www.dbsvickers.com

ed-TH / sa- YM

Smoother ride on cheaper oil

Market seemingly discounting positive effects of lower oil price for land transport operators

Still expecting fare increases, though a tad lower Raised forecasts by 4%-9%. Turning positive again

on CD (upgraded to BUY; TP: S$2.93) and SMRT (BUY, TP raised to S$1.90)

Watch out for bus tender outcome and details for insights on potential changes

Land transport plays lagging oil decline. With the recent fall in oil price to below US$50/bbl, the market seems to be unexcited of the positive effects on land transport operators. CD and SMRT are up by only 1% to 3%, though oil price has dropped by close to 50% in the past three months. Energy and fuel accounts for 9% to 14% of land transport operators costs. While we initially had reservations on the extent of the benefits noting the stronger USD and potentially lower fare increases, the further slump in oil should more than offset the mitigating factors. Raised forecasts by 4%-9%. We revised our oil price assumption to US$80/ 70 per bbl for 2015/2016. Correspondingly, we also adjusted for a stronger USD (vs SGD) and assumed a lower rate of fare increase to 2%, from 3%, in 2015. The resultant net impact is still positive and our forecasts are raised by 4% to 9% for FY15F/16F. Further declines in oil will provide further upside to our forecasts. We estimate that every US$5/bbl change in oil price could translate into 3% and 6% increase in earnings for CD (FY16F) and SMRT (FY17F) respectively, all else being constant. Preferred pick still SMRT for stronger earnings recovery; upgrade CD to BUY, TP raised to S$2.93. We upgrade CD to BUY, raised TP to S$2.93 on the back of higher net profit forecasts. We project earnings growth of 7%/15% in FY15F/16F. Our current top pick is still SMRT (BUY, TP: S$1.90) given our expectations for it to post strong earnings recovery in this FY, after three years of decline. In its upcoming 3Q15 results, we are projecting the Group to post a c.75% net profit growth to c.S$25m on the back of higher revenue and lower costs.

STI : 3,341.07

Analyst Andy SIM CFA +65 6682 3718 andysim@dbs.com

STOCKS

Source: DBS Bank ComfortDelgro : Major operator of taxi, bus and rail passenger transport services.

SMRT : Primarily involved in operating the main MRT line in Singapore.

Energy/Fuel as % of costs vs oil price assumptions

8.5% 8.9%

12.2% 11.7%

7.0% 6.3%

10.9% 9.7%

105110

80

70

0

20

40

60

80

100

120

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016FCD (previous) SMRT (previous)CD (revised) SMRT (revised)Avg Oil price [RHS] (previous) Avg oil price (US$/bbl)

E nergy/Fuel costs as % of revenue Avg oil price (US$/bbl)

Source: DBS Banks estimates, Bloomberg Finance L.P., Company data

DBS Group Research . Equity 14 Jan 2015

Singapore Industry Focus

Singapore Land Transport Refer to important disclosures at the end of this report

Price Mkt Cap Target Price Performance (%)

S$ US$m S$ 3 mth 12 mth Rating

ComfortDelgro 2.55 4,089 2.93 2.4 26.5 BUY SMRT 1.57 1,791 1.90 3.0 33.3 BUY

Industry Focus

Singapore Land Transport

Page 2

Smoother ride with cheaper oil 2015 expecting a well-oiled ride. 2014 was an exciting year for land transport counters, particularly in 2Q14 where there were announced changes to buses. But, as we noted in our earlier report on 30 June 2014, we argued that the positives then had been priced in; and we consequently downgraded CD to HOLD. Fast forward to 2015, we expect a smoother ride and have turned more positive on public transport operators, largely premised on the following: 1. Recent collapse of oil price, and thus revised up our EPS

forecasts for CD and SMRT. Share price movements seem to disregard this positive impact;

2. Expecting a fare increase, albeit smaller quantum; and, 3. Outcome of the Bulim bus contract, which should shed

more light on the possible profitability of buses based on the Government Bus Contracting model

Revising forecasts up by 4%-9% on lower oil price. With the recent further slump in oil price to below US$50/bbl, the market seems to be unexcited of the positive effects on land transport operators, judging by the share price performances. CD and SMRT are up by only 1% to 3%, though oil price has dropped by close to 50% in the past three months. While other transport-related companies have oil/energy as a higher cost component (e.g. airlines), energy and fuel still accounts for 9% to 14% of land transport operators costs.

We revised our assumptions and raised our forecasts by 4% to 9% for land transport companies in Singapore. We expect the positive effects to flow through for land transport operators for 2015. If the low oil price is sustained, the benefits will be seen further out into 2016 or even 2017, based on our expectations. Upgrade CD to BUY, raise TP to S$2.93. We are upgrading CD to BUY, with a raised TP of S$2.93 on the back of 3.8%/8.6% increases on our FY15F/16F net profit forecasts. As such, we project an earnings growth of 7%/15% in FY15F/16F. The higher rate of growth in FY16F is on expectations that we should see lower energy/fuel costs as management locks in its costs, coupled with the expected changes in bus operations. The Government Bus Contracting model for public schedule buses is expected to take place from 2H16. Current preferred pick still SMRT with raised TP of S$1.90. We also raised our earnings forecasts for SMRT by 4.3%/7% for FY15F/16F on lower oil price assumptions, offset by a lower rate of fare increase. Our TP is raised to S$1.90. At this stage and in the near term, our preference is for SMRT due to: (i) a strong earnings recovery after three years of decline, and the upcoming 3Q15 results, expected on 29 Jan15, should continue to show a solid growth quantum as per 2Q15s results; and (ii) lower price of oil.

Share prices of CD and SMRT stayed muted although oil price is down by c.50% in the past 3 months

CD and SMRT up by 1-3% while oil price down

by >46%

Industry Focus

Singapore Land Transport

Page 3

Oil price: Lower oil price will benefit land transport operators Positive effects will flow through with slump in oil price; raising forecasts by 4%-9% on lower oil price assumption. Energy and electricity account for between 9% to 14% of CD and SMRTs costs. The recent slump in oil price and bringing it to multi-year lows will have a positive impact on land transport operators, based on our expectations. We have thus further lowered our cost assumptions for both operators, and are raising forecasts by 4%-9%. Our new oil price assumption is US$80 and US$70/bbl for 2015 and 2016 respectively. Effects offset by stronger USD; smaller quantum of fare increase expected. One could note that the quantum of net benefit to our estimates seems relatively muted, considering crude oil price has slumped by 50% over the last six months or so. This is due to: (i) the effects of a weaker SGD vs USD; and (ii) dialing back our expectations for a fare increase in 2015 to 2%, from 3% previously.

Bottomline: Net positive, but land transport a laggard and market yet to price in lower oil price, in our view. The changes to our assumptions and net profit forecasts are reflected in the table below. The net impact is still positive for both CD and SMRT. Our current expectation is that SMRT would be in better stead to gain more (if oil price continues to stay low), given its higher percentage of energy costs to revenue. We also believe that CD has been more proactive in hedging its diesel requirements, while SMRT seem to have taken a more opportunistic stance in the hope of lower prices.

Changes to oil price and fare increase assumptions, and resultant change to DBS net profit forecasts of CD and SMRT

Previous New Comments Key changes to assumptions FY14F FY15F FY16F FY14F FY15F FY16F Oil price 100 105 110 90 80 70 Assumption is higher than current oil price as

the land transport operators have hedged a portion of their requirements. Further downtrend in oil will have additional upside to earnings, assuming all else being constant.

Fare increase 3% 3% 3% 3% 2% -1% Assume a 2% increase, a tad lower than the 2.8% max allowed for 2015, and a -1% decline for 2016

Previous New Comments Net profit forecasts (S$m) FY14 FY15 FY16 FY14 FY15F FY16F

CD 281 290 318 282 302 345 CD has hedged 70% of FY15F diesel (as per Nov14)

% chg (previous to new) 0.3% 3.8% 8.6%

SMRT* 93 111 127 97 119 127

% chg (previous to new) 4.3% 7.0% 0.1%

*SMRT equates to FYE Mar 15F/16F/17F Source: DBS Bank estimates

Industry Focus

Singapore Land Transport

Page 4

CD Operating expenses breakdown (FYE Dec13) SMRT Operating expenses breakdown (FYE Mar14)

Source: Company, DBS Bank Source: Company, DBS Bank

Energy/Fuel costs as % of revenue for CD/ SMRT vis--vis yearly average oil price (US$/bbl)

Source: DBS Bank, Bloomberg Finance L.P., Company

Staff and related Costs

37%

Depreciation and

amortisation10%

Payment for contract

services15%

Material & consumables

7%

Energy and fuel costs

9%

Repairs and maintenance

costs7%

Road and diesel taxes

4%

Insurance and accident

comp4% Others

7%

FY13 total operating expenses = S$3.32bn

Staff & related costs41%

Depreciat'n & PPE

impairment16%

Repairs and

maintenance costs10%

E lectricity & diesel

costs14%

Other operating expenses211.724

FY14 total operating expenses = S$1.13bn

8.5% 8.9%

12.2% 11.7%

6.3%7.1% 7.3%

9.1%

7.0% 7.3%8.3% 7.8% 7.7% 7.6% 7.0%

6.3%

9.3%10.2%

11.2%

13.5%

11.6%12.6%

15.7%14.8%

14.0%

12.4%10.9% 9.7%

105110

55

6673

99

63

80

111 112 109

90

80

70

0

20

40

60

80

100

120

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016FCD (previous) SMRT (previous) CD (revised)

SMRT (revised) Avg Oil price [RHS] (previous) Avg oil price (US$/bbl)

Energy/Fuel costs as % of revenue Avg oil price (US$/bbl)Lowering oil price assumption , and correspondingly lower the energy/fuel costs as % to revenue for CD and SMRT

Industry Focus

Singapore Land Transport

Page 5

1) Fare increase: Expecting positive effects, though

smaller than slated 3.4% Expecting smaller fare increase quantum, but still a step in the right direction for operators. Assuming a 2% increase for 2015, below 2.8% maximum allowed. The 2015 fare increase is expected to be announced soon, likely sometime in January and effective in April, going by 2014s timeline. We moderated our expectations and now expect a 2% fare increase, from 3% previously. We believe we are conservative in our assumption, as this is still below the 2.8% maximum allowable for 2015. While we are now expecting a lower rate of increase, the bottomline is that there should still be an increase, in our view. Increase is carried over from 2014s fare review exercise. The fare review exercise in 2014 indicated a 6.6% fare increase. However, given the seemingly large increment, this was broken down into two phases a 3.2% increase in 2014, with the remaining 3.4% slated for 2015. Based on the fare review mechanism formula, fares are expected to drop by -0.6% in 2015, largely due to lower CPI and energy costs. Fortunately, this has to be taken together with the remaining 3.4% carried over from 2014, which shows a maximum net increase of 2.8%. Despite the drop in oil price, we continue to believe that the Public Transport Council will approve a fare increase, though it could be a shade below the maximum allowable 2.8%. We have dialed back our fare increase for 2015 to 2%, from 3% previously for both CDs and SMRTs rail and bus operations.

Fare Review Mechanism

Fare Formula = Price Index - 0.5% Where Price Index = 0.4cCPI + 0.4WI + 0.2EI cCPI: Change in core Consumer Price Index over preceding year Wage Index (WI): Change in Average Monthly Earnings (Annual National Average) over the preceding year, adjusted to account for any change in the employers CPF contribution rate Energy Index (EI): Change in Energy Index which is a composite of cost changes in electricity and diesel 0.5% = Productivity extraction set for 2013 to 2017

Source: Public Transport Council, Fare Review Mechanism Committee 2014 Fare Review Exercise key dates

Date

5 Nov 2013 PTC responds to release of Fare Review

Mechanism Committees Report

19 Dec 2013 Public Transport operators submit proposal for

fare review

16 Jan 2014 PTC announces quantum of fare increase for

2014; Total 6.6%, of which 3.2% was

implemented in 2014

6 April 2014 Fare increase implemented

Source: PTC, DBS Bank

2) Watch this space: Bus tender (Bulim bus contract) closing delayed; keen competition

Details, if any, should be closely watched with it being a price discovery mechanism. A key development to look out for in 2015 will be the outcome and details of the bus contract. The tender for the Bulim bus contract will close on 19 Jan. This was extended by two weeks from 5 Jan 2015. Based on media reports, there are about 20 parties that could be participating in the tender, such as the current incumbents, local private bus operators as well as foreign international players.

Factored in possibility of SBSTransit and SMRT not winning the competitive tender contracts. We have already factored in the possibility that both SBST and SMRT may not be successful in the competitive tenders. Instead, both the incumbents would only retain the remaining nine packages which are on the negotiated contracts. Thus, any success in the upcoming competitive tender will be a positive, though it will also ultimately depend on the potential margins.

Industry Focus

Singapore Land Transport

Page 6

Selected summary of details on the Government Bus Contracting Model tender that will be closing on 19 Jan 2015

Area Selected details Scope of Tender 26 bus services to operate from three bus interchanges - Bukit Batok, Clementi and Jurong East,

and terminate at five bus interchanges - Bedok, Boon Lay, Marina Centre, Shenton Way and Toa Payoh

Supported by new Bulim Bus Depot

Start with 380 buses leased to operator in 2016, and growing to about 500 buses in 2021

Contract term Five years, and LTA can grant extension of another two years

Contract Evaluation, Payment and Variation

2-envelope process for quality and price, with more weightage given to the quality proposal

Local company to be set up, and senior management overseeing operations to be based in Singapore

Provisions for additional bus capacity to enable Government to make adjustments to the Bulim bus services

Service fee will be adjusted to better reflect operating climate, taking into consideration inflation, wage levels and fuel costs

Incentive Framework Operator will receive performance payment of up to 10% of annual service fee if it meets the standards. Vice versa, 10% of service fee will be deducted if it does not meet required standards in five categories: Bus reliability, first/last bus punctuality, maintenance of bus, maintenance of interchanges and depot, and maintenance of bus ticketing system.

Transition 26 bus services will be carried out in three tranches from 2H2016

Source: LTA, DBS Bank

Location of Bulim depot and bus interchanges (number of bus routes has been increased to 26)

Source: LTA media release dated 28 May 2014

Industry Focus

Singapore Land Transport

Page 7

Stock picks The huge slump in oil price over the past couple of months (and appears to be still continuing) will benefit both public transport operators, even after accounting for a stronger USD and a lower fare increase. We are hence positive, in view of this development and that the market has yet to fully recognise that. Upgrade CD to BUY, raised TP to S$2.93. We raised our forecasts by 4%-9%, and TP for CD to S$2.93 on the back of lower oil price assumption, offset partially by a stronger USD and lower fare increase. We had turned neutral on CD in July 2014, as we believed the run up in 2Q14 had largely priced in the positives from the potential turnaround of its bus operations. Since then, CD has been flat, thus vindicating our view. CD has hedged about 70% of its diesel/electricity requirements for 2015, and will continue to enter into further hedges for FY16F as and when appropriate. If oil price continues to stay low, CD should continue to benefit from this trend. Top pick is still SMRT, TP raised marginally to S$1.90. Our current top pick is still SMRT, given our expectations for it to post strong earnings recovery in this FY, after three years of decline. In its upcoming 3Q15 results (expected on 29 Jan15), we are also expecting the trend seen in 2Q to continue, with a high quantum of y-o-y increase. We are projecting the Group

to post a 25% net profit growth to c.S$25m on the back of higher revenue and lower costs. We understand that, unlike CD which has been proactively hedging its diesel requirements, SMRT has been adopting a less active stance. In the trend of declining oil prices, we expect to see more benefits, given SMRT's unhedged position. Any potential development in rail financing framework should also be positive for SMRT. Risks. Sharp reversal in oil price. Our current thesis is premised on improved margins due to the lower oil price. In the event that there is a spike in oil price, land transport operators would likely be affected. Assuming that this happens, our preference would be for CD over SMRT, given the formers more proactive stance in hedging. Lower-than-expected fare increase. We have penciled in 2%/-1% changes for 2015/2016 fare review exercise. A lower-than-expected increase or higher decline (in 2016) could result in lower profits for the operators. Market de-rating. We note that both SMRT and CD are trading at above their historical valuations, largely due to market expectations of changes in government policies. Any market de-rating factors could pose risks to share price performance.

Peer valuation table

Source: DBS Bank, Bloomberg Finance L.P.

FYE Shr Mkt Pric e Ta rge tCompa ny Ca p Ca p (S$) Pric e %

(m) (US$m) 13-Ja n (S$) Ups ide Rc md 15F 16F 15F 16F 15F 16F 15F 16F

ComfortDelgro Dec 2,139 4,089 2.55 2.93 15% Buy 18.0x 15.7x 2.2x 2.1x 3.3% 4.0% 7% 15%

SMRT * Mar 1,522 1,791 1.570 1.90 21% Buy 20.1x 18.9x 2.6x 2.4x 2.4% 2.7% 22% 6%

EPS / DPUPE (x) P/B (x) Div Yld Growth

Industry Focus

Singapore Land Transport

Page 8

CD price and PE band chart CD PB trading band

Source: DBS Bank, Bloomberg Finance L.P. Source: DBS Bank, Bloomberg Finance L.P. SMRT price and PE band chart SMRT PB trading band

Source: DBS Bank, Bloomberg Finance L.P. Source: DBS Bank, Bloomberg Finance L.P.

0.9

1.4

1.9

2.4

2.9

3.4

3.9

4.4

4.9 Ja

n-04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

(x)

Avg: 3x

+1sd: 3.7x

+1sd: 3.7x

-1sd: 2.4x

-2sd: 1.7x

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

(x)

Avg: 2x

+1sd: 2.4x

+2sd: 2.7x

-1sd: 1.6x

-2sd: 1.2x

5.0

8.0

11.0

14.0

17.0

20.0

23.0

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

(x)

Avg: 15.1x

+1sd: 17.9x

+2sd: 20.7x

-1sd: 12.3x

-2sd: 9.5x

-

10.0

20.0

30.0

40.0

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-04

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-06

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-13

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-14

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-15

(x)

+1sd: 27.2x

+2sd: 35x

-1sd: 11.8.0x

-2sd: 4.1x

Avg: 19.5x

Page 9

www.dbsvickers.com ed: TH / sa: YM

BUY S$2.55 STI : 3,341.07 (Upgrade from HOLD) Price Target : 12 months S$ 2.93 (Prev S$ 2.71) Potential Catalyst: M&A, higher dividend payout DBS vs Consensus: FY14F/15F within, FY16F marginally higher on revised oil price assumption Analyst Andy SIM CFA +65 6682 3718 andysim@dbs.com

Price Relative

7 9

9 9

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R e l a t i v e I n d e xS $

C o m f o r t D e lg r o ( L H S ) R e la t iv e S T I IN D E X ( R H S ) Forecasts and Valuation FY Dec (S$ m) 2013A 2014F 2015F 2016F

Turnover 3,748 3,891 4,053 4,111 EBITDA 768 809 862 894 Pre-tax Profit 414 446 477 547 Net Profit 263 282 302 345 Net Pft (Pre Ex.) 263 282 302 345 EPS (S cts) 12.5 13.3 14.2 16.3 EPS Pre Ex. (S cts) 12.5 13.3 14.2 16.3 EPS Gth (%) 5 6 7 15 EPS Gth Pre Ex (%) 5 6 7 15 Diluted EPS (S cts) 12.4 13.2 14.2 16.2 Net DPS (S cts) 7.0 7.7 8.5 10.1 BV Per Share (S cts) 102.0 107.7 114.2 121.9 PE (X) 20.5 19.2 18.0 15.7 PE Pre Ex. (X) 20.5 19.2 18.0 15.7 P/Cash Flow (X) 7.7 7.4 7.0 6.9 EV/EBITDA (X) 7.8 7.4 6.8 6.2 Net Div Yield (%) 2.7 3.0 3.3 4.0 P/Book Value (X) 2.5 2.4 2.2 2.1 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 12.6 12.7 12.8 13.8 Earnings Rev (%): - 4 9 Consensus EPS (S cts): 13.3 14.1 15.5 Other Broker Recs: B: 7 S: 1 H: 4 ICB Industry : Consumer Services ICB Sector: Travel & Leisure Principal Business: Major operator of taxi, bus and rail passenger transport services.

Source of all data: Company, DBS Bank , Bloomberg Finance L.P.

At A Glance Issued Capital (m shrs) 2,139 Mkt. Cap (S$m/US$m) 5,455 / 4,089 Major Shareholders Blackrock (%) 6.0 Capital Group Companies (%) 4.9 Free Float (%) 89.1 Avg. Daily Vol.(000) 6,383

Company Focus

ComfortDelgro Bloomberg: CD SP | Reuters: CMDG.SI Refer to important disclosures at the end of this repor

DBS Group Research . Equity 14 Jan 2015

Looking to be a comfortable ride

Upgrade to BUY as we raised TP to S$2.93 on the back of higher earnings forecasts

Current slump in oil price will be beneficial to CD, even after factoring in a stronger USD and lower fare increases

Raised FY15F/16F net profit forecasts by 4%/9% Stronger y-o-y growth of 15% projected in FY16F on

new bus contracting model, lower oil price

Upgrade to BUY on lower oil price. We have turned positive again on CD on the back of the recent slump in oil price, which we believe will eventually bode well for land transport operators like CD. The market seems to be discounting this development as CD's share price movement has been muted in the last three months, though oil price has declined by a massive c.46%. While there are mitigating factors (stronger USD, lower fare increases) to limit the positive effects, we estimate that there will still be positive implications.

Lower oil price assumptions to US$80/70 per bbl. We lowered our oil price assumptions for CD to US$80/bbl and US$70/bbl for FY15F/16F respectively. This is still markedly above the current spot oil prices, but we need to note that CD has hedged c.70% of its 2015 diesel requirements. Thus, the positive impact will be greater in FY16, particularly if oil price stays low. Notwithstanding the above, CD will see declining fuel/energy costs which should be positive for the Groups margins.

Raised FY15F/16F net profit by 4%/9%. We raised FY15F/16F net profit forecasts by 4%/9% on lower oil price and a lower rate of fare increase. In fact, we are now assuming fares to decline by 1% in 2016, down from the 2% we penciled in for 2015. Even with that, we are projecting earnings growth to pick up pace in FY16F with the new bus contracting model and lower oil price. Other potential catalysts are M&A and a higher dividend payout.

Company Focus

ComfortDelgro

Page 10

INVESTMENT THESIS

Profile Rationale ComfortDelGro Corporation Limited is a land transport services company. Its business includes bus, taxi, rail car rental and leasing, automotive engineering services, testing services, etc. Besides being a market leader for bus and taxis in Singapore, its business spans across other geographies such as UK, Australia, China, Vietnam and Malaysia.

Beneficiary of lower oil price The recent slump in oil price should pose a positive impact

to CDs operations, even after accounting for a stronger USD and lower quantum of fare increases. Energy and fuel accounts for c.9% of CDs costs, and after imputing a lower oil price assumption, we estimate that this should be about 6-7% in FY16F.

Active hedging policy CD has actively hedged its fuel/energy requirements to

the best of its ability. It has hedged c.70% of its Singapore diesel requirements in view of the lower oil price. Even if oil price were to trend upwards, the positive is that we would see a lower diesel cost for the Group, given its hedges that are in place.

Strong balance sheet CD has a strong balance sheet and has headroom to gear

up to pursue bite-sized inorganic growth opportunities.

Valuation Risks Our target price of S$2.93 is derived from the average valuations using discounted cash flow (DCF) and price-earnings ratio methods. We adopt a DCF model as the business provides stable and predictable cashflows, while the PER methodology takes into account near-term earnings growth. We peg our PER valuation at 15x FY15F earnings, based on its historical trading average. DCF methodology is based on a weighted cost of capital of 8.7% and a terminal growth assumption of 1%. We have a HOLD recommendation for ComfortDelgro (CD).

Oil price surge Energy and fuel costs account for about 9% of CD's costs

and a surge in oil price may impact margins and vice versa, though this is partially mitigated by its hedging policies.

Regulatory risks Lower-than-expected fare increase may impact our

forecasts.

Source: DBS Bank

Company Focus

ComfortDelgro

Page 11

Income Statement (S$ m) Balance Sheet (S$ m) FY Dec 2013A 2014F 2015F 2016F FY Dec 2013A 2014F 2015F 2016F

Turnover 3,748 3,891 4,053 4,111 Net Fixed Assets 2,777 2,911 2,920 2,827 Cost of Goods Sold 0 0 0 0 Invts in Associates & JVs 6 11 15 21 Gross Profit 3,748 3,891 4,053 4,111 Other LT Assets 1,061 1,061 1,061 1,061 Other Opng (Exp)/Inc (3,321) (3,433) (3,568) (3,565) Cash & ST Invts 836 945 1,082 1,124 Operating Profit 426 458 486 545 Inventory 71 71 74 75 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 120 156 162 164 Associates & JV Inc 4 4 5 5 Other Current Assets 214 214 214 214 Net Interest (Exp)/Inc (16) (17) (14) (4) Total Assets 5,085 5,368 5,528 5,486 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 414 446 477 547 ST Debt 218 218 218 100 Tax (87) (94) (100) (115) Creditor 665 708 737 747 Minority Interest (64) (70) (75) (86) Other Current Liab 179 216 222 237 Preference Dividend 0 0 0 0 LT Debt 590 590 500 300 Net Profit 263 282 302 345 Other LT Liabilities 638 638 638 638 Net Profit before Except. 263 282 302 345 Shareholders Equity 2,155 2,289 2,427 2,591 EBITDA 768 809 862 894 Minority Interests 640 710 786 872 Total Cap. & Liab. 5,085 5,368 5,528 5,486 Sales Gth (%) 5.7 3.8 4.2 1.4 EBITDA Gth (%) 3.9 5.4 6.6 3.7 Non-Cash Wkg. Capital (440) (483) (510) (531) Opg Profit Gth (%) 3.4 7.5 6.0 12.2 Net Cash/(Debt) 28 137 364 724 Net Profit Gth (%) 5.7 7.1 7.0 14.5 Effective Tax Rate (%) 21.0 21.0 21.0 21.0 Cash Flow Statement (S$ m) Rates & Ratio FY Dec 2013A 2014F 2015F 2016F FY Dec 2013A 2014F 2015F 2016F

Pre-Tax Profit 414 446 477 547 Gross Margins (%) 100.0 100.0 100.0 100.0 Dep. & Amort. 337 346 371 343 Opg Profit Margin (%) 11.4 11.8 12.0 13.3 Tax Paid (78) (57) (94) (100) Net Profit Margin (%) 7.0 7.2 7.4 8.4 Assoc. & JV Inc/(loss) (4) (4) (5) (5) ROAE (%) 12.6 12.7 12.8 13.8 Chg in Wkg.Cap. 6 6 20 7 ROA (%) 5.3 5.4 5.5 6.3 Other Operating CF 22 0 0 0 ROCE (%) 8.2 8.3 8.5 9.5 Net Operating CF 698 737 770 791 Div Payout Ratio (%) 56.2 58.0 60.0 62.0 Capital Exp.(net) (418) (480) (380) (250) Net Interest Cover (x) 26.6 27.2 35.8 132.4 Other Invts.(net) (130) 0 0 0 Asset Turnover (x) 0.8 0.7 0.7 0.7 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 12.8 12.9 14.3 14.5 Div from Assoc & JV 2 0 0 0 Creditors Turn (avg days) (702.5) (723.6) (709.7) (789.7) Other Investing CF 14 0 0 0 Inventory Turn (avg days) (69.5) (74.5) (71.0) (79.0) Net Investing CF (532) (480) (380) (250) Current Ratio (x) 1.2 1.2 1.3 1.5 Div Paid (138) (148) (163) (181) Quick Ratio (x) 0.9 1.0 1.1 1.2 Chg in Gross Debt 120 0 (90) (318) Net Debt/Equity (X) CASH CASH CASH CASH Capital Issues 35 0 0 0 Net Debt/Equity ex MI (X) CASH CASH CASH CASH Other Financing CF (55) 0 0 0 Capex to Debt (%) 51.7 59.4 52.9 62.5 Net Financing CF (38) (148) (253) (499) Z-Score (X) 2.9 2.9 3.0 3.3 Currency Adjustments 8 0 0 0 N. Cash/(Debt)PS (S cts) 1.3 6.4 17.1 34.1 Chg in Cash 136 109 137 42 Opg CFPS (S cts) 32.8 34.4 35.3 36.9 Free CFPS (S cts) 13.3 12.1 18.4 25.5 Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions FY Dec 4Q2013 1Q2014 2Q2014 3Q2014 FY Dec 2013A 2014F 2015F 2016F Turnover 990 951 1,016 1,037 Revenues (S$ m) Cost of Goods Sold 0 0 0 0 Bus & Bus Station 1,890 1,890 1,930 1,895 Gross Profit 990 951 1,016 1,037 Rail 165 195 218 229 Other Oper. (Exp)/Inc (895) (849) (896) (913) Taxi 1,198 1,286 1,373 1,443 Operating Profit 95 102 120 124 Automotive Engn 317 332 339 346 Other Non Opg (Exp)/Inc 3 3 3 4 Others 179 188 193 199 Associates & JV Inc 2 1 1 0 Total 3,748 3,891 4,053 4,111 Net Interest (Exp)/Inc (6) (6) (6) (6) EBIT (S$ m) Exceptional Gain/(Loss) 0 0 0 0 Bus & Bus Station 170 175 184 206 Pre-tax Profit 94 99 117 123 Rail 5 2 0 2 Tax (19) (22) (25) (25) Taxi 146 154 165 173 Minority Interest (15) (14) (16) (17) Automotive Engn 53 53 54 55 Net Profit 60 63 76 81 Others 53 74 82 109 Net profit bef Except. 60 63 76 81 Total 426 458 486 545 EBITDA 186 190 211 218 EBIT Margins (%) Bus & Bus Station 9.0 9.2 9.6 10.9 Sales Gth (%) 1.2 (4.0) 6.9 2.1 Rail 2.9 1.0 0.0 1.0 EBITDA Gth (%) (11.8) 2.2 10.8 3.4 Taxi 12.2 12.0 12.0 12.0 Opg Profit Gth (%) (22.1) 6.4 18.1 3.3 Automotive Engn 16.7 16.0 16.0 16.0 Net Profit Gth (%) (21.9) 5.7 19.6 6.7 Others 29.5 39.4 42.6 54.6 Gross Margins (%) 100.0 100.0 100.0 100.0 Total 11.4 11.8 12.0 13.3 Opg Profit Margins (%) 9.6 10.7 11.8 11.9 Key Assumptions Net Profit Margins (%) 6.0 6.7 7.4 7.8 SGP bus ridership growth 3.4 3.0 3.0 3.0 SGP fare chg (%) 3.8 2.5 2.0 (1.0) Avg oil price (US$) 95.0 90.0 80.0 70.0 Chg in staff strength (%) 2.0 0.5 1.0 (0.5) Source: Company; DBS Bank

Page 12

www.dbsvickers.com ed: TH / sa: YM

BUY S$1.57 STI : 3,341.07 Price Target : 12-month S$ 1.90 (Prev S$ 1.86) Potential Catalyst: Better-than-expected operational performance, change in regulatory framework DBS vs Consensus: Above on lower oil price assumptions, other income Analyst Andy SIM CFA +65 6682 3718 andysim@dbs.com

Price Relative

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R e l a t i v e I n d e xS $

S M R T ( L H S ) R e la t iv e S T I IN D E X ( R H S ) Forecasts and Valuation FY Mar (S$ m) 2014A 2015F 2016F 2017F

Turnover 1,164 1,244 1,315 1,307 EBITDA 255 307 352 357 Pre-tax Profit 75 117 143 152 Net Profit 62 97 119 127 Net Pft (Pre Ex.) 62 97 119 127 EPS (S cts) 4.1 6.4 7.8 8.3 EPS Pre Ex. (S cts) 4.1 6.4 7.8 8.3 EPS Gth (%) (26) 57 22 6 EPS Gth Pre Ex (%) (26) 57 22 6 Diluted EPS (S cts) 4.1 6.4 7.8 8.3 Net DPS (S cts) 2.2 3.3 3.7 4.2 BV Per Share (S cts) 52.7 56.9 61.4 66.0 PE (X) 38.6 24.5 20.1 18.9 PE Pre Ex. (X) 38.6 24.5 20.1 18.9 P/Cash Flow (X) 10.2 6.6 7.3 7.7 EV/EBITDA (X) 11.2 9.9 9.0 8.7 Net Div Yield (%) 1.4 2.1 2.4 2.7 P/Book Value (X) 3.0 2.8 2.6 2.4 Net Debt/Equity (X) 0.6 0.7 0.8 0.7 ROAE (%) 7.9 11.7 13.2 13.1 Earnings Rev (%): 4 7 - Consensus EPS (S cts): 5.8 6.7 8.2 Other Broker Recs: B: 6 S: 4 H: 4 ICB Industry : Consumer Services ICB Sector: Travel & Leisure Principal Business: Primarily involved in operating the main MRT line in Singapore.

Source of all data: Company, DBS Bank, Bloomberg Finance L.P.

At A Glance Issued Capital (m shrs) 1,522 Mkt. Cap (S$m/US$m) 2,390 / 1,791 Major Shareholders Temasek Holdings Pte Ltd (%) 54.2 Free Float (%) 45.8 Avg. Daily Vol.(000) 1,017

Company Focus

SMRT Bloomberg: MRT SP | Reuters: SMRT.SI Refer to important disclosures at the end of this repor

DBS Group Research . Equity 14 Jan 2015

Thriving on lower oil prices Remain positive on low oil prices, recovering bus

and rail segments vis--vis attractive valuations

Revise FY16F/FY17F earnings by 4%/7% on lower oil price assumptions

Maintain BUY on compelling 0.7x PEG valuation, raise TP to S$1.90

Benefitting from low oil prices, improving bus and rail segments. We remain positive on SMRT given that: 1) we expect better operating efficiencies and earnings recovery for bus and rail segments going into 3Q15; 2) lower oil prices will further improve earnings growth and margins; 3) valuations are at an attractive 0.7x PEG; and 4) more catalysts for the stock from rail financing framework. SMRTs margins are improving from more efficient bus and train segments. We believe improvements seen in 2Q15 will accelerate into the upcoming 3Q15 results. We expect bus segments losses to continue narrowing, led by lower opex (especially staff and fuel costs). The recent oil price correction will also be a key driver to reduce diesel and electricity opex going forward.

Raise FY15-17F earnings by 4%-7%. Oil prices have corrected from >US$100/bbl before August 2014 to approximately US$50/bbl and we expect SMRT to benefit through lower diesel and electricity costs. We lowered our oil price assumption to US$80/bbl (FY16F) and US$70/bbl (FY17F) from US$95 and US$92/bbl respectively. Our lower oil price assumptions are offset by a stronger USD and lower rate of fare increase.

Maintain BUY with a higher S$1.90 TP. Valuation on a PEG basis is compelling at 0.7x, with FY14F-FY17F earnings CAGR at 27% vs FY16F PE valuation of 20.1x. Along with earnings revision, we raise our TP to S$1.90 pegged to average valuations based on DCF (WACC=5.2%, t=1%) and 18x FY16F PE (historical average) accordingly. From a nearer-term perspective, we expect SMRT to continue posting robust y-o-y growth and project 3Q15 earnings of c.S$25m, up by 75%. Further stock catalysts could come from potential development of the rail financing framework. Maintain BUY.

Company Focus

SMRT

Page 13

INVESTMENT THESIS

Profile Rationale SMRT Corporation Limited is the market leader in rail in Singapore as it operates the Mass Rapid Transit (MRT) system and LRT (Light Rail Transit) system. It also provides provides bus, taxi, charter hire services, and consultancy and project management services. In addition, SMRT leases commercial space and advertising panels at MRT/ LRT stations, and in trains, buses and taxis.

2Q15 results were ahead on cost efficiencies 2Q15 earnings grew 75% y-o-y driven by ridership, rental

rate growth and cost efficiencies. Oil price in particular has declined, leading to lower fuel costs. Factoring in lower oil price outlook, we are now more bullish on earnings going forward. Valuations are attractive at 0.7x PEG, following our earnings upgrade.

Robust earnings recovery on back of lower oil price, efficiencies We further revised up our FY15F-16F earnings up by 4%-

7% on the back of the recent slump in oil price, after accounting for a stronger USD and effects of a lower increase in fares. This implies an earnings CAGR (FY14-17F) of c.27%, which equates to a PEG ratio of c.0.7x despite SMRTs PE (FY16F) at 20x.

Valuation Risks Our target price of S$1.90 is based on the average of our discounted cash flow (DCF) and price-earnings ratio (PER) valuation methodology. We adopt a DCF model as the business has previously shown a stable and predictable pattern, while the PER methodology takes into account near term earnings volatility. We peg our PER valuation at 18x FY16F. DCF methodology is based on a weighted cost of capital at 5.2% and a terminal growth assumption of 1%.

Regulatory changes Significant changes in the regulatory framework that

could benefit or pose a risk to the Groups financials. Service disruptions Further train service disruptions leading to higher repair/

maintenance costs, operating expenses and regulatory fines.

Regulatory changes Energy and fuel costs account for about 12% of SMRT's

costs and a surge in oil price may impact margins and vice versa. The surge in oil price may have a greater impact on SMRT compared to CD (at this juncture), given the latters proactive stance in hedging.

Source: DBS Bank

Company Focus

SMRT

Page 14

Income Statement (S$ m) Balance Sheet (S$ m) FY Mar 2014A 2015F 2016F 2017F FY Mar 2014A 2015F 2016F 2017F

Turnover 1,164 1,244 1,315 1,307 Net Fixed Assets 1,642 1,962 2,165 2,178 Cost of Goods Sold 0 0 0 0 Invts in Associates & JVs 53 53 54 54 Gross Profit 1,164 1,244 1,315 1,307 Other LT Assets 34 34 34 34 Other Opng (Exp)/Inc (1,080) (1,118) (1,159) (1,138) Cash & ST Invts 161 88 116 168 Operating Profit 84 126 156 169 Inventory 84 83 88 87 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 99 83 88 87 Associates & JV Inc 0 1 1 1 Other Current Assets 0 0 0 0 Net Interest (Exp)/Inc (9) (10) (13) (17) Total Assets 2,073 2,303 2,545 2,610 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 75 117 143 152 ST Debt 156 156 156 156 Tax (13) (19) (23) (24) Creditor 355 415 438 436 Minority Interest 0 (1) (1) (1) Other Current Liab 54 69 73 75 Preference Dividend 0 0 0 0 LT Debt 480 580 730 730 Net Profit 62 97 119 127 Other LT Liabilities 225 217 210 205 Net Profit before Except. 62 97 119 127 Shareholders Equity 802 866 935 1,005 EBITDA 255 307 352 357 Minority Interests 0 1 2 3 Total Cap. & Liab. 2,073 2,303 2,545 2,610 Sales Gth (%) 4.0 6.9 5.7 (0.6) EBITDA Gth (%) (2.0) 20.3 14.9 1.2 Non-Cash Wkg. Capital (226) (318) (336) (336) Opg Profit Gth (%) (23.6) 49.8 23.5 8.4 Net Cash/(Debt) (476) (648) (771) (718) Net Profit Gth (%) (25.7) 57.3 22.4 6.4 Effective Tax Rate (%) 17.6 16.0 16.0 16.0 Cash Flow Statement (S$ m) Rates & Ratio FY Mar 2014A 2015F 2016F 2017F FY Mar 2014A 2015F 2016F 2017F

Pre-Tax Profit 75 117 143 152 Gross Margins (%) 100.0 100.0 100.0 100.0 Dep. & Amort. 171 180 196 187 Opg Profit Margin (%) 7.2 10.1 11.9 12.9 Tax Paid (5) (4) (19) (23) Net Profit Margin (%) 5.3 7.8 9.1 9.7 Assoc. & JV Inc/(loss) 0 (1) (1) (1) ROAE (%) 7.9 11.7 13.2 13.1 Chg in Wkg.Cap. (13) 77 14 (2) ROA (%) 2.9 4.4 4.9 4.9 Other Operating CF 5 (8) (7) (5) ROCE (%) 4.3 6.1 6.8 6.9 Net Operating CF 234 361 328 309 Div Payout Ratio (%) 54.1 51.6 47.3 50.4 Capital Exp.(net) (649) (500) (400) (200) Net Interest Cover (x) 9.2 12.7 11.8 9.8 Other Invts.(net) 5 0 0 0 Asset Turnover (x) 0.5 0.6 0.5 0.5 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 29.0 26.7 23.7 24.4 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 187.3 149.8 161.7 167.7 Other Investing CF 2 0 0 0 Inventory Turn (avg days) 29.0 32.5 32.3 33.5 Net Investing CF (643) (500) (400) (200) Current Ratio (x) 0.6 0.4 0.4 0.5 Div Paid (30) (33) (50) (56) Quick Ratio (x) 0.5 0.3 0.3 0.4 Chg in Gross Debt 29 100 150 0 Net Debt/Equity (X) 0.6 0.7 0.8 0.7 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 0.6 0.7 0.8 0.7 Other Financing CF 19 0 0 0 Capex to Debt (%) 102.0 67.9 45.1 22.6 Net Financing CF 17 67 100 (56) Z-Score (X) 2.2 2.0 1.9 1.9 Currency Adjustments 0 0 0 0 N. Cash/(Debt)PS (S cts) (31.3) (42.6) (50.7) (47.2) Chg in Cash (391) (72) 27 53 Opg CFPS (S cts) 16.2 18.7 20.6 20.4 Free CFPS (S cts) (27.3) (9.1) (4.8) 7.2 Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions FY Mar 3Q2014 4Q2014 1Q2015 2Q2015 FY Mar 2014A 2015F 2016F 2017F Turnover 293 290 297 314 Revenues (S$ m) Cost of Goods Sold 0 0 0 0 MRT Operations 624 655 689 702 Gross Profit 293 290 297 314 LRT Operations 10 11 11 11 Other Oper. (Exp)/Inc (273) (268) (268) (281) Bus Operations 218 231 243 210 Operating Profit 20 22 29 33 Taxi Operations 133 138 145 149 Other Non Opg (Exp)/Inc 0 0 0 0 Others 98 101 108 112 Associates & JV Inc 0 0 0 0 Total 1,164 1,244 1,315 1,307 Net Interest (Exp)/Inc (2) (3) (2) (3) Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 18 20 27 30 Key Assumptions Tax (4) (3) (5) (5) MRT ridership growth (%) 2.9 2.0 3.0 3.0 Minority Interest 0 0 0 0 Bus ridership growth (%) 4.6 3.0 3.0 3.0 Net Profit 14 17 22 25 Oil price (US$/bbl) 100.0 90.0 80.0 70.0 Net profit bef Except. 14 17 22 25 Chg in staff (%) 6.0 1.0 2.0 (6.0) EBITDA 63 68 74 80 Sales Gth (%) (1.0) (1.3) 2.6 5.7 EBITDA Gth (%) 1.1 7.1 10.0 7.9 Opg Profit Gth (%) 0.5 9.0 33.8 13.7 Net Profit Gth (%) (1.2) 18.9 32.2 13.0 Gross Margins (%) 100.0 100.0 100.0 100.0 Opg Profit Margins (%) 6.9 7.6 9.9 10.6 Net Profit Margins (%) 4.9 5.8 7.5 8.0 Source: Company; DBS Bank

Industry Focus

Singapore Land Transport

Page 15

DBS Bank 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 GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the DBS Vickers Group) 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 DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd., its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the DBS Group)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. 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. 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. DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. ANALYST CERTIFICATION The research analyst 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 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 this report. As of the date the report is published,the analyst and his/her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (interest includes direct or indirect ownership of securities). COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (DBSVS), their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 30 Nov 2014 except for ComfortDelgro and SMRT.

2. DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may beneficially own a total of 1% of any class of common equity securities of the company mentioned as of 30 Nov 2014

3.

Compensation for investment banking services: DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates have received compensation, within the past 12 months, and within the next 3 months may receive or intend to seek compensation for investment banking services from SMRT.

Industry Focus

Singapore Land Transport

Page 16

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

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

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Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR") (formerly known as HwangDBS Vickers Research Sdn Bhd). 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

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In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

DBS Bank Ltd.

12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel. 65-6878 8888

Company Regn. No. 196800306E

Singapore Land TransportComfortDelgroSMRT