Deutsche Bank Markets Research Asia

ASEAN Singapore Conglomerates

Industry

Date

Singapore Conglomerates

Industry Update

07 February 2012

Kevin Chong

Feedback from US investor meetings

Research Analyst (+65) 6423 5549 [email protected]

Growing investor interest in the O&M sector; focus on UDW orders We recently concluded a US marketing trip and observed, on average, greater investor interest in the O&M sector. Investors were keen on the potential in the ultra-deepwater space (UDW), global demand prospects (apart from Petrobras), competition, positioning of the Singapore yards in Brazil, and risks (Buy KEP and SMM). Focus was also on the potential O&M beneficiaries in the small/mid-cap space (Buy Ezra). However, investor interest was less in Chinese shipbuilders, considering the continued challenging industry fundamentals (Hold COS and 1101 HK; Buy YZJ). Activity up in the UDW space; positive momentum should continue The UDW space has seen activity rise recently; SMM won a US$793m contract from Sete Brasil (Feb 2012) to build an UDW drillship, KEP secured a US$809m contract from Sete Brasil (Dec 2011) to build an UDW semisub, while rig contractor Ensco announced (Jan 2012) a 2.5-year contract for its UDW semisub (currently being constructed in KEP) in the US Gulf of Mexico at a healthy day rate of US$530,000. Ocean Rig also announced (Feb 2012) a threeyear contract for its UDW semisub at about US$610,000/day. Note that most of the fixtures in 2010 were around US$400,000-450,000/day. We had highlighted the strength of the UDW market, citing demand exceeding supply with rig requirements in multiple locations around the world (please refer to our report, 2012: Look out for pickup in ultra-deepwater orders, dated 18 Nov 2011). The continued market strength and current slowdown in delivery of floaters (only five un-contracted UDW units to be delivered from 1Q12 to 1Q13) has led to a tighter market and a healthy increase in high-spec rig day rates. Interest rising for O&M beneficiaries in the small/mid-cap space Several investors were interested in potential small/mid-cap beneficiaries of the improvement in the O&M space. Ezra featured strongly in our discussions, as we believe market expectations are low, its ability to win new subsea contracts has significantly improved following the acquisition of AMC, 2H12 should see a strong turnaround in subsea earnings, and new orders should remain robust with the overall strength of the O&M/subsea markets. Challenging prospects for Chinese shipbuilders While share prices of the Chinese shipbuilders have risen recently, industry fundamentals remain poor with significant vessel oversupply, intense competition keeping vessel selling prices low, and tight credit conditions for ship owners limiting their funding ability. Overall, we believe investors were neutral/cautious on the Chinese shipbuilders and prefer the O&M sector. Strength in O&M share price performance could continue Share prices of Singapore O&M names have done well over the past three months, rising 14-24%, and currently trading around their historical PE and PB averages. We think this strength could continue as industry conditions are strong and their market positioning is firm. We remain overweight on the O&M sector and expect increased industry spending and upgrade/replacement opportunities. Our SOTP-based target prices are as follows: KEP S$13.40, SMM S$5.80 and SCI S$6.65. Risks: US$ depreciation, execution and a sustained plunge in oil prices (see pages 15-16).

Companies Featured Keppel Corp Ltd (KPLM.SI),SGD10.72 2011A 2012E P/E (x) 12.6 11.7 EV/EBITDA (x) 6.9 6.3 Price/book (x) 2.2 2.3 Sembcorp Marine (SCMN.SI),SGD4.96 2010A 2011E P/E (x) 10.6 14.0 EV/EBITDA (x) 5.0 9.2 Price/book (x) 4.3 3.5 Sembcorp Industries Ltd (SCIL.SI),SGD4.87 2010A 2011E P/E (x) 10.0 11.7 EV/EBITDA (x) 3.9 5.3 Price/book (x) 2.4 2.0 Ezra Holdings (EZRA.SI),SGD1.16 2011A 2012E P/E (x) 27.2 9.2 EV/EBITDA (x) 18.4 8.9 Price/book (x) 0.8 0.9 Yangzijiang Shipbldg (YAZG.SI),SGD1.19 2010A 2011E P/E (x) 9.2 6.2 EV/EBITDA (x) 5.2 4.2 Price/book (x) 3.7 1.9 Cosco Corporation (COSC.SI),SGD1.19 2010A 2011E P/E (x) 14.5 18.4 EV/EBITDA (x) 7.2 7.2 Price/book (x) 4.0 2.1 China Rongsheng (1101.HK),HKD2.75 2010A 2011E P/E (x) 20.9 5.5 EV/EBITDA (x) 20.0 7.2 Price/book (x) 2.4 1.0

Buy 2013E 11.1 5.9 2.1 Buy 2012E 14.0 7.5 3.1 Buy 2012E 11.5 4.6 1.8 Buy 2013E 6.2 7.0 0.8 Buy 2012E 7.6 4.5 1.6 Hold 2012E 16.1 7.0 1.9 Hold 2012E 4.7 5.6 0.8

________________________________________________________________________________________________________________ Deutsche Bank AG/Hong Kong All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 146/04/2011.

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Valuation charts Keppel Corp (KEP SP, Buy, target price S$13.40) Figure 1: SOTP valuation table for KEP

Figure 2: Keppel forecast and ratios

Source: Deutsche Bank

Source: Deutsche Bank, Company data

Figure 3: Keppel new order chart

Figure 4: Keppel net order chart 13

12.0 10.0

9.4

8.0

7.4

7.0

S$bn

6.5 5.2 3.2 1.7

3

2004

Source: Deutsche Bank, Company data

Source: Deutsche Bank, Company data

Figure 5: KEP PER band chart

Figure 6: KEP PB chart 6

20 16

33%

Max - 5.2x Min - 0.9x Average - 2.3x Current - 2.3x

22x

Max - 22.4 x Min - 4.8 x Average - 12.0 x Current - 11.5x

2011

1

2014E

2013E

2012E

2011

2010

2009

2008

2007

2006

2005

2004

2003

0.0

2010

2.0

4.6 3.4

2009

2.2

5.6 5

2008

3.1

2007

4.0

7.2 7

2006

6.0

9

7.0

2005

7.3

10.8

10.5

11

8.0

S$m

12.2

10.0

ROE (RHS)

23%

4

16x

12 P/B

ROE

13%

12x

8

2

Average P/B

3%

5x

4

0

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Page 2

Nov 11

Nov 10

Nov 09

Nov 08

Nov 07

Nov 06

Nov 05

Nov 04

-7% Dec 03

Dec 11

Dec 10

Dec 09

Dec 08

Dec 07

Dec 06

Dec 05

Dec 04

Dec 03

0

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Deutsche Bank AG/Hong Kong

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Sembcorp Marine (SMM SP, Buy, target price S$5.80) Figure 7: SOTP valuation table for SMM

Figure 8: SMM forecast and ratios

Source: Deutsche Bank

Source: Deutsche Bank, Company data

Figure 9: SMM new order chart

Figure 10: SMM net order chart

Source: Deutsche Bank, Company data

Source: Deutsche Bank, Company data

Figure 11: SMM PER band chart

Figure 12: SMM PB chart 50%

Max. - 29.7 x Min.. - 3.8 x Average - 14.7 x Current - 13.6 x

9 8

23x

7

18x

6

Max. - 8.3 x Min. - 1.2 x Average - 3.2 x Current - 3.0 x

8

45% 40% 35%

6

14x

30%

ROE (RHS) P/B

5

25% 4

4 3

ROE

10

20% 15%

6x

2

2

10%

1

5%

Source: Deutsche Bank, Company data, Bloomberg Finance LP

Deutsche Bank AG/Hong Kong

0 Dec-11

Dec-10

Dec-09

Dec-08

Dec-07

Dec-06

Dec-05

Dec-04

0% Dec-03

Dec-11

Dec-10

Dec-09

Dec-08

Dec-07

Dec-06

Dec-05

Dec-04

Dec-03

0

Source: Deutsche Bank, Company data, Bloomberg Finance LP

Page 3

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Sembcorp Industries (SCI SP, Buy, target price S$6.65) Figure 13: SOTP valuation table for SCI

Figure 14: SCI forecast and ratios

Source: Deutsche Bank

Source: Deutsche Bank

Figure 15: SCI PER band chart

Figure 16: SCI PB chart

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Figure 17: Utility division – implied PER

Figure 18: Implied vs. actual PER of SMM

5

25

-150%

SMM Implied PER (LHS) Source: Deutsche Bank, Company data, Bloomberg Finance LP

Page 4

SMM PER (LHS)

Dec-11

Jun-11

Dec-10

-5

Jun-10

0

Dec-09

SMM share price (RHS)

Jan-12

Jan-11

Jan-10

Jan-09

SCI share price (RHS)

-100%

5

Jun-09

Utilites PER

Jan-08

Jan-07

Jan-06

0

Dec-08

1

0

-50%

10

Jun-08

-1 s.d.

15

Dec-07

2

Jun-07

Mean: 7.2x

5

0%

20

Dec-06

3

50%

Jun-06

4

+1 s.d.

10

100%

%diff.

30

Dec-05

15

35

6

PER

Utilities PER (x)

20

7

Share price S$

25

-200%

% difference (RHS)

Source: Deutsche Bank, Company Data, Bloomberg Finance LP

Deutsche Bank AG/Hong Kong

Deutsche Bank

07 February 2012

Conglomerates

Markets Research

Singapore Conglomerates

Ezra Holdings (EZRA SP, Buy, target price S$1.70) Figure 19: Ezra PER band chart

Figure 20: Ezra PB chart

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Cosco Corp (COS SP, Hold, target price S$1.10) Figure 21: Cosco PER band chart

Figure 22: Cosco PB chart

Source: Deutsche Bank, Company data, Bloomberg Finance LP

Source: Deutsche Bank, Company data, Bloomberg Finance LP

Deutsche Bank AG/Hong Kong

Page 5

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Yangzijiang Shipbuilding (YZJ SP, Buy, target price S$1.40) Figure 23: YZJ PER band chart

Figure 24: YZJ PB chart

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Source: Deutsche Bank, Bloomberg Finance LP, Company data

China Rongsheng (1101 HK, Hold, target price HK$3.20) Figure 25: China Rongsheng PER band chart

Figure 26: China Rongsheng PB chart 4

25%

ROE (RHS)

23%

Max. - 3.0 x Min. - 0.6 x Average - 1.5 x Current - 0.8 x

3

21% 19%

ROE

P/B

17% 2

15% Average P/B

13% 11%

1

9% 7%

0

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Page 6

Jan 12

Dec 11

Nov 11

Oct 11

Sep 11

Jul 11

Aug 11

Jun 11

Apr 11

May 11

Feb 11

Mar 11

Jan 11

Dec 10

5%

Source: Deutsche Bank, Bloomberg Finance LP, Company data

Deutsche Bank AG/Hong Kong

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Peer comp table Figure 27: Peer comp table Company

Ticker Rec

TP

Price

Curr

M Cap

PER (x)

(LC)

(US$ m)

China Rongsheng

1101.HK Hold

3.20

2.75

HKD 2,482.3 20.9

Cosco Corporation

COS SP Hold

1.10

1.19

Yangzijiang Shipbldg

YZJ SP Buy

1.40

Guangzhou Shipyard

317 HK

NR

China State Shipbldg 600150 CH

NR

PB (x)

EV/EBITDA (X)

10 11E 12E 10 11E 12E

10 11E 12E

Div Yld (%)

10 11E 12E 10 11E 12E

4.7 2.4

1.0

0.8 20.0

7.2

5.6 23.4 18.9 19.1 1.1

3.6 4.3

SGD

2,144.4 14.5 18.4 16.1 4.0

2.1

1.9

7.2

7.2

7.0 21.8 11.8 12.6 2.5

2.0 2.2

1.19

SGD

3,674.6

9.2

6.2

7.6 3.7

1.9

1.7

5.2

4.3

4.5 36.4 33.9 23.2 3.2

4.7 3.8

NR

7.16

HKD

593.8

4.7

5.8

NR

28.30

5.4 0.9

0.8

0.7

7.5

8.2

8.2 20.7 15.3 14.1 2.9

2.1 2.1

CNY 4,751.2 11.2 10.6 10.2 1.8

1.7

1.5

5.6

5.5

5.5 16.4 13.9 12.0 2.0

1.3 1.0

12.1

8.8 2.6

1.5

1.3

9.1

6.5

6.1 23.7 18.8 16.2 2.3

2.7 2.7

Chinese Average 40,000

5.5

ROE (%)

36,850 KRW

9.3

Samsung Heavy Ind.

010140.KS Buy

7,608.0

7.1

8.9 10.6 2.5

1.8

1.6

5.8

6.7

7.8 26.7 22.7 16.1 1.8

1.4 1.4

Hyundai Heavy Ind.

009540 KS Buy 400,000 294,000 KRW 19,981.2

5.6

7.7

7.1 2.4

1.4

1.2

6.1

7.4

6.6 31.8 19.2 17.9 2.5

2.4 2.4

Hyundai Mipo

010620 KS Buy 164,000 129,000 KRW

2,307.2

6.9

6.6

6.9 1.1

0.6

0.5

3.3

4.6

5.1 13.3

7.9 2.2

2.3 2.3

DSME

042660.KS Buy

40,000

30,050 KRW

5,143.1

5.7

7.7

8.1 1.7

1.2

1.1

5.5

6.0

7.9 21.4 17.0 14.1 2.2

1.3 1.3

STX Shipbuilding

067250 KS Hold

13,000

13,850 KRW

898.0

7.3

6.2

8.7 0.8

0.7

0.7

8.2

7.1 15.1 11.5 11.7

Hanjin Heavy Ind.

097230 KP

NR

NR

21,600 KRW

929.3 20.9

na.

na. 0.5

0.5

0.6 12.8 37.7 10.6

8.9

7.4

8.3 1.5

1.0

0.9

6.9 11.6

8.8 17.7 12.7 10.6 1.9

1.5 1.6

KEP SP Buy

13.40

10.72

SGD 15,388.3 12.5 12.6 11.7 3.1

2.2

2.3

6.5

6.9

6.3 24.4 26.7 21.0 4.5

4.1 4.3

SMM SP Buy

5.80

4.96

SGD 8,332.5 10.6 14.0 14.0 4.3

3.5

3.1

5.0

9.2

7.5 38.4 26.4 23.3 8.7

3.6 3.6

11.6 13.3 12.9 3.7

2.9

2.7

5.8

8.0

6.9 31.4 26.5 22.1 6.6

3.8 3.9

8.8

7.3

7.3 16.2 16.3 16.9 0.7

1.0 1.1

Korea Average Keppel Corp. Sembcorp Marine Singapore Average

9.0

8.0 1.6

1.6 1.6

1.5 -3.3 -0.5 1.1

0.3 0.4

ABG Shipyard

ABGS IN

NR

NR

415.75

INR

431.7

9.7

9.0

7.8 1.7

1.5

1.2

Bharati Shipyard

BHSL IN

NR

NR

94.00

INR

58.1

1.9

4.1

9.6 na.

na.

na. 10.8 12.8 12.8 15.7

4.6

1.9 na.

Pipavav Shipyard

PIPV IN

NR

NR

72.95

INR

990.3

na.

na. 29.8 2.8

na.

na. 16.8 11.3 11.3

9.6

na 0.4

na. na.

Lamprell Plc

LAM LN

NR

NR

330.00

GBp

1,348.9 17.9 16.6 11.5 3.2

2.1

1.9

9.3 10.6

6.8 24.8 16.8 19.3 2.5

2.3 2.9

National Oilwell

NOV US

NR

NR

82.14

USD 34,819.2 20.6 17.5 13.9 2.2

2.0

1.8

7.3

6.4

6.4 10.9 11.7 13.4 0.5

0.5 0.6

Others Average

12.5 11.8 14.5 2.5

1.9

1.6 10.6

9.7

8.9 14.3 11.8 12.9 1.0

1.3 1.9

Regional Average

11.0

1.6

1.4

9.2

7.9 20.0 15.7 14.1 2.4

2.2 2.3

9.8 10.8 2.3

8.4

4.1

na. 3.2

Source: Deutsche Bank, Bloomberg Finance LP, priced on 6 Feb 2012

Deutsche Bank AG/Hong Kong

Page 7

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research Model updated:26 January 2012

Fiscal year end 31-Dec

Running the numbers Asia

Financial Summary

2009

2010

2011

2012E

2013E

2014E

0.72 0.90 0.38 3.4

0.74 0.85 0.42 3.6

0.83 1.02 0.43 4.1

0.91 0.91 0.46 4.6

0.96 0.96 0.49 5.1

1.03 1.03 0.52 5.6

1,753 11,794 6,962

1,759 16,274 11,332

1,779 18,579 14,506

1,779 19,121 15,222

1,779 19,121 15,009

1,779 19,121 14,698

P/E (DB) (x) P/E (Reported) (x) P/BV (x)

9.3 7.4 2.41

12.5 10.8 3.12

12.6 10.2 2.24

11.7 11.7 2.33

11.1 11.1 2.11

10.4 10.4 1.91

FCF Yield (%) Dividend Yield (%)

2.1 5.6

nm 4.5

nm 4.1

5.7 4.3

7.8 4.5

8.3 4.8

EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

0.6 4.1 4.6

1.2 6.5 7.3

1.4 6.9 7.6

1.2 6.3 6.9

1.0 5.9 6.4

0.9 5.4 5.9

12,247 1,679 1,679 174 0 1,505 29 322 322 0 1,856 372 219 0 1,587

9,140 1,745 1,745 189 0 1,556 55 278 204 0 1,889 396 186 0 1,511

10,082 2,105 2,105 208 0 1,897 40 240 349 0 2,177 445 242 0 1,841

12,884 2,404 2,404 207 0 2,198 23 305 0 0 2,526 520 366 0 1,639

15,375 2,555 2,555 215 0 2,340 22 240 0 0 2,602 533 335 0 1,733

16,747 2,710 2,710 224 0 2,486 22 197 0 0 2,705 552 303 0 1,850

-322 1,265

-204 1,307

-349 1,491

0 1,639

0 1,733

0 1,850

670 -427 243 8 -661 -235 1,361 717 -1,219

450 -815 -364 74 -757 2,300 59 1,311 -1,329

-242 -802 -1,044 99 -882 809 -208 -1,225 -2,257

1,593 -515 1,078 0 -820 0 -74 184 -618

1,942 -461 1,480 0 -867 0 -66 548 -342

1,994 -419 1,575 0 -925 0 -36 614 -382

3,392 2,157 90 5,926 5,741 17,307 1,759 6,835 8,594 5,985 2,727 8,713 -1,633

4,783 2,243 108 7,094 6,233 20,461 4,068 7,111 11,179 6,415 2,866 9,282 -714

3,598 2,716 99 9,153 8,918 24,483 4,877 8,414 13,292 7,390 3,801 11,191 1,279

3,790 3,024 99 9,153 10,280 26,346 4,877 9,092 13,969 8,210 4,167 12,377 1,087

4,338 3,270 99 9,153 11,848 28,708 4,877 10,252 15,129 9,077 4,501 13,578 539

4,952 3,465 99 9,153 12,905 30,574 4,877 10,891 15,768 10,002 4,804 14,806 -75

3.7 16.4 13.7 12.3 42.0 30.0 3.5 2.4 -18.7 nm

-25.4 2.5 19.1 17.0 48.9 24.4 8.9 4.3 -7.7 nm

10.3 12.5 20.9 18.8 41.6 26.7 8.0 3.9 11.4 nm

27.8 9.9 18.7 17.1 49.9 21.0 4.0 2.5 8.8 nm

19.3 5.7 16.6 15.2 49.9 20.1 3.0 2.1 4.0 nm

8.9 6.7 16.2 14.8 49.9 19.4 2.5 1.9 -0.5 nm

DB EPS (SGD) Reported EPS (SGD) DPS (SGD) BVPS (SGD)

ASEAN Singapore Conglomerates

Keppel Corp Ltd Reuters: KPLM.SI

Bloomberg: KEP SP

Weighted average shares (m) Average market cap (SGDm) Enterprise value (SGDm)

Valuation Metrics

Buy Price (6 Feb 12)

SGD 10.72

Target Price

SGD 13.40

52 Week range

SGD 7.10 - 12.94

Market Cap (m)

SGDm 19,121 USDm 15,301

Company Profile

Income Statement (SGDm)

Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, financial services, property investment and development, telecommunications and transportation, energy, and engineering.

Sales revenue Gross profit EBITDA Depreciation Amortisation EBIT Net interest income(expense) Associates/affiliates Exceptionals/extraordinaries Other pre-tax income/(expense) Profit before tax Income tax expense Minorities Other post-tax income/(expense) Net profit

Price Performance 14 12 11 9 8 6 Feb 10May 10Aug 10Nov 10Feb 11May 11Aug 11Nov 11

DB adjustments (including dilution) DB Net profit

Keppel Corp Ltd Straits Times Index (Rebased)

Cash Flow (SGDm)

Margin Trends 22 20 18 16 14 12 09

10

11

12E

EBITDA Margin

13E

14E

EBIT Margin

Balance Sheet (SGDm)

Growth & Profitability 40 30 20 10 0 -10 -20 -30

35 30 25 20 15 10 5 0 09

10

11

12E

13E

Sales growth (LHS)

Cash flow from operations Net Capex Free cash flow Equity raised/(bought back) Dividends paid Net inc/(dec) in borrowings Other investing/financing cash flows Net cash flow Change in working capital

14E ROE (RHS)

Solvency

Cash and other liquid assets Tangible fixed assets Goodwill/intangible assets Associates/investments Other assets Total assets Interest bearing debt Other liabilities Total liabilities Shareholders' equity Minorities Total shareholders' equity Net debt

Key Company Metrics

15 10 5 0 -5 -10 -15 -20 -25 09

10

11

Net debt/equity (LHS)

12E

13E

14E

Net interest cover (RHS

Sales growth (%) DB EPS growth (%) EBITDA Margin (%) EBIT Margin (%) Payout ratio (%) ROE (%) Capex/sales (%) Capex/depreciation (x) Net debt/equity (%) Net interest cover (x) Source: Company data, Deutsche Bank estimates

Kevin Chong +65 6423 5549

Page 8

[email protected]

Deutsche Bank AG/Hong Kong

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Model updated:03 November 2011

Fiscal year end 31-Dec

Running the numbers Asia

Financial Summary

2009

2010

2011E

2012E

2013E

0.21 0.21 0.11 0.6

0.34 0.34 0.15 0.9

0.39 0.41 0.36 1.3

0.35 0.35 0.18 1.4

0.35 0.35 0.18 1.6

0.40 0.40 0.20 1.8

2,064 6,850 4,652

2,058 5,503 3,187

2,071 8,559 5,145

2,071 10,354 7,558

2,071 10,354 7,159

2,071 10,354 6,626

P/E (DB) (x) P/E (Reported) (x) P/BV (x)

16.0 16.0 2.63

7.9 7.9 4.05

10.6 10.0 4.29

14.0 14.0 3.47

14.0 14.0 3.09

12.4 12.4 2.75

FCF Yield (%) Dividend Yield (%)

26.6 3.3

6.7 5.6

15.1 8.7

nm 3.6

7.0 3.6

8.7 4.1

0.9 8.1 9.3

0.6 3.4 3.7

1.1 5.0 5.5

1.9 9.2 10.5

1.3 7.5 8.8

1.0 6.1 7.2

5,064 726 573 71 0 502 -11 65 0 -11 545 94 21 0 430

5,725 1,061 938 75 0 862 -5 25 0 25 908 151 57 0 700

4,555 1,212 1,026 83 0 943 -7 58 53 32 1,078 184 34 0 860

4,059 966 822 100 0 723 -5 54 0 50 821 77 8 0 736

5,535 1,146 949 137 0 812 -5 61 0 34 903 154 15 0 733

6,692 1,318 1,081 158 0 923 -5 76 0 35 1,029 176 20 0 833

0 430

0 700

-53 808

0 736

0 733

0 833

1,917 -96 1,821 -82 -215 -220 9 1,314 1,398

428 -60 368 10 -233 -202 -18 -75 -505

1,358 -69 1,289 16 -328 -12 -29 937 376

252 -548 -296 0 -368 100 7 -557 -267

1,087 -368 720 0 -367 0 0 353 -23

1,201 -308 893 0 -417 0 -3 474 80

2,054 698 6 408 1,446 4,612 222 3,030 3,252 1,318 42 1,360 -1,832

1,979 678 6 434 1,591 4,688 20 2,707 2,727 1,884 76 1,960 -1,959

2,915 682 6 594 1,082 5,279 8 2,584 2,592 2,599 88 2,687 -2,907

2,359 1,130 6 648 1,241 5,383 108 2,205 2,313 2,967 103 3,070 -2,251

2,711 1,360 6 709 1,627 6,414 108 2,855 2,963 3,334 118 3,452 -2,603

3,185 1,510 6 785 1,930 7,417 108 3,424 3,532 3,751 135 3,885 -3,077

12.2 78.2 11.3 9.9 52.8 28.7 1.9 1.4 -134.7 44.1

13.0 63.7 16.4 15.1 44.1 43.7 1.2 0.9 -99.9 161.8

-20.4 14.6 22.5 20.7 86.7 38.4 1.6 0.9 -108.2 132.1

-10.9 -8.9 20.3 17.8 50.0 26.4 13.5 5.5 -73.3 133.8

36.4 -0.3 17.2 14.7 50.0 23.3 6.6 2.7 -75.4 150.4

20.9 13.6 16.2 13.8 50.0 23.5 4.6 1.9 -79.2 170.9

DB EPS (SGD) Reported EPS (SGD) DPS (SGD) BVPS (SGD)

ASEAN Singapore Marine

Sembcorp Marine Reuters: SCMN.SI

2008

Bloomberg: SMM SP

Weighted average shares (m) Average market cap (SGDm) Enterprise value (SGDm)

Valuation Metrics

Buy Price (6 Feb 12)

SGD 4.96

Target Price

SGD 5.80

52 Week range

SGD 3.07 - 6.00

Market Cap (m)

SGDm 10,354 USDm 8,285

EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

Company Profile

Income Statement (SGDm)

SembCorp Marine is a leading marine engineering company in Asia. Its activities include ship repair, ship building, ship conversion, rig building, and offshore engineering.

Sales revenue Gross profit EBITDA Depreciation Amortisation EBIT Net interest income(expense) Associates/affiliates Exceptionals/extraordinaries Other pre-tax income/(expense) Profit before tax Income tax expense Minorities Other post-tax income/(expense) Net profit

Price Performance 7.0 6.0 5.0 4.0 3.0 Feb 10May 10Aug 10Nov 10Feb 11May 11Aug 11Nov 11

DB adjustments (including dilution) DB Net profit

Sembcorp Marine Straits Times Index (Rebased)

Cash Flow (SGDm)

Margin Trends 24 20 16 12 8 08

09

10

11E

EBITDA Margin

12E

13E

EBIT Margin

Balance Sheet (SGDm)

Growth & Profitability 40 30 20 10 0 -10 -20 -30

50 40 30 20 10 0 08

09

10

11E

12E

Sales growth (LHS)

13E ROE (RHS)

Solvency 0

200 150

-50

100 -100

50

-150

0 08

09

10

Net debt/equity (LHS)

11E

12E

Cash flow from operations Net Capex Free cash flow Equity raised/(bought back) Dividends paid Net inc/(dec) in borrowings Other investing/financing cash flows Net cash flow Change in working capital

13E

Net interest cover (RHS

Cash and other liquid assets Tangible fixed assets Goodwill/intangible assets Associates/investments Other assets Total assets Interest bearing debt Other liabilities Total liabilities Shareholders' equity Minorities Total shareholders' equity Net debt

Key Company Metrics Sales growth (%) DB EPS growth (%) EBITDA Margin (%) EBIT Margin (%) Payout ratio (%) ROE (%) Capex/sales (%) Capex/depreciation (x) Net debt/equity (%) Net interest cover (x) Source: Company data, Deutsche Bank estimates

Kevin Chong +65 6423 5549

[email protected]

Deutsche Bank AG/Hong Kong

Page 9

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research Model updated:04 November 2011

Fiscal year end 31-Dec

Running the numbers Asia

Financial Summary

2008

2009

2010

2011E

2012E

2013E

0.31 0.28 0.11 1.5

0.38 0.38 0.15 1.9

0.42 0.44 0.17 2.1

0.42 0.42 0.16 2.4

0.42 0.42 0.16 2.7

0.47 0.47 0.18 3.0

1,779 6,889 4,976

1,792 5,327 3,401

1,784 7,552 5,512

1,788 8,654 7,131

1,788 8,654 7,056

1,788 8,654 6,529

P/E (DB) (x) P/E (Reported) (x) P/BV (x)

12.6 13.7 1.59

7.8 7.8 1.98

10.0 9.6 2.41

11.7 11.7 2.01

11.5 11.5 1.79

10.3 10.3 1.60

FCF Yield (%) Dividend Yield (%)

28.8 2.8

10.1 5.0

14.3 4.0

nm 3.3

5.1 3.4

10.7 3.7

0.5 5.1 6.4

0.4 2.6 3.1

0.6 3.9 4.6

0.8 5.3 6.9

0.6 4.6 5.9

0.5 3.9 4.9

9,929 974 974 178 18 778 -9 126 -44 10 862 131 224 0 507

9,572 1,307 1,307 182 18 1,108 -7 110 0 8 1,218 203 333 0 683

8,764 1,426 1,426 208 18 1,200 -29 160 32 4 1,367 194 380 0 793

9,262 1,334 1,334 281 18 1,035 -5 180 0 2 1,212 130 332 0 750

11,194 1,533 1,533 318 18 1,198 -48 191 0 2 1,342 215 365 0 763

12,721 1,690 1,690 330 18 1,342 -47 210 0 2 1,507 242 415 0 850

44 551

0 683

-32 761

0 750

0 763

0 850

2,261 -275 1,987 -116 -397 620 -989 1,105 1,317

933 -397 536 15 -306 828 -876 197 -396

1,702 -625 1,078 23 -415 948 -744 890 339

752 -903 -151 0 -396 362 -100 -286 -330

1,120 -676 444 0 -383 705 -248 518 -178

1,226 -298 928 0 -387 266 -168 640 -141

2,401 2,499 150 991 2,426 8,467 808 4,394 5,202 2,594 671 3,265 -1,593

2,598 2,694 142 1,124 2,773 9,330 880 4,215 5,095 3,320 916 4,236 -1,718

3,488 3,439 360 1,359 2,246 10,892 1,602 4,269 5,871 3,815 1,205 5,020 -1,886

3,202 4,060 342 1,675 2,605 11,885 1,964 4,202 6,166 4,329 1,390 5,719 -1,238

3,720 4,418 325 2,153 3,040 13,656 2,668 4,528 7,196 4,852 1,608 6,460 -1,052

4,360 4,386 307 2,575 3,384 15,011 2,935 4,766 7,701 5,435 1,875 7,311 -1,425

15.2 8.5 9.8 7.8 38.6 18.0 3.7 1.9 -48.8 90.2

-3.6 24.1 13.7 11.6 39.4 23.1 4.3 2.0 -40.6 153.3

-8.4 11.1 16.3 13.7 38.3 22.2 7.2 2.8 -37.6 41.9

5.7 -1.5 14.4 11.2 38.3 18.4 9.7 3.0 -21.7 212.7

20.9 1.8 13.7 10.7 38.3 16.6 6.0 2.0 -16.3 24.7

13.6 11.4 13.3 10.5 38.3 16.5 2.3 0.9 -19.5 28.3

DB EPS (SGD) Reported EPS (SGD) DPS (SGD) BVPS (SGD)

ASEAN Singapore Conglomerates

Sembcorp Industries Ltd Reuters: SCIL.SI

Bloomberg: SCI SP

Weighted average shares (m) Average market cap (SGDm) Enterprise value (SGDm)

Valuation Metrics

Buy Price (6 Feb 12)

SGD 4.87

Target Price

SGD 6.65

52 Week range

SGD 3.32 - 5.52

Market Cap (m)

SGDm 8,654 USDm 6,925

EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

Company Profile

Income Statement (SGDm)

Sembcorp Industries is an energy, water and marine group operating in 19 countries across six continents worldwide. The group has facilities with 5,600 megawatts of gross power capacity and over six million cubic metres of water per day in operation and under development. It is also a leader in marine and offshore engineering, as well as an established developer of integrated townships and industrial parks. The group has total assets of over S$10b and employs over 8,500 employees. Listed on the main board of the Singapore Exchange, it is a component stock of the Straits Times Index and several MSCI indices.

Sales revenue Gross profit EBITDA Depreciation Amortisation EBIT Net interest income(expense) Associates/affiliates Exceptionals/extraordinaries Other pre-tax income/(expense) Profit before tax Income tax expense Minorities Other post-tax income/(expense) Net profit

Price Performance 5.6 5.2 4.8 4.4 4.0 3.6 3.2

DB adjustments (including dilution) DB Net profit

Cash Flow (SGDm)

Feb 10May 10Aug 10Nov 10Feb 11May 11Aug 11Nov 11

Cash flow from operations Net Capex Free cash flow Equity raised/(bought back) Dividends paid Net inc/(dec) in borrowings Other investing/financing cash flows Net cash flow Change in working capital

Sembcorp Industries Ltd Straits Times Index (Rebased)

Margin Trends 18 16 14 12 10 8 6

Balance Sheet (SGDm) 08

09

10

11E

EBITDA Margin

12E

13E

EBIT Margin

Growth & Profitability 25 20 15 10 5 0 -5 -10

25 20 15 10 5 0 08

09

10

11E

12E

13E

Cash and other liquid assets Tangible fixed assets Goodwill/intangible assets Associates/investments Other assets Total assets Interest bearing debt Other liabilities Total liabilities Shareholders' equity Minorities Total shareholders' equity Net debt

Key Company Metrics Sales growth (LHS)

ROE (RHS)

Solvency 0 -10 -20 -30 -40 -50 -60

250 200 150 100 50 0 08

09

10

11E

12E

13E

Sales growth (%) DB EPS growth (%) EBITDA Margin (%) EBIT Margin (%) Payout ratio (%) ROE (%) Capex/sales (%) Capex/depreciation (x) Net debt/equity (%) Net interest cover (x) Source: Company data, Deutsche Bank estimates

Net debt/equity (LHS)

Net interest cover (RHS

Kevin Chong +65 6423 5549

Page 10

[email protected]

Deutsche Bank AG/Hong Kong

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Model updated:28 October 2011

Fiscal year end 31-Aug

Running the numbers Asia

Financial Summary

ASEAN Singapore Oil & Gas

Ezra Holdings Reuters: EZRA.SI

Bloomberg: EZRA SP

2009

2010

2011

2012E

2013E

2014E

DB EPS (USD) Reported EPS (USD) DPS (USD) BVPS (USD)

0.13 0.12 0.01 0.9

0.10 0.10 0.01 0.9

0.05 0.05 0.00 1.0

0.10 0.10 0.00 1.0

0.15 0.15 0.00 1.2

0.18 0.18 0.00 1.4

Weighted average shares (m) Average market cap (USDm) Enterprise value (USDm)

599 388 430

699 1,032 1,347

817 1,032 1,620

868 809 1,442

868 809 1,487

868 809 1,508

P/E (DB) (x) P/E (Reported) (x) P/BV (x)

4.9 5.5 1.25

15.1 14.3 1.41

27.2 27.2 0.81

9.2 9.2 0.90

6.2 6.2 0.79

5.3 5.3 0.69

FCF Yield (%) Dividend Yield (%)

nm 1.6

nm 0.8

nm 0.0

nm 0.0

nm 0.0

nm 0.0

EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

1.3 5.5 5.9

3.8 15.5 18.1

2.9 18.4 26.2

1.8 8.9 11.3

1.4 7.0 8.5

1.3 6.1 7.4

329 107 79 5 0 73 -5 21 -10 0 79 9 0 0 70

354 116 87 12 1 74 -12 13 4 0 80 3 0 0 77

559 138 88 26 0 62 -24 11 0 0 49 9 0 0 40

797 224 162 34 0 128 -31 11 0 0 107 19 0 0 88

1,042 297 214 38 0 175 -34 17 0 0 159 29 -1 0 131

1,145 341 248 43 0 204 -36 17 0 0 185 33 -1 0 152

10 80

-4 73

0 40

0 88

0 131

0 152

-26 -177 -203 63 0 114 34 8 -96

14 -289 -275 -3 -7 347 -34 27 -52

-42 -279 -321 114 -9 199 -54 -71 -84

128 -159 -31 0 0 59 -25 3 5

122 -177 -55 0 0 100 -7 38 -51

163 -195 -32 0 0 100 -7 61 -41

161 299 18 107 366 952 310 108 418 534 0 534 148

187 613 19 153 458 1,431 655 182 836 593 1 594 467

116 1,003 172 228 622 2,140 931 363 1,294 846 1 846 815

119 1,128 172 238 742 2,399 990 512 1,502 897 0 897 871

157 1,267 171 256 891 2,741 1,090 624 1,714 1,027 0 1,027 933

218 1,418 171 273 952 3,032 1,190 663 1,853 1,180 -1 1,179 972

22.8 148.5 23.9 22.1 8.9 15.5 53.6 30.9 27.8 14.2

7.3 -27.1 24.6 21.1 10.6 13.6 81.8 23.4 78.6 6.3

58.1 -52.3 15.8 11.1 0.0 5.6 74.1 15.8 96.3 2.5

42.5 118.6 20.3 16.0 0.0 10.1 20.0 4.6 97.1 4.1

30.8 48.0 20.5 16.8 0.0 13.6 17.0 4.6 90.9 5.2

9.9 16.8 21.6 17.8 0.0 13.8 17.0 4.5 82.5 5.6

Valuation Metrics

Buy Price (6 Feb 12)

SGD 1.17

Target Price

SGD 1.70

52 Week range

SGD 0.75 - 1.83

Market Cap (m)

SGDm 1,011 USDm 809

Company Profile

Income Statement (USDm)

Ezra is an integrated offshore services provider. It provides Deepwater subsea services, Offshore support, Engineering and Fabrication, and Construction services over the complete lifecycle of an oilfield.

Sales revenue Gross profit EBITDA Depreciation Amortisation EBIT Net interest income(expense) Associates/affiliates Exceptionals/extraordinaries Other pre-tax income/(expense) Profit before tax Income tax expense Minorities Other post-tax income/(expense) Net profit

Price Performance 2.8 2.4 2.0 1.6 1.2 0.8 0.4 Feb 10May 10Aug 10Nov 10Feb 11May 11Aug 11Nov 11 Ezra Holdings

Straits Times Index (Rebased)

Cash Flow (USDm)

Margin Trends 28 24 20 16 12 8 09

10

11

12E

EBITDA Margin

13E

14E

EBIT Margin

70 60 50 40 30 20 10 0

20 15 10 5 0 10

11

12E

13E

Sales growth (LHS)

14E ROE (RHS)

Solvency 15

120 100 80 60 40 20 0

10 5 0 09

10

11

Net debt/equity (LHS)

12E

13E

Cash flow from operations Net Capex Free cash flow Equity raised/(bought back) Dividends paid Net inc/(dec) in borrowings Other investing/financing cash flows Net cash flow Change in working capital

Balance Sheet (USDm)

Growth & Profitability

09

DB adjustments (including dilution) DB Net profit

14E

Net interest cover (RHS

Cash and other liquid assets Tangible fixed assets Goodwill/intangible assets Associates/investments Other assets Total assets Interest bearing debt Other liabilities Total liabilities Shareholders' equity Minorities Total shareholders' equity Net debt

Key Company Metrics Sales growth (%) DB EPS growth (%) EBITDA Margin (%) EBIT Margin (%) Payout ratio (%) ROE (%) Capex/sales (%) Capex/depreciation (x) Net debt/equity (%) Net interest cover (x) Source: Company data, Deutsche Bank estimates

Kevin Chong +65 6423 5549

[email protected]

Deutsche Bank AG/Hong Kong

Page 11

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research Model updated:09 November 2011

Fiscal year end 31-Dec

Running the numbers Asia

Financial Summary

2008

2009

2010

2011E

2012E

2013E

0.45 0.45 0.13 1.2

0.63 0.63 0.17 1.7

0.80 0.80 0.23 2.6

0.97 0.97 0.28 3.2

0.79 0.79 0.23 3.6

0.59 0.59 0.17 4.0

3,500 14,259 9,883

3,653 13,393 5,654

3,701 27,137 14,778

3,837 23,062 13,544

3,837 23,062 14,412

3,837 23,062 15,957

P/E (DB) (x) P/E (Reported) (x) P/BV (x)

9.0 9.0 1.89

5.8 5.8 3.29

9.2 9.2 3.67

6.2 6.2 1.90

7.6 7.6 1.65

10.2 10.2 1.51

FCF Yield (%) Dividend Yield (%)

14.8 3.1

15.5 4.6

12.9 3.2

nm 4.7

nm 3.8

nm 2.8

1.3 7.7 8.2

0.5 2.6 2.8

1.1 5.2 5.5

0.9 4.2 4.6

0.9 4.5 4.9

0.9 5.9 7.0

DB EPS (CNY) Reported EPS (CNY) DPS (CNY) BVPS (CNY)

ASEAN Singapore Marine

Yangzijiang Shipbldg Reuters: YAZG.SI

Bloomberg: YZJ SP

Weighted average shares (m) Average market cap (CNYm) Enterprise value (CNYm)

Valuation Metrics

Buy Price (6 Feb 12)

SGD 1.19

Target Price

SGD 1.40

52 Week range

SGD 0.77 - 1.93

Market Cap (m)

SGDm 4,566 USDm 3,654

EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

Company Profile

Income Statement (CNYm)

Yangzijiang Shipbuilding is a shipbuilder in China with products ranging from large and medium sized containerships, large bulk carriers to medium multipurpose ships.

Sales revenue Gross profit EBITDA Depreciation Amortisation EBIT Net interest income(expense) Associates/affiliates Exceptionals/extraordinaries Other pre-tax income/(expense) Profit before tax Income tax expense Minorities Other post-tax income/(expense) Net profit

7,359 1,452 1,292 85 4 1,203 -7 -3 0 507 1,700 76 44 0 1,580

10,624 2,364 2,152 124 6 2,022 -8 -3 0 539 2,550 260 0 0 2,290

12,923 3,076 2,855 162 7 2,687 -25 -2 0 970 3,629 677 -3 0 2,955

14,356 3,482 3,195 229 7 2,959 -55 -2 0 1,770 4,673 935 -2 0 3,740

15,963 3,531 3,228 296 7 2,925 -86 -2 0 1,200 4,038 1,009 0 0 3,028

17,849 3,040 2,701 400 7 2,294 -86 -2 0 800 3,007 752 0 0 2,255

DB adjustments (including dilution) DB Net profit

0 1,580

0 2,290

0 2,955

0 3,740

0 3,028

0 2,255

2,578 -464 2,114 0 -1,014 477 -2,955 -1,378 1,221

2,216 -139 2,077 0 -311 415 -1,435 747 -42

3,656 -159 3,497 1,283 -618 260 -3,686 736 707

-1,813 -699 -2,511 0 -1,088 2,912 -1,400 -2,087 -3,922

46 -1,499 -1,453 0 -881 0 3,610 1,276 -1,512

-69 -1,799 -1,868 0 -656 0 2,478 -45 -1,445

3,060 1,962 0 1,805 11,392 18,220 490 13,415 13,905 4,315 0 4,315 -2,570

3,807 1,967 0 4,839 9,798 20,411 907 13,194 14,101 6,310 0 6,310 -2,900

4,543 2,630 0 9,192 9,810 26,176 1,227 14,871 16,097 9,928 150 10,078 -3,316

2,456 3,101 0 11,432 13,579 30,568 4,222 14,044 18,266 12,154 148 12,303 1,766

3,732 4,304 0 9,288 15,402 32,727 4,222 14,355 18,577 14,002 148 14,150 490

3,686 5,704 0 7,788 17,213 34,392 4,222 14,721 18,942 15,301 148 15,450 535

90.9 60.0 17.6 16.3 27.8 37.2 6.3 5.2 -59.6 181.0

44.4 38.9 20.3 19.0 27.0 43.1 1.3 1.1 -46.0 239.0

21.6 27.4 22.1 20.8 29.1 36.4 1.2 0.9 -32.9 107.0

11.1 22.1 22.3 20.6 29.1 33.9 4.9 3.0 14.4 53.6

11.2 -19.0 20.2 18.3 29.1 23.2 9.4 4.9 3.5 34.2

11.8 -25.5 15.1 12.9 29.1 15.4 10.1 4.4 3.5 26.8

Price Performance 2.4 2.0 1.6 1.2 0.8 0.4 Feb 10May 10Aug 10Nov 10Feb 11May 11Aug 11Nov 11 Yangzijiang Shipbldg Straits Times Index (Rebased)

Cash Flow (CNYm)

Margin Trends 24 22 20 18 16 14 12 08

09

10

11E

EBITDA Margin

12E

13E

EBIT Margin

Balance Sheet (CNYm)

Growth & Profitability 100 80 60 40 20 0

50 40 30 20 10 0 08

09

10

11E

12E

Sales growth (LHS)

13E ROE (RHS)

Solvency 20 0 -20 -40 -60 -80

300 250 200 150 100 50 0 08

09

10

11E

Net debt/equity (LHS)

12E

Cash flow from operations Net Capex Free cash flow Equity raised/(bought back) Dividends paid Net inc/(dec) in borrowings Other investing/financing cash flows Net cash flow Change in working capital

13E

Net interest cover (RHS

Cash and other liquid assets Tangible fixed assets Goodwill/intangible assets Associates/investments Other assets Total assets Interest bearing debt Other liabilities Total liabilities Shareholders' equity Minorities Total shareholders' equity Net debt

Key Company Metrics Sales growth (%) DB EPS growth (%) EBITDA Margin (%) EBIT Margin (%) Payout ratio (%) ROE (%) Capex/sales (%) Capex/depreciation (x) Net debt/equity (%) Net interest cover (x) Source: Company data, Deutsche Bank estimates

Kevin Chong +65 6423 5549

Page 12

[email protected]

Deutsche Bank AG/Hong Kong

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Model updated:13 October 2011

Fiscal year end 31-Dec

Running the numbers Asia

Financial Summary

2009

2010

2011E

2012E

2013E

0.13 0.13 0.07 0.5

0.05 0.05 0.03 0.5

0.11 0.11 0.04 0.5

0.06 0.06 0.02 0.6

0.07 0.07 0.03 0.6

0.10 0.10 0.03 0.7

2,239 6,093 5,332

2,239 2,445 2,536

2,239 3,605 4,322

2,239 2,665 3,432

2,239 2,665 3,483

2,239 2,665 3,553

P/E (DB) (x) P/E (Reported) (x) P/BV (x)

20.2 20.2 1.86

22.2 22.2 2.46

14.5 14.5 4.00

18.4 18.4 2.12

16.1 16.1 1.95

12.3 12.3 1.75

FCF Yield (%) Dividend Yield (%)

6.7 2.6

nm 2.7

nm 2.5

2.4 2.0

3.0 2.2

3.9 2.9

1.5 9.8 12.5

0.9 7.4 13.5

1.1 7.2 10.0

0.9 7.2 10.9

0.8 7.0 10.5

0.9 6.0 8.3

3,476 630 546 121 0 425 26 1 0 0 451 32 117 0 303

2,899 298 341 153 0 187 -9 0 0 0 179 41 28 0 110

3,861 476 599 168 0 430 -28 0 0 0 402 43 110 0 249

3,693 345 479 165 0 315 -33 1 0 0 283 73 64 0 145

4,205 396 500 167 0 333 -37 1 0 0 298 60 73 0 165

4,088 483 596 169 0 426 -36 2 0 0 392 78 96 0 217

0 303

0 110

0 249

0 145

0 165

0 217

1,074 -665 409 4 -178 480 26 741 401

-164 -470 -634 0 -191 472 69 -285 -435

-265 -176 -441 0 -70 -61 -14 -586 -775

262 -197 65 0 -52 248 0 260 -110

281 -200 80 0 -59 0 0 21 -123

307 -203 103 0 -78 0 0 25 -174

1,880 2,094 10 3 2,813 6,799 657 4,533 5,190 1,144 465 1,609 -1,224

1,549 2,361 10 2 2,501 6,422 1,115 3,696 4,812 1,084 527 1,611 -434

867 2,223 9 4 2,951 6,053 992 3,267 4,259 1,199 596 1,794 125

1,128 2,255 9 5 2,933 6,330 1,240 3,176 4,416 1,254 660 1,914 112

1,148 2,289 9 6 3,314 6,766 1,240 3,426 4,666 1,367 733 2,100 92

1,173 2,323 9 7 3,247 6,760 1,240 3,167 4,407 1,525 829 2,354 67

53.7 -10.2 15.7 12.2 51.8 29.0 19.1 5.5 -76.0 nm

-16.6 -63.6 11.8 6.5 61.0 9.9 16.2 3.1 -26.9 20.5

33.2 126.0 15.5 11.1 36.0 21.8 4.6 1.0 7.0 15.2

-4.4 -41.7 13.0 8.5 36.0 11.8 5.3 1.2 5.9 9.5

13.9 13.9 11.9 7.9 36.0 12.6 4.8 1.2 4.4 9.1

-2.8 31.5 14.6 10.4 36.0 15.0 5.0 1.2 2.8 11.8

DB EPS (SGD) Reported EPS (SGD) DPS (SGD) BVPS (SGD)

ASEAN Singapore Marine

Cosco Corporation Reuters: COSC.SI

2008

Bloomberg: COS SP

Weighted average shares (m) Average market cap (SGDm) Enterprise value (SGDm)

Valuation Metrics

Hold Price (6 Feb 12)

SGD 1.19

Target Price

SGD 1.10

52 Week range

SGD 0.84 - 2.35

Market Cap (m)

SGDm 2,665 USDm 2,132

EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

Company Profile

Income Statement (SGDm)

Cosco Corporation is a diversified group with the largest Ship Repair, Ship Building & Marine operation in China. It also has activities in the Dry bulk Shipping, Shipping Agency and other sectors.

Sales revenue Gross profit EBITDA Depreciation Amortisation EBIT Net interest income(expense) Associates/affiliates Exceptionals/extraordinaries Other pre-tax income/(expense) Profit before tax Income tax expense Minorities Other post-tax income/(expense) Net profit

Price Performance 2.8 2.4 2.0 1.6 1.2 0.8 Feb 10May 10Aug 10Nov 10Feb 11May 11Aug 11Nov 11

DB adjustments (including dilution) DB Net profit

Cosco Corporation Straits Times Index (Rebased)

Cash Flow (SGDm)

Margin Trends 16 14 12 10 8 6 08

09

10

11E

EBITDA Margin

12E

13E

EBIT Margin

Balance Sheet (SGDm)

Growth & Profitability 60 40 20 0 -20 -40

35 30 25 20 15 10 5 0 08

09

10

11E

12E

Sales growth (LHS)

13E ROE (RHS)

Solvency 25 20 15 10 5 0

20 0 -20 -40 -60 -80 -100 08

09

10

Net debt/equity (LHS)

11E

12E

Cash flow from operations Net Capex Free cash flow Equity raised/(bought back) Dividends paid Net inc/(dec) in borrowings Other investing/financing cash flows Net cash flow Change in working capital

13E

Net interest cover (RHS

Cash and other liquid assets Tangible fixed assets Goodwill/intangible assets Associates/investments Other assets Total assets Interest bearing debt Other liabilities Total liabilities Shareholders' equity Minorities Total shareholders' equity Net debt

Key Company Metrics Sales growth (%) DB EPS growth (%) EBITDA Margin (%) EBIT Margin (%) Payout ratio (%) ROE (%) Capex/sales (%) Capex/depreciation (x) Net debt/equity (%) Net interest cover (x) Source: Company data, Deutsche Bank estimates

Kevin Chong +65 6423 5549

[email protected]

Deutsche Bank AG/Hong Kong

Page 13

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research Model updated:24 August 2011

Fiscal year end 31-Dec

Running the numbers Asia

Financial Summary

China Manufacturing

China Rongsheng Reuters: 1101.HK

Bloomberg: 1101 HK

2008

2009

2010

2011E

2012E

2013E

DB EPS (CNY) Reported EPS (CNY) DPS (CNY) BVPS (CNY)

-0.09 -0.09 0.00 -0.1

0.23 0.23 0.00 0.1

0.30 0.30 0.07 2.4

0.40 0.40 0.08 2.3

0.48 0.48 0.10 2.7

0.46 0.46 0.09 3.1

Weighted average shares (m) Average market cap (CNYm) Enterprise value (CNYm)

5,600 na na

5,600 na na

5,761 35,973 43,834

7,000 15,670 27,534

7,000 15,670 25,026

7,000 15,670 23,728

nm nm 0.00

na na 0.00

20.9 20.9 2.43

5.5 5.5 0.97

4.7 4.7 0.83

4.9 4.9 0.73

na na

na na

nm 1.1

nm 3.6

20.7 4.3

12.8 4.1

nm nm nm

nm nm nm

3.5 20.0 24.2

1.4 7.2 8.4

1.0 5.6 6.6

0.8 4.8 5.7

4,725 21 -406 107 5 -518 -49 0 0 27 -540 0 -13 0 -527

9,473 2,075 1,509 221 6 1,282 -61 0 0 85 1,307 2 2 0 1,302

12,665 3,208 2,186 367 9 1,810 10 0 0 224 2,044 263 61 0 1,719

19,584 4,726 3,825 528 36 3,261 -27 0 0 70 3,304 426 50 0 2,828

25,290 5,529 4,441 639 35 3,767 -30 0 0 160 3,897 502 58 0 3,336

28,900 6,164 4,921 690 33 4,198 21 0 0 160 4,380 1,095 66 0 3,219

0 -527

0 1,302

0 1,719

0 2,828

0 3,336

0 3,219

4,032 -2,574 1,458 0 0 1,396 -1,030 1,824 4,268

-496 -1,080 -1,576 0 0 2,585 -232 777 -1,849

-6,978 -2,375 -9,353 9,567 -476 12,935 -5,122 7,552 -8,908

618 -4,000 -3,382 0 -566 2,276 342 -1,330 -2,825

6,238 -3,000 3,238 0 -667 0 -4 2,567 2,170

3,013 -1,000 2,013 0 -644 0 -4 1,365 -995

2,087 5,688 29 0 9,910 17,714 3,636 14,137 17,773 -470 411 -59 1,549

2,863 7,164 35 56 11,854 21,970 6,875 13,849 20,725 833 413 1,246 4,012

10,413 12,124 109 138 18,212 40,996 17,635 8,725 26,361 13,859 776 14,635 7,222

9,081 15,596 102 138 22,562 47,480 20,257 10,275 30,532 16,122 826 16,947 11,176

11,647 17,957 96 138 21,730 51,568 20,257 11,636 31,893 18,790 884 19,675 8,610

13,011 18,267 91 138 23,563 55,070 20,257 12,497 32,754 21,366 950 22,316 7,246

614.1 -19.9 -8.6 -11.0 nm nm 54.5 23.0 nm nm

100.5 na 15.9 13.5 0.0 717.6 11.4 4.8 322.1 20.9

33.7 28.3 17.3 14.3 22.8 23.4 18.7 6.3 49.3 nm

54.6 35.4 19.5 16.7 20.0 18.9 20.4 7.1 65.9 120.8

29.1 18.0 17.6 14.9 20.0 19.1 11.9 4.5 43.8 124.1

14.3 -3.5 17.0 14.5 20.0 16.0 3.5 1.4 32.5 nm

Valuation Metrics

Hold Price (6 Feb 12)

HKD 2.75

Target Price

HKD 3.20

52 Week range

HKD 1.96 - 7.52

Market Cap (m)

HKDm 19,250 USDm 2,483

P/E (DB) (x) P/E (Reported) (x) P/BV (x) FCF Yield (%) Dividend Yield (%) EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

Company Profile

Income Statement (CNYm)

China Rongsheng Heavy Industries is a leading shipbuilder in China manufacturing bulk carriers, oil tankers and containerships. The group is also involved in offshore engineering, marine engine building and engine machinery.

Sales revenue Gross profit EBITDA Depreciation Amortisation EBIT Net interest income(expense) Associates/affiliates Exceptionals/extraordinaries Other pre-tax income/(expense) Profit before tax Income tax expense Minorities Other post-tax income/(expense) Net profit

Price Performance 9 8 6 5 3 2 Nov 10

Feb 11

May 11

Aug 11

Nov 11

DB adjustments (including dilution) DB Net profit

China Rongsheng HANG SENG INDEX (Rebased)

Cash Flow (CNYm)

Margin Trends 20 10 0 -10 -20 08

09

10

11E

EBITDA Margin

12E

13E

EBIT Margin

Balance Sheet (CNYm)

Growth & Profitability 700 600 500 400 300 200 100 0

800 600 400 200 0 08

09

10

11E

12E

Sales growth (LHS)

13E ROE (RHS)

Solvency 350 300 250 200 150 100 50 0

140 120 100 80 60 40 20 0 08

09

10

11E

Net debt/equity (LHS)

12E

Cash flow from operations Net Capex Free cash flow Equity raised/(bought back) Dividends paid Net inc/(dec) in borrowings Other investing/financing cash flows Net cash flow Change in working capital

13E

Net interest cover (RHS

Cash and other liquid assets Tangible fixed assets Goodwill/intangible assets Associates/investments Other assets Total assets Interest bearing debt Other liabilities Total liabilities Shareholders' equity Minorities Total shareholders' equity Net debt

Key Company Metrics Sales growth (%) DB EPS growth (%) EBITDA Margin (%) EBIT Margin (%) Payout ratio (%) ROE (%) Capex/sales (%) Capex/depreciation (x) Net debt/equity (%) Net interest cover (x) Source: Company data, Deutsche Bank estimates

Kevin Chong +65 6423 5549

Page 14

[email protected]

Deutsche Bank AG/Hong Kong

Deutsche Bank

07 February 2012

Conglomerates

Markets Research

Singapore Conglomerates

Valuation and Risks Figure 28: Valuation and risks Company name

Valuation and risks Valuation

Risks

Keppel Corp

Our target price is SOTP-based. We value O&M through DCF to better reflect the long-term value of the group. Our DCF assumptions are as follows: rf 2.5%, rp 4.5%, g 2%, COE 8.1%, and WACC 6.5%. For Keppel Land, we use the stock's market value, as we have done for the other listed components. At our target price, KEP would trade at a P/B of 2.9x (versus the group's 2003-11 average of 2.3x; high of 5.2x and low of 0.9x), which is justified by the positive long-term prospects in O&M and the group's established track record and reputation, in our view.

(1) A sharp and sustained plunge in oil prices may affect E&P plans, (2) project execution, (3) Keppel receives its revenues in US$ and hence is exposed to foreign currency risks, and (4) greater-than-expected weakness in the property sector.

Sembcorp Marine

Our target price is SOTP-based. We value SMM's O&M business through DCF. Our DCF assumptions are as follows: rf 2.5%, rp 4.5%, g 2%, COE 8.4%, and WACC 7.3%. For the group's other components in Cosco, we used the market value for its direct stake in listed COS and derived an implied value for the unlisted Cosco Shipyard Group (CSG) based on the market value for COS (the bulk of the value for COS is derived from CSG). At our target price, SMM will trade at 16.4x FY12E PER, which is above its long-term historical average of 13.6x (high 29.7x; low 3.8x), and we believe this is justified due to its strong execution track record, established reputation and the healthy O&M sector.

(1) A significant slowdown in the global economy would reduce demand for oil and thereby appetite for new drilling and production capex; (2) cost overruns could hurt margins and earnings; (3) SMM's revenues are in US$, hence exposing the company to foreign currency risks; (4) any problems in the shipbuilding industry could affect Cosco Corp, which would in turn affect SMM; and (5) a sustained decline in the price of oil.

Sembcorp Industries

Our target price is SOTP-derived, based on our target price for SembMarine and the market price of Gallant Ventures, while we used a 12x multiple (FY12E) for the utilities business. At our target price, SCI would trade at a P/B of 2.5x, which is above the group's 1999-2010 average of 2.1x (high of 4.4x and low of 0.8x), which we believe is justified by 1) healthy long-term fundamentals in the O&M space; 2) stability and growth potential of its utilities business; and 3) its robust balance sheet, which may allow the group to expand through M&A opportunities.

(1) Execution of overseas utilities investments such as Fujairah and investments in China (which have been affected by natural gas shortages); (2) any fall in order wins or contract execution failures for SMM; (3) a significant and sustained fall in oil prices, which would have an impact on E&P spending; (4) greater-thanexpected depreciation of the US$; and (5) greater-than-expected cost increases.

Ezra Holdings

We set Ezra's target price at S$1.70, which is derived by averaging the estimated values of the PEG and Gordon Growth model methods. At our target price, Ezra would trade at a FY12E PER of 13.4x, which is lower than its historical average of 14.7x since the group's listing in 2003 (in light of the weak FY11 results and Ezra's realignment efforts). Ezra's estimated value is S$1.57 based on a PEG of 0.9x (higher than its 0.33x average PEG achieved during 2003-08 due to the group's healthy long-term prospects with its new subsea focus). If Ezra's value is based on the Gordon Growth model (ROE-COE growth method), it yields a theoretical estimated value of S$1.83, assuming a long-term growth rate of 3%, average FY12E-14E ROE of 12.5% and cost of equity of 9.7%. For the cost of equity, we have used Deutsche Bank's latest risk-fee rate assumption of 2.5% and risk premium of 4.5%.

(1) Any delays in the delivery of upcoming vessels would have an impact on the expected revenues and profitability of the group, (2) execution risks as any unforeseen mishaps during operations may affect the revenues and profitability of the group, (3) a significant and sustained fall in oil prices, which will have an impact on E&P spending, (4) an unexpected fall in charter rates for Liftboats, MFSVs, and the Heavy Lift accommodation pipelay vessel, and (5) any unexpected departures of key executives.

Yangzijiang Shipbldg Our S$1.40 target price for YZJ is based on the Gordon Growth Model. Our base-case assumptions for this methodology are a COE of 13.1% (rfr of 3.1% and rp of 5.8%), a growth assumption of 3% and an average ROE of 23.8% for FY11-13E. The model yields a theoretical PB of 2.1x, or an estimated per share value of S$1.40, based on the FY12E book value. Our target price for YZJ is based on PB, in light of the volatile operating environment and industry risks. At our target price, YZJ would trade at 9.4x FY12E PER, which is below the group's historical average (since listing) of 10.5x due largely to the challenging operating environment and its increased exposure to micro-financing and held-to-maturity assets.

(1) About 20% of YZJ's costs are in steel, so ship plate price increases would have a negative impact on group earnings; (2) YZJ is exposed to the dry bulk sector (about half the order book) and may be affected if the BDI experiences a sharp and sustained fall; (3) YZJ's second yard is relatively new, so any execution problems on the multiple orders on hand would be negative for profit margins; and (4) new orders for YZJ are dependent on their customers' ability to obtain financing, hence, if credit markets tighten, it could have a detrimental impact on new orders.

Source: Deutsche Bank

Deutsche Bank AG/Hong Kong

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Deutsche Bank

07 February 2012

Conglomerates

Markets Research

Singapore Conglomerates

Figure 28: Valuation and risks (cont’d) Company name

Cosco Corporation

Valuation and risks Valuation

Risks

We have pegged COS's target price at 1.8x P/B (FY12E), by which we derive our target price. At 1.8x P/B, the valuation is 29% higher than COS's 2009 crisis low P/B of 1.4x and seems justified with FY11-13E ROE average of 13% being 33% above the group's 2009 ROE of 9.9%. Our target price implies 15x FY12E PER, which is at a discount to the 2005-2011 average of 20.2x in light of the current challenging operating environment and the group's project execution issues, but above their 2009 crisis lows of 10.4x.

Upside risks: (1) steel accounts for about 15-20% of COSCO's costs. Ship plate price decline would positively affect the group's earnings; (2) most of COSCO's shipbuilding orders are in dry bulk vessels., so the group's earnings could benefit if there are any unexpected increases in demand for bulk carriers; (3) COSCO has experienced execution problems in vessel construction over the past few years, so any better-than-expected project execution would be positive for profit margins; and (4) new orders for COSCO are dependent on their customers' ability to obtain financing, so if the credit markets improve significantly, it could have a positive impact on their new orders. Downside risks: (1) most of COS's orders are in dry bulk vessels, so If the BDI experiences a sharp and sustained fall, it may affect the group's new order prospects; (2) the group has secured several offshore-related orders over the past year, and COS's earnings would be affected if customer demand declines in this area; (3) Cosco is targeting improvement in execution in the coming months, and any further execution issues would be negative for the group's margins; and (4) any unexpected worsening of the credit markets would have a negative impact on group's new orders.

China Rongsheng

In our view, the sum-of-the-parts valuation methodology best addresses RHI's different operations and industry exposures in relation to global peers. This method suggests a target price of HK$3.20, implying 1.0x FY12E PB for the group. For the shipbuilding division, we pegged it at about a 10% discount to its peers in light of the short operating history. We used a 20% discount versus industry peers for its other divisions in offshore engineering, marine engines and engineering machinery. While pegging RHI's divisions to peers at a discount introduces volatility to its valuations, given the group's short trading history and lack of a long-term operating track record, we believe it should follow the valuations of sector leaders.

Upside risks: (1) unexpected decline in steel price, (2) unexpected strengthening of US dollar vs. renminbi, (3) unexpected surge in new orders, (4) better-than-expected execution, and (5) improvement in credit markets. Downside risks: (1) rise in steel price, (2) unfavorable government regulations, (3) unexpected customer cancellations or delay of shipbuilding contracts, (4) execution problems in light of the group's short operating history, and (5) over-expansion.

Source: Deutsche Bank

Page 16

Deutsche Bank AG/Hong Kong

Deutsche Bank

07 February 2012

Conglomerates

Singapore Conglomerates

Markets Research

Appendix 1 Important Disclosures Additional information available upon request For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr

Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Kevin Chong Equity rating key Buy: Based on a current 12- month view of total shareholder return (TSR = percentage change in share price from current price to projected target price plus projected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total shareholder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes:

Equity rating dispersion and banking relationships 450 400 350 300 250 200 150 100 50 0

60 % 35 % 12 % Buy

10 % Hold

Companies Covered

5%

9%

Sell

Cos. w/ Banking Relationship

Asia-Pacific Universe

1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were: Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period

Deutsche Bank AG/Hong Kong

Page 17

Deutsche Bank

07 February 2012

Markets Research

Conglomerates

Singapore Conglomerates

Regulatory Disclosures 1. Important Additional Conflict Disclosures Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

2. Short-Term Trade Ideas Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the SOLAR link at http://gm.db.com.

3. Country-Specific Disclosures Australia and New Zealand: This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act and New Zealand Financial Advisors Act respectively. Brazil: The views expressed above accurately reflect personal views of the authors about the subject company(ies) and its(their) securities, including in relation to Deutsche Bank. The compensation of the equity research analyst(s) is indirectly affected by revenues deriving from the business and financial transactions of Deutsche Bank. EU countries: Disclosures relating to our obligations under MiFiD can be found at http://www.globalmarkets.db.com/riskdisclosures. Japan: Disclosures under the Financial Instruments and Exchange Law: Company name - Deutsche Securities Inc. Registration number - Registered as a financial instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA, Type II Financial Instruments Firms Association, The Financial Futures Association of Japan, Japan Securities Investment Advisers Association. Commissions and risks involved in stock transactions - for stock transactions, we charge stock commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. "Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are not registered credit rating agencies in Japan unless “Japan” or "Nippon" is specifically designated in the name of the entity. Russia: This information, interpretation and opinions submitted herein are not in the context of, and do not constitute, any appraisal or evaluation activity requiring a license in the Russian Federation.

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