29 July 2014

CitySpring Infrastructure Trust Capitalising on demand for Data Centres

Non-rated

SINGAPORE | UTILITIES| NON-RATED NOTE Rating:

Company Overview CitySpring is the 1st infrastructure business trust to be listed on SGX Mainboard since 2007. Its portfolio comprises 100% of City Gas Trust, 70% of SingSpring Trust, 100% of Basslink (including 100% of Basslink Telecoms) and 100% of CityNet Infrastructure Management Pte Ltd. Recently it has announced forming of a new JV with Shimizu Corporation to develop and lease a data centre in Singapore. In this report, we provide a quick summary of the business for CitySpring. However, we do not commit to an active coverage and do not have a rating on the stock. Investment Strategy Principal objective is to invest in infrastructure assets and to provide unitholders with long-term, regular and predictable distributions as well as the potential for long-term capital growth. Focus within the infrastructure sector will be:  Utilities  Transportation/logistics  Communications

Target Price (SGD) Forecast Dividend (SGD) Closing Price (SGD) Potential Upside

N.A. N.A. 0.500 N.A.

Company Description Ci tySpri ng i s a n i nfra s tructure bus i nes s trus t l i s ted on SGX Ma i nboa rd. Through i ts s ubs i di a ri es , i t produces a nd reta i l town ga s (Ci ty Ga s ) a nd s uppl i es des a l i na ted wa ter (Si ngSpri ng) i n Si nga pore, tra ns mi tti ng el ectri ci ty i n Aus tra l i a (Ba s s l i nk) a nd i s the trus tee-ma na ger (Ci tyNet) of NetLink Trus t, whi ch ma na ges tel ecom a s s ets i n Si nga pore.

Company Data

CitySpring will seek investment opportunities globally, with a focus primarily on Asia, Middle East, Australia and New Zealand.

Raw Beta (Past 2yrs weekly data) Market Cap. (USD mn / SGD mn) Ent. Value (USD mn / SGD mn)

Investment Merits  Stable stream of cash flows for the long-term.  Offers some hedge against inflation as higher costs are generally passed on to consumers through tariffs and variable payments.  Attractive distribution yield of 6.6%, above most of its peers.  Potential for capital growth through investment opportunities

Valuation and Outlook In our report, we highlight the positive prospects and potential returns from the new JV to lease a Data Centre (DC) in Singapore. Growth in demand for DC space is expected to outstrip supply growth in Singapore and in Asia-Pacific region. We think this may be a start for CitySpring to venture further in the business of leasing wholesale DCs. Current trading price implies P/B of 2.1x, comparable to its peers and price over cash earnings of 12.7x. Taking into consideration future cash earnings (PSR est.) from the new JV with Shimizu, its 3-years average cash earning would potentially have an 8.5% upside by end FY17. With higher projected cash earnings, distributions to unitholders are likely set to rise. Distribution yield at current price is ~6.6%, above most of its peers. We opined that current price has yet to factor in the potential future cash earnings to be generated from the new JVC. We do not have a rating on CitySpring.

1440 / 1805

3M Average Daily T/O (mn)

0.667

Closing Px in 52 week range 0.45

0.50

0.52 0.50

Volume, mn CITY SP Equity STI (rebased)

5 4

0.48

3

0.46 2

0.44 0.42

1

0.40

0

Jun-14 May-14 Apr-14 Mar-14 Feb-14 Jan-14 Dec-13 Nov-13 Oct-13 Sep-13 Aug-13 Jul-13

Risk Factors  Competition from other natural gas retailers, as well as retailers of alternative energy sources such as electricity, LPG.  City Gas risks losing exclusive rights if town gas converts to natural gas.  Disruption to its operations, esp. in SingSpring, Basslink.  FX rate for AUD/SGD as distributions from Australian subsidiaries are in Australian dollar.

0.41 612 / 759

Major Shareholders 1. Tema s ek Hol di ngs 2. Norges Ba nk 3. Nuveen As s et Ma na gement

(%) 37.4 0.7 0.6

Valuation Method N.A. Analyst Colin Tan col i nta nwh@phi l l i p.com.s g +65 6531 1221

----

Page | 1 MCI (P) 046/11/2013 Ref. No.: SG2014_0111

CitySpring Infrastructure Trust 29 July 2014 Close to S$2 billion worth of assets in its portfolio CitySpring’s portfolio comprises 100% of City Gas Trust (City Gas), 70% of SingSpring Trust (SingSpring), 100% of Basslink (including 100% of Basslink Telecoms) and 100% of CityNet Infrastructure Management Pte. Ltd. (CityNet). #1. City Gas City Gas is the sole producer and retailer of town gas in Singapore and also the sole user of the low-pressure piped town gas supply network in Singapore. City Gas holds the sole licence from the Energy Market Authority of Singapore to produce and retail town gas in Singapore and is regulated by Energy Market Authority (EMA) in respect of such activities. The licence also authorises it to retail natural gas. The structure of the gas industry in Singapore is shown in the following diagram: Fig 1: Singapore Gas Industry The gas system in Singapore consists of two separate gas pipeline networks namely, the town gas pipeline network and the natural gas pipeline network. Natural gas is imported into Singapore as piped natural gas from Malaysia and Indonesia via four offshore pipelines. Singapore also imports liquefied natural gas (LNG) from various countries across the world.

Source: EMA The town gas pipeline network serves ~50% of households in Singapore. Town gas is City Gas’s production facility in Senoko Avenue, used mainly by domestic and commercial customers for cooking and water heating Singapore, has a designed capacity of 1.6 and is manufactured and retailed by City Gas Pte Ltd. City Gas established a business million m3 per day. venture with Osaka Gas Co., Ltd. (“Osaka Gas”) to market and sell natural gas to industrial customers in Singapore. The entity, City-OG Gas Energy Services Pte Ltd, is 51% owned by City Gas and 49% owned by Osaka Gas. Cash earnings is contributed by its town gas production and the retail business. Customer base continues to grow from 670,000 in FYE13 to about 690,000 in FYE14, along with rise in town gas sales volume. City Gas charges customers based on gas tariffs (subject to price control by EMA) and is expected to fully recover its fuel costs over a period of time through tariff adjustments mechanism. Town gas tariffs tracks the High Sulphur Fuel Oil (HSFO) forward price closely. Fig 2: City Gas Business Overview

Source: Company

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CitySpring Infrastructure Trust 29 July 2014 #2. SingSpring SingSpring owns Singapore’s first large-scale seawater desalination plant, that can produce 136,380 m3 (30 million gallons) of desalinated potable water per day, and capable of meeting about 10% Singapore’s current water needs. The desalination plant serves as one of the Four National Taps to provide water for Singapore’s needs. SingSpring and Singapore’s national water agency, the Public Utilities Board (PUB), entered into a 20-year term water purchase agreement (WPA) which commenced in Dec 2005. This ensures a long-term and predictable cashflow for SingSpring till Dec 2025. SingSpring receives 2 forms of payments from PUB throughout the term of the 20-year WPA: 1. Capacity payments: for making available the full water capacity of the desalination plant upon demand and does not vary with the volume of water supplied. 2. Output payments: for the variable costs in supplying water to PUB, whereby the payment is pegged to the volume of water supplied. Fig 3: Business Overview of SingSpring SingSpring engages Hyflux Engineering Pte Ltd, a subsidiary of Hyflux Ltd, as the Operations and Maintenance operator for SingSpring, to ensure it will meet all requirements under the WPA.

Source: Company #3. Basslink Basslink owns and operates the Basslink Interconnector, a 370-km HVDC undersea electricity interconnector between the electricity grids of the States of Victoria and Tasmania across the Bass Strait in Australia. It is the only electricity interconnector between Tasmania and mainland Australia. Basslink enhances the availability and security of electricity supply to both Tasmania and Victoria. At the same time, the interconnector enables Hydro Tasmania to trade in Australia’s National Electricity Market (NEM).

Hydro-Electric Corporation (Hydro Tasmania) is an entity owned by the State of Tasmania. Basslink’s principal source of revenue is a facility fee paid monthly by Hydro Tasmania for the operation of the interconnector.

Basslink receives facility fee paid from Hydro Tasmania for operation of the Basslink Interconnector under a 25-year term Basslink Services Agreement (BSA), which commenced in 2006. The facility fee is based on Basslink’s cumulative availability in a calendar year and payable in full if availability is greater than 97%. The BSA includes a Commerical Risk Sharing Mechanism (CRSM), whereby CRSM payments are based on the differences between the high and low spreads of Victoria’s electricity pool prices, subject to a cap of +25% and a floor of -25% to the unadjusted facility fee. The CRSM payments can be paid either by Basslink to Hydro Tasmania or Hydro Tasmania to Basslink, depending on the value of arbitrage opportunities presented by price volatility in the Victorian spot market. A low volatility may lead to negative CRSM (i.e. Basslink pay to Hydro Tasmania), and hence, a negative impact on revenue and earnings contribution from Basslink.

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CitySpring Infrastructure Trust 29 July 2014 Fig 4: Basslink Business Model AEMO (Australian Energy Market Operator) the NEM. Basslink will transfer any inter-regional revenue generated, which arise from the difference between Tasmanian and Victorian spot prices, to Hydro Tasmina in exchange for facility fee.

Source: Hydro Tasmania Basslink Telecom Basslink also has a number of fibre optic cables carrying hi-speed telecommunication traffic. Basslink Telecoms, which is wholly owned by Basslink, offers a range of wholesale telecoms transmission services between Hobart in Tasmania and Melbourne in Victoria. Basslink will sell high-capacity network connectivity from Victoria to Tasmania and onward to Hobart, under an agreement with Aurora Energy and the Tasmanian Government. #4. CityNet CityNet is the trustee-manager for NetLink Trust which consists of certain telecommunications infrastructure assets in Singapore since July 2011. NetLink Trust was established as part of the Info-Communications Development Authority’s (IDA) effective open access requirements under Singapore’s Next Generation Nationwide Broadband Network (NGNBN). SingTel transferred certain infrastructure assets (ducts, manholes and exchange buildings) to NetLink Trust as part of its undertaking to IDA. SingTel is the sole unitholder of NetLink Trust. City Net receives annual management fee in its capacity as trustee-manager of NetLink Trust. Acquisition of OpenNet in 2013 CityNet acquired OpeNet Pte. Ltd. (OpenNet) in November 2013, whereby the principal activities of OpenNet are to design, build and operate the fibre network for NGNBN. CityNet will receive an additional S$2m to its annual management fee of about S$2.1m following the acquisition. Its appointment as trustee-manager will be extended for a 3-year period from the completion of acquisition date.

OpenNet is appointed as the Network Company, which operates at the passive infrastructure layer (1st layer) of the NGNBN Industry Structure.

Fig 5: Group Structure

*Note: The new JVC with Shimizu is not included in the diagram. Also not included is the 51%-owned City-OG Gas Energy Services under City Gas. Source: Company

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CitySpring Infrastructure Trust 29 July 2014 Financials CitySpring uses cash earnings to measure performance instead of accounting profits/losses. Cash earnings remove the effect of accounting treatment of non-cash expenses (which are fairly large) it has on its financial statements and thus better reflects the cash flows generated by the infrastructure assets. Cash earnings contribution City Gas contributes the most and over 50% on average to CitySpring’s core cash earnings (Gas, Water, Electricity) over the last 5 years. Decline in cash earnings from City Gas was mainly due to rise in fuel costs which fluctuate daily on the open market. City Gas however, can only change the tariffs at which it charges its customers once every 3 months, under EMA’s regulations. This leads to higher volatility on returns from City Gas per fiscal period basis. On a longer-term basis, City Gas is expected to have stable cash earnings as fuel costs are passed through to end users. Cash earnings from Basslink was lower in FY14 mainly due to higher negative CRSM, higher legal costs incurred for various contract disputes with Hydro Tasmania and lower contribution. Excluding FY14, Basslink’s cash earnings typically average S$20m- 30m over the last 5 years. SingSpring’s cash earnings average about S$16-17m. Cash earnings over capital invested, equity CitySpring’s total cash returns on equity average ~18.6% over the last 5 fiscal years. Cash returns from City Gas and Basslink exhibit higher volatility due to lagging gas tariff and CRSM respectively. Total cash return over capital invested was about ~3.9% over the same period, whereby City Gas and SingSpring generated relatively higher cash return over assets to Basslink. Fig 6: Revenue Contribution 500

Fig: 7: Asset Mix by Segments (FY14)

Gas (SGD mn) Electricity (SGD mn)

20%

Water (SGD mn) Total %y-y

400

15%

300

10%

200

5%

100

0%

Gas (SGD mn)

Water (SGD mn)

Electricity (SGD mn)

Others (SGD mn)

103 , 5% 550 , 28%

1,085 , 56%

0 FY09

FY10

FY11

FY12

FY13

FY14

Fig 8: Cash Earnings Contribution 125

Gas (SGD mn) Corporate (SGD mn)

Fig 9: Cash Earnings (CEPU) vs Distribution (DPU) per unit

Water (SGD mn) Total (SGD mn)

Electricity (SGD mn)

CEPU (SG cents)

14

DPU (SG cents)

Units ('mn)

1,500

10

75

8

50

6

25

4

0

2 FY09

FY10

FY11

2,000

12

100

(25)

210 , 11%

-5%

FY12

FY13

FY14

1,000

500

0

0

FY08

FY09

FY10

FY11

FY12

FY13

(50)

Fig 10: Cash Return on Assets/Capital Invested ROA: Gas (%) ROA: Electricity (%)

15%

Fig 11: Cash Return on Equity Basis

ROA: Water (%) CitySpring CROCI (%)

ROE: Gas (%) ROE: Electricity (%)

30%

ROE: Water (%) CitySpring ROE (%)

25% 10%

20% 15%

5%

10%

0%

5% FY10

FY11

FY12

FY13

FY14

FY10

FY11

FY12

FY13

FY14

Source: Company, PSR

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CitySpring Infrastructure Trust 29 July 2014 New Joint Venture with Shimizu Corporation CitySpring recently announced on 30 June 2014 that it has entered into a joint venture, DataCentre One Pte Ltd (JVC), with Shimizu Corporation (Shimizu) to develop and lease a purpose built data centre (DC) in Singapore. The JVC will be 51% owned by CitySpring while the remaining 49% will be owned by Shimizu. The JVC will lease the DC to 1-Net Singapore Pte Ltd, a wholly-owned subsidiary of MediaCorp, for a period of 20 years upon commencement of the Data Centre (DC). The DC is expected to be completed by 1st quarter of 2016. We think this may be a start for CitySpring to venture further in the business of leasing wholesale DCs to capture growing demand for DC space in Asia-Pacific region. According to Broadgroup, an international consulting firm, DC space is forecasted to grow at 8.5% CAGR in Singapore and 11.7% CAGR in Asia-Pacific region leading up to 2015. The growth will be fueled by growing cloud traffic, driven by users accessing the cloud for Web surfing, video streaming and digital collaboration across devices. Demand growth for DC space is expected to outstrip supply growth in the region. Management also noted there are relatively fewer purpose-built data centres in the region. Hence this is a potential market for CitySpring to venture in. Total investment for the data centre is about S$130m, which will be funded approximately 50:50 by equity financing and long-term debt financing. Assuming the investment is able to generate ~18% on the cash returns over equity, CitySpring may see about S$6m estimated cash earnings (taking into account CitySpring’s 51% stake) annually on average over the next 20 years from FY17. This would potentially lead to approximately 8.5% upside over its 3-year average cash earnings (S$70m). Fees payable by 1-Net to the JVC are expected to be in the range of S$11m to S$18m yearly. Precise fees are of a commercially sensitive nature and therefore, are not disclosed. Fig 12: Artist’s Impression of “1-Net North” Data Centre to be built by the JVC

The Data Centre will have 4 floors of data centre halls and 1 floor of office and ancillary space. (gross floor area of approximately 214,000 square feet). It will be designed to be both carrier-neutral and Tier 3 data centre (i.e. 99.98% availability: redundant components and multiple active paths for cooling and power distribution).

Source: 1-Net Singapore

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CitySpring Infrastructure Trust 29 July 2014 Investment Merits Revenue comprises mainly of fixed payments over its assets, hence it is largely stable and generally predictable. Higher costs from operations and maintenance are generally passed on to its consumers (e.g. through gas tariffs, output payment to SingSpring), hence earnings are protected against inflation in some form. CitySpring offers an attractive distribution yield of 6.6%. CitySpring will also continue to look for investment opportunities aligned with its long-term investment strategy to achieve growth for its unitholders. Risk Factors Liberalisation of natural gas retail market from 1 April 2014 Prior to opening up of the natural gas retail market in Singapore, all gas retailers other than City Gas are restricted to retailing natural gas only in Jurong Island and the Jurong and Tuas industrial areas (“JIT areas”). With effect from 1 April 2014, gas retailers are able to sell their natural gas services to premises connected to the natural gas network outside the JIT areas. As of date, there are 8 gas retailers that are licensed to retail natural gas in Singapore. Conversion of town gas to natural gas CitySpring risks losing market share of its exclusive franchise should the town gas supply network be converted to carrying natural gas. We understand that there were plans to progressively convert the town gas network and until then, City Gas would continue to be the sole retailer for town gas, which mainly caters to residential households. Full conversion, which includes converting the piped gas network and replacing town gas appliances of customers to work with natural gas, may take 6-7 years and will have to be carried out in phases, according to estimates.

Licensed Gas Retailers in Singapore: 1. Gas Supply Pte Ltd 2. SembCorp Gas Pte Ltd 3. City Gas Pte Ltd 4. Green Energy Supply Pte Ltd 5. City-OG Gas Energy Services Pte Ltd 6. Pavillion Gas Pte Ltd 7. Keppel Gas Pte Ltd 8. Singapore Gas Pte Ltd

Is the gearing high? As its infrastructure assets are able to produce steady cash flows which are largely not affected by volume or utilisation rate over the long term, optimal debt structure can be pursued by CitySpring, while ensuring financial flexibility to service its debt service obligations. With the purchase and cancellation of the Basslink bonds in FY12, overall debt ratio for CitySpring has come down to 67% since. However, we do view that the gearing for Basslink is high, considering that liabilities are over 90% of its assets and finance costs weigh heavily on Basslink’s earnings. In minimising interest rate risks, CitySpring also employs hedging by entering into swaps or other derivatives as its assets were acquired using partly debt financing at variable rates. Other risk factors:  AUD/SGD FX rate, as Basslink make its distribution in Australian dollar  Operation disruptions to its infrastructure  Competition from other LPG retailers and retailers of electricity source in both commercial and residential markets. Valuation and Outlook In our report, we highlight the positive prospects and potential returns from the new JV to lease a Data Centre (DC) in Singapore. Growth in demand for DC space is expected to outstrip supply growth in Singapore and in Asia-Pacific region. We think this may be a start for CitySpring to venture further in the business of leasing wholesale DCs. Current trading price implies P/B of 2.1x, comparable to its peers and price over cash earnings of 12.7x. Taking into consideration future cash earnings (PSR est.) from the new JV with Shimizu, its 3-years average cash earning would potentially have an 8.5% upside by end FY17. With higher projected cash earnings, distributions to unitholders are likely set to rise. Distribution yield at current price is ~6.6%, above most of its peers. We opined that current price has yet to factor in the potential future cash earnings to be generated from the new JVC. We do not have a rating on CitySpring.

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CitySpring Infrastructure Trust 29 July 2014 Peer Comparison Fig 13: Comparison between CitySpring and peers listed in Australia and Singapore Market Prices as of: 29-Jul-14 Company ASX-Listed Origin Energy Ltd APA Group AGL Energy Ltd SP Ausnet DUET Group Spark Infrastructure Group Energy Developments Ltd Energy World Corp Ltd Envestra Ltd ERM Power Ltd Pacific Energy Ltd Average SGX-Listed Hyflux Ltd Hankore Environment Tech Keppel Infrastructure Trust Average Average (all) CitySpring Infrastructure Trust

FYE

Price (LC$)

Mkt Cap (SG$'mn)

P/B FY13/14

EV/EBITDA FY13/14

DIV YIELD (%) FY13/14 FY14/15F

DEBT RATIO FY13/14

06/2013 06/2013 06/2013 03/2014 06/2013 12/2013 06/2013 06/2013 06/2013 06/2013 06/2013

14.18 7.35 14.58 1.35 2.41 1.91 4.98 0.36 1.33 2.04 0.50

18,253 7,168 9,521 5,405 3,705 3,263 986 718 2,778 569 211

1.0 2.0 1.1 6.8 1.8 1.3 2.4 1.1 2.1 2.0 1.2 2.1

12.4 15.0 8.3 12.6 9.8 43.0 7.0 16.9 10.5 10.5 5.8 13.8

4.0 5.9 4.4 6.4 8.2 6.8 2.4 0.0 6.2 4.2 2.5 4.6

3.5 4.9 4.4 6.2 7.1 6.1 4.6 n.a. 4.8 5.9 4.0 5.2

24.1 56.0 23.3 57.2 66.7 33.4 50.0 35.2 62.5 35.0 24.5 42.5

12/2013 06/2013 12/2013

1.18 0.89 1.03

977 452 649

2.0 0.5 1.0 1.2 1.9

18.7 11.6 15.1 14.0

2.0 0.0 4.5 2.2 4.1

1.9 n.a. 7.6 4.8 5.1

52.9 23.8 0.0 25.6 38.9

03/2014

0.50

752

2.1

12.4

6.6

6.7

66.6

Source: Bloomberg, PSR

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CitySpring Infrastructure Trust 29 July 2014 Appendix Fig 1: Gas Volume Sold by City Gas

Fig 2: Water Capacity Availability of SingSpring

Fig 3: Availability of Basslink

Source: Company Fig 4: Basslink Overview

Source: Company, 2007

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CitySpring Infrastructure Trust 29 July 2014 Board Of Directors Daniel Cuthbert Ee Hock Huat (Chairman, Independent Director) Mr Ee serves on the boards of Citibank Singapore Limited and Surface Mount Technology (Holdings) Limited. He is also the Chairman, Board of Advisors of Walton International Group Limited. He is the Deputy Chairman of the Securities Industry Council and a Fellow and Council Member of Singapore Institute of Directors. Mr Ee had also served as the Chairman of Gas Supply Pte Ltd from 2002 to July 2010 and on the board of National Environment Agency from 2006 to March 2012. He was a Member of the Corporate Governance Council from February 2010 till its dissolution in May 2012. Mr Ee has more than 14 years of experience in the banking sector, in particular in corporate finance. Prior to that, he had served in various capacities in the public sector from 1975 to 1985. Mr Ee graduated from the University of Bath, UK with a Bachelor of Science in Systems Engineering (1st Class Honours) and has a Master of Science in Industrial Engineering from the National University of Singapore. He was awarded the Public Service Medal in 2003. Other Non-Executive and Independent Directors:  Ong Beng Teck (Non-Executive)  Mark Andrew Yeo Kah Chong (Independent)  Yeo Wilco (Independent)  Haresh Jaisinghani (Independent) Key Executive Officers Tong Yew Heng, CEO Prior to joining the Trustee-Manager, Mr Tong was with Temasek for 11 years from 1995 to 2006 where he held various positions, including as a director of investments (energy and resources) where he led a team responsible for sourcing, evaluating and making investments in the energy and resources sector.Mr Tong’s experience in Temasek includes stewardship of companies in Temasek, direct investments, investments in private equity funds, mergers and acquisitions, privatisations and divestments. Mr Tong graduated from the University of Strathclyde (United Kingdom) in 1988 with a Bachelor of Engineering (Hons) degree and holds a Master of Business Administration from the Nanyang Technological University. He also attended the Programme for Executive Development at the International Institute of Management Development, Switzerland in 2000 and is a member of the Institute of Singapore Chartered Accountants. Tan Cheong Hin, CIO Prior to joining the Trustee-Manager, Mr Tan was with Temasek for 13 years from 1995 to 2008 where he held various positions, including as a director of investments whose responsibilities include stewardship of Temasek’s portfolio companies, joint ventures, divestments, investments in private equity funds and direct investments. From 2008 to 2009, Mr Tan was with the Raffles Medical Group as its Business Development Director. From 2010 to 2011, Mr Tan was the Senior Vice President of the direct investment business of the Islamic Bank of Asia, a subsidiary of DBS Bank Ltd. Mr Tan graduated from the National University of Singapore with Bachelor of Business Administration (First Class Honours) and Master of Science (Management) degrees. He is a Chartered Financial Analyst (CFA) charter holder. He also attended the Advanced Management Program at INSEAD in Fontainbleau (France). Susanna Cher Mui Sim, CFO & Company Secretary Prior to joining the Trustee-Manager, Ms Cher was the Chief Financial Officer of Singapore publicly listed healthcare company, Thomson Medical Centre Limited (“TMC”). Ms Cher also managed the Patient Service Centre, Business Office, Management Information Systems, Central Supplies Departments and assisted with handling of Investor Relations. She was a key team member who contributed to TMC’s listing on SGX-ST, SESDAQ in 2005. Prior to joining TMC, Ms Cher was the Group Management Accountant of Wearne Brothers Management Services Pte. Ltd., the management arm of WBL Corporation Limited, a company listed on the Mainboard of the SGX-ST. Ms Cher graduated from the National University of Singapore in 1982 with a degree in Accountancy and is a member of the Institute of Singapore Chartered Accountants and CPA Australia. Ms Cher is responsible for all aspects of financial reporting and treasury activities, including distribution planning, cash management, risk management, co-ordinating with external auditors, managing tax affairs and other finance-related management issues. She handles the human resources and administration functions and is also the Joint Company Secretary.

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CitySpring Infrastructure Trust 29 July 2014 Jacqueline Ong, Vice President (Investment) Ms Ong was the Vice President (Investments) and Economist with AIMAC for about eight years prior to joining the Trustee-Manager. AIMAC is an infrastructure fund management company which manages a US$400 million infrastructure fund with focus on the Asian infrastructure industries like power, water/waste, roads/logistics, telecommunications and urban development. Ms Ong was responsible for deal-sourcing, due diligence, deal finalisation, post-investment management and divestments. She also provides analysis of country/sector development in areas of interest. She was previously a Senior Regional Economist with IDEAglobal which has offices in Singapore, London, New York and provides independent economic research and market analysis worldwide. Ms Ong helped lead the emerging market research team in macroeconomic analysis and formulating strategies. She is also well-versed in conducting seminars/talks for the banking community on various economic issues. Ms Ong holds a Master’s degree in Applied Economics and a Bachelor of Arts degree in Economics/Statistics from the National University of Singapore. Marc Liu, Vice President (Investment) Mr Liu joined the Trustee-Manager in Jan 2007 after City Gas was restructured to become a core asset of CitySpring Infrastructure Trust. As a member of CitySpring’s investment team, he is responsible for the identification, evaluation and execution of infrastructure related investment projects. Mr Liu was Senior Manager, Business Development at City Gas for 2 years from 2005 to 2006. Mr Liu earned his Bachelor of Economics degree from Shanghai University and received his Masters in Finance from San Diego State University, where he graduated with honors as Beta Gamma Sigma. Mr Liu is a Chartered Financial Analyst (CFA) charterholder and a member of CFA Singapore. Mr Liu also serves as Vice President, Operations and Commercial at SingSpring Pte Ltd, the trustee-manager of SingSpring Trust. Annie Khung, Vice President (Finance) Ms Khung has been with CitySpring since 2007. She assists in the reporting of the Group results, budgeting, taxation and other financialrelated matters. She also reviews the financial performance of the subsidiary operating companies and assists in developing Group financial policies and procedures. Prior to joining CitySpring, Ms Khung was with Ernst & Young LLP where she left as an Audit Manager. Ms Khung graduated with degrees in Bachelor of Commerce and Bachelor of Finance from the University of Adelaide, Australia. She is a non-practising member of both the Institute of Singapore Chartered Accountants and CPA Australia. Source: Company

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CitySpring Infrastructure Trust 29 July 2014 Fig: Revenue Contribution 500 Gas (SGD mn) Electricity (SGD mn) 400

Fig: Asset mix by Operations 20%

Water (SGD mn) Total %y-y

Gas (SGD mn)

Water (SGD mn)

Electricity (SGD mn)

Others (SGD mn)

103 , 5%

15%

550 , 28% 300

10%

200

5%

100

0% 1,085 , 56%

0 FY09

FY10

Fig: Cash Earnings Contribution Gas (SGD mn) 125 Corporate (SGD mn)

FY11

FY12

FY13

Water (SGD mn) Total (SGD mn)

FY14

Electricity (SGD mn)

Fig: DPS with Dividend payout CEPU (SG cents) 14

DPU (SG cents)

Units ('mn)

1,500

10

75

8

50

6

25

4

0

2 FY09

FY10

FY11

2,000

12

100

(25)

210 , 11%

-5%

FY12

FY13

FY14

1,000

500

0

0

FY08

FY09

FY10

FY11

FY12

FY13

(50) Fig: Cash Flows

Fig: Gearing

CFO (SGD mn) CFF (SGD mn)

150

CFI (SGD mn) FCF (SGD mn)

120

net debt (SGD mn)

2,000

Debt ratio (%)

100%

100

100

80%

1,500 80

50

60

0

60% 1,000

40%

40 500

(50)

20%

20

(100)

0 FY09

FY10

FY11

FY12

Fig: Cash Return over Assets/ Capital Invested ROA: Gas (%) 15% ROA: Electricity (%)

FY13

0

FY14

ROA: Water (%) CitySpring CROCI (%)

0% FY09

FY10

FY11

Fig: Cash Return over Equity Basis ROE: Gas (%) 30% ROE: Electricity (%)

FY12

FY13

FY14

ROE: Water (%) CitySpring ROE (%)

25% 10%

20% 15%

5%

10% 0%

5% FY10

FY11

FY12

FY13

FY14

FY10

FY11

FY12

FY13

FY14

Source: Company, PSR

Page | 12

CitySpring Infrastructure Trust 29 July 2014 FYE Mar Income Statement (SGD mn) Revenue EBITDA Depreci a ti on & Amorti s a ti on EBIT Net Fi na nce (Expens e)/Inc Other i tems As s oci a tes & JVs Excepti ona l i tems Profit Before Tax Ta xa ti on Profit After Tax Mi nori ty i nteres t Net Income, reported Cash Earnings

FY12

FY13

FY14

481 132 (56) 76 (89) 0 0 0 (12) (23) (35) (1) (36) 54

524 149 (55) 95 (69) 0 0 0 26 (6) 20 (1) 18 95

521 119 (52) 67 (65) 0 0 0 2 (2) 0 (2) (2) 60

FYE Mar Per share data (SGD) EPU, reported CEPU DPU BVPU

FY12

FY13

FY14

-0.03 0.04 0.04 0.28

0.01 0.06 0.03 0.23

0.00 0.04 0.03 0.23

FY12

FY13

FY14

(12) 130 7 125 (0) 58

26 127 10 162 (0) 106

2 114 20 136 (0) 83

(3) 0 (3)

(3) 0 (2)

(2) 39 38

0 (2) (45) 14 (33) 21 (0) 120

0 (9) (50) 1 (59) 45 (0) 165

0 40 (50) (13) (23) 98 (3) 260

FYE Mar Cashflow statements (SGD mn) CFO Profi t before ta x Adjus tments WC cha nges Ca s h genera ted from ops Ta xes pa i d Cashflow from ops CFI CAPEX, net Others Cashflow from investments CFF Uni t i s s ua nce Loa ns , net of repa yments Di s tri buti ons pa i d Others Cashflow from financing Net change in cash Effects of excha nge ra tes CCE, end Source: Compa ny Da ta , PSR es t

FYE Mar Balance Sheet (SGD mn) PPE Inta ngi bl es As s oci a tes & JVs Long term i nves tments Others Total non-current assets Inventori es Accounts Recei va bl es Inves tments Ca s h Others Total current assets Total Assets Short term l oa ns Accounts Pa ya bl es Others Total current liabilities Long term l oa ns Others Total non-current liabilities Non-control l i ng i nteres t Shareholder Equity

FYE Mar Valuation Ratios P/CE (X), a dj. P/B (X) EV/EBITDA (X) Di vi dend Yi el d (%) Growth & Margins (%) Growth Revenue EBITDA EBIT Ca s h Ea rni ngs Margins EBITDA ma rgi n EBIT ma rgi n Net Profi t Ma rgi n Key Ratios CROE (%) CROA (%) Net Debt/(Ca s h) Net Gea ri ng (X)

FY12 1,205 416 0 0 168 1,790 15 64 0 161 10 250 2,040 9 90 7 107 1,344 156 1,500 9 424

FY13 1,161 404 0 0 151 1,716 18 65 0 202 11 297 2,013 138 99 19 256 1,207 185 1,392 9 356

FY14 1,008 388 0 0 146 1,543 20 69 0 304 12 405 1,948 152 106 24 282 1,145 154 1,299 11 355

FY12

FY13

FY14

7.9 1.2 12.9 10.5%

7.3 2.0 12.3 7.1%

12.7 2.1 14.7 6.6%

13.4% 8.8% -0.5% 6.4% 13.3% -20.0% 10.1% 24.0% -28.9% n.m. 75.2% n.m. 27.4% 28.5% 22.9% 15.8% 18.0% 12.9% -7.3% 3.7% 0.1% 14.1% 24.4% 16.9% 2.6% 4.7% 3.0% 1,192 2.8

1,142 3.2

993 2.8

*Historical multiples and yields are based on historical prices

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CitySpring Infrastructure Trust 29 July 2014 Ratings History Market Price Target Price

0.60

Source: Bl oomberg, PSR

0.50

0.40 0.30 0.20 0.10 0.00

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

1 2 3 4 5 PSR Rating System Total Returns Recommendation Rating > +20% Buy 1 +5% to +20% Accumul a te 2 -5% to +5% Neutra l 3 -5% to -20% Reduce 4 <-20% Sel l 5 Remarks We do not ba s e our recommenda tions entirel y on the a bove qua ntitative return ba nds . We cons i der qua l i tative fa ctors l i ke (but not l i mi ted to) a s tock's ri s k rewa rd profi l e, ma rket s entiment, recent ra te of s ha re pri ce a ppreci a tion, pres ence or a bs ence of s tock pri ce ca tal ys ts , a nd s pecul a tive undertones s urroundi ng the s tock, before ma ki ng our fi na l recommenda tion

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Page | 15

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