Sources: MasNet, Bloomberg, Business Times, Straits Times and other media

Please refer to important disclosures at the back of this document. MICA (P) 039/06/2012

Morning Call 29 Apr 2013

Asia Pacific Equity Research | Singapore

MARKET PULSE

Key Idea CapitaLand Limited: Firm performances across key segments 1Q13 PATMI came in at S$188.2m – up 41% YoY mostly due to heavier income recognition of property developments in Singapore and China and S$46m net gain from the sale of a Beijing project. Excluding one-time items, 1Q13 operating profit is S$133.3m which increased 70% YoY and we judge this to be generally within expectations. Despite incremental curbs from Chinese authorities, a good 955 residential units were sold in China over the quarter; this is a strong start to the year and significantly higher than the 189 units sold in 1Q12. There was also a stark pickup in Singapore residential sales, with 544 units sold over 1Q13 versus 681 units sold in the entire FY12. In addition, retail mall segment CMA’s 1Q13 PATMI was above view due to lower-than-expected opening costs, increased contributions from new malls and better performances from CMT, ION Orchard and the China Funds. Maintain BUY on CAPL with an unchanged fair value estimate of S$4.29 (20% discount to RNAV). More reports: - Ascott Residence Trust: Excluding one-off item, 1Q13

misses expectations - Starhill Global REIT: Not in its prime yet - CDL Hospitality Trusts: 1Q13 results miss expectations - Frasers Commercial Trust: Strong uplift in 2QFY13 DPU - VARD: Name change for STX OSV from today - Raffles Medical Group: 1Q13 results within expectations News Headlines • US stocks closed lower on Friday following data showing

that the economy expanded at a slower-than-expected pace in 1Q13 and consumer sentiment fell in Apr.

• Courts Asia has announced the site of its first ‘Big-Box’ Megastore in Malaysia. Scheduled for opening in Aug 2013, the store will be located in 8trium in Bandar Sri Damansara.

• Serial System reported a 19% YoY increase in revenue to US$171.6m; PATMI rose 10% to US$1.6m.

• Ntegrator International has won two new contracts worth a combined S$3.3m from repeat customers.

Key Singapore Indices Close Chg % Chg STI 3348.9 11.2 0.3 Catalist 180.2 -0.8 -0.5 Finance 873.8 3.7 0.4 Property 829.9 2.6 0.3 Electronics 553.3 11.2 2.0 Vol(m) 2437.5 -16.5 -0.7 Val(S$m) 1452.2 -274.7 -15.9

World Indices Close Chg % Chg Dow Jones 14712.6 11.8 0.1 Nasdaq 3279.3 -10.7 -0.3 S&P500 1582.2 -2.9 -0.2 FTSE 6426.4 -16.2 -0.3 KLCI 1711.3 5.0 0.3 Hang Seng 22547.7 146.5 0.7 Nikkei 13884.1 -42.0 -0.3 SET 1582.9 8.7 0.6 KOSPI 1944.6 -7.0 -0.4 TWSE 8022.1 0.3 0.0

Market Statistics (SG) STI 52-week range 2,699 3,353 No. of gainers 332 No. of losers 192 No. of unchanged 181

Economic Statistics S$/US$ 1.2 0.0 Yen/US$ 97.9 -0.1 3-mth S$ SIBOR 0.4 0.0 3-mth US$ SIBOR 0.3 0.0 Crude futures (US$) 92.7 -0.3

Research Team (65) 6531 9800 e-mail: info@ocbc-research.com

OCBC Investment Research Market Pulse 29 Apr 2013

2

CapitaLand Limited: Firm performances across key segments ● 1Q13 results in line ● Firm resi. sales in SG and CN ● CMA 1Q figures above view 1Q13 PATMI up 41% YoY 1Q13 PATMI came in at S$188.2m – up 41% YoY mostly due to heavier income recognition of property developments in Singapore and China and S$46m net gain from the sale of a Beijing project. Excluding one-time items, 1Q13 operating profit is S$133.3m which increased 70% YoY and we judge this to be generally within expectations. 1Q13 topline is S$661.9m; this is up 3% YoY and again mostly in line. We see 1Q13 results and sales updates pointing to firm operating trends across key fundamental drivers – Singapore and Chinese residential sales and the retail mall business – and therefore believe the market would likely react positively to 1Q13 figures. Pickup in residential sales in Singapore and China Despite incremental curbs from Chinese authorities in 1Q13, a good 955 residential units were sold in China over the quarter; this is a strong start to the year and significantly higher than the 189 units sold in 1Q12. We see a good chance that CAPL would at least sustain the rate of ~3k units sold in FY12. There was also a stark pickup in Singapore residential sales, given the impact of price incentives, with 544 units sold over 1Q13 versus 681 units sold in the entire FY12. Strong execution at retail mall segment CMA’s 1Q13 PATMI increased 10% YoY to S$73.2m. Excluding one-time items, we judge this to be above view due to lower than expected opening costs, increased contributions from new malls and better performances from CMT, ION Orchard and the China Funds. Given the H7N9 bird flu outbreak, shopper traffic for its Chinese malls showed a decrease of 0.9% YoY but note that same-mall tenant sales were up +15.9% YoY. We see a nearer term impact from worsening H7N9 fears to be possible but a sustained long-term business impact, in our view, is unlikely.

Maintain BUY Maintain BUY with an unchanged fair value estimate of S$4.29 (20% discount to RNAV). (Eli Lee)

. . . . .

Ascott Residence Trust: Excluding one-off item, 1Q13 misses expectations ● Gross profit contracts 9% YoY ● SG sees lower occupancy ● Reduce FV to S$1.35 Realised exchange gain of S$8.1m Ascott Residence Trust (ART) reported a 3% YoY decrease in revenue to S$69.2m for 1Q13. Gross profit fell 9% YoY to S$33.8m. However, unitholders’ distribution increased by 14% YoY to S$27.6m. Unitholders’ distribution included S$8.1m from the replacement of foreign currency bank loans using proceeds from the S$150m placement in Feb. Without this one-off item, unitholders’ distribution would have fallen by 19% YoY and we judge the results to be lower than ours and the street’s expectations. 1Q13 DPU increased 5% YoY to 2.25 S cents, forming 25% of ours and the street's FY13F expectations. SG RevPAU dips 11% YoY Revenue fell because there was a reduction of S$3.1m in contributions from existing properties, chiefly from Singapore, Vietnam and Japan (due to a depreciation of JPY against SGD). A partial counteracting factor was a S$0.7m increase in revenue from the net effect of acquisitions less divestments. RevPAU fell 10% YoY to S$124, weighed by the performance of Singapore and the Philippines. In Singapore, 1Q13 RevPAU decreased by 11% YoY on a same store basis to S$193, driven by lower occupancy as a result of disruption from the construction of MRT tunnel for the new downtown line near Somerset Liang Court, poorer demand from project groups, and higher non-refundable GST.

OCBC Investment Research Market Pulse 29 Apr 2013

3

Maintain HOLD We are cutting our FY13F DPU estimate to 8.1 S cents from 8.7 S cents. Our fair value for ART declines from S$1.36 to S$1.35 and we maintain our HOLD rating. With the equity placement in Feb, ART lowered its gearing to 36% as of 31 Mar. We expect that the REIT will continue to be active with acquisitions this year and if substantial enough, such acquisitions could serve as positive price catalysts. (Sarah Ong)

. . . . .

Starhill Global REIT: Not in its prime yet ● 1Q13 results within view ● Singapore assets continued to fare well ● Still exhibiting good growth potential Commendable set of 1Q13 results Starhill Global REIT’s (SGREIT) 1Q13 results came in within our expectations. Revenue and NPI grew by 16.5% and 12.3% YoY to S$53.6m and S$41.9m respectively, due mainly to the 10% increase in base rent for Toshin master lease at Ngee Ann City (NAC), receipt of the resulting rental arrears, and stronger performance at Wisma Atria (WA) post redevelopment. The impact from the accumulated net arrears (S$3.8m or 0.19 S cents) was more apparent on the distributable income, which saw a 28.0% jump to S$26.6m. As such, DPU for the quarter stood at 1.37 S cents, representing 27.0% of our FY13F DPU. Excluding the arrears payout, we note that DPU would have increased 10.3% YoY to 1.18 cents, still impressive in our view. Singapore portfolio delivered strongly Noteworthy was the strong operational performance at its Singapore portfolio, which contributed 66.3% to 1Q13 NPI. For the first time, both NAC and WA achieved full occupancy for both its office and retail segments, while positive rental reversions were secured. Management noted that the centre sales at WA increased 49% in 1Q as the new tenant mix created an uplifting effect on the sales efficiency. This helped to offset the decline in NPI at its Japan (-37.8% YoY) and Chengdu properties (-12.8%), which suffered from a loss of income from asset disposal, weakening JPY and increased competition.

Maintain BUY SGREIT also updated that the next rent review with Toshin for the period from Jun 2013 to Jun 2016 is still in progress. We do not rule out the possibility that SGREIT may again benefit from further upside. We are currently maintaining our view that SGREIT is likely to perform well going forward, as it continues to ride on the strength of its Singapore portfolio, gain from its newly acquired Plaza Arcade, and a 7.2% rent increase from its Malaysia master leases. We also understand that SGREIT has obtained loan facilities to fully refinance its debts due 2013, leaving it with no refinancing needs until 2015 (30.5% gearing). Maintain BUY with a higher fair value of S$1.05 (before: S$0.98) as we lower our cost of equity to 6.7% from 7.0%. (Kevin Tan)

. . . . .

CDL Hospitality Trusts: 1Q13 results miss expectations ● 1Q13 DPU forms 23% of consensus FY13F ● Singapore weaker than what we expected ● Cut FV to S$2.05 1Q13 misses expectations CDLHT reported 1Q13 revenue of S$37.9m, down 1.3% YoY. Lower gross revenue from the Singapore hotels was partially offset by higher revenue from the overseas properties. Net property income fell 2.1% to S$35.3m. Total return for the period dipped 0.7% YoY to S$28.4m. 1Q13 DPU of 2.69 S cents fell slightly short of expectations, forming 23.0% and 22.6% of ours and consensus FY13F estimates respectively. Weak Singapore performance RevPAR for CDLHT's Singapore hotels fell 7.9% YoY to S$191 on the back of 1.2ppt drop in occupancy to 87.0% and a 6.8% drop in average room rate to S$219. Management attributed the weak performance to the absence of the biennial Singapore Airshow, Chinese New Year falling in Feb instead of Jan, which disrupted corporate travel. There was softer demand for meetings and conferences with tighter spending on corporate travel. Management also acknowledges that competition in Singapore is increasing with a growing supply of hotel rooms, e.g. a large increase of 8.6% in hotel room supply is expected this year.

OCBC Investment Research Market Pulse 29 Apr 2013

4

Maiden contribution from Angsana Velavaru Angsana Velavaru contributed S$1.2m in gross revenue for the first two months after its acquisition. The resort registering a year-on-year RevPAR growth of 28.5% or US$105 to US$474 for the two months ended 31 Mar 2013. With gearing at 28.3% as of 31 Mar 2013, CDLHT remains on the lookout for acquisition opportunities in the next 12 months. Maintain HOLD While we have been cautious on the local hospitality sector since Dec, industry data and data from corporates has been weaker than what we anticipated. We are lowering our FY13 RevPAR growth assumption for CDLHT's Singapore hotels from 3.2% to 0% and cut our RNAV-based fair value for CDLHT from S$2.11 to S$2.05. We maintain our HOLD rating on CDLHT. (Sarah Ong)

. . . . .

Frasers Commercial Trust: Strong uplift in 2QFY13 DPU Frasers Commercial Trust (FCOT) announced its 2QFY13 results this morning. NPI fell 7.0% YoY to S$23.0m due to the loss of income arising from divestments of KeyPoint and the Japan properties. However, distributable income grew 16.8% to S$13.1m due mainly to savings following the redemption of its Series A Convertible Perpetual Preferred Units (CPPUs). DPU for the quarter stood at 1.9883 S cents, representing a 14.4% YoY growth. This is largely in line with our expectations, as 1HFY13 DPU of 3.5715 S cents formed 51.4% of our full-year DPU forecast. We will be speaking to management later in the morning for more details on its outlook. For now, we place our Buy rating and S$1.52 fair value under review. (Kevin Tan)

. . . . .

VARD: Name change for STX OSV from today STX OSV will now commence trading under the new trading counter name Vard Holdings (SGX-ST: MS7) with effect from today. This follows its acquisition by Fincantieri in Dec last year and the passing of the special resolution to rename itself during its AGM last week. Separately, we quizzed the management on the 4% fall in its share price last Friday, and management replied that it is equally baffled and has not seen any negative developments which could have trigger such a sell-off. If anything, the management is now more excited about the new majority shareholder and the opportunities they would bring. We currently have a BUY rating with S$1.52 fair value estimate, and will provide further updates together with its 1Q results in the coming weeks. (Chia Jiunyang)

. . . . .

Raffles Medical Group: 1Q13 results within expectations Raffles Medical Group (RMG) reported its 1Q13 results this morning which were within our expectations. Revenue rose 11.2% YoY to S$81.1m, while PATMI increased by 16.0% YoY to S$13.5m, such that topline and bottomline formed 23.3% and 22.2% of our FY13 forecasts, respectively. This is unsurprising as 1Q is seasonally RMG’s weakest quarter and we had expected this trend to continue this year. RMG’s Hospital Services division was the main growth driver in 1Q13, with healthy revenue growth of 16.4% YoY. This was attributed to higher patient acuity and the expansion of specialist services provided. Revenue growth for its Healthcare Services division came in at a more modest 4.0% YoY. We will provide more updates after the analyst briefing. We maintain our HOLD rating on RMG but place our S$3.01 fair value estimate under review. (Wong Teck Ching Andy)

. . . . .

OCBC Investment Research Market Pulse 29 Apr 2013

5

Calendar of key events

Mon Tue Wed Thur Fri 29-Apr-13 30-Apr-13 01-May-13 02-May-13 03-May-13

Raffles Medical 1Q13 SG 1Q Unemplyment Rate

Flextronics 4Q13/SMRT FY13 OCBC/Broadway/Venture

1Q13 China Apr HSBC Mfg PMI

SG Mar Bank Loans & Advances

US Apr ISM Mfg DBS/UOB 1Q13 Genting Singapore 1Q13

US May FOMC Rate Decision US Apr Domestic Vehicle

Sales US Mar Trade Balance

SembCorp Marne 1Q13 Cosco 1Q

US Apr Chg in Nonfarm Payrolls

US Apr Unemployment RateUS Apr ISM Non Mfg

Composite

06-May-13 07-May-13 08-May-13 09-May-13 10-May-13 MTQ FY13 OSIM 1Q13

STE 1Q13 ASL Marine 3QFY13

SembCorp Industries 1Q13 Hi-P/Wilmar 1Q13

Hyflux/FRT 1Q13 CWT/StarHub 1Q13

China Apr CPI

F&N 2Q13 Marco Polo Marine 2QFY13 Amtek Engineering 3Q13

13-May-13 14-May-13 15-May-13 16-May-13 17-May-13 Viz Branz 3Q13 results

China Apr Ind Production China Apr Retail Sales

US Apr Adv Retail Sales US Mar Business Inventories

Noble/STX OSV 1Q13 UEEC/Comfort Delgro 1Q13

Olam 3Q13

SG Mar Retail Sales US Apr Industrial Production

US Apr CPI US Apr Housing Starts

US May Philadelphia Fed

SIA FY13 results SG Apr NODX

US May U of Michigan Confidence

20-May-13 21-May-13 22-May-13 23-May-13 24-May-13 US Apr Existing Home Sales SG Apr Industrial Production

SG Apr CPI US Apr New Home Sales

US Apr Durable Goods Orders

27-May-13 28-May-13 29-May-13 30-May-13 31-May-13 US 1Q GDP SG Apr Bank Loans &

Advances China May Mfg PMI (1st Jun)

US May U of Michigan Confidence

Notes: All US Tech results dates have been adjusted to Singapore dates. US Initial jobless claims are released every Friday.

MBA mortgage applications are released every Wednesday.

OCBC Investment Research Market Pulse 29 Apr 2013

6

SHAREHOLDING DECLARATION: For shareholding disclosure on individual companies, please refer to the latest reports of these companies. DISCLAIMER FOR RESEARCH REPORT This report is solely for information and general circulation only and may not be published, circulated, reproduced or distributed in whole or in part to any other person without our written consent. This report should not be construed as an offer or solicitation for the subscription, purchase or sale of the securities mentioned herein. Whilst we have taken all reasonable care to ensure that the information contained in this publication is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness, and you should not act on it without first independently verifying its contents. Any opinion or estimate contained in this report is subject to change without notice. We have not given any consideration to and we have not made any investigation of the investment objectives, financial situation or particular needs of the recipient or any class of persons, and accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the recipient or any class of persons acting on such information or opinion or estimate. You may wish to seek advice from a financial adviser regarding the suitability of the securities mentioned herein, taking into consideration your investment objectives, financial situation or particular needs, before making a commitment to invest in the securities. OCBC Investment Research Pte Ltd, OCBC Securities Pte Ltd and their respective connected and associated corporations together with their respective directors and officers may have or take positions in the securities mentioned in this report and may also perform or seek to perform broking and other investment or securities related services for the corporations whose securities are mentioned in this report as well as other parties generally. Privileged / confidential information may be contained in this document. If you are not the addressee indicated in this document (or responsible for delivery of this message to such person), you may not copy or deliver this message to anyone. Opinions, conclusions and other information in this document that do not relate to the official business of OCBC Investment Research Pte Ltd, OCBC Securities Pte Ltd and their respective connected and associated corporations shall not be understood as neither given nor endorsed. RATINGS AND RECOMMENDATIONS: - OCBC Investment Research’s (OIR) technical comments and recommendations are short-term and trading oriented. - OIR’s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon. - As a guide, OIR’s BUY rating indicates a total return in excess of 10% given the current price; a HOLD trading indicates total

returns within +/-10% range; a SELL rating indicates total returns less than -10%. - For companies with less than S$150m market capitalization, OIR’s BUY rating indicates a total return in excess of 30%; a HOLD

trading indicates total returns within a +/-30% range; a SELL rating indicates total returns less than -30%. Co.Reg.no.: 198301152E

Carmen Lee Head of Research

For OCBC Investment Research Pte Ltd

Published by OCBC Investment Research Pte Ltd