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

DAILY REVIEW | 08 APRIL 2015 FINANCIAL MARKETS

MAJOR MARKET INDICES CLOSE FSSTI

1D (%)

MTD (%)

YTD (%)

3465.6

0.4

0.5

3.0

17875.4

0.0

0.6

0.3

S&P 500

2076.3

-0.2

0.4

0.8

NASDAQ

4910.2

-0.1

0.2

3.7

FTSE (UK)

6961.8

1.9

2.8

6.0

Nikkei

19640.5

1.3

2.3

12.5

Hang Seng

25275.6

0.8

1.5

7.1

3961.4

2.5

5.7

22.5

14.8

0.3

-3.3

-23.0

Dow Jones

Shanghai Composite VIX

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

948.7

Daily Market Volume (mln)

1982.3

52-week STI High

3476.2

52-week STI Low

3149.9

KEY INTEREST RATES CLOSE

1D (%)

MTD (%)

YTD (%)

3 Mth SGD SIBOR

1.0

0.1

0.7

123.6

3 Mth Swap Offer Rate

1.1

3.5

-0.4

48.4

SG 10 YR Bond Yield

2.1

1.2

-6.0

-6.3

US 10 YR Bond Yield

1.9

-0.5

-2.0

-13.2

US FUTURES As at 8.00am SG time

CLOSE

1D (%)

Dow Jones

MTD (%)

YTD (%)

17785.0

-0.1

0.5

0.7

S&P 500

2067.4

0.0

0.3

1.1

NASDAQ

4334.0

-0.2

0.1

2.7

COMMODITIES

Gold

CLOSE

1D (%)

MTD (%)

YTD (%) 2.1

1209.4

0.0

2.2

Crude Oil

54.0

3.5

13.4

1.3

Baltic Dry

583.0

-0.9

-3.2

-25.4

8276.0

0.0

-0.3

-2.6

Crude Palm Oil

FSSTI INDEX 3600 3500

52-week price chart

3400 3300 3200 3100 3000

US stocks fell a marginal 0.1-0.2% after two days of gains, amid declines in consumer and utility shares. Equities in the final hour erased gains after the Standard & Poor’s 500 Index climbed as much as 0.4% amid corporate deals. FedEx Corp advanced 2.7% after agreeing to buy TNT Express NV for US$4.8 billion. Axalta Coating Systems rose 9.8% after Berkshire Hathaway agreed to buy 20 million of its shares from affiliates of the Carlyle Group. The S&P 500 rose 0.7% on Monday after Federal Reserve Bank of New York President William Dudley said the pace of rate increases may be “shallow” once tightening begins. Fed Bank of Atlanta President Dennis Lockhart said late yesterday he favours putting off a rate rise for the next two meetings. Minneapolis Fed President Narayana Kocherlakota said last night that policy makers “should be extraordinarily patient about reducing the level of monetary accommodation,” and raising the fed funds rate would be a “mistake” this year.

IDEA OF THE DAY We highlight key points from an update with UG Healthcare’s (25 cents, unchanged) Executive Director, Mr Lee Jun Yih: Expansion plans on track. Progressing as planned as stated in its IPO prospectus, UG Healthcare’s maximum production capacity has increased to 1.5bln gloves in Jan-15 from 1.3bln. Going forward, it is slated to bump up its annual production capacity to 1.9bln by Jul-15, representing a 46% increase from end-2014. We understand from management that the company’s two plants in Seremban, Malaysia has available floor space to house even more production lines when utilization rates are fully used for the 1.9bln production capacity. Conversion to surgical gloves. We understand from management that they have plans to convert some of their current production capacity from examination gloves to surgical gloves. While this may result in the reduced output of total gloves as the production lines experience a period of downtime, the gross margins for surgical gloves are actually higher (around 30%) that than of examination gloves (around 22%). Nevertheless, the company’s core output is still expected to consist largely of examination gloves at least until FY16. 2H ending June’15 will see higher sales. While the company’s revenue in 2H15 is expected to be positively boosted by the appreciating US dollar, we believe that its volume output would be hit by the downtime in its production lines as mentioned above. Operationally, higher administrative expenses and increased wage costs due to its new status as a listed company may impact margins. If not for one-off IPO expenses, operating profit will be flat for full year to June’15. While the company was listed in 1H15, we understand that the bulk of the IPO expenses have not been accounted for and are actually slated to be recognised in 2H15. We estimate that such expenses would be around S$1mln and after taking into account the issues for 2H15 as noted above, we believe that UG Healthcare could register a drop in FY15 net profit. Nevertheless, we are expecting FY15 operating performance to be flat on a year on year basis, reflecting the lack of new capacity. A brighter FY June’2016. With the full 1.9bln production capacity slated to kick in from 1Q to Sept’15, we believe that earnings should recover in FYJune’16 where we estimate that operating profit could increase by 30% to S$6.4mln. Based on management’ guidance of a 20% payout ratio in FY’16, dividend yield is 2.7%.

2900 2800 04/14 05/14 06/14 07/14 08/14 09/14 10/14 11/14 12/14 01/15 02/15 03/15

Source: Bloomberg

Reasonable valuations. At trailing 10x P/E and 1.2x P/B, UG’s valuations are reasonable compared to Riverstone’s 15x P/E and 3x P/B respectively. We believe the valuation gap could close over time if UG can demonstrate consistent earnings growth and dividend payments going forward.

Singapore Research Team Tel: 6533 0595 Email: [email protected] Please see research disclaimer on last page

Page

1

OTHER HIGHLIGHTS SingTel ($4.42, unchanged) has signed an agreement to acquire a 98% stake in US-based Trustwave while the la er’s Chairman and CEO, Robert J McCullen, will hold the balance 2% equity interest. Trustwave is the largest independent managed security services provider in North America with presence in Europe and Asia Pacific. It has a broad por olio of services across 3 main areas – threat management, vulnerability management and compliance management. Delivered through the unified cloud-based TrustKeeper® pla orm, Trustwave’s services help customers from a wide range of industries protect their IT infrastructure, applica ons and networks and respond to cyber threats. The acquisi on will expand SingTel’s exis ng por olio of cloud based solu ons and further entrench its leadership posi on in the managed services market. Singtel will leverage Trustwave’s threat intelligence, technology and talent to meet the growing demand for always-on managed security services in North America and the Asia Pacific region. Singtel expects that postacquisi on, Trustwave will con nue to operate as a standalone business unit and strengthen its posi on in the US and Europe. It will leverage SingTel Group Enterprise’s assets and market presence to broaden its overall security por olio and address the fast growing emerging security market opportunity in the Asia Pacific region. The enterprise value of Trustwave is US$850 mln. The aggregate considera on for the deal is approximately US$810 mln for Singtel’s 98% equity interest, excluding net debt, and is subject to working capital adjustments at closing. The transac on is expected to be EBITDA posi ve from the second year of acquisi on, and earnings accre ve from the third year. The transac on is subject to the fulfilment of certain condi ons precedent, including relevant approvals from regulatory authori es and other third par es, and is expected to complete in 3-6 months’ me. We keep our HOLD ra ng on SingTel as valua on appears fair at 18x forward P/E, 2.8x P/B, supported with yield of 4%. Hiap Tong ($0.127, unchanged) announced that it had entered into a sale and purchase agreement with Inner Mongolia Wulanchabu An Da Heavy Li and Transport, in rela on to the divestment by the company of its en re 80% shareholding interest held in Inner Mongolia Hiap Tong An Da Heavy Li for S$0.57mln. The move is not expected to have a material impact on the EPS and NTA of the company in FY15.

Ascendas REIT ($2.63, up 7.0 cents) announced the sale of 26 Senoko Way to JTC Corpora on has been completed for S$24.8 mln. Following this sale, A-REIT owns 104 proper es in Singapore and 2 business park proper es in China. The proceeds from the sale can be used to fund commi ed investments, repay exis ng indebtedness, fund general corporate and working capital needs, and/or to make distribu ons to unitholders of A-REIT. In accordance with A-REIT’s Trust Deed, the Manager is en tled to a divestment fee of 0.5% of the considera on sum of the property. The divestment fee will be paid to the Manager in the form of units in A-REIT, which shall not be sold within one year from the date of issuance. Trading at 1.3x P/B, the trust currently offers distribu on yield of about 5.6%. Sino Construc on ($0.052, unchanged) announced the lapse of the sale and purchase agreements between the company and each of Signet and JEMS, due to the non-fulfilment of certain condi on precedents. To recap, the company had entered into a sale and purchase agreement with Lighthouse Strategic Group on 06-Jun-14, for the acquisi on of shares cons tu ng 51% of Signet Coking Coal Interna onal. Separately, the company had also entered into a condi onal sale and purchase agreement with Bizcap Investments Ltd on 22-Jul-14 for the acquisi on of shares cons tu ng 52% of JEMS Explora on Pty Ltd. The company added that it remains commi ed to the current restructuring efforts, with a con nued focus on the rollout of Magnum Modular Power Genera on Pte. Ltd.’s South Korean Micro Power Plant strategy. The company may explore further mineral opportuni es in the future, however securing short to long term stable cashflow businesses are its highest immediate concern. Ntegrator Int’l ($0.025, up 0.1 cent) said that it has been awarded a S$25.6mln contract from a local provider of fibre infrastructure. This contract is for a period of three years from 30-Mar-15 to 29-Mar-18, and involves the supply of services for the installa on, opera on and maintenance of the Next Gen NBN in Singapore. The contract is expected to contribute posi vely to the company’s financial performance over the next three fiscal years 2015 to 2018, subject to mely comple on of the project and effec ve cost management. Including the latest contract, the company has won a total of eight contracts year-to-date, including customers from Myanmar, Singapore and Vietnam. This brings the cumula ve value of the company’s order wins in 2015 to approximately S$50.8mln.

FSSTI STOCK SELECTION HIGHEST CONSENSUS FY15E DIV YIELD (%)

LOWEST TRAILING P/B (X)

1 HUTCHISON PORT-U

6.95

1 GOLDEN AGRI-RESO

0.48

2 ASCENDAS REIT

5.88

2 HONGKONG LAND

0.65

3 SPH

5.13

3 CAPITALAND LTD

0.90

4 CAPITAMALL TRUST

5.01

4 JARDINE STRATEGIC

0.93

5 KEPPEL CORP

4.93

5 WILMAR INTERNATIONAL

0.98

LOWEST CONSENSUS FY15 P/E (X)

LOWEST TRAILING EV/EBITDA (X)

1 NOBLE GROUP LTD

8.49

1 SIA

2 SEMBCORP INDUSTRIES

9.64

2 NOBLE GROUP

7.65

10.29

3 JARDINE C&C

7.94

4 OLAM INTERNATIONAL

10.44

4 SEMBCORP MARINE

8.25

5 OCBC

10.87

5 COMFORTDELGRO

8.47

3 KEPPEL CORP

5.84

Source: Bloomberg Estimates (FSSTI Universe)

Please see research disclaimer on last page

Page

2

11 MARCH - 05 APRIL

SHARE TRANSACTIONS

Company

Party

ACQUISITIONS Ascendas India Trust Ellipsiz Geo Energy Resources San Teh Ltd Sinotel Technologies

Kabouter Mgm LLC Chan Wai Leong Heah Theare Haw Kao Ching Fong nee Pan Jia Yue Ting

DISPOSALS Global Logis cs Proper es

Blackrock

Buy

Sell

Transacted Price* ($)

Market Price ($)

New Balance

Stake (%)

2,576,000 7,500,000 8,005,900 82,000 1,207,000

-

0.92 0.145 0.193 0.28 0.098

-

55,350,708 16,919,077 64,617,196 111,931,703 182,589,756

6.01 3.06 5.58 32.73 43.20

-

239,564

ND

2.60

339,031,866

7.00

* ND: Not Disclosed

SHARE BUYBACK

Company

A-SONIC Golden Palm Resources GP Industries OSIM OCBC SATS Ltd UOB USP Group

Please see research disclaimer on last page

No. of shares

Price ($)

CumulaƟve Purchases

Of Maximum (%)

199,300 157,900 17,100 1,276,100 150,000 25,000 29,490 305,400

0.063 0.186 0.68 1.865 10.60 3.10 23.20 0.073

525,600 4,625,500 9,093,300 1,276,100 18,816,500 19,271,700 686,107 17,606,800

0.7 11.2 18.3 1.7 5.5 17.2 0.4 26.2

Page

3

DIVIDENDS (LIST IS NOT EXHAUSTIVE) Company

Amount

M1 Straits Trading CSE Global Great Eastern Holdings Keppel Land Keppel Corp Keppel T&T Rotary Engineering SembCorp Industries Thai Beverage DBS Group IFS Capital SembCorp Marine ST Engineering Vicom Ltd Frencken Group Golden Agri-Resources Lee Metal Pan-United Corpora on SBS Transit Sing Investments & Finance UOL Singapore Reinsurance United Engineers UOB UOB-Kay Hian UOI Wee Hur ARA Asset Managment BBR Chip Eng Seng City Developments ComfortDelgro CWT Mewah Interna onal OCBC Smar lex China Avia on Oil Elec & Eltek Hock Lian Seng Talkmed Group Telechoice Interna onal Wilmar Interna onal Nera Telecommunica ons Overseas Educa on Challenger Tech First Resources Hong Leong Finance Hwa Hong Keppel Land Pacific Radiance Sing Holdings UMS Holdings Venture Corp Best World Bonvests Holdings Cityneon Memtech Interna onal NSL Ltd Petra Foods Hyflux Mermaid Mari me Sheng Siong Mun Siong SHS Holdings World Precision Machinery Manufacturing Integra on Tech Super Group Wheelock Proper es Ho Bee Land Megachem Poh Tiong Choon Jardine C&C Zagro Asia Kingsmen Crea ves Innovalues Haw Par Corpora on TPV Technology Koh Brothers Low Keng Huat Shangri-La Asia Dynamic Colours

11.9¢ final 4¢ interim 1.5¢ final 40¢ final / 5¢ special 14¢ final 36¢ final 3.5¢ final / 11.5¢ special 2.5¢ final 11¢ final Baht0.46 final 30¢ final 1.5¢ final 8¢ final 4¢ final / 7¢ special 8.75¢ final / 9.5¢ special 1¢ final 0.177¢ final 1¢ final / 1¢ special 2.75¢ final 1.05¢ final 6¢ final 15¢ final 0.8¢ final 5¢ final / 5¢ special 50¢ final / 5¢ special 5¢ final 12¢ final / 2¢ special 1¢ final / 1¢ special 2.7¢ final 0.8¢ final 4¢ final / 2¢ special 8¢ final / 4¢ special 4.5¢ final 4¢ final 1.7¢ final 18¢ final 0.35¢ final 2¢ final US3¢ final 4¢ final 2.43¢ final 1.6¢ final 5.5¢ final 2¢ final 2.75¢ final 1.25¢ final 2.3¢ final 6¢ final 1¢ final / 0.15¢ special 14¢ final 3¢ final 1¢ final 2¢ final / 1¢ special 50¢ final 0.5¢ final 1.6¢ final 1¢ final 0.6¢ final 3¢ special 2.58¢ final / 2.19¢ special 1.6¢ final US0.4¢ final 1.5¢ final 0.15¢ final / 0.35¢ special 0.93¢ final Rmb10¢ final 0.5¢ final 2.1¢ final 6¢ final 5¢ final 0.7¢ final 1.75¢ final US67¢ final 1¢ final 2.5¢ final 0.6¢ final / 0.8¢ special 14¢ final US0.128¢ final 0.5¢ final / 0.3¢ special 3¢ final / 2¢ special HK6¢ final 1.5¢ final

Please see research disclaimer on last page

Last Day Cum-Dividend

First Day Ex-Dividend

Date Payable

16 Apr 17 Apr 20 Apr 20 Apr 20 Apr 21 Apr 21 Apr 22 Apr 22 Apr 23 Apr 24 Apr 24 Apr 24 Apr 24 Apr 24 Apr 27 Apr 27 Apr 27 Apr 27 Apr 27 Apr 27 Apr 27 Apr 28 Apr 28 Apr 28 Apr 28 Apr 28 Apr 28 Apr 29 Apr 29 Apr 29 Apr 29 Apr 29 Apr 29 Apr 29 Apr 29 Apr 29 Apr 30 Apr 30 Apr 30 Apr 30 Apr 30 Apr 30 Apr 04 May 04 May 04 May 04 May 04 May 04 May 04 May 04 May 04 May 04 May 04 May 05 May 05 May 05 May 05 May 05 May 05 May 06 May 06 May 06 May 07 May 07 May 07 May 08 May 08 May 08 May 11 May 11 May 11 May 12 May 12 May 14 May 18 May 20 May 22 May 25 May 27 May 27 May 03 Jun

17 Apr 20 Apr 21 Apr 21 Apr 21 Apr 22 Apr 22 Apr 23 Apr 23 Apr 24 Apr 27 Apr 27 Apr 27 Apr 27 Apr 27 Apr 28 Apr 28 Apr 28 Apr 28 Apr 28 Apr 28 Apr 28 Apr 29 Apr 29 Apr 29 Apr 29 Apr 29 Apr 29 Apr 30 Apr 30 Apr 30 Apr 30 Apr 30 Apr 30 Apr 30 Apr 30 Apr 30 Apr 04 May 04 May 04 May 04 May 04 May 04 May 05 May 05 May 05 May 05 May 05 May 05 May 05 May 05 May 05 May 05 May 05 May 06 May 06 May 06 May 06 May 06 May 06 May 07 May 07 May 07 May 08 May 08 May 08 May 11 May 11 May 11 May 12 May 12 May 12 May 13 May 13 May 15 May 19 May 21 May 25 May 26 May 28 May 28 May 04 Jun

30 Apr 08 May 20 May 07 May 07 May 06 May 05 May 19 May 18 May 20 May NA 08 May 14 May 15 May 07 May 15 May 08 May 22 May 08 May 08 May 11 May 16 Jun 22 May 13 May 13 May 16 Jun 13 May 12 May 19 May 21 May 20 May 20 May 12 May 15 May 12 May 24 Jun 19 May 18 May 18 May 21 May 15 May 20 May 15 May 20 May 19 May 19 May 21 May 25 May 22 May 20 May 20 May 20 May 28 May 20 May 25 May 20 May 26 May 22 May 26 May 19 May 25 May 20 May 22 May 28 May 20 May 02 Jun 28 May 22 May 28 May 29 May 29 May 29 May 25 Jun 29 May 29 May 03 Jun 04 Jun 09 Jun 16 Jun 11 Jun 11 Jun 19 Jun

Page

4

WHAT’S AHEAD

Sun

AÖÙ®½ 2015

Mon

Tue

Wed

Thu

1

5

6

7

Fri 2

8

Sat 3

4

9

10

11

16

17

18

23

24

25

Keppel DC REIT

12

13

Keppel Infrastructure Keppel REIT M1 SPH Reit Soilbuild Biz Space REIT

19

First Reit Keppel T&T SPH

20

21

27

28

UOI

Please see research disclaimer on last page

15

Keppel Land

Mapletree Industrial Capitamall Trust

Sabana REIT

26

14

Keppel Corp Qian Hu

22

Cache Logis cs Cambridge Industrial Mapletree Commercial SGX

China Avia on Oil Mapletree Greater China

29

30

OCBC UOB

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 07/04/15. 2. The research analysts do not have an interest in the company / companies as recommended in this report as at the close of 07/04/15.

*

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

Page

6

DailyReview (080415).indd

the managed services market. Singtel will leverage Trustwave's threat intelligence, technology and talent to meet the growing demand for always-on managed security services in North. America and the Asia Pacific region. Singtel expects that post- acquision, Trustwave will connue to operate as a standalone business unit ...

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