China / Hong Kong Industry Focus Real Estate (Warehouse) Sector

Refer to important disclosures at the end of this report

DBS Group Research . Equity 20 Nov 2017

Benefiting from rebound in online sales HSI :29,199

· Online sales rebounded on Single’s Day, likely to ANALYST drive up warehouse rentals in 4Q17 Danielle WANG CFA,+852 2820 4915 [email protected]

· Tier 1 and satellite cities to lead rental growth, Trista QIN+852 2863 8820 while inland cities suffer from oversupply [email protected]

Ken HE CFA,+86 21 6888 3375 · Rebound in e-commerce growth has triggered [email protected] industry-chain plays to compete for warehouses Carol WU+852 2863 8841 [email protected] · Our top picks are -H (2202.HK) and (200053.CH)

Alibaba’s online sales onSingle’s Day surged39% y-o-y to Recommendation & valuation Rmb168.2bn in 2017,vs. 32% y-o-y growth in 2016. E- commerce retail sales have sped up with 32% year-on-year (y- Disc/ o-y) growth registered in 10M17, outpacing the 26% in 2016 Target Mkt (Prem) and iResearch’s full-year projection of 25.4% for 2017. Major Currency Price Price Rec Cap to NAV e-retailers are actively expanding the categories of consumer Local$ Local$ US$m % goods, especially in fresh food and cross-border BJ Properties merchandises.Both export and import activities have picked up HKD 0.32 0.44 BUY 281 65.9 (925 HK) strongly year to date, mainly led by imports. Imports increased China Logistics by 17% in value terms in 10M17 while exports grew 7%. Property HKD 2.41 n.a. NR 900 n.a. (1589 HK)* Tier 1 cities to lead rental growth in 4Q17.Rentals at logistics Shenzhen Chiwan HKD 22.88 28.71 BUY 1,025 63.0 propertiesin key cities were relatively flattish quarter-on-quarter (200053 CH) (q-o-q) in second quarter 2017, while Chongqing/Chengdu Vanke-H HKD 28.1 25.00 BUY 47,682 -23.7 continued to suffer from oversupply. Looking ahead, Shanghai, (2202 HK) ^ Shenzhen and Beijing are expected to log 1-3% growth in Vanke-A CNY 28.9 22.20 HOLD 47,682 -41.2 rentals for 4Q17-1Q18. Industrial land supply in 14 key cities (000002 CH) ^ dropped by 19% y-o-y in 1H17, mainly due to substantial cut in Chengdu, Chongqing, and Wuhan. Growth of warehouse * Consensus investments also remained low at 5% in 10M17, vs. 5%/28% ^ TP under review in 2016/2015, which will likely slow down warehouse supply Source: Thomson Reuters, DBS Vickers from 2018 onwards and support rental growth.

Upstream plays are also chasing warehouses, likely to push up capital values further. Alibaba (BABA.US, BUY) announced the Major players’ landbank move to raise its stake in Cainiao and expandits investments in warehouses. SF Express (002352.CH, not-rated) has signed GFA (m sm) 2014 1H17 various cooperation agreements with GLP, Vanke and GLP 10.7 29.2 Goodman to co-develop logistics properties. Suning Goodman 1.3 4.2 (002024.CH, not-rated) also announced its decision to set up a e-Shang/Redwood 0.6 4.1 logistics property fund, partnering with Shenzhen government- CNLP (Yupei) 0.7 4.0 backed firms. We are POSITIVE on the sector and prefer SOEs Mapletree 0.8 2.6 and large developers with strong access to warehouse land. Vanke 0.2 2.6 Our top picks are Vanke-H and Shenzhen Chiwan. The latter’s Shenzhen Chiwan (Blogis) 0.9 1.9 Beijing Properties 1.1 1.7 share price has risen by 25% month-to-date, as long-awaited Source: Company, DBS Vickers B-to-A conversion will likely resume. Valuation remains attractive at 45% discount to NAV.

ASIAN INSIGHTS VICKERS SECURITIES ed- JS/ sa- AH

Industry Focus China Real Estate (Warehouse) Sector

Domestic demand to drive growth PMI: stayed at around 52% in October 2017 China’s shift to a consumption-driven economy is generating strong demand for modern high-quality logistics properties. E- % commerce retail sales have sped up with 32% year-on-year (y- 57 o-y) growth registered in 10M17, outpacing the 26% in 2016 and iResearch’s full-year projection of 25.4% for 2017. 55 Alibaba’s online sales onSingle’s Day grew 39% y-o-y to 53 Rmb168.2bn in 2017, vs. 32% y-o-y growth in 2016.Major e- retailers are actively expanding the categories of consumer 51 goods, especially in fresh food and cross-border merchandises. They have further penetrated into rural areas and are exploring 49 more opportunities there. In addition, major e-retailers are also expanding their consumer finance business, which could 47 facilitate and drive online consumption activities further. 45 Therefore, demand for warehouses remains decent.

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Sep-10 Sep-14 Sep-15 Sep-16 Sep-17 Sep-11 Sep-12 Sep-13 SF Express (002352.CH, not-rated) is expanding its cold-chain May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 logistics business.China’s manufacturing Purchasing Managers' Source: CEIC, DBS Vickers Index (PMI) has been recovering since hitting 49.0 in Feb 2016, the lowest level since 2010. PMI had gradually climbed to 51.6 Import and export growth in October2017,indicating an expansion of manufacturing · Export growth has remained positive y-o-y over the past eight activities.Both export and import activities have picked up months; +7% y-o-y growth in 10M17 strongly year to date, mainly led by imports. Imports increased · Imports have achieved double-digit y-o-y growth year to date; by 17% in value terms in 10M17 while exports grew 7%. +17% y-o-y growth in 10M17 Consumption upgrade continues to drive up demand for fresh foods and cross-border goods, and hence, demand for cold 30% storage warehouses and bonded warehouses. SF Express is teaming up with GLP and Vanke to build cold storage facilities. 20%

10%

0%

- 10%

- 20%

- 30% Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Feb- 12 Feb- 13 Feb- 14 Feb- 15 Feb- 16 Feb- 17

Source: CEIC, DBS Vickers

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Industry Focus China Real Estate (Warehouse) Sector

Logistics Prosperity Index China warehouse index · Logistics Prosperity Index (LPI) has remained above 50 for · China warehouse index was low at 49.6 in July following the past 16 months themid-year online sales promotions in June · Index recovered to 55.1 in October

% % 57 61 59 55 57 53 55 51 53 51 49 49 47 47 45 45 J ul -16 J ul -17 Jan-16 Jan-17 Jun-16 Jun-17 Oct-16 Oct-17 Feb- 16 Feb- 17 Sep-16 Sep-17 Apr-16 Apr-17 Dec-15 Dec-16 Nov-15 Nov-16 Mar-16 Mar-17 Aug-16 Aug-17 May-16 May-17 Feb- 16 Nov-13 Nov-16 Mar-13 Aug- 14 Aug- 17 May-15 Source: China Federation of Logistics & Purchasing (CFLP), DBS Source: China Federation of Logistics & Purchasing (CFLP), DBS Vickers Vickers

China E-retailer logistics index Online retail sales · China E-retailer logistics index edged down to 122.3 in · Online retails sales growth slowed down from 33% in October 2017, from123.6 in September 2017 2015 to 26% in 2016 · But, y-o-y growth picked up to 32% in 10M17

J an2015=100 RMB trn 125 8 70% 124 7 123 60% 6 122 50% 5 121 40% 4 120 30% 119 3 20% 118 2 10% 117 1 116 0 0% 115 2011 2012 2013 2014 2015 2016 2017E 2018E J ul -17 Jan-17 Jun-17 Oct-17 Oct-16 Feb- 17 GMV of China Online Retail Sales (LHS) Sep-16 Sep-17 Apr-17 Dec-16 Nov-16 Mar-17 Aug-17 May-17 Growth rate (RHS)

Source: China Federation of Logistics & Purchasing (CFLP), DBS Source: iResearch, CEIC, DBS Vickers Vickers

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Industry Focus China Real Estate (Warehouse) Sector

Key Industry Trends Management, on 14 November 2017. Intensifying competition should continue to drive up capital value of warehouses. Land supply – Industrial land supply has been on a declining trend since 2012, with aggregate industrial land supply in 14 Land supply in 14 major cities major cities contracting by 19% y-o-y during Jan-Jun 2017, · Guangzhou, Tianjin and Hangzhou raised industrial land largely from Chengdu, Chongqing and Wuhan. Shenzhen has supply in 1H17 joined Nanjing to suspend supply of any industrial land in · Chengdu, Chongqing and Wuhan had cut industrial land during the same period. Apart from these two cities, Beijing’s supply substantially in 1H17 industrial land supply was the lowest among other cities. The · Nanjing and Shenzhen suspended industrial land supply in land supply for warehouses could be much lower as big cities 1H17 have significantly cut supply for warehouse use. Beijing has ceased to offer land for warehouse use for the last two years. mn sm The falling supply of industrial land will likely lead to 120 undersupply of warehouses in 2-3 years' time. 100 Investments picking up, foreign investors are coming back. The e-commerce boom had led warehouse construction to grow 80 rapidly from 2012-2015. Major investors such as Blackstone, 60 Warburg Pincus, APG, Brookfield, Temasek, and PGGM had poured money into China’s logistics real estate sector during 40 that period. However, foreign investors have slowed down their investments during the past two years given concerns 20 over the RMB depreciation. As RMB has reversed its downward trend year to date, foreign capital has been flowing to logistics 0 property assets/companies lately. Invesco Real Estate is buying a warehouse portfolio from e-Shang/Redwood for US$308m. 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Allianz is also reported to invest US$100m in e- Source: CRIC, DBS Vickers Shang/Redwood’s fund.FAI growth in warehouse sector picked up to5% in 10M17 from 2% in first quarter (1Q) 2017. Warehouse fixed asset investment Domestic players to continue the race.Yupei raised HK$1.8bn · Growth recovered lately, but remained low at 5% in through its HK IPO in July 2016. Vanke has acquired c.3.2m 10M17 square metres (sm) of land reserved for warehouse use in since mid-2015 and management indicated that the company has Rmb bn also secured c.5m sm of warehouse projects. Vanke is also a 8,000 40% part of a consortium involved in an ongoing transaction to take 7,000 35% GLP private. In early May, it was reported that Haier and China 6,000 30% Merchants Securities had established a JV fund (with a scale of Rmb10bn) for logistics-related acquisitions/investments. In late- 5,000 25% June, Cainiao also teamed up with China Life to establish a 4,000 20% warehouse JV fund (with a scale of Rmb8.5bn). 3,000 15% 2,000 10% Following foreign capital,upstream players are now also 1,000 5% competingfor warehouse assets. In late 3Q17, Alibaba announced the move to raise its stake in Cainiao to 51% from 0 0% 2012 2013 2014 2015 2016 47% previously and its plan to investRmb100bn in intelligent logistics and warehouses over the next five years. Apart from Investment in warehouse Y-o-Y growth its cooperation with GLP and Vanke in cold-chain warehouses, SF Express also signed a strategic cooperation with Goodman Source: CEIC, DBS Vickers to co-develop logistics properties, on 13 November 2017. On top of that, Suning (002024.CH, not-rated) also announced its decision to set up a logistics property fund with a target size of Rmb30bn, partnering with Shenzhen Capital Group RE Fund

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Industry Focus China Real Estate (Warehouse) Sector

Rentalswere generally flattish in major cities in 3Q17; central area continues to suffer from excess supply. In the 14 cities we Rental growth in 14 key cities, 3Q17 vs. 3Q16 track, warehouse rentals have grown at a CAGR of between · Key cities in Yangtze River Delta region and Pearl River 1% and 13% over the past seven years with Dalian, Tianjin Delta region recorded 2-3% y-o-y growth in rental rates and Chengdu’s CAGR at the lower end of 0-2%, and Nanjing · Chengdu suffered the biggest decline, followed by and Hangzhou the highest at CAGRs of 13% and 9% respectively. In 3Q17, rentals in the rest of the coastal cities Chongqing and Wuhan remained relatively stable, based on CBRE data, while Chengdu and Chongqing recorded modest q-o-q declines. RMB/sm/month 50 4% 6% Looking ahead, tier 1 and satellite cities to lead rental growth. 45 3% 2% 2%2%2% 4% Driven by strong online sales towards the year-end, tier 1 and 40 2% 35 0% 2% satellite citiesare expected to see stronger rental growth, while 30 0%0% 0% most cities will likely see 0-1% rental growth. Western China 25 -2% 0% cities like Chengdu and Chongqing will likely see further rental 20 -3% 15 -2% declines due to high vacancy rates and high potential supply in -5% 10 -4% the coming months. 5 0 -6% Asset values and cap rates - Falling land supply and strong Dalian Tianjin Beijing Wuhan Ningbo acquisition interest led to strong growth in land prices and in Nanjing Qingdao Shanghai Chengdu Shenyang Shenzhen Hangzhou Chongqing

turn increasing asset values along with cap rate compression. Guangzhou While developers have a keen interest in acquiring land for Rents (LHS) y-o-y, change warehouse development, the local governments’ low incentives to supply industrial land has led to higher land prices over the Source: CRIC, DBS Vickers past years. As a result, we expect capital appreciation to grow faster than rental growth over the next few years. Hence, we also expect cap rate compression to continue. Rental growth estimates for the coming six months · Shanghai and Shenzhen continueto lead rental growth due to limited supply as well as potential demolition of Cold chain logistics is also growing rapidly. While cold chain ageing warehouses warehouse space per capita grew rapidly from 53 litres in 2011 · Chongqing, Chengdu and Wuhan will likely see further to 88 litres in 2016, the number is still substantially lower than rental declines the 362 litres in the US, implying strong growth potential. China citizens’ increasing awareness of food safety and recent % media reports on China’s vaccine scandal are likely to draw 4 people’s attention to cold chain storage and transportation. 3 2 1 0 (1) (2) (3) Dalian Tianjin Beijing Wuhan Ningbo Nanjing Qingdao Shanghai Chengdu Shenzhen Shenyang Hangzhou Chongqing Guangzhou

Source: CBRE, DBS Vickers

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Industry Focus China Real Estate (Warehouse) Sector

Cold chain warehouse per capita · Cold chain warehouse space per capita in the US was 4.1x that in China in 2016, narrowing from 6.8x in 2012 · Cold chain warehouse space per capita in Shanghai was 3.4x the national level in 2016, vs.3.0x in 2012

Cubic meters per capita 400 350 300 250 200 150 100 50 0 2012 2013 2014 2015 2016 China Shanghai US

Source: China Warehouse Industry Bluebook 2017, DBS Vickers

Warehouse players’ valuation comparison

3-mth daily Hist. Hist. Disc/ Target Mkt trading PE PE av g. Yield Yield P/Bk av g. ROE ROE NAV (Prem) Currency Price Price Recom Cap v alue F iscal 17F 18F PE 17F 18F 16A PB 17F 18F to NAV Company Name Code Local$ Local$ US$m US$m Yr x x x % % x x % % Local$ % Beijing Properties* 925 HK HKD 0.32 0.44 BUY 281 0.14 Dec n.a. n.a. 13.8 0.0 0.0 0.5 1.2 (3.1) (1.7) 0.94 65.9 CMST Dev elopment 'A' 600787 CH CNY 10.77 n.a. NR 3,621 36 Dec 31.2 28.7 28.9 0.4 0.4 2.5 2.0 7.6 7.8 n.a. n.a. China Fortune Ld.Dev.'A'* 600340 CH CNY 32.21 41.45 BUY 14,548 127 Dec 11.7 9.4 222.7 2.6 3.2 3.9 3.7 29.7 29.5 41.57 22.5 Shenzhen Chiwan 'B'*^ 200053 CH HKD 22.88 28.71 BUY 1,025 0.14 Dec n.a. n.a. 26.2 0.0 0.0 2.5 1.9 (0.8) (1.1) 61.8 63.0 Mapletree Logist.Trust*# MLT SP SGD 1.28 1.38 Buy 2,898 5 Mar 17.3 16.9 12.2 5.9 6.0 1.2 1.1 7.1 7.2 1.03 -24.3 China South City Hdg.*# 1668 HK HKD 1.85 1.34 FV 1,896 12 Mar 19.7 17.0 4.5 2.7 3.1 0.5 0.7 2.6 3.0 2.6 28.1 Hydoo Intl.Holding 1396 HK HKD 0.65 n.a. NR 334 0.14 Dec n.a. n.a. 5.8 n.a. n.a. 0.4 1.0 n.a. n.a. n.a. n.a. Wuzhou Intl.Hdg. 1369 HK HKD 0.89 n.a. NR 252 0.19 Dec n.a. n.a. 25.3 n.a. n.a. 1.1 1.3 n.a. n.a. n.a. n.a. Zall Group 2098 HK HKD 7.16 n.a. NR 10,649 6 Dec n.a. n.a. 10.6 n.a. n.a. 5.3 1.9 n.a. n.a. n.a. n.a. Goodman Group GMG AU AUD 8.65 n.a. NR 20,030 41 J un 19.9 18.8 19.2 3.0 3.2 1.9 1.4 9.5 9.9 n.a. n.a. Prologis PLD US USD 66.3 n.a. NR 35,263 120 Dec 43.0 42.4 117.3 2.6 2.7 2.4 1.5 5.8 5.9 n.a. n.a. Sinotrans 'H' 598 HK HKD 3.59 n.a. NR 1,952 8 Dec 8.1 7.5 10.9 3.8 4.2 0.9 0.9 10.2 10.4 n.a. n.a. Kerry Logistics Network 636 HK HKD 9.91 n.a. NR 2,151 1 Dec 12.3 11.7 10.3 2.2 2.2 1.1 1.3 8.5 8.3 n.a. n.a. Sitc International Hdg. 1308 HK HKD 7.5 n.a. NR 2,545 2 Dec 14.8 12.0 10.4 4.7 5.6 2.7 1.6 18.3 19.1 n.a. n.a. Bej.Sps.And Entm.Ind. 1803 HK HKD 2.22 n.a. NR 334 1 Dec n.a. n.a. 15.9 n.a. n.a. 11.4 7.6 n.a. n.a. n.a. n.a. China V anke 'H'* 2202 HK HKD 28.1 25.00 BUY 47,682 47 Dec 10.7 9.1 10.0 4.1 4.8 2.3 1.7 20.3 20.9 22.7 -23.7 China V anke 'A'* 000002 CH CNY 28.9 22.20 HOLD 47,682 199 Dec 13.0 11.1 10.6 3.4 4.0 2.8 1.7 20.3 20.9 20.47 -41.2 China Logistics Property 1589 HK HKD 2.41 n.a. NR 900 0.36 Dec n.a. 68.9 n.a. 0.0 0.0 0.7 n.a. (1.2) n.a. n.a. n.a. ^ Core EPS

# FY17: FY18; FY18: FY19

Source: Thomson Reuters, *DBS Vickers

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Industry Focus China Real Estate (Warehouse) Sector

Appendix

Beijing rental rate and y-o-y growth Shanghai rental rate and y-o-y growth

Rmb/month Rmb/month 40.5 3.5% 45.0 10.0% 40.0 3.0% 44.0 43.0 8.0% 39.5 2.5% 42.0 6.0% 39.0 2.0% 41.0 40.0 4.0% 38.5 1.5% 39.0 2.0% 38.0 1.0% 38.0 37.0 37.5 0.5% 0.0% 36.0 37.0 0.0% 35.0 - 2.0% 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2015Q1 2015Q2 2015Q3 2015Q4 2017Q3 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 Rental (LHS) y-o-y growth (RHS) Rental (LHS) y-o-y growth (RHS)

Shenzhen rental rate and y-o-y growth Guangzhou rental rate and y-o-y growth

Rmb/month Rmb/month 38.0 9.0% 36.0 10.0% 9.0% 37.0 8.0% 35.0 7.0% 8.0% 36.0 34.0 6.0% 7.0% 35.0 6.0% 5.0% 33.0 34.0 5.0% 4.0% 32.0 33.0 4.0% 3.0% 3.0% 32.0 31.0 2.0% 2.0% 30.0 31.0 1.0% 1.0% 30.0 0.0% 29.0 0.0% 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 Rental (LHS) y-o-y growth (RHS) Rental (LHS) y-o-y growth (RHS)

Qingdao rental rate and y-o-y growth Shenyang rental rate and y-o-y growth

Rmb/month Rmb/month 16.7 0.8% 23.4 3.0% 2.5% 16.7 0.6% 23.2 2.0% 0.4% 23.0 16.6 1.5% 0.2% 22.8 16.6 1.0% 22.6 0.0% 0.5% 16.5 - 0.2% 22.4 0.0% 16.5 - 0.4% 22.2 - 0.5% 2015Q2 2015Q3 2015Q4 2016Q2 2016Q3 2016Q4 2017Q1 2017Q3 2015Q1 2016Q1 2017Q2 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 Rental (LHS) y-o-y growth (RHS) Rental (LHS) y-o-y growth (RHS)

Source: CBRE, DBS Vickers

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Industry Focus China Real Estate (Warehouse) Sector

Tianjin rental rate and y-o-y growth Dalian rental rate and y -o-y growth

Rmb/month Rmb/month 31.0 0.5% 25.2 1.6% 0.4% 25.2 1.4% 0.4% 30.5 25.2 1.2% 0.3% 1.0% 0.3% 25.2 30.0 0.8% 0.2% 25.2 0.2% 0.6% 25.1 29.5 0.1% 0.4% 0.1% 25.1 0.2% 29.0 0.0% 25.1 0.0% 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 Rental (LHS) y-o-y growth (RHS) Rental (LHS) y-o-y growth (RHS)

Nanjing rental rate and y-o-y growth Hangzhou rental rate and y-o-y growth

Rmb/month Rmb/month 28.0 12.0% 28.0 12.0% 27.0 10.0% 27.0 10.0% 26.0 8.0% 26.0 8.0% 25.0 6.0% 25.0 6.0% 24.0 4.0% 24.0 4.0% 23.0 22.0 2.0% 23.0 2.0% 21.0 0.0% 22.0 0.0% 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 Rental (LHS) y-o-y growth (RHS) Rental (LHS) y-o-y growth (RHS)

Chengdu rental rate and y-o-y growth Chongqing rental rate and y-o-y growth

Rmb/month Rmb/month 27.5 2.0% 19.5 4.0% 27.0 1.0% 19.4 3.0% 0.0% 19.3 26.5 19.2 2.0% 26.0 - 1.0% 19.1 1.0% - 2.0% 19.0 25.5 0.0% - 3.0% 18.9 25.0 - 4.0% 18.8 - 1.0% 24.5 18.7 - 2.0% - 5.0% 18.6 24.0 - 6.0% 18.5 - 3.0% 23.5 - 7.0% 18.4 - 4.0% 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 Rental (LHS) y-o-y growth (RHS) Rental (LHS) y-o-y growth (RHS)

Source: CBRE, DBS Vickers

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Industry Focus China Real Estate (Warehouse) Sector

Wuhan rental rate and y-o-y growth Top 10 logistics developers

Rmb/month Rank Company GFA (m sm) 23.2 3.0% 1 GLP 18.3 23.0 2 Goodman 2.5 22.8 2.0% 3 Yupei 2.1 22.6 1.0% 22.4 4 e-Shang/Redwood 2.1 0.0% 22.2 5 Blogis 1.8 22.0 - 1.0% 21.8 6 Prologis (AMB) 1.7 21.6 - 2.0% 7 Mapletree 1.7 21.4 - 3.0% 21.2 8 Ping An RE 1.5 21.0 - 4.0% 9 Cainiao 1.2 10 Vipshop 1.1

2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 Rental (LHS) y-o-y growth (RHS)

Source: CBRE, DBS Vickers Source: CAWS, GLP, JLL, DBS Vickers

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Industry Focus China Real Estate (Warehouse) Sector

DBSVHK 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

Completed Date: 20 Nov 2017 08:32:09 (HKT) Dissemination Date: 20 Nov 201712:55:02 (HKT) Sources for all charts and tables are DBS Vickers unless otherwise specified.

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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.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. 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.

DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making.

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ANALYST CERTIFICATION The research analyst(s) 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(s) 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 the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate 1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBSVS, DBSV HK or their subsidiaries and/or other affiliates have a proprietary position in China Vanke Company Limited 'H' (2202 HK) recommended in this report as of 15 Nov 2017.

DBS Bank Ltd, DBS HK, DBSVS, DBSV HK or their subsidiaries and/or other affiliates have proprietary positions in Global Logistic Properties Limited (GLP SP) and Mapletree Logistics Trust (MLT SP) recommended in this report as of 31 Oct 2017.

2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.

3. DBS Bank Ltd, DBS HK, DBSVS, DBSV HK, their subsidiaries and/or other affiliates have a net long position exceeding 0.5% of the total issued share capital in Mapletree Logistics Trust (MLT SP) recommended in this report as of 31 Oct 2017.

4. Compensation for investment banking services: DBS Bank Ltd, DBS HK, DBSVS, DBSV HK, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for investment banking services from Beijing Properties Holdings Limited (925 HK) and Mapletree Logistics Trust (MLT SP) as of 31 Oct 2017.

5. DBS Bank Ltd, DBS HK, DBSVS, DBSV HK, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for Beijing Properties Holdings Limited (925 HK) and Mapletree Logistics Trust (MLT SP) in the past 12 months, as of 31 Oct 2017.

DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction 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.

6. Disclosure of previous investment recommendation produced: DBS Bank Ltd, DBSVS, DBSVHK, their subsidiaries and/or other affiliates of DBSVUSA may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBSVHK, their subsidiaries and/or other affiliates of DBSVUSA in the preceding 12 months.

1An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.

2Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

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Industry Focus China Real Estate (Warehouse) Sector

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”). DBS holds Australian Financial Services Licence no. 475946. DBSVS is 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, and DBSVHK is regulated by the Securities and Futures Commission of Hong Kong under the laws of Hong Kong, 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 Bank Ltd, DBS Bank (Hong Kong) Limited and DBS Vickers (Hong Kong) Limited, all of which are registered with or licensed by the Hong Kong Securities and Futures Commission to carry out the regulated activity of advising on securities. Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas 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 , 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 This report is produced by DBSVHK which is regulated by the Hong Kong Securities and Futures Commission

Kingdom This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd (“DBSVUK”). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom.

In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates 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 DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication. Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor, International Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Financial Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for Centre professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

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United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined Emirates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent. United States This report was prepared by DBSVHK. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. 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 In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. DBS Vickers (Hong Kong) Limited 18th Floor Man Yee building, 68 Des Voeux Road Central, Central, Hong Kong Tel: (852) 2820-4888, Fax: (852) 2868-1523 Company Regn. No. 31758

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Industry Focus China Real Estate (Warehouse) Sector

DBS Regional Research Offices

HONG KONG MALAYSIA SINGAPORE DBS Vickers (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua 18th Floor Man Yee Building 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 68 Des Voeux Road Central Capital Square, Marina Bay Financial Centre Tower 3 Central, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 2820 4888 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2863 1523 Tel.: 603 2604 3333 Fax: 65 65353 418 e-mail: [email protected] Fax: 603 2604 3921 e-mail: [email protected] Participant of the Stock Exchange of Hong Kong Ltd e-mail: [email protected] Company Regn. No. 196800306E

INDONESIA THAILAND PT DBS Vickers Sekuritas (Indonesia) DBS Vickers Securities (Thailand) Co Ltd Contact: Maynard Priajaya Arif Contact: Chanpen Sirithanarattanakul DBS Bank Tower 989 Siam Piwat Tower Building, Ciputra World 1, 32/F 9th, 14th-15th Floor Jl. Prof. Dr. Satrio Kav. 3-5 Rama 1 Road, Pathumwan, Jakarta 12940, Indonesia Bangkok Thailand 10330 Tel: 62 21 3003 4900 Tel. 66 2 857 7831 Fax: 6221 3003 4943 Fax: 66 2 658 1269 e-mail: [email protected] e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand

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