Left Brain Right B - the DBS Vickers Securities Equities Research

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Regional Equity Strategy 4Q 2009 Country Assessment with NPLs and provisions stabilizing. Consumer Goods earnings were bolstered by higher CPO prices for plantation stocks listed on SGX. Driven by topline growth and recovery in margins. Overall sales showed a sequential improvement (+12%) over 1Q09, led by Real Estate, Basic Materials, Oil and Gas and Financials. EBIT margins recovered from 1Q09 lows to previous year’s level of 15%, following cost cutting measures undertaken and improvement in top line. Margin recovery was evident in Healthcare, Industrials, Reits and Technology sectors. Earnings revisions by sector (S$m) Pre-Results Post-Result % Chng Sector 2009 2010 2009 2010 2009 2010 Basic Materials 366 318 265 323 -27% 2% Consumer Goods 2,753 3,046 3,197 3,569 16% 17% Consumer Services 1,820 1,934 1,398 1,861 -23% -4% Financials 5,196 5,865 5,253 6,374 1% 9% Health Care 140 151 151 166 8% 10% Industrials 3,860 3,806 4,118 3,858 7% 1% Oil & Gas 591 582 621 604 5% 4% Real Estate 2,671 3,037 3,280 3,293 23% 8% REITS 1,427 1,427 1,477 1,501 4% 5% Technology -158 -11 -5 45 nm nm Telecommunications 4,223 4,687 4,310 4,707 2% 0% DBSV Coverage 22,888 24,842 24,065 26,300 5% 6% Source: DBS Vickers Recovery in earnings % Negative earnings 50 growth most likely in 40 recession years, but followed by sharp 30 rebound on recovery 20 10 0 -10 -20 Earnings growth -30 GDP growth -40 -50 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09F10F Source: Datastream, DBS Vickers More room for earnings upgrades. Earnings have bottomed, in line with the economy and we expect the recovery momentum to remain intact. We have raised earnings by 5% and 6% for FY09F and FY10F respectively, led by Consumer Goods (plantation stocks), Financials, Healthcare, Real Estate and REITS. Currently, our EPS growth for STI stocks at 18% for 2010 is a far cry from the recovery years of 1999 and 2003, where we saw earnings growth of >40%. We believe there is potential upside to earnings growth for 2010, which will underpin the longer term recovery plays. Expect a better 2H09 - earnings upgrades across the board. Unlike 1Q09 where upgrades were focused in the telcoms and plantation sectors, we note earnings upgrades across all sectors for 2010. We expect 2H09 to post a strong 26% yoy growth, after the 29% yoy fall in 1H09, mainly due to the low base in 4Q08, particularly asset based companies which suffered from write down in value of investments. Page 45
Regional Equity Strategy 4Q 2009 Country Assessment Earnings Estimates by Sector Eanings Growth PER Sector 2008 2009F 2010F CAGR 08-10 2008 2009F 2010F Basic Materials 96.7 -8.7 20.8 5.0 13.0 14.2 11.7 Consumer Goods 83.8 6.1 16.9 11.4 16.8 15.8 13.5 Consumer Services -38.8 -40.5 103.2 10.0 22.8 38.3 18.8 Financials -13.3 -12.8 21.1 2.8 15.1 17.4 14.3 Health Care 10.0 5.5 15.4 10.3 20.0 19.0 16.5 Industrials 9.4 -20.0 -5.1 -12.9 11.4 14.2 15.0 Oil & Gas -25.0 13.7 16.0 14.9 13.1 11.6 10.0 Real Estate -1.7 22.0 5.4 13.4 18.7 15.3 14.5 REITS 33.2 2.0 3.0 2.5 15.6 15.3 14.9 Technology -74.7 Loss Loss nm 45.0 nm nm Telecommunications -6.4 10.0 9.2 9.6 14.2 12.9 11.9 DBSV Coverage (Before EI) -2.5 -6.3 15.1 3.8 15.6 16.6 14.5 DBSV Coverage (After EI) -23.2 -10.8 18.8 2.9 15.4 17.3 14.5 STI DBSV Forecast Avg (Before EI) -18.7 -18.9 18.3 -2.1 14.2 17.5 14.8 STI DBSV Forecast Avg (Aft EI) -20.7 -20.6 15.1 -4.4 13.6 16.9 14.7 STI Consensus Avg -18.7 -21.9 18.3 -3.9 13.6 17.5 14.8 Source: DBS Vickers VALUATION AND OUTLOOK DBS Economist has upgraded our 2009 and 2010 GDP forecasts to –3% and +5.2% respectively. Providing the additional kicker to GDP growth is the upcoming launch of the integrated resorts, which will add at least 1.5% to Singapore’s GDP, creating 60,000 jobs. The ripple effects are wide, ranging from gaming, property, hospitality, property to service providers such as retail, media and transport operators. Singapore 12-mth forward GDP growth and earnings growth forecast trend (%) (%) 8 40 GDP growth (L) 6 4 2 30 20 10 0 0 -2 Earnings growth (R) -10 -4 02 03 04 05 06 07 08 09 -20 Source: Consensus Economics Inc, DBS, IBES Page 46
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Left Brain Right B - the DBS Vickers Securities Equities Research

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