Morning Pack: Regional Equities

Regional Equities
Morning Pack
DBS Group Research. Equity 21 June 2011
Corporate Access
SINGAPORE
Industrial REITs Another prized portfolio (Derek TAN/LOCK Mun Yee) Rare opportunity for industrial S-REITs to acquire a sizeable portfolio of industrial assets in Singapore. Qualities aplenty; earnings accretion is significantly higher for MINT vs A-REIT. BUY MINT (TP S$1.21), Maintain HOLD for A-REIT (TP S$2.14) on valuations
Hyundai Steel Date: 20-24 Jun; Location: US Malaysia Airports Date: 24-27 Jun; Location: US
Malaysia
Corp Day / Event Pulse of Asia 1H11 Date: 5 7 July; Location: SG
Berjaya Sports Toto: HOLD RM4.52; Target Price Price Target : 12- month RM4.55 (Prev RM 4.25) Brighter Days Ahead (YEE Mei Hui) Results in line with expectations, lower 3sen final DPS declared. Raise FY12-13F earnings by 1-6% to factor in impact from new 4D jackpot game (partly offset by higher operating cost). Maintain Hold with TP of RM4.55 (from RM4.25).
Major Reports Recently Published

Banking Sector Capital raising risk is overblown(Alexander Lee) Sector has fallen back to lower end of trading range on capital raising fears. We see minimal equity raising risk from the Big 4 due to rumoured risk-weight changes. Good time to accumulate as dilution risk discount is unwarranted. Automobile Sector Fortune favours the dealers (Rachel MIU) Luxury brand auto dealers flourishing on low penetration rates and growing affluence; robust demand despite auto curbs in Beijing. Inflationary pressures and capacity build-up key concerns for mass-market automakers. Expect weak auto sales till inflection point in August when rising volumes in 4Q should push full year total volume growth to 8%. Top auto dealer picks are China ZhengTong and Zhongsheng Group for their luxury auto brand exposure. Our pick of automaker is Dongfeng Motor. Strategy Update Focus on domestic plays (Chanpen SIRITHANARATTANAKUL / Thailand Research Team) The Thai market eased 1.8% in May 2011 against an average of 1.6% contraction for regional peers. Small- & Mid-Cap slightly outpaced large-caps last month as investors took profit on large-cap Petrochemicals and Energy stocks following the release of 1Q11 results.
CHINA / HONG KONG

Shui On Land: HOLD; HK$3.09; Price Target: 12-Month HK$3.86; 272 HK Execution on track (Danielle WANG/Carol Wu/Andy Yee) Locked in 50% of its ambitious sales target. En-bloc sale at lower margin but will strengthen cash flow. Valuation undemanding but lack of near-term catalyst. Maintain HOLD with TP of HK$3.86. Result Snapshot Huabao (336 HK) : Defensive business with decent growth Flash Notes China Mobile: HOLD; HK$69.1; Price Target: 12-Month HK$74; 941 HK Boring set of May 2011 operational statistics. Prefer smaller players in the sector (Tsz Wang TAM) China Telecom: BUY; HK$4.62; 12 month Price Target: HK$5.20 Consistent May 2011 operational performance (Tsz Wang TAM) China Unicom: BUY; HK$14.98; 12 month Price Target: HK$18.0 May 2011 3G sub growth fell short of market expectation (Tsz Wang TAM) Comba: BUY; HK$8.24; Price Target: 12-Month HK$10.5; 2342 HK CommScope files lawsuit against Comba Telecom (Tsz Wang TAM)
INDONESIA
Intiland Development: BUY; Rp315; Price Target : Rp 505 (Prev Rp 725); DILD IJ Target Price Busy years ahead (Indonesia Research Team) Attractive project pipeline for the next four years. Huge landbank earmarked for wide range of properties to ride on the sectors growth. Cut FY11F/12F earnings by 31%/67% after imputing more conservative revenue recognition. Albeit lower TP of Rp505, maintain BUY, due to cheap valuation of 0.33xP/NAV, offering 62% upside
KOREA
Lock & Lock: BUY; CP (June 17): W40,100; TP (12M): W44,000 ; 115390 KS Business in China continuing to thrive
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report
Recipients of this report, received from DBS Vickers Research (Singapore) Pte Ltd (DBSVR), are to contact DBSVR at +65 6398 7954 in respect of any matters arising from or in connection with this report.
Regional Morning Pack

Market Data
Earnings Gth (%) 11F 12F Singapore Malaysia HK HSI HK HSCCI (Red) HK HSCEI (H) Thailand Indonesia 7.1 17.6 14.1 1.8 18.3 10.6 25.3 13.3 11.6 15.6 14.5 17.9 9.2 15.1 PE (x) 11F 13.6 15.4 11.5 12.6 9.8 11.4 14.1 12F 12.0 13.8 10.0 11.0 8.3 10.2 11.7 Asia KLCI JCI Index PCOMP MXFEJ index KOSPI SET Taiex HSCCI Index HSCEI Index Hang Seng STI Shanghai A Nikkei 225 BSE Sensex U.S./Others Dow Jones S&P NASDAQ FTSE 100 DAX Index
Key Indices
Indices Closed as of 20 Jun 11 1,559 3,729 4,153 509 2,020 1,013 8,531 3,938 12,009 21,600 3,014 2,621 9,354 17,507 % chg vs previous close -0.3 0.2 0.0 -0.5 -0.6 -0.6 -1.2 -0.5 -0.3 -0.4 0.3 -0.8 0.0 -2.0 YTD (%) 2.7 0.7 -1.1 -3.1 -1.5 -1.9 -4.9 -5.6 -5.4 -6.2 -5.5 -6.7 -8.6 -14.6 QTD (%) 0.9 1.4 2.4 -4.7 -4.1 -3.3 -1.8 -7.2 -9.8 -8.2 -3.0 -10.5 -4.1 -10.0 MTD (%) 0.1 -2.8 -2.2 -7.2 -5.7 -5.7 -5.1 -9.1 -9.5 -8.8 -4.6 -4.5 -3.5 -5.4
Source: DBS Vickers
12,080 1,278 2,630 5,693 7,150
0.6 0.5 0.5 -0.4 -0.2
4.3 1.6 -0.9 -3.5 3.4
-1.9 -3.6 -5.4 -3.6 1.5
-3.9 -5.0 -7.3 -5.0 -2.0
Source: Bloomberg, DBS Vickers

Commodity Indicators
Commodities Nickel Spot Coal Spot Tin Steel Copper Gold Spot Soybean Oil Spot Soybean Spot Sugar Spot Rice Wheat Spot Palm Oil Spot (CIF R) Palm Oil Spot (FOB Msia) Crude Oil Brent Spot Corn Spot USD/mt USD/mt USD/mt RMB/mt USD/lb USD/t. oz USD/pound USD/bushel USD/pound USD/cwt USD/bushel USD/mt RM/mt USD/barrel USD/bushel Latest Closing Previous Closing 21,617 119 24,800 4,994 399 1,541 55 13 31 15 6 1,113 3,230 112 7 21,593 119 25,005 5,013 400 1,539 55 13 30 15 6 1,110 3,870 113 7
-12.5% -5.9% -7.8% 7.8% 3.6% 8.4% 2.6% -0.3% -14.5% -0.4% -13.2% -13.4% -14.1% 18.5% 21.9%
Y T D % chng
Nickel Spot Coal Spot Tin Steel Copper Gold Spot Soybean Oil Spot Soybean Spot Sugar Spot Rice Wheat Spot Palm Oil Spot (CIF R) Palm Oil Spot (FOB Msia) Crude Oil Brent Spot Corn Spot Rubber Spot 45%
-11.8% -25% -15% -5% 5% 15%

Credit Spreads
Credit Spreads US Junk Bond Asia Convertible Bonds CBOE SPX Volatility 494 347 20 484 339 22
25%
35%
YT D % chng
CBOE SPX Volatility Asia Convertible Bonds 5% -7% -5% -3% -1% 1% 3% 5% 7% US Junk Bond
Page 2
Regional Market Focus
High Conviction Picks

DBS Group Research . Equity
High Conviction Stock Picks
Price 20 June11 (LCY) 10.48 5.33 13.30 6.35 12.58 34.40 13.38 4.41 5.77 31.40 149.00 88.25 111.00 334.00 3,600 44,500 43,000 421,500 16,400 46,400 25,200 Target Price (LCY) 13.55 6.25 15.00 8.70 19.50 50.20 20.00 7.50 8.22 38.23 214.00 118.00 162.00 420.00 5,000 57,300 55,000 650,000 34,000 72,000 45,000 Upside (%) 29 17 13 37 55 46 49 70 42 22 44 34 46 26 39 29 28 54 107 55 79 % Chg -1w (5) 0 3 0 (7) (4) (4) (14) (2) 1 (2) (1) 0 (1) (2) (3) 2 (3) 0 6 (4) % Chg since Entry Date 6 (3) 33 2 (11) (6) (16) (23) (10) (2) 6 0 28 (2) (8) (3) 13 (13) (28) (10) 4 Date of Entry to List 7-Jan-11 20-May-11 1-Apr-11 9-May-11 20-May-11 20-May-11 20-May-11 20-May-11 20-May-11 27-May-11 23-Jul-10 3-Jun-11 1-Mar-11 3-Jan-11 13-May-11 13-May-11 7-Feb-11 8-Apr-11 11-Mar-11 7-Jan-11 22-Oct-10 Mcap US$m 15,101 27,595 6,914 2,827 4,651 15,006 4,657 8,490 64,277 2,188 9,307 2,314 8,693 13,115 7,790 5,834 2,452 33,891 2,875 3,208 13,761 3mths Avg Daily T/O US$m 46 30 4 8 71 97 21 57 209 10 42 1 29 27 10 10 19 123 38 28 282
21 June 2011
Company Big Caps (>$2bn) Keppel Corporation Wilmar Hong Leong Bank IJM Corporation China National Building China Shenhua Energy Cosco Pacific Evergrande ICBC Luk Fook Bangkok Bank BIG C Supercenter KASIKORNBANK Siam Cement Bank Negara Indonesia Indo Tambangraya Megah Dongkuk Steel Mill Co POSCO Daewoo Securties Hanwha Corp Hynix Semiconductor Company Big Caps (>$2bn) Keppel Corporation
Exch KEP SP WIL SP HLBK MK IJM MK 3323 HK 1088 HK 1199 HK 3333 HK 1398 HK 590 HK BBL TB BIGC TB KBANK TB SCC TB BBNI IJ ITMG IJ 001230 KS 005490 KS 006800 KS 000880 KS 000660 KS SG SG MY MY HK HK HK HK HK HK TH TH TH TH IND IND KS KS KS KS KS
Sector Industrials Consumer Goods Banks Industrials Industrials Basic Material Industrials Real Estates Banks Consumer i Banks Consumer i Banks Industrials Banks Basic Material Basic Material Basic Material Financials Chemical Technology
Wilmar International
Hong Leong Bank
IJM Corporation
China National Building Material China Shenhua Energy
COSCO Pacific
Evergrande Real Estate
Reasons for Picks / Potential Catalysts Key beneficiary of sustained uptick in rig orders. FY11 YTD order wins of S$4.5bn (64% of full year assumption of S$7bn), almost doubled end FY10 orderbook. Options for another 15 jackups worth US$3.2bn provide visibility to order pipeline. Processing margins to expand in 2HCY11 due to end product prices lagging fall in CPO prices. Initial contribution from Sucrogen (sugar) and growth from rice & flour milling to demonstrate attractive growth platform, triggering rerating. Attractive valuation relative to strong FY11-13F earnings CAGR of 19%. Sustainable 15-17% growth led by domestic and regional expansion. We expect EON Capital acquisition to be earnings enhancing. Among the best asset quality and capital strength in Malaysia. Construction going strong, potential for orderbook to double. Robust property sales. Canal City and Sebana Cove scheduled for launch in CY12. Buy with RM8.70 TP. Re-rating due to strong recovery in cement prices in core-profit generating regions. Expect 40% earnings CAGR for FY10-12 boosted by GM margin improvement and volume growth. Undemanding valuation provides good entry level. Earning enhancement from potential M&As. Increasing spot exposure provides higher leverage to coal price. Promising sector outlook and attractive valuation. Higher terminal earnings forecast due to strong container throughput growth and container tariff hike, as well as higher operating leverage from its higher portion of young terminals. Better earnings prospect for its container leasing and manufacturing business, driven by strong container demand, high container selling price and leasing rate. Cheap at 11x FY11 PE, and 3.7% dividend yield. Presales YTD have been strong. It has locked in 37% of its 2011 presales target (vs sector average of 28%); Strong management team and execution capability. It takes them only 4 years to grow from a Guangzhou player to a national leader with a and bank size close to 100m sm; At 45% discount to NAV and 6.9x FY11 P/E, valuations remain attractive.
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report
Regional Market Focus High Conviction Pick
ICBC
Has one of the best internal capital generation capabilities. Low capital raising risk compared to smaller banks. One of the best positioned banks in the longer run for offshore Rmb business. The bank is also well positioned to weather deposit rate liberalization given strong retail deposit franchise. Reasons for Picks / Potential Catalysts Luk Fook rides strongly on huge appetite for jewelleries in the Greater China Region to see strengthening YTD same-store sales growth. Its extensive and scalable sales network increasingly strengthens brand awareness and customer loyalty. Coupled with rising RMB and improving affordability across Chinese consumers, its bright growth prospects offer ample re-rating potentials ahead. Reiterate our BUY rating. Higher loan growth of 12%, led by stronger demand for corporate and SMEs, with slightly widening of NIM by 3bps to 2.54% and 10% fee income growth for FY11F. Transforming into regional bank, with diversified loan portfolio in both domestic and international markets (17% of total loans), specifically China. Highest NPL coverage ratio of 170% in the sector and strong capital base. Merger with Carrefour will create synergies and close up gap with top player, Tesco Lotus. Launching 15 BIG C Extras concept stores to cater and maintain premium Carrefour customer segment. Strong earning growth with lift in scale and margin. Maintain BUY and Bt118 TP, cheapest among leading retail peers, large 31% upside potential. Expect strong loan growth of 12% for FY11F, with leading share in high-yield SME loans segment. Sustainable high NIM at 3.5%, 18% fee income growth for FY11F, and good asset quality with the lowest NPL ratio at 2.9% in FY10. Higher ROE to18.0% in FY11F vs 15.7% in FY10, premised on K-Transformation and channel expansion projects completion in 2011-12. 1Q11 earnings grew 34% y-o-y but fell 45% q-oq. Excluding the gain in 4Q10 from divesting PTTCH, earnings were up 62% q-o-q above expectations. Expect weak earnings in 2Q11 to lower spreads on HDPE and softening cement sales. Earnings to gain momentum in 2H11 when SCCs new crackers run at full capacity upon the startup of 2 downstream plants. Maintain BUY, DCF-based TP Bt420. SCC has Bt73bn cash on hand for M&As. BBNI poised for a turnaround story in 2H11 and 2012. BBNI will continue to improve its asset quality in 2011 for a cleaner platform for growth in 2012. Relatively cheap compared to its peers at 2x PBV versus Mandiri at 2.7xPBV and BBRI at 3.2xPBV. Higher coal prices were offset by higher than expected production cost in 1Q11, like other coal miners. However, we expect earnings to accelerate in 2Q onwards underpinned by higher volume and ASP. ITMG has better CV coals (5-7K vs 5K for Adaro) and bigger exposure to export market with higher ASP. Fears of overcapacity for heavy plates ease with healthy domestic demand ; Korea is still a net importer of heavy plates, supported by strong ship building activities with backlogs and recovering new orders. Expect profit improvement; FY11F operating profit is projected to grow 21.5% to KRW331bn due to a hike in selling prices coupled with sales volume growth. Undemanding valuation: Currently, it is trading at 0.8x FY11 P/BV which is 35% discounted to the KOSPI average. POSCO is likely to raise its domestic selling prices despite recent BaoSteels cut on domestic selling prices and Korean governments implicit price control. We project 2Q11s operating profit to grow by 55% followed by 1Q11s c KRW1tr operating profit (based on IFRS GAAP), backed by price hikes and sales volume growth. POSCO currently trades at FY11F P/BV of 1.0x, a discount to its domestic and regional peers. The negative sentiment on its M&As was already priced in. Share price correction has been overdone. Given its most outstanding portfolio, Daewoo Securities is our sector favorite. Daewoo Securities is expected to deliver the highest earnings growth within the Korean brokerage sector (up 16% y-o-y to KRW400bn in FY11). Gunpowder industry is moving into a peak season. Stock is currently undervalued, considering its subsidiaries (Hanwha chemical, Koreanlife insurance) re-rating. Its subsidiaries (Hanwha chemical , Koreanlife insurance) will continue to be re-rated. Starting from 1Q11, the pace of decline in DRAM prices is expected to slow down. Considering the recent upswing of semiconductor prices, 2Q11 and full-year earnings should outperform market consensus as well. Considering strong growth for the mobile DRAM market, we expect the stock's valuation to rise to 2005 level when the NAND market achieves robust growth.
Company Big Caps (>$2bn) Luk Fook Holdings
Bangkok Bank
Big C Supercenter
KASIKORNBANK
Siam Cement
Bank Negara Indonesia
Indo Tambangraya Megah Dongkuk Steel Mill Co
POSCO
Daewoo Securities
Hanwha Corp
Hynix Semiconductor
Source: Bloomberg, DBS Vickers, Hanadaetoo Securities
Page 2
Regional Market Focus High Conviction Picks
Company Small & Mid Caps (<US$2bn) ARA Asset Management ARA SP CDL Hospitality CDREIT SP Parkway Life PREIT SP Boustead BOUS MK DRB-Hicom DRB MK Beijing Jingkelong 814 HK Ming Fai 3828 HK Orient Watch 398 HK Tai Cheung 88 HK VST 856 HK Amata Corporation AMATA TB Major Cineplex MAJOR TB Sampoerna Agro SGRO TB LIG 002550 KS Meritz Fire 000060 KS Neowiz Games Corp 095660 KS
Exch SG SG SG MY MY HK HK HK HK HK TH TH IND KS KS KS
Sector Financial Reits Reits Industrials Industrials Consumer Services Consumer Goods Consumer Services Real Estates Technology Real Estates Consumer Services Consumer Goods Insurance Insurance Consumer Goods
Price 9 June 11 (LCY) 1.53 2.04 1.80 6.09 2.26 9.78 2.12 4.74 5.98 1.58 12.60 15.10 3,300 25,550 12,250 50,500
Target Price (LCY) 1.82 2.30 1.95 7.90 3.80 14.14 3.30 8.42 7.88 3.30 20.00 19.50 4,200 38,500 19,100 66,600
Upside (%) 19 13 8 30 68 45 56 78 32 109 59 29 27 51 56 32
% Chg -1w (4) 1 (1) (3) 0 (2) (3) (2) (3) (14) 2 (4) (2) 2 7 7
% Chg since Entry Date (5) 0 1 21 26 (3) (8) 2 (4) (16) (22) 6 (5) 11 0 (0)
Date of Entry to List 20-May-11 9-May-11 20-May-11 4-Oct-10 13-Dec-10 4-May-11 29-Apr-11 20-May-11 20-May-11 20-May-11 3-Sep-10 9-May-11 24-May-11 7-Jan-11 8-Apr-11 22-Apr-11
Mcap US$m 951 1,585 881 1,884 1,437 229 173 286 474 255 440 436 724 1,414 986 1,021
3mths Avg Daily T/O US$m 1 2 1 2 5 0 1 2 0 1 4 5 2 9 7 8
Company Small & Mid Caps (<$2bn) ARA Asset Management
Reasons for Picks / Potential Catalysts 1Q11 result highlighted strong earnings quality. Significant boost for ARAs brand name in Asia Pacific from Hui Xian Listing. After taking into account 1-for-10 bonus issue. SOTP-based TP was adjusted to S$1.82. Largest single player in the Singapore hospitality sector, with c6% share in room inventory, that will enable the group to leverage on the robust tourism outlook in the republic. Hotel performance is expected to improve from Q2 onwards, which are seasonally better quarters, while the completion of Studio M Hotel acquisition and rate hikes from the reopening of refurbished rooms at Novotel Clarke Quay and Orchard Hotel will boost performance. Attractive DPU growth of 17% and 11% in FY11 and FY12 respectively and a strong balance sheet with low gearing of c26%. Stable and defensive portfolio; 88% of portfolio revenue with downside rental protection. Higher inflation in Singapore bodes well for its hospital's rental reversion pegged to CPI Opportunity for inorganic growth through acquisitions (Australia, Malaysia, Japan) and asset enhancement in Singapore. GLC-linked conglomerate trades at attractive multiples and dividend yields with a potential for higher payout. Proactive management, morphing into GLC property proxy, and surging contract flows for BHIC. Beneficiary of upswing in crude palm oil (CPO) prices. We expect a significant rerating from its bargain basement PE and P/Bk valuations on the back of a 3-year EPS CAGR of 79%. The eventual divestment of 30% of Bank Muamalat could enable the group to expand its footprint regionally. Based on 1.4x NTA, similar to Hong Leong Banks offer for EON Bank's assets, this could raise RM600m. Strengthening its services and property business with the Pos Malaysia acquisition. Beijing Jingkelong continues to ride on an inflationary environment for decent growth ahead. Potential A-share listing by mid-2011 for more fundings should help accelerating expansion further. Trading at c.30% dicount to our target price of HK$14.14 and a bargain of c.18x 12-month rolling PE versus peers' >25x, BUY. Fast growing retail business on the back of rapid expansion of 7 Magic franchise network in China. Improving profitability of 7 Magic business on rising sales percentage of skin care products. Stable performance from hotel amenity operation with mid-teens growth. Well-poised to benefit from the booming demand for luxuries in China. Strong ties with Rolex Group for opening the world's largest Rolex Store in Shanghai. At c.13x PE, it is well on track for an upward rerating given peers' 15-20x FY11 PE. Luxurious house at Plunketts Road on the Peak sold at encouraging prices. Strong net cash of est.HK$2.4bn (HK$3.8/sh) led by continued asset divestments. Compelling valuation. Buy with TP of HK$7.88. Double digit growth in turnover expected and 22% EPS growth expected in 2011. Growth driven by strengthenging relationship with new clients such as Apple, Dell, and Lenovo. Attractive valuation at P/E of 4.7x. Strong land sales momentum - from 254 rai in 2009 to 1,295 rai in 2010 - should continue in 2011. Potential catalysts include (i) securing large land deals, (ii) listing of Amata Vietnam on Vietnam Stock Exchange, and (iii) securing licenses to develop a new project in Vietnam. Maintain BUY and RNAV-based TP of Bt20. Earnings should be strong in 2Q11F due to attractive film line up for both Hollywood and Thai films. Ad income should also improve in 2Q11F due to higher traffic and election. Besides an attractive Hollywood film line-up, King Narasuan 3 & 4 will also boost cinema and advertising income in 2Q11F and 4Q11F, respectively. Reiterate BUY for strong earnings momentum and 26% upside to Bt19.50 TP, pegged to 23x FY11F PE.
CDL Hospitality Trusts
Parkway Life REIT
Boustead Holdings
DRB-Hicom
Beijing Jingkelong
Ming Fai
Oriental Watch
Tai Cheung
VST Holdings
Amata Corporation
Major Cineplex
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Regional Market Focus High Conviction Pick
Company Small & Mid Caps (<$2bn) Sampoerna Agro
Reasons for Picks / Potential Catalysts Aggressive planting to fuel FFB, EPS growth (13.3%, 12.2% 3-year CAGR, respectively). Relatively unaffected by 09 El Nino resilient 4Q10 volume. Strong balance sheet, c.2% DPS yield, 27% upside to TP. Second least expensive upstream planter regionally. Back to competing for 2nd place vs low valuation, the worst is over. Auto loss insurance improvement plans + alpha. Biggest benefactor from improved persistency rates. Superior growth and profitablity to be spotlighted after spin-off. The main beneficiary of the recovery in new contract of protection-related products. Attractive valuations vs. bigger players (Adj. P/B Top 3 non-life insurers 1.5x vs Meritz F&M 1.1x). Sales growth for Crossfire is higher than expected and should continue in the long term. Crossfire revenue in China (published by Tencent) would grow 20% q-o-q in 1Q11. 1Q11 earnings will surpass market expectations, with sales increasing 12% q-q (49.2% y-y). Neowiz Games is still attractive (based on low 9x P/E vs. NC Soft's 25x) although the company currently derives most of its growth from a single profit driver.
LIG
Meritz Fire & Marine
Neowiz Games
Source: Bloomberg, DBS Vickers, Hanadaetoo Securities
Page 4
Singapore Industry Focus
Industrial REITs
DBS Group Research . Equity 21 Jun 2011
Another prized portfolio

Rare opportunity for industrial S-REITs to acquire a sizeable portfolio of industrial assets in Singapore Qualities aplenty; earnings accretion is significantly higher for MINT vs A-REIT BUY MINT (TP S$1.21), Maintain HOLD for A-REIT (TP S$2.14) on valuations
Rare opportunity to acquire a sizeable Singapore-based portfolio of industrial properties. Recent media reports highlighted that Mapletree Industrial Trust (MINT) and Ascendas REIT (A-REIT) have been short-listed in the final bidding for JTCs tender exercise of 21 flatted factories and amenity centers. This is a rare opportunity for both REITs to acquire such a sizeable portfolio of 3.5m sq ft NLA of welllocated assets in Singapore. In terms of NLA, the target assets will account for c13% and c 21% of AREITs and MINTs current portfolios respectively. Location is a strong selling point. Within the industrial hubs in Eastern Singapore, the properties are located close to established housing estates and typically enjoy strong demand for space from tenants. We understand that current average occupancy is high at c96%. We expect the portfolios operational performance to remain robust with growth from expected positive rental reversions in current industrial up-cycles on top of improving occupancies. In addition, there are also opportunities for re-development that will be earnings accretive, subject to regulatory approval. Earnings accretion expected. At current gearing of c33% and 36% respectively, we believe both MINT and A-REIT have the financial capacity to acquire. In our scenario analysis, we assume A-REIT and MINT each be awarded a tranche of properties at S$300m @ 7% NPI yield. We estimate DPU accretion of c4% for A-REIT and c15% for MINT, assuming debt cost of 3.0%. In addition, an assumed equity fund raising exercise for MINT would unveil estimated DPU accretion from +6% to +14% (TP +1% to +10%) assuming between 20-70% of funding through new equity raising. BUY MINT, TP S$1.21 offers total return of 11%, HOLD AREIT on valuations. We are positive on A-REIT and/or MINT as possible winners in this tender exercise, which will provide re-rating catalysts for stock prices. While the portfolio offers income diversification to A-REIT, it has greater strategic fit with MINT, which already manages a portfolio of similar-type flatted factories. In addition, a win would have a greater impact on MINTs earnings and target prices given a larger contribution to its portfolio.
STI :
3,013.60
Analyst Derek TAN CPA +65 6398 7966 derektan@dbsvickers.com LOCK Mun Yee +65 6398 7972 munyee@dbsvickers.com
Industrial REITs
FYE* Price S$ Mkt Cap S$m Target Price S$
Rating
Dividend Yield (%) FY11F FY12F
A-Reit Ascendas India Cache Logistics Cambridge Industrial Mapletree Logistics Mapletree Industrial
Mar 2.03 4,227 2.14 Hold Mar 0.935 718 1.05 Buy Dec 0.94 598 1.11 Buy Dec 0.49 583 0.56 Buy Dec 0.91 2,208 1.07 Buy Mar 1.16 1,697 1.21 Buy
6.5 8.0 8.3 9.3 7.3 6.6
6.8 8.8 9.1 10.3 7.5 7.0
Source: DBS Vickers * For reits with Mar FYE, yields are stated on FY12 and FY13 basis
www.dbsvickers.com Refer to important disclosures at the end of this report ed: MY / sa: JC
Industry Focus Industrial REITs
JTC portfolio which will win it? Recent media reports noted that a unit of Ascendas group likely to be Ascendas REIT (A-REIT), Mapletree Industrial Trust (MINT) and Soilbuild Group have been short-listed to take part in the second and final round of bidding for JTC Corporation's latest tender of industrial assets involving 21 flatted factories and amenity centers tipped to worth an estimated S$600-650m. JTC portfolio details
Property Cluster Kallang Basin 7 Kolam Ayer 3 Kolam Ayer 4 Tai Seng Portfolio Tranche 1 Kallang Basin 1 Kallang Basin 2 Kallang Basin 3 Bedok Kampong Ubi Portfolio Tranche 2 Land Area (sqm) 14,502 21,369 12,113 38,304 86,288 9,690 14,604 17,739 38,480 29,957 110,470 NLA (sqm) 27,953 38,976 14,836 50,284 132,049 12,388 23,357 37,832 73,314 50,521 197,412 NLA (sq ft) 300,774 419,382 159,635 541,056 1,420,847 133,295 251,321 407,072 788,859 543,606 2,124,153 GFA (sqm) 37,023 48,335 19,639 73,857 178,854 17,713 34,024 46,852 90,454 67,208 256,251 GFA (sq ft 398,367 520,085 211,316 794,701 1,924,469 190,592 366,098 504,128 973,285 723,158 2,757,261 No. of blocks 2 flatted factory & 1 amenity 1 flatted factory & 1 amenity 1 flatted factory 3 flatted factory & 1 amenity 10 1 flatted factory & 1 amenity 2 flatted factory 1 flatted factory 2 flatted factory & 1 amenity 2 flatted factory & 1 amenity 11
Total portfolio size is understood to range between S$600650m. The sale involves 21 blocks of flatted factories and amenity centers adding up an approximately 3.5m sqft of net lettable area (NLA). These properties are located mainly in Eastern Singapore in estates like Kolam Ayer, Kallang Basin, Tai Seng, Bedok and Kampong Ubi. The assets will be sold in two tranches.
Note: Land Area, GFA and NLA are approximate figures Source: JTC, DTZ, DBS Vickers
Map of Singapore ( Both portfolio Tranches of the JTC portfolio are located in Eastern-Central part of Singapore)
Source: JTC, DTZ, DBS Vickers
Page 2
The bidders and how it could potentially benefit them The short-listed parties A-REIT and MINT are notable industrial landlords in Singapore, each having significant market share (collectively own 15%) of the total flatted factory market in Singapore. Soilbuild is a boutique developer of residential and business space in Singapore and currently owns less than 0.1% of flatted factory market supply. A-REIT and MINT collective owns 15%* of the total flatted factory market in Singapore
Other public agencies 13% MINT 11% J TC 8% A-REIT 4% Ascendas Land 1% Soilbuild 0%
What it could mean for bidders, A-REIT and MINT? We are positive on this development, which will act as re-rating catalyst for both AREIT and MINT. The sizeable portfolio will offer significant in-organic growths to both REITs. In addition, we see attractive qualities in this portfolio from: A sizeable and well-located portfolio. The JTC portfolio on offer is sizeable - with a total GFA of 4.7m sqft and NLA of 3.5m sqft. Given the current competitive landscape in Singapores industrial market, offer of such a sizeable, welllocated and operationally ready portfolio of properties, is rare and hence will provide significant inorganic growths for the bidders (A-REIT, MINT and Soilbuild). In terms of NLA, the 2 tranches of assets will add some c 13% and c 21% to A-REITs and MINTs portfolios respectively. We note that the properties are mainly located in established estates in the Eastern-Central part of Singapore and have an underlying land lease expiry of c 46 years. These properties are well served by major connecting expressways linking to the Singapores airport and seaport. In addition, their presence near housing estates means good ready supply of labour for tenants to work in their premises. Flatted factories in both Tranches are mainly located in Eastern-Central Singapore, along the Pan-Island Expressway
Tranche 1: Kolam Ayer Tranche1: Kallang Basin 1,2 and 3 Tranche 1: Tai Seng Tranche 2: Kampong Ubi Tranche 2: Bedok i d ti l
Other priv ate owners/REITs 63%
* Estimated based on NLA/GFA basis Source: URA, Colliers, various REITs
MINT - a powerhouse in flatted factory space. MINT (11% of total flatted factory stock in Singapore) has the single largest share of the flatted factory market, compared to A-REIT (4%) who owns a more diversified portfolio of industrial properties. Both are established landlords with many years of industry experience and strong tenant network A-REIT is the first industrial REIT listed on the SGX back in 2002, while Mapletree Investments (MINTs sponsor) managed the portfolio of flatted factories that was sold by JTC back in 2008. More strategic fit to MINT in our view. The portfolio on sale under the current tender exercise comprises mainly flatted factories, similar to the previous trade sale conducted by JTC back in 2008, which was then sold to Mapletree Investments. While the portfolio will offer income diversification to A-REIT portfolio, it appears to have a more strategic fit with MINT, given its track record as a manager of such properties and with a portfolio of similar-type flatted factories. We see MINTs participation as their bid to entrench their leading position in the flatted factory space in Singapore
Tranche2: Kallang Basin 7
Source: URA, Colliers, various REITs
Stable portfolio of assets with low vacancy rates in recent years. Looking ahead, the outlook for Singapores
Page 3
industrial sector remains positive with manufacturing activities expected to remain robust as international companies look to set up their global hubs here, supported by a strong government mandate towards attracting foreign investments. In the public space (factory), historical trends indicate that vacancy rates in the Eastern and North-Eastern parts of Singapore have been on a downtrend since 2004 and remained relatively low at < 5% over the past 2 years, highlighting the strong demand for factory space. The JTC portfolio is also believed to currently enjoy high average occupancy of 96% as well as stable operational performance even during the recent financial crisis. Declining vacancy rates (%) of factory space (public) in Eastern Singapore
45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 1997Q1 1998Q3 2000Q1 2001Q3 2003Q1 2004Q3 2006Q1 2007Q3 2009Q1 2010Q3
Priv ate Sector - East (%) Public Sector - East Island Priv ate Series4
estimated to have a gearing of 33% and hence could debtfund up to another S$1.1bn worth of assets. Based on its latest reported gearing of c.36.1%, MINT has debt funded headroom of S$350m, which means that the trust remains financially comfortable assuming being awarded 1 out of the 2 tranches. Gearing will head towards 49% if awarded both tranches of properties. A-REIT and MINT have the debt-funded capability to acquire
50% 48% 46% 44% 42% 40% 38% 36% 34% 32% 30% A-REIT MINT 33% 36% 39% 36% Current Gearing (%) S$300m Acquisition S$600m Acquisition 43% 49%
* Assuming that each Tranche is worth S$300m Source: various REITs, DBSV estimates
While outcome of the tender may be manifold, with each bidder having an equal chance of being awarded either 1 or both tranches of properties. We believe the likely outcome would be an award to different bidders for each tranche. In our appended scenario analysis, we have assumed that MINT and A-REIT each be awarded a tranche of properties at a price of S$300m (we have assumed similar price for both tranches for simplistic reasons, although we note that properties in Tranche 2 are slightly larger in terms of NLA compared to Tranche 1), with both REITs funding acquisitions by debts. We estimate that a win by MINT has greater impact on earnings and our target prices given that the contribution from the target portfolio is much larger (at c16% of total current portfolio size) compared to A-REITs, which only accounts for c6% of its current portfolio size.
Source: URA, Colliers, various REITs
Potential earnings accretion for both A-REIT and MINT if successful; further organic growth expected. If awarded, we believe the portfolio will boost earnings for both A-REIT and MINT. Further organic growths could also stem from potential increases in overall occupancy rate from the current c96%. In addition, as there are no rental caps imposed on these properties, it allows the landlord to renew expiring rents at higher rates in line with market. A positive underlying demand for industrial space augurs well for further upsides in coming quarterly rental reversions, which bodes well for improving asset yields going forward. Both MINT and A-REIT have strong balance sheets and substantial debt headroom for future acquisitions. Both A-REIT and MINT have debt-funding capability to acquire more, assuming a target 45% gearing ratio. A-REIT, post placement exercise and factoring in its development commitments, is
Page 4
Estimated impact of FY12F DPU / Target prices of MINT and A-REIT, assuming acquisition size of S$300m A-REIT Target acquisition NPI yield 6.50% 6.75% 7.00% 7.25% 7.50% DPU Impact (FY12F) 3.0% 3.2% 3.6% 4.0% 4.4% TP Impact (%) 1.9% 2.9% 3.9% 4.8% 5.2% MINT DPU Impact (FY12F) 12.9% 14.1% 15.0% 16.0% 17.1% TP Impact (%) 12% 13% 14% 15% 16%
Redevelopment potential. An additional attraction, we believe, to bidders A-REIT and MINT is the opportunity to re-develop some of the properties into modern industrial facilities and enhance the asset efficiency, subject to regulatory approval. Given the good location and strong accessibility, upgrading and redevelopment would materialize, subject to demand from end user tenants, and hence further enhance yields for the 2 REITs.
Stock picks BUY MINT, TP S$1.21 offers total return of 11%, HOLD A-REIT on valuations. We are positive on A-REIT and/or MINT as possible winners in this tender exercise, providing re-rating catalysts for stock prices. While the portfolio offers income diversification to A-REIT, it has in our view, greater strategic fit to MINT. MINT has a track record of managing flatted factories and already owns portfolio of similar-type properties. In addition, a win by MINT would have a greater impact on earnings and our target prices given the larger contribution to its portfolio.
Source: various REITs, DBSV estimates
MINT equity fund raising a possibility? MINTs gearing is estimated to inch up to 43% post acquisition and we believe that the market is likely to expect MINT to undertake future equity raisings to pare down its gearing. In our analysis of possible funding scenarios by MINT, we assume a base case 7.0% NPI yield on acquisition. We estimate that the acquisition will still be earnings accretive even if MINT raises fresh equity between 20-70% of the total acquisition of S$300m. We estimate c.6-14% earnings hike to our FY12 DPU estimates. Earnings accretion for MINT at various debt/equity structures Funding Ratio Resultant FY12 DPU TP Impact (Debt Equity) Gearing (%) Impact* (%) (%) 80% Debt - 20% Equity 70% Debt - 30% Equity 60% Debt - 40% Equity 50% Debt - 50% Equity 40% Debt - 60% Equity 30% Debt - 70% Equity
41% 39% 38% 37% 36% 34% +14% +13% +11% +9% +7% +6% +10% +7% +6% +4% +2% +1%
* MINT financial year-end is March Source: DBSV estimates
Page 5

Appendix Properties and surrounding comparables.
Nearby Comparables Properties (1) (2) (3) Kallang Basin 4 Kallang Basin 5 Kallang Basin 6
Owner Mapletree Industrial Trust Mapletree Industrial Trust Mapletree Industrial Trust
Rental (S$/psf pm) S$ 1.33* S$ 1.53* S$ 1.51*
Value (S$ psf) S$ 150 psf S$ 168 psf S$ 169 psf
Type Flatted Factories Flatted Factories Flatted Factories
* Based on MINT IPO prospectus for FY10 Source: JTC, HDB, Mapletree Industrial Trust IPO prospectus
Map of Kallang Place

Tranche 1: Kallang Basin 7
Tranche 2: Kallang Basin 1, 2& 3
(1) Kallang Basin 4 (2) Kallang Basin 5
(3) Kallang Basin 6
Source : streetdirectory.com, MIT, JTC websites, DBS Vickers
Page 6
NearbyComparables Properties (1) (2) (3) (1) Kampong Ampat (2) 19 Tai Seng Drive Ubi-Plex 1
Owner Mapletree Industrial Trust Mapletree Industrial Trust HDB
* Based on MINT IPO prospectus for FY10 Source: JTC, HDB, Mapletree Industrial Trust IPO prospectus
Rental (S$/psf pm) S$ 1.72* S$1.34* S$ 1.05
Value (S$ psf) S$ 224 psf S$ 157 psf -
Type Flatted Factories Light Industrial Building Flatted Factories
Map of Tai Seng / Ubi Industrial Estate
(2) MIT portfolio
Tranche 1: Tai Seng
(1) MIT portfolio
Tranche 2: Kampung Ubi (3) UbiPlex1
Page 7
Nearby Comparables Properties (1) (2) (3) Kolam Ayer 1 Kolam Ayer 2 Kolam Ayer 5
Owner Mapletree Industrial Trust Mapletree Industrial Trust Mapletree Industrial Trust
* Based on MINT IPO prospectus for FY10
Rental S$/psf pm) S$ 1.33* S$ 1.34* S$ 1.60*
Value (S$ psf) S$ 167 psf S$ 150 psf S$ 154 psf
Source: JTC, HDB, Mapletree Industrial Trust IPO prospectus
Map of Kolam Ayer
(1) Kolam Ayer 1 (3) Kolam Ayer 5
Tranche 1: Kolam Ayer
(2) Kolam Ayer 2
Page 8
Nearby Comparables Properties * * Shimei East Kitchen EASTLink
Owner HDB HDB
Rental S$/psf pm) 1.31 1.04 1.06
* Bedok Industrial Park E HDB * Flatted factories located nearby but not on map
Source: JTC, HDB, Mapletree Industrial Trust IPO prospectus
Map of Bedok
Tranche 2: Bedok
Page 9
S-REIT Peer Comparison Table

REIT Office Fraser Commercial Trust CapitaCommercial Trust K-REIT Retail/Mixed CapitaMall Trust CapitaRetail China Trust Frasers Centrepoint Trust Starhill Global REIT Suntec REIT Mapletree Commercial Trust Industrial A-Reit Ascendas India Trust Cache Logistics Trust Cambridge Industrial Trust* Mapletree Logistics Trust Mapletree Industrials Trust Hospitality CDL Hospitality Trust Ascott Residence Trust Dec Dec 2.04 1.16 2.30 1.38 Buy Buy Buy 12.0 8.1 9.8 13.3 8.3 10.3 5.9% 7.0% 5.5% 6.5% 7.2% 5.7% 1.34 0.91 1.28 Mar Mar Dec Dec Dec Mar 2.03 0.935 0.94 0.49 0.91 1.16 2.14 1.05 1.11 0.56 1.07 1.21 Hold Buy Buy Buy Buy Buy 13.2 7.5 8.0 4.6 6.6 7.7 13.8 8.3 8.5 5.0 6.9 8.1 6.5% 8.0% 8.3% 9.3% 7.3% 6.6% 6.8% 8.8% 9.1% 10.3% 7.5% 7.0% 1.15 1.10 1.03 0.80 1.07 1.33 Dec Dec Sep Dec Dec Mar 1.91 1.24 1.49 0.62 1.47 0.86 2.05 1.30 1.73 0.73 1.69 1.05 Buy Hold Buy Buy Buy Buy 9.7 8.6 8.4 4.3 9.0 4.8 10.8 8.8 8.8 4.6 9.0 5.0 5.1% 6.9% 5.6% 7.0% 6.1% 5.6% 5.6% 7.1% 5.9% 7.4% 6.1% 5.8% 1.23 1.06 1.16 0.66 0.82 0.98 Dec Dec Dec FYE Share Price $ 0.795 1.45 1.29 Target Px 1.05 1.59 1.34 Buy Buy Hold Rcmd DPU FY11 6.1 6.7 7.2 DPU FY12 6.4 6.7 6.8 Yield FY11 7.7% 4.7% 5.6% Yield FY12 8.1% 4.7% 5.3% P/Bk Nav (x) 0.59 0.96 0.85
Parkway Life Dec 1.80 1.95 * For reits with Mar FYE, yields are stated on FY12 and FY13 basis Source: DBS Vickers
Page 10
Malaysia Company Focus
Berjaya Sports Toto

Bloomberg: BST MK
Reuters: BSTB.KL
DBS Group Research Equity
21 Jun 2011
HOLD RM4.52 KLCI : 1,559.19

Price Target : 12- month RM4.55 (Prev RM 4.25) Reason for Report : 4QFY11 Results Analyst YEE Mei Hui +603 2711 1332 meihui@hwangdbsvickers.com.my
Brighter Days Ahead

Results in line with expectations, lower 3sen final DPS declared Raise FY12-13F earnings by 1-6% to factor in impact from new 4D jackpot game (partly offset by higher operating cost) Maintain Hold with TP of RM4.55 (from RM4.25) Results within our & consensus expectations. 4QFY11 net profit came in at RM104m (+29% yoy, -9% qoq), bringing full-year earnings to RM348m (-9% yoy). 4QFY11 revenue grew 5% yoy, 6% qoq on the back of more draws (1 and 2 respectively), seasonally stronger Chinese New Year, and higher revenue/draw (+3%yoy, +1%qoq) with record jackpot for Supreme Toto 6/58 (hit RM48b in Apr11). EBIT margin improved 2.9ppt yoy (-2.6ppt qoq) to 17% due to more favourable prize payout (59% vs 4QFY10: 65%; 3QFY11: 57%), including 10% lower Special Prize for 4D Big Game (effective Dec10) to help mitigate higher pool betting duty (8% from 6% effective Jun10). Final exempt DPS of 3sen declared (4QFY10: 8sen), bringing FY11 DPS to 21sen or 4.6% (FY10: 58sen including 31sen share dividend).
2014F
Price Relative
RM 5.50 Relative Index 206 186 166 4.50 146 126 4.00 106 86 3.50 2007 2008 2009 2010 66 2011
5.00
Berjaya Sports Toto (LHS)
Relative KLCI INDEX (RHS)
Forecasts and Valuation

FY Apr (RM m) 2011A 2012F 2013F
Turnover EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) EPS (sen) EPS Pre Ex. (sen) EPS Gth Pre Ex (%) Diluted EPS (sen) Net DPS (sen) BV Per Share (sen) PE (X) PE Pre Ex. (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): Consensus EPS (sen): Other Broker Recs:
3,434 553 506 348 348 26.0 26.0 (9) 26.0 21.0 33.7 17.4 17.4 16.4 11.2 4.6 13.4 0.2 77.4
3,844 573 536 394 394 29.4 29.4 13 29.4 21.9 41.3 15.4 15.4 14.5 10.6 4.8 11.0 CASH 78.6 0.8 28.7 B: 9
4,121 632 599 440 440 32.9 32.9 12 32.9 24.4 49.7 13.7 13.7 13.1 9.4 5.4 9.1 CASH 72.3 5.8 29.9 S: 1
4,347 667 638 468 468 35.0 35.0 6 35.0 26.0 58.7 12.9 12.9 12.3 8.7 5.7 7.7 CASH 64.5 N/A N/A H: 9
4D Jackpot could help win back market share. We expect BSTs newly launched variation game to compete effectively with firstmover Magnum, as BST has the advantage of more outlets (681 vs 490), including presence in Sabah (~40 outlets). We have raised our FY12-13F earnings by 1-6% to factor in contribution from 4D Jackpot: a) 4D Jackpot market expands by 30% over next 2 years with BSTs entry; b) BSTs market share of 4D Jackpot sales gradually increases to 50% from ~20% currently by FY13, and c) Lower blended prize payout ratio (-0.3-0.6ppt). Potential upside could come from spillover demand for BSTs other games (partly offset by some cannibalization of existing lotto games which make up 28% of revenue). Maintain Hold. BSTs earnings growth potential has improved with the launch of 4D Jackpot (but impact may not be as significant as Magnums experience). Although potential bumper dividend is low now as parent Berjaya Land have sorted out financing for its RM711m convertible bond repayment due in Aug 2011, BST could still pay handsome dividends (FY11 payout: 81% vs 75% policy) on lower net gearing of 22% (FY10: 43%) and rising operating cashflows.
At A Glance Issued Capital (m shrs) Mkt. Cap (RMm/US$m) Major Shareholders Tan Sri Vincent Tan CY (%) Free Float (%) Avg. Daily Vol.(000) 1,351 6,107 / 2,009 54.4 47.8 1,151
ICB Industry : Consumer Services ICB Sector: Travel & Leisure Principal Business: Principal activities include licensed toto betting, leasing of online lottery equipment and manufacture and distribution of computerised lottery equipment
Source of all data: Company, DBS Vickers, Bloomberg
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report sa: WMT
Company Focus Berjaya Sports Toto
Key Assumptions
FY Apr 2010A 2011A 2012F 2013F 2014F
Sensitivity Analysis
2011
No of draws Gross revenue/draw Prize payout (%) Income Statement (RM m)

FY Apr
176 20.8 61.9
177 20.9 61.8
176 23.6 61.2
176 25.3 61.2
176 26.7 61.2
No of draws +/- 1 Gross revenue/draw +/- 1% Prize payout +/1ppt
Net Profit +/0.6% Net Profit +/1.1% Net Profit +/7.8%
2010A
2011A
2012F
2013F
2014F
Revenue Cost of Goods Sold Gross Profit Other Opng (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Preference Dividend Net Profit Net Profit before Except. EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins & Ratio Gross Margins (%) Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%) Net Interest Cover (x)
3,393 (2,811) 581 (17) 564 0 0 (16) 0 548 (160) (5) 0 383 383 581 (8.2) (5.1) (5.2) (7.3) 17.1 16.6 11.3 82.5 32.6 46.5 200.5 35.5
3,434 (2,881) 553 (18) 534 0 (1) (27) 0 506 (150) (8) 0 348 348 553 1.2 (4.9) (5.3) (9.2) 16.1 15.6 10.1 77.4 26.0 38.6 80.7 19.8
3,844 (3,271) 573 (22) 551 0 (1) (13) 0 536 (134) (9) 0 394 394 573 11.9 3.7 3.2 13.1 14.9 14.3 10.2 78.6 26.1 38.1 74.2 40.9
4,121 (3,489) 632 (22) 611 0 (1) (10) 0 599 (150) (10) 0 440 440 632 7.2 10.4 10.8 11.7 15.3 14.8 10.7 72.3 26.7 38.0 74.2 60.5
4,347 (3,679) 667 (22) 646 0 (1) (6) 0 638 (159) (10) 0 468 468 667 5.5 5.5 5.7 6.4 15.4 14.9 10.8 64.5 26.1 36.3 74.2 100.3
Driven by GDP growth & new 4D Jackpot (assume win market share from Magnum)
Lower prize payout with contribution from 4D Jackpot
Margins Trend
18.0% 17.0% 16.0% 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 2010A 2011F 2012F 2013F 2014F Operating Margin % Net Income Margin %
Source: Company, DBS Vickers
Page 2

Balance Sheet (RM m)
FY Apr 2010A 2011A 2012F 2013F 2014F
Asset Breakdown 97 4 751 263 8 102 7 1,232 145 312 305 5 449 15 1,232 (195) (187) 8.1 32.5 1.0 2.9 0.8 0.8 0.4 0.4 3.3 8.8 136 2 761 451 6 85 0 1,442 0 412 550 5 450 24 1,442 (321) (99) 9.9 42.5 0.9 2.6 1.3 1.3 0.2 0.2 2.2 9.7 138 2 761 577 6 90 0 1,575 0 432 550 9 552 33 1,575 (336) 27 8.3 44.8 0.7 2.5 1.6 1.5 CASH 0.0 3.8 11.5 137 2 761 718 7 94 0 1,719 0 452 550 10 665 42 1,719 (351) 168 8.1 44.0 0.7 2.5 1.8 1.8 CASH (0.3) 3.8 NA 136 2 761 868 7 99 0 1,873 0 474 550 11 786 52 1,873 (368) 318 8.1 43.8 0.7 2.4 2.1 2.0 CASH (0.4) 3.8 NA
Debtors 11.1% Net Fixed Assets 17.0% Associates'/J Vs 0.3%
Net Fixed Assets Invts in Associates & JVs Other LT Assets Cash & ST Invts Inventory Debtors Other Current Assets Total Assets ST Debt Other Current Liab LT Debt Other LT Liabilities Shareholders Equity Minority Interests Total Cap. & Liab. Non-Cash Wkg. Capital Net Cash/(Debt) Debtors Turn (avg days) Creditors Turn (avg days) Inventory Turn (avg days) Asset Turnover (x) Current Ratio (x) Quick Ratio (x) Net Debt/Equity (X) Net Debt/Equity ex MI (X) Capex to Debt (%) Z-Score (X)
Inventory 0.8%
Bank, Cash and Liquid Assets 70.9%
Driven by strong operating cashflows
Cash Flow Statement (RM m)

FY Apr 2010A 2011A 2012F 2013F 2014F
Capital Expenditure
25
Pre-Tax Profit Dep. & Amort. Tax Paid Assoc. & JV Inc/(loss) Chg in Wkg.Cap. Other Operating CF Net Operating CF Capital Exp.(net) Other Invts.(net) Invts in Assoc. & JV Div from Assoc & JV Other Investing CF Net Investing CF Div Paid Chg in Gross Debt Capital Issues Other Financing CF Net Financing CF Currency Adjustments Chg in Cash Opg CFPS (sen) Free CFPS (sen)
548 17 (160) 0 5 39 449 (15) 0 (47) 0 (46) (108) (433) 187 0 (66) (312) (3) 27 33.2 32.5
506 18 (150) 1 129 (113) 392 (12) 0 0 0 3 (9) (267) 100 0 (22) (189) (1) 192 19.6 28.4
536 22 (134) 1 15 13 454 (21) 0 0 0 13 (8) (292) 0 0 (26) (319) 0 127 32.8 32.4
599 22 (150) 1 16 10 498 (21) 0 0 0 16 (4) (326) 0 0 (26) (353) 0 141 36.1 35.7
638 22 (159) 1 16 6 524 (21) 0 0 0 20 (1) (348) 0 0 (26) (374) 0 150 38.0 37.6
20 15 10 5 0 2010A 2011F 2012F 2013F 2014F
Capital Expenditure (-)
Page 3

Quarterly / Interim Income Statement (RM m)
FY Apr 4Q2010 1Q2011 2Q2011 3Q2011 4Q2011
Margins Trend
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Revenue Cost of Goods Sold Gross Profit Other Oper. (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Net Profit Net profit bef Except. EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins Gross Margins (%) Opg Profit Margins (%) Net Profit Margins (%)
858 (733) 125 (7) 118 1 0 (5) 0 117 (34) (2) 81 81 125
835 (720) 115 (7) 108 0 0 (12) 0 99 (33) (1) 64 64 115
846 (738) 107 (7) 100 0 0 (5) 0 98 (31) (2) 65 65 107
851 (680) 171 (7) 164 0 0 (6) 0 161 (44) (3) 115 115 171
901 (744) 158 (7) 150 0 (1) (4) 0 148 (43) (1) 104 104 158
Operating Margin %
Net Income Margin %
More draws & stronger gross revenue/draw driven by record jackpot for Supreme Toto 6/58
0.9 (16.3) (17.1) (17.3) 14.6 13.7 9.4
(2.7) (8.3) (8.8) (20.9) 13.8 12.9 7.7
1.2 (6.6) (7.1) 1.8 12.7 11.8 7.7
0.6 59.4 63.8 76.5 20.1 19.2 13.5
5.9 (7.8) (8.2) (9.3) 17.5 16.7 11.6 More favourable prize payout, including 10% lower Special Prize for 4D Big Game (effective Dec10) to help mitigate impact of higher pool betting duty (8% from 6% effective Jun10).
Valuation based on dividend discount model

FY12F Gaming Dividend per share Discounted Cashflows (8.4% WACC) Terminal value (3% long-term growth) NPV Assumptions L.T. Growth Rate Risk Free Rate Beta (x) Market Risk Cost of equity 3.0% 4.0% 0.73 10.0% 8.4% 0.22 0.20 0.24 0.21 0.26 0.20 3.92 4.53 FY13F FY14F
Page 4
China / Hong Kong Company Focus
Shui On Land
Bloomberg: 272 HK | Reuters: 0272.HK
20 June 2011
HOLD HK$3.09 HSI : 21,600

Price Target : 12-month HK$3.86 (Prev HK$3.98) Reason for Report : Business update and TP revision Analyst Danielle WANG, CFA (852) 2820 4915 danielle_wang @hk.dbsvickers.com Carol WU (852) 2863 8841 carol_wu@hk.dbsvickers.com Andy YEE (852) 2971 1773 andy_yee@hk.dbsvickers.com
Execution on track
Locked in 50% of its ambitious sales target En-bloc sale at lower margin but will strengthen cash flow Valuation undemanding but lack of near-term catalyst Maintain HOLD with TP of HK$3.86
Price Relative
HK$ 1 1 .0 0 9 .0 0 177 7 .0 0 5 .0 0 3 .0 0 1 .0 0 2007 127 77 27 2008 2009 2010 Re la tive Ind e x 227
Locked in 50% of its ambitious sales target. Shui On is looking to double contracted sales to RMB10bn this year. In 5M11, Shui On recorded RMB4bn presales from residential and nearly RMB1bn from en-bloc sale of an office tower in Wuhan. In total, Shui On has achieved 50% of its sales target this year, higher than its peers average of 35%. Shui On still has half of its residential saleable resources or 250k sm to be launched in the rest of this year. In addition, with c. 190k sm of commercial space for sale on hand worth over RMB4bn we believe Shui On will be able to achieve its target. En-bloc sale at lower margin but strengthen cash flow. As part of its plan to accelerate asset turn, Shui On sold one office tower in Wuhan at ASP of RMB16k/sm to Pingan, lower than ASP of RMB20k/sm for residential contracted sales recorded last year. Although the gross margin will be around 25% lower than the residential parts 50%, the sales proceeds will be transferred to Shui On this year, before its delivery. This strengthened its cash flow to support its faster asset turn. Maintain HOLD due to lack of short-term catalysts. We updated our valuation model to move non-core commercial GFA from investment property to saleable GFA and revised up EPS estimates in FY11/FY12 by 5%/5%, but cut NAV by 3% to reflect the en-bloc sale impacts. In our view, stronger policy headwinds on highend property market remains as investors key concern. Moreover, Shui On may lack positive catalyst in 3Q as further new launches will concentrate in 4Q and interim results may be unimpressive with low completion in 1H. Maintain HOLD with TP of HK$3.86.
At A Glance Issued Capital (m shrs) Mkt Cap (HK$m/US$m) Major Shareholders (%) Lo Hong Sui, Vincent Standard Chartered Free Float (%) Avg Daily Volume (m shrs)
5,212 / 2,069 50.93 5.74 43.33 8.0
Shu i O n (LH S)
R e la tive H SI IN D E X (RH S)

FY Dec (RMB m) Turnover EBITDA Pre-tax Profit Net Profit Core Net Profit* EPS (RMB) EPS (HK$) EPS Gth (%) Core EPS* (HK$) DPS (HK$) BV Per Share (HK$) PE (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Core Earnings Rev (%) Earnings Rev (%) Consensus EPS (RMB) Other Broker Recs: 2009A 6,758 3,058 3,894 2,673 2,113 0.55 0.67 42.5 0.53 0.14 5.38 4.6 7.7 6.9 4.6 0.6 0.3 13.9 2010A 4,879 1,600 4,367 2,809 623 0.55 0.66 (0.4) 0.15 0.12 5.87 4.7 (4.2) 18.3 3.7 0.5 0.6 12.1 2011F 8,778 2,528 2,888 1,405 1,304 0.28 0.33 (50.0) 0.31 0.07 6.13 9.3 (3.7) 13.9 2.3 0.5 0.8 5.5 5% 5% 0.24 S: 6 2012F 10,161 2,132 3,043 1,492 1,441 0.29 0.35 6.2 0.34 0.08 6.40 8.8 (9.6) 18.4 2.7 0.5 0.9 5.6 5% 5% 0.30 H: 6
B: 6
16,104
ICB Industry: Financials ICB Sector: Real Estate Holding & Development Principal Business: Property development & management
Source of all data: Company, DBSV, Bloomberg, HKEX
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report ed- MY / sa- PY
Company Focus Shui On Land
Discount to NAV
Discount to NAV band
% 0 (10) (20) (30) (40) (50) (60) (70) (80) (90) (100) Oct-06
HK$ 12 +1SD -34.3% Avg: -49.3% -1SD -64.3% 10 8 6 4 2 0 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11
-3% -25% -47% -69% -91%
Oct-07
Oct-08
Oct-09
Feb-07
Feb-08
Feb-09
Feb-10
Oct-10
Feb-11
Jun-07
Jun-08
Jun-09
Jun-10
PE chart
Jun-11
PB chart
x 14 12 10 8 6 4 2 0 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Jun-07 Jun-08 Jun-09 Jun-10 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Jun-11
Avg: 7.8x -1SD: 5.4x +1SD: 10.1x
x 3.0 2.5 2.0 1.5 1.0

-1SD: 0.5x +1SD: 1.5x Avg: 1x
0.5 0.0 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10
Page 2
Share price performance

Price Performance 1-wk 2-wk % % (1.4) (13.9) (11.1) (13.5) (6.1) (8.2) (2.2) (5.9) (3.3) (11.2) (3.3) (2.1) (3.0) (5.3) (4.7) (9.7) (5.0) (7.3) (13.9) (15.0) (4.2) (3.4) (1.4) (5.9) 3.6 4.0 (1.2) (5.9) (0.3) (4.2) (5.5) (8.7) (1.4) (5.9) 7.9 (3.3) (2.3) (3.5) (6.1) (13.4) 3.1 (2.2) 0.0 0.0 (0.4) (3.8) (7.8) (14.7) (5.2) (10.2) (6.0) (15.3) (2.2) (5.2) (1.4) (8.5) (9.8) (11.3) (4.0) (10.4) (5.5) (6.8) (8.2) (15.1) (3.5) (4.0) (7.7) (5.9) 2007 high % (42.9) (70.9) (78.6) (83.9) n.a. (21.5) n.a. (77.8) (42.0) n.a. n.a. (67.0) n.a. (62.8) (77.9) (79.1) n.a. (68.0) n.a. (59.9) n.a. (50.2) (70.9) (69.8) (71.1) (77.2) (47.0) (62.5) (85.1) (71.6) (71.3) (56.7) (65.2) (31.7)
Agile Property (3383) BJ Cap. Land (2868) BJ North Star (588) C C Land (1224) Central China (832) China Overseas (688) China SCE Property (1966) Country Garden (2007) CR Land (1109) Evergrande (3333) Fantasia (1777) Franshion (817) Glorious Property (845) Greentown (3900) GZ R&F (2777) Hopson Dev (754) Kaisa Group (1638 HK) KWG (1813) Longfor Properties (960) Poly HK (119) Renhe Commercial (1387) Shanghai Forte (2337) Shenzhen Inv (604) Shimao Property (813) Shui On Land (272) Sino-Ocean (3377) SOHO China (410) SPG Land (337) SRE Group (1207) Yanlord Land (YLLG) Ying Li (YINGLI) Yuexiu Property (123) Average Hang Seng Index
1-mth % (11.4) (17.5) (8.6) (4.3) (17.8) (5.5) (2.5) (2.2) (12.8) (22.9) (6.5) (11.5) (0.4) (10.8) (7.0) (10.9) (2.5) (7.7) (15.2) (20.2) (1.5) 0.0 (7.4) (16.0) (10.2) (18.4) (7.7) (12.2) (21.4) (13.7) (10.4) (15.6) (10.4) (6.9)
2-m th % (18.8) (28.1) (12.0) (12.6) (19.3) (4.8) (4.4) (9.7) (12.9) (15.8) (13.5) (15.2) (0.4) (12.6) (13.4) (21.1) (5.5) (14.9) (12.4) (33.0) (3.6) 0.6 (11.0) (22.4) (13.7) (27.1) (8.7) (21.1) (22.5) (22.1) (16.9) (19.2) (14.6) (9.6)
3-mth % 3.9 (9.6) (8.2) 13.0 (11.2) 7.5 (1.5) 1.3 (3.4) 21.5 (10.2) (6.3) 12.0 (2.8) (6.3) (19.6) 1.5 (8.4) (4.0) (28.8) 18.4 1.5 (5.8) (12.8) (9.1) (23.0) 8.4 (18.1) (19.1) (13.7) (6.8) (16.1) (4.9) (3.1)
4-mth % 5.4 (14.2) (15.1) (5.3) (23.1) 16.3 (6.3) (1.9) (2.8) 14.8 (5.0) (8.0) 4.0 (16.7) (12.6) (26.6) 12.8 (11.5) 6.1 (32.1) 14.4 1.8 (12.4) (19.5) (15.3) (29.8) 10.5 (27.8) (26.7) (21.6) (5.5) (25.0) (8.7) (8.5)
5-mth % (8.2) (19.9) (21.0) (6.9) (26.0) (0.5) (8.9) 2.3 (12.0) 4.0 (14.2) (12.7) (12.4) (23.0) (20.7) (30.6) 1.5 (25.5) (8.8) (41.5) 1.5 24.7 (18.4) (31.9) (22.0) (33.3) 1.9 (33.3) (32.1) (28.1) (11.5) (32.2) (15.6) (10.0)
6-mth % 4.9 (17.5) (18.4) 4.2 (20.3) 5.4 (10.1) 3.4 (8.5) 14.2 (12.2) (11.9) (18.5) (16.0) (8.2) (21.2) 21.9 (18.0) 5.3 (37.8) (2.2) 40.3 (14.7) (23.7) (16.9) (32.5) 11.3 (21.8) (29.5) (27.7) (10.4) (32.5) (10.0) (4.6)
7-mth % 2.4 (24.7) (19.5) (11.8) (18.2) (3.4) (9.7) 2.0 (15.5) 24.6 (14.8) (15.2) (21.3) (16.7) (11.6) (22.3) 31.9 (22.6) 12.8 (42.4) (10.0) 43.8 (18.4) (30.1) (21.4) (30.8) 4.5 (28.6) (29.5) (30.6) (11.5) (32.5) (12.2) (8.5)
1-yr % 36.1 (5.2) (12.0) (0.7) 1.9 (3.9) (7.1) 40.4 (20.5) 90.1 (14.2) (7.6) (2.5) (16.7) (7.3) (32.7) 70.6 5.1 44.7 (42.6) (19.2) 78.5 (3.0) (27.6) (12.0) (42.2) 43.3 (10.3) (25.7) (30.2) (17.9) (16.5) 1.0 6.5
Source: Bloomberg
Page 3
Peers valuation
3m avg daily Mkt trading Recom Cap HK$m 2,215 1,195 6,898 4,225 5,564 value US$m 24.2 0.9 0.2 2.1 0.4 55.5 0.5 6.3 26.1 54.0 2.0 5.1 1.4 17.3 3.2 5.0 7.1 10.3 14.5 1.2 22.1 3.5 6.6 6.0 0.2 0.4 3.0 1.2 5.0 NR NR Hold Buy NR NR Buy Buy NR NR NR NR NR NR NR NR NR Hold Buy Buy Hold NR Hold Buy NR Disc/ (Prem) NAV to NAV HK$ 23.5 n.a. n.a. 5.8 5.2 18.9 n.a. 4.72 21.4 10.0 4.34 5.87 27.3 18.1 n.a. n.a. 13.1 2.7 n.a. 20.4 6.4 8.9 9.9 9.6 n.a. 3.06 1.12 n.a. % 52.1 n.a. n.a. 53.2 66.8 19.6 n.a. 35.1 41.9 55.9 52.3 60.3 73.3 47.0 n.a. 54.5 n.a. 65.0 50.6 n.a. 57.1 52.0 61.7 36.4 70.9 n.a. 60.8 69.6 n.a. 43.9~
20-Jun Price Company Name Agile Property* Beijing Cap. Land Beijing North Star C C Land* Central China* China Overseas * China SCE Country Garden CR Land* Evergrande* Franshion* Glorious Property Greentown China Guangzhou R&F Hopson Dev KWG Property Longfor Properties Poly Hong Kong Renhe Commercial Shanghai Forte Shimao Property* Shui On Land* Sino-Ocean Land* SOHO China* SPG Land* SRE Group Yanlord Land^* Ying Li^* Yuexiu Property Average Code 3383 2868 588 1224 832 688 1966 2007 1109 3333 817 845 3900 2777 754 1813 960 119 1387 2337 813 272 3377 410 337 1207 YLLG YINGLI 123 HK$ 2.17 1.69 2.7 1.74 1.95
12-m target HK$
EPS Growth 11F % (34.6) 20.8 12F % 15.5 11.0 n.a. 19.3 26.2 23.6 25.8 25.1 56.2 13.7 3.6 30.1 39.6 16.1 21.1 20.0 6.2 27.2 17.0 n.a. 17.8 39.1 51.9
PE 11F x 8.5 3.3 5.6 4.8 5.0 8.8 6.7 5.8 4.5 5.7 4.5 6.4 8.8 5.3 6.9 7.0 9.3 6.4 3.5 n.a. 7.5 8.7 8.6
Net PE Yield Yield ROE ROE Gearing P/Bk 12F x 7.3 3.0 n.a. 7.7 4.0 8.4 4.0 7.1 5.4 9.1 4.6 2.9 5.0 4.3 5.0 8.3 6.3 4.6 5.7 5.8 8.8 5.0 6.4 3.0 n.a. 6.4 4.1 6.2 5.9 11F % 3.0 11.5 n.a. 1.7 6.3 2.0 4.2 4.0 2.0 3.7 1.4 2.6 5.8 6.5 3.0 3.2 1.7 1.7 7.4 2.7 4.7 2.3 3.1 3.9 8.6 n.a. 0.8 0.0 3.0 3.7 12F % 11F % 12F % 10A % 49.6 18.1 59.3 Cash 29.4 21.6 25.4 40.4 52.3 52.5 18.4 52.0 132.0 93.4 51.3 47.7 40.1 58.6 Cash 70.9 67.9 45.2 42.8 Cash 52.6 66.6 32.5 40.3 62.8 50.9 10A x 1.8 0.7 0.4 0.6 0.8 2.3 1.3 1.7 1.4 2.7 0.8 1.0 1.0 1.3 0.3 3.0 0.8 1.8 1.0 1.0 0.5 0.5 1.4 0.6 0.2 0.9 1.5 0.8 1.1
11.24 39,033
Buy 16.44 n.a.
3.4 19.4 19.4 12.8 18.0 17.1 n.a. 2.6 n.a. 4.6 n.a. 6.8
n.a. (23.5) 2.88 123.1 2.62 n.a. n.a. 7.50 3.03 n.a. n.a. n.a. n.a. n.a. n.a. 11.3 0.1 (3.8) 11.2 (18.4) 8.3 (18.9) 44.2 3.3 44.1 5.6 (6.9) 20.8 (19.2) (50.0) 12.5 (20.9) n.a. (16.9) 27.0 (3.6)
54.9 11.9 19.4 10.0
7.5 18.2 17.9 2.4 20.8 21.0 4.5 21.7 21.4 4.7 18.1 19.3 2.5 2.1 9.6 10.6 5.9 8.3 4.7 32.6 30.7 3.2 15.7 17.2 8.2 19.6 25.1 7.3 21.0 21.2 3.1 6.1 6.3 4.2 14.3 16.9 2.2 24.0 25.5 4.0 8.0 10.6 8.1 29.6 28.8 3.3 14.4 16.5 6.4 13.5 14.8 2.7 4.0 7.8 n.a. 0.0 4.0 5.5 7.5 5.6 8.7
15.16 123,895 3.06 51,099 12.42 66,918 4.41 66,150 2.07 18,964 2.33 18,157 7.28 11,934 9.6 9,746 6.53 11,443 4.92 14,234 11.14 57,427 4.59 16,563 1.35 28,836 3.48 8,802 8.77 31,128 3.09 16,104 3.42 19,285 6.32 32,790 2.8 0.55 1.20 0.34 2,943 2,367 2,335 735
Buy 18.86
Buy 17.10
27.3 12.8 10.0 49.7 13.6
n.a. (27.4)
n.a. (57.4)
1.0 10.82
32.1 10.9
n.a. (39.4) 3.86 6.25 7.94 3.37 n.a. 1.53 0.52 n.a.
Buy 14.30
(67.5) 259.4 23.1
6.1 20.8 n.a. n.a.
10.1 15.1 15.9 0.9 11.7 12.2 5.9 29.7 8.7 11.0
(28.5) 503.6 24.9
1.35 12,533
4.7 14.7 17.0
~ Market cap weighted average; Simple average discount to NAV = 54% ^ Denominated in SGD for price and market cap Source: Bloomberg, * DBS Vickers
Page 4
Key Assumption
Sensitivity Analysis
FY Dec Property price growth Rental for office Rental for retail ADR growth for hotel
2010A 0% 0% 5% 5%
2011F -5% to -15% 5% 5% 5%
2012F 0% 5% 5% 5%
Property price grow th rate Tier 1 Tier 2 Bear case Base case Bull case -30% -15% 0% -20% -10% 10%
FY12 EPS (RMB) 0.23 0.29 0.33
Source: DBS Vickers
Source: DBS Vickers
Segmental Breakdown (RMBm)

FY Dec Revenues Development Properties Investment Properties Hotels Others Total 1,449 497 25 95 2,066 6,078 542 18 120 6,758 4,133 597 22 127 4,879 7,708 868 42 160 8,778 8,542 1,457 42 120 10,161 2008A 2009A 2010A 2011F 2012F
En-bloc sales of Wuhan office tower will be booked in FY11
Page 5
Income Statement(RMBm)
Margin Trends
FY Dec Turnover Cost of Goods Sold Gross Profit Other Opg (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Preference Dividend Net Profit Core Net Profit EBITDA Sales Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Effec tive Tax Rate (%)
2008A 2,066 (1,028) 1,038 (489) 549 44 (133) 2,265 2,725 (657) (270) 1,798 (598) 600 (54.8) (73.7) (76.0) 24.1
2009A 6,758 (3,229) 3,529 (524) 3,005 436 (89) 542 3,894 (1,301) 80 2,673 2,113 3,058 227.1 409.7 447.4 33.4
2010A 4,879 (2,869) 2,010 (477) 1,533 58 42 2,734 4,367 (1,357) (201) 2,809 623 1,600 (27.8) (47.7) (49.0) 31.1
2011F 8,778 (5,013) 3,765 (963) 2,802 274 (187) 2,888 (1,128) (356) 1,405 1,304 2,528 79.9 58.0 82.8 39.0
2012F 10,161 (6,200) 3,961 (1,202) 2,759 627 (343) 3,043 (1,021) (529) 1,492 1,441 2,132 15.8 (15.7) (1.5) 33.6
% 60 40 20 0 (20) (40) 2008A 2009A 2010A 2011F 2012F
Gross margin Core net margin
Gross margin has been adjusted down due to lower margin from Wuhan office tower sales
Page 6
Balance Sheet (RMBm)
Asset Breakdown
FY Dec Net Fixed Assets Invts in Assoc s & JVs Other LT Assets Cash & ST Invts Other Current Assets Total Assets ST Debt Other Current Liab LT Debt Other LT Liabilities Shareholder's Equity Minority Interests Total Cap. & Liab. Non-Cash Wkg. Cap Net Cash/(Debt)
2008A 343 1,627 18,340 2,686 12,919 35,915 2,152 5,948 7,482 2,158 16,863 1,312 35,915 6,971 (6,948)
2009A 356 2,135 22,669 3,725 13,707 42,592 2,540 6,298 8,775 2,405 21,579 995 42,592 7,409 (7,590)
2010A 540 2,190 28,761 5,221 19,541 56,253 1,944 6,803 18,254 3,224 24,820 1,208 56,253 12,738 (14,977)
2011F 540 2,190 32,409 5,749 24,643 65,531 4,944 8,483 21,754 3,224 25,918 1,208 65,531 16,160 (20,949)
2012F 1,185 2,190 36,352 7,821 28,750 76,298 10,944 12,111 21,754 3,224 27,057 1,208 76,298 16,639 (24,877)
Cash & ST Invts Other 9% Current Assets Other LT 35% Assets 51% Net Fixed Assets 1% Invts in Assocs & JVs 4%
Cash Flow Statement (RMBm)
Operating cashflow
FY Dec Pre-Tax Profit Dep. & Am ort. Tax Paid Assoc. & JV Inc/(loss) Chg in Wkg. Cap. Other Operating CF Net Operating CF Capital Exp. (net) Other Invts. (net) Invts. in Assoc. & JV Div from Assoc. & JV Other Investing CF Net Investing CF Div Paid Chg in Gross Debt Capital Issues Other Financing CF Net Financing CF Net Cashflow
2008A 2,725 51 (780) (44) (799) (1,799) (646) (56) (2,287) 1,939 (729) (1,133) (630) 2,079 (431) 1,018 (761)
2009A 3,894 53 (339) (436) (438) (1,121) 1,613 (47) (2,937) 522 (233) (2,695) (285) 1,447 1,759 (579) 2,342 1,260
2010A 4,367 67 (745) (58) (5,329) (1,382) (3,080) (33) (3,460) (280) 248 (3,525) (249) 3,278 2,970 5,999 (606)
2011F 2,888 (1,128) (274) (3,422) (1,637) (3,572) (1,824) 274 (1,551) (307) 3,000 2,957 5,650 528
2012F 3,043 (1,021) (627) (480) (2,273) (1,358) (1,971) 627 (1,344) (353) 6,000 (873) 4,775 2,072
RMB m 2,000 1,000 0 (1,000) (2,000) (3,000) (4,000) 2008A 2009A 2010A 2011F 2012F
Page 7
China / Hong Kong Results Snapshot
Huabao
Bloomberg: 336 HK EQUITY | Reuters: 0336.HK Page 1
20 June 2011
BUY HK$10.0
Price Target: 12-month HK$11.3 (Prev HK$14.20) EPS PE PBV Div Yield (x) (x) (%) Revision down 4.3% 17.7 4.9 1.7 down 9.6% 14.9 4.0 2.0
Defensive business with decent growth

Reporting Period Full year 2011 Performance In line Mkt Cap HK$31,496m US$4,038m FY 2012F 2013F EPS (HK$) 0.57 0.67 EPS G th Pre-Ex 12% 19%
Result Summary FY Mar (HK$ millions)
At a Glance
FY10 2,366 (580) 1,787 36 (73) (233) 1,517 16 (2) 1 1,532 (162) (29) 1,340 0.432 0.128 0.111 FY11 2,852 (732) 2,121 123 (81) (290) 1,872 25 (14) (1) 1,881 (249) (28) 1,604 0.510 0.152 0.000 chg (%) 20.5 26.2 18.7 239.0 10.8 24.5 23.4 56.3 833.3 22.8 53.7 (6.1) 19.7 18.2 18.8 (100.0)
Turnover Cost of Sales Gross profit Other revenue Sales & Marketing Expenses Administrative expenses Operating profit Interest income Interest expenses Associates Profit before taxation Taxation Minority interest Net profit EPS (HK$) Basic DPS (HK$) Special DPS (HK$) Margin (%) Gross margin Operating margin Net margin
Price Relative
HK$
FY11 results were in line with our and market expectations Cut special dividend; ordinary payout ratio unchanged at 30% Stable sales growth with sustainable margin Maintain BUY; TP lowered to HK$11.3 on adjusted earnings
Result Highlights FY11 net profit and turnover were in line with our and market expectations. However, slow inter-provinces consolidation in tobacco industry and various food safety issues have slightly dented flavours sales growth. But this was offset by stronger growth in fine fragrance, thanks to an acquisition in Sep 10. Higher R&D costs lowered operating margin for fragrance division but was compensated by 4ppt margin improvement for flavours division. Reconstituted tobacco leaves (RTL) registered sales of HK$86.8m with an operating margin of 17.2%, a bit lower than expected. Balance sheet remained solid with net cash of over HK$900m. Special dividend was cut as expected but ordinary dividend payout ratio remained unchanged at 30%. Recommendation Major trends in tobacco industry remain intact, i.e. reducing tar content, stronger demand in mid/high end tobacco products and slow consolidation. Markets concern on food safety will continue to cloud growth prospects for food division in the short term. Thus, we have trimmed our sales growth for flavours by a few ppts to 16%. On a positive note, production upgrade of the existing 10,000 tons RTL capacity has been going well, which would enhance product quality, selling prices and profit margin. Huabao is confident that 20,000 ton new RTL capacity will achieve higher ASP of over RMB30,000/ton and gross margin of >50%. Huabao is also providing technical service in RTL business of Anhui Tobacco Group. Notwithstanding high inflation, increasing integration into aromatic materials will help to sustain margins. A new company has been set up in Hunan to produce litsea cubeba, (a natural aromatic raw material). However, we expect the change in product mix to lower overall gross margin to 72%. We have revised down our EPS growth by 4% and 10% for FY12 and FY13 respectively to reflect the adjustment in flavours sales growth. TP is also lowered to HK$11.3, based on 20x FY12 PE. However, its strong balance sheet, defensive outlook of tobacco industry and undemanding valuation at the low end of historical PE range should appeal to investors amid markets concern on interest rate hike, high inflation and slowing GDP growth in China. Maintain BUY.
75.5 64.1 56.6
74.3 65.6 56.3
Relative Index 204 184
13.10 11.10 9.10 7.10 5.10 3.10 2007
164 144 124 104 84 2008 2009 2010 64 2011
Huabao (LHS)
Relative HSI INDEX (RHS)
Source: Company, DBS Vickers, Bloomberg
ANALYST: Patricia YEUNG (852) 2863 8908 patricia_yeung@hk.dbsvickers.com

In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report ed- MY / sa- AL Recipients of this report, received from DBS Vickers Research (Singapore) Pte Ltd (DBSVR), are to contact DBSVR at +65 6535 9688 in respect of any matters arising from or in connection with this report.
Results Snapshot Huabao
PE band chart
PB band chart
Share Price (HK$) 17 26x 15 13 11 9 7 5 Mar-11 May-11 Mar-10 May-10 Sep-10 Nov-10 Jan-11 Sep-09 Nov-09 Jan-10 Jul-10 Jul-09 23x 20x 18x 15x
Share Price (HK$) 17 15 13 11 9 7 5 Mar-11 May-10 May-11 Mar-10 Sep-10 Nov-10 Sep-09 Nov-09 Jan-10 Jan-11 Jul-09 Jul-10
7.7x 6.9x 6.1x 5.4x 4.6x
Page 2
China / Hong Kong
Flash Notes
Page 1
20 June 2011
China Mobile
HOLD; HK$69.1; 12 month Price Target: HK$74
(0941 HK) Analyst: Tsz Wang TAM CFA, +852 2971 1772 tw_tam@hk.dbsvickers.com
Boring set of May 2011 operational statistics. Prefer smaller players in the sector
Mobile sub growth fell by 5.4% m-o-m. 3G accounted for 52% of total mobile net adds. The weaker net-adds follows seasonality last year. Maintain HOLD on lack of share price catalysts. Prefer smaller players like China Telecom and China Unicom Our view: - The weaker mobile sub run-rate follows seasonality, and therefore we do not expect CMs share price to react on this set of operational statistics. - Contribution from 3G sub is increasing, and accounts for 52% of total mobile net-adds in May (vs. 45% in Apr). - Our full year forecast suggests a monthly run-rate of 5.2m for the rest of the year, which should be achievable. Recommendation: Maintain HOLD on CM (TP: HK$74) on lack of share price catalysts. We prefer the two smaller players - China Telecom and China Unicom on more favourable regulatory support.
Whats new? - CM released its May KPIs at 9am HKT. - Mobile sub net-adds fell by 5.4% m-o-m to 5.02m in May, following the seasonality seen last year (c.f. 10.5% m-o-m decline in May 2010). Total mobile sub base expanded to 611.17m. - 3G sub net-add grew by 9.5% m-o-m to 2.616m, taking total base to 31.998m. - On the other hand, CM only signed up 2.404m 2G users, representing m-o-m decrease of 17.6%. 2G subscriber monthly net additions
(million) 6 5 4 3 2 1 0 (1) (2) (3) (4) Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11
3G subscriber monthly net additions

(million) 4 3 2 1 0 (1) (2) (3) (4) Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 3G: TD (LHS)
Source: Company
95% 75% 55% 35% 15% -5% -25% -45% -65%
Mar-10 +793%
100% 80% 60% 40% 20% 0% -20% -40% -60% -80% -100%
2G: GSM (LHS)

Source: Company
MoM growth (RHS)
MoM growth (RHS)
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report ed-JS / sa- DL
China / Hong Kong Flash Notes

PE band chart PB band chart
Share Price (HK$) 180 160 140 120 100 80 60 40 20 0
51x 40x
29x
Share Price (HK$) 180 160 18x 140 120 100 80 6x 60 40 20 0
13.8x
10.6x
7.5x
4.3x
1.2x
Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11
Peers valuation
Target Currenc y Company Name China Mobile* China Telecom-H* China Unicom* PCCW SmarTone Singapore Tel*~ Chunghwa Telekom unikasi* Bharti Airtel~ NTT DoCoMo~ KDDI Corp~ Telstra Corp France Telecom Deutsche Telekom Telecom Italia Telefonica MTN Group Swisscom AG AT&T Inc Vodafone Group~ Verizon Com m Sprint Nextel Qwest Comm BCE Inc Average Code 941 HK 728 HK 762 HK 8 HK 315 HK ST SP 2412 TT TLKM IJ BHARTI IN 9437 JP 9433 JP TLS AU FTE FP DTE GR TIT IM TEF SM MTN SJ SCMN VX T US VOD US VZ US S US Q US BCE CN HKD HKD HKD HKD HKD SGD TWD IDR INR Price 69.1 4.58 14.8 3.23 11.42 3.02 99 6,850 380.55 Price Rec Local$ Local$ 74 Hold 5.2 18 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Buy Buy NR NR NR NR NR NR NR NR NR NR NR NR Mkt Cap^ US$m 177,934 8,156 44,752 3,014 1,507 38,979 26,546 16,085 32,207 76,735 32,006 40,096 54,493 64,508 17,786 37,829 23,495 Fiscal Yr Dec-10 Dec-10 Dec-10 Dec-10 Jun-10 Mar-11 Dec-10 Dec-10 Mar-11 Mar-11 Mar-11 Jun-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Mar-11 Dec-10 Dec-10 Dec-10 Dec-10 PE 10A x 9.6 20.2 79.2 11.6 17.1 12.6 16.1 11.8 23.9 11.9 9.8 12.1 7.8 26.8 5.7 7.3 17.5 11.0 9.2 n.a. 39.5 n.a. n.a. 13.1 17.8 PE 11F x 9.4 18.2 53.9 12.0 14.2 12.1 16.6 10.9 18.2 11.4 9.8 11.1 8.7 14.3 7.5 9.3 12.2 10.3 13.0 9.2 16.0 n.a. n.a. 12.3 14.1 PE 12F x 9.1 13.9 28.8 9.8 12.1 11.1 16.2 10.3 13.7 10.7 8.9 11.0 8.7 13.9 7.3 8.9 10.6 10.1 12.1 8.5 13.7 n.a. n.a. 11.7 11.9 Yield 11F % 4.6 1.9 0.7 5.2 7.0 6.2 5.6 5.1 0.4 4.0 2.6 9.1 9.7 6.8 7.1 9.7 4.9 5.7 5.6 5.9 5.5 0.0 n.a. 5.5 5.2 P/Bk EV/EBITDA 11F x 1.8 1.3 1.4 n.a. 4.0 1.9 2.2 3.1 2.6 1.1 1.1 3.1 1.3 1.1 0.6 3.0 3.1 2.5 1.6 n.a. 2.4 1.2 n.a. 2.2 2.0 11F x 3.4 4.4 5.3 7.0 4.7 7.3 7.9 4.0 8.3 3.6 3.8 5.0 4.9 5.1 4.4 5.7 4.8 6.2 5.7 n.a. 5.5 5.5 n.a. 5.8 5.4 ROE 11F % 20.3 7.2 2.6 (61.8) 29.4 16.1 12.8 29.5 14.9 10.3 11.8 27.7 15.4 8.5 8.0 32.7 26.3 28.8 12.5 11.2 13.5 (12.0) n.a. 16.1 12.2
3.2 Hold 7,700 Hold
JPY 140,900 JPY 572,000 AUD EUR EUR EUR EUR ZAr CHF USD USD USD USD USD CAD 3.04 14.415 10.46 0.9295 16.495 13595 385.3 30.77 25.9 35.51 5.19 6.83 37.21
NR 107,440
NR 182,220 NR 132,599 NR 100,461 NR NR NR 15,527 0 29,410
~ FY10: FY11; FY11: FY12; FY12: FY13 ^ H-share market cap for H-share Source: Bloomberg, *DBS Vickers
Page 2
Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11
China / Hong Kong
Flash Notes
Page 1
21 June 2011
China Telecom
BUY; HK$4.62; 12 month Price Target: HK$5.20
Consistent May 2011 operational performance

Mobile sub growth was 2.6m, in line with our expectation Our forecast implies monthly run-rate of 2.8m for the rest of the year 3G accounted for 70% of total mobile net-adds Maintain BUY with TP of HK$5.2 - Our full year forecast implies monthly run-rate of 2.8m for the rest of the year, which should be achievable, in our view. - 3G net adds of 1.83m even exceeded China Unicoms 1.738m. - 3G accounted for 70% of total mobile net-adds in May. Of note, management targets 17m 3G sub net adds (50% of total net adds) in FY11, vs. y-t-d cumulative number of 7.38m. - We expect continued 3G sub growth to achieve 50%+ contribution going forward. - Availability of entry-level smartphones will boost 3G penetration in China. - Broadband net-adds were also in line with companys target of 12m in FY11 (equivalent to 1m per month) - Overall performance is unexciting, but consistent with managements target. Recommendation: - Maintain BUY with TP of HK$5.2
Whats new? - Mobile sub growth was 2.6m, down from 2.85m in Apr. Total mobile sub base expanded to 105.7m - 3G sub net adds rose 24% m-o-m to 1.83m, taking sub base to 19.67m. - Broadband sub net adds increased 7% m-o-m to 1.04m. Broadband sub base reached 68.86m. - Loss in local access lines slightly widened to 0.48m. Our view: - Mobile sub growth is in line with our expectation.
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report ed- MY / sa- CW
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Flash Notes
Source: Company
China / Hong Kong
Source: Company
Mobile subscriber monthly net additions
Broadband subscriber monthly net additions
Page 2
(million) 4.0
(million) 1.6 2.08 1.45 2.97 3.14 3.07 3.10 3.05 3.01 3.30 3.03 3.02 3.02 2.80 2.62 3.04 2.53 2.51 2.50 3.53 2.40 3.80 2.85 2.60
0.69 0.89 0.70 0.69 0.62 0.79 0.78 0.81 0.81 0.80 0.88 0.90 0.83 1.01 0.84 0.78 0.79 1.03 0.89 0.97 1.04 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11
Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11
0.0
(3.5)
(3.0)
(2.5)
(2.0)
(1.5)
(1.0)
(0.5)
Source: Company
CU's 2G (GSM) 5.9%
(million)
Fixed line subscriber monthly net additions
Market share in terms of mobile sub net adds (May 2011)
Source: Companies
(1.52) (1.78) (1.46) (1.84) (2.53) (1.90)
CM's 2G (GSM) 24.2% CU's 3G (WCDMA) 17.5% CT's 2G (CDMA) 7.7% CT's 3G (CDMA2000) 18.4% CM's 3G (TD) 26.3%
Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11
(1.03) (1.40) (1.20) (1.07) (0.89) (0.96) (1.04) (0.79) (0.85) (1.16) (1.22) (0.42) (0.86) (0.41) (0.41) (0.48)
Market share in terms of 3G sub net adds (May 2011)
Market share in terms of 3G sub base (May 2011)
CT 29.6% (1.83m)
CT 26.7% (19.7m)
CM 42.3% (2.62m) CU 28.1% (1.74m) CU 29.9% (22.1m)
CM 43.4% (32m)
Source: Companies
Source: Companies
Monthly subscriber growth

Million CDMA net-add CDMA sub base Broadband net-add Broadband sub base Fixed line net-add Fixed line sub base May-10 3.02 71.50 0.80 57.45 (1.07) 181.96 Jun-10 3.02 74.52 0.88 58.33 (0.89) 181.07 Jul-10 Aug-10 2.80 77.32 0.90 59.23 (0.96) 180.11 2.62 79.94 0.83 60.06 (1.04) 179.07 Sep-10 3.04 82.98 1.01 61.07 (0.79) 178.28 Oct-10 Nov-10 2.53 85.51 0.84 61.91 (0.85) 177.43 2.51 88.02 0.78 62.69 (1.16) 176.27 Dec-10 2.50 90.52 0.79 63.48 (1.22) 175.05 Jan-11 3.53 94.05 1.03 64.51 (0.42) 174.63 Feb-11 Mar-11 Apr-11 May-11 2.40 96.45 0.89 65.40 (0.86) 173.77 3.80 100.25 1.45 66.85 (0.41) 173.36 2.85 103.10 0.97 67.82 (0.41) 172.95 2.60 105.70 1.04 68.86 (0.48) 172.47
Source: Company
Page 3

PE band chart PB band chart
Share Price (HK$) 9 8 7 6 5 4 3 2 1 0 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 16x 12x 9x 5x 20x
Share Price (HK$) 9 8 7 6 5 4 3 2 1 0 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 0.6x 2.3x 1.8x 1.4x 1.0x
Peers valuation
Target Currenc y Company Name China Mobile* China Telecom-H* China Unicom* PCCW SmarTone Singapore Tel*~ Chunghwa Telekom unikasi* Bharti Airtel~ NTT DoCoMo~ KDDI Corp~ Telstra Corp France Telecom Deutsche Telekom Telecom Italia Telefonica MTN Group Swisscom AG AT&T Inc Vodafone Group~ Verizon Com m Sprint Nextel Qwest Comm BCE Inc Average Code 941 HK 728 HK 762 HK 8 HK 315 HK ST SP 2412 TT TLKM IJ BHARTI IN 9437 JP 9433 JP TLS AU FTE FP DTE GR TIT IM TEF SM MTN SJ SCMN VX T US VOD US VZ US S US Q US BCE CN HKD HKD HKD HKD HKD SGD TWD IDR INR Price 69.3 4.62 14.98 3.29 10.94 3.02 97.7 6,950 389.85 Price Rec Local$ Local$ 74 Hold 5.2 18 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Buy Buy NR NR NR NR NR NR NR NR NR NR NR NR Mkt Cap^ US$m 178,476 8,228 45,304 3,071 1,444 38,989 26,169 16,297 32,894 76,251 31,819 39,990 54,651 65,114 17,518 37,857 23,556 Fiscal Yr Dec-10 Dec-10 Dec-10 Dec-10 Jun-10 Mar-11 Dec-10 Dec-10 Mar-11 Mar-11 Mar-11 Jun-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Mar-11 Dec-10 Dec-10 Dec-10 Dec-10 PE 10A x 9.7 20.4 80.2 11.9 16.4 12.6 15.9 12.0 24.5 11.9 9.8 12.1 7.8 26.9 5.6 7.3 17.5 11.0 9.2 n.a. 39.6 n.a. n.a. 13.4 17.9 PE 11F x 9.4 18.4 54.6 12.2 13.6 12.1 16.4 11.0 18.7 11.3 9.8 11.1 8.6 14.4 7.3 9.2 12.2 10.3 13.1 9.4 16.1 n.a. n.a. 12.6 14.2 PE 12F x 9.1 14.0 29.2 10.0 11.6 11.1 16.0 10.5 14.0 10.6 8.9 11.0 8.7 14.0 7.1 8.9 10.7 10.0 12.1 8.6 13.7 n.a. n.a. 12.0 11.9 Yield 11F % 4.6 1.9 0.6 5.1 7.3 6.2 5.7 5.0 0.4 4.0 2.6 9.1 9.8 6.8 7.3 9.7 4.9 5.8 5.6 5.8 5.5 0.0 n.a. 5.3 5.2 P/Bk EV/EBITDA 11F x 1.8 1.3 1.4 n.a. 3.9 1.9 2.1 3.1 2.6 1.1 1.1 3.1 1.3 1.1 0.6 3.0 3.2 2.5 1.6 n.a. 2.4 1.2 n.a. 2.3 2.0 11F x 3.4 4.4 5.4 7.0 4.4 7.3 7.7 4.0 8.5 3.6 3.8 4.9 4.9 5.1 4.4 5.7 4.8 6.2 5.8 n.a. 5.5 5.5 n.a. 5.9 5.4 ROE 11F % 20.3 7.2 2.6 (61.8) 29.4 16.1 12.8 29.5 14.9 10.3 11.8 27.7 15.4 8.5 8.0 32.7 26.3 28.8 12.5 11.2 13.5 (11.8) n.a. 16.1 12.3
3.2 Hold 7,700 Hold
NR 107,367
NR 183,345 NR 135,313 NR 100,857 NR NR NR 15,587 0 30,216
Page 4

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

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/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 DBSVR. It is being distributed in the United States by DBSV US, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBS Vickers Securities (USA) Inc (DBSVUSA) directly and not its affiliate. 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: a. b. such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and 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 to the 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 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. 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 companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the analyst and his / her spouse and/or relatives and/or associate 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 securities, directorships and trustee positions).
Page 5

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. PT. DBS Vickers Securities Indonesia ("DBSVI") has a proprietary position in Telekomunikasi Indonesia Tbk PT (TLKM IJ) recommended in this report as of 17 Jun 2011. 2. DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates may beneficially own a total of 1% or more of any class of common equity securities of the subject companies mentioned in this document as of the latest available date of the updated information. Compensation for investment banking services: DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates may have received compensation, within the past 12 months, and within the next 3 months may receive or intends to seek compensation for investment banking services from the subject companies mentioned in this document. 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.
3.
RESTRICTIONS ON DISTRIBUTION 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 or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use General would be contrary to law or regulation. This report is being distributed in Australia by DBSVR and DBSVS, which are exempted from the requirement to hold an Australian financial services licence under the Corporation Act 2001 [CA] in respect of financial services provided to the recipients. DBSVR and DBSVS are regulated by the Monetary Authority of Singapore [MAS] under the laws Australia of Singapore, which differ from Australian laws. Distribution of this report is intended only for wholesale investors within the meaning of the CA.. This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by Hong Kong the Hong Kong Securities and Futures Commission. This report is being distributed in Singapore by DBSVR, which holds a Financial Advisers licence and is regulated by the MAS. This report may additionally be distributed in Singapore by DBSVS (Company Regn. No. 198600294G), which is an Exempt Financial Adviser as defined under the Financial Advisers Act. Any research report produced by a foreign DBS Vickers entity, analyst or affiliate is distributed in Singapore only to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chap. 289 of Singapore. Any distribution of research reports published by a foreign-related corporation of DBSVR/DBSVS to Accredited Investors is provided pursuant to the approval by MAS of research distribution arrangements under Paragraph 11 of the First Schedule to the FAA. This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Services Authority. Research distributed in the UK is intended only for institutional clients. rd This report is being distributed in Dubai/United Arab Emirates by DBS Bank Ltd, Dubai (PO Box 506538, 3 Floor, Building 3, Gate Precinct, DIFC, Dubai, United Arab Emirates) and is intended only for clients who meet the DFSA regulatory criteria to be a Professional Client. It should not be relied upon by or distributed to Retail Clients. DBS Bank Ltd, Dubai is regulated by the Dubai Financial Services Authority. Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations. 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 Vickers (Hong Kong) Limited 18 Floor Man Yee building, 68 Des Voeux Road Central, Central, Hong Kong Tel: (852) 2820-4888, Fax: (852) 2868-1523
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Page 6
China / Hong Kong
Flash Notes
Page 1
21 June 2011
China Unicom
(0762HK) Analyst: Tsz Wang TAM CFA, +852 2971 1772 tw_tam@hk.dbsvickers.com
May 2011 3G sub growth fell short of market expectation

3G sub net adds came below market expectation of 2m+ Expect short-term share price pressure CUs operational stats used to exhibit m-o-m volatility We remain bullish on CUs long-term outlook. BUY. - We expect the share price to be under pressure in the near-term. - Management is targeting 25m 3G net-adds (35m total mobile sub net-adds) for FY11, which implies 2.4m monthly run-rate for the rest of the year. This will become challenging if the monthly net-adds remains below 2m in the coming 2 months. - 2G sub growth continued to slow down, as CU strategically focuses on 3G business. - Broadband net-adds picked up simply due to a low base in Apr. - Overall, May performance was unsatisfactory. - However, we remain bullish on CUs long-term outlook, underpinned by its competitive advantage in WCDMA technology. - CUs operational statistics have exhibited m-o-m volatility in the past. Any weakness in share price provides an opportunity to accumulate. Recommendation We expect share price to come under pressure in shortterm. Maintain BUY with TP of HK$18.
Whats new? - 3G subscriber net adds fell to1.738m, from 1.817m last month, taking total 3G subscriber base to 22.09m. - 2G subscriber growth dropped by 11% y-o-y to 0.586m. Subscriber base expanded to 157.248m. - Total mobile subscriber net adds (2G + 3G) fell 6% m-o-m to 2.324m. - CU lost 0.304m fixed-line users, and its total local access lines shrank to 95.845m. - Broadband subscribers grew 32.8% m-o-m to 0.834m. Total number of subscribers reached 51.264m. Our view - 3G sub net-adds in May was disappointing as investors were anticipating 3G sub growth of 2m+.
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report ed- MY / sa- CW
2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0
0.0
(3.0)
(2.5)
(2.0)
(1.5)
(1.0)
(0.5)
Flash Notes
China / Hong Kong
Source: Company
Source: Company
Fixed-line subscriber monthly net additions
Mobile subscriber monthly net additions - GSM
Page 2
(million) 0.5
(million)
(0.51) (0.95) (1.25) (2.11) (0.30) (0.41) (0.27) (0.20) (0.51) (0.28) (0.32) (0.42) (0.41) (0.42) (0.73) (1.91) 0.29 (0.04) (0.34) (0.40) (0.30)
Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11
0.94 0.80 0.61 0.64 0.81 0.74 0.87 0.73 0.76 0.64 0.63 0.68 0.80 0.63 0.60 0.62 0.83 0.73 1.08 0.66 0.59
Broadband subscriber monthly net additions
Mobile subscriber monthly net additions - WCDMA
0.0 0.87 0.54 0.33 0.22 0.97 0.79 1.20 0.60 0.83 0.83 0.76 0.85 0.62 0.65 0.30 0.29 0.97 0.66 0.95 0.63 0.83 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11
0.2
0.4
0.6
0.8
1.0
1.2
2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 0.15 0.52 0.80 0.92 0.85 0.47 0.76 0.68 1.02 1.03 0.94 1.01 1.04 1.10 1.12 1.28 1.41 1.21
(million) 1.4
1.86 1.82 1.74
(million)
Monthly subscriber growth

Million Mobile net-add Total m obile sub base WCDMA net-add WCDMA sub base GSM net-add GSM sub base Broadband net-add Broadband sub base Fixed line net-add Fixed line sub base May-10 1.79 155.29 1.02 6.53 0.76 148.76 0.83 42.93 (0.51) 101.13 Jun-10 1.68 156.96 1.03 7.56 0.64 149.40 0.83 43.76 (0.28) 100.85 Jul-10 Aug-10 1.57 158.53 0.94 8.50 0.63 150.03 0.76 44.52 (0.32) 100.54 1.69 160.22 1.01 9.51 0.68 150.71 0.85 45.36 (0.42) 100.11 Sep-10 1.84 162.07 1.04 10.55 0.80 151.51 0.62 45.98 (0.41) 99.70 Oct-10 Nov-10 1.73 163.80 1.10 11.66 0.63 152.15 0.65 46.63 (0.42) 99.28 1.72 165.53 1.12 12.78 0.60 152.75 0.30 46.93 (0.73) 98.55 Dec-10 1.90 167.43 1.28 14.06 0.62 153.37 0.29 47.22 (1.91) 96.64 Jan-11 2.23 169.66 1.41 15.47 0.83 154.19 0.97 48.20 0.29 96.93 Feb-11 Mar-11 Apr-11 May-11 1.94 171.60 1.21 16.68 0.73 154.92 0.66 48.86 (0.04) 96.89 2.94 174.54 1.86 18.54 1.08 156.00 0.95 49.80 (0.34) 96.55 2.48 177.01 1.82 20.35 0.66 156.66 0.63 50.43 (0.40) 96.15 2.32 179.34 1.74 22.09 0.59 157.25 0.83 51.26 (0.30) 95.85
Source: Company
PE band chart
PB band chart
Share Price (HK$) 25 20 55x 15 10 5 0 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 43x 31x 19x 7x
Share Price (HK$) 30 25 20 15 10 5 0 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 3.8x
2.9x
2.1x 1.3x
0.5x
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Page 3
Peers valuation
Target Currenc y Company Name China Mobile* China Telecom-H* China Unicom* PCCW SmarTone Singapore Tel*~ Chunghwa Telekom unikasi* Bharti Airtel~ NTT DoCoMo~ KDDI Corp~ Telstra Corp France Telecom Deutsche Telekom Telecom Italia Telefonica MTN Group Swisscom AG AT&T Inc Vodafone Group~ Verizon Com m Sprint Nextel Qwest Comm BCE Inc Average Code 941 HK 728 HK 762 HK 8 HK 315 HK ST SP 2412 TT TLKM IJ BHARTI IN 9437 JP 9433 JP TLS AU FTE FP DTE GR TIT IM TEF SM MTN SJ SCMN VX T US VOD US VZ US S US Q US BCE CN HKD HKD HKD HKD HKD SGD TWD IDR INR Price 69.3 4.62 14.98 3.29 10.94 3.02 97.7 6,950 389.85 Price Rec Local$ Local$ 74 Hold 5.2 18 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Buy Buy NR NR NR NR NR NR NR NR NR NR NR NR Mkt Cap^ US$m 178,476 8,228 45,304 3,071 1,444 38,989 26,169 16,297 32,894 76,251 31,819 39,990 54,651 65,114 17,518 37,857 23,556 Fiscal Yr Dec-10 Dec-10 Dec-10 Dec-10 Jun-10 Mar-11 Dec-10 Dec-10 Mar-11 Mar-11 Mar-11 Jun-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Dec-10 Mar-11 Dec-10 Dec-10 Dec-10 Dec-10 PE 10A x 9.7 20.4 80.2 11.9 16.4 12.6 15.9 12.0 24.5 11.9 9.8 12.1 7.8 26.9 5.6 7.3 17.5 11.0 9.2 n.a. 39.6 n.a. n.a. 13.4 17.9 PE 11F x 9.4 18.4 54.6 12.2 13.6 12.1 16.4 11.0 18.7 11.3 9.8 11.1 8.6 14.4 7.3 9.2 12.2 10.3 13.1 9.4 16.1 n.a. n.a. 12.6 14.2 PE 12F x 9.1 14.0 29.2 10.0 11.6 11.1 16.0 10.5 14.0 10.6 8.9 11.0 8.7 14.0 7.1 8.9 10.7 10.0 12.1 8.6 13.7 n.a. n.a. 12.0 11.9 Yield 11F % 4.6 1.9 0.6 5.1 7.3 6.2 5.7 5.0 0.4 4.0 2.6 9.1 9.8 6.8 7.3 9.7 4.9 5.8 5.6 5.8 5.5 0.0 n.a. 5.3 5.2 P/Bk EV/EBITDA 11F x 1.8 1.3 1.4 n.a. 3.9 1.9 2.1 3.1 2.6 1.1 1.1 3.1 1.3 1.1 0.6 3.0 3.2 2.5 1.6 n.a. 2.4 1.2 n.a. 2.3 2.0 11F x 3.4 4.4 5.4 7.0 4.4 7.3 7.7 4.0 8.5 3.6 3.8 4.9 4.9 5.1 4.4 5.7 4.8 6.2 5.8 n.a. 5.5 5.5 n.a. 5.9 5.4 ROE 11F % 20.3 7.2 2.6 (61.8) 29.4 16.1 12.8 29.5 14.9 10.3 11.8 27.7 15.4 8.5 8.0 32.7 26.3 28.8 12.5 11.2 13.5 (11.8) n.a. 16.1 12.3
3.2 Hold 7,700 Hold
NR 107,367
NR 183,345 NR 135,313 NR 100,857 NR NR NR 15,587 0 30,216
Page 4


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Page 5

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China / Hong Kong
Flash Notes
Page 1
20 June 2011
Comba
CommScope files lawsuit against Comba Telecom

Lawsuit is related to infringement for remote electrical tilt (RET) antenna products. Management believes that the patent was void. RET antenna is one of Combas many products. Maintain positive stance on overall business outlook. - The allegation against the Company for patent infringement in China and Brazil should not be valid. Our view: - The news is negative to share price. - However, the potential loss relating to China is Rmb12m, representing less than 2% of our FY11F earnings. While we do not have the estimate for Brazil case, the potential financial loss does not look to be very significant. - Antenna segment accounted for 28% of total revenue last year. RET antenna is one of Combas many products. The company also derives revenue from wireless optimization projects. We remain positive on the companys overall outlook. - Management revealed that there should be no interruption in production and sales of RET antenna. - In our view, it is inevitable for PRC technology companies to face lawsuits when they start to be a threat to overseas competitors. Recommendation: We expect pressure on share price in the short-term. The stock now trades at 14x FY11 PE. Maintain BUY with TP of HK$10.5, and recommend to accumulate the shares on weakness.
Whats new? According to HKEx announcement, CommScope (through its subsidiary Andrew) has taken legal action against Comba in the PRC, in relation to patent infringement for remote electrical tilt (RET) antenna products. They are seeking for an injunction and indemnification of economic loss of RMB12m. CommScope has also initiated similar legal proceedings in Brazil against Comba. Combas view: - The patent had been void and cancelled in various regions. - In Europe, the patent over RET Antenna was cancelled by European Patent Office in 2009. - In China, the patent of Andrews RET Antenna was declared void in 2007 and 2009 by the State Intellectual Property Office and was also subsequently declared void by the Beijing Intermediate Peoples Court in late 2010. - The Company considers that the patent under litigation in China and Brazil should be declared void.
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report ed- JS / sa- AL
PE band chart
PB band chart
Share Price (HK$) 12 10 8 6 4 2 0 Sep-10 May-09 May-11 Sep-08 Jan-08 Jan-10
17x 13x 9x 5x 1x
Share Price (HK$) 12 10 8 6 4 2 0 Sep-10 May-09 May-11 Sep-08 Jan-08 Jan-10
3.9x
2.9x 2.0x 1.1x 0.2x
Peers valuation
Mkt Currency Company Name Comba Telecom* ZTE Corp-H China Comservice-H Centron Telecom MOBI Dev Xi'an Haitian-H O-Net Comm Powerwave Tech China GrenTech Wuhan Fingu Sunwave Comm Allwin Telecom Code 2342 HK 763 HK 552 HK 1155 HK 947 HK 8227 HK 877 HK PWAV US GRRF US 002194 CH 002115 CH 002231 CH HKD HKD HKD HKD HKD HKD HKD USD USD CNY CNY CNY Price Local$ 8.24 27.05 4.77 1.53 1.65 0.3 2.92 2.71 2.3 10.58 14.41 11.64 Cap^ US$m 1,588 2,185 1,220 151 169 6 312 458 55 908 477 288 PE 10A x 16.3 23.1 12.6 5.4 13.0 n.a. 11.7 90.3 88.5 27.8 30.7 64.7 PE 11F x 14.1 19.7 10.9 4.9 8.1 n.a. 10.6 13.6 2.9 19.6 23.4 28.7 PE 12F x 12.3 16.2 9.8 4.3 6.2 n.a. 8.6 9.1 2.3 19.3 18.1 16.5 Yield 11F % 1.8 1.2 3.6 4.2 n.a. n.a. 0.1 n.a. n.a. 1.3 1.2 1.4 P/Bk EV/EBITDA 11F x 3.1 2.9 1.5 0.6 1.0 n.a. 1.7 5.4 0.3 2.7 3.6 4.1 11F x 8.7 11.9 5.7 3.2 2.3 n.a. 5.5 9.3 n.a. n.a. 15.1 18.2 ROE 11F % 24.2 15.5 13.5 14.2 n.a. n.a. 16.1 56.8 20.0 11.3 15.8 13.9
^ H-share market cap for H-share Source: Bloomberg, *DBS Vickers
Page 2
Indonesia Company Focus
Intiland Development
Bloomberg: DILD IJ EQUITY
Reuters: DILD.JK
21 Jun 2011
BUY Rp315 JCI : 3,729.12

Price Target : 12-Month Rp 505 (Prev Rp 725) Reason for Report : Company updates Potential Catalyst: Project materializations, stronger than expected marketing sales Analyst Indonesia Research Team +6221 3983 2668
Busy years ahead

Attractive project pipeline for the next four years Huge landbank earmarked for wide range of properties to ride on the sectors growth Cut FY11F/12F earnings by 31%/67% after imputing more conservative revenue recognition Albeit lower TP of Rp505, maintain BUY, due to cheap valuation of 0.33xP/NAV, offering 62% upside
Relative Index 291 241 191 141 91 41 2011
Price Relative
Rp 758 658 558 458 358 258 158 58 2007
Attractive project pipeline, busy years ahead. 2011 should be another busy year for DILD with the recent launch of a commercial cluster and three residential clusters and three high rise developments launches in 2H11. Two of its Whiz Hotel should also start operations by the end of this year. This year, the company is targeting 82% y-o-y marketing sales growth to Rp2tr. Huge landbank to ride on property sector upcycle. DILD has 1608ha of undeveloped landbank, valued at Rp4.4tr, earmarked for various projects. Indonesias property industry is in an upcycle because of the low interest rate environment and a growing middle income population. And armed with its large landbank, DILD can ride on this with a diverse project mix to cater to several target segments especially the middle income and inner city residential, as well as retail and commercial spaces. Its diverse product range should reduce concentration risks and provide more stable earnings. Reiterate BUY with lower TP of Rp505 offering 62% upside. We cut FY11F/12F earnings by 31%/67% after imputing more conservative revenue recognition assumptions. Initially, we are too aggressive on the launch schedule. Our target price is also reduced to Rp505 after we shaved RNAV to Rp919/share and applied a larger 45% valuation discount. The counter is now trading at 0.33x P/NAV while average property companies in Indonesia are trading c.50% discount, presenting a cheap valuation. Rerating catalysts are project execution and stronger than expected marketing sales.
At A Glance Issued Capital (m shrs) Mkt. Cap (Rpbn/US$m) Major Shareholders UBS AG Singapore (%) Credit Suisse Singapore (%) PT Permata Ratnamulia (%) Free Float (%) Avg. Daily Vol.(000)
2008
2009
2010
Intiland Development (LHS)
Relative JCI INDEX (RHS)

FY Dec (Rp bn) 2009A 2010A 2011F 2012F
Revenue EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) EPS (Rp) EPS Pre Ex. (Rp) EPS Gth Pre Ex (%) Diluted EPS (Rp) Net DPS (Rp) BV Per Share (Rp) PE (X) PE Pre Ex. (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): Consensus EPS (Rp): No. of brokers following:
387 139 59 26 26 8 8 (438) 8 0 371 38.2 38.2 21.2 9.4 0.0 0.8 0.2 2.2
843 356 429 350 214 34 21 150 31 0 345 9.3 15.3 9.9 9.7 0.0 0.9 0.0 14.8
1,192 514 463 357 357 34 34 67 31 0 380 9.2 9.2 9.9 6.7 0.0 0.8 0.0 9.5 (30.1) 24.8 S: 0
1,942 687 632 467 467 45 45 31 41 0 425 7.0 7.0 7.4 4.9 0.0 0.7 CASH 11.2 (67.0) 27.9 H: 0
B: 2
ICB Industry : Financials ICB Sector: Real Estate Investment & Servi Principal Business: Property developer with diverse portfolio consists of middle to high-end residential townships, office buildings, highrise apartments and mixed-use developments in Jakarta and Surabaya and recent addition of budget hotel chain network.
10,366 3,265 / 380 22.2 20.3 7.3 50.2 19,117
Source of all data: Company, DBS Vickers, Bloomberg
In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore. www.dbsvickers.com Refer to important disclosures at the end of this report ed: JS / sa: MA
Company Focus Intiland Development

Busy years ahead. The company had re-emerged from its dormant years in 2010 and now has a robust development pipeline for the next four years. In addition to its current projects, it has three new townships and 10 high rise developments to offer. This year, we should see the launch of three landed residential clusters, a commercial cluster, and three high rise developments. The two Whiz Hotels, one in Semarang and one in Kuta which are currently under construction, should also be ready to start operation. This year, the company is targeting 82% y-o-y marketing sales growth to Rp2tr. Actively seeking new emerging business opportunities. DILD is actively seeking new opportunities to support its rapid earnings growth target. For example, following the success of Pinang Residence, ID Homes pilot project, it is now focusing on this clusters homebuilding business. DILD is currently eyeing 10 pieces of land (c.1ha each) in South Jakarta. If it manages to secure these, they will be Launching and construction schedule
Launches
Development Types
developed into five new ID Homes project in 2011 and 2012 comprising about 30 houses each (priced at Rp1.21.8bn per unit). DILDs industrial park business is also recovering rapidly with strong foreign direct investments flowing into Indonesia. Ngoro Industrial Park (NIP) has received many enquiries from multinational companies. The company is currently conducting feasibility studies on two sites in East Java to try to replicate its successful NIP model there. DILD is also open to taking in partners to secure larger business opportunities. For instance, in Spazio and WestOne City, it formed JV or joint operations with land owners to secure the projects. It is also open to forming strategic partnerships that are synergistic and can ramp up its sales and diversify risks, like what it is currently seeking for the TB Simatupang project.
Townships
- Harmony and The Hills Clusters in Talaga Bestari
2010
- Jungle Walk and The Forest clusters in Talaga Bestari - Block B Graha Natura - Cengkareng, Banten Phase 1 - Gandaria Phase 2 - WestOne City 1st cluster - TB Simatupang Phase 1 - Whiz Hotel Semarang - Whiz Hotel Kuta
2011F
- Block C & D Graha Natura
2012F
High-rise developments Hotels Others
- 1 Park Residence - Regatta 4th tower - Spazio - Whiz Hotel Yogyakarta - Ngoro Industrial Park Phase 2 - Pinang Residence - Harmony and The Hills Clusters in Talaga Bestari - Block A-D, Graha Natura - 1 Park Residence
- Kebon Melati Phase 1 - Regatta Phase 2
Constructions
Townships
- Jungle Walk and The Forest clusters in Talaga Bestari - Cengkareng, Banten Phase 1 - WestOne City 1st cluster - Spazio - TB Simatupang Phase 1 - Kebon Melati Phase 1 - Regatta Phase 2
High-rise developments Hotels Others
- Whiz Hotel Semarang - Whiz Hotel Kuta - Ngoro Industrial Park Phase 2 - Pinang Residence
Source: Company
Page 2

Key Project Developments
Projects Townships Talaga Bestari l Graha Natura Graha Famili Cengkareng High-rise developments 1Park Residence, Gandaria Gandaria Phase 2 Regatta, Pantai Mutiara TB Simatupang South Jakarta South Jakarta North Jakarta South Jakarta West Jakarta West Surabaya 70% of units had been sold, on track to meet 90% sales target by 2011. Construction has started in August 2010 with 30% already completed. In process for planning and permit to prepare for marketing launch in 4Q11, riding on 1 Park Residences sales momentum. The marketing for the final tower was launched in November 2010. In total, only 162 units (c.40%) remain. Completion of refurbishment and construction works and sales are to be finalized by this year. In planning for 3 office towers (c.12ha net lettable area) and 1ha retail area developments to be launched in 2H11. Phase B is expected to be launched in 2013 to consist of strata-title offices and residential units for sale. The work for front entrance, roads infrastructure, landscape and marketing office have been completed. Marketing launch for the first 3 apartment towers is expected later this year. Office spaces were 60% sold since launch in November 2010. Construction targeted to be completed in 2012. To start operations by 4Q11. To start operations by 4Q11. Tangerang 60% of 2 launched residential clusters and 40% of 1 commercial cluster are sold. Will launch another residential cluster in 2H11. Construction for commercial cluster to be completed in July, while the residential ones by August. Marketing office, land development works and show units have been completed with c.18ha are now ready for sales. Block B, the first one, is expected to be launched in 2H11 pending permit issuance. Focusing to ramp up and complete marketing sales for remaining small inventories by this year. Finalised acquisition of entrance to improve accessibility from Airport. Development of master plan for phase 1 (c.100ha) with integrated green township concept for launching later this year. Progress Report
West Surabaya West Surabaya North Jakarta
WestOne City Spazio Whiz Hotels Semarang Kuta Others Ngoro Industrial Park ID Homes
East Java South Jakarta
Under phase 2, 100ha is being developed and expected to be completed by 3Q11, while infrastructure should be finalised by 1H11. The pilot project, Pinang Residence, South Jakarta, is c.75% sold with construction well underway. Both sales and construction are expected to be completed this year.
Source: Company
Huge landbank to ride on property industry growth. DILD has 1,560ha of undeveloped landbank, valued at Rp4.4tr, earmarked for township developments and 48ha earmarked for high-rise developments. Indonesias property industry is in an upcycle supported by a low interest rate environment and growing middle income population. And armed with its large landbank, DILD can ride on the expected strong growth of Indonesias property sector. DILDs diverse project mix allows it to cater to a wider market segment, ranging from middle income residential and inner city residential projects, retail, commercial, and industrial spaces. The diversification should reduce concentration risks and provide stable earnings Fringe townships, housing solution amid soaring property prices. DILD has 1,511ha of landbank in the outskirts of Jakarta for three township developments; 100ha remaining in Talaga Bestari, Tangerang, 321ha in Cengkareng, and 1,090ha in Banten. These townships should provide housing solutions for the middle-low to middle income segment, who can no longer afford properties in Jakartas inner city. Despite being in the outskirts, all three townships are strategically located. Talaga Bestari and Tangerang are relatively close to the inner city toll road, while Banten is close to railway heading to the inner city. Hence, these projects should sell. Jakarta Township Locations
Project Talaga Bestari Tangerang* Banten* Access to the city Jakarta-Merak Toll Road Soekarno Hatta International Airport Toll Road Proposed JORR2 Toll Road Jakarta-Merak Railway
Source: Company *Planned developments
High rise developments, convenient yet affordable city living solution. As traffic jams worsen in Jakarta, more people are opting to live in the inner city to cut down
Page 3

commuting time. Hence, inner city apartments are gaining popularity as convenient yet affordable city living solutions. In its pipeline, DILD has eight high-rise developments in Jakarta inner city to meet growing demand. Its target markets are middle to high income groups. Although affordable, they are still priced higher than townships because of their strategic location. Since 2008, the take up rates for inner city apartments have been healthy at c.89%. The absorption rate for middle to upper class apartments in CBD and South Jakarta areas are higher at 94.8% and 92.1%, respectively. 5 out of the 8 DILDs developments are in these two locations. DILDs existing project, 1 Park Residence, also has a healthy take up rate. Since launched in February 2010, the project is already 70% sold. Jakarta High Rise Developments Locations
Project 1Park Residence Gandaria Phase 2* TB Simatupang * Kebon Melati * Regatta WestOne City* Location South Jakarta South Jakarta South Jakarta Central Jakarta Beachside Jakarta West Jakarta
Our target price is also reduced to Rp505 after we shaved RNAV to Rp919/share and applied a larger 45% valuation discount. Despite lowering our TP, we maintain our BUY call. The counter is currently trading at a cheap valuation of 0.33xP/NAV, offering 62% upside Average property companies in Indonesia are trading c.50% discount. Rerating catalysts are project execution and stronger than expected marketing sales. Meanwhile, the risk to our call is the impact and quantum of the expected interest rate hikes in 2011 on overall property demand. Sum of the parts valuation
Asset Types Investment properties Landed residentials Mixed use & high rise developments Industrial estates Landbank Total surpluses FY11F equity value RNAV RNAV per share (Rp) Surplus Value (Rpbn) 192 759 692 320 4,475 6,438 4,036 10,474 919
Source: DBS Vickers, company
Source: Company *Planned developments
Reiterate Buy, 62% upside to Rp505 TP. We cut FY11F/12F earnings by 31%/67% after imputing more conservative revenue recognition and launch schedule assumptions. Initially, we are too aggressive on the launch schedule front.
Peers Comparisons Indonesia Property Developers

Company Bloomberg Ticker Market Cap (Rptr) P/NAV FY11F P/E FY12F P/E
Intiland Development
Summarecon Agung* Bumi Serpong Damai* Ciputra Development* Agung Podomoro Land* Lippo Karawaci Alam Sutera Realty* Average
DILD IJ
SMRA IJ BSDE IJ CTRA IJ APLN IJ LPKR IJ ASRI IJ
3.3
7.8 14.9 6.4 6.8 14.8 5.5
0.3
0.6 0.5 0.5 0.5 0.5 0.6 0.5
9.2
23.7 20.3 23.0 12.6 22.5 11.0 17.5
7.0
17.8 15.7 16.8 9.5 18.3 8.4 13.4
Source: Companies, Bloomberg, DBS Vickers *Not under DBS Vickers coverage universe. NAV data is provided by each company. Based on 20 June FY11 closing prices
Page 4
Segmental Breakdown
FY Dec 2008A 2009A 2010A 2011F 2012F
Revenues (Rp m) Real Estate - House and Land Real Estate - Apartment Rental Income Golf Course and Sports Total EBIT (Rp bn) Real Estate - House and Land Real Estate - Apartment Rental Income Golf Course and Sports Total EBIT Margins (%) Real Estate - House and Land Real Estate - Apartment Rental Income Golf Course and Sports Total Income Statement (Rp bn)
FY Dec
187 28 97 20 332 44 (1) (9) 7 41 23.7 (5.0) (9.4) 35.6 12.3
206 63 89 28 387 35 5 20 1 61 17.1 8.4 22.2 3.2 15.9
569 159 84 31 843 160 31 64 3 258 28.1 19.4 76.8 10.6 30.6
604 475 80 32 1,192 362 124 47 9 543 60.0 26.1 59.0 27.8 45.5
715 1,076 117 34 1,942 316 349 69 9 744 44.2 32.5 59.0 27.8 Margins Trend 38.3
44.0% 39.0% 34.0%
Higher than usual margin due to low land acquisition cost back in the 90s
2008A
2009A
2010A
2011F
2012F
29.0% 24.0% 19.0% 14.0% 9.0% 4.0% 2008A 2009A 2010A 2011F 2012F Operating Margin % Net Income Margin %
Revenue Cost of Goods Sold Gross Profit Other Opng (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Preference Dividend Net Profit Net Profit before Except. EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins & Ratio Gross Margins (%) Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%) Net Interest Cover (x)
332 (202) 130 (89) 41 6 6 (30) 22 46 (26) (5) 0 14 (8) 85 N/A N/A N/A N/A 39.1 12.3 4.3 1.3 0.7 0.9 0.0 1.4
387 (225) 162 (101) 61 29 14 (46) 0 59 (20) (13) 0 26 26 139 16.4 64.8 49.9 80.8 41.9 15.9 6.6 2.2 1.2 2.3 0.0 1.3
843 (436) 406 (148) 258 12 53 (30) 137 429 (59) (20) 0 350 214 356 117.9 155.6 320.9 1,268.5 48.2 30.6 41.6 14.8 10.4 7.7 0.0 8.5
1,192 (582) 610 (191) 419 15 55 (25) 0 463 (52) (55) 0 357 357 514 41.4 44.4 62.2 1.8 51.1 35.1 29.9 9.5 7.5 8.7 0.0 17.1
1,942 (1,034) 908 (331) 578 17 59 (23) 0 632 (92) (72) 0 467 467 687 62.9 33.6 38.0 31.0 46.8 29.7 24.1 11.2 8.9 10.4 0.0 25.6
Divestment of mature investment properties, a once off gain
Page 5

Balance Sheet (Rp bn)
FY Dec 2008A 2009A 2010A 2011F 2012F
Asset Breakdown
Debtors 32.5%
Net Fixed Assets Invts in Associates & JVs Other LT Assets Cash & ST Invts Dev Props held for sales Debtors Other Current Assets Total Assets ST Debt Other Current Liab LT Debt Other LT Liabilities Shareholders Equity Minority Interests Total Cap. & Liab. Non-Cash Wkg. Capital Net Cash/(Debt) Debtors Turn (avg days) Creditors Turn (avg days) Inventory Turn (avg days) Asset Turnover (x) Current Ratio (x) Quick Ratio (x) Net Debt/Equity (X) Net Debt/Equity ex MI (X) Capex to Debt (%)
124 0 439 64 1,379 62 44 2,111 423 278 209 57 1,128 15 2,111 1,206 (569) 67.6 104.6 27.3 0.2 2.2 0.2 0.5 0.5 4.7
143 146 252 67 1,361 84 87 2,140 319 431 39 164 1,154 33 2,140 1,101 (291) 68.5 83.7 116.2 0.2 2.1 0.2 0.2 0.3 1.1
144 206 206 116 2,926 414 586 4,599 99 550 163 163 3,578 46 4,599 3,376 (146) 107.8 40.6 381.2 0.3 6.2 0.8 0.0 0.0 20.4
130 208 374 177 2,749 586 727 4,951 99 490 163 163 3,935 101 4,951 3,572 (85) 153.0 40.6 391.0 0.2 7.2 1.3 0.0 0.0 68.7
116 213 485 322 2,432 954 1,066 5,588 99 587 163 163 4,403 173 5,588 3,865 60 144.7 40.6 353.8 0.4 7.0 1.9 CASH 0.0 49.6
Net Fixed Assets 11.3% Associates'/J Vs 16.2% Inventory 33.0% Bank, Cash and Liquid Assets 7.0%
Properties held for sale to remain high, showing busy developments
Cash Flow Statement (Rp bn)

FY Dec 2008A 2009A 2010A 2011F 2012F
Capital Expenditure
200 180 160 140 120 100 80 60 40 20 0 2008A 2009A 2010A 2011F 2012F
Pre-Tax Profit Dep. & Amort. Tax Paid Assoc. & JV Inc/(loss) Chg in Wkg.Cap. Other Operating CF Net Operating CF Capital Exp.(net) Other Invts.(net) Invts in Assoc. & JV Div from Assoc & JV Other Investing CF Net Investing CF Div Paid Chg in Gross Debt Capital Issues Other Financing CF Net Financing CF Currency Adjustments Chg in Cash Opg CFPS (Rp) Free CFPS (Rp)
46 31 (17) (6) (58) (14) (19) (29) 0 (36) 6 0 (59) (5) 106 0 0 101 1 24 13 (16)
59 36 (22) (14) 98 (135) 22 (4) (5) (27) 3 0 (33) (1) (11) 0 0 (12) 0 (23) (24) 6
429 35 (39) (53) (2,312) 1,661 (279) (53) 0 (78) 9 2 (121) (9) (93) 553 0 451 (1) 51 196 (32)
463 30 (58) (55) (190) 0 191 (180) 0 0 53 0 (127) 0 0 0 0 0 0 64 37 1
632 37 (52) (59) (333) 0 224 (130) 0 0 55 0 (75) 0 0 0 0 0 0 149 54 9
Capital Expenditure (-)
Capex for planned Whiz hotel developments
Page 6

Quarterly / Interim Income Statement (Rp bn)
FY Dec 2Q2010 3Q2010 4Q2010 1Q2011
Margins Trend
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Revenue Cost of Goods Sold Gross Profit Other Oper. (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Net Profit Net profit bef Except. EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins Gross Margins (%) Opg Margins (%) Net Profit Margins (%)
177 (99) 79 (27) 52 (8) 1 (8) 137 174 (29) (7) 138 1 59
260 (138) 121 (86) 35 1 0 (4) 0 31 (14) 1 18 18 39
128 (68) 60 (6) 54 15 53 (7) 0 114 (7) 2 109 109 129
307 (167) 140 (37) 103 5 1 (7) 0 102 (10) (4) 88 88 115
Operating Margin %
Net Income Margin %
Strong sales in 1Q11
46.4 (33.6) (32.8) (87.0) 44.4 29.4 77.8 46.7 13.5 6.9
(50.7) 226.3 53.1 508.2 46.7 42.0 85.6
140.2 (10.2) 92.4 (20.0) 45.6 33.6 28.5
Page 7
Retail
Lock & Lock (115390)

Business in China continuing to thrive
Staying strong in China in 2Q
We forecast Lock & Lock to post 2Q11 consolidated sales of W135bn (+49% y-y). The company has already recorded combined sales of over W90bn for April/May on the back of strong sales of its outsourced products (i.e., Living Box, cold water bottles and Bisfree products) and new products. Monthly sales in China are growing 40-80% y-y, thanks to vibrant sales from the home shopping division and other special sales channels. The companys consolidated 2Q OP is forecast to be W23bn (+27% y-y). 2Q OPM, however, should drop 3%p to 17% y-y (+3.7%p to 17% q-q) because of rising labor costs at home and abroad and a temporary rise in TV advertisement costs (W3bn). Margin growth will be driven by a 9.8% increase in ASP in China since May and a higher sales portion for high-margin plastic products.
BUY
TP (12M): W44,000
CP (June 17): W40,100
June 20, 2011 Analyst Sunjae Song
Recipients of this report, received from DBS Vickers Research (Singapore) Pte Ltd (DBSVR), are to contact DBSVR Lee, Eun Young at +65 6398 7964 eunyoung@dbsvickers.com in respect to any matters arising from or in connection with the analysis of this report. In Singapore, this research report or research analysis may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
sa: YM
Margin improvement in 2H11

Margins are expected to rise in 2H, underpinned by a 9.8% increase in ASP in China, an identical hike scheduled for July in Korea and higher fixed costs, such as labor costs, offset by operating leverage. For the Southeast Asian market, Lock & Locks glass plant in Vietnam is scheduled for completion in October. Unit sales in Vietnam, Thailand, India and Indonesia should be in full swing starting next year. In particular, the company is set to raise Vietnam sales to US$16mn in 2011, which would double 2010 sales (US$7.7mn), and US$60mn in 2013. Overall, the company is targeting sales of US$214mn in 2013, or a nine-fold increase from US$23.8mn in 2010, when including sales from production units (e.g., plastic injection molding and glass).
Financial Data
Sales OP PTP NP EPS Chg P/E P/B EV/EBITDA ROE BPS Net DER Wbn Wbn Wbn Wbn W % X X X % W % 2009 163.1 18.0 54.2 47.7 1,192 85.8 2010 228.3 25.5 75.3 67.6 1,370 15.0 26.2 4.6 22.5 24.2 7,766 (26.5) 2011F 261.8 24.2 91.1 78.3 1,567 13.6 25.6 4.4 19.7 18.5 9,191 (4.9) 2012F 303.8 30.9 110.9 95.9 1,919 22.5 20.9 3.7 15.8 19.1 10,932 (1.0) 2013F 335.9 34.4 127.7 111.2 2,224 15.9 18.0 3.1 13.6 18.6 12,958 0.7
31.0 4,302 10.7
Source: company data, Hana Daetoo Securities, based on K-GAAP
Equity Research
Lock & Lock
June 20, 2011
Table 1. Consolidated earnings (under K-IFRS)

1Q10 Sales OP OPM YoY Sales OP
Source: company data, Hana Daetoo Securities
(Unit: W bn, %)
2Q10 90.6 18.1 20.0
3Q10 110.6 24.3 22.0
4Q10 108.3 20.7 19.1
1Q11 108.8 14.4 13.3
2Q11F 135.0 23.0 17.0
76.7 16.5 21.5
41.9 -12.4
49.0 27.1
Hana Research Center Rating Definitions

Stock ratings for the next twelve months Rating Definition BUY Target Price implies at least 15% upside potential Target Price implies less than 15% upside or downside Neutral potential Reduce Target Price implies at least 15% downside potential Sector ratings for the next twelve months Rating Definition Overweight Sector index implies at least 15% upside potential Sector index implies less than 15% upside or downside Neutral potential Underweight Sector index implies at least 15% downside potential
Compliance Notice

As of June 20, 2011, Hana Daetoo Securities does not own over 1% of the outstanding shares of the company covered in this report. This report accurately reflects the research analysts personal views and was written without any undue external influence or interference, and no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that analyst in the report. As of June 20, 2011, the analyst does not own any shares of the company covered in this report. As of June 20, 2011, this report was not provided in advance to an institutional investor or other third party.
Lock & Lock
June 20, 2011
GENERAL DISCLOSURE/DISCLAIMER BY HANA DAETOO SECURITIES CO LTD This report was written by Hana Daetoo Securities Co Ltd to help its clients invest in securities over which Hana Daetoo Securities Co Ltd holds the copyright. This report cannot be copied, redistributed, forwarded or altered in any way without the consent of Hana Daetoo Securities Co Ltd. This report has been prepared by Hana Daetoo Securities Co Ltd and is provided for information purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. We make no representation as to its accuracy or completeness and it should not be relied upon as such. The company accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. The final investment decision is based on the clients judgment, and this report cannot be used as evidence in any legal dispute related to investment decisions. ANALYST CERTIFICATION BY HANA DAETOO SECURITIES CO LTD The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 20 Jun 2011 the analyst and his / 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 securities, directorships and trustee positions). GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Vickers Research (Singapore) Pte Ltd ("DBSVR"), a direct wholly-owned subsidiary of DBS Vickers Securities (Singapore) Pte Ltd ("DBSVS") and an indirect 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 DBSVR. It is being distributed in the United States by DBSV US, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBS Vickers Securities (USA) Inc (DBSVUSA) directly and not its affiliate. 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DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc ("DBSVUSA"), a U.S.-registered broker-dealer, may beneficially own a total of 1% or more of any class of common equity securities of the subject company as of 20 Jun 2011. Compensation for investment banking services: DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA may have received compensation, within the past 12 months, and within the next 3 months may receive or intends to seek compensation for investment banking services from the subject company. 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
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2)
Lock & Lock

this document should contact DBSVUSA exclusively. RESTRICTIONS ON DISTRIBUTION General
June 20, 2011
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Morning Pack: Regional Equities

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Morning Pack: Regional Equities

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Regional Equities

Corp Day / Event Pulse of Asia 1H11 Date: 5 7 July; Location: SG

Major Reports Recently Published

CHINA / HONG KONG

Regional Morning Pack

Source: DBS Vickers

12,080 1,278 2,630 5,693 7,150

0.6 0.5 0.5 -0.4 -0.2

4.3 1.6 -0.9 -3.5 3.4

-1.9 -3.6 -5.4 -3.6 1.5

-3.9 -5.0 -7.3 -5.0 -2.0

Source: Bloomberg, DBS Vickers

-11.8% -25% -15% -5% 5% 15%

Source: Bloomberg, DBS Vickers

Source: Bloomberg, DBS Vickers

Regional Market Focus

High Conviction Picks

Hong Leong Bank

China National Building Material China Shenhua Energy

Evergrande Real Estate

Regional Market Focus High Conviction Pick

Company Big Caps (>$2bn) Luk Fook Holdings

Bank Negara Indonesia

Indo Tambangraya Megah Dongkuk Steel Mill Co

Source: Bloomberg, DBS Vickers, Hanadaetoo Securities

Regional Market Focus High Conviction Picks

Upside (%) 19 13 8 30 68 45 56 78 32 109 59 29 27 51 56 32

3mths Avg Daily T/O US$m 1 2 1 2 5 0 1 2 0 1 4 5 2 9 7 8

Company Small & Mid Caps (<$2bn) ARA Asset Management

CDL Hospitality Trusts

Parkway Life REIT

Regional Market Focus High Conviction Pick

Company Small & Mid Caps (<$2bn) Sampoerna Agro

Meritz Fire & Marine

Source: Bloomberg, DBS Vickers, Hanadaetoo Securities

Singapore Industry Focus

Another prized portfolio

Dividend Yield (%) FY11F FY12F

6.5 8.0 8.3 9.3 7.3 6.6

6.8 8.8 9.1 10.3 7.5 7.0

Industry Focus Industrial REITs

Source: JTC, DTZ, DBS Vickers

Industry Focus Industrial REITs

Other priv ate owners/REITs 63%

* Estimated based on NLA/GFA basis Source: URA, Colliers, various REITs

Tranche2: Kallang Basin 7

Source: URA, Colliers, various REITs

Industry Focus Industrial REITs

Source: URA, Colliers, various REITs

Industry Focus Industrial REITs

Source: various REITs, DBSV estimates

* MINT financial year-end is March Source: DBSV estimates

Industry Focus Industrial REITs

Rental (S$/psf pm) S$ 1.33* S$ 1.53* S$ 1.51*

Value (S$ psf) S$ 150 psf S$ 168 psf S$ 169 psf

Type Flatted Factories Flatted Factories Flatted Factories

Map of Kallang Place

Tranche 2: Kallang Basin 1, 2& 3

(1) Kallang Basin 4 (2) Kallang Basin 5

(3) Kallang Basin 6

Source : streetdirectory.com, MIT, JTC websites, DBS Vickers

Industry Focus Industrial REITs