MARKET PULSE. Key Idea

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1 Asia Pacific Equity Research Singapore MARKET PULSE Morning Call Key Singapore Indices Key Idea Close Chg % Chg STI Catalist Finance Property Electronics Vol(m) Val(S$m) World Indices Close Chg % Chg Dow Jones Nasdaq S&P FTSE KLCI Hang Seng Nikkei SET KOSPI TWSE Market Statistics (SG) STI 52-week range 2,799 3,465 No. of gainers 315 No. of losers 196 No. of unchanged 154 Economic Statistics S$/US$ Yen/US$ mth S$ SIBOR mth US$ SIBOR Crude futures (US$) Research Team (65) info@ocbc-research.com Raffles Medical Group: Upgrade to BUY premised on re-emergence of value Raffles Medical Group (RMG) is targeting the sale of its freehold seven-storey commercial podium which is located near Orchard Road. This is because it has failed to secure regulatory approval for the change of use of the property to a medical centre. The podium is independently valued at S$98m (as at end 2012), a 6.4% premium to its purchase price in Apr Meanwhile, management is aiming to improve its operating efficiencies by implementing a new Hospital Information System and Electronics Medical Records System. We believe that value has re-emerged for RMG following its drastic 16.5% share price decline from its recent peak. RMG remains on track to achieve a core EPS CAGR of 12.7% from FY12-14F, while offering FY13F ROE of 14.9%. Rolling forward our valuations to 29x blended FY13/14F EPS, we derive a higher fair value estimate of S$3.42 (previously S$3.22). Upgrade RMG from Hold to BUY. More reports: - Singapore Residential Property: Stabilizing sales environment News Headlines US stocks surged Monday, with the Dow extending their triple-digit moves into a fifth session, as investors latched onto any clues ahead of Wednesday s monetarypolicy decision by the FOMC. Singapore's non-oil domestic exports (NODX) fell 4.6% YoY in May, extending the 1% dip in Apr. Roxy-Pacific Holdings has acquired the freehold Yi Mei Garden in Tampines Road through a collective sale for $136m. Singapore Airlines has posted a lower passenger load factor of 74.6% for May, which was down 1.2ppt compared to the previous year. Cityneon Holdings Ltd said it has clinched S$5.7m worth of contracts for the Formula 1 Singapore Grand Prix. Banks say that a move to set financial benchmarks based on actual trades will have zero financial impact on customers. First Ship Lease Trust's B+/negative outlook rating has been unaffected by a counterparty default, said Standard & Poor's Rating Services. Sources: MasNet, Bloomberg, Business Times, Straits Times and other media Please refer to important disclosures at the back of this document. MCI (P) 006/06/2013

2 Raffles Medical Group: Upgrade to BUY premised on re-emergence of value Commercial podium to be sold Targeting better operating efficiencies Upgrade to BUY; FV raised to S$3.42 Seeking to sell its commercial podium near Orchard Road Raffles Medical Group (RMG) recently engaged real estate services firm Jones Lang LaSalle to advise and manage the sale of its freehold seven-storey commercial podium located at 30 Bideford Road. This would be done via a tender process, which closes on 15 Jul. RMG s decision to sell does not come as a surprise to us, as we had previously flagged the sale of the property as a viable option after its re-application for change of use to a medical centre was unsuccessful. As a recap, RMG completed the purchase of the 42,668 sf building for S$92.08m in Apr The latest independent valuation of the property was S$98m as at 31 Dec 2012, representing a 6.4% premium to its purchase price. We expect management to utilise the sale proceeds for its expansion plans rather than pay out a special dividend to shareholders. Investment outlay for its Raffles Hospital extension and possible Shenzhen hospital (non-binding Letter of Intent signed) is estimated to amount to S$80-130m and S$150m, respectively (capex to occur in stages). Enhancing productivity via digitalisation of medical records Operationally, RMG is seeking to implement a new Hospital Information System and Electronics Medical Records System. We believe this would enhance RMG s efficiency and improve the quality of delivery of its healthcare services as patients records can be easily shared between doctors, nurses and other ancillary services departments. The targeted completion for the implementation is by year end. Value has re-emerged, upgrade to BUY RMG s share price has fallen 16.5% from its peak attained on 11 Apr this year, far more drastic than the 3.7% dip by the STI during the same period. This is despite the fact that RMG remains on track to achieve a core EPS CAGR of 12.7% from FY12-14F, while offering FY13F ROE of 14.9%. As we now roll forward our valuations to 29x blended FY13/14F EPS, we derive a higher fair value estimate of S$3.42 (previously S$3.22) on RMG. We believe that value has re-emerged for RMG following its sharp share price correction, and thus upgrade the stock from Hold to BUY. (Wong Teck Ching Andy)..... Singapore Residential Property: Stabilizing sales environment Headline 1,912 units sold, up 2.4% MoM Uptick in mid-tier segment sales Risks of curbs diminished Headline total of 1,912 units sold - up 2.4% MoM. URA reported that a headline total of 1,912 new private homes (including 457 EC units) were sold in May 13, which was up 2.4% MoM and down 7.0% YoY. Excluding EC and landed-units, 1,442 units were sold in the month - up 6.3% MoM and down 13.5% YoY with a stake-up rate of 96.8% (versus 120.0% in Apr 13). As a result, the inventory of launched and unsold units (excl. EC/landed) in the market increased by 1.7% MoM to 5,295 units. Uptick in mid-tier segment sales. The majority of sales continues to fall in the mass-market segment (Outside Central Region or "OCR") with 718 units sold, forming 49.8% of total sales and is flat MoM. A key driver of OCR sales was the launch of Stratum (380 total units, Elias Rd) which sold 269 units at a median price of S$925 psf. In the mid-tier (Rest of Central Region or "RCR") space, there was a significant 28.1% MoM uptick to 601 units sold, driven mostly by a 172.2% MoM increase in units launched. Key launches include Corals at Keppel Bay (366 total units, Keppel Bay Drive) 132 units sold at S$2,150 psf, and KAP Residences (142 total units, King Albert Park) 105 units sold at S$1,839 psf. Diminished regulatory risks from stabilizing sales. We see FY13 primary sales slowing down to a rate of 16k-18k versus 22k units in FY12, pointing at a less frothy albeit still healthy environment. In view of this, the risks of incremental property curbs going forward 2

3 appear more diminished, in our view. In addition, developers are likely to show a more measured approach in tendering for land ahead, though demand is likely stay firm. Maintain NEUTRAL. We have a NEUTRAL rating on the residential property sector and prefer developers with strong balance sheets and diversified exposure. Our top picks are CapitaLand [BUY, S$4.29], Keppel Land [BUY, S$4.53] and CapitaMalls Asia [BUY, S$2.55]. (Eli Lee)

4 Calendar of key events Mon Tue Wed Thur Fri 17-Jun Jun Jun Jun Jun-13 SG May NODX China May Property Prices US May CPI US May Housing Starts US Jun FOMC Rate Decision US Jun Philadelphia Fed US May Existing Home Sales 24-Jun Jun Jun Jun Jun-13 SG May CPI US May New Home Sales SG May Industrial Production US 1Q GDP SG May Bank Loans & Advances US Jun U of Michigan Confidence 01-Jul Jul Jul Jul Jul-13 China Jun Mfg PMI US Jun ISM Mfg China Jun Non Mfg PMI US Jun Total Vehicle Sales US Jun ISM Non Mfg Composite US Jun Unemployment Rate 08-Jul Jul Jul Jul Jul-13 China Jun CPI China Jun Exports YoY US Minutes from Jun US Jul U of Michigan China Jun Imports YoY FOMC Meeting Confidence 15-Jul Jul Jul Jul Jul-13 SG May Retail Sales China Jun Ind Production China Jun Retail Sales China 2Q GDP USJun Adv Retail Sales SG Jun NODX China Jun Property Prices Notes: All US Tech results dates have been adjusted to Singapore dates. US Initial jobless claims are released every Friday. MBA mortgage applications are released every Wednesday. 4

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