DBSVickers_StarburstHoldings30062015

7/23/2019 DBSVickers_StarburstHoldings30062015

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www.dbsvickers.com

ed: TH / sa: JC

BUY

Last Traded Price: S$0.48 (STI: 3,280.18)Price Target :S$ 0.56 (17% upside) (Prev S$ 0.77)

Reason for Report :Revision in earningsPotential Catalyst: Contract wins

Analyst

LING Lee Keng +65 6682 3703 [email protected]

Price Relative

Forecasts and ValuationFY Dec (S m) 2014A 2015F 2016F 2017F

Revenue 39.4 22.0 43.8 53.3

EBITDA 16.7 4.5 16.1 18.9Pre-tax Profit 15.8 2.6 14.3 17.0Net Profit 13.2 2.2 12.0 14.2Net Pft (Pre Ex.) 13.2 2.2 12.0 14.2EPS (S cts) 5.3 0.9 4.8 5.7EPS Pre Ex. (S cts) 5.3 0.9 4.8 5.7EPS Gth (%) 51 (84) 453 19EPS Gth Pre Ex (%) 51 (84) 453 19Diluted EPS (S cts) 5.3 0.9 4.8 5.7Net DPS (S cts) 1.2 0.2 1.0 1.1BV Per Share (S cts) 20.6 21.3 25.1 29.7PE (X) 9.1 55.4 10.0 8.4PE Pre Ex. (X) 9.1 55.4 10.0 8.4P/Cash Flow (X) 13.3 98.7 23.8 10.1EV/EBITDA (X) 6.3 22.8 7.2 5.7Net Div Yield (%) 2.5 0.4 2.0 2.4P/Book Value (X) 2.3 2.3 1.9 1.6Net Debt/Equity (X) CASH CASH CASH CASHROAE (%) 34.0 4.1 20.7 20.7

Earnings Rev (%): (88) (43) NEWOther Broker Recs: B: 1 S: 0 H: 0

ICB Industry:IndustrialsICB Sector: Aerospace & DefensePrincipal Business:Design, fabricate, install and maintain anti-ricochet ballistic protection systems for firearm shooting ranges andtactical training mock-ups

Source of all data: Company, DBS Bank, Bloomberg Finance L.P

At A Glance

Issued Capital (m shrs) 250Mkt. Cap (S$m/US$m) 120 / 88.9Major Shareholders

Chin Wah Lim (%) 40.0Tin Foo Yap (%) 40.0

Free Float (%) 20.03m Avg. Daily Val (US$m) 0.1

DBS Group Research . Equity 30 Jun 2015

Singapore Company Focus

Starburst HoldingsBloomberg: STARB SP |Reuters: STAB.SI Refer to important disclosures at the end of this report

Hit by contract delays 1H15 expected to be weak due to delay in contract

awards

Expect a strong recovery in FY16 and FY17

Beneficiary of higher defence spending in SoutheastAsia and the Middle East

Maintain BUY, TP cut to S$0.56

1H15 weak due to delay in contract awards. Delay inthe award of contracts has led Starburst reporting a net lossof S$0.5m for 1Q15. We see another set of weak results in2Q15, as contract flow in 1H15 has been slow. However, weexpect 2H15 to be better, with the recent signing of LOI fora S$16.1m contract.

Expect a strong recovery in FY16 and FY17. We havepushed back the award of contracts originally slated for FY15to FY16, and those for FY16 to FY17/FY18. Based onprogressive booking method, we expect Starburst to bookrevenue of S$22m for FY15F, which is similar to its FY13level, before the ramp-up in FY14. We see a strong recoveryin FY16 and FY17, with the expected award of a few big

contracts in the range of S$20m to S$60m.

Outlook remains buoyant. Starburst, a niche defence play,is abeneficiary of higher defence spending in Southeast Asiaand the Middle East. SEA is actively upgrading andmodernising facilities, partly to protect critical infrastructurewhereas in the Middle East, the implementation ofcompulsory military services is propelling demand for newshooting ranges in Middle East.

Maintain BUY, TP cut to S$0.56. Our target price ofS$0.56 is based on 12x FY16 PE, which is pegged to a 40%

discount to peers average of 20x forward PE. Key risksinclude lumpy project wins and customer concentration asStarbursts contracts are mainly from government agencies.Maintain BUY.

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Jul-14 Dec-14 May-15

Relative IndexS$

Starburst Holdings (LHS) Relative STI INDEX (RHS)


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Page 2

Company Focus

Starburst Holdings

INVESTMENT THESIS

Profile Rationale

Design, fabricate, install and maintain anti-ricochet ballistic

protection systems for firearm shooting ranges and tactical

training mock-ups.

Niche defence play

Starburst is one of the very few integrated specialists who

design, manufacture, install and upkeep anti-ricochetballistic protection systems for firearm training facilities.

Since its inception in 1999, Starburst has built a track

record with different govermental agencies.

Beneficiary of higher defence spending in Southeast Asia &

the Middle East

SEA is actively upgrading and modernising facilities, partly

to protect critical infrastructure whereas in the Middle

East, the implementation of compulsory military services is

propelling demand for new shooting ranges in Middle

East.

1H15 weak but 2H15 better; expect stronger recovery in

FY16 and FY17

We have pushed back the award of contracts originally

slated for FY15 to FY16, and those for FY16 to

FY17/FY18.

Contract wins in 1H15 have been slow. We see a strong

recovery in FY16 and FY17, with the expected award of a

few big contracts in the range of S$20m to S$60m.

Valuation Risks

Our target price of S$0.56 is based on 12x FY16 PE, which is

pegged to 40% discount to peers average of 20x forwardPE.

Mainly dependent on project-based non-recurring contracts

Starbursts business is largely made up of non-recurring

contracts, which is dependent on its ability to secure new

contracts.

Customer concentration -contracts mainly from government

agencies

Historically, a substantial proportion of Starbursts

revenues has been derived from contracts entered into

indirectly with governmental agencies in Southeast Asia

and the Middle East.

Capital-intensive business

The contract sums for projects are payable by customers

progressively, based on the stage of completion of thework carried out for the relevant project. Starburst may

have to put up capital to fund the working capital of

projects.

Source: DBS Bank


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Page 3

Company Focus

Starburst Holdings

Delay in award of contracts

Delay in the award of contracts has led Starburst to report a

net loss of S$0.5m for 1Q15, vs S$6.1m profit for 1Q14. In

1Q15, Starburst was involved primarily in the final installation

phase of the projects secured earlier. In comparison, projects

in 1Q14 were mostly in the fabrication phase. We see

another set of weak results in 2Q15, as contract flow in 1H15

has been slow. However, we expect 2H15 to be better, with

the recent signing of LOI for a S$16.1m contract.

We have pushed back the award of contracts originally slated

for FY15 to FY16, and those for FY16 to FY17/FY18. For the

firearm shooting range and tactical training mock-up

divisions, we are expecting a few smaller contracts to be

awarded in 2H15. Including the two contracts totaling

S$18.6m that were announced earlier, plus maintenance and

steel faade works contracts, 2H15 should be better than1H15. Based on progressive booking method, we expect

Starburst to book revenue of S$22m for FY15F, which is

similar to its FY13 level, before the ramp-up in FY14. We see

a strong recovery in FY16 and FY17, with the expected award

of a few big contracts in the range of S$20m to S$60m.

Source: DBS Bank

Geopolitical issues affected Middle East. One of the reasons

for the delay in contract awards in the Middle East could be

geopolitical issues. Issues like Islamic State of Iraq and al-

Sham (ISIS) and the airstrikes by Saudi Arabia against Iran-

backed Shiite rebels in turbulent Yemen, have affected the

Middle East countries.

Outlook

Growth in defence spending

Defence-related spending has become a necessity in todays

world, to help protect us in this fast evolving environment.

Many countries are building up military capabilities, with an

eye towards better protection of their key infrastructure.

The two key markets for Starburst Southeast Asia and the

Middle East region are beefing up their defence spending.Countries like Brunei, Cambodia, Indonesia, Laos, Malaysia,

Philippines, Singapore, Thailand and Vietnam, are now

among the top defense spenders globally, according to a

McKinsey report. In the Middle East, the political turmoil in

the region has also led to higher defence spending, according

to Stockholm International Peace Research Institute (SIPRI).

Strong growth in the Middle East.We continue to expect

strong defence spending in the Middle East, with Saudi

Arabia to continue with its high defence spending.

Historically, Saudi Arabia has been a country with the

highest defence spending in the region, and this isexpected to continue. Defence spending for Qatar, UAE

and Kuwait will also increase, with more countries

imposing compulsory military training for male citizens.

Southeast Asia offers opportunities to upgrade and new

builds. Precautionary protection against attacks on key

infrastructure like seaports, airports, petrochemical plants

and government administration buildings has led to

higher defence spending. For Singapore and Malaysia,

defence spending will more likely be for upgrading of

existing facilities and not entirely new builds. For Thailand

and Brunei, demand is mainly for new builds as the

countries beef up their defence facilities.

Double production capacity to undertake bigger

contracts

Starburst has acquired a piece of land measuring

approximately 8,805.6 sqm with a gross floor area of

approximately 7,002.4 sqm in Tuas for S$22.4m. This will

enable the Group to increase its fabrication efficiency and

capacity, and to undertake more as well as larger projects

simultaneously. A significant portion of the IPO proceeds last

year was utilised for this purpose.

Supply, fabrication and installation contract wins

Source: DBS Bank

Maintenance and steel work contracts

Date Job scope

Total contract

value ( S$m)

Duration

(years)Maintenance

12-Feb-15 Maintenance of security

and detention fact ilities

in Southeast Asia

7.14 5

Projected win

in 2015

Firearm shoot ing range in

SEA

4 4

Stee l works

3-Feb-15 Facade stee lworks for

Marina One project

11.8 1.5

Date Job scope

Total contract

value ( S$m)

Duration

(years)

Potential win

2015 Middle East and Southeast Asia 15 1.5

2016 Middle East and Southeast Asia 70 3

2017 Middle East and Southeast Asia 20 22017/2018 Middle East and Southeast Asia 60 3

Total 165

Contracts clinched

9-Feb Middle East 2.5 Feb to Sep

10-Jun Middle East * 16.1 by Dec 16

Total 18 6

* LOI


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Page 4

Company Focus

Starburst Holdings

Valuation

There are only a few players in this industry. Globally,

competitors include Cubic Range Design Solutions in USA,

Meggitt Training Systems Inc in the UK and Microcircuit

Systems Pte Ltd. Among SGX-listed companies, ST

Engineering is the closest competitor as it is also involved in

land defence systems and marine capabilities for defence and

commercial enterprises, besides specialising in aerospace and

electronics.

We believe players in this industry will remain niche as growth

potential is not particularly attractive for new players in this

already mature industry. Furthermore, pre-requisites such as

specialised technical skills and established track record deter

new entrants.

Our target price of S$0.56 is based on 12x FY16 PE, which is

pegged to a 40% discount to peers average of 20x forward

PE.

Risk

Customer concentration - contracts mainly from government

agencies

Historically, the bulk of Starbursts revenues have been

derived from contracts entered into with governmental

agencies in Southeast Asia and the Middle East.

Mainly dependent on project-based non-recurring contracts

Starbursts business is largely made up of non-recurring

contracts, which is dependent on its ability to secure new

contracts. Delay in the award of contracts will affect its

financials.

Peer comparison

Source: DBS Bank

N a m e

F i sca l Y r

En d

M a r k e t

C a p ( m )

Px Las t

Date

FY14A

PE (x)

FY15F

PE (x)

FY16F

PE (x)

S a l e s

FY14

( m l n s )

Net P ro f i t

FY14

( m l n s )

Net Profit

M a r g i n

FY14

FY14A

ROE

(% )

FY14A

Div Yld

(% )

FY14A

P/BV

(x )

Gross

M a r g i n

FY14

Net Debt to

Equ i ty ( x )

FY15F EPS

Gth (%)

FY16F EPS

Gth (%)

S TARBURS T HOLDINGS 12/2014 120. 0 S$0.480 9.1 55.4 10.0 39.4 13.2 33.4 34.0 2.6 2.3 56.4 (23.7) (83.5) 453.1

CUBIC CORP 09/2014 1,332.6 US$49.57 19.0 26.2 15.4 1,398.4 69.5 5.0 5.2 0.5 1.8 22.6 (14.7) (27.0) 70.5

SINGAP TECH ENG 12/2014 10,231.9 S$3.29 19.6 18.8 17.5 6,539.4 532.0 8.1 23.7 n.a. 4.7 20.2 (24.9) 3.2 7.4

MEGGITT PLC 12/2014 3,651.0 466.00 21.2 13.5 12.3 1,553.7 177.0 11.4 8.4 3.0 1.7 39.8 26.9 57.7 7.8

A ve ra ge ( e x S ta rburs t) 19 . 5 15.1


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Company Focus

Starburst Holdings

Segmental Breakdown

FY Dec 2013A 2014A 2015F 2016F 2017F

Revenues (S$ m)Firearm shooting ranges 18.1 36.8 10.5 35.0 49.0

Maintenance services andothers 2.9 2.5 11.5 8.8 4.3

Total

21.0 39.4 22.0 43.8 53.3

Gross Margins (%) 60.0 56.4 50.0 56.0 56.0

Income Statement (S$ m)

FY Dec 2013A 2014A 2015F 2016F 2017F

Revenue 21.0 39.4 22.0 43.8 53.3

Cost of Goods Sold (8.4) (17.2) (11.0) (19.3) (23.5)

Gross Profit 12.6 22.2 11.0 24.5 29.9

Other Opng (Exp)/Inc (2.4) (6.2) (7.8) (9.9) (12.5)

Operating Profit 10.2 16.0 3.2 14.6 17.3

Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0

Associates & JV Inc 0.0 0.0 0.0 0.0 0.0

Net Interest (Exp)/Inc (0.1) (0.3) (0.6) (0.3) (0.3)

Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0

Pre-tax Profit 10.1 15.8 2.6 14.3 17.0

Tax (1.4) (2.6) (0.4) (2.4) (2.8)

Minority Interest 0.0 0.0 0.0 0.0 0.0

Preference Dividend 0.0 0.0 0.0 0.0 0.0

Net Profit 8.7 13.2 2.2 12.0 14.2

Net Profit before Except. 8.7 13.2 2.2 12.0 14.2

EBITDA 10.6 16.7 4.5 16.1 18.9

GrowthRevenue Gth (%) 21.4 87.0 (44.2) 99.1 21.8

EBITDA Gth (%) 34.0 57.0 (72.7) 254.8 17.5

Opg Profit Gth (%) 31.0 57.2 (80.0) 357.1 18.2

Net Profit Gth (%) 35.0 50.8 (83.5) 453.1 18.6Margins & RatioGross Margins (%) 60.0 56.4 50.0 56.0 56.0

Opg Profit Margin (%) 48.4 40.7 14.6 33.5 32.5

Net Profit Margin (%) 41.5 33.4 9.9 27.4 26.6

ROAE (%) 44.3 34.0 4.1 20.7 20.7

ROA (%) 29.7 25.4 3.3 16.2 16.2

ROCE (%) 34.3 29.0 2.6 17.1 17.7

Div Payout Ratio (%) 25.8 22.8 20.0 20.0 20.0

Net Interest Cover (x) 124.3 61.6 5.3 48.8 57.7

Source: Company, DBS Bank

Margins Trend

9.0%

14.0%

19.0%

24.0%

29.0%

34.0%

39.0%

44.0%

49.0%

2013A 2014A 2015F 2016F 2017F

Op er at in g M ar gin % N et I nc om e M ar gin %


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Page 6

Company Focus

Starburst Holdings

Quarterly / Interim Income Statement (S$ m)

FY Dec 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015

Revenue 14 8 8 10 3

Cost of Goods Sold (5) (3) (3) (6) (2)

Gross Profit 9 5 5 4 0

Other Oper. (Exp)/Inc (1) (1) (3) (1) (1)Operating Profit 7 4 2 3 0

Other Non Opg (Exp)/Inc 0 0 0 0 0

Associates & JV Inc 0 0 0 0 0

Net Interest (Exp)/Inc 0 0 0 0 0

Exceptional Gain/(Loss) 0 0 0 0 0

Pre-tax Profit 7 4 2 3 0

Tax (1) (1) 0 0 0

Minority Interest 0 0 0 0 0

Net Profit 6 3 2 3 (1)

Net profit bef Except. 6 3 2 3 (1)

EBITDA 8 4 2 3 0

GrowthRevenue Gth (%) N/A (41.4) (4.7) 37.1 (72.2)

EBITDA Gth (%) nm (49.6) (43.2) 43.8 nm

Opg Profit Gth (%) nm (50.6) (45.1) 47.0 nm

Net Profit Gth (%) nm (51.1) (46.0) 56.4 nm

MarginsGross Margins (%) 63.8 59.7 63.4 39.0 16.4

Opg Profit Margins (%) 54.7 46.2 26.6 28.5 (15.3)

Net Profit Margins (%) 44.9 37.5 21.2 24.2 (17.9)

Balance Sheet (S$ m)

FY Dec 2013A 2014A 2015F 2016F 2017F

Net Fixed Assets 9 9 8 22 21

Invts in Associates & JVs 0 0 0 0 0

Other LT Assets 7 5 5 5 4

Cash & ST Invts 0 18 26 13 21

Inventory 3 2 6 12 15

Debtors 10 13 7 14 17

Other Current Assets 11 16 16 16 16

Total Assets 40 63 67 81 94

ST Debt 3 0 0 0 0

Creditor 4 6 3 6 7

Other Current Liab 2 3 0 2 3

LT Debt 4 2 9 9 9

Other LT Liabilities 1 1 1 1 1

Shareholders Equity 26 51 53 63 74

Minority Interests 0 0 0 0 0

Total Cap. & Liab. 40 63 67 81 94

Non-Cash Wkg. Capital 18 23 26 34 38Net Cash/(Debt) (7) 16 17 4 12

Debtors Turn (avg days) 114.4 110.7 168.5 86.0 104.2

Creditors Turn (avg days) 116.1 107.3 169.3 89.5 105.3

Inventory Turn (avg days) 102.3 61.7 162.7 188.9 227.2

Asset Turnover (x) 0.7 0.8 0.3 0.6 0.6

Current Ratio (x) 2.8 5.6 14.8 6.7 6.9

Quick Ratio (x) 1.2 3.5 8.8 3.2 3.8

Net Debt/Equity (X) 0.3 CASH CASH CASH CASH

Net Debt/Equity ex MI (X) 0.3 CASH CASH CASH CASH

Capex to Debt (%) 9.5 25.3 (1.2) 172.8 5.6

Z-Score (X) 7.6 9.1 7.2 6.5 6.3


Revenue Trend

Asset Breakdown (2015)

-80%

-60%

-40%

-20%

0%

20%

40%

60%

0

2

4

6

8

10

12

14

16

4Q2012

1Q2013

2Q2013

3Q2013

4Q2013

1Q2014

2Q2014

3Q2014

4Q2014

1Q2015

R ev en ue R ev en ue G ro wt h % ( Qo Q)

Net FixedAssets -16.5%

Assocs'/JVs -0.0%

Bank, Cashand Liquid

Assets -55.3%

Inventory -13.3%

Debtors -14.9%

Lack of new contract wins


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Company Focus

Starburst Holdings

Cash Flow Statement (S$ m)

FY Dec 2013A 2014A 2015F 2016F 2017F

Pre-Tax Profit 10 16 3 14 17

Dep. & Amort. 0 1 1 1 2

Tax Paid (1) (1) (3) 0 (2)

Assoc. & JV Inc/(loss) 0 0 0 0 0Chg in Wkg.Cap. (15) (6) 0 (10) (4)

Other Operating CF (1) 0 0 0 0

Net Operating CF (7) 9 1 5 12

Capital Exp.(net) (1) (1) 0 (16) (1)

Other Invts.(net) 0 0 0 0 0

Invts in Assoc. & JV 0 0 0 0 0

Div from Assoc & JV 0 0 0 0 0

Other Investing CF (2) 0 0 0 0

Net Investing CF (3) (1) 0 (16) (1)

Div Paid (2) (2) 0 (2) (3)

Chg in Gross Debt 4 (4) 7 0 0

Capital Issues 0 15 0 0 0

Other Financing CF 0 0 0 0 0

Net Financing CF 2 8 7 (2) (3)

Currency Adjustments 0 0 0 0 0

Chg in Cash (7) 17 8 (13) 9

Opg CFPS (S cts) 3.4 6.0 0.5 6.2 6.5

Free CFPS (S cts) (3.0) 3.4 0.5 (4.2) 4.6


Capital Expenditure

Target Price & Ratings History

Source: DBS Bank

0

2

4

6

8

10

12

14

16

18

2013A 2014A 2015F 2016F 2017F

Capital Expenditure (-)

S$m

S .N o . D a te

C l o s i n g

P r i c e

T a r g e t

P r i c e

R a t i n g

1: 26 Sep 14 0.64 0.77 Buy

ot e: Share price and Target price are adjusted for corporate actions.

1

0.29

0.39

0.49

0.59

0.69

0.79

Jul-14 Nov-14 Mar-15

S

Finance acquisition of

leasehold land andbuildings

Proceeds from IPO

Acquisition ofleasehold land andbuildings


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Page 8

Company Focus

Starburst Holdings

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY(>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD(-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED(negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

GENERAL DISCLOSURE/DISCLAIMER

This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) PteLtd, its respective connected and associated corporations and affiliates (collectively, the DBS Vickers Group) only and no part of this documentmay be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd.

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBSBank Ltd., its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents(collectively, the DBS Group)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressedare 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 forthe information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtainseparate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss(including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given inrelation to this document This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBSGroup, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned inthis document. The DBS Group may have positions in, and may effect transactions in securities mentioned herein and may also perform or seekto 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 therecan be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or riskassessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete orcondensed 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 andassumptions 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 fromactual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BERELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:

(a)

such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk

assessments stated therein.

Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating tothe commodity referred to in this report.

DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or researchdepartment, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months.

ANALYST CERTIFICATION

The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companiesand their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/hercompensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date ofthe report is published, the analyst and his/her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in thesecurities recommended in this report (interest includes direct or indirect ownership of securities).

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (DBSVS), their subsidiaries and/or other affiliates do not have aproprietary position in the securities recommended in this report as of 31 May 2015.

2. DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may beneficially own a total of 1% of any class ofcommon equity securities of the company mentioned as of 31 May 2015.

3. Compensation for investment banking services:

DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates have received compensation, within the past 12months, and within the next 3 months may receive or intend to seek compensation for investment banking services fromStarburst Holdings.


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Company Focus

Starburst Holdings

DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment bankingtransaction 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 documentshould contact DBSVUSA exclusively.

RESTRICTIONS ON DISTRIBUTION

General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of orlocated in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would becontrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (DBS) or DBS Vickers Securities (Singapore) Pte Ltd(DBSVS), both of which are exempted from the requirement to hold an Australian Financial Services Licence under theCorporation Act 2001 (CA) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulatedby the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of thisreport is intended only for wholesale investors within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by theHong Kong Securities and Futures Commission.

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

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

Wong Ming Tek, Executive Director, ADBSR

Singapore

This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.

198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by theMonetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreignentities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the FinancialAdvisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, ExpertInvestor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such personsonly to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arisingfrom, or in connection with the report.

Thailand

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

United

Kingdom

This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning ofthe Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK isintended only for institutional clients.

Dubai This research report is being distributed in The Dubai International Financial Centre (DIFC) by DBS Bank Ltd., (DIFC Branch)having its office at PO Box 506538, 3

rdFloor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre

(DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority.This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may actupon it.

United States Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except incompliance with any applicable U.S. laws and regulations. It is being distributed in the United States by DBSVUSA, whichaccepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in anysecurities referred to herein should contact DBSVUSA directly and not its affiliate.

Other

jurisdictions

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

DBS Bank Ltd.12 Marina Boulevard, Marina Bay Financial Centre Tower 3

Singapore 018982

Tel. 65-6878 8888Company Regn. No. 196800306E

DBSVickers_StarburstHoldings30062015

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