SECTOR RESEARCH | Singapore

February 12, 2014

Offshore & Marine

OVERWEIGHT

FY13 results may be a mixed bag 

Singapore offshore & marine stocks likely to deliver a mixed bag of results in the upcoming reporting season.



We are above consensus for Sembcorp Marine. Positive earnings surprises, if any, could come from our top small-cap picks, Mermaid Maritime and Nam Cheong.



Ezion’s results most probably a non-event but share price could see boost from more lucrative liftboat contract wins and/or favourable corporate developments.

(Unchanged)

Analyst YEAK Chee Keong, CFA (65) 6432 1460 [email protected]

Results Preview Round-up We are above consensus for Sembcorp Marine and anticipate a sequential upturn in operating margin to 12.0% in 4Q13E. Small-tomid-cap offshore oil and gas names could see strong double-digit YoY net profit growth but commercial shipbuilders (Cosco and Yangzijiang) could post YoY dips. Earnings surprises, if any, would come from Mermaid Maritime and Nam Cheong.

What’s Our View Good sanity check. Earnings reports by the sector are a reflection of the execution of orders secured in the past. Although a good sanity check, we believe they should be read in conjunction with future prospects. 2014 investment themes. Our three key investment themes for 2014 are premised on: (1) a sustained rig building momentum, (2) cyclical rebound in OSV demand, and (3) lacklustre commercial shipbuilding orders for Chinese shipyards. We also like companies with good structural growth prospects, namely, Ezion and Mermaid. So far, the OSV recovery theme appears to pan out well with new vessel orders for Nam Cheong and Vard since the beginning of the year. The OSV recovery theme looks to be playing out well with several new vessel orders seen for Nam Cheong and Vard since the beginning of the year. Maintain Overweight. We reiterate our Overweight call on the sector, with Sembcorp Marine, Ezion, Mermaid and Nam Cheong our top 2014 BUYs. For the last two, we would recommend buying ahead of results release on possible positive surprises.

Figure 1: Sector valuation table Mkt cap (USD m) Keppel Corp 14,930 Sembcorp Industries 7,503 Sembcorp Marine 6,757 Cosco Corp 1,260 Yangzijiang 3,467 Vard Holdings 780 Nam Cheong 538 Ezion 2,177 Swiber 304 Mermaid Maritime 567

Rec Buy Hold Buy Sell Sell Buy Buy Buy Hold Buy

Target Last price price 12.48 10.49 5.50 5.34 5.14 4.11 0.65 0.72 1.05 1.15 1.04 0.84 0.37 0.33 3.00 2.30 0.69 0.64 0.61 0.51

Source: Factset, Maybank KE

FYE Dec Dec Dec Dec Dec Dec Dec Dec Dec Sep

EPS FY13E (1.1) 4.1 1.1 (66.1) (13.2) (59.9) 19.9 32.2 (5.5) 388.9 30.0

growth (%) FY14E FY15E (10.4) 6.9 14.4 7.0 34.1 7.7 75.0 7.1 (20.3) (1.6) 93.5 41.5 33.7 (7.6) 78.2 16.8 17.2 29.4 211.5 7.0 52.7 11.4

EV/EBITDA (x) FY13E FY14E FY15E 10.1 10.0 9.5 8.0 6.0 5.7 9.8 7.4 7.0 14.2 12.0 11.7 4.0 5.0 5.6 10.8 7.1 4.8 8.1 6.0 6.4 16.8 9.9 8.2 9.5 8.3 7.3 7.4 4.9 4.6 9.9 7.6 7.1

FY13E 10.4 12.2 15.7 44.7 7.2 12.9 9.4 17.5 6.9 36.6 17.3

P/E (x) P/BV (x) FY14E FY15E FY13E FY14E FY15E 11.6 10.8 2.0 1.8 1.7 10.6 9.9 1.9 1.6 1.4 11.7 10.9 3.2 2.7 2.4 25.5 23.8 1.2 1.2 1.2 9.0 9.1 1.2 1.1 1.0 6.6 4.7 1.6 1.3 1.1 7.0 7.6 1.9 1.5 1.4 9.8 8.4 2.6 2.0 1.6 5.9 4.5 0.6 0.5 0.5 11.8 11.0 1.1 1.0 1.0 11.0 10.1 1.7 1.5 1.3

SEE PAGE 10 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

FY13E 18.9 16.3 21.1 2.8 17.9 11.7 23.6 17.7 9.0 3.5 14.2

ROE (%) Div yield (%) FY14E FY15E FY13E FY14E FY15E 16.3 16.2 4.2 4.2 4.2 16.3 15.3 2.8 2.8 2.8 24.9 23.2 3.6 3.6 3.6 4.8 5.0 1.4 2.1 2.1 12.3 11.2 4.8 4.9 4.9 21.6 25.2 2.4 4.9 7.3 24.3 19.0 1.9 4.4 4.1 23.0 21.2 0.0 0.0 0.0 9.6 11.4 1.6 1.6 1.6 9.2 9.1 2.1 1.2 1.2 16.2 15.7 2.5 3.0 3.2

Singapore Offshore & Marine

FY13E earnings may be a mixed bag We expect the offshore & marine stocks under our coverage to deliver a mixed bag of results for 4Q13/FY13 in the upcoming reporting season. We favour players with offshore oil and gas exposure but maintain caution on commercial shipbuilders. In our view, the results would be consistent with our outlook for the sector, in particular the following three key themes:  Sustained rig building momentum,  Cyclical rebound in OSV demand, and  Lacklustre commercial shipbuilding orders for Chinese shipyards. We also like companies with good structural growth prospects, namely, Ezion and Mermaid. We would recommend buying Mermaid and Nam Cheong ahead of their results release on possible positive surprises. Figure 2: 4Q13E and FY13E net profit – Maybank KE vs consensus

Sembcorp Marine SGD (m) Sembcorp Industries SGD (m) Ezion USD (m) Mermaid Maritime* USD (m) Swiber USD (m) Nam Cheong MYR (m) Vard NOK (m) Cosco Corp SGD (m) Yangzijiang CNY (m) *1QFY9/14 results for Mermaid Source: Bloomberg, Maybank KE

Results release 24 Feb 2014 26 Feb 2014 20 Feb 2014 12/13 Feb 2014 To be announced 26 Feb 2014 25 Feb 2014 24 Feb 2014 To be announced

MBKE 172.3 186.8 33.4 12.3 12.2 50.5 131.1 8.9 583.2

4Q13E net profit % chg YoY Consensus 3.1 152.4 (8.7) 184.1 62.7 33.2 11.8 1,750.2 (15.9) 9.6 2.4 45.9 (30.3) 153.1 (62.5) 20.8 (27.8) 566.4

% chg YoY (8.8) (10.1) 61.7 1,683.9 (34.0) (7.0) (18.6) (12.3) (29.9)

MBKE 545.6 783.5 154.0 n.a. 44.1 186.5 371 34.9 2,932.8

FY13E net profit % chg YoY Consensus 525.7 1.3 780.8 4.0 153.8 95.3 n.a. n.a. 41.5 (3.5) 181.9 36.5 393.1 (58.9) 46.8 (67.0) 2,916.0 (18.4)

% chg YoY (2.4) 3.6 110.2 n.a. (3.5) 33.2 (56.4) (55.7) (18.9)

Sembcorp Marine (SMM SP, BUY, TP SGD5.14) 4Q traditionally stronger. We forecast FY13E net profit of SGD546m (+1% YoY) on revenue of SGD5,488m (+24% YoY). The fourth quarter is traditionally a strong quarter for SMM as repair and offshore variation orders wrap up by year-end. We expect operating margins to climb higher to 12.0% in 4Q13 (3Q13: 10.1%, 4Q12: 10.8%), which would translate to full-year operating margin of 11.9%. Full-quarter contribution from Integrated New Yard Facility. 4Q13 would see a full-quarter contribution from SMM’s Integrated New Yard Facility at Tuas, which started operations last August. While a full ramp-up by end4Q13 is unlikely, we see it as a good gauge of the pace of buildup to ensure a better estimate of FY14 potential. This is important as we expect higher ship repair volume to mitigate lower margins from drillship contracts. Revenue recognition for second drillship. The second Sete Brasil drillship is expected to reach initial revenue recognition in either 4Q13 or 1Q14. We have assumed recognition in 4Q13. If this does not materialise, 4Q13E revenue would be lower and margins could exceed our forecasts. What to watch out for. Two key data points to monitor in SMM’s upcoming results are (1) ship repair volume and (2) operating margins. The numbers would validate our investment thesis that the market has been overly pessimistic on its margins.

February 12, 2014

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Singapore Offshore & Marine Sembcorp Marine – Summary Earnings Table FYE Dec (SGD m) Revenue EBITDA Recurring Net Profit Recurring Basic EPS (SGD cts) EPS Growth (%) DPS (SGD cts) P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x) Net Debt/(Cash) (SGD m) ROE (%) ROA (%) Consensus Net Profit (SGD m) Source: Company, Maybank KE

FY11 3,960.2 823.4 751.9 36.6 (12.6) 25.0

FY12 4,430.1 648.2 538.5 25.8 (29.5) 13.0

FY13E 5,488.4 755.5 545.6 26.1 1.3 15.0

FY14E 6,606.8 1,007.7 731.3 35.0 34.0 15.0

FY15E 6,902.2 1,063.1 786.9 37.7 7.6 15.0

11.2 9.1 6.1 3.5

15.9 11.5 3.2 3.5

15.7 9.9 3.6 3.2

11.7 7.4 3.6 2.7

10.9 7.0 3.6 2.4

(1,954.5) 30.0 14.6

(1,075.9) 22.2 9.9

(960.4) 21.1 8.7 525.7

(1,341.0) 24.9 10.3 637.9

(1,841.7) 23.2 10.0 702.3

Sembcorp Industries (SCI SP, HOLD, TP SGD5.50) We expect the focus of SCI’s upcoming results to be on: 

Extent of decline in power price spreads in Singapore (-19% YoY in 3Q13),



Any further impairments on UK Teesside operations, and



Prospects for future pipeline projects.

We forecast FY13E net profit of SGD784m (+4% YoY) on revenue of SGD10,783m (+6% YoY). Power spread contraction an overhang. We believe that power spread contraction in Singapore due to intensifying competition would be a shortterm overhang on stock price, given that SCI derives ~80% of Utilities segment revenue and ~60% of Utilities segment net profit from Singapore. Long-term prospects hinge on profitability of pipeline of Utilities segment projects that are scheduled to come through progressively over 2014-2016. These projects have the potential to strengthen long-term recurring income. However, we think the market may place less emphasis on such potential until there is better visibility on earnings contributions from the projects. Sembcorp Industries – Summary Earnings Table FYE Dec (SGD m) Revenue EBITDA Net Profit Basic EPS (SGD cts) EPS Growth (%) DPS (SGD cts) P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x) Net Debt/(Cash) (SGD m) ROE (%) ROA (%) Consensus Net Profit (SGD m) Source: Company, Maybank KE

February 12, 2014

FY11 9,047.1 1,300.6 809.3 45.3 2.0 17.0

FY12 10,189.1 1,341.5 753.3 42.2 (7.0) 15.0

FY13E 10,782.8 1,276.8 783.5 43.9 4.0 15.0

FY14E 12,436.0 1,702.2 897.1 50.2 14.5 15.0

FY15E 13,208.4 1,799.5 959.0 53.7 6.9 15.0

11.8 6.9 3.2 2.3

12.7 6.7 2.8 2.1

12.2 7.1 2.8 1.9

10.6 5.3 2.8 1.6

9.9 5.0 2.8 1.4

(953.0) 20.4 7.1

260.0 17.5 6.1

(861.9) 16.3 5.9 780.8

(1,729.2) 16.3 6.1 854.6

(2,431.3) 15.3 5.9 934.4

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Singapore Offshore & Marine Ezion Holdings (EZI SP, BUY, TP SGD3.00) Little impact on share price. Ezion’s results generally have little impact on its share price, which is predominantly driven by contract wins and corporate developments. Key earnings risk for the liftboat business would be deployment delays, but the company has been able to preempt these through reshuffling of vessels and contract additions. Execution has not yet emerged as a major cause for concern. Look out for new contract wins or corporate developments. We believe the upcoming results would largely be a non-event. That said, we would look out for new lucrative liftboat contracts or further corporate developments in its marine supply base business (Ocean Sky). From a big picture perspective, the long-term investment case for Ezion remains intact. Ezion Holdings – Summary Earnings Table FYE Dec (USD m) Revenue EBITDA Reported Net Profit Recurring Net Profit Recurring EPS (US cts) EPS Growth (%) DPS (SGD cts)

FY11 107.0 62.0 58.1 45.9 4.8 43.3 0.1

FY12 158.7 87.1 78.8 65.4 6.1 25.7 0.1

FY13E 290.3 179.3 154.0 126.2 10.4 72.4 0.1

FY14E 556.7 303.3 237.9 228.2 18.4 75.9 0.1

FY15E 606.1 365.7 277.7 267.0 21.5 17.0 0.1

P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x)

38.2 48.0 0.0 5.9

30.4 34.1 0.0 3.4

17.6 16.6 0.0 2.6

10.0 9.8 0.0 2.0

8.6 8.1 0.0 1.6

Net Gearing (%) ROE (%) ROA (%) Consensus Net Profit (USD m) Source: Company, Maybank KE

35.2 21.7 12.4

75.5 14.3 6.6

103.6 19.0 7.8 137.5

107.3 21.8 9.2 228.1

73.1 20.5 10.2 282.0

Mermaid Maritime (MMT SP, BUY, TP SGD0.61) Could surprise on the upside. We forecast Mermaid’s quarterly net profit to come in at USD12.3m but we believe the risk is on the upside. Positive surprise, if any, would come from operating leverage effect from its subsea segment due to higher utilisation leading to higher-than-expected margins. We were also conservative in our cost assumptions. 1QFY9/14E results could build on the preceding quarter’s momentum and provide a better gauge of FY14E earnings. Evolving into an integrated oilfield services player. Mermaid is our top small-caps pick in the sector. Our key investment thesis is its potential evolvement into an integrated oilfield services player with PTTEP as a key future client.

February 12, 2014

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Singapore Offshore & Marine Mermaid Maritime – Summary Earnings Table FYE Sep (USD m) Revenue EBITDA Recurring Net Profit Recurring Diluted EPS (US cts) Diluted EPS Growth (%) DPS (US cts)

FY12 183.6 43.1 3.2 0.2 n.a. 0.0

FY13 269.6 52.7 15.7 1.1 388.9 0.9

FY14E 314.4 78.7 49.0 3.5 211.5 0.5

FY15E 333.9 84.7 52.5 3.7 7.0 0.5

FY16E 399.3 117.6 63.7 4.5 21.4 0.5

P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x)

178.9 13.1 0.0 1.5

36.6 10.7 2.1 1.1

11.8 7.2 1.2 1.0

11.0 6.7 1.2 1.0

9.0 4.8 1.2 0.9

18.3 0.8 0.6

(2.4) 3.5 2.5

11.2 9.2 6.7 47.3

9.9 9.1 6.8 51.2

47.3 10.2 6.7 58.5

Net Gearing (%) ROE (%) ROA (%) Consensus Net Profit (USD m) Source: Company, Maybank KE

Swiber Holdings (SWIB SP, HOLD, TP SGD0.69) Do not be surprised by wide swings. Swiber’s quarterly profits can fluctuate widely due to the lumpy and seasonal nature of its EPIC offshore construction business. Quarterly margins are also dependent on utilisation and execution. We forecast a 5.6% YoY dip in FY13E EPS despite a 9% YoY revenue growth, due mainly to marginally weaker margins. Several stock overhangs discourage us from turning bullish at this juncture. First, even though Swiber has bagged USD235m in new orders recently, its contract wins last year fell short of our initial expectations (USD588m won vs USD1.0b expected). Second, we are wary of execution risks from its intention to move into deepwater projects. Third, the market may be concerned over earnings replacement following its sale of Kreuz. Swiber Holdings – Summary Earnings Table FYE Dec (USD m) Revenue EBITDA Recurring Net Profit Recurring Basic EPS (US cts) EPS Growth (%) DPS (US cents) P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x) Net Gearing (%) ROE (%) ROA (%) Consensus Net Profit (SGD m) Source: Company, Maybank KE

February 12, 2014

FY11 654.5 108.0 32.1 6.3 (14.0) 0.0

FY12 952.2 138.5 45.7 7.7 21.1 0.8

FY13E 1,033.9 129.8 44.1 7.3 (5.6) 0.8

FY14E 1,156.6 147.0 51.9 8.5 17.6 0.8

FY15E 1,288.5 167.8 66.7 11.0 28.4 0.8

8.0 9.4 0.0 0.7

6.6 7.4 1.6 0.6

7.0 7.8 1.6 0.6

6.0 6.9 1.6 0.6

4.6 6.1 1.6 0.5

87.9 9.4 2.7

95.0 10.8 2.7

73.7 8.8 2.2 41.5

72.2 9.6 2.5 48.8

68.4 11.3 3.1 54.5

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Singapore Offshore & Marine Nam Cheong (NCL SP, BUY, TP SGD0.37) Positive vessel sale momentum should show up in upcoming results. Nam Cheong has benefited from positive vessel sale momentum, which should be reflected in its upcoming results. 3Q13 was a record quarter, boosted by the sale of seven vessels worth USD190.5m. We expect 4Q13 to be reasonably strong, judging by the sale of four vessels worth USD66m during the quarter and progressive revenue recognition for the seven vessels sold in 3Q13. However, following a record 3Q13, we forecast sequential dip in 4Q13E net profit to SGD50.5m (+2% YoY, -15% QoQ). 2015 build-to-stock programme may be revealed. The key event to look out for in Nam Cheong’s upcoming results release is the announcement of its 2015 newbuild programme. We have assumed 28 vessels for the 2015 programme. But given our view of a positive OSV cycle which seems to have panned out in Nam Cheong’s favour, the number may be higher. A higher-than-expected newbuild programme would be a positive catalyst for the stock. Nam Cheong Limited – Summary Earnings Table FYE Dec (MYR m) Revenue EBITDA Recurring Net Profit Recurring Basic EPS (sen) EPS Growth (%) DPS (sen)

FY11 606.2 111.2 93.2 4.9 (22.0) 0.5

FY12 876.6 150.3 136.6 7.1 46.6 1.3

FY13E 1,324.3 222.5 186.5 8.9 24.2 1.6

FY14E 1,989.8 303.0 250.6 11.9 34.4 3.7

FY15E 1,819.8 280.5 232.1 11.0 (7.4) 3.4

P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x)

17.2 16.8 0.6 3.4

11.7 12.4 1.6 2.7

9.4 8.4 1.9 1.9

7.0 6.2 4.4 1.5

7.6 6.7 4.1 1.4

Net Gearing (%) ROE (%) ROA (%) Consensus Net Profit (MYR m) Source: Company, Maybank KE

63.0 20.8 9.6

38.2 25.6 12.0

21.8 24.6 11.5 182.4

37.2 24.3 11.6 222.5

12.7 19.1 10.0 240.0

Vard Holdings (VARD SP, BUY, TP SGD1.04) Wooing investors anew. We expect Vard to start regaining investor confidence over the next few quarters if it can demonstrate margin recovery with no further writedowns in the Niteroi yard operations. We are confident this is possible on account of: (1) strong order wins (FY13: a record NOK13.4b, YTD: >NOK2.0b) with more vessels to be built in its Romanian and Norwegian yards, (2) low outstanding value of unrecognised revenue (~NOK0.5b) for vessels to be delivered in the Niteroi yard in Brazil, and (3) cyclical rebound in OSV demand. EBITDA margin key data point. In our view, FY13 is as good as a write-off for Vard in terms of earnings performance but the key 4Q13 data point to watch would be its EBITDA margin. We forecast 4Q13E EBITDA margin of 7.3%, leading to FY13E EBITDA margin of 6.8%. Margin recovery would continue to play out in the subsequent quarters, cumulating in FY14E EBITDA margin of 9.1%, based on our forecasts.

February 12, 2014

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Singapore Offshore & Marine Vard Holdings – Summary Earnings Table FYE Dec (NOK m) Revenue EBITDA Recurring Net Profit Recurring Basic EPS (NOK cts) EPS Growth (%) DPS (SGD cts) P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x) Net Gearing (%) ROE (%) ROA (%) Consensus Net Profit (NOK m) Source: Company, Maybank KE

FY11 12,401 2,355 1,594 135.1 34.3 15.0

FY12 11,129 1,473 902 76.4 (43.4) 13.0

FY13E 11,006 743 371 31.4 (58.9) 2.0

FY14E 12,527 1,138 720 61.0 93.9 4.0

FY15E 15,826 1,665 1,018 86.2 41.4 6.0

3.0 3.3 17.9 1.4

5.4 5.2 15.5 1.5

13.1 10.3 2.4 1.6

6.7 6.7 4.8 1.3

4.8 4.6 7.1 1.1

(12.1) 54.1 12.7

47.2 27.0 7.0

70.9 12.0 2.8 393.1

68.1 21.7 5.2 586.0

58.0 25.2 6.4 784.2

Cosco Corp (COS SP, SELL, TP SGD0.65) Low expectations. After two quarters of major misses, we have low expectations for Cosco and anticipate just SGD34.9m (-67% YoY) in net profit for FY13E. Margins would likely remain suppressed (FY13E gross margin: 9.8%) due to (1) depletion of high-margin orders, (2) poor execution of offshore projects, (3) weak shipbuilding prices, and (4) rising costs (labour, raw materials and financing) in China. Cosco Corp – Summary Earnings Table FYE Dec (SGD m) Revenue EBITDA Recurring Net Profit Recurring Basic EPS (SGD cts) EPS Growth (%) DPS (SGD cts)

FY11 4,162.9 469.1 139.4 6.23 (44.0) 3.0

FY12 3,734.3 468.6 105.7 4.72 (24.2) 2.0

FY13E 3,391.9 323.5 34.9 1.56 (67.0) 1.0

FY14E 3,691.5 384.3 63.3 2.83 81.5 1.5

FY15E 3,871.6 392.4 67.8 3.03 7.1 1.5

P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x)

11.5 8.1 4.2 1.2

15.1 8.1 2.8 1.3

45.9 11.8 1.4 1.2

25.3 9.9 2.1 1.2

23.6 9.7 2.1 1.2

Net Gearing (%) ROE (%) ROA (%) Consensus Net Profit (SGD m) Source: Company, Maybank KE

44.7 10.7 2.0

104.1 8.2 1.4

142.1 2.7 0.5 46.8

141.9 4.8 0.9 57.9

146.6 5.1 0.9 75.3

Yangzijiang Shipbuilding (YZJSGD SP, SELL, TP SGD1.05) Cautious on Chinese shipbuilding. We are cautious about a turnaround in China’s shipbuilding sector. We believe the glut in shipping capacity as well as Chinese shipyard capacity, coupled with sub-par trade demand recovery would cap the appreciation in shipbuilding prices. Margin decline could start to show. Yangzijiang has seen resilience in its shipbuilding gross margins due to its discipline in contract selection. However, we believe margin decline could start to show up from 4Q13 as a result of a depletion of high-margin contracts and recognition of low-value contracts.

February 12, 2014

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Singapore Offshore & Marine Expect 2014 contract win to slow down. Furthermore, we expect contract win momentum to slow down in FY14. While 4Q13 and 1Q14 could see some knee-jerk surge in orders, the current uncertain global economic situation may hamper overall shipbuilding orders. Yangzijiang could also secure some offshore orders, but this would be a short-term negative as we expect execution risks in the initial stages. Yangzijiang Shipbuilding – Summary Earnings Table FYE Dec (CNY m) Revenue EBITDA Recurring Net Profit Basic EPS (fen) EPS Growth (%) DPS (SGD cts) P/E (x) EV/EBITDA (x) Div Yield (%) P/BV (x) Net Debt/(Cash) (CNY m) ROE (%) ROA (%) Consensus Net Profit (CNY m) Source: Company, Maybank KE

February 12, 2014

FY11 15,705.8 4,715.0 3,976.6 103.8 34.6 5.5

FY12 14,799.1 4,436.8 3,594.9 93.4 (10.0) 5.5

FY13E 13,677.7 3,998.9 2,932.8 76.0 (18.7) 5.5

FY14E 12,409.3 3,182.9 2,329.8 60.3 (20.7) 5.5

FY15E 14,420.1 2,829.8 2,290.5 59.3 (1.7) 5.5

5.5 4.9 4.8 1.7

6.2 5.2 4.8 1.4

7.6 5.8 4.8 1.3

9.5 7.2 4.8 1.2

9.7 8.1 4.8 1.1

(1,144.8) 34.5 11.7

(1,133.0 25.2 10.8

(565.2) 17.7 8.4 2,916

728.9 12.7 6.5 2,300

1,144.4 11.6 6.1 2,377

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Singapore Offshore & Marine Research Offices REGIONAL

HONG KONG / CHINA

INDONESIA

WONG Chew Hann, CA Regional Head of Institutional Research (603) 2297 8686 [email protected]

Howard WONG Head of Research (852) 2268 0648 [email protected] • Oil & Gas - Regional

Wilianto IE Head of Research (62) 21 2557 1125 [email protected] • Strategy

ONG Seng Yeow Regional Head of Retail Research (65) 6432 1453 [email protected]

Alexander LATZER (852) 2268 0647 [email protected] • Metals & Mining - Regional

Rahmi MARINA (62) 21 2557 1128 [email protected] • Banking & Finance

Jacqueline KO, CFA (852) 2268 0633 [email protected] • Consumer

Aurellia SETIABUDI (62) 21 2953 0785 [email protected] • Property

Alexander GARTHOFF Institutional Product Manager (852) 2268 0638 [email protected]

ECONOMICS Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 [email protected] Luz LORENZO Philippines (63) 2 849 8836 [email protected] Tim LEELAHAPHAN Thailand (662) 658 1420 [email protected] JUNIMAN Chief Economist, BII Indonesia (62) 21 29228888 ext 29682 [email protected] Josua PARDEDE Economist / Industry Analyst, BII Indonesia (62) 21 29228888 ext 29695 [email protected]

MALAYSIA WONG Chew Hann, CA Head of Research (603) 2297 8686 [email protected] • Strategy • Construction & Infrastructure Desmond CH’NG, ACA (603) 2297 8680 [email protected] • Banking & Finance LIAW Thong Jung (603) 2297 8688 [email protected] • Oil & Gas - Regional • Shipping ONG Chee Ting, CA (603) 2297 8678 [email protected] • Plantations - Regional Mohshin AZIZ (603) 2297 8692 [email protected] • Aviation - Regional • Petrochem YIN Shao Yang, CPA (603) 2297 8916 [email protected] • Gaming – Regional • Media TAN Chi Wei, CFA (603) 2297 8690 [email protected] • Power • Telcos WONG Wei Sum, CFA (603) 2297 8679 [email protected] • Property & REITs LEE Yen Ling (603) 2297 8691 [email protected] • Building Materials • Glove Producers CHAI Li Shin (603) 2297 8684 [email protected] • Plantation • Construction & Infrastructure KANG Chun Ee (603) 2297 8675 [email protected] • Consumer Ivan YAP (603) 2297 8612 [email protected] • Automotive LEE Cheng Hooi Regional Chartist (603) 2297 8694 [email protected] Tee Sze Chiah Head of Retail Research (603) 2297 6858 [email protected]

February 12, 2014

Karen KWAN (852) 2268 0640 [email protected] • Property & REITs Osbert TANG, CFA (86) 21 5096 8370 [email protected] • Transport & Industrials Philip TSE, CFA FRM (852) 2268 0643 [email protected] • Property & REITs Ricky WK NG, CFA (852) 2268 0689 [email protected] • Utilities & Renewable Energy Simon QIAN, CFA (852) 2268 0634 [email protected] • Telecom & Internet Steven ST CHAN (852) 2268 0645 [email protected] • Banking & Financials Warren LAU (852) 2268 0644 [email protected] • Technology – Regional William YANG (852) 2268 0675 [email protected] • Technology – Regional

INDIA Jigar SHAH Head of Research (91) 22 6623 2601 [email protected] • Oil & Gas • Automobile • Cement Anubhav GUPTA (91) 22 6623 2605 [email protected] • Metal & Mining • Capital Goods • Property Urmil SHAH (91) 22 6623 2606 [email protected] • Technology • Media

SINGAPORE NG Wee Siang Head of Research (65) 6432 1467 [email protected] • Banking & Finance Gregory YAP (65) 6432 1450 [email protected] • SMID Caps – Regional • Technology & Manufacturing • Telcos Wilson LIEW (65) 6432 1454 [email protected] • Property Developers ONG Kian Lin (65) 6432 1470 [email protected] • S-REITs James KOH (65) 6432 1431 [email protected] • Consumer - Regional YEAK Chee Keong, CFA (65) 6432 1460 [email protected] • Offshore & Marine Derrick HENG (65) 6432 1446 [email protected] • Transport (Land, Shipping & Aviation) WEI Bin (65) 6432 1455 [email protected] • Commodity • Logistics • S-chips John CHEONG (65) 6432 1461 [email protected] • Small & Mid Caps • Healthcare

Anthony YUNUS (62) 21 2557 1136 [email protected] • Consumer • Poultry Isnaputra ISKANDAR (62) 21 2557 1129 [email protected] • Metals & Mining • Cement Pandu ANUGRAH (62) 21 2557 1137 [email protected] • Infrastructure • Construction • Transport Janni ASMAN (62) 21 2953 0784 [email protected] • Cigarette • Healthcare • Retail

PHILIPPINES Luz LORENZO Head of Research (63) 2 849 8836 [email protected] • Strategy Laura DY-LIACCO (63) 2 849 8840 [email protected] • Utilities • Conglomerates • Telcos Lovell SARREAL (63) 2 849 8841 [email protected] • Consumer • Media • Cement Rommel RODRIGO (63) 2 849 8839 [email protected] • Conglomerates • Property • Gaming • Ports/ Logistics Katherine TAN (63) 2 849 8843 [email protected] • Banks • Construction Ramon ADVIENTO (63) 2 849 8845 [email protected] • Mining

THAILAND Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 [email protected] • Consumer / Materials Jesada TECHAHUSDIN, CFA (66) 2658 6300 ext 1394 [email protected] • Financial Services Kittisorn PRUITIPAT, CFA, FRM (66) 2658 6300 ext 1395 [email protected] • Real Estate Sittichai DUANGRATTANACHAYA (66) 2658 6300 ext 1393 [email protected] • Services Sector Sukit UDOMSIRIKUL Head of Retail Research (66) 2658 6300 ext 5090 [email protected]

Surachai PRAMUALCHAROENKIT (66) 2658 6300 ext 1470 [email protected] • Auto • Conmat • Contractor • Steel Suttatip PEERASUB (66) 2658 6300 ext 1430 [email protected] • Media • Commerce Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 [email protected] • Energy • Petrochem Termporn TANTIVIVAT (66) 2658 6300 ext 1520 [email protected] • Property Woraphon WIROONSRI (66) 2658 6300 ext 1560 [email protected] • Banking & Finance Jaroonpan WATTANAWONG (66) 2658 6300 ext 1404 [email protected] • Transportation • Small cap Chatchai JINDARAT (66) 2658 6300 ext 1401 [email protected] • Electronics

VIETNAM LE Hong Lien, ACCA Head of Institutional Research (84) 844 55 58 88 x 8181 [email protected] • Strategy • Consumer • Diversified • Utilities THAI Quang Trung, CFA, Deputy Manager, Institutional Research (84) 844 55 58 88 x 8180 [email protected] • Real Estate • Construction • Materials TRUONG Thanh Hang (84) 844 55 58 88 x 8085 [email protected] • Consumer Le Nguyen Nhat Chuyen (84) 844 55 58 88 x 8082 [email protected] • Oil & Gas NGUYEN Thi Ngan Tuyen, Head of Retail Research (84) 8 44 555 888 x 8081 [email protected] • Food & Beverage • Oil&Gas • Banking NGUYEN Trung Hoa, Dy Head of Retail Research (84) 8 44 555 888 x 8088 [email protected] • Macro • Steel • Real estate TRINH Thi Ngoc Diep (84) 4 44 555 888 x 8208 [email protected] • Technology • Utilities • Construction TRUONG Quang Binh (84) 4 44 555 888 x 8087 [email protected] • Rubber plantation • Tyres and Tubes • Oil&Gas PHAM Nhat Bich (84) 8 44 555 888 x 8083 [email protected] • Consumer • Manufacturing • Fishery NGUYEN Thi Sony Tra Mi (84) 8 44 555 888 x 8084 [email protected] • Port operation • Pharmaceutical • Food & Beverage

Mayuree CHOWVIKRAN (66) 2658 6300 ext 1440 [email protected] • Strategy Padon VANNARAT (66) 2658 6300 ext 1450 [email protected] • Strategy

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Singapore Offshore & Marine APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice. This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events. MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report. This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect. 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 would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report. Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Singapore This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. Thailand The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect. US This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

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Singapore Offshore & Marine DISCLOSURES Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.

Disclosure of Interest Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Singapore: As of 12 February 2014, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report. Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. As of 12 February 2014, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report. MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.

OTHERS Analyst Certification of Independence The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. Reminder Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Ong Seng Yeow | Executive Director, Maybank Kim Eng Research

Definition of Ratings Maybank Kim Eng Research uses the following rating system BUY Return is expected to be above 10% in the next 12 months (excluding dividends) HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends) SELL Return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

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Singapore Offshore & Marine  Malaysia Maybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194 Stockbroking Business: Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888 Fax: (603) 2282 5136

 Philippines Maybank ATR Kim Eng Securities Inc. 17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200 Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

 Singapore Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Research Pte Ltd 9 Temasek Boulevard #39-00 Suntec Tower 2 Singapore 038989 Tel: (65) 6336 9090 Fax: (65) 6339 6003

 Hong Kong

Kevin FOY [email protected] Tel: (65) 6336-5157 US Toll Free: 1-866-406-7447

 New York

Maybank Kim Eng Securities (London) Ltd 6/F, 20 St. Dunstan’s Hill London EC3R 8HY, UK

Maybank Kim Eng Securities USA Inc 777 Third Avenue, 21st Floor New York, NY 10017, U.S.A.

Tel: (44) 20 7621 9298 Dealers’ Tel: (44) 20 7626 2828 Fax: (44) 20 7283 6674

Tel: (212) 688 8886 Fax: (212) 688 3500

 Indonesia

 India

Kim Eng Securities (HK) Ltd Level 30, Three Pacific Place, 1 Queen’s Road East, Hong Kong

PT Maybank Kim Eng Securities Plaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia

Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India

Tel: (852) 2268 0800 Fax: (852) 2877 0104

Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

Tel: (91).22.6623.2600 Fax: (91).22.6623.2604

 Thailand Maybank Kim Eng Securities (Thailand) Public Company Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

 South Asia Sales Trading

 London

 Vietnam Maybank Kim Eng Securities Limited 4A-15+16 Floor Vincom Center Dong Khoi, 72 Le Thanh Ton St. District 1 Ho Chi Minh City, Vietnam Tel : (84) 844 555 888 Fax : (84) 8 38 271 030

 Saudi Arabia In association with

Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686 Fax: (966) 26068787

 North Asia Sales Trading Alex TSUN [email protected] Tel: (852) 2268 0228 US Toll Free: 1 877 837 7635

www.maybank-ke.com | www.maybank-keresearch.com

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