Singapore Company Guide

SPH Edition 1 Version 1 | Bloomberg: SPH SP | Reuters: SPRM.SI

Refer to important disclosures at the end of this report

DBS Group Research . Equity

3 Sep 2015

FULLY VALUED (Downgrade from HOLD)

ANTICIPATING LOWER AD SPEND

Last Traded Price: S$3.88 (STI : 2,878.13) Price Target : S$3.51 (-10% downside) (Prev S$3.98) Potential Catalyst: Higher dividends, M&A Where we differ: Below, as we believe slower GDP growth will lead to Adex and earnings decline Analyst Alfie YEO +65 6682 3717 [email protected] Andy SIM CFA +65 6682 3718 [email protected]

Slowing GDP growth will lead to lower Adex. We believe Adex is likely to be impacted negatively in a less positive macroeconomic setting. Based on historical trends, Adex is relatively correlated to GDP. Rising corporate and consumer interest rates, tepid export demand, a higher-cost environment, and weak consumer sentiment could prompt cut backs in consumer spending. This could lead to slowing demand for products and services, and lower advertising expenditure by companies. Notwithstanding its strong balance sheet, we believe there could be downside to DPS in FY16F/17F on the back of lower earnings, which could reduce the investment appeal for this counter.

Price Relative S$

Relative Index

4.7 206

4.5 4.3

186

4.1

166

3.9 3.7

146

3.5

126

3.3 106

3.1 2.9 Sep-11

Sep-12

SPH (LHS)

Forecasts and Valuation FY Aug (S$ m) Revenue EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) EPS (S cts) EPS Pre Ex. (S cts) EPS Gth (%) EPS Gth Pre Ex (%) Diluted EPS (S cts) Net DPS (S cts) BV Per Share (S cts) 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 (%)

Sep-13

Sep-14

86 Sep-15

Relative STI INDEX (RHS)

2014A 1,215 408 528 404 242 25.3 15.1 (6) (24) 24.6 21.0 230.5 15.4 25.6 16.8 17.8 5.4 1.7 0.1 11.2

Earnings Rev (%): Consensus EPS (S cts): Other Broker Recs:

2015F 1,178 429 394 298 298 18.6 18.6 (26) 23 18.1 21.0 228.1 20.9 20.9 16.2 17.0 5.4 1.7 0.1 8.1

2016F 1,176 406 360 263 263 16.5 16.5 (12) (12) 16.0 19.0 223.5 23.6 23.6 17.2 18.1 4.9 1.7 0.1 7.3

2017F 1,188 405 361 264 264 16.5 16.5 0 0 16.1 19.0 221.0 23.5 23.5 17.0 18.2 4.9 1.8 0.1 7.4

19.1 B: 0

(11) 18.7 S: 5

(11) 19.5 H: 8

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

ASIAN INSIGHTS www.dbsvickers.com ed: TH / sa: JC

Downgrade to FULLY VALUED. We turn cautious on SPH and downgrade our recommendation to FULLY VALUED, from HOLD. We believe print ad growth could be negatively impacted on the back of slower GDP growth. We lowered our Adex growth assumptions on expectations of reduced advertising and marketing expenditure arising from an expected cut back in consumer spending and poorer business environment.

Imputing lower Adex assumptions. We reduce our FY16F/FY17F earnings forecast by -11% each to S$263m/S$264m as we impute -5% Adex growth for FY16F. This is to factor for a lower GDP growth environment and less positive Adex outlook. Valuation: TP of S$3.51 based on sum of parts. Our target price of S$3.51 is based on sum-of-parts valuation. We value SPH's core newspaper and magazine operations at S$1.43/share based on discounted cash flow model. SPH’s 70% stake in SPH REIT is valued based on our target price of S$0.99. These two parts are added to the estimated value of Seletar Mall, net cash and investments, to derive our TP. Key Risks to Our View: Adex reversal. As our view is premised on declining Adex, a strong economic recovery and pick-up in consumption will lead to Adex improvement, which is a key risk to our negative view. At A Glance Issued Capital (m shrs) Mkt. Cap (S$m/US$m) Free Float (%) 3m Avg. Daily Val (US$m) ICB Industry : Consumer Services / Media

1,597 6,198 / 4,387 100.0 10.9

VICKERS SECURITIES

Company Guide SPH

SPH’s Adex growth vs Singapore GDP growth 12-mth ma total ad spend yoy gth (%) 15.0% 10.0% 5.0% 0.0% -5.0%

Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

Anticipate slower growth Slower GDP growth to have an adverse implication on Adex. We believe slower GDP growth in Singapore would have a negative impact on advertising expenditure (Adex) in Singapore. Our Singapore economist has downgraded 2015 GDP growth forecast from 3.2% to 2.4% earlier, the lowest level in six years. Manufacturing output is weak, pick-up in exports is poor, labour and production costs have risen, interest rates are higher, while loan growth is slowing. On the back of a less positive macroeconomic backdrop, we believe a slower GDP outlook would impact Adex negatively. We revise our FY16F/FY17F earnings by -11% each to reflect a slowing Adex spend environment, in line with weaker GDP growth.

-10.0% 12-mth ma total ad spend yoy gth (%)

Source: Nielsen, DBS Bank

SPH’s Adex growth vs Singapore GDP growth 20%

Adex has already declined, on lower visitor arrivals and slower domestic consumption. Adex growth has declined yo-y since July 2014 and has been underperforming for one year. We attribute this to a combination of factors including decline in visitor arrivals, lower disposable incomes from higher interest rates, slowing private consumption expenditure and increased usage of online channels away from the traditional print sources.

Adex growth rate (SPH)

15%

Singapore GDP growth

10% 5% 0% -5% -10%

Visitor arrivals' growth rate has declined

-15%

Y oY 40%

-20%

2016F

2015F

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

-25%

Source: Company, DBS Bank

30% 20% 10% 0%

Slowing GDP growth will lead to lower Adex. Rising corporate and consumer interest rates, tepid export demand, a higher cost environment, and weak consumer sentiment could potentially put jobs, wages and disposable income at risk, prompting cut backs in consumer spending. This leads to slowing demand growth for products and services and eventually, lower advertising and marketing expenditure by companies. Adex, being a key marketing and advertising tool, is likely to be impacted negatively in a less positive macroeconomic setting.

ASIAN INSIGHTS Page 2

-10% -20%

Source: Thomson Reuters Datastream, DBS Bank

VICKERS SECURITIES

Company Guide SPH

Singapore’s private consumption growth has been weakening

Valuation

YoY % 9.0

Downgrade to FULLY VALUED, with a lower S$3.51 TP. Post earnings revision, we lower our TP to S$3.51. Our DCF component is adjusted downward to S$1.43. This is also in line with the structural challenge of having more advertisers and users utilising the online platforms, thereby lowering print revenues. We also have a lower value for SPH’s stake in SPH REIT after our REITs team revised SPH REIT’s TP from S$1.03 to S$0.99. We look to Adex showing further signs of recovery before we turn positive again. Downgrade to FULLY VALUED. Dividend yield is below 6-year mean, yet interest rates are rising

% 1.2

+1sd Avg -1sd -2sd

Sep-15

Singapore’s 3m SIBOR has spiked

+2sd

Mar-15

Impute declining Adex assumptions. We reduce our FY16F/FY17F earnings forecast by -11% each to S$263m/S$264m as we impute -5% Adex growth for FY16F. This is to factor for a lower GDP growth environment and less positive Adex outlook.

(%)

Sep-14

FY16F-FY17F earnings lowered by 11%

9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0

Mar-14

Source: Bloomberg Finance L.P., DBS Bank

Sep-13

Nov-14

Mar-15

Jul-14

Nov-13

Mar-14

Jul-13

Mar-13

Jul-12

Nov-12

Mar-12

Jul-11

Nov-11

Mar-11

Jul-10

Nov-10

Mar-10

0.0

Mar-13

1.0

Sep-12

2.0

Mar-12

3.0

Sep-11

4.0

Mar-11

5.0

Sep-10

6.0

Mar-10

7.0

Sep-09

8.0

Source: DBS Bank

1.0 0.8 0.6 0.4 0.2 0.0

Source: Thomson Reuters Datastream, DBS Bank

ASIAN INSIGHTS

VICKERS SECURITIES Page 3

Company Guide SPH Adex growth rate (%)

CRITICAL DATA POINTS TO WATCH Earnings Drivers: Publication model is driven by ad spend. SPH’s business model is driven by advertising revenue rather than circulation, with advertising receipts accounting for 76% (24% circulation and others) of operating profits in FY14. SPH also has a property business which developed and owns Seletar Mall, and 70% shareholding in SPH REIT (Paragon and Clementi Malls). We estimate rental income from the three malls to contribute 18% of revenue for FY15F. SPH used to own Paragon and Clementi malls. But it has since spun off the properties to SPH REIT for a 70% stake in the latter. Muted outlook for Singapore Adex. A combination of sluggish consumer sentiment, poor GDP growth and subdued use of internet advertising in recent years has caused advertising expenditure to plummet. According to our economics desk, Singapore is entering its slowest growth in six years for 2015 (at 2.4%). Uncertainties in the global economy and domestic restructuring continue to weigh on growth. The labour crunch has further compounded the problem, limiting companies’ ability to grow. Loan growth has also dipped into the red, -0.1% y-o-y in May, the first decline since October 2010. We believe these signs are pointing towards downward pressure on growth, inflation, consumer spending and ultimately advertising. Rising US dollar. Our FX desk sees the US dollar rising to 1.45 against the SGD by 2H16. Purchases of primary raw materials for newsprint such as pulp, are denominated in US dollars. Yet publication sales are domestic and denominated in SGD. A rising US dollar presents risks that lead to higher costs and lower margins as selling prices are maintained. On the back of an appreciating US dollar against SGD, we are anticipating gross margins to decline from 2015 through 2017.

0

-1.59

-5 -6.77

-10

-11.00 2013A

2014A

2015F

2016F

2017F

610

610

2016F

2017F

1.4

1.4

2016F

2017F

Newprint (US$/mt) 622

607 556

508 381 254 127 0 2013A

2014A

2015F

Avg USD/SGD 1.43 1.25

1.24

1.27

2013A

2014A

2015F

1.14 0.86 0.57 0.29 0.00

Avg Staff # 4,349

4,204

4,214

4,224

4,234

2014A

2015F

2016F

2017F

4,000 3,500

Mixed outlook for property. As of 2Q15, occupancy for Paragon and Clementi malls remained robust at 100%, with average occupancy uplift of 10.4%. Paragon remains the more robust of SPH’s properties, delivering a strong +11.6% higher rents for new and renewed leases. Clementi Mall suffered a rental reversion dip of 8.8% but that was only for 2% of total NLA and likely due to fine-tuning of tenancies at selected parts of the mall. This strategy will enable the REIT to reap better tenant synergies to improve traffic going forward. Income visibility is strong for the malls with only 5.1% of the REIT’s 2015 gross income left to be renewed in 2015, which suggests strong income visibility.

3,000 2,500 2,000 1,500 1,000 500 0 2013A

Singapore Adex Total yoy growth (%) 25% 20% 15% 10% 5% 0% -5% -10% -15%

Total yoy growth (%)

-20%

Source: Company, DBS Bank

ASIAN INSIGHTS Page 4

VICKERS SECURITIES

Company Guide SPH

Balance Sheet: Strong cash hoard. SPH’s business is cash generative, with working capital financed by longer payment periods to creditors for operations. Due to its operating model, the business has amassed a cash hoard of over S$1bn including long-term investments. Even though its balance sheet has net debt, returns generated by excess cash used for investments has enabled it to offset interest costs. The strong cash management has led to an attractive dividend payout of over 80%. However, we are expecting FY16F-FY17F DPS to fall due to slower earnings growth. Share Price Drivers: We believe Seletar Mall's spin-off into SPH REIT would be a share price catalyst. In 2014, SPH securitised its stake in Paragon and Clementi Malls into SPH REIT. However, its new Seletar Mall remains on its balance sheet, with room for SPH REIT to acquire a stake in Seletar. We currently estimate Seletar Mall's gross development value at S$345m.

Leverage & Asset Turnover (x) 0.3 0.50 0.3

0.40 0.30

0.2

0.20 0.2 0.10 0.1

0.00 2013A

2014A

Gross Debt to Equity (LHS)

2016F

2017F

Asset Turnover (RHS)

Capital Expenditure S$m 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2013A

Weak Adex. SPH’s earnings is primarily driven by Adex spend. Recovery in general economy and ultimately Adex spend would accelerate top line and earnings growth. However, we do not see a near-term recovery as consumption and GDP outlook remains weak for now. In fact, we have factored in declines in Adex for FY15F and FY16F. This should drive lower earnings and consequently a lower share price.

2015F

2014A

2015F

2016F

2017F

Capital Expenditure (-)

ROE (%) 14.0% 12.0% 10.0% 8.0% 6.0%

Lower dividend payout. The stock yields a c.5% dividend rate, and its business model is generally cash generating. But with slower earnings growth, we believe DPS and dividend yield will be impacted negatively. This should in turn drive a lower share price.

4.0% 2.0% 0.0% 2013A

2014A

2015F

2016F

2017F

Forward PE Band (x) (x)

Key Risks: Improvement in macroeconomic environment. SPH's advertising revenue is contingent on economic sentiment, and a turn for the better or worse could further impact its core advertising revenue. Key indicators include the general state of economy including GDP, interest rates and consumption spending, on which we currently hold a less positive view. We believe these will ultimately impact advertising spend and earnings negatively. Our view is premised on a declining Adex, and thus an economic recovery with Adex improvement will derail our negative view.

26.7

+2sd: 26.7x

21.7

+1sd: 21.9x

16.7

Avg: 17.1x

11.7

‐1sd: 12.3x

6.7 Sep-11

‐2sd: 7.5x Sep-12

Sep-13

Sep-14

PB Band (x) (x) 2.9 2.7

COMPANY BACKGROUND Singapore Press Holdings Limited publishes, prints, and distributes newspapers and magazines, with a dominant market position in Singapore. It also invests in properties, provides multimedia, broadcasting and event management services, and operates internet portals. It has a 70% stake in SPH REIT.

ASIAN INSIGHTS

Sep-15

+2sd: 2.67x

2.5

+1sd: 2.37x

2.3 2.1

Avg: 2.06x

1.9

‐1sd: 1.76x

1.7 1.5 1.3 Sep-11

‐2sd: 1.45x Sep-12

Sep-13

Sep-14

Sep-15

Source: Company, DBS Bank

VICKERS SECURITIES Page 5

Company Guide SPH

Key Assumptions FY Aug

2013A

2014A

2015F

2016F

2017F

Adex growth rate (%) Newprint (US$/mt) Avg USD/SGD Avg Staff #

(1.59) 622 1.25 4,349

(6.77) 607 1.24 4,204

(10.00) 556 1.27 4,214

(5.00) 610 1.40 4,224

0.00 610 1.40 4,234

Segmental Breakdown FY Aug

2013A

2014A

2015F

2016F

2017F

1,041 198 0 N/A 1,239

1,010 205 0 N/A 1,215

955 222 0 N/A 1,178

936 240 0 N/A 1,176

945 243 0 N/A 1,188

242 141 0 18 401

220 148 0 16 384

210 151 0 23 384

176 163 0 24 363

175 166 0 24 365

23.2 71.2 N/A N/A 32.4

21.8 72.2 N/A N/A 31.6

21.9 68.0 N/A N/A 32.6

18.8 68.0 N/A N/A 30.9

18.6 68.0 N/A N/A 30.7

2013A

2014A

2015F

2016F

2017F

1,239 (679) 560 (159) 401 0 (6) (18) 111 489 (55) (3) 0 431 320 454

1,215 (693) 522 (138) 384 0 (31) 13 162 528 (58) (66) 0 404 242 408

1,178 (678) 499 (116) 384 0 (8) 18 0 394 (58) (39) 0 298 298 429

1,176 (695) 481 (117) 363 0 (8) 5 0 360 (54) (42) 0 263 263 406

1,188 (703) 485 (120) 365 0 (8) 4 0 361 (55) (43) 0 264 264 405

(2.6) (14.4) (11.5) (15.0)

(2.0) (10.2) (4.3) (24.2)

(3.1) 5.4 (0.1) 22.8

(0.2) (5.5) (5.3) (11.5)

1.1 (0.2) 0.5 0.2

45.2 32.4 34.8 14.9 8.3 7.3 148.4 22.3

43.0 31.6 33.3 11.2 6.2 5.6 83.1 NM

42.4 32.6 25.3 8.1 4.5 5.2 112.9 NM

40.9 30.9 22.4 7.3 4.0 4.9 115.4 NM

40.8 30.7 22.2 7.4 4.0 4.9 115.2 NM

Revenues (S$ m) Newspaper ops Rental Property devt. Others Total EBIT (S$ m) Newspaper ops Rental Property devt. Others Total EBIT Margins (%) Newspaper ops Rental Property devt. Others Total Income Statement (S$ m) FY Aug 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 (Pre-ex) (%) Margins & Ratio Gross Margins (%) Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%) Net Interest Cover (x)

Source: Company, DBS Bank

ASIAN INSIGHTS Page 6

VICKERS SECURITIES

Company Guide SPH

Quarterly / Interim Income Statement (S$ m) FY Aug 3Q2014 4Q2014 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

1Q2015

2Q2015

3Q2015

310 (172) 138 (31) 107 0 (8) 16 0 115 (17) (9) 90 90 113

298 (171) 127 (38) 89 0 (17) 15 109 196 (12) (40) 145 35 85

307 (168) 139 (28) 111 0 (8) (7) 0 96 (18) (9) 69 69 116

270 (163) 107 (29) 78 0 5 9 0 92 (13) (10) 70 70 96

307 (166) 140 (28) 112 0 (4) 17 0 125 (18) (10) 98 98 121

11.1 (67.2) (67.8) (70.0)

(3.7) (24.2) (17.0) (60.4)

3.0 36.4 25.1 95.6

(12.0) (17.7) (29.9) 0.3

13.5 26.1 44.0 41.2

44.6 34.6 28.9

42.6 29.8 48.5

45.3 36.2 22.6

39.7 28.9 25.7

45.8 36.6 32.0

2013A

2014A

2015F

2016F

2017F

Net Fixed Assets Invts in Associates & JVs Other LT Assets Cash & ST Invts Inventory Debtors Other Current Assets Total Assets

332 62 4,329 1,447 24 148 32 6,373

286 85 4,641 1,471 24 144 1 6,651

262 87 4,641 1,477 24 147 1 6,638

241 89 4,641 1,462 24 147 1 6,604

223 91 4,641 1,482 24 149 1 6,610

ST Debt Creditor Other Current Liab LT Debt Other LT Liabilities Shareholder’s Equity Minority Interests Total Cap. & Liab.

3 269 71 1,738 77 3,536 679 6,373

926 298 61 879 91 3,687 709 6,651

926 287 58 879 91 3,649 748 6,638

926 287 55 879 91 3,576 790 6,604

926 290 55 879 91 3,536 833 6,610

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)

(137) (294) 48.9 160.9 15.0 0.2 4.8 4.7 0.1 0.1 1.4 2.9

(190) (335) 43.9 162.0 13.7 0.2 1.3 1.3 0.1 0.1 1.0 2.6

(174) (328) 45.2 171.0 13.9 0.2 1.3 1.3 0.1 0.1 1.7 2.6

(170) (344) 45.7 162.5 13.3 0.2 1.3 1.3 0.1 0.1 1.7 2.6

(172) (323) 45.4 160.6 13.2 0.2 1.3 1.3 0.1 0.1 1.7 2.6

Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (Pre-ex) (%) Margins Gross Margins (%) Opg Profit Margins (%) Net Profit Margins (%) Balance Sheet (S$ m) FY Aug

Source: Company, DBS Bank

ASIAN INSIGHTS

VICKERS SECURITIES Page 7

Company Guide SPH

Cash Flow Statement (S$ m) FY Aug 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 (S cts) Free CFPS (S cts)

2013A

2014A

2015F

2016F

2017F

489 58 (76) 6 21 (54) 444 (25) (589) (18) 2 (69) (699) (678) 569 17 439 347 0 93 26.5 26.2

528 54 (66) 31 4 (182) 369 (19) (122) 71 3 10 (56) (355) 62 1 (42) (335) 0 (22) 22.9 21.9

394 54 (61) 8 (13) 0 382 (30) 0 (10) 0 0 (40) (336) 0 0 0 (336) 0 6 24.7 22.0

360 51 (58) 8 0 0 361 (30) 0 (10) 0 0 (40) (336) 0 0 0 (336) 0 (15) 22.6 20.7

361 48 (54) 8 1 0 364 (30) 0 (10) 0 0 (40) (304) 0 0 0 (304) 0 20 22.7 20.9

Source: Company, DBS Bank Target Price & Ratings History 4.48

S$

4.38 4.28 4.18

2 4.08

3

S.No .

Da te

1: 2: 3: 4:

16 Oct 14 14 Jan 15 15 Apr 15 10 Jul 15

Cl o s i n g Pri c e 4.10 4.08 4.14 4.04

Ta rg e t Pri c e 4.01 4.01 3.98 3.98

R a ti n g Hold Hold Hold Hold

4

1 3.98 3.88 3.78 3.68 Sep-14

Jan-15

May-15

Sep-15

Not e : Share price and Target price are adjusted for corporate actions.

Source: DBS Bank

ASIAN INSIGHTS Page 8

VICKERS SECURITIES

Company Guide SPH

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the “DBS Vickers 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 DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd., its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions 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. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given 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. The DBS Group, 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. The DBS Group 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 the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating 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.

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 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).

COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), their subsidiaries and/or other affiliates have a proprietary position in SPH recommended in this report as of 31 July 2015. 2.

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

3.

Compensation for investment banking services: DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries 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 company mentioned.

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Company Guide SPH

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.

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

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

Hong Kong

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

Indonesia

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

Malaysia

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

Wong Ming Tek, Executive Director, ADBSR Singapore

This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.

Thailand

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

United Kingdom

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

Dubai

This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC Branch) rd having its office at PO Box 506538, 3 Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United States

Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations. It is being distributed in the United States by DBSVUSA, 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 DBSVUSA directly and not its affiliate.

Other jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. DBS Bank Ltd. 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel. 65-6878 8888 Company Regn. No. 196800306E

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