www.dbsvickers.com

sa- AH

China plays outperformed in Feb China plays outperformed in February, thanks to

policy easing expectations

Earnings revisions for index stocks declined, but Lenovo and AIA were notable exceptions

We continue to like our overweight call on Chinese financials

China plays outperformed in February. February proved to be a fruitful month for equity markets around the world. All major indices we track recorded gains in February. However, the HSI’s gain of 1.3% was lacklustre when compared to gains seen for Chinese, US, or European indices. The HSI was dragged down by pedestrian performances of gaming, global banks, Hong Kong conglomerates and Hong Kong property developers. The HSI’s forward PE valuation was unchanged at 11.5x in the past month despite re-rating of China plays. Thanks to policy easing expectations, the HSCEI re-rated to 8.3x forward PE compared to 7.9x a month ago. The CSI 300 index’s PE also nudged up to 12.3x vs. 12.0x a month ago.

Continue to favour Chinese financials. We expect more easing will come, in part because February’s data releases remained weak. We still like our overweight call for Chinese financials in 1H15. On the other hand, we remain cautious on HK retail and gaming given policy headwinds and unfavourable currency trends.

Upcoming corporate access

Prosperity REIT Date: 6-9 Mar; Location: HK

Lee & Man Paper Date: 10-11 Mar; Location: HK

Lai Sun Development Date: 11 Mar; Location: KL

SOHO China Date: 11 Mar; Location: SG

J iangnan Group Date: 12 Mar; Location: HK

Country Garden Date: 12 Mar; Location: HK

Texhong Date: 17 Mar; Location: HK

Prosperity REIT Date: 17-18 Mar; Location: SG

Best Pacific Date: 18 Mar; Location: HK

Sino-Ocean Land Date: 19-20 Mar; Location: SG

Cosco International Date: 20 Mar; Location: HK

Lai Sun Development Date: 31 Mar; Location: SG

Source: DBS Vickers

HSI: 24,823 ANALYST Alexander LEE CFA, +852 2971 1930 alexander_lee@hk.dbsvickers.com

Performance of key indices

A s ofIndices 2/27 1 week 1 month YTD 2014A siaHSI 24,823 (0.0) 1.3 5.2 1.3 HSCEI 12,186 1.0 4.0 1.7 10.8 HSCCI 4,657 0.7 3.9 7.1 (4.5) Shanghai Comp. 3,310 2.0 3.1 2.3 52.9 Shenzhen Comp. 1,630 1.2 7.8 15.2 33.8 CSI300 3,573 1.4 4.0 1.1 51.7 NIKKEI 225 18,798 2.5 6.4 7.7 7.1 KOSPI 1,986 1.2 1.9 3.7 (4.8) Taiex 9,622 1.0 2.8 3.4 8.1 STI 3,403 (1.0) 0.3 1.1 6.2 KLCI 1,821 0.7 2.2 3.4 (5.7) SET 1,587 (1.0) 0.4 6.0 15.3 JCI 5,450 0.9 3.0 4.3 22.3 Sensex 29,220 (0.0) 0.1 6.3 29.9 OthersDow Jones 18,133 (0.0) 5.6 1.7 7.5 S&P 500 2,105 (0.3) 5.5 2.2 11.4 Nasdaq 4,964 0.2 7.1 4.8 13.4 FTSE 100 6,947 0.5 2.9 5.8 (2.7) DAX 30 11,402 3.2 6.6 16.3 2.7

% change

Source: Bloomberg Finance L.P., DBS Vickers

DBSV Top Ten Buy List

Closing Tgt

T icker price PBV PER y ield ROE Price(HK$) (X ) (X ) (%) (%) (HK$)

Anhui Conch 914.HK 26.35 1.4 8.1 2.4 18.5 35.00CCB 939.HK 6.45 0.9 5.3 6.6 17.6 7.72China Hongqiao 1378.HK 5.23 0.7 3.9 5.8 19.7 7.96CMB 3968.HK 17.70 1.0 5.5 5.5 18.7 22.30CR Land 1109.HK 20.60 1.2 13.3 2.0 9.9 23.00Galaxy Sec * 6881.HK 9.25 1.7 12.9 2.0 12.7 n.a.Haier Electronics 1169.HK 20.45 3.1 13.6 0.7 25.7 27.35Sino-Ocean Land 3377.HK 4.84 0.7 7.1 5.0 9.8 5.55Tencent 700.HK 135.90 9.4 30.0 0.3 32.5 156.00Value Partners 806.HK 6.79 3.1 13.9 3.2 23.9 8.47* consensus estimates

F Y15F

Source: Bloomberg Finance L.P., DBS Vickers

DBS Group Research . Equity 2 March 2015

China / Hong Kong Market Focus

Monthly market wrap Refer to important disclosures at the end of this report

Market Focus

Monthly market wrap

Page 2

Market recap

China plays outperformed in February. February proved to be a fruitful month for equity markets around the world. All major indices we track recorded gains in February. However, the HSI’s gain of 1.3% was lacklustre when compared to gains seen for Chinese, US, or European indices. The HSI was dragged down by pedestrian performances by gaming, global banks, Hong Kong conglomerates and Hong Kong property developers. The HSI’s forward PE valuation was unchanged at 11.5x in the past month despite re-rating of China plays. Thanks to policy easing expectations, the HSCEI re-rated to 8.3x forward PE compared to 7.9x a month ago. The CSI 300 index’s PE also nudged up to 12.3x vs. 12.0x a month ago.

Policy and commodity beneficiaries outperformed. TV manufacturers were among best performers in February after positive profit alerts, and drove household consumers to be the best performing sector. Many of the other outperforming sectors were beneficiaries of liquidity easing. The RRR cut and low CPI figure we saw in February fanned expectations for an interest rate cut. As a result, brokers, insurance companies, property developers and other high gearing sectors and companies were among the top performing sectors. Another theme was recovering commodity prices, which helped commodity plays rebound in February.

Worst performers were commodity users, consumer, and gaming. On the other hand, commodity users such as airlines and power producers underperformed in February. Consumer and gaming continued to be lacklustre, and Chinese New Year revenues lacked excitement.

HSI and HSCEI performance

A s ofIndices 2/27 1 week 1 month YTD 2014A siaHSI 24,823 (0.0) 1.3 5.2 1.3 HSCEI 12,186 1.0 4.0 1.7 10.8 HSCCI 4,657 0.7 3.9 7.1 (4.5) Shanghai Comp. 3,310 2.0 3.1 2.3 52.9 Shenzhen Comp. 1,630 1.2 7.8 15.2 33.8 CSI300 3,573 1.4 4.0 1.1 51.7 NIKKEI 225 18,798 2.5 6.4 7.7 7.1 KOSPI 1,986 1.2 1.9 3.7 (4.8) Taiex 9,622 1.0 2.8 3.4 8.1 STI 3,403 (1.0) 0.3 1.1 6.2 KLCI 1,821 0.7 2.2 3.4 (5.7) SET 1,587 (1.0) 0.4 6.0 15.3 JCI 5,450 0.9 3.0 4.3 22.3 Sensex 29,220 (0.0) 0.1 6.3 29.9 OthersDow Jones 18,133 (0.0) 5.6 1.7 7.5 S&P 500 2,105 (0.3) 5.5 2.2 11.4 Nasdaq 4,964 0.2 7.1 4.8 13.4 FTSE 100 6,947 0.5 2.9 5.8 (2.7) DAX 30 11,402 3.2 6.6 16.3 2.7

% change

Source: Thomson Reuters, DBS Vickers

Market Focus

Monthly market wrap

Page 3

1 month sector share price performance

-15%

-10%

-5%

0%

5%

10%

15%

Pow

er -

Chi

naC

onsu

mer

(lux

urie

s)Tr

ansp

ort (

airli

nes)

Con

sum

er (a

ppar

el)

Gam

ing

Wat

er, e

nviro

nmen

tal

Con

glom

erat

es -

HK

Tran

spor

t (to

ll roa

ds)

Con

sum

er (r

etai

lers

)C

onsu

mer

(spo

rtsw

ear)

Coa

lPh

arm

aceu

tical

sG

asPr

oper

ties -

HK

Tran

spor

t (sh

ippi

ng)

Food

and

bev

erag

esPo

wer

, inf

ra &

util

ities

Soft

war

e &

IT se

rvic

esA

ltern

ativ

e en

ergy

REIT

Bank

s -H

KTr

ansp

ort (

port

s)In

dust

rial

Con

sum

er (p

erso

nal)

HSI

Bank

s -C

hina

Bank

s -G

loba

lH

SCEI

Stee

l & a

lum

iniu

mRa

il & c

onst

ruct

ion

Prop

ertie

s -C

hina

Aut

os a

nd p

arts

Insu

ranc

eO

ilTe

leco

m -

Chi

naH

ardw

are

& e

quip

Tele

com

-H

KBr

oker

s-C

hina

Cem

ent

Con

sum

er (h

ouse

hold

)

Source: Thomson Reuters, DBS Vickers

YTD sector share price performance

‐10%

‐5%

0%

5%

10%

15%

20%

Consumer (luxuries)

Coal

Consumer (retailers)

Gam

ing

Gas

Brokers‐China

Water, environmental

Consumer (sportsw

ear)

Industrial

Power ‐China

Consumer (apparel)

Banks ‐China

Steel &

 aluminium

Banks ‐Global

Pharmaceuticals

Rail &

 construction

Food and beverages

Transport (shipping)

Alternative energy

HSCEI

Properties ‐H

KConsumer (personal)

Transport (ports)

Hardware & equip

Transport (toll roads)

Transport (airlines)

Banks ‐HK

Oil

HSI

Power, infra & utilities

Conglomerates ‐HK

Properties ‐China

Cement

Telecom ‐HK

Software & IT services

REIT

Insurance

Autos and parts

Telecom ‐China

Consumer (household)

Source: Thomson Reuters, DBS Vickers

Market Focus

Monthly market wrap

Page 4

US 10yr treasury yield

HK$

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

08 09 10 11 12 13 14 15

(%)

7.740

7.745

7.750

7.755

7.760

7.765

7.770

7.775

7.780

Jan/13 Jul/13 Jan/14 Jul/14 Jan/15

Sources: Bloomberg Finance L.P, DBS Vickers

Market Focus

Monthly market wrap

Page 5

Hang Seng Index and key news flow

21,000

21,500

22,000

22,500

23,000

23,500

24,000

24,500

25,000

25,500

26,000

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15

10

1

2

3

4

5-6

7-8

9

11

12

13

14

1517

16 18

19

20

21

22

23

24

26

2728

29

30

31

32-3425

35 36-39

40

41

42 43

44

45

46-47

48-49

51

54

53

50,52

55-57

# Date1 17-01-142 23-01-143 11-02-144 25-02-145 05-03-146 07-03-147 17-03-148 19-03-149 04-04-14

10 16-04-1411 30-04-1412 19-05-1413 22-05-1414 29-05-1415 03-06-1416 09-06-1417 20-06-1418 01-07-1419 07-07-1420 10-07-1421 16-07-1422 21-07-1423 24-07-1424 06-08-1425 08-08-1426 13-08-1427 18-08-1428 21-08-1429 02-09-1430 04-09-14

China extends relending facility for building affordable housing

China's 2Q GDP growth was slightly above estimates at 7.5%

Occupy Central downsizing; Big 4 banks Aug loan rebound; Ukraine ceasefire

HSBC Flash PMI surprised by rising to 50.8

HSBC flash PMI disappointed at 50.3 vs. 51.7 in prior month and forecast of 51.5

China export growth rebounded to 7%, above forecasts

July TSF and new loan were way below estimates

PBOC cuts RRR by 50bps for selective banks; PBOC relending facility for SMEs

July China export was much better than forecast; US bombs Iraq targets

Irregularities found in accounts of Portugal's biggest listed bank

Russia imposed sanctions on Western food imports

China urges local governments to quicken spending

China 1Q GDP of 7.4% slightly beat estimates of 7.3%

Suzhou and Wuhan loosen HPR policies

HKEX announced mutual market access proposed scheme

China exports grew 10.6% vs. forecasts of 0.1%

Chaori Solar warns it may miss bond paymentLarge disappointment in China exports, which declined 18.1% y-o-y

China FDI in July disappointed

China issued Document 140 to regulate interbank / shadow banking businessHSBC Flash PMI surprised by rising to 49.7 from 48.1

Crimean parliament asked to separate from Ukraine to join Russian Federation

Market flash manufacturing PMI dipped below 50 to 49.6

HKMA began to defend HK$ peg with injections to meet demand

CNY depreciated sharply from 6.095 to 6.12

News or datapointMarket talk of potential default on Zhenfu trust products pick up

HSBC Flash PMI surprised by rising to 52

CNY reached a 2014 low at 6.267

Yuebao size grew to Rmb500bn, raising concerns for bank deposit growth

ECB announced fresh measures including rate cuts and buying ABS

Source: Thomson Reuters, DBS Vickers

Market Focus

Monthly market wrap

Page 6

Hang Seng Index and key news flow (con’t)

# Date

31 12-09-1432 22-09-1433 23-09-1434 26-09-1435 30-09-1436 10-10-1437 14-10-1438 20-10-1439 21-10-1440 23-10-1441 30-10-1442 31-10-1443 10-11-1444 21-11-1445 04-12-1446 11-12-1447 12-12-1448 16-12-1449 17-12-1450 05-01-1551 06-01-1552 09-01-1553 15-01-1554 16-01-1555 22-01-1556 30-01-1557 04-02-15

US 3Q GDP beat forecasts and grew 3.5%

China Securities Journal reported China may ease LDR ratio requirement

Police oversee clearing of main Occupy protest site in AdmiraltyNov Rmb loans topped expectations at Rmb853bn vs. forecasts of Rmb655bnRussian Ruble crashes on Black Tuesday

PBOC announced benchmark interest rate cutsCBRC sought feedback on draft rules for WMPs; allows indirect equity investments

Bank of Japan expands liquidity pumping

China loosens mortgage policies by expanding pool of eligible buyers

Disappointing TSF and industrial production dataNews or datapoint

Police fires tear gas at demonstrators on the 28th, a Sunday night

HSBC CH manufacturing flash PMI improved to 50.4 and beat forecasts

PBOC said planning to inject Rmb200bn into joint stock banks1st batch of Chinese brokers receive approval for Southbound stock connect

HSBC flash PMI surprised positively after gaining from 50.2 to 50.5HK university students begin week-long boycott of classes for Suffrage

HKEX announced SH-HK stock connect will begin on 17 November

Large Chinese brokers penalized for breaching margin financing rules

50bps RRR cut and an additional 50bps cut for qualified lenders

Premier Li Keqiang said Shenzhen-HK stock connect should be next

CK and Hutchison announced restructuringHKEX said it would allow short selling for northbound SH-HK trades in near future

Swiss Franc abandons Euro cap

Draghi announced EUR 1trn QE for the Eurozone from Mar'15 to Sept'16Minsheng Bank's president resigns after corruption investigation reports

China 3Q GDP slowed to 7.3% but beat forecasts of 7.2%; Gov-student talks in HK

Agile confirms chairman is under house custody

Source: Bloomberg Finance L.P., DBS Vickers

Market Focus

Monthly market wrap

Page 7

HSI 1 year forward PE bands

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

08 09 10 11 12 13 14 15 16

HSI 5 yr mean of 1 yr forward P/E +1 std -1 std +2 std -2 std

12.1x

11.3x

10.5x

9.7x

8.8x

Source: DBS Vickers

HSCEI 1 year forward PE bands

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

08 09 10 11 12 13 14 15 16

HSCEI 5 yr mean of 1 yr forward P/E +1 std -1 std +2 std -2 std

11.9x10.3x

8.7x

7.0x

5.4x

Source: DBS Vickers

CSI 300 1 year forward PE bands

-

1,000

2,000

3,000

4,000

5,000

6,000

05 06 07 08 09 10 11 12 13 14 15 16

CSI300 5 yr mean of 1 yr forward P/E +1 std -1 std +2 std -2 std

17.7x

15.0x

12.2x

9.5x

6.8x

Source: DBS Vickers

Market Focus

Monthly market wrap

Page 8

Moving average and RSI for HSI

Moving average and RSI for HSCEI

20,000

21,000

22,000

23,000

24,000

25,000

26,000

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

HSI 50d avg 100d avg 250d avg

20

50

80

14d RSI

9,000

9,500

10,000

10,500

11,000

11,500

12,000

12,500

13,000

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

HSCEI 50d avg 100d avg 250d avg

20

50

80

14d RSI

Moving average and RSI for CSI 300

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400

3,600

3,800

4,000

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

CSI 50d avg 100d avg 250d avg

20

50

80

14d RSI

Sources: Bloomberg Finance L.P, DBS Vickers

Market Focus

Monthly market wrap

Page 9

Macro and currency

Data released during February suggests policy easing. There were relatively few macro data releases in February due to Chinese New Year. However, some had high significance. The CPI’s decline to 0.8% likely triggered the rate cut over the weekend, as real lending rates exceeded PBOC’s comfort level. Meanwhile, the slow M2 growth suggests there is need for further RRR cuts to offset capital outflows.

CNY depreciated 0.3% in February. CNY depreciated 0.3% against the USD in February, but still appreciated 0.7% against the Euro and 1.2% against the Yen. We expect CNY will continue to depreciate against the USD in 1H15.

Summary of macro data released during February

J an-15 A ctual Surv ey + /- f rom Prior

A v g forecast period

Official PMI (Dec) 49.8 50.2 (0.4) 50.1

Trade surplus (US$ bn) 60.0 48.9 11.1 49.6

Exports (yoy %) (3.3) 5.9 (9.2) 9.7

Imports (yoy %) (19.9) (3.2) (16.7) (2.4)

M2 growth (yoy %) 10.8 12.1 (1.3) 12.2

New loans (Rmb bn) 1,470 1,350 120.0 697

Total financing (Rmb bn) 2,050 2,100 (50.0) 1,690

CPI (%) 0.8 1.0 (0.2) 1.5

PPI (%) (4.3) (3.8) (0.5) (3.3)

Source: CEIC, DBS Vickers

CNY

CNH

6.00

6.05

6.10

6.15

6.20

6.25

6.30

Jan/13 Jul/13 Jan/14 Jul/14 Jan/15

6.00

6.05

6.10

6.15

6.20

6.25

6.30

Jan/13 Jul/13 Jan/14 Jul/14 Jan/15

CNY / EUR

JPY / CNY

6.0

7.0

8.0

9.0

10.0

11.0

12.0

07 08 09 10 11 12 13 14 15

(CNY/EUR)

10.0

12.0

14.0

16.0

18.0

20.0

22.0

07 08 09 10 11 12 13 14 15

(JPY/CNY)

Sources: Bloomberg Finance L.P, DBS Vickers

Market Focus

Monthly market wrap

Page 10

Earnings revisions

Index stocks continued to see cuts to earnings forecasts. Earnings revisions continued to head south in February. HSI constituents saw negative earnings revisions of 2.1-2.2% for 2015-2016 forecasts, while HSCEI constituents saw 1.8-1.9% cuts to their forecasts. The new market forecasts imply flat earnings for 2015 and 11-12% growth for 2016 earnings.

Upbeat earnings of Lenovo and AIA triggered upbeat revisions. Non-bank Chinese financials are still seeing some of the best earnings revisions in 1Q15 among index stocks. The momentum of earnings revisions was stronger for insurance companies than brokerages in February. Meanwhile, Lenovo

and AIA are two notable large caps with jumps in earnings forecasts, after upbeat earnings announcements.

On the other hand, disappointing earnings and newsflow dragged forecasts for HSBC. Oil and gaming continue to have the worst earnings revisions in 1Q15, although the cuts have decelerated in February when compared to January.

Revision trends for HSI consensus earnings

Revision trends for HSCEI consensus earnings

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700

Jan/12 Jul/12 Jan/13 Jul/13 Jan/14 Jul/14 Jan/15

2014 2015 2016

1,200

1,300

1,400

1,500

1,600

1,700

1,800

Jan/12 Jul/12 Jan/13 Jul/13 Jan/14 Jul/14 Jan/15

2014 2015 2016

Sources: Bloomberg Finance L.P., DBS Vickers

Market Focus

Monthly market wrap

Page 11

Best EPS revisions among index stocks in 1Q15

Consensus earnings revisions for China Life (2628.HK) Consensus earnings revisions for PICC P&C (2328.HK)

1.50

1.60

1.70

1.80

1.90

2.00

2.10

2.20

2.30

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Consensus earnings revisions for CPIC (2601.HK) Consensus earnings revisions for NCI (1336.HK)

1.70

1.80

1.90

2.00

2.10

2.20

2.30

2.40

2.50

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

1.80

1.90

2.00

2.10

2.20

2.30

2.40

2.50

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Consensus earnings revisions for Citic Securities (6030.HK) Consensus earnings revisions for Haitong Sec. (6837.HK)

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Sources: Bloomberg Finance L.P., DBS Vickers

Market Focus

Monthly market wrap

Page 12

Consensus earnings revisions for Cathay Pacific (293.HK) Consensus earnings revisions for Air China (753.HK)

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

0.30

0.40

0.50

0.60

0.70

0.80

0.90

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Consensus revisions for Zijin Mining (2899.HK) Consensus earnings revisions for Greatwall (2333.HK)

0.10

0.11

0.12

0.13

0.14

0.15

0.16

0.17

0.18

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

4.00

4.20

4.40

4.60

4.80

5.00

5.20

5.40

5.60

5.80

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Consensus revisions for AIA (1299.HK) Consensus earnings revisions for Lenovo (992.HK)

2.00

2.10

2.20

2.30

2.40

2.50

2.60

2.70

2.80

2.90

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Sources: Bloomberg Finance L.P., DBS Vickers

Market Focus

Monthly market wrap

Page 13

Worst EPS revisions among index stocks in 1Q15

Consensus earnings revisions for CNOOC (883.HK) Consensus earnings revisions for PetroChina (857.HK)

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Consensus earnings revisions for Sinopec (386.HK) Consensus earnings revisions for Kunlun Energy (135.HK)

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Consensus earnings revisions for Galaxy (27.HK) Consensus earnings revisions for Sands (1928.HK)

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY14 FY15(HK$)

Sources: Bloomberg Finance L.P., DBS Vickers

Market Focus

Monthly market wrap

Page 14

Consensus earnings revisions for HSBC (5.HK) Consensus revisions for China Oilfield Services (2883.HK)

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

1.30

1.50

1.70

1.90

2.10

2.30

2.50

2.70

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Consensus revisions for Jiangxi Copper (358.HK) Consensus earnings revisions for Yanzhou Coal (1171.HK)

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

-

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Consensus earnings revisions for Dongfeng (489.HK) Consensus earnings revisions for ABC (1288.HK)

1.50

1.60

1.70

1.80

1.90

2.00

2.10

2.20

2.30

2.40

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

0.90

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15

FY15 FY16(HK$)

Sources: Bloomberg Finance L.P., DBS Vickers

Market Focus

Monthly market wrap

Page 15

H-share to A-share price gaps

H-share A -share H-share H-share A -share H-shareName T icker Exchange v s. A - share Name T icker Exchange v s. A - shareZHEJ IANG SHIBA-H 1057 Shenzhen -77% CHINA INTL MAR-H 2039 Shenzhen -40%LUOYANG GLASS-H 1108 Shanghai -74% CHINA RAIL GR-H 390 Shanghai -40%SHANDONG MOLON-H 568 Shenzhen -73% CHINA SOUTHERN-H 1055 Shanghai -40%NORTHEAST ELEC-H 42 Shenzhen -70% XINJ IANG GOLD-H 2208 Shenzhen -38%CMOC-H 3993 Shanghai -67% PETROCHINA CO-H 857 Shanghai -36%SHENJ I GROUP-H 300 Shanghai -66% LIVZON PHARM-H 1513 Shenzhen -36%FIRST TRACTOR-H 38 Shanghai -66% ZOOMLION HEAVY-H 1157 Shenzhen -35%SINOPEC YIZHEN-H 1033 Shanghai -65% DONGFANG ELECT-H 1072 Shanghai -34%SHANDONG XINHU-H 719 Shenzhen -64% CSR CORP LTD-H 1766 Shanghai -33%J INGCHENG MAC 187 Shanghai -64% ZTE CORP-H 763 Shenzhen -31%TIANJ IN CAP-H 1065 Shanghai -63% HAITONG SECURI-H 6837 Shanghai -30%SHANGHAI ELECT-H 2727 Shanghai -63% ANHUI EXPRESS-H 995 Shanghai -30%NANJ ING PANDA-H 553 Shanghai -61% CHINA CITIC BK-H 998 Shanghai -29%CHONGQING IRON-H 1053 Shanghai -61% GUANGZHOU AUTO-H 2238 Shanghai -28%YANZHOU COAL-H 1171 Shanghai -61% GUANGSHEN RAIL-H 525 Shanghai -27%DALIAN PORT PD-H 2880 Shanghai -58% AIR CHINA LTD-H 753 Shanghai -27%J INGWEI TEXTIL-H 350 Shenzhen -58% CHINA LIFE INS-H 2628 Shanghai -27%METALLURGICAL-H 1618 Shanghai -56% SHANGHAI PHARM-H 2607 Shanghai -26%CHINA SHIPPING-H 2866 Shanghai -55% CITIC SECURITI-H 6030 Shanghai -24%SINOPEC SHANG-H 338 Shanghai -54% CEB BANK-H 6818 Shanghai -19%GUANGZHOU SHIP-H 317 Shanghai -54% GREAT WALL MOT-H 2333 Shanghai -18%SHANDONG CHEN-H 1812 Shenzhen -53% CHINA PETROLEU-H 386 Shanghai -16%BEIJ ING NORTH-H 588 Shanghai -53% CHINA MINSHENG-H 1988 Shanghai -16%ZHENGZHOU COAL-H 564 Shanghai -50% ANGANG STEEL-H 347 Shenzhen -14%CHINA OILF IELD-H 2883 Shanghai -50% BANK OF CHINA-H 3988 Shanghai -11%MAANSHAN IRON-H 323 Shanghai -50% CHINA SHENHUA-H 1088 Shanghai -10%SICHUAN EXP-H 107 Shanghai -50% BANK OF COMMUN-H 3328 Shanghai -10%CHINA COSCO HO-H 1919 Shanghai -49% HUADIAN POWER-H 1071 Shanghai -7%ZIJ IN MINING-H 2899 Shanghai -47% CHINA CONST BA-H 939 Shanghai -7%DATANG INTL PO-H 991 Shanghai -46% FOSUN PHARMA-H 2196 Shanghai -7%CHINA COAL ENE-H 1898 Shanghai -45% AGRICULTURAL-H 1288 Shanghai -6%BYD CO LTD-H 1211 Shenzhen -45% WEICHAI POWER-H 2338 Shenzhen -4%CHINA SHIPPING-H 1138 Shanghai -45% CHINA PACIFIC-H 2601 Shanghai -3%CHINA EAST AIR-H 670 Shanghai -45% TSINGTAO BREW-H 168 Shanghai -1%ALUMINUM CORP-H 2600 Shanghai -44% CHINA MERCH BK-H 3968 Shanghai 0%SHENZHEN EXPRE-H 548 Shanghai -44% IND & COMM BK-H 1398 Shanghai 1%CHINA COM CONS-H 1800 Shanghai -43% PING AN INSURA-H 2318 Shanghai 1%DONGJ IANG ENVI-H 895 Shenzhen -43% HUANENG POWER-H 902 Shanghai 4%CHINA RAIL CN-H 1186 Shanghai -43% ANHUI CONCH-H 914 Shanghai 6%BBMG CORP-H 2009 Shanghai -42% J IANGSU EXPRES-H 177 Shanghai 8%HISENSE KELON -H 921 Shenzhen -41% Vanke-H 2202 Shenzhen 16%J IANGXI COPPER-H 358 Shanghai -40%

Source: Bloomberg Finance L.P., DBS Vickers

Market Focus

Monthly market wrap

Page 16

DBSV HK top ten BUYs

EPS

Closing DBSV Tgt CA GRT icker price rat ing Price F Y14F F Y15F 13-15 F Y14F F Y15F F Y14F F Y15F F Y14F F Y15F

Top pick s (HK$) (HK$) (X ) (X ) (%) (%) (%) (X) (X ) (%) (%)

Anhui Conch 914.HK 26.35 BUY 35.00 9.4 8.1 20.4 19.2 18.5 1.6 1.4 2.1 2.4

CCB 939.HK 6.45 BUY 7.72 5.5 5.3 5.3 20.0 17.6 1.0 0.9 6.4 6.6

China Hongqiao 1378.HK 5.23 BUY 7.96 4.6 3.9 6.5 19.0 19.7 0.8 0.7 4.9 5.8

CMB 3968.HK 17.70 BUY 22.30 5.8 5.5 5.1 20.6 18.7 1.1 1.0 5.1 5.5

CR Land 1109.HK 20.60 BUY 23.00 12.6 13.3 -21.7 10.8 9.9 1.3 1.2 2.1 2.0

Galaxy Sec * 6881.HK 9.25 NR n.a. 16.0 12.9 36.8 12.3 12.7 2.0 1.7 1.8 2.0

Haier Electronics 1169.HK 20.45 BUY 27.35 16.2 13.6 19.4 27.6 25.7 4.0 3.1 0.6 0.7

Sino-Ocean Land 3377.HK 4.84 BUY 5.55 8.8 7.1 -3.4 8.4 9.8 0.7 0.7 4.0 5.0

Tencent 700.HK 135.90 BUY 156.00 40.9 30.0 39.9 34.9 32.5 12.7 9.4 0.2 0.3

Value Partners 806.HK 6.79 BUY 8.47 15.5 13.9 49.4 25.4 23.9 3.6 3.1 2.7 3.2

Simple av erage 13.5 11.4 15.8 19.8 18.9 2.9 2.3 3.0 3.3

* consensus estimates

PER ROE Div y ieldPBV

Anhui Shareholding structure change paves way for further reform; Anhui Conch may become privately owned

Conch Benefits to include flexibility on div idend payout ratio and refinancing, better aligned incentives

(914.HK) H-share premium overhang is less concerning, as premium is down to close to zero

CCB CCB is our preferred large cap Chinese bank and offers one of the best div idend y ields in the sector

(939.HK) Bank is well capitalized and has small dilution risk

H-share premium overhang is gone with A-share rally

China We expect China's aluminium price to recover as loss making producers exit

Hongqiao Hongqiao has lower cost structure; can gain market share

(1378.HK) Valuations are low, with PE at <5x due to poor confidence on earnings. Recovering aluminium price should reverse trend.

CMB Best deposit franchise among joint stock banks

(3968.HK) More nimble to compete effectively after China’s financial reforms and deregulations

Valuation premium over sector has narrowed

CR Land Contracted sales likely to pick up strongly

(1109.HK) One of the few developers who have potential to succeed in China’s retail market place

Asset injection is potential catalyst if price is attractive

Galaxy Mutual market access should spark A-share market recovery and IPO rev ival

Securities Well positioned to capture southbound trades; has A-share research for northbound institutional trades

(6881.HK) Should benefit in longer run from China’s aim to develop capital markets

Haier Recovering property sales to aid future demand for Haier products

Electronics Rising logistics revenue thanks to cooperation with Alibaba

(1169.HK) Valuation gap against A-share parent has narrowed

Sino-Ocean We foresee a turnaround for Sino-Ocean in 2015 due to improvements in landbank structure

Land Latest land acquisitions are NAV-accretive and likely to lift gross margins

(3377.HK) Beneficiary of interest rate cuts

Tencent New advertising offerings help drive revenue growth; Tencent only has 5% market share in online ads

(700.HK) We foresee Tencent can better monetize its >800m users through new ad offerings and other new products

We project Tencent can grow its revenues by 50% CAGR during FY14-16

Value Foresee AUM can continue to expand in 2015

Partners Key funds have sizeable exposure to A-shares

(806.HK) AUM expansion and P/AUM re-rating from better profitability are key catalysts

Source: DBS Vickers

Market Focus

Monthly market wrap

Page 17

DBSV universe comparison table

St ockc ode St oc k name

M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

14FPE (x )

15FPB (x )

14FY ld (% )

14FRO E (% )

14FA ut o manuf ac t urers & dealers

1114 Brilliance China 9,863 15.22 15.10 -1 H 12.5 11.3 3.4 0.7 31.91728 China ZhengTong 1,163 4.08 5.50 35 B 7.7 6.7 0.9 2.6 11.91828 Dah Chong Hong 1,096 4.64 5.08 9 B 11.3 8.2 0.9 3.4 8.2

489 Dongfeng Motor Group 13,710 12.34 15.70 27 B 7.2 6.2 1.2 1.8 17.4175 Geely Automobile 3,938 3.47 3.70 7 B 19.3 9.7 1.4 0.8 7.7

2333 Great Wall Motor 19,379 49.40 42.70 -14 H 14.5 11.7 3.6 2.3 27.12238 Guangzhou Automobile 6,173 7.44 8.30 12 B 11.1 8.4 1.1 2.5 10.1

425 Minth Group 2,307 16.28 19.10 17 B 13.1 11.3 1.8 3.0 14.01316 Nexteer Automotive Group 2,506 7.78 9.30 20 B 16.4 12.7 3.6 1.2 24.11148 Xinchen China Power Hldgs 506 3.05 4.40 44 B 12.1 8.5 1.3 0.0 11.0

881 ZhongSheng 1,849 6.68 8.80 32 B 9.2 6.9 1.0 1.6 12.7Bank ing and F inance (Ch ina- A ) @ @ @

601398 CH ICBC-A 210,478 4.58 5.30 16 B 5.7 5.7 1.1 6.1 20.1601939 CH China Construction Bank-A 183,106 5.68 6.17 9 H 6.2 6.0 1.2 5.6 20.0601988 CH Bank of China-A 24,795 4.11 4.04 -2 H 6.8 6.6 1.0 4.4 16.5601288 CH Agricultural Bank of China-A 126,640 3.34 3.59 7 H 6.0 6.1 1.1 5.9 19.7601328 CH Bank of Comm-A 58,315 6.09 6.33 4 H 6.8 6.4 1.0 4.4 14.9600036 CH China Merchants Bank-A 47,770 14.69 17.84 21 B 6.2 5.8 1.2 4.8 20.6601998 CH China CITIC Bank-A 40,843 6.77 5.62 -17 S 7.8 7.1 1.2 2.6 16.9600016 CH China Minsheng Bank-A 40,691 9.24 9.12 -1 FV 6.8 6.2 1.3 1.5 21.1

Bank ing and F inance (Ch ina)1288 Agricultural Bank of China 161,237 3.85 4.48 16 B 5.4 5.5 1.0 6.5 19.73988 Bank of China 166,044 4.46 5.06 13 B 5.8 5.6 0.9 5.2 16.53328 Bank of Communications 64,061 6.69 7.91 18 B 5.9 5.5 0.8 5.1 14.9

998 China CITIC Bank 35,473 5.88 7.02 19 B 5.3 4.8 0.8 3.8 16.9939 China Construction Bank 207,929 6.45 7.72 20 B 5.5 5.3 1.0 6.4 20.0605 China F inancial Serv ices 261 0.59 0.90 53 B 6.2 5.1 0.8 2.4 14.0

3968 China Merchants Bank 57,559 17.70 22.30 26 B 5.8 5.5 1.1 5.1 20.61988 China Minsheng Bank 41,263 9.37 11.41 22 B 5.4 4.9 1.0 1.9 21.13618 Chongqing Rural Bank 5,792 4.83 5.56 15 B 5.2 4.8 0.9 5.7 17.41398 ICBC 260,110 5.66 6.62 17 B 5.5 5.5 1.0 6.3 20.1

Bank ing and F inance (HK )2388 Bank of China HK 37,286 27.35 26.40 -3 B 11.4 10.4 1.7 3.5 15.3

23 Bank of East Asia 9,653 31.90 33.50 5 H 11.7 11.0 1.1 3.7 9.82356 Dah Sing Banking Group 2,371 13.12 14.90 14 B 9.2 8.7 0.9 2.6 10.5

11 Hang Seng Bank 34,858 141.40 143.80 2 B 15.7 13.5 1.9 4.0 16.7

Cement 914 Anhui Conch Cement 18,005 26.35 35.00 33 B 9.4 8.1 1.6 2.1 19.2

3323 China Nat'l Bldg Mat 5,284 7.59 6.00 -21 FV 5.5 4.8 0.7 2.7 14.41313 China Resources Cement 3,875 4.60 7.00 52 B 6.3 6.0 1.0 3.2 17.4

691 Shanshui Cement 2,505 4.30 2.20 -49 FV 21.6 25.9 1.1 0.9 4.62233 West China Cement 588 1.01 0.78 -23 H 10.3 8.6 0.7 1.5 6.8

Chemicals189 Dongyue Group 743 2.72 2.70 -1 FV 10.6 9.3 0.8 2.9 8.0746 Lee & Man Chemical 408 3.84 4.80 25 B 9.3 7.0 1.3 3.8 15.2408 Yip's Chemical 321 4.42 8.50 92 B 12.0 6.4 0.8 3.8 6.9

Source: DBS Vickers

@@@ denominated in RMB

Market Focus

Monthly market wrap

Page 18

DBSV universe comparison table (con’t)

St oc kc ode St oc k name

M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

14FPE (x )

15FPB (x )

14FY ld (% )

14FRO E (% )

14FCong lomerat es- HK

4 Wharf Holdings # 22,101 56.55 64.90 15 B 15.3 13.0 0.7 3.3 3.920 Wheelock # 10,899 41.60 44.25 6 B 11.1 8.6 0.7 2.6 4.4

F ood and Bev erages506 China F oods 959 2.66 3.70 39 B nm 36.1 1.3 0.0 -4.5

2319 China Mengniu 8,844 35.00 32.80 -6 H 27.2 23.5 2.6 0.8 10.91117 China Modern Dairy 1,749 2.81 3.00 7 B 10.4 12.7 1.6 0.0 16.41068 China Yurun 698 2.97 3.80 28 H 116.6 75.3 0.3 0.0 0.3

322 Tingy i Holding 14,091 19.50 20.70 6 B 32.7 26.5 4.5 1.5 14.4168 Tsingtao Brewery 8,544 49.05 57.70 18 H 26.0 23.0 3.4 1.1 13.7220 Uni-President China 3,397 6.10 5.50 -10 F V 41.4 31.3 1.9 0.7 4.9345 V itasoy 1,552 11.58 11.60 0 H 38.9 31.9 6.8 1.8 18.2151 Want Want China 14,546 8.55 10.80 26 B 22.9 19.7 6.4 3.0 30.1

Hardw are & Equ ipment2018 AAC Technologies Holdings 8,131 51.35 35.50 -31 H 20.0 17.4 5.4 2.3 29.3

552 China Comm Serv ices 3,179 3.56 4.40 24 B 8.5 7.9 0.8 3.5 10.23777 China F iber Optic Network 466 2.07 3.90 88 B 7.1 5.3 0.9 2.8 15.92342 Comba 489 2.26 3.50 55 H 14.7 7.8 1.0 1.7 6.8

992 Lenov o Group 17,131 11.96 10.80 -10 B 19.6 21.2 5.3 2.0 28.82618 TCL Communication 1,160 7.35 11.90 62 B 7.7 6.2 2.3 3.8 33.11300 Trigiant Group 279 1.66 4.40 165 B 4.0 3.8 0.8 8.5 22.6

856 V ST Holdings 503 2.56 2.60 2 B 6.7 6.2 1.0 3.4 14.9303 V Tech 3,585 110.70 110.00 -1 B 17.5 15.2 6.2 5.6 35.7763 ZTE 7,659 17.28 23.00 33 B 18.6 16.4 1.9 1.3 10.6

Househo ld /Personal (Ch ina/HK ) 1880 Belle Int'l 9,124 8.39 10.30 23 B 12.8 12.3 2.2 3.0 nm2111 Best Pacific Int'l Hldgs 499 3.80 4.80 26 B 14.2 10.3 2.3 2.1 22.96388 Coach @ ^^^ 910 25.60 48.10 88 H 13.3 11.7 4.6 3.1 36.0

210 Daphne International 440 2.07 2.40 16 F V 18.7 12.2 0.7 2.1 3.61169 Haier Electronics 7,102 20.45 27.35 34 B 16.2 13.6 4.0 0.6 27.61044 Hengan 14,043 88.95 81.30 -9 H 28.8 24.5 6.0 2.3 21.9

494 Li & F ung 8,549 7.93 11.30 42 B 14.1 14.0 3.6 4.2 16.42331 Li Ning 746 3.07 3.65 19 H nm 168.2 2.1 0.0 -35.8

311 Luen Thai 192 1.44 3.20 122 B 4.1 3.6 0.5 7.4 11.81382 Pacific Textile 2,163 11.60 10.40 -10 H 15.0 16.7 4.3 9.1 28.31913 Prada 15,392 46.65 38.33 -18 H 21.9 29.6 5.1 2.0 25.1

531 Samson Holding 404 1.03 1.24 20 B 18.1 16.4 0.8 11.6 4.41910 Samsonite Int'l 4,440 24.45 30.00 23 B 21.9 19.1 3.4 2.1 16.21023 Sitoy Group 573 4.44 4.69 6 H 8.8 9.9 2.2 6.3 27.1

751 Sky worth 2,030 5.53 3.58 -35 F V 12.1 10.3 1.5 2.7 12.11836 Stella International 2,059 20.10 20.50 2 H 15.6 13.8 2.1 4.7 13.91070 TCL Multimedia ^^ 791 4.60 2.83 -38 H 18.7 14.9 1.3 1.6 7.22678 Texhong Textile Group 948 8.31 8.80 6 B 20.9 8.3 1.8 1.4 8.5

321 Texwinca 1,272 7.14 8.10 13 B 14.6 12.4 1.7 6.8 11.3

Source: DBS Vickers

# P/NAV ; '@ denominated in USD ; ^^^ Valuation based on US-listed share; ^^ Core profit and EPS

Market Focus

Monthly market wrap

Page 19

DBSV universe comparison table (con’t)

St oc kc ode St oc k name

M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

14FPE (x )

15FPB (x )

14FY ld (% )

14FRO E (% )

14FIndust rials

569 China Automation 123 0.93 1.80 94 B 2.9 4.0 0.4 6.9 12.8517 Cosco International 681 3.45 4.10 19 B 19.7 17.8 0.7 1.8 3.5838 EV A Precision 452 2.00 1.30 -35 F V 19.8 16.3 1.5 1.3 7.8

1366 J iangnan Group 610 1.40 2.20 57 B 5.8 4.8 1.1 4.3 21.6179 J ohnson Electric 3,207 28.25 27.20 -4 H 15.7 15.8 1.9 2.0 12.6

2314 Lee and Man Paper 2,409 4.00 5.30 33 B 9.2 8.4 1.0 3.8 11.82689 Nine Dragons 3,026 5.03 4.50 -11 F V 10.8 14.8 0.7 2.0 7.5

669 Techtronic 6,340 26.85 25.50 -5 B 19.8 16.8 3.0 1.0 16.53393 Wasion Group 944 7.69 9.20 20 B 12.5 10.2 1.8 2.8 15.2

In f rast ruc t u re152 Shenzhen International 2,644 10.84 13.84 28 B 8.7 10.4 1.1 3.5 13.8

Inv est ment Serv ic es (Ch ina / HK )388 HK Exchanges & Clearing 26,965 179.00 141.40 -21 S 42.6 32.7 11.0 2.1 24.7806 V alue Partners Group 1,611 6.79 8.47 25 B 15.5 13.9 3.6 2.7 25.4

M ed ia 752 Pico F ar East 309 1.97 2.23 13 B 9.9 9.0 1.5 5.4 15.4511 TV B 2,804 49.65 45.18 -9 H 13.3 12.8 2.6 5.2 19.4

Pharmac eut ic al & Healt h Care2877 China Shineway 1,260 11.82 15.00 27 H 10.3 9.4 1.6 3.9 16.41681 Consun Pharmaceutical 727 5.64 7.70 37 B 18.9 15.3 3.0 0.8 17.4

853 Microport Scientific 638 3.48 2.96 -15 F V n.a. 22.5 1.6 0.0 -0.21066 Shandong Weigao 3,688 6.39 6.40 0 F V 24.3 21.7 2.4 1.2 10.11099 Sinopharm Group 9,687 27.15 31.00 14 B 19.5 17.5 1.9 1.4 11.22393 Yestar International 523 2.17 3.18 46 B 31.4 21.7 8.1 1.6 28.2

Propert ies (Ch ina)3383 Agile Property # 2,328 4.61 4.38 -5 H 3.8 3.7 0.3 2.7 9.5

832 Central China # 609 1.94 2.34 21 B 4.2 3.4 0.3 7.1 14.21224 CC Land # 467 1.40 1.94 39 H 4.9 3.6 0.2 4.1 5.1

81 China Ov erseas Grand Oceans 1,174 3.99 6.80 70 B 7.2 3.5 0.4 2.8 10.6688 China Ov erseas # 24,926 23.65 29.90 26 B 8.8 7.4 1.0 2.1 18.4

1109 China Resources Land # 17,347 20.60 23.00 12 B 12.6 13.3 0.8 2.1 10.82007 Country Garden # 8,109 3.09 4.65 50 B 5.2 4.4 0.7 5.8 18.83333 Ev ergrande Real Estate # 6,450 3.42 3.50 2 H 5.7 5.2 0.4 4.4 12.1

fsg sp F irst Sponsor Group @@ 1 1.23 1.57 28 B 28.4 13.4 0.6 1.6 3.2817 F ranshion Properties # 2,666 2.28 3.08 35 B 6.5 5.4 0.4 4.6 10.1813 Shimao Property # 7,370 16.46 21.00 28 B 5.7 5.1 0.6 5.3 18.0272 Shui On Land # 1,857 1.80 1.72 -4 F V 20.1 n.a. 0.4 3.3 1.4

3377 Sino-Ocean Land # 4,678 4.84 5.55 15 B 8.8 7.1 0.6 4.0 8.4410 Soho China # 3,721 5.55 6.47 17 H 9.2 17.8 0.5 5.7 6.3337 Greenland (Hong Kong) # 784 5.00 5.34 7 B 106.0 17.1 0.9 1.0 1.7

Yllg sp Yanlord Land # @@ 1,380 0.97 0.99 3 H 6.8 9.6 0.5 1.4 6.9123 Yuexiu Property # 2,495 1.56 1.40 -10 H 5.4 8.5 0.5 4.7 9.3

Source: DBS Vickers

@@ denominated in SGD; # P/NAV

Market Focus

Monthly market wrap

Page 20

DBSV universe comparison table (con’t)

St oc kc ode St oc k name

M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

14FPE (x )

15FPB (x )

14FY ld (% )

14F

RO E(% )14F

Propert ies (HK )1 Cheung Kong # 45,843 153.50 168.00 9 B 6.6 12.2 0.8 6.9 14.3

41 Great Eagle # 2,266 26.80 28.90 8 H 9.6 10.3 0.4 2.7 3.510 Hang Lung Group # ^ 6,324 36.20 42.25 17 H 13.9 13.4 0.8 2.2 4.9

101 Hang Lung Properties # ^ 12,724 22.00 24.80 13 B 9.8 14.0 0.6 3.5 7.812 Henderson Land # ^ 20,504 53.00 55.00 4 H 17.5 17.3 0.7 2.0 4.0

HKL SP Hongkong Land ^ # @ 17,764 7.55 8.05 7 B 19.5 19.5 0.8 2.4 3.414 Hysan Dev elopment # 5,103 37.20 40.90 10 B 18.5 18.0 0.6 3.3 3.3

173 K. Wah Intl # 1,412 3.93 5.71 45 B 19.4 14.0 0.4 3.8 2.0683 Kerry Properties # 4,825 25.90 32.95 27 B 8.6 13.9 0.4 3.1 5.6488 Lai Sun Dev elopment # 448 0.17 0.25 45 B 2.3 19.9 0.2 1.4 7.4

66 MTR ^ # 27,059 36.00 34.75 -3 H 18.0 22.0 1.0 2.7 7.417 New World Dev # 10,493 9.15 10.95 20 B 10.0 10.8 0.5 4.6 6.516 SHK Properties # ^ 44,313 121.60 142.00 17 B 15.3 17.5 0.7 2.8 5.383 Sino Land # 9,915 12.68 14.58 15 B 15.1 17.6 0.6 3.9 4.6

1972 Swire Properties # 19,424 25.75 28.70 11 B 21.8 21.2 0.7 2.4 3.488 Tai Cheung # 510 6.41 7.44 16 B 3.9 15.3 0.4 4.7 16.5

369 Wing Tai Properties # 839 4.86 5.91 22 B 14.2 15.7 0.3 2.8 2.1Railw ay & Const ruc t ion

1800 China Comm Construction 19,772 9.48 7.90 -17 H 9.0 7.8 1.2 2.6 13.51186 China Railway Construction 15,065 9.47 9.80 3 H 8.2 7.9 1.0 1.8 13.1

390 China Railway Group 17,303 6.30 6.30 0 B 10.0 8.6 1.1 1.5 11.71766 CSR Corp 17,869 10.04 10.80 8 H 20.9 17.8 2.7 1.4 13.83311 China State Construction 5,712 11.04 13.20 20 B 12.4 10.0 2.3 2.4 20.2

Real Est at e Inv est ment T rust 2778 Champion REIT 2,844 3.84 4.03 5 H nmf nmf 0.5 5.3 4.2

778 F ortune REIT 2,129 8.80 9.34 6 B nmf nmf 0.7 4.7 3.86139 J inmao Inv estment 1,431 5.55 6.40 15 B nmf nmf 1.3 8.6 1.5

808 Prosperity REIT 554 3.02 2.88 -5 B nmf nmf 0.7 5.3 3.5435 Sunlight REIT 851 4.04 3.73 -8 B nmf nmf 0.6 4.9 2.9823 The Link REIT 14,628 49.50 53.35 8 B nmf nmf 1.2 3.3 19.4

Rest au rant s538 Ajisen China 666 4.73 5.40 14 F V 18.8 15.9 1.6 3.2 8.8341 Cafe de Coral 2,100 28.05 27.00 -4 H 27.8 27.3 4.3 2.4 16.0

Ret ailers814 Beijing J ingkelong 105 1.97 1.90 -4 H 16.4 14.4 0.4 6.3 2.4653 Bonjour Holdings 329 0.75 0.83 11 H 10.9 10.9 3.7 5.5 42.7291 China Resources Ent 5,052 16.18 31.00 92 B 19.3 15.9 0.9 2.1 4.5116 Chow Sang Sang 1,704 19.52 24.22 24 B 11.0 9.7 1.5 3.4 14.5330 Esprit Holdings 2,010 8.02 8.30 3 F V 91.9 21.6 0.9 0.7 1.0709 Giordano 775 3.83 3.75 -2 H 15.3 14.3 2.0 6.2 13.0393 Glorious Sun 226 1.67 1.80 8 H 12.3 9.8 0.7 6.5 5.9

3308 Golden Eagle % 2,165 9.40 10.21 9 B 14.1 11.9 2.4 2.2 18.1493 Gome Elec Appliances % 2,296 1.05 1.06 1 H 11.2 10.5 0.9 3.3 7.8

3389 Hengdeli 895 1.45 1.46 1 H 12.2 10.0 0.9 2.5 7.91833 Intime Department Store 1,193 4.26 5.60 31 H 7.9 6.7 0.7 5.0 10.3

J D US J D.com ^^@ 38,652 27.67 31.20 13 B nm nm 8.2 0.0 -68.7980 Lianhua Supermarket 520 3.60 3.60 0 H 175.7 54.8 1.0 0.0 0.5

Source: DBS Vickers

^ EPS and Net Profit exclude fair value changes on investment properties; % - Fully Diluted EPS; # P/NAV; ^^Core profit and EPS; '@ denominated in USD

Market Focus

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Page 21

DBSV universe comparison table (con’t)

St ockcode St oc k name

M k tCap

(US$m)

SharePric e

(HK $ )

T argetPric e

(HK $ )upside

(% ) RemdPE (x )

14FPE (x )

15FPB (x )

14FY ld (% )

14FRO E (% )

14FRet ailers (c on t 'd )

1212 Lifesty le 3,004 14.30 16.85 18 B 11.4 10.7 2.0 3.5 18.6590 Luk F ook % 1,869 24.60 35.66 45 B 7.8 9.1 1.9 5.2 26.5825 New World Dept Stores 433 1.99 1.82 -9 H 6.4 10.2 0.5 17.8 8.0398 Oriental Watch 93 1.26 1.57 25 H 35.5 24.6 0.3 4.8 0.9

3368 Parkson 592 1.67 1.66 -1 H 16.1 11.3 0.7 3.7 4.2178 Sa Sa 1,676 4.57 5.35 17 H 13.8 14.1 5.6 5.1 43.5

1700 Springland Int'l 761 2.42 2.72 12 H 7.3 6.9 0.9 6.8 13.3891 Trinity Ltd 336 1.49 1.95 31 H 12.3 9.9 0.7 5.9 6.1

1025 Wumart ^^ 932 5.64 6.12 9 H 13.6 13.0 1.5 3.7 11.2Sof t w are & Comput er Serv ic es

268 Kingdee 847 2.55 3.60 41 B 22.8 17.7 2.6 0.9 12.1700 Tencent ^^ 164,249 135.90 156.00 15 B 40.9 30.0 12.7 0.2 34.9

St eel, alumin ium & c opper347 Angang Steel 5,485 5.88 7.20 22 B 30.0 25.5 0.7 0.8 2.4

1378 China Hongqiao Group 4,155 5.23 7.96 52 B 4.6 3.9 0.8 4.9 19.0323 Maanshan I & S 2,155 2.17 1.95 -10 H 216.0 17.4 0.6 0.0 0.3486 United Co RUSAL PLC 11,049 5.64 7.00 24 B 37.7 9.8 5.8 0.0 6.9

T elecom Serv ic es (Ch ina)941 China Mobile 278,116 105.40 110.00 4 B 15.7 16.0 2.0 2.7 13.3762 China Unicom 40,326 13.06 11.80 -10 H 20.2 17.8 1.1 1.5 5.6728 China Telecom 52,387 5.02 5.70 14 B 18.7 17.0 1.1 1.9 6.2

T elecom Serv ic es (HK )1883 CITIC Telecom 1,168 2.70 3.50 30 B 12.5 11.7 1.4 4.2 11.46823 HKT Trust 10,037 10.28 9.70 -6 H 24.4 21.9 1.9 4.6 8.7

215 Hutchison Telecom 2,436 3.92 3.50 -11 H 22.7 20.0 1.7 3.3 7.5315 SmarTone 2,090 15.48 16.00 3 B 30.0 20.5 5.0 2.0 17.4

T ransport at ion - Po rt s & A irpo rt s694 Beijing Capital Intl A irport 4,082 7.31 6.35 -13 B 17.5 15.6 1.5 2.3 8.6144 China Merchants Hldgs 9,749 29.50 28.20 -4 B 16.1 13.8 1.1 1.8 8.0

1199 COSCO Pacific 4,239 11.18 12.50 12 B 12.8 11.6 0.8 3.1 6.7Wat er In f rast ruc t u re, Env ironment al

371 Beijing Enterprises Water % 5,412 4.82 4.90 2 H 27.4 22.3 2.8 1.1 10.6257 China Ev erbright Intl 6,255 10.82 13.10 21 B 29.8 22.6 3.3 1.0 11.6

CEWL SP China Ev erbright Water @@ 1,743 0.96 1.17 23 B 46.3 24.4 2.1 0.0 7.3SIIC SP SIIC Env ironment @@ 915 0.13 0.23 77 B 21.9 15.8 1.6 0.0 8.2

967 Sound Global 1,034 6.59 10.71 63 B 13.7 10.8 2.2 0.0 17.31065 Tianjin Cap Env ironmental 981 5.33 3.60 -32 S 19.0 18.1 1.5 1.1 7.8

Source: DBS Vickers

@@ denominated in SGD

% - Fully Diluted EPS; ^^Core profit and EPS

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Page 22

DBSV 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 GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Vickers (Hong Kong) Limited (“DBSVHK”), a direct wholly-owned subsidiary of DBS Vickers Securities Holdings Pte Ltd ("DBSVH"). This report is intended for clients of DBSV Group 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 DBSVHK. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBSVHK and/or DBSVH) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document 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. DBSVHK 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. DBSVH is a wholly-owned subsidiary of DBS Bank Ltd. DBS Bank Ltd 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. DBSVHK, DBS Bank Ltd and their associates, their directors, and/or employees 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 and it may not contain all material information concerning the company (or companies) referred to in this report. 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 DBSVHK and/or DBSVH (and/or any persons associated with the aforesaid entities), that:

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Market Focus

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Page 23

COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBSVHK and its subsidiaries do not have a proprietary position in the securities recommended in this report as of the date the report is

published. 2. DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates beneficially own a total of 1% or more of any class of common equity

securities of Fortune Real Estate Investment Trust (778 HK) mentioned in this document as of the latest available date of the updated information.

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DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager 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.

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