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www.dbsvickers.comRefer to important disclosures at the end of this report

BUY S$6.32 FSSTI : 3,033.05(Upgrade from Hold)

Price Target : 12-month S$ 8.22 (Prev S$ 7.84)Reason for Report : Company updatePotent ial Catalyst: Strong 2Q08 results, sustained healthy refiningmarginAnalystSingapore Research Team +65 6533 9688research@dbsvickers.com

Price Relative

2 . 50

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2004 2005 2006 2007 2008

S$

74

94

114

134

154

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Relative Index

Singapo re Pe tro leum Co (LHS ) Re la t ive FSSTI INDEX (RHS )

Forecasts and ValuationFY Dec (S$ m) 2006A 2007A 2008F 2009FTurnover 8,574 8,767 14,125 12,935EBITDA 416 698 842 855Pre-tax Profit 338 581 700 711Net Prof it 285 508 546 562Net Pft (Pre Ex.) 285 508 546 562EPS (S cts) 55.2 98.9 106.0 108.9EPS Pre Ex. (S cts) 55.2 98.9 106.0 108.9EPS Gth Pre Ex (%) (35) 79 7 3Dilut ed EPS (S cts) 55.4 98.9 105.9 108.8Net DPS (S cts) 35.0 60.0 63.5 65.3BV Per Share (S cts) 305.6 347.8 392.8 438.1PE (X) 11.5 6.4 6.0 5.8PE Pre Ex. (X) 11.5 6.4 6.0 5.8

P/Cash Flow (X) 9.9 5.5 5.1 4.9EV/EBITDA (X) 7.9 5.2 4.2 3.8Net Div Yield (%) 5.5 9.5 10.0 10.3P/Book Value (X) 2.1 1.8 1.6 1.4Net Debt/Equity (X) 0.0 0.2 0.1 CASHROAE (%) 19.0 30.3 28.6 26.2

Earnings Rev (%): 8.4 10.1Consensus EPS (S cts): 95.0 102.0Sector :Oil & GasPrincipal Business: Petroleum refining, marketing, distribution andtrading of crude oil and petroleum products. Other activit iesinclude E&P.

Reuters Sngapore Refining Margin

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14

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US$/bbl

2004-07 range 2008 2004-07 Avg

Source: Reuters, Company

At A GlanceIssued Capital (m shrs) 516Mkt. Cap (S$m/US$m) 3,263 / 2,389Major Shareholders

Keppel Oil & Gas (%) 45.4Free Float (%) 54.6Avg. Daily Vol.(000) 2,205

DBS Group Research . Equity 11 Jun 2008

Singapore Company Focus

Singapore Petroleum CoBloomberg: SPC SP | Reut ers: SPCS.SI

Opportunity for re-entryStory: SPCs share price has fallen 13.2% within twoweeks to a 4-month low, and is 22% below this yearspeak. We believe the current share price level offers goodre-entry opportunities with limited downside.

Point:We raised FY08-09F net profit by 8.4% and 10.1%,respectively, to reflect current strong crude prices, but

maintain our refining margin assumptions. Consequently,SPCs sum-of-parts target price is upgraded to S$8.22. Atthe current price, SPC is attractive for the followingreasons: (i) limited downside risk from current level, i.e.cheap valuation, (ii) strong 2Q08 results should be nearterm share price catalyst, (iii) attractive dividend yield of10%, and (iv) 30% upside to our revised target price.

Relevance:The counter is trading at only 6.0x 2008 PE and4.2x EV/EBITDA vs regional peers (ex-Japan) 8.7x 2008 PEand 5.7x EV/EBITDA. We upgrade SPC to BUY from Hold.

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Company Focus

Sngapore Petroleum Co

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HighlightsVolatile refining marginRefining margins (Reuters Singapore complex margin)

continue to exhibit high volatility it touched this years low

of US$4/bbl in early Jan 2008 and peaked at US$13.3/bbl in

early Apr 2008. Margins averaged S$6.9/bbl in 1Q08 and

US$8.8/bbl QTD. Current refining margins are hovering at

US$7-9/bbl, supported by exceptionally strong middle

distillate (diesel and jet fuel) crack spreads, but off set by soft

gasoline and fuel oil spreads.

Expect strong earnings in 2Q08Given seasonally strong refining margins in 2Q08 and strong

crude oil price, SPCs quarterly results should peak in 2Q08.

We expect it to book US$8.5/bbl refining margin, up from

US$7/bbl in 1Q08 but below S$9.5/bbl in 2Q07. E&P

performance should also be boosted by strong crude price;

we expect Brent crude to average US$118/bbl in 2Q08, up

from US$97/bbl in 1Q08. Net profit should jump 81% q-o-q

(but flat y-o-y) to S$177m.

Rsing contribution from E&PWith higher E&P production volume, SPC is increasinglybenefiting from rising crude price. As crude price continues to

break new highs, earnings contribution from E&P will be

rising significantly. E&P contributed to 9% of operating profit

in 2007, but should rise to 34% and 40% in 2008-09 on the

back of higher E&P volume and strong crude price.

Softer refining margin in 2H08 but resilient crude priceWe expect average refining margin to soften in 2H08 relative

to 1H08 due to seasonality and increasing concerns about the

impact of Indias new Reliance refinery. Gasoline spread is

likely to remain weak due to weak demand growth in key

market such as the US, while middle distillate spreads may

revert to norm from the current exceptionally strong levels.

However, this should be supported by stronger than

previously expected contribut ion from E&P due to sustained

strong crude price.

Earnings and target price revisionWe are retaining our refining margin assumptions at

US$6.3/bbl for 2008 and US$5.5/bbl for 2009. However, to

reflect the current strong crude price, we imputed higher

Brent crude price assumptions of US$115/bbl for 2008 (from

US$90/bbl), US$105/bbl for 2009 (from US$85/bbl), US$95for 2010 (from US$85/bbl), US$85/bbl for 2011and

US$75/bbl from 2012 onwards (from US$70/bbl). The raised

assumptions will boost earnings contribut ion from SPCs E&P

portfolio.

Our FY08-09F net profit is raised by 8.4% and 10.1% to

S$546m and $562m, respectively, in anticipation of stronger

profit contribution from E&P. Consequently, we upgraded

our sum-of-parts target price to S$8.22 from S$7.84.

SPC: Sum-of-Parts ValuationDivision S$/share Valuation methodE&P 1.86 DCF; 10% discount rate, Cue Energy (3-

month average market price).

Refining 6.36 8x 2008 PE.Total 8.22Source: DBS VickersSensitivity Analysis to Target Price

Refining margin (US$/bbl)LT Brent (US$/bbl) 5.3 5.8 6.3 6.8 7.355 6.83 7.29 7.75 8.22 8.6865 7.06 7.52 7.99 8.45 8.9175 7.29 7.76 8.22 8.68 9.1485 7.52 7.99 8.45 8.91 9.3895 7.76 8.22 8.68 9.15 9.61

Source: DBS VickersRsksKey risk to our forecast is a collapse in refining margins. This

could be caused by sharp erosion in oil demand due to high

oil prices, and removal of government subsidies in some

countries that could keep refined product prices from

catching up with rising crude price.

Opportunity to re-enter, upgrade to BuySPCs share price is currently at a 4-month low, after falling13.2% in the past two weeks vs the FSSTIs 2.2% decline

during the period. At the current price, valuations are cheap

at only 6.0x 2008 PE and 4.2x EV/EBITDA compared to

regional peers (ex-Japan) average of 8.7x 2008 PE and 5.7x

EV/EBITDA. The counter is attractive for the following

reasons: (i) limited downside risk f rom current level, i.e. cheap

valuations, (ii) strong 2Q08 results should be near term share

price catalyst, (iii) attractive dividend yield of 10%, and (iv)

30% upside to our revised target price. Note that we assume

dividend payout of 60% vs 63% and 61% payout in FY06-

07. We upgrade SPC to BUY from Hold.

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Company FocusSngapore Petroleum Co

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Interim Results Increasing contribution from E&P(S$m) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08F 2007 2008F 2009FBrent (US$/bbl) 57.6 68.7 74.9 88.7 96.8 116.0 72.6 115.0 105.0

Refining margin (US$/bbl) 7.0 9.0 5.0 7.7 7.0 8.5 7.0 6.3 5.5

E&P capacity (boed)* 2,600 2,600 2,600 10,000 9,000 11,000 3,800 11,000 15,000

Refining capacity (bpd) 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000

Sales 1,925 1,975 2,239 2,629 2,714 3,249 8,767 14,125 12,935E&P 10 13 18 105 94 153 145 455 501

Refining 1,915 1,962 2,221 2,524 2,620 3,096 8,261.6 13,670 12,434

Operating profit 117 194 106 158 120 225 575 723 732E&P 5 8 7 32 38 66 52 244 295

Refining 112 186 99 126 82 159 523 479 437Net profit 112 179 100 117 98 177 508 546 562Note: * DBS Vickers estimate

Source: Company, DBS Vickers

Peers comparisonMarket PE P/BV EV/EBITDA Div Yield ROA ROE

Cap (x) (x) (x) (%) (%) (%)BB Ticker Name US$m 08F 09F 08F 09F 08F 09F 08F 08F 08FSPC SP Equity SINGAPORE PETROLEUM CO LTD** 2,385 6.0 5.8 1.6 1.4 4.2 3.8 10.0 12.1 28.6TOP TB Equity THAI OIL PCL* * 3,583 6.5 7.8 1.5 1.4 4.5 4.5 7.8 12.7 25.3

PTTAR TB Equity PTT AROMATICS & REFINING * * 2,266 9.0 6.8 1.2 1.1 6.2 4.7 7.3 6.6 13.0

IRPC TB Equity IRPC PCL 2,776 7.9 8.0 0.9 0.9 6.8 6.9 5.0 9.3 12.5

BCP TB Equity BANGCHAK PETROLEUM PCL 413 14.0 5.4 0.6 0.6 8.5 3.7 2.8 2.8 5.0

SHELL MK Equit y SHELL REFINING CO (F.O.M.) 991 10.6 11.3 1.5 1.5 6.8 7.0 5.2 11.6 26.3

CTX AU Equit y CALTEX AUSTRALIA LIMITED 3,743 11.1 10.7 1.3 1.2 5.9 5.7 4.6 7.4 13.8

BPCL IN Equity BHARAT PETROLEUM* 2,390 5.8 5.3 0.7 0.7 3.9 35.0 4.7 4.6 12.6

HPCL IN Equit y HINDUSTAN PETROLEUM* 1,548 5.4 4.9 0.6 0.6 4.6 4.0 6.2 3.7 12.4

IOCL IN Equity INDIAN OIL CORP* 10,160 6.5 6.5 1.0 1.0 4.7 4.4 4.3 5.7 14.2

010950 KS Equity S-OIL CORPORATION 7,874 10.2 10.3 2.1 1.9 4.9 5.2 7.4 8.6 20.3

096770 KS Equity SK ENERGY CO LTD 10,208 11.1 9.4 1.6 1.4 7.6 7.2 1.7 6.7 15.7

5001 JP Equity NIPPON OIL CORP* 10,142 14.8 13.7 0.8 0.7 7.3 7.3 2.3 2.2 5.3

5002 JP Equity SHOWA SHELL SEKIYU KK 3,959 12.5 16.7 1.2 1.1 8.0 8.7 3.2 2.0 5.4

5007 JP Equity COSMO OIL* 3,495 13.3 15.8 0.8 0.8 9.1 8.2 1.8 4.9 5.5

Regional average 9.6 9.2 1.2 1.1 6.2 7.8 5.0 6.7 14.4Regional average (ex-Japan) 8.7 7.7 1.2 1.1 5.7 7.7 5.6 7.6 16.6

FTO US Equity FRONTIER OIL 2,846 9.7 7.9 2.4 1.9 5.1 4.5 0.8 16.7 30.6

SUN US Equity SUNOCO 4,835 11.8 8.2 1.8 1.6 5.3 4.2 2.9 2.1 26.5

VLO US Equity VALERO ENERGY 23,968 8.3 6.9 1.2 1.1 4.7 4.2 1.1 4.9 18.1

TSO US Equity TESORO 3,264 13.8 6.9 1.0 0.9 5.8 4.2 1.7 3.0 18.7

U.S. average 10.9 7.5 1.6 1.4 5.2 4.3 1.6 6.7 23.5

Note: * Fiscal year-end March 09-10Source: Bloomberg, * * DBS Vickers

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Company Focus

Sngapore Petroleum Co

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Income Statement (S$ m) Balance Sheet (S$ m)FY Dec 2006A 2007A 2008F 2009F FY Dec 2006A 2007A 2008F 2009FTurnover 8,574 8,767 14,125 12,935 Net Fixed Assets 958 1,334 1,377 1,417Cost of Goods Sold (8,072) (8,020) (13,244) (12,039) Invts in Associates & JVs 141 127 139 151Gross Profit 502 747 881 896 Other LT Assets 60 83 83 83Other Opng (Exp)/Inc (152) (172) (158) (163) Cash & ST Invts 429 483 592 852Operating Profit 349 575 723 732 Other Current Assets 1,552 2,281 2,559 2,345Other Non Opg (Exp)/Inc 0 18 0 0 Total Assets 3,140 4,308 4,750 4,848Associates & JV Inc 11 14 12 12Net Interest (Exp)/Inc (22) (25) (35) (33) ST Debt 444 837 837 837Exceptional Gain/(Loss) 0 0 0 0 Other Current Liab 1,015 1,522 1,727 1,591Pre-tax Profit 338 581 700 711 LT Debt 0 0 0 0Tax (54) (73) (154) (149) Other LT Liabilit ies 111 159 159 159Minority Interest 0 0 0 0 Shareholders Equity 1,570 1,790 2,027 2,261Net Profit 285 508 546 562 Total Cap. & Liab. 3,140 4,308 4,750 4,848Net Profit before Except. 285 508 546 562EBITDA 416 698 842 855 Non-Cash Wkg. Capital 537 759 832 755

Net Cash/(Debt) (15) (354) (245) 15Sales Gth (%) 14.7 2.2 61.1 (8.4)EBITDA Gth (%) (17.2) 67.6 20.6 1.5Opg Profit Gth (%) (21.7) 64.7 25.7 1.3

Net Profit Gth (%) (29.5) 78.7 7.4 2.9Effective Tax Rate (%) 15.9 12.6 22.0 21.0

Cash Fow Statement (S$ m) Rates & RatioFY Dec 2006A 2007A 2008F 2009F FY Dec 2006A 2007A 2008F 2009FPre-Tax Profit 338 581 700 711 Gross Margins (%) 5.9 8.5 6.2 6.9Dep. & Amort. 56 91 107 110 Opg Profit Margin (%) 4.1 6.6 5.1 5.7Tax Paid (20) (42) (80) (154) Net Profit Margin (%) 3.3 5.8 3.9 4.3Assoc. & JV Inc/(loss) (11) (14) (12) (12) ROAE (%) 19.0 30.3 28.6 26.2Chg in Wkg.Cap. (52) (273) (147) 82 ROA (%) 9.3 13.7 12.1 11.7Other Operating CF 64 22 0 0 ROCE (%) 18.6 27.0 25.5 25.5Net Operating CF 375 365 568 738 Div Payout Ratio (%) 63.2 60.8 60.0 60.0Capital Exp.(net) (66) (408) (150) (150) Net Interest Cover (x) 15.8 22.8 20.8 22.1Other Invts.(net) 0 (15) 0 0 Asset Turnover (x) 2.8 2.4 3.1 2.7Invts in Assoc. & JV 0 35 0 0 Debtors Turn (avg days) 37.2 49.0 35.8 38.2 Div from Assoc & JV 9 11 0 0 Creditors Turn (avg days) 40.3 54.2 41.0 45.1Other Investing CF (4) 7 0 0 Inventory Turn (avg days) 25.5 32.7 27.9 32.6Net Investing CF (62) (369) (150) (150) Current Ratio (x) 1.4 1.2 1.2 1.3Div Paid (165) (284) (309) (328) Quick Ratio (x) 1.0 0.8 0.8 0.9Chg in Gross Debt 51 393 0 0 Net Debt/Equity (X) 0.0 0.2 0.1 CASHCapital Issues 5 1 0 0 Capex to Debt (%) 14.9 48.7 17.9 17.9Other Financing CF (37) (52) 0 0 N. Cash/(Debt)PS (S cts) (2.9) (68.8) (47.4) 3.0Net Fnancing CF (147) 58 (309) (328) Opg CFPS (S cts) 82.9 124.2 138.8 127.0Net Cashflow 166 54 109 260 Free CFPS (S cts) 59.8 (8.2) 81.1 113.9Quarterly / Interim Income Statement (S$ m) Segmental BreakdownFY Dec 2Q2007 3Q2007 4Q2007 1Q2008 FY Dec 2006A 2007A 2008F 2009FTurnover 1,975 2,239 2,629 2,714 Revenues (S$ m)Cost of Goods Sold (1,737) (2,087) (2,424) (2,560) Upstream 49 145 455 501Gross Profit 237 152 205 154 Downstream 8,525 8,622 13,670 12,434Other Oper. (Exp)/Inc (29) (46) (44) (34)Operating Profit 208 106 161 120 Total 8,574 8,767 14,125 12,935Other Non Opg (Exp)/Inc 0 0 0 0Associates & JV Inc 3 4 2 3Net Interest (Exp)/Inc (6) (2) (14) (2) Operating profit (S$ m)Exceptional Gain/(Loss) 0 0 0 0 Upstream 15 52 244 295Pre-tax Profit 205 109 150 121 Downstream 338 523 479 437Tax (26) (9) (33) (22)Minority Interest 0 0 0 0 Total 353 576 723 732Net Profit 179 100 117 98Net prof it bef Except. 179 100 117 98EBITDA 224 124 216 165 Operating profit Margins

Upstream 29.7 36.1 53.7 58.9Sales Gth (%) 2.6 13.4 17.4 3.2 Downstream 4.0 6.1 3.5 3.5EBITDA Gth (%) 67.5 (44.7) 74.5 (23.7)Op Profit Gth (%) 77.3 (49.0) 51.7 (25.6) Total 4.1 6.6 5.1 5.7Net Prof it Gth (%) 59.9 (44.3) 17.5 (16.1)Gross Margins (%) 12.0 6.8 7.8 5.7Opg Profit Margins (%) 10.5 4.7 6.1 4.4Net Profit Margins (%) 9.1 4.5 4.5 3.6Source: Company, DBS Vickers

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Company FocusSngapore Petroleum Co

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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 (0-15% total return over the next 12 mont hs for small caps, 0-10% 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 identif iable catalysts within this time frame)Share price appreciation + dividends

DBS Vickers Research is available on the following electronic platforms: DBS Vickers (www.dbsvresearch.com); Thomson

(www.thomson.com/financial); Factset (www.factset.com); Reuters (www.rbr.reuters.com); Capital IQ (www.capitaliq.com) and Bloomberg(DBSR GO). For access, please contact your DBSV salesperson.

GENERAL DISCLOSURE/DISCLAIMERThis document is published by DBS Vickers Research (Singapore) Pte Ltd (" DBSVR" ), a direct wholly-ow ned subsidiary of DBS Vickers Securit ies(Singapore) Pte Ltd (" DBSVS" ) and an indirect wholly-owned subsidiary of DBS Vickers Securit ies Holdings Pte Ltd (" DBSVH" ). [This report is intendedfor clients of DBSV Group only and no part of this document may be (i) copied, photocopied or duplicated in any form by any means or (ii)redistributed without the prior written consent of DBSVR.]

The research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty as to itsaccuracy, 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 particularneeds of any specific addressee. This document is for t he information of addressees only and is not to be taken in substitution for the exercise of

judgement by addressees, who should obtain separate legal or financial advice. DBSVR accepts no liabilit y whatsoever for any direct or consequentialloss arising f rom any use of this document or further communication given in relation to this document. This document is not to be construed as anoffer 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

affi liates and/or persons associated with any of them may from t ime to time have interests in the securities mentioned in this document. DBSVR,DBSVS, DBS Bank Ltd and their associates, their directors, and/or employees may have positions in, and may effect transactions in securitiesmentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.

DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking t ransaction as amanager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures inthis disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.

ANALYST CERTIFICATIONThe 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 certif ies that no part of his/her compensationwas, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 11 Jun 2008, t he analyst andhis / her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report( interest includes direct or indirect ownership of securit ies, directorships and trustee positions).

COMPANY-SPECIFIC / REGULATORY DISCLOSURES1. DBS Vickers Securities (Singapore) Pte Ltd and its subsidiaries do not have a proprietary position in the securities

recommended in this reportas of9 Jun 2008.

2. DBSVR, DBSVS, DBS Bank Ltd and/or other af fi liates of DBS Vickers Securit ies (USA) Inc (" DBSVUSA" ), a U.S.-registeredbroker-dealer, may beneficially own a total of 1% or more of any class of common equity securities of the subjectcompany as of 11 Jun 2008.

3. Compensation for investment banking services:DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA may have received compensation, within thepast 12 months, and within the next 3 months may receive or intends to seek compensation for investmentbanking services from the subject company.

DBSVUSA does not have its own investment banking or research department, nor has it participated in anyinvestment banking t ransaction 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 transactionin any security discussed in this document should contact DBSVUSA exclusively.

4. There are no company-specific disclosures for Singapore Petroleum Co.

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