singapore dollar and all currency liquidity coverage ra os were 186% and 134% respec vely, well above the regulatory requirements of 100% and 60%. Asset quality stayed resilient with a NPL ra o of 1.3% as at 30 September 2015, albeit an increase from 1.2% before due to a few problema c oil and gas accounts. NPL coverage remained strong at 142.7% and 345.4% if collateral was considered.

COMMODITIES

Gold

US stocks fell 0.4-0.5% paring the strongest monthly gain since 2011 as weaker- than-es mated quarterly results weighed on financial and consumer staples shares. Energy and raw-material companies, two of the strongest groups since September, added to their gains in the month’s final session, with Exxon Mobil Corp and Chevron Corp rising a er pos ng be er-than-expected earnings. VIX the fear gauge rose 3.4% amid heightened vola lity.

FSSTI INDEX 3600 3500 3400

Shareholders’ equity increased 5.6% from a year ago to $30.2 billion as at 30 September 2015, largely contributed by net profits and improved valua ons on available-for-sale investments. Return on equity was 11.1%. As at 30 September 2015, the Group’s strong capital posi on remained well above the MAS minimum requirements with Common Equity Tier 1 and Total CAR at 13.6% and 16.4% respec vely. The Group’s leverage ra o stood at 7.2% as at 30 September 2015, well above the minimum requirement of 3%. Looking ahead, management maintains for a mid-single digit loan growth across their loan por olio, slightly be er than OCBC’s low single digit loan growth guidance. With the 12 month SIBOR having doubled on a year on year basis and with the US Federal Reserve expec ng to start raising interest rates in Dec’15, UOB’s net interest margin which has risen 6 basis points in 3Q’15 is expected to rise further. Part of this is expected to be offset by higher NPL and slowing loans growth though.

3300 3200 3100 3000 2900 2800

52-week price chart

2700 10/14 11/14 12/14 01/15 02/15 03/15 04/15 05/15 06/15 07/15 08/15 09/15

Source: Bloomberg

To celebrate its 80th year of founding, UOB has declared a one- me special dividend of 20 cents a share. Including its normal annual 70 cents a share, dividend yield is an a rac ve 4.4% (3.4% div yield if we exclude the one- me 20 cents dividend). This coupled with its undemanding 10x PE, 1.1x book and decent ROE of 11-12%, we maintain our BUY recommenda on (we note that The Wee family has been buying shares in UOB recently with 250,000 shares purchased in Aug’15 at $19 and 270,000 shares purchased in June’15 at $22.835, raising their stake to 18.1% of the company).

Singapore Research Team Tel: 6533 0595 Email: [email protected]

Please see research disclaimer on last page

Page

1

OTHER HIGHLIGHTS NOL ($0.995, unchanged) has reported a 3Q 2015 net loss of US$96 mln, compared to a net loss of US$23 mln in 3Q 2014, mainly due to the absence of the tradi onal third quarter peak season in Europe and North America that led to severe freight rates erosion in major trade lanes. The group posted a third quarter 2015 Core EBIT loss of US$66 mln, versus a Core EBIT of US$21 mln in the same quarter last year. NOL’s Core EBITDA in 3Q 2015 was US$21 mln, compared to US$114 mln in the same period last year. While NOL’s cost savings program yielded US$80 mln in 3Q15, bringing its total YTD cost savings to US$335 mln, this was more than offset by weak global demand and huge contrac on in freight rates. In 3Q 2015, APL, NOL’s container shipping business, reported a revenue decline of 29% to US$1.2b versus the same quarter last year. APL’s average freight rates fell 21% amidst pressure from over-capacity in the industry. Volume contracted 11%, which APL a ributed to various reasons, including a significant drop in U.S. exports and weak demand in the Intra-Asia short-sea market. APL also voided sailings in response to weak global demand and trimmed capacity in unprofitable trade lanes. APL was able to maintain a high headhaul u lisa on of above 90%. As part of its effort to ra onalise network, 6 chartered ships were returned in the 3Q and as a result, total cost of sales per forty-foot-equivalent unit (FEU) fell by 17% yoy due to opera onal cost efficiencies and lower bunker costs. We downgrade NOL to HOLD as valua on appears fair at 0.73x P/B given the current challenging industry environment. Oxley Holdings ($0.42, unchanged) revealed that its second development project in Phnom Penh, Cambodia, The Peak, has achieved sales of more than 50% of Phase 1 of the development, comprising 507 residen al units in Tower 1. Located in the heart of Phnom Penh facing the Mekong River and within close proximity to Naga World Hotel and Aeon Mall, The Peak is a freehold 55-storey mixed-use development comprising two residen al towers with a total of 1,014 units, one commercial tower with 15 levels of office units and a hotel with approximately 300 rooms, si ng above a podium with five levels of retail space. Construc on of The Peak is expected to commence in early 2016 and the development is expected to be completed in 2020. The residen al towers at The Peak are designed to offer a range of units from studio apartments to 1-, 2- and 3-bedroom apartments and penthouses to suit various lifestyle needs. The development has two levels of recrea on facili es and a sky bridge offering breathtaking views. Buyers of The Peak residen al units are guaranteed a 12% net rental return over two years, subject to condi ons. Tiong Seng Holdings ($0.235, up 0.5 cent) announced that it has been awarded a contract from the Land Transport Authority of approximately S$72.9 mln for the proposed construc on of a bus depot at Sungei Seletar. The latest contract is not expected to have any material impact on the group’s NTA and EPS for the current FY15.

Saizen REIT ($0.925, unchanged) has accepted an offer for the acquisi on of all the real estate assets in Saizen REIT’s por olio in Japan by Triangle TMK for an agreed purchase considera on of JPY44,660.0 mln (S$517.3 mln), subject to adjustments, if any. Triangle TMK is a Japanese affiliate of Lone Star Real Estate Fund IV and Lone Star Funds. The purchase considera on is at a 3.4% premium to the appraised value of the Proper es and is es mated to translate into an implied net offer price of S$1.172 per unit of Saizen REIT, or a slight premium to Saizen REIT’s adjusted NAV per Unit based on audited figures as at 30 June 2015, a er taking into account es mated transac on-related costs and expenses. The es mated implied net offer price of S$1.17 per Unit also represents a 36.9% premium above the closing price of S$0.855 per Unit on 22 October 2015, being the day immediately prior to the Manager’s announcement of the Offer on 23 October 2015, and a 40.9% premium above the 1-month volume-weighted average price per Unit as of 22 October 2015. The Manager intends to distribute the net proceeds from the proposed transac on to Saizen REIT’s unitholders as soon as prac cable following comple on of the Proposed Transac on via special distribu on(s). However, the proposed transac on is s ll condi onal upon, among others, approval from Unitholders at an EGM of Saizen REIT to be convened and is expected to be completed in the 1Q of 2016 and no later than 31 March 2016 or such other date as the par es may agree in wri ng. The ming and details concerning the special distribu on(s) proposals will be provided in the Unitholders’ circular for the purpose of seeking Unitholders’ approval for the Proposed Transac on. Overseas Educa on Ltd ($0.645, up 0.5 cent) has issued a profit warning for its 3Q FY15 results, based on a preliminary review of the unaudited management accounts of the Group. It expects to record a materially lower profit before income tax for Q3 2015, compared to the same period last year. This is mainly due to the higher deprecia on charges associated with the comple on of the newly completed school campus and the finance costs on bond borrowings from 1 July 2015. IFS Capital Ltd ($0.35, up 2.0 cents) has warned that the group is expected to report a net higher loss for Q3 2015 which is likely to also result in a net loss for 9M 2015 as compared to the corresponding periods last year. Based on the preliminary review of its dra unaudited consolidated financial results for the Q3 2015 and for the 9M 2015, the poor performance can be a ributable to (i) fair value loss on quoted equity shares from weak market sen ment; and (ii) higher specific allowances for loan and receivable losses. Further details of the Group’s financial performance will be provided when it announces its financial results for Q3 2015 and 9M 2015.

FSSTI STOCK SELECTION HIGHEST CONSENSUS FY15E DIV YIELD (%)

LOWEST TRAILING P/B (X)

1 HUTCHISON PORT-U

8.26

1 GOLDEN AGRI-RESOURCES

2 ASCENDAS REIT

6.54

2 NOBLE GROUP

0.47

3 NOBLE GROUP

6.40

3 HONGKONG LAND

0.65

4 KEPPEL CORP

5.92

4 UOL GROUP

0.68

5 CAPITALAND MALL TRUST

5.84

5 CAPITALAND LTD

0.77

LOWEST CONSENSUS FY15 P/E (X)

0.40

LOWEST TRAILING EV/EBITDA (X)

1 NOBLE GROUP

5.29

1 SIA

2 YANGZIJIANG SHIPPING

7.17

2 YANGZIJIANG SHIPPING

4.26 5.00

3 KEPPEL CORP

9.17

3 NOBLE GROUP

7.21

4 OCBC BANK

9.38

4 JARDINE C&C

7.84

5 SEMBCORP INDUSTRIES

9.38

5 COMFORTDELGRO

8.95

Source: Bloomberg Estimates (FSSTI Universe)

Please see research disclaimer on last page

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2

26 - 29 OCTOBER

SHARE TRANSACTIONS Company

Party

ACQUISITIONS Epicentre Holdings Health Management Intl ICP Ltd IX Biopharma Jason Holdings KS Energy Mapletree Commercial Trust Tee Interna onal

GM Capital Management Pte Ltd Gan See Khem Aw Cheok Huat Ko Kheng Hwa Lim Chwee Kim Pacific One Energy Schroders Plc Phua Chian Kin

DISPOSALS IHH Healthcare Jason Holdings

EPF Jason Sim

Buy

Sell

Transacted Price* ($)

Market Price ($)

New Balance

Stake (%)

1,800,000 164,300 4,595,400 300,100 42,800,000 105,100 15,100 564,300

-

0.203 0.31 0.015 0.178 0.075 0.385 1.385 0.237

-

5,300,000 295,362,095 630,860,900 261,100 42,800,000 305,211,462 148,207,431 292,660,720

5.68 51.18 24.70 0.04 19.81 59.50 7.00 58.15

-

442,900 42,800,000

2.12 0.075

-

730,288,800 51,028,000

8.88 23.62

* ND: Not Disclosed

SHARE BUYBACK

Company

AEM Holdings Nordic Group Osim Interna onal Tiong Seng Holdings

Please see research disclaimer on last page

No. of shares

Price ($)

CumulaƟve Purchases

Of Maximum (%)

5,000 38,000 3,350,000 136,000

0.27 0.187 1.378 0.235

5,000 2,886,600 25,754,700 566,000

0.1 7.2 34.5 1.2

Page

3

DIVIDENDS (LIST IS NOT EXHAUSTIVE) Company

Amount

Last Day Cum-Dividend

First Day Ex-Dividend

Date Payable

Lantrovision Mapletree Greater China Parkson Retail Asia Spindex Industries Starhill Global Reit Viva Industrial Trust

1.3¢ final 3.499¢ 2¢ final 2.8¢ final 1.31¢ 1.647¢

30 Oct 30 Oct 30 Oct 30 Oct 30 Oct 30 Oct

02 Nov 02 Nov 02 Nov 02 Nov 02 Nov 02 Nov

13 Nov 26 Nov 13 Nov 19 Nov 27 Nov 26 Nov

Ascendas Hospitality Trust Chuan Hup Holdings Eu Yan Sang Interplex Holdings ISOTeam Ltd Micro-Mechanics

2.66¢ interim 1¢ final / 2¢ special 0.5¢ final 1.5¢ final 1.15¢ final 2¢ final / 1¢ special

02 Nov 02 Nov 02 Nov 02 Nov 02 Nov 02 Nov

03 Nov 03 Nov 03 Nov 03 Nov 03 Nov 03 Nov

04 Dec 18 Nov 20 Nov 20 Nov 13 Nov 18 Nov

Wing Tai Holdings ASL Marine Santak Holdings Lum Chang Holdings Sim Lian Group Karin Technology

3¢ final 0.4¢ final 0.5¢ final 1.25¢ final 7.28¢ final HK9¢ final

02 Nov 03 Nov 04 Nov 05 Nov 05 Nov 06 Nov

03 Nov 04 Nov 05 Nov 06 Nov 06 Nov 09 Nov

23 Nov 17 Nov 18 Nov 25 Nov 26 Nov 26 Nov

SMRT Mul -Chem Ascendas India Trust Datapulse Technology Transit-Mixed Concrete TTJ Holdings

1.5¢ interim 1.11¢ interim 2.74¢ interim 0.2¢ final 2¢ interim 8¢ final

06 Nov 11 Nov 12 Nov 12 Nov 30 Nov 30 Nov

09 Nov 12 Nov 13 Nov 13 Nov 01 Dec 01 Dec

26 Nov 27 Nov 27 Nov 27 Nov 23 Dec 18 Dec

Khong Guan Flour Milling Tee Interna onal SPH Osim Interna onal Avi-Tech Electronics

3¢ final 0.15¢ special 8¢ final / 5¢ special 1¢ interim 1.4¢ special

01 Dec 01 Dec 07 Dec 24 Dec 12 Feb 16

02 Dec 02 Dec 08 Dec 28 Dec 15 Feb 16

14 Dec 18 Dec 23 Dec 06 Jan 16 29 Feb 16

SHARE CONSOLIDATION Company

ConsolidaƟon RaƟo

Longcheer Holdings Jaya Holdings

Consolida on 10 into 1 Consolida on 20 into 1

Please see research disclaimer on last page

Ex Date

Record Date

02 Nov 2015 06 Nov 2015

04 Nov 2015 11 Nov 2015

Page

4

WHAT’S AHEAD

Sun

Mon

1

NÊò›Ã›Ù 2015 Tue

Wed

2

DBS Group SIA Engineering Singapore Post

8

3

Far East Hospitality Reit Fortune Reit

9

Best World Intl Breadtalk Group China Sunsine Chemical Hotel Royal

10

Li Heng Chemical Fibre Technologies

Thu

4 CapitaLand Challenger Technologies Haw Par Corp Rickmers MariƟme Rowsley Ltd SATS Ltd Thakral CorporaƟon

11 Amara Holdings CNMC Goldmine Croesus Retail Trust OƩo Marine UOL Vard Holdings Vicom Ltd Wilmar InternaƟonal

5 ASL Marine China Merchants Holdings CWT Frencken Group Lippo Malls Indonesia Retail FSL Trust Parkway Life Reit Religare Health Trust SIA

12 Biosensors Intl Cosco CorporaƟon Ezion Holdings GenƟng Singapore Golden AgriResources Ho Bee Land HTL InternaƟonal Saizeb Reit SBS Transit Sinarmas Land Singapore Telecoms Super Group

Fri

Sat

6

7

Asian Pay TV Trust ARA Asset Management Aspial CorporaƟon Fragrance Group Frasers Centrepoint Ltd IFS Capital KSH Holdings Perennial Real Estate Singapore Reinsurance Starhub Ltd ST Engineering 13

14

ComfortDelgro Corp IReit Global Mewah InternaƟonal Olam InternaƟonal Straco CorporaƟon Tat Hong Holdings World Precision

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

Please see research disclaimer on last page

Page

5

RESEARCH DISCLAIMER This report is intended for clients of Lim & Tan Securities Pte Ltd [herein after termed as LTS] only and no part of this document may be – i.

Copied, photocopied, duplicated, stored or reproduced in any form by any means or

ii. Re-distributed or disseminated, directly or indirectly, to any other person in whole or in part, for any purpose without the prior consent of LTS. This research report is prepared for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate particular investments and consult your independent financial adviser before making any investments or entering into any transaction in relation to any securities or investment instruments mentioned in this report. The information, tools and material presented herein this report are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject LTS to any registration or licensing requirement within such jurisdiction. The information and opinions presented in this research report have been obtained or derived from sources believed by LTS to be reliable. Their accuracy, completeness or correctness is, however, not guaranteed. Opinions and views expressed in this report are subject to change without notice, and no part of this publication is to be construed as an offer, or solicitation of an offer to buy or sell securities, futures, options or other financial instruments or to provide investment advice or services. Therefore, LTS accepts no liability for loss arising from the use of the material presented in this report where permitted by law and/or regulation. LTS may have issued other reports that are inconsistent with the assumptions, views and analytical methods of the analysts who prepared them. LTS, its directors, its connected persons and employees may, from time to time, own or have positions in any of the securities mentioned or referred to in this report or any securities related thereto and may from time to time add to or dispose of or may be materially interested in any such securities. LTS’s research analysts are primarily responsible for the content of this report, in part or in whole, and certifies that the views about the companies expressed in this report accurately reflect his personal views. LTS prohibits the research analysts who prepares this report from receiving any compensation (excluding salary and bonuses) or oth er incentives and benefits receivable in respect of this report or for providing specific recommendation for, or in view of a particular company or companies mentioned in this report. LTS-SPECIFIC / REGULATORY DISCLOSURE 1. LTS does not have a proprietary position in the company / companies as recommended in this report as at the close of 30/10/15. 2. The research analysts do not have an interest in the company / companies as recommended in this report as at the close of 30/10/15.

*

Includes direct or indirect ownership of securities or Futures Contracts (excluding the amount of securities or Futures Contracts owned), directorships or trustee positions.

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6

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consumer staples shares. Energy and raw-material companies, two of the .... mixed-use development comprising two residenal towers with a total of 1,014 units, ...

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