MARKET OUTLOOK & SUMMARY REPORT Summary: 2ndMARCH – 8thMARCH 2014

Outlook: 10thMARCH– 15thMARCH 2014

MARKET SUMMARY FOR LAST WEEK (2nd MARCH – 8th MARCH 2014)

Dollar gains on solid February U.S. jobs report

The dollar moved higher against most major currencies on Friday after data revealed the U.S.

economy created more payrolls than expected in February. The Bureau of Labor Statistics reported

earlier that the U.S. economy added 175,000 jobs in February, beating expectations for a 149,000

increase. The U.S. private sector added 162,000 jobs last month, exceeding expectations for a

154,000 rise. January's figure was revised up to 145,000 from 142,000.

The report also showed that the U.S. unemployment rate ticked up to 6.7% in February, from 6.6%

the previous month. Analysts had expected the unemployment rate to remain unchanged last

month. Meanwhile, data also showed that the U.S. trade deficit expanded to $39.1 billion in January,

from $38.98 billion in December, whose figure was revised from a previously estimated deficit of

$38.7 billion. The data sent the dollar gaining, as the Federal Reserve has said it will pay close

attention to data when deciding on how quickly it will dismantle its monthly bond-buying program.

Gold drops on robust U.S. jobs report

Gold prices fell on Friday after data revealed the U.S. economy picked up more jobs than expected in

February, which investors expect will prompt the Federal Reserve to continue dismantling monetary

stimulus tools that have bolstered gold prices since 2012.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at

$1,338.80 a troy ounce during U.S. trading, down 0.96%, up from a session low of $1,329.00 and off

a high of $1,353.10. The April contract settled up 0.86% at $1,351.80 on Thursday. Futures were

likely to find support at $1,320.10 a troy ounce, the low from Feb. 28, and resistance at $1,355.00,

Monday's high.

Chinese trade balance -22.98B vs. 14.50B forecast

China’s trade balance fell more-than-expected last month, official data showed on Saturday. In a

report, National Bureau of Statistics of China said that Chinese Trade Balance fell to -22.98B, from

31.86B in the preceding month.

Analysts had expected Chinese Trade Balance to fall to 14.50B last month. Exports fell 18.1% from a

year ago, after a 10.6% gain in January, and were much worse than the 6.8% increase that

economists had expected.

Imports rose 10.1% from a year ago, after a 10% gain in January, and were stronger than the 8%

increase that economists had expected.

European stocks trim gains after Draghi comments

European stock markets pared advances in the afternoon on Thursday after European Central

Bank President Mario Draghi offered no fresh easing measures to fight the euro zone’s low inflation.

The Stoxx Europe 600 index XX:SXXP -1.25% moved 0.1% higher to close at 337.28, after trading as

high as 338.90 ahead of Draghi’s comments.

U.S. stocks mixed on jobs report, Ukraine unease; Dow rises 0.19%

Concerns that the Ukraine crisis my heat up anew offset a better-than-expected February jobs report

and sent stocks trading mixed to higher on Friday.

At the close of U.S. trading, the Dow Jones Industrial Average rose 0.19%, the S&P 500 index rose

0.05%, while the Nasdaq Composite index fell 0.37%. The Bureau of Labor Statistics reported earlier

that the U.S. economy added 175,000 jobs in February, beating expectations for a 149,000 increase.

Offsetting gains, however, were concerns the Russian standoff in Ukraine may be heating up anew.

Russian President Vladimir Putin said earlier that he wouldn't ignore pleas for help from Russian

speakers in Ukraine, which markets interpreted as rebuff to U.S. President Barack Obama's call to

end the crisis.

KEY EVENTS LAST WEEK (2nd MARCH – 8th MARCH 2014)

Currency Event Actual Forecast

CNY HSBC Final Manufacturing PMI 48.5 48.5 GBP Manufacturing PMI 56.9 56.9 EUR ECB President Draghi Speaks USD ISM Manufacturing PMI 53.2 52.3 AUD Building Approvals m/m 6.8% 0.7% AUD Cash Rate 2.50% 2.50% GBP Construction PMI 62.6 63.6 AUD GDP q/q 0.8% 0.7% GBP Services PMI 58.2 58.0 USD ADP Non Farm Employment Change 139K 159K USD ISM Non-Manufacturing PMI 51.6 53.8 AUD Retail Sales m/m 1.2% 0.5% AUD Trade Balance 1.43B 0.11B GBP Official Bank Rate 0.5% 0.5% USD Unemployment Claims 323K 336K CAD Ivey PMI 57.2 56.7 CAD Employment Change -7.0K 16.9K CAD Unemployment Rate 7.0% 7.0% USD Non Farm Employment Change 175K 151K USD Unemployment Rate 6.7% 6.6%

KEY EVENTS THIS WEEK (10th MARCH – 15th MARCH 2014)

Currency Event Singapore Time (+8GMT) Importance

AUD NAB Business Confidence Tuesday 8:30 AM High JPY Monetary Policy Statement Tuesday Tentative High GBP Manufacturing Production m/m Tuesday 5:30 PM High GBP Inflation Report Hearings Tuesday 6:00 PM High NZD Official Cash Rate Thursday 4:00 AM High NZD RBNZ Monetary Policy Statement Thursday 4:00 AM High AUD Employment Change Thursday 8:30 AM High AUD Unemployment Rate Thursday 8:30 AM High NZD RBNZ Gov Wheeler Speaks Thursday 9:10 AM High CNY Industrial Production y/y Thursday 1:30 PM High USD Core Retail Sales m/m Thursday 8:30 PM High USD Retail Sales m/m Thursday 8:30 PM High USD Unemployment Claims Thursday 8:30 PM High USD PPI m/m Friday 8:30 PM High USD Prelim UoM Consumer Sentiment Friday 9:55 PM High

SGX COMPANY EARNINGS RELEASE (CONFIRMED)

Company Date

Novo Group Ltd/Singapore Monday, 11th March

WBL Corp Ltd Monday, 11th March

Medi-Flex Ltd Tuesday, 12th March

Data as at 9/3/14

THIS WEEK’s FUNDAMENTAL ANALYSIS (FA) IDEA 1

Sheng Siong Group Ltd (BUY)

Ticker: SSG:SP Last Closed Price: 0.605 12M TP: 0.680 Upside/Downside Potential: 12.4% COMPANY DESCRIPTION

Sheng Siong Group Ltd is one of the largest super market chains in Singapore. The Company currently operates 33 stores in Singapore as of FY2014. Sheng Siong's stores sell fresh and chilled produce, seafood, meat and vegetables, processed, packaged and preserved food products as well as general merchandise such as toiletries and essential household items.

CONCLUSION To conclude, we favour Sheng Siong Group for its steady income growth, attractive dividend yields and defensive traits. With a healthy balance sheet and an expected recovery in supermarket retail sales in Singapore, we believe that Sheng Siong Group will continue to increase its profit margins through lowering its operating costs, such as via direct sourcing and better warehouse utilization. However, given strong competitive pressures in the supermarkets landscape, higher input costs due to food inflation and an upward pressure on foreign manpower costs, we do not expect the stock to outperform the market greatly. Nevertheless, with a huge dividend payout ratio and an above average dividend yield, coupled with a potential catalyst in the form of its e-commerce initiative, we believe that Sheng Siong Group remains a good buy

KEY FIGURES Mkt Cap

SGD837.04mil

Issued Capital (M shrs) 1383.54

30 Day Avg Vol 408,167

2012 2013 2014F 2015F

Net Income (SGD M) 31 39 40 41 EBITDA (SGD M) 43 52 53 55 EPS (SGD cents) 3.0 2.8 2.9 3.0 P/E (x) 19.9 21.3 20.8 20.2 Div Yield (%) 4.6 4.3 4.4 4.6 ROE (%) 27.8 25.8 26.4 26.6 Payout ratio (%) 91.4 92.5 - -

NUS Invest Research Analyst Jeremy Ong Leong Wen

Expected Recovery for Supermarket Retail Sales in Singapore

Private consumption is expected to continue to grow in line with GDP growth in Singapore. Private consumption is forecasted to grow by 2.6% in 2013 and 3.3% in 2014. The positive outlook is further supported by the Singapore Retail Sales Index, with retail sales steadily recovering, increasing by 2.3% in Dec 2013 as compared to Nov 2013. Additionally, retail sales of supermarkets have grown from between 1.0% to 8.4% from Dec 2012 to Dec 2013, despite weak overall retail sales growth.

Strong Earnings Growth and Balance Sheet

Sheng Siong Group reported a core net profit growth of 18.6% yoy to $38.9M in FY2013. This is after adjusting for a one-time gain of $10.5M from the sale of warehouse and a $1.6M tax provision in FY2012. Revenue increased by 7.9% to $687.4M in the same year, driven by higher new store sales. Gross profit margin improved as well in FY2013 by 23% due to lower input costs at its distribution centre and better sales mix. In addition, Sheng Siong Group’s balance sheet remained healthy, with a net cash position of $99.6M and no borrowings as at the end of FY2013.

Attractive Dividend Yields and Potential Catalyst in Pilot E-commerce Initiative

Sheng Siong Group has shown attractive dividend yields with its 1.4 cents final dividend declared, bringing the total dividend payout for FY2013 to 2.6 cents. With a handsome dividend payout ratio of 92%, SSG provides shareholders with an above average dividend yield of 4.3%. Additionally, Sheng Siong Group is presently in the pilot phase of its e-commerce initiative. While it e-commerce initiative presently makes negligible contribution to the group, it is expected to expand and cover the whole of Singapore if it is reasonably successful. This could potentially lead to higher profit margins and earnings.

both as a dividend play and a potential growth stock. Key Macroeconomic Risks and Expansion Issues

The supermarket industry is likely to remain highly competitive in FY2014, with few new stores being opened and with competitors fighting to improve the sales of present stores. Additionally, gross margins are likely to be impacted by higher input prices with food inflation as well as an upward pressure on labour costs, with tightening manpower issues due to additional restrictions and levies imposed on the supply for foreign labour.

Moreover, Sheng Siong Group faces expansion issues, with no new stores opened in FY2013 due to the group’s inability to find suitable retail space to open new outlets. Nevertheless, the group intends to continue its expansion plans in FY2014 and further mitigatethe problem by entering the digital marketplace with its e-commerce initiative.

THIS WEEK’S FUNDAMENTAL ANALYSIS (FA) IDEA 2

Thai Beverage Public Company Limited (BUY)

Ticker: SGX: Y92 Last Closed Price: 0.610 TP: 0.680 Upside/Downside Potential: 11.48%

COMPANY DESCRIPTION

Thai Beverage Public Company Limited, more commonly referred to as ThaiBev, is the largest beverage producer and distributor in Thailand. It has distilleries in Thailand, China, Scotland, Poland, Ireland, and France. Apart from its famous brands of alcoholic beverages like Chang Beer, Mekhong Whisky, and Sang Som Rum, ThaiBev also produces non-alcoholic beverages. Its key products in this category include drinking water, tonic soda, green tea and soft drinks. ThaiBev has also continually increased its influence in Southeast Asia; its most recent acquisition of Singapore conglomerate Fraser and Neave Limited occurred in January 2013.

KEY FIGURES

Market Cap (SGD)

15,317.12 M

Outstanding Shares 25,110.03 M Price/Book ratio (mrq) 4.137 30 Day Avg Vol (shrs) 21.025 M

FY12 FY13 FY14F FY15F

Revenue (THBm) 161,044 155,771 168,569 181,494

EBITDA (THBm) 26,733 24,933 27,019 29,983

Net profit (THBm) 28,493 19,130 21,104 23,979

EPS (THB)

Div Yield (%) 2.85 2.99 3.30 3.72

ROE (%) 40.38 21.78 21.31 21.79

P/B (x) 4.35 3.77 3.44 1.47

Cash and cash equivalents (THBm)

4,547 5,108 5,029 1,973

Short term debt (THBm)

16,007 12,357 19,995 24,289

Long term debt 88,146 54,343 41,554 29,433

NUS Invest Research Analyst Joseph Soh

Proven earnings stability in Thailand

Despite the increased liquor excise tax in Thailand announced in Sep 2013, ThaiBev has maintained stable profits by successfully increasing their selling price of alcoholic beverages at a higher rate than the excise tax. ThaiBev saw a better-than-expected earnings performance of its spirit and beer business in 4QFY13 (Oct-Dec13) as a result of its pricing power. Coupled with the strong performance and good profit contribution from newly acquired F&N, ThaiBev enjoyed a normalized profit of 18.9 billion THB. There is a 6% YoY growth when compared to norm. profit in 2012 (remove exchange gain/loss and one-off earnings of 12.7 billion THB). YoY growth despite the tougher business environment caused by increased tax signifies stability in ThaiBev.

Continued earnings growth in F&N

As mentioned above, Fraser & Neave has displayed strong performance. In the most recent 1QFY14, (Oct-Dec 13), F&N reported EBIT of SGD 61 million, an 18% YoY jump. The increase was attributed to robustness of the soft drinks, alcoholic drinks and dairy businesses. Soft drink demand grew in Singapore and Malaysia, and brewery volume jumped in Myanmar during and after SEA games. This resulted in 28% YoY increase in EBIT from beverages. Growth in EBIT from dairy business (10% YoY) was supported by sales volume in F&N Dairies Thailand Limited. Continual high demands in beverages and dairy products indicate that fundamentals of ThaiBev are likely to remain strong.

Low cash flow compared to current liabilities

Following a debt funded acquisition of 28.7% stake in Fraser & Neave, ThaiBev has faced higher debt and lower cash flow over the past two years. This is contrasted to 2011’s short and long term debt of 7.027 billion THB and 11.2 billion THB respectively, and cash&CE of 3.455 billion THB. Given ThaiBev’s recent low cash flow adequacy with respect to its short term debt, there is risk associated with ThaiBev not having

CONCLUSION

ThaiBev has enjoyed recent success in its 4QFY13

despite a marked increase in alcohol excise tax

announced by the Thai government. Its success was due

to a combination of generally inelastic demand for its

alcoholic products and the healthy market conditions in

its region of operations. By being able to successfully

raise revenue and profit in spite of the tax, ThaiBev

promises stable earnings in the future. In addition, the

excellent performance of its recently acquired F&N not

only adds to ThaiBev’s profit, but also brings upside

potential on corporate synergistic relations with F&N.

Thus far, ThaiBev has leveraged revenue and cost

synergies with F&N, especially through F&N Dairy

Thailand tapping on ThaiBev’s logistics network. ThaiBev

will also begin implementing a still undisclosed project

for further synergy in 4QDY14. Despite relatively strong

fundamentals, it should be noted that ThaiBev has yet

to fully rebound (financial gearing-wise) from its

acquisition of F&N. Also, lower cash flow with respect to

its short term debt is still observed for the past two

years. Nevertheless, with market conditions expected to

continue being favourable, ThaiBev should face little to

no liquidity risk in settling short term debts. Given the

comparative valuations below, ThaiBev also boasts

attractive dividend yields and lower P/E and P/B ratios

(suggesting slightly undervalued). We recommend BUY

at current price.

(THBm) Net Gearing (%) 122.4 65.32 54.42 45.15

sufficient liquid funds should market conditions become less favourable.

Source: KT ZMICO Securities, Bloomberg

THIS WEEK’s TECHNICAL ANALYSIS (TA) TRADE IDEA 1

GBP/JPY (Short) Current Price: 172.527 Suggested Take Profit:171.718 Suggested Stop Loss: 172.797 Risk-Reward Ratio: 1:3

NUSInvest Analyst Nicholas Lim Bing Yi

4-Hour Chart

Looking at the 4-hour chart for the GBP/JPY pair, the first thing that caught my eye was the bearish pinbar formation before markets closed for the weekend. The upper shadow of the pinbar also coincided with the high for 2014 thus far, as seen by the resistance level numbered (1). In addition, at the bottom of the chart we can see that the volume indicator has observed a significantly higher volume projection for the pinbar, lending weight to the pinbar’s bearishness. Furthermore, we can see that prices have actually broken out of an upwards-sloping trendline from last week’s price activities and closed for the weekend below its support level. Throwing oscillators into the mix, we can also see that both the Stochastics and the RSI show that prices have broken downwards after hovering about the overbought regions (upper orange lines). The Stochastics in particular shows a bearish divergence during last week’s strong uptrend which further adds to the bearish sentiment. The second resistance-turned-support line numbered (2) is our take profit level. We can see from the chart that it provided a significant resistance level for the month of February as prices threatened to break higher. This was eventually breached last week and we can look towards it being tested again, only this round as a support level.

2

1

1-Hour Chart

Zooming in to the hourly chart, we can see once again the trendline that we have identified earlier.

We can also observe prices moving in an uptrend and consistently taking support from the blue

Kijun-Sen line of the Ichimoku Cloud indicator, as depicted by the yellow circles. However, prices

closed for the weekend below the blue Kijun-sen, breaching its support level thus we can look at it

being a resistance level for our stop-loss to be based upon. In addition, the Chikou span has crossed

below the prices and if prices can eventually breach the upper and lower limit of the cloud, the

Ichimoku indicator would give us a strong confirmation of a large downtrend. It is also for this reason

that we can set a nearer take profit level at the upper limit of the cloud numbered (3) for those who

are more risk-adverse.

With that being said, we should also keep a lookout on the upcoming news releases that will affect

the GBPJPY. This coming week will comprise of Bank of Japan’s press conference and monetary

policy statements together with UK’s manufacturing and inflation data, so we have to be vigilant and

trade accordingly around these figures.

3

THIS WEEK’s TECHNICAL ANALYSIS (TA) TRADE IDEA 2

Forex (FX): AUD/USD (Short) Current Price: 0.9070 Suggested Take Profit : 0.8930 Suggested Stop Loss : 0.9140 Risk-Reward Ratio : 1 : 2

NUSInvest Analyst Stephen

Daily Chart

From the chart above, we can see that there is a strong resistance at 0.9140 level, corresponding to the 61.8 Fibonnaci expansion level that is drawn from the low in January to the high in February 2014. The 0.9140 level also acted as a previous resistance level in Dec 2013, further confirming the strength of the resistance. On the last trading day of last week, we could see a bearish pinbar rejecting this 0.9140 level, suggesting a potential reversal of current uptrend.

Last week, official data from US revealed that employers in US non-farm sector added more jobs than initially projected in February. The positive news is an indication that the Fed will maintain the pace of its QE tapering, which will progressively strengthen the USD. Meanwhile, in a statement taken on Friday Reserve Bank of Australia Governor Glenn Stevens said that the exchange rate of the Aussie was high by historical standards.

Trader can look for short opportunities with TP level at 0.8930, the support provided by 23.6 Fibonacci retracement level, and stop loss at 0.9140.

SUMMARY OF TRADES TO DATE

Instrument Entry (L/S)*

Target Stop Analysis By

Date of Analysis

Dukang (Equity) L 0.420 0.360 Samuel 1/9/13

GBPCHF (FX) L 1.4507/1.4558 1.4396 Tri 1/9/13

USDCAD (FX) L 1.04744 1.0340 Nicholas 8/9/13

Midas (Equity) L 0.48 0.44 Stephen 8/9/13

AUDUSD (FX) L 0.9272 0.9212 Steven 15/9/13

EURUSD (FX) S 1.3240 1.3465 Kar Yong 15/9/13

Kreuz Holdings (Equity) L 0.78 0.77 Yong Kin 22/9/13

Cosco Corp. (Equity) S 0.815 0.85 Ruwei 22/9/13

Mapletree Commercial Trust (Equity)

L 1.42 1.10 JieJi 6/10/13

ComfortDelgro (Equity) S 1.855 1.965 Wei Hong 6/10/13

GBPUSD (FX) S 1.57106 1.60000 Nicholas 13/10/13

THBEV (Equity) L 0.550 0.510 Stephen 13/10/13

Hafary Holdings (Equity) L 0.38 N/A Lester 20/10/13

AUDUSD (FX) S 0.9620 0.9700 Steven 20/10/13

NZDUSD (FX) S 0.8400 0.8530 Kar Yong 20/10/13

Genting SP (Equity) S 1.495 1.54 Yong Kin 26/10/13

OSIM (Equity) S 2.13 2.18 Ruwei 26/10/13

CapitaCommercial Trust L $1.55 $1.32 JieJi 1/11/13

Mapletree GCC Trust L $0.96 $0.910 Wei Hong 1/11/13

KepLand (Equity) S $3.09 $3.40 JieJi 11/1/13

CoscoCorp (Equity) L $0.865 $0.685 Wei Hong 11/1/13

*L/S Denotes Long/Short Entries

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