Market Focus

Singapore Supplementary Budget

Refer to important disclosures at the end of this report

DBS Group Research . Equity

27 Mar 2020

Unprecedented anti-viral boost STI : 2,487.56 • Dishing out total handouts of S$55bn, a whopping 11% of GDP • Significant cost savings of 4% cushions STI earnings decline to 5% for 2020F Analyst • Booster shot to Aviation-related, hospitality and retail sectors Janice CHUA +65 6682 3692; [email protected]

• Key beneficiaries are SATS, SIA Engineering, Genting, Starhub, MINT, Kee Yan YEO, CMT +65 6682 3706; [email protected] UOB, OCBC Andy SIM, CFA +65 6682 3718; [email protected]

Dipping into reserves for an unprecedented relief package. The Singapore Research Team; [email protected] government’s relief package of S$48bn is generous and timely, blowing

market expectations. Including February’s Care and Share package of Key Indices S$6bn, the total handout of S$55bn represents an unprecedented 11% of Current % Chng GDP, and more than double the relief package of S$20.5bn dished out STI Index 2,487.56 -0.7% during the Global Financial Crisis. Aimed at saving jobs and supporting FS Small Cap Index 244.02 4.5% industries, this will cushion the recessionary impact as Singaporeans brave USD/SGD Curncy 1.43 -0.1% through this dark period. The impact is broad based, benefiting both Daily Volume (m) 445 consumers and corporates. Daily Turnover (S$m) 676

Lifeline for aviation-related and hospitality industries, which are directly hit Daily Turnover (US$m) 473 by COVID-19. The absence of tourists with several countries in lockdown Source: Bloomberg Finance L.P. mode and Singapore in ‘quarantine’ stage put these industries in dire Market Key Data straits. The proposed wage subsidies of 75% for the aviation sector under (%) EPS Gth Div Yield Jobs Support Scheme (JSS) will preserve jobs as well as help to keep these 2019 (0.4) 5.4 companies in survival mode despite the loss of revenue for a few months. 2020F (7.3) 5.3 Total estimated cost savings for aviation-related industry is estimated at 2021F 13.6 5.3 S$574m or 20% of Industrial sector’s net earnings.

(x) PER EV/EBITDA Shot in the arm for the economy, more property rebates. The thrust of the 2019 11.4 11.8 package is to save jobs and improve livelihoods. This will be positive for 2020F 12.2 12.4 banks, reducing the risks of provisions spiking up. In addition, banks will

2021F 10.8 10.6 enjoy cost savings of 2% from JSS. In the property sector, property tax rebates work out to about 1 month of rent for retail landlords and Beneficiaries hospitality landlords (c.9% of revenues) and 10 days of rent for 12-mth commercial and industrial landlords. The various expanded job schemes, Price Mkt Cap Target Performance (%) loan programmes and deferment of income taxes for companies will S$ US$m S$ 3 mth 12 mth Rating improve business cash flows especially for firms in the industrial and Mapletree offices properties sectors. This will benefit most landlords, but we see Industrial 2.35 3,614 3.00 (8.9) 13.0 BUY industrial REITs benefiting the most. Among the industrial landlords, we TrustGenting Spore 0.62 5,181 0.80 (33.9) (39.7) BUY believe Mapletree Industrial Trust (MINT), with a large exposure to small SATS Ltd 3.32 2,594 2.66 (34.4) (34.9) FV and medium enterprises (SMEs), will be a key beneficiary. SIA Engrg 1.88 1,472 na (33.3) (21.7) na Singapore Cost savings significant at 4% for STI stocks, cushioning earnings drop. Airlines 6.50 5,382 na (66.5) (68.3) na We estimate the relief package will lead to cost savings culminating to ST Engrg 3.04 6,618 na (22.7) (19.2) na 4% for STI stocks, arising from JSS subsidies for labour intensive StarHub 1.32 1,597 1.40 (6.4) (12.6) BUY industries and those hit by COVID-19. This should help to cushion our OCBC Bank 8.75 26,907 8.60 (20.0) (20.7) HOLD earnings decline projection for FY20F to -5% from -9%. Besides the UOB 19.73 22,999 19.00 (25.3) (21.1) HOLD specific measures to lift the aviation sector that will benefit companies like SATS and SIA Engineering (SIE), other key beneficiaries with more Source: DBS Bank, Bloomberg Finance L.P. than 5% uplift to net earnings are Starhub and Genting. The relief Closing price as of 26 Mar 2020 package will sustain the economy and build resilience in the system. Banks, as proxies to the economy, will be key beneficiaries, the impact of wage subsidies amounting to 2% of net profits.

ed: JS/ sa: DT, PY, CS Market Focus

Extraordinary S$48bn Resilience Budget to Fight COVID-19. Enhanced Jobs Support Scheme (JSS) amounts to S$13.7bn. The DPM and Finance Minister, Mr Heng Swee Kiat, One of the key thrusts is to ensure that the livelihoods of delivered a Resilience Budget in Singapore Parliament residents are protected. The government is enhancing the response to the challenges brought on by the COVID-19 Jobs Support Scheme and will provide employers a 25% pandemic. This comes just 5 weeks after the Singapore cash grant (up from 8% previously announced on 18 Feb) 2020 Budget. on the gross monthly salary of each employee for nine months. This is increased from three months previously. The overall supplementary budget amounts to S$48bn and coupled with the S$6bn Care and Support package Aviation and Food Services receive additional JSS. For the announced on 18 Feb 2020, the total committed amount to aviation and tourism-related, and food services sector, which fight against COVID-19 pandemic totals S$55bn, are directly and deeply impacted by the virus outbreak, the representing 11% of Singapore’s GDP. JSS will support 75% and 50% of the first S$4,600 of employees’ gross monthly wages for 9 months. The focus of this S$48bn Resilience Budget rests on three key objectives: Further to that, the aviation sector will also receive S$350m 1. Support Workers, Protect Livelihoods support under the Aviation Support Package to provide cost 2. Stabilise and Support Businesses relief for the sector as well as to maintain some level of air 3. Build Resilience connectivity to allow Singaporeans to return.

This Supplementary Budget is unprecedented and far larger Impact on STI index earnings than the S$20.5bn Package during the Global Financial Impact on component stocks Crisis. The government is expected to draw on S$17bn of Prior to the supplementary budget we had expected the nation’s past reserves. earnings of STI component stocks to contract by 9% y-o-y in FY20F. With the supplementary budget leading to significant The key thrust of this supplementary budget is to save jobs cost savings amounting to 4% for STI stocks, we now expect and provide support to businesses, particularly those STI component stocks to register 5% y-o-y earnings industries deeply impacted by the outbreak. These include contraction. aviation and travel-related, hospitality, transport and food services sectors.

DBS: estimated uplift of c.4% to FY20F EPS arising from Singapore Resilience Budget Measures Sector 2019 Net Earnings S$m Banks 15,565 Real Estate 4,437 Consumer Staples 3,287 Industrials 2,901 Communication Services 2,533 Consumer Discretionary 2,001 REITs 1,733 Financial 391 Information Technology 363 Grand Total 33,212

FY20 net earnings forecast before budget 30,256 FY20 net earnings forecast after budget 31,551 FY20 EPS change before supplementary budget -8.9% FY20 EPS change after supplementary budget -5.0%

Source: DBS Bank estimates’

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Market Focus

Resilience Budget and impact on sectors Est. benefit Beneficiaries Measures (S$m) Aviation

SIA (1) Estimate 17,500 employees qualify for wage support - $380m 380 (2) Extension of 100% rebate on parking charges at until 31 Oct20 (prev. 31 Jul)

SATS (1) Estimate >7,000 Singaporeans and PRs qualify for wage support - $96m 101 (2) Property tax rebate est. <$5m (3) Licensing rebates and other ground handlers and cargo agent rebates

SIA Eng (1) Cost savings of about S$84m accruing to SIE for FY21, which is around 17% of last year’s wage bill At least 28 (2) Expect earnings to decline by 16% (prev >21%) in FY21

ST Eng (1) Costs savings of about S$70m from wage support for around 7,000 staff in Singapore 70 Hospitality

Genting (1) Expect 8,750 employees to qualify for wage support – S$150m (2) 60% property tax rebate translates into an additional S$20m of cost savings 180 (3) S$90m earmarked for tourism recovery efforts will help to support top line

Banks

(1) Enterprise Financing Scheme (EFS) - Trade Loan: Increase maximum loan quantum from $5 m to $10 m, Government's risk-share increases from up to 70%, to 80%. (2) Increase subsidies to businesses for loan insurance premiums under the Loan Insurance Scheme, from UOB, 50% to 80%. 310 OCBC (3) Expand the Temporary Bridging Loan Programme (TBLP) to all enterprises, and increase the maximum supported loan from $1 m to $5 m. (4) SMEs that require support beyond the TBLP can continue to tap the EFS - SME Working Capital Loan. (5) Jobs Support Scheme and Wage Credit scheme

Food service

Sheng Siong, (1) Enhanced Jobs Support Scheme for Food Service from 8% to 50%, up to S$4,600 gross monthly DFI, Koufu wage for 9 months, from 3 months previously

Jumbo (2) Enhanced Grocery Vouchers for Singaporeans living in 1- or 2-room flats worth $300 from $100 Land transport

(1) Estimate 7,000 employees qualify for Jobs Support Scheme ComfortDelgro (2) Help to defray costs of growing idle fleet; to pass on benefit to taxi drivers

Telco

Starhub (1) Enhanced Jobs Support Scheme of 25% from 8%, up to S$4,600 gross monthly wage for 9 months, 13 from 3 months previously 65-70

Property

(1) Property tax rebate at 100% for Hospitality and Retail, and 30% for other Commercial properties, up Various from 30% and 15%, respectively property (2) Enhanced rental waivers of 2 months for commercial and non-residential tenants in government companies, properties (3) Overall impact positive for REITs as it limits potential downside to DPUs; property companies savings will step the dip in income as recurring incomes dip in 2020.

Source: Ministry of Finance, DBS Bank

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Market Focus

Sector and related company impact/ commentaries

The related supplementary measures and impact on the various sectors/ companies are detailed as follows:

Aviation-related (Paul YONG, Suvro SARKAR, Alfie YEO) This is significantly a higher level of support than the • : SIA Group employs over 27,000 people S$18-20m in jobs credit scheme grants received in (based on their latest annual report) and the enhanced FY09/10 post-GFC, and is likely commensurate with the Jobs Support Scheme will help to defray a significant massive impact to air travel expected in the coming portion of its staff costs, which make up a large portion of months, with parent SIA grounding almost 96% of its the Group’s fixed cash costs. Assuming a dependency capacity in coming days, which is likely to sustain till the ratio of 35%, SIA would be eligible to obtain wage end of the year. support for over 17,500 of its staff and assuming 70% of the full benefit on average will flow through for SIA, this • ST Engineering: ST Engineering (STE) is a diversified could amount to over S$42m a month or c.S$380m in conglomerate with a staff strength of close to 22,000 support for SIA over 9 months. across geographies. We estimate around 65% of staff are based in Singapore, of which around 50% would be Extension of the 100% rebate on parking charges at locals. Aerospace sector will have a bigger proportion of Changi Airport until 31 Oct 2020 (from 31 July previously) locals on the payroll, whereas other sectors more heavily will also be helpful for SIA. Together, these measures will into manufacturing and marine shipyards would have help reduce the cash outflow from SIA during this higher dependency on foreign workers. challenging period and lower its operating losses. In total, we estimate STE would be able to obtain wage • SATS: Enhanced Jobs Support Scheme for aviation sector support for around 7,000 staff in Singapore, but we are will see S$96m in benefits to SATS for 9 months. We not assuming 75% offset of wages, but rather 25% offset estimate property tax rebates of around S$5m as well. Our as STE’s businesses including aerospace MRO may not estimate assumes (i) SATS operates on 62% dependency qualify under the additional tier of support for severely ratio for its aviation segment and we estimate that it has stressed businesses as STE has minimal exposure to airport ~7,000 Singaporeans and PRs who will be eligible; (ii) a operations and ground handling. wage offset of 75% for every local worker employed applies. Other benefits from the $350m enhanced aviation Taking this into account, we estimate STE to save around support package include rental rebates of 1) 20% for S$70m in staff costs in FY20. This is around 4% of STE’s tenancy at Changi Airfreight Centre and 2) rent rebates overall staff costs. We estimate this could help cushion any for lounges and offices at Changi Airport Terminal potential decline in STE’s performance in FY20 to a buildings. significant extent. The impact on STE of course will not be as affected operationally compared to SIA Engineering, as • SIA Engineering: SIA Engineering (SIE) should be a its Aerospace division has a more diversified revenue mix significant beneficiary of the enhanced Jobs Support with low dependence on the line maintenance business. Scheme. We estimate around 60% of SIE’s employee The Group itself has multiple segments with exposure to strength of 4500 are locals (Singaporeans + PRs) who more stable government and defence spending. would qualify for the scheme. Given the wage offset of 25% up to the first S$4,600 of wages for locals for 9 months, we estimate cost savings of about S$28m accruing to SIE for FY21, which is around 6% of last year’s wage bill.

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Market Focus

Gaming (Jason SUM) Land Transport (Andy SIM)

• (GENS) is poised to reap significant • Special Relief Fund of S$300/ month till Sep 2020. A cost savings. Based on the latest available figures, we Special Relief Fund payment of S$300 per vehicle per believe that Genting employs around 12,500 employees, month till end September for taxi hirers will help alleviate 70% of which are Singaporeans and Permanent Residents. the costs of rental. This works out to S$10 per day. This As part of the enhanced Job Support Scheme, assuming should be on top of the current rental rebates that are in 75% wage offset (given that Genting is part of the place. tourism sector), and an average monthly salary of S$2,500, Genting would receive around S$16.4m per On 25 March, ComfortDelGro has announced an increase month or around c.S$150m for the total nine-month in rental rebate to S$46.50 (up from S$36.50/day) and period. extending it till end April. The S$36.50/ day rebate was supposed to step down to S$30/day in April. This could Furthermore, GENS would also enjoy a 60% property tax help to reduce the idle rate with lesser taxi hirers returning rebate, up from 10% initially, which translates into further their taxis. savings of c.S$20m. Overall, Genting could see c.S$170m reduction in its full-year operating costs, with total Fund to defray cost of idle fleet. $12m will also be set potential cost savings accounting for around 28% of our aside to help taxi operators defray the costs of their FY20 full-year EBITDA projection. Finally, the S$90m unhired fleet. This is expected to be pass on to drivers, earmarked for tourism recovery efforts to catalyse an which we believe CD has done. imminent rebound should also have some positive impact on GENS, given that RWS is one of Singapore’s top tourist Food Service (Alfie YEO) attractions. • Relief for F&B foodservices; positive for supermarket operators. Key measure for the sector is the Enhanced Banks (LIM Rui Wen) Jobs Support Scheme which will impact F&B Foodservices • Alleviating concerns over non-performing loans. While it is significantly. Co-funding of wages will increase from 8% a given that credit costs and non-performing loans for for 3 months to 50% for 9 months with monthly wage both businesses and individuals will be higher y-o-y, we ceiling increased from S$3,600 to S$4,600. This will have believe the Supplementary Budget will help businesses a positive impact on wage cost for Koufu and Jumbo. On mitigate some cashflow difficulties in the meantime with our estimates, the additional reliefs will increase to S$4- various enhancements to Enterprise Financing Scheme 7m from S$1-2m previously. However, downside risk to (EFS), subsidies to businesses under the Loan Insurance revenue and earnings prevail if travel restrictions and Scheme, Temporary Bridging Loan Programme (TBLP) and limited social interactions/ dining out prevail. EFS - SME Working Capital Loan. Impact on supermarkets is a net positive with the Further, the government will also be setting aside S$20bn Enhanced Grocery Voucher. Jobs Support Scheme (25% of loan capital to support companies with strong co-funding) will go towards retaining headcount at capabilities. In addition, the substantial enhancements to supermarkets for DFI and SSG. We continue to be positive Jobs Support Scheme and Wage Credit Scheme are likely on supermarkets while maintaining our neutral stance on to go a long way to preserve jobs, and also help to F&B Foodservices. alleviate concerns on potential defaults on mortgages (which accounts for close to a quarter of Singapore Banks’ Telecom Sector (Sachin MITTAL) loan book) and individual non-performing loans among • StarHub is the biggest beneficiary in the telecom sector. Singapore banks as the economy continues to see an Under the Jobs Support Scheme, the government will co- expected contraction. Increased co-funding of wages will fund 25% of local workers’ wages (up to a monthly salary likely have 1-2% positive impact on banks’ earnings. of S$4600) for 9 months till December 2020. In terms of percentage impact on earnings, StarHub will benefit the most. We estimate that StarHub might benefit by S$13m (~9%% of FY20F earnings), Singtel by S$65-70m (~3% of FY21F earnings) & Netlink by S$2m (1.5% of its free cash flow). We have assumed that 80% of the staff is local and the Government will co-fund S$1000 per month on average for the local staff.

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Industrials (HO Pei Hwa) While hoteliers are seeing a slight lift in occupancies from • Offshore & Marine sector will benefit from wage support. Malaysians (who chose to stay in Singapore) post the lock- Shipyards, a labour-intensive industry, will enjoy some cost down in Malaysia and stay-home-notices (SHN) for savings from the enhanced job credit scheme. While the returning travellers, average daily rates (ADR) are generally quantum is not big, every bit helps in this current lower than usual. challenging operating environment as capex recovery is once again deferred by low oil prices as COVID-19 takes a The expansion of the tax rebates (30% of property tax) to toll on oil demand. commercial and industrial properties is also welcomed as recent channel checks suggest that industrial and office . We estimate that Keppel employs (eventually) tenants have been asking for some form of ~2,000 local employees that qualify for wage support, assistance (through rent rebates etc) as their own business resulting in S$21m cost savings, or c.2.5% of Keppel’s activities are impacted. FY20F profit. Based on our estimates, the property tax rebates work out Group. hires c.2,500 local to roughly 1 month of rent for retail landlords and employees and will enjoys wage support of ~S$26m. The hospitality landlords (c.9% of revenues) and 10 days of cost savings will help to narrow its current net loss rent for commercial and industrial landlords. estimate of S$32m for FY20F. Parent Sembcorp Industries has ~600 local employees under its Energy business and Infusing cashflow to tenants. The expanded various job corporate office in Singapore. We estimate that total cost schemes, loan programs and deferment of income taxes savings after excluding minority interests for SMM would for companies will improve business cash flows especially be ~S$21m, boosting FY20F bottomline by c.5.6%. for firms in the industrial and offices property sectors. This will also mitigate the risk of systemic closures, which is a Property Sector (Derek TAN, Rachel TAN) rising risk given the sharp economic slowdown in our • Ammunition for landlords to help tenants. We believe that view. the enhanced property tax rebates will come as a relief to landlords as most are balancing the need to provide help The various aid packages will help most landlords, but we to their tenants due to COVID-19 and economic see industrial REITs benefiting the most as we understand downturn. At the same, this should help to stem the risk that tenants in the manufacturing sector have been of potential tenant closures (and unwarranted vacancies seeking assistance from their landlords in recent times. spiking in the near term). The increase in property tax Among the industrial landlords, we believe Mapletree rebate from 30% to 100% for the most directly impacted Industrial Trust (MINT), with a large exposure to small and sectors (retail, hospitality and MICE) will be timely for medium enterprises (SMEs) will benefit the most. landlords.

With calls from government to pass down the rebates to the tenants, we believe most landlords will do so and provide more (on top of marketing efforts for retailers) in the immediate term. The hoteliers will also be able to mitigate near term losses as island-wide occupancies drop towards the low 30%-35% with Singapore limiting entry to tourists (passenger traffic at the airport since the lockdown has fallen more than 90%).

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Market Focus

Comparison of measures (SARS, COVID-19) SARS COVID-19 Resilience Package Remarks (2003) (Feb 2020) (March 2020) (Resilience Package vs. COVID-19) Property tax rebate - $2,000 rebate plus 10% - 30% rebate for - No property tax for - property tax holiday for rebate on property tax for accommodation and qualifying commercial hospitality and retail commercial properties function room components properties (hotels, serviced properties increased to 1 - Gazetted hotels received of hotels, serviced apartments, tourist year $2,000 rebate plus 30% residences and MICE attractions, shops and - property tax rebate rebate on property tax venues restaurants). extended to other (excluding F&B and retail - 15% property tax rebate - 30% property tax rebate commercial properties such components) for Changi Airport for other non-residential as offices and industrial - 15% property tax rebate properties. for commercial properties

Employment rebate - 50% reduction in foreign - co-fund 8% of wages for - co-fund wages for all - increase in benefits to worker levy for unskilled all locals of up to $3,600 locals up to $4,600 until businesses employing workers employed by for 3 months end-2020: locals hotels - Aviation/Tourism Sector - - ensure job security for - levy reduced from $240 75% locals to $120 for 8 months - Food Services Sector - 50% - Other Sectors - 8% to 25%

Additional measures - grants for STB-approved - faster write-down of - increase maximum - ensure that credit lines tourism-related courses investment in Enterprise Financing for operating cash flows - employees can undergo plant/machinery/renovation Scheme - Trade Loan to requirements will be upgrading during lull s $10m available for businesses. period - businesses to increase - extend Temporary investment and carry out Bridging Loan Programme renovations during lull to all enterprises up to a maximum of $5m.

Others - - 25% rebate on corporate - automatic deferment of - provide businesses with tax up to $15,000 income tax payment for some flexibility to manage companies for three cash flows in the short- months. term.

Source: MTI, DBS Bank

Property tax rebates expanded to more sectors COVID-19 Resilience Package Remarks (Feb 2020) (March 2020) Property tax rebates 30% for Hospitality, and 15% for 100% for Hospitality and Retail, and More support for all commercial qualified Commercial properties 30% for other Commercial properties properties, especially Hospitality and Retail Retail 1-week rent rebate 4-weeks rent rebate Increased 4 times Hospitality 2-weeks rent rebate 4-weeks rent rebate Doubled Office n/a 2-weeks rent rebate Support for Office properties Industrial n/a 2-weeks rent rebate Support for Industrial properties Source: MTI, DBS Bank

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Market Focus

Impact to Retail landlords – Sensitivity analysis We estimate that Singapore focused retail REITs can still deliver We revised our previous forecast to include the effects of new yields in the range of 5.2-10% in FY20F even after providing 2 property tax rebates announced for FY20 for all qualifying months’ worth of rental rebates to all tenants. commercial properties. We revise our sensitivity analysis to take into account: Retail commercial properties will be given full year tax rebates 1. Loss of 3 months of Gross Turnover (GTO) rental while office commercial properties will be given 30% tax revenue (assumed at 3% of rental income) rebates for FY20, which will affect our earnings for S-REITs in 2. Full year tax rebate for retail revenues, and 30% tax varying degrees. S-REITs with a higher percentage of revenue rebates for other Singapore-based qualifying assets generated through Singapore retail assets such as CapitaLand 3. 2 months rental rebates for all tenants Mall Trust and Frasers Centrepoint Trust will have a bigger negative impact in anticipation of higher rebates offered to tenants vs the rebates from the government.

Revenue Previous Sensitivity break Estimates Analysis down SG % % revenue FY20F FY20F FY20F FY20F FY20F FY20F Dividend % Chg focused revenue from other Revenues Distribut DPU Revenues Distribut DPU Yield (%) retail from qualifying (S$m) able (Scts) (S$m) able (Scts) S-REITs retail properties Income Income properties (S$m) (S$m) CMT 90.8% 9.2% 806.5 447.2 12.1 747.1 387.8 10.5 5.9% -13.2% FCT 100.0% 0.0% 201.4 143.0 12.8 184.4 126.0 11.3 5.2% -11.8% MCT 40.6% 59.4% 562.6 331.4 10.0 553.4 322.2 9.7 5.4% -2.7% SGREIT 49.6% 12.0% 211.6 97.5 4.5 203.5 89.4 4.1 10.0% -8.2% LREIT 70.6% 0.0% 87.7 61.4 5.2 82.5 56.2 4.8 8.9% -8.6% SPH REIT 67.8% 10.9% 301.8 163.1 5.9 285.6 146.9 5.3 6.9% -10.0%

Source: DBS Bank

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Market Focus

DBS Bank recommendations are based on 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 share price catalysts within this time frame) *Share price appreciation + dividends

Completed Date: 27 Mar 2020 09:51:02 (SGT) Dissemination Date: 27 Mar 2020 12:31:59 (SGT)

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Market Focus

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COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS'') or their subsidiaries and/or other affiliates have proprietary positions in SATS, Genting Singapore, StarHub, Sembcorp Industries, Mapletree Industrial Trust, Singapore Airlines Limited, Sheng Siong Group, SingTel, ST Engineering, ComfortDelgro, NetLink NBN Trust, Keppel Corporation, Sembcorp Marine, CapitaLand Mall Trust, Frasers Centrepoint Trust, Mapletree Commercial Trust, Starhill Global REIT, SPH REIT, OCBC, UOB, recommended in this report as of 28 Feb 2020.

2. Neither DBS Bank Ltd nor DBS 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, their subsidiaries and/or other affiliates have a net long position exceeding 0.5% of the total issued share capital in OUE Commercial REIT, StarHub, Mapletree Industrial Trust, ComfortDelgro, NetLink NBN Trust, CapitaLand Mall Trust, Mapletree Commercial Trust, Starhill Global REIT, SPH REIT, recommended in this report as of 28 Feb 2020.

4. DBS Bank Ltd, DBS HK, DBSVS, DBSVUSA or their subsidiaries and/or other affiliates beneficially own a total of 1% of any class of common equity securities of ComfortDelgro, NetLink NBN Trust, Starhill Global REIT, as of 28 Feb 2020.

Compensation for investment banking services: 4. DBS Bank Ltd, DBS HK, DBSVS their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for investment banking services from Sembcorp Industries, Mapletree Industrial Trust, Singapore Airlines Limited, Koufu Group Limited, Keppel Corporation, CapitaLand Mall Trust, Frasers Centrepoint Trust, Mapletree Commercial Trust, LendLease Global Commercial REIT, as of 28 Feb 2020.

5. DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for Sembcorp Industries, Mapletree Industrial Trust, Singapore Airlines Limited, CapitaLand Mall Trust, Frasers Centrepoint Trust, Mapletree Commercial Trust, LendLease Global Commercial REIT, in the past 12 months, as of 28 Feb 2020.

1 An 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.

2 Financial 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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6. 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.

Directorship/trustee interests: 7. Euleen Goh Yiu Kiang, a member of DBS Group Holdings Board of Directors, is a Non-Exec Director / Chairman of SATS as of 31 Dec 2019. 8. Nihal Vijaya Devadas Kaviratne CBE, a member of DBS Group Holdings Board of Directors, is a Director of StarHub as of 31 Dec 2019. 8. Dave GLEDHILL, a member of DBS Group Management Committee, is a Director of Singapore Airlines Limited as of 02 Mar 2020. Peter Seah Lim Huat, Chairman & Director of DBS Group Holdings, is a Director / Chairman of Singapore Airlines Limited as of 31 Dec 2019. 9. Sim S. LIM, a member of DBS Group Management Committee, is a Independent non-executive director of ST Engineering as of 02 Mar 2020. 10. Danny Teoh Leong Kay, a member of DBS Group Holdings Board of Directors, is a Director of Keppel Corporation as of 31 Dec 2019.

Disclosure of previous investment recommendation produced: 11. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates 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, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.

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, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946.

DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission 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 has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Bank (Hong Kong) Limited, a registered institution registered with the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). DBS Bank Ltd., Hong Kong Branch is a limited liability company incorporated in Singapore.

For any query regarding the materials herein, please contact Carol Wu (Reg No. AH8283) at [email protected]

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

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Market Focus

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

Wong Ming Tek, Executive Director, ADBSR

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

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.

United This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore. 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 units 608 - 610, 6th Floor, International Gate Precinct Building 5, PO Box 506538, DIFC, Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated Financial by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the Centre DFSA rulebook) and no other person may act upon it.

United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as Emirates defined 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.

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Market Focus

United States This report was prepared by DBS Bank Ltd. 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 Regional Research Offices

HONG KONG MALAYSIA SINGAPORE DBS (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua 13th Floor One Island East, 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 18 Westlands Road, Capital Square, Marina Bay Financial Centre Tower 3 Quarry Bay, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 3668 4181 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2521 1812 Tel.: 603 2604 3333 Fax: 65 65353 418 e-mail: [email protected] Fax: 603 2604 3921 e-mail: [email protected] e-mail: [email protected] Company Regn. No. 196800306E

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

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