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Co.

Reg No: 198700034E MICA (P) : 099/03/2012

Singapore
Initiating Coverage
17 December 2012

Buy (new)
Share price: Target price: SGD2.91 SGD4.18 (new)

United Engineers
Change is in the Air
Initiate with BUY and TP of SGD4.18. With an investment property portfolio worth SGD1.7 billion, United Engineers Limited (UEL), a long undervalued company, is on the brink of a major transformation to unlock value. The catalyst for change could come from its major shareholder, OCBC. But we think more can be done to help UEL realise its value. For one, its portfolio of commercial assets, anchored by UE Square, can be redeveloped. Its hospitality assets also could be sold. We initiate coverage on UEL with a BUY rating and target price of SGD4.18, suggesting 43.6% upside from current levels. Shareholders could push for change. OCBC owns a 24.5% stake in UEL and we believe that it holds the key to UELs quest to unlock value. In recent months, OCBC shareholders have given the nod for the sale of the groups two long-term investments, Fraser & Neave (F&N) and Asia Pacific Breweries (APB). On WBL Corporation, another of its investment, OCBC stood aside in the hope that Straits Trading Company and its partners could hasten the unlocking of its value. All eyes are now on UEL, the last remaining piece of the OCBC jigsaw. How UEL can unlock value. The Urban Redevelopment Authority will be reviewing the master plan for Singapore next year, which could mean an increase in plot ratio. We think this offers UEL a unique opportunity to redevelop UE Square, its key commercial asset in the area. In addition, with potential buyers in acquisitive mode, we do not rule out a sale of its hospitality assets at the right price. Deeply undervalued diamond. On book value alone, UEL is worth SGD3.96/share. But this figure is still understated as it excludes assets like UE BizHub Central which alone is worth SGD0.40/share. We value UELs group RNAV (after debt) at SGD5.30/share. Our target price of SGD4.18 is based on a 25% discount to RNAV. With the current share price reflecting just 54% of the stocks real worth, UEL is truly a diamond in the rough. Initiate with BUY.
United Engineers Summary Earnings Table
FYE Dec (SGD m) Revenue EBITDA Net Profit Basic EPS (SG cts) EPS Growth (%) DPS (SG cts) PER (x) EV/EBITDA (x) Div Yield (%) P/BV (x) 2010 569.4 154.3 108.6 41.7 88.7% 10.0 6.8 9.9 3.5 0.8 2011 1,187.1 361.3 290.4 97.3 133.3% 15.0 2.9 4.8 5.3 0.7 71.1% 23.4% 9.4% 2012F 483.3 65.3 41.7 13.8 -85.8% 5.0 20.4 27.1 1.8 0.7 72.5% 3.3% 1.3% 2013F 646.4 107.3 75.1 24.9 79.9% 8.0 11.3 17.9 2.8 0.6 79.7% 5.6% 2.3% 2014F 1,033.2 204.1 152.2 50.4 102.7% 10.0 5.6 6.4 3.5 0.6 30.8% 10.3% 4.6%

Alison FOK alisonfok@maybank-ke.com.sg (65) 6433 1477

Stock Information
Description: United Engineers has three core businesses construction, engineering and integrated property services. Its portfolio comprises just under 1,000 serviced apartments and offices in Singapore and overseas. Ticker: Shares Issued (m): Market Cap (USD m): 3-mth Avg Daily Turnover (USD m): ST Index: Free float (%): Major Shareholders: OCBC WBL Corporation Lee Foundation UEM SP 302 722.4 0.9 3,164.1 67.2% % 18.9 7.5 6.4

Key Indicators
ROE annualised (%) Net gearing (x) NAV/shr (SGD): Interest cover (x): 3.8 0.77 3.96 2.7

Historical Chart
3.00 2.70 2.40 2.10 1.80 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12

Performance: 52-week High/Low 1-mth Absolute (%) Relative (%) 19.3 12.2

SGD2.96 /SGD1.75 3-mth 19.3 15.7 6-mth 36.6 19.8 1-yr 59.5 34.7 YTD 61.2 34.8

Net Gearing (%) 73.2% ROE (%) 11.8% ROA (%) 4.8% Source: Company, Maybank KE estimates

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

United Engineers

Investment highlights
Banking on OCBCs push for divestment. Over the past decade, OCBC has been intent on divesting its non-financial investments, which include Straits Trading Company, Robinsons and Raffles Hotel, to name a few. More recently, it sold its stakes in F&N (18.2%) and APB (7.9%) for SGD3.2b to Thai tycoon Charoen Sirivadhanabhakdi. With WBL and UEL the last pieces remaining, we have no doubt that OCBC will eventually sell its stakes in these companies, albeit at the right price. Investment properties undervalued. UELs investment properties are undervalued, having a net asset value of SGD3.96/share as of 3Q12. Its headquarters, UE BizHub Central, is currently held as a fixed asset at cost. We estimate the surplus from this one property alone based on its market value is worth SGD130m, or SGD0.40/share. In addition, more can be done, in our view. For example, existing investment properties can be redeveloped to take advantage of current buoyant market conditions. Time ripe to redevelop UE Square? Built in 1997, UE Square is the oldest mixed property in UELs portfolio of property investment assets. With a Downtown MRT station being built right across the road from the property, a redevelopment plan to maximise its commercial and retail space will certainly be in UELs favour. A full-fledged redevelopment of the commercial and retail elements could go a long way to maximising the value of this property and add SGD0.34/share to our RNAV. Hospitality assets could be sold. UEL is still in the early stages of growing its hospitality business, from 708 keys currently to 3,000 keys in the next 3-5 years. We value their hospitality assets under the Park Avenue brand name at SGD360.5m or SGD1.10/share, which may attract the attention of the most aggressive buyer of hospitality assets in the market now, the Far East Group. We believe UELs 4-star hospitality assets are a good fit for Far Easts ambitions in this area. Property earnings kicking in next year. 2012 is not expected to be a good year in contrast to 2011s bumper harvest. However, this is due to no revenue recognition for property development. With 8 Riversuites, a 862-unit 99-year condominium already 43% presold since launch in Sep 2012 and the completion of the prime orchardgateway mall in Orchard Road, we expect 2013 to start showing a recovery. This will be followed by the completion of Sengkang Mall and Austville EC in 2014, and Watercolours EC in 2015. Deeply undervalued diamond. On book value alone, UEL is worth SGD3.96/share. But this figure is still understated as it excludes assets like UE BizHub Central which alone is worth SGD0.40/share. We value UELs group RNAV (after debt) at SGD5.30/share. Our target price of SGD4.18 is based on a 25% discount to RNAV. With the current share price reflecting just 54% of the stocks real worth, UEL is truly a diamond in the rough. Initiate with BUY.

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United Engineers

Shareholding structure
Majority shareholder is OCBC. OCBC holds a deemed stake of 24.5% in UEL assuming full conversion of 32m in convertible bonds, while the Lee Foundation holds a 8.1% stake, again assuming full dilution of 10.5m in convertible bonds. The OCBC Groups stake is held partly through the bank itself and partly through its life insurance arm Great Eastern.
Figure 1: OCBC & Lee Foundation shareholding
Preference shares Convertible bonds Convertible bonds OCBC OCBC Great Eastern Units (m) 0.6 22.1 10.1 Shares (m) 16.5 7.6 56.0 80.0 7.8 18.5 26.3 24.5% Stake (%)

Common shares OCBC 56.0 Total common shares assuming full CB conversion Convertible bonds Lee Foundation 10.5 Common shares Lee Foundation 18.5 Total common shares assuming full CB conversion Total shares o/s Source: Company data 326.9

8.1%

On the divestment trail. Since the announcement in 2000 by the Monetary Authority of Singapore (MAS) that banks must separate their financial and non-financial activities, OCBC has sought to divest its non-core assets. Over the past decade, it has sold off Raffles Hotel and Raffles Investment, and more recently, its stakes in APB and F&N, which have triggered a fierce tussle among prospective buyers. Still in its stable awaiting divestment are stakes in UEL and WBL. Which company to sell next? Putting aside Great Eastern, we believe UEL and WBL are next in line for sale by OCBC. In the case of WBL, the Straits Trading Company has taken over management control with the help of Third Avenue and Aberdeen Asset Management. In Nov 2012, it offered a cash price of SGD3.41 per share for OCBCs stake, which is 2% below its NAV of SGD3.48/share. OCBC is unlikely to act on this as the pricing is unattractive, a view which has been vindicated by the market seeing how WBL is now trading at SGD3.96, way above the offer price. For UEL however, OCBC is its only major shareholder and we believe the path leading to its eventual sale would be much smoother than WBL.
Figure 2: OCBCs divestment of non-financial assets Date of divestment Project May-03 Cancellation of F&N shares Dec-03 Cancellation of WBL shares Dec-03 Sale of Raffles Hotel May-04 Sale of Whitesands Shopping Mall Jul-04 Sale of Raffles Investments Jun-06 Sale of Robinson and Company Mar-08 Sale of Straits Trading Jul-12 Great Eastern Jul-12 Source: OCBC Sale of F&N and APB shares 11.8m APB /212.3m F&N 4.6% /14.9% 2,416.1 Sale of F&N and APB shares No. of shares (m) 12.1 3.9 Equity stake 4.0% 2.3% 43.3% 55.0% 49.8% 29.9% 6.2% 3.4%/3.2% Book value (SGD m) Amount received (SGD m) 8.8 53.0 159.0 121.7 135.3 799.8 Net gain (SGD m) 88 29.5 75.0 52.9 127.5

2.4 20.2 8.7m APB/ 46.2m F&N

23.5 84.8 68.9 7.8

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United Engineers

Strong redevelopment potential


Shrewd visionary. From the divestment of UE Tech Park to fund working capital for The Rochester project to the sale of UE Print Media to finance the development of orchardgateway and ensure working capital for its various property stakes, UEL has proven to be a shrewd visionary in the commercial property space in the past 10 years. orchardgateway is scheduled to launch in 4Q13 and we expect this will generate cash flow of approximately SGD500m, due to the conditions and terms of a turnkey contract in early 2014. With this large amount of cash on hand, UEL will have sufficient financial backing to seek out new opportunities.
Figure 3: UEL past property divestments
Projects UE Tech Park UE Print Media Source: Company data Year 2006/07 2010 Type Warehouse PPT Price (SGD m) 115 51 Book value (SGD m) 105 40 Premium above BV (%) 9.5 27.5

Time ripe to redevelop UE Square? Built in 1997, UE Square is the oldest mixed property in UELs portfolio of assets. With a Downtown MRT station being built right across from it, a redevelopment plan to maximise its commercial or retail space may be in UELs favour. Two possible scenarios. UE Square comprises commercial space, retail mall, serviced suites and a car park with 265 lots. We have constructed two scenarios that will support the case for redevelopment. In the first, Shell Company, the anchor tenant of Shell House, UE Squares office space, will be moving out next year. UEL can take advantage of this timing to apply for a change of use of its car park space to commercial and retail purposes, thereby increasing the overall efficiency ratio for the space. The second is a more extreme scenario that will see UEL redeveloping the entire area. With the recent change in en bloc rules that allow the five-year project completion period to begin on the date the collective sale order is granted rather than the date of issue of the Qualifying Certificate, we believe developers interest in en bloc sales will be rekindled. Compared to Up@Robertson Quay, a recent launch in the vicinity, UE Squares residential units are transacting at an ASP of SGD1,534 psf, a whopping 91% discount to the new sale prices. In our view, this huge difference will make a strong case for redevelopment of the entire building.
Figure 4: Exterior view of UE Square

Source: Company

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United Engineers Figure 5: Estimated NLA breakdown of UE Square NLA (sq ft)
Office Retail Hospitality Source: Company data 316,000 79,000 100,000 495,000

Breakdown
63.8% 16.0% 20.2% 100.0%

Scenario 1: Redevelopment of car park space. UE Squares car park currently has 265 parking spaces that are reserved for both commercial and residential tenants. Even though this a shared area, UEL does not rule out the possibility of redeveloping the car park to maximise the retail and/or commercial space in UE Square. Although we tip it as a possible scenario, we have not been able to estimate any contribution to RNAV because the conditions that will allow them to do this are still in flux. Scenario 2: Redevelopment of entire UE Square. Shell Houses largest tenant, Shell Company, will be moving out next year. The company currently takes up 30% of the office space at Shell House. Its exit makes it an ideal time to redevelop UE Square and the car park. With a plot ratio of 3.9x, we estimate UEL could add an additional SGD0.34/share to its RNAV.
Figure 6: Scenario analysis of redevelopment of UE Square
Current Office Retail Hospitality Land area (sq m) 7,623 1,906 2,382 11,911 GPR (x) 3.9 3.9 3.9 GFA (sq ft) 316,000 79,000 100,000 495,000

Proposed development Office Retail Hospitality

% of share 65% 20% 15%

Attrib GFA (sq ft) 321,750 99,000 74,250

Dev charge (SGD m) 121.4 37.3 25.1

Capital value (SGD m) 2000 2500 1500

Market value (SGD m) 643.5 247.5 111.4 1002.4

Prop Dev Devt cost DC BV of prop Surplus No. of shares (m) Addnl to Surplus Source: Company data

1002.4 148.5 0 686 110.6 327 0.34

Possible buyers for hospitality assets. Based on our estimates, UELs hospitality assets under the Park Avenue brand name currently have a market value of SGD360.5m, or SGD1.10/share. In our view, the most probable buyer in the market right now is the Far East Group. Its robust balance sheet and aggressive quest for new acquisitions will make it a prime candidate to consider UELs hospitality assets.

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United Engineers

Financials
Multiple income streams. UEL has built a steady stream of revenue and earnings from its businesses over the past 10 years. Even in times of crisis, it was a safe haven underpinned by consistent construction earnings. During the SARs crisis in 2003, the group achieved strong results following a restructuring of its investment in the electronics sector. Between 2003 and 2006, however, earnings suffered a contraction due to losses from its trading business, but this was disposed of by 2006. Since then, infrastructure development in Singapore has brought in a steady flow of contracts for UEL. The completion of The Rochester in 2011 helped boost its recurring income through higher rents. The divestment of UE Print Media Hub and spinoff of UE E&C in 2011 provided one-off gains, which explained the sudden hike in its earnings that year.
Figure 7: Revenue trend
1200 1000 800 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Company

Figure 8: PATMI trend


300 250 200 150 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Company

Engineering and construction earnings to slide. We expect engineering and construction earnings to come off this year as UEL saw a 20% shortfall in its FY11 orderbook of SGD502m compared to FY10s. We estimate that 8 Riversuites and Austville Residences will support the bulk of the construction earnings between 2013 and 2014.
Figure 9: FY11 revenue breakdown Figure 10: Core sales trend
Engineer & Construction 600.0 12% 23% Engineer & Construction Property Development Property rental and services 65% 0.0 2010 2011 2012F 2013F 2014F 500.0 400.0 300.0 200.0 100.0 Property rental and services

Source: Company

Source: Company

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United Engineers

High gearing not a concern. Borrowing has never been much of an issue for UEL. Its net gearing has been relatively steady at between 0.4x and 0.8x in the past five years. Most of the borrowings are normally associated with project financing of property stakes and investment properties. But it can also fall back on a steady inflow of construction earnings and income from investment properties for funds. Current net gearing at 0.7x. As of 3Q12, UELs net gearing was 0.7x. In 2013, we expect gearing will hinge on its ability to finance its residential construction projects and two joint ventures, ie, a mall in Sengkang and orchardgateway. We also project a high churn rate in operating cash flow as the construction of orchardgateway picks up. The new mall is scheduled to open before the holiday season in 4Q13.
Figure 11: Cash vs borrowings
Cash 1,400 1,200 1,000 800 600 400 -100 200 -200 0 2007 Source: Company 2008 2009 2010 2011 -300 Source: Company Borrowings

Figure 12: Cash flow trend


500 CFO 400 300 200 100 0 2007 2008 2009 2010 2011 CFI CFF

4Q12 likely to end on a poor note. In the absence of revenue recognition for property development, UELs FY12 results may well end on a poor note in contrast to FY11. But a better year is in store in 2013, in our view. Park Avenue Changi will be launched in 2Q13 and property rental services should give earnings a slight boost. By the time orchardgateway is launched in 4Q13, UEL will also have a number of property developments ready to receive their Temporary Occupation Permit (TOP) in 2014. We expect 8 Riversuites will start to recognise revenue as its construction gets underway. Dividend payout. UEL does not have an official dividend policy but its payout has ranged from 13.9% to 40.7% pa since 2007. The exception was 2008 when the payout was over 110%. In 2011, shareholders saw a huge boost in dividend from the net proceeds of its sale of UE E&C. Figure 13: Dividend payout
16 14 12 10 8 6 4 2 0 2007 2008 2009 2010 2011 Source: Company data 150% 100% 50% 0% DPS Dividend payout 350% 300% 250% 200%

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United Engineers

Valuation methodology
We value UEL based on the market value of its investment properties and the NPV of the development profit from its various property stakes. We have factored in all the investment properties, including UE BizHub East which is expected to come on-stream in 2Q13. We estimate UELs RNAV at SGD5.30 per share, assuming full dilution after the exercise of various share options, and convertible bonds. The group holds a remainder of 24.8m shares options and convertible bonds to be converted.
Figure 14: RNAV analysis
Location Serviced Suites Park Avenue Clemenceau Park Avenue Rochester Park Avenue Changi Park Avenue Robertson Commercial Shell House UE BizHub East Industrial UE BizHub Central UE BizHub East Retail UE Square Rochester Mall UE BizHub EAST UE Square Rochester Changi Robertson Quay UE Square Changi Ang Mo Kio Changi Location UE Square Rochester Changi Rooms (key/ sqft) 150 271 251 36 NLA 268,892 33,950 NLA 305,695 497,512 NLA 69,965 86,339 59,000 Per key (SGD m) 699,192 547,985 348,075 547,985 Capital 1,411.2 981.8 Capital 199.9 199.9 Capital 1,710.5 1,570.9 1,020.0 Market value MV (SGD m) 104.9 148.5 87.4 19.7 MV 445.9 33.3 MV 160.0 249.9 MV 135.1 119.4 93.8 1,598.0 122.2 -257.4 -25% discount 877.7 Various stakes Sengkang Mall UEEC Stake 30% 68% 0.64 151.5 117.8 0.46 0.36 3.36 Per share 0.32 0.45 0.27 0.06 1.36 0.10 0.49 0.76 0.41 0.37 0.29 4.89 0.37 -0.79

NPV of development profits Cash (debt) (excluding proportionate of land debt)

1,360.9 Source: Maybank KE estimates

4.18

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United Engineers

Company background
Incorporated in 1912, United Engineers was a byproduct of a merger between two British engineering firms Riley Hargreaves & Co. and Howarth Erskine & Co. As the name suggests, the groups construction and engineering capabilities have been a core part of its business. Nevertheless, UEL has sought to cultivate alternative revenue streams. In 2011, it divested its construction business and parts of its engineering segment into a subsidiary, UE E&C, and continues to exercise majority control through a 68.2% stake. Today, UEL has consolidated its core strengths into three main businesses engineering, construction and integrated property services. Engineering services: UEL has expanded its capabilities to encompass three different fields of engineering. They are: Mechanical & electrical (M&E) engineering, which provides support services for the construction business via UE E&C. This includes providing electrical power distribution, air-conditioning and mechanical ventilation systems, fire protection and sanitary systems. Environmental engineering, which includes water treatment and medical waste management. UEL puts a strong emphasis on the environmental engineering sector where it sees growth opportunities, particularly in the waste-to-energy and water industries. Other than Singapore, it also has operations in China with the headquarters in Jiangsu. In China, UEL owns two buildoperate-transfer (BOT) water treatment plants in Hengyang, Hunan Province, and Liaocheng, Shandong Province. It also operates six medical waste treatment plants that provide end-to-end services from collection and treatment to disposal. Steel engineering and fabrication, which is undertaken by McAlister and Company Limited.

Construction division: UEL acquired an 85% stake in Greatearth Construction in the 1990s. All construction services are now undertaken by UE E&C. The group has almost 30 years of track record offering integrated construction services. Around 80% of the orderbook are projects from Singapore, with the rest undertaken by 90%-owned United Engineers (B) Sdn Bhd for projects in Brunei. Integrated property services: This business can be divided into two categories, namely, property development and property management. Currently, UEL manages investment properties with leasable space of more than 1.2m sq ft, as well as runs hotel management services under its own brand, Park Avenue. As for property development, the group holds a diversified residential portfolio via joint-venture stakes or assuming full control over residential projects.

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United Engineers

Figure 15: Company structure

United Engineers Ltd Construction


UE E&C (68.2%) Construction design and build, civil works, residential, industrial and commercial projects Rental of Construction Equipment United Engineer Sdn (Brunei)

Engineering
McAlister Engineering (100%) Steel Engineering and Fabrication UE Enivortech Pte. Environmental Engineering Water treatment Medical Waste UE E&C (68.2%) M&E Engineering

Integrated Property Services


Project Management Services Asset Management Services Hospitality Management Services Facility Management Property Development

Source: Company data

UE E&C (68.2% stake)


Spinoff of UE E&C strengthens groups vision. UEL spun off its construction business into an independent subsidiary named UE E&C in 2011 with a market capitalisation of SGD130m. The purpose was to unlock the value of its construction business in line with UELs vision to move towards property management and development. The group maintains a 68.2% stake in UE E&C and continues to leverage on the latters expertise to build its own properties. UE E&C has three business segments M&E engineering, construction and civil engineering, and rental of construction equipment. Building a second cash return cycle. Previously, UEL has relied in part on cash flow from construction activities to support its venture into property development. Now, however, the group has moved away from such reliance to focus on its hospitality and retail businesses with an eye to ensuring stable earnings. Still giving good value. Although UE E&C has no dividend policy, it offered a generous dividend of 6 cents per share, or 25% dividend payout, in 2011. UEL extracted SGD11m from its 68.2% stake.

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United Engineers

Property development
Four residential developments. UEL has stakes in four residential properties, of which two are held through its associate, UE E&C. Due to accounting regulations, presales of units at Watercolours and Austville Residences, both Executive Condominium (EC) projects, will be fully recognised only when they receive their TOP in 2014 and 2015, respectively. Meanwhile, 8 Riversuites is 43% sold as of Oct 2012. YTD, UEL has yet to recognise SGD684m worth of sales proceeds and has SGD584m worth of properties as yet unsold. For now, the group is actively seeking to acquire land in Singapore and overseas.
Figure 16: Property development projects
Project Watercolours (EC) Ascentia Sky Austville Residences (EC) 8 Riversuites Source: Maybank KE estimates Stake 20% 17% 55% 100% Tenure 99 Yr 99 Yr 99 Yr 99 Yr TOP 2015 2012 2014 2015 No. of units 390 373 540 862 % sold 65% 100% 100% 43% Land psf (SGD) 291 536 321 774 Cost psf (SGD) 623 996 655 1,141 ASP psf (SGD) 735 1,150 720 1,300

Figure 17: Artists impression of Austville Residences

Figure 18: Artists impression of 8 Riversuites

Source: Company

Source: Company

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United Engineers

Property management
Mixed-use developments. UEL has been focusing on building up its expertise in integrated commercial and serviced hotel developments. It has been savvy in picking locations for its projects, which are typically sited across the road from upcoming MRT stations. The group singlehandedly started its own hospitality brand, Park Avenue, in 1997. It now has a total of 708 serviced suites, of which 251 suites (35.4% of total) are in Park Avenue Changi, which is expected to begin operation in 1Q13. Management is targeting 3,000 keys in 3-5 years time, implying a CAGR of 33%. We estimate Park Avenues market value to be SGD360.5m, or SGD1.10/share. The Rochester. A distinctive mix of residential apartments, retail mall and a hotel, The Rochester has proved itself to be a success story. All of its residential units were sold between 2007 and 2011. It also has 271 serviced suites. Nearby, Star Vista, which opened in early December, is expected to pull in the crowds and increase the retail footprint in the area. Park Avenue Rochester commenced operations in 1Q12 and has seen its occupancy rate rising to 80-90% so far, subject to seasonality factors. UE BizHub Central. UE BizHub Central offers industrial space for lease and doubles as UELs headquarters. Among its anchor tenants are Motorola and Apple. The site was purchased for SGD30m and has a 30+30-year lease from 1990, which is due for renewal next year. UE BizHub East. UE BizHub East is an integrated development comprising a hotel, retail space and a business park. It has a lettable space of 423,000 sq ft spread over two tower blocks. The industrial space has received its TOP in June this year. From our understanding, UEL has secured big names such as Cisco Systems, British Telecom and International SOS as anchor tenants. While the industrial space is currently 50% occupied, the retail space is 85% occupied and has NTUC FairPrice as the anchor tenant.
Figure 19: Property management
NLA (sq ft)/rooms Serviced Suites Park Avenue Clemenceau Park Avenue Rochester Park Avenue Changi Park Avenue Robertson Commercial Shell House UE BizHub East Industrial UE BizHub Central UE BizHub East Retail UE Square Rochester Mall UE BizHub EAST Source: Company data 150 271 251 36 316,000 34,000 300,000 500,000 79,000 75,000 90,000 Est. occupancy as of 4Q12 83% 80% 0% 80% 98% 90% 100% 50% 98% 90% 85%

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United Engineers Figure 20: UE Bizhub Central Figure 21: Artists impression of UE BizHub East

Source: Company

Source: Company

Figure 22: Artists impression of The Rochester

Figure 23: UE Square

Source: Company

Source: Company

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United Engineers

Management team
Mr Tan Ngiap Joo Independent, Non-executive Director Mr Tan joined the Board of Directors in October 2006 and was appointed Chairman in April 2007. He was last re-elected as director of UEL in 2010 and serves as Chairman of the Executive Committee and member of the Nominating, Remuneration and Development Committees. Mr Tan was the Deputy President of Oversea-Chinese Banking Corporation Limited and Chief Executive Officer (CEO) of the Bank of Singapore (Australia) Limited. Mr Jackson Chevalier Yap Kit Siong Non-Independent, Executive Director Group Managing Director and CEO Mr Yap joined the Board of Directors in 1999 and was last re-elected as director of UEL in 2009. He serves as member of the Executive and Development Committees. He joined UEL as Chief Operating Officer in 1997 and was appointed Group Managing Director and CEO in 2001. As CEO, Mr Yap is responsible for leading the management team to implement strategic goals and directions set by the Board. Prior to joining UEL, he worked in the oil and petrochemicals industry and his last position was Planning Manager in Exxon Chemical Singapore. Mr Wong Hein Jee Chief Financial Officer Mr Wong was appointed Chief Financial Officer on 1 October 2011. He brings with him more than 20 years of experience in corporate finance and accounting and was formerly the Group Chief Financial Officer of Tat Hong Holdings Ltd and WBL Corporation Limited. He is a member of the Institute of Certified Public Accountants of Singapore and obtained his MBA from the University of Chicago. As Chief Financial Officer, Mr Wong is responsible for the group's financial and accounting functions.

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United Engineers
PROFIT AND LOSS (SGD m) FYE Dec Sales Cost of goods sold Gross profit Operating expenses Operating profit Net interest Interest income Interest expense Net other non-op. JV+Assoc. Pretax profit Income taxes Net profit EBITDA EPS (SG cts) 2010 569.4 -376.7 192.7 -56.9 135.8 -0.2 3.6 -3.8 6.8 142.4 -33.9 108.6 154.3 41.7 2011 1,187.1 -770.1 417.0 -67.2 349.8 -7.6 2.6 -10.2 6.6 348.9 -58.5 290.4 361.3 97.3 2012F 483.3 -328.6 154.7 -93.2 61.5 -12.7 2.6 -15.3 3.4 52.2 -10.4 41.7 65.3 13.8 2013F 646.4 -439.5 206.8 -102.7 104.2 -12.3 2.6 -14.9 2.0 93.8 -18.8 75.1 107.3 24.9 2014F 1,033.2 -702.5 330.6 -130.8 199.8 -11.6 2.7 -14.3 2.0 190.2 -38.0 152.2 204.1 50.4 BALANCE SHEET (SGD m) FYE Dec Total assets Current assets Cash & ST investment Inventories Accounts receivable Others Other assets LT investments Net fixed assets Investment properties Others Total liabilities Current liabilities Accounts payable ST borrowings Others Long-term liabilities Long-term debts Others Shareholder's equity Paid-in capital Reserve Minority interests KEY RATIOS FYE Dec Growth (% YoY) Sales Operating profit EBITDA Net profit EPS Profitability (%) Gross margin Operating margin EBITDA margin Net margin ROA ROE Stability Gross debt/equity (%) Net debt/equity (%) Int. coverage (X) Int. & ST debt coverage (X) Cash flow int. coverage (X) Cash flow int. & ST debt (X) Current ratio (X) Quick ratio (X) Net cash/(debt) (SGD m) Per share data (SG cts) EPS CFPS BVPS SPS EBITDA/share DPS 2010 2,267.5 991.5 266.6 7.1 149.9 567.9 1,276.0 92.2 72.4 1,057.4 54.0 1,346.5 835.6 311.6 468.1 55.8 511.0 472.3 38.7 921.0 273.9 648.2 -1.1 2011 3,079.5 1,552.6 453.3 7.5 301.9 789.9 1,526.9 100.2 81.2 1,242.8 102.7 1,840.5 648.6 379.9 176.4 92.3 1,191.9 1,157.4 34.4 1,239.0 300.9 883.4 54.7 2012F 3,212.0 1,609.8 540.6 5.3 317.8 746.2 1,602.1 152.6 83.6 1,250.0 115.9 1,943.4 730.6 397.2 291.1 42.4 1,212.8 1,169.0 43.7 1,268.6 320.8 891.7 56.0 2013F 3,257.4 1,336.1 353.9 9.6 371.9 600.7 1,921.3 152.6 85.8 1,256.3 426.7 1,917.0 724.9 407.3 276.5 41.1 1,192.1 1,145.6 46.4 1,340.4 333.4 951.1 56.0 2014F 3,301.7 1,640.1 904.2 9.6 339.7 386.6 1,661.6 152.6 87.6 1,262.5 158.9 1,821.4 657.0 368.0 248.8 40.2 1,164.4 1,111.3 53.2 1,480.3 345.9 1,078.4 56.0

CASH FLOW (SGD m) FYE Dec Operating cash flow Operating profit Depreciation & amortisation Change in working capital Others Investment cash flow Net capex Change in LT investment Change in other assets Cash flow after invt. Financing cash flow Change in share capital Net change in debt Change in other LT liab. Net cash flow

2010 -93.0 142.4 8.2 -170.2 -73.5 -116.7 -136.7 8.6 11.4 -209.7 154.8 0.5 155.8 -1.5 -54.9

2011 -29.6 348.9 9.8 -298.8 -89.5 -209.7 -211.2 -13.9 15.5 -239.3 425.5 0.7 387.4 37.4 186.2

2012F 84.4 52.2 10.6 40.5 -18.8 -208.7 -166.7 -53.5 11.5 -124.2 198.4 0.8 126.2 71.4 74.2

2013F 5.3 93.8 10.9 -68.7 -30.8 -158.5 -166.7 -3.4 11.5 -153.3 -67.4 0.8 -37.9 -30.3 -220.7

2014F 237.6 190.2 11.2 86.3 -50.0 458.1 450.0 -3.4 11.5 695.8 -113.7 0.8 -62.0 -52.5 582.1

2010

2011

2012F

2013F

2014F

-19.1 81.4 99.5 121.4 88.7 33.8 23.8 27.1 19.1 4.8 11.8 102.1 73.2 709.6 0.3 36.2 4.8 1.2 1.2 -673.8 41.7 -0.2 3.5 2.2 0.6 10.0

108.5 157.6 134.2 167.5 133.3 35.1 29.5 30.4 24.5 9.4 23.4 107.6 71.1 47.2 2.0 33.2 8.0 2.4 2.4 -880.5 97.3 0.6 4.2 4.0 1.2 15.0

-59.3 -82.4 -81.9 -85.6 -85.8 32.0 12.7 13.5 8.6 1.3 3.3 115.1 72.5 5.1 0.1 2.4 0.3 2.2 2.2 -919.5 13.8 0.2 4.2 1.6 0.2 5.0

33.7 69.4 64.3 79.9 79.9 32.0 16.1 16.6 11.6 2.3 5.6 106.1 79.7 8.6 0.3 5.3 207.7 1.8 1.8 -1,068.3 24.9 -0.7 4.4 2.1 0.4 8.0

59.8 91.8 90.2 102.7 102.7 32.0 19.3 19.8 14.7 4.6 10.3 91.9 30.8 17.4 0.8 12.3 -13.2 2.5 2.5 -455.9 50.4 1.9 4.9 3.4 0.7 10.0

Source: Company, Maybank KE estimates

17 December 2012

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United Engineers

RESEARCHOFFICES
REGIONAL
P K BASU Regional Head, Research & Economics (65) 6432 1821 pk.basu@maybank-ke.com.sg WONG Chew Hann, CA Acting Regional Head of Institutional Research (603) 2297 8686 wchewh@maybank-ib.com ONG Seng Yeow Regional Products & Planning (852) 2268 0644 ongsengyeow@maybank-ke.com.sg

ECONOMICS
Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 suhaimi_ilias@maybank-ib.com Luz LORENZO Economist Philippines | Indonesia (63) 2 849 8836 luz_lorenzo@maybank-atrke.com

MALAYSIA
WONG Chew Hann, CA Head of Research (603) 2297 8686 wchewh@maybank-ib.com Strategy Construction & Infrastructure Desmond CHNG, ACA (603) 2297 8680 desmond.chng@maybank-ib.com Banking - Regional LIAW Thong Jung (603) 2297 8688 tjliaw@maybank-ib.com Oil & Gas Automotive Shipping ONG Chee Ting, CA (603) 2297 8678 ct.ong@maybank-ib.com Plantations Mohshin AZIZ (603) 2297 8692 mohshin.aziz@maybank-ib.com Aviation Petrochem Power YIN Shao Yang, CPA (603) 2297 8916 samuel.y@maybank-ib.com Gaming Regional Media Power TAN CHI WEI, CFA (603) 2297 8690 chiwei.t@maybank-ib.com Construction & Infrastructure Power WONG Wei Sum, CFA (603) 2297 8679 weisum@maybank-ib.com Property & REITs LEE Yen Ling (603) 2297 8691 lee.yl@maybank-ib.com Building Materials Manufacturing Technology LEE Cheng Hooi Head of Retail chenghooi.lee@maybank-ib.com Technicals

SINGAPORE
Gregory YAP Head of Research (65) 6432 1450 gyap@maybank-ke.com.sg Technology & Manufacturing Telcos - Regional Wilson LIEW (65) 6432 1454 wilsonliew@maybank-ke.com.sg Hotel & Resort Property & Construction James KOH (65) 6432 1431 jameskoh@maybank-ke.com.sg Logistics Resources Consumer Small & Mid Caps YEAK Chee Keong, CFA (65) 6433 5730 yeakcheekeong@maybank-ke.com.sg Healthcare Offshore & Marine Alison FOK (65) 6433 5745 alisonfok@maybank-ke.com.sg Services S-chips Bernard CHIN (65) 6433 5726 bernardchin@maybank-ke.com.sg Transport (Land, Shipping & Aviation) ONG Kian Lin (65) 6432 1470 ongkianlin@maybank-ke.com.sg REITs / Property Wei Bin (65) 6432 1455 weibin@maybank-ke.com.sg S-chips Small & Mid Caps

THAILAND
Sukit UDOMSIRIKUL Head of Research (66) 2658 6300 ext 5090 Sukit.u@maybank-ke.co.th Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 Maria.L@maybank-ke.co.th Consumer/ Big Caps Andrew STOTZ Strategist (66) 2658 6300 ext 5091 Andrew@maybank-ke.co.th Mayuree CHOWVIKRAN (66) 2658 6300 ext 1440 mayuree.c@maybank-ke.co.th Strategy Suttatip PEERASUB (66) 2658 6300 ext 1430 suttatip.p@maybank-ke.co.th Media Commerce Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 sutthichai.k@maybank-ke.co.th Energy Petrochem Termporn TANTIVIVAT (66) 2658 6300 ext 1520 termporn.t@maybank-ke.co.th Property Woraphon WIROONSRI (66) 2658 6300 ext 1560 woraphon.w@maybank-ke.co.th Banking & Finance Jaroonpan WATTANAWONG (66) 2658 6300 ext 1404 jaroonpan.w@maybank-ke.co.th Transportation Small cap. Chatchai JINDARAT (66) 2658 6300 ext 1401 chatchai.j@maybank-ke.co.th Electronics Pongrat RATANATAVANANANDA (66) 2658 6300 ext 1398 pongrat.R@maybank-ke.co.th Services/ Small Caps

INDONESIA
Katarina SETIAWAN Head of Research (62) 21 2557 1125 ksetiawan@maybank-ke.co.id Consumer Strategy Telcos Lucky ARIESANDI, CFA (62) 21 2557 1127 lariesandi@maybank-ke.co.id Base metals Coal Oil & Gas Rahmi MARINA (62) 21 2557 1128 rmarina@maybank-ke.co.id Banking Multifinance Pandu ANUGRAH (62) 21 2557 1137 panugrah@maybank-ke.co.id Auto Heavy equipment Plantation Toll road Adi N. WICAKSONO (62) 21 2557 1130 anwicaksono@maybank-ke.co.id Generalist Anthony YUNUS (62) 21 2557 1134 ayunus@maybank-ke.co.id Cement Infrastructure Property Arwani PRANADJAYA (62) 21 2557 1129 apranadjaya@maybank-ke.co.id Technicals

HONG KONG / CHINA


Edward FUNG Head of Research (852) 2268 0632 edwardfung@kimeng.com.hk Construction Ivan CHEUNG, CFA (852) 2268 0634 ivancheung@kimeng.com.hk Property Industrial Ivan LI, CFA (852) 2268 0641 ivanli@kimeng.com.hk Banking & Finance Jacqueline KO, CFA (852) 2268 0633 jacquelineko@kimeng.com.hk Consumer Staples Andy POON (852) 2268 0645 andypoon@kimeng.com.hk Telecom & equipment Alex YEUNG (852) 2268 0636 alexyeung@kimeng.com.hk Industrial Warren LAU (852) 2268 0644 warrenlau@kimeng.com.hk Technology - Regional Karen Kwan (852) 2268 0640 karenkwan@kimeng.com.hk China Property

VIETNAM
Michael KOKALARI, CFA Head of Research (84) 838 38 66 47 michael.kokalari@maybank-kimeng.com.vn Strategy Nguyen Thi Ngan Tuyen (84) 844 55 58 88 x 8081 tuyen.nguyen@maybank-kimeng.com.vn Food and Beverage Oil and Gas Ngo Bich Van (84) 844 55 58 88 x 8084 van.ngo@maybank-kimeng.com.vn Banking Trinh Thi Ngoc Diep (84) 844 55 58 88 x 8242 diep.trinh@maybank-kimeng.com.vn Technology Utilities Construction Dang Thi Kim Thoa (84) 844 55 58 88 x 8083 thoa.dang@maybank-kimeng.com.vn Consumer Nguyen Trung Hoa +84 844 55 58 88 x 8088 hoa.nguyen@maybank-kimeng.com.vn Steel Sugar Resources

PHILIPPINES
Luz LORENZO Head of Research (63) 2 849 8836 luz_lorenzo@maybank-atrke.com Strategy Laura DY-LIACCO (63) 2 849 8840 laura_dyliacco@maybank-atrke.com Utilities Conglomerates Telcos Lovell SARREAL (63) 2 849 8841 lovell_sarreal@maybank-atrke.com Consumer Media Cement Kenneth NERECINA (63) 2 849 8839 kenneth_nerecina@maybank-atrke.com Conglomerates Property Ports/ Logistics Katherine TAN (63) 2 849 8843 kat_tan@maybank-atrke.com Banks Construction Ramon ADVIENTO (63) 2 849 8842 ramon_adviento@maybank-atrke.com Mining

INDIA
Jigar SHAH Head of Research (91) 22 6623 2601 jigar@maybank-ke.co.in Oil & Gas Automobile Cement Anubhav GUPTA (91) 22 6623 2605 anubhav@maybank-ke.co.in Metal & Mining Capital goods Property Ganesh RAM (91) 226623 2607 ganeshram@maybank-ke.co.in Telecom Contractor

17 December 2012

Page 16 of 19

United Engineers APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES
DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each securitys price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdictions stock exchange in the equity analysis. Accordingly, investors returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, MKE) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, Representatives) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice. This report may contain forward looking statements which are often but not always identified by the use of words such as anticipate, believe, estimate, intend, plan, expect, forecast, predict and project and statements that an event or result may, will, can, should, could or might occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events. MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report. This report is prepared for the use of MKEs clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect. 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. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report. Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Singapore This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (Maybank KERPL) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. Thailand The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (MBKET) does not confirm nor certify the accuracy of such survey result. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect. US This research report prepared by MKE is distributed in the United States (US) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (Maybank KESUSA), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (Maybank KESL) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

17 December 2012

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United Engineers DISCLOSURES


Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (PTKES) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (KESI) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.

Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Singapore: As of 14 December 2012, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report. Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. As of 17 December 2012, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report. MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.

OTHERS
Analyst Certification of Independence The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the research analysts compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. Reminder Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Ong Seng Yeow | Executive Director, Maybank Kim Eng Research

Definition of Ratings
Maybank Kim Eng Research uses the following rating system: BUY HOLD SELL Return is expected to be above 10% in the next 12 months (excluding dividends) Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends) Return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

Some common terms abbreviated in this report (where they appear):


Adex = Advertising Expenditure BV = Book Value CAGR = Compounded Annual Growth Rate Capex = Capital Expenditure CY = Calendar Year DCF = Discounted Cashflow DPS = Dividend Per Share EBIT = Earnings Before Interest And Tax EBITDA = EBIT, Depreciation And Amortisation EPS = Earnings Per Share EV = Enterprise Value FCF = Free Cashflow FV = Fair Value FY = Financial Year FYE = Financial Year End MoM = Month-On-Month NAV = Net Asset Value NTA = Net Tangible Asset P = Price P.A. = Per Annum PAT = Profit After Tax PBT = Profit Before Tax PE = Price Earnings PEG = PE Ratio To Growth PER = PE Ratio QoQ = Quarter-On-Quarter ROA = Return On Asset ROE = Return On Equity ROSF = Return On Shareholders Funds WACC = Weighted Average Cost Of Capital YoY = Year-On-Year YTD = Year-To-Date

17 December 2012

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United Engineers

Maybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194

Malaysia

Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Research Pte Ltd 9 Temasek Boulevard #39-00 Suntec Tower 2 Singapore 038989 Tel: (65) 6336 9090 Fax: (65) 6339 6003

Singapore

London

Maybank Kim Eng Securities (London) Ltd 6/F, 20 St. Dunstans Hill London EC3R 8HY, UK Tel: (44) 20 7621 9298 Dealers Tel: (44) 20 7626 2828 Fax: (44) 20 7283 6674

New York

Maybank Kim Eng Securities USA Inc 777 Third Avenue, 21st Floor New York, NY 10017, U.S.A. Tel: (212) 688 8886 Fax: (212) 688 3500

Stockbroking Business:

Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888 Fax: (603) 2282 5136

Kim Eng Securities (HK) Ltd Level 30, Three Pacific Place, 1 Queens Road East, Hong Kong Tel: (852) 2268 0800 Fax: (852) 2877 0104

Hong Kong

Indonesia

PT Kim Eng Securities Plaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

India

Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India Tel: (91).22.6623.2600 Fax: (91).22.6623.2604

Maybank ATR Kim Eng Securities Inc. 17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200 Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

Philippines

Maybank Kim Eng Securities (Thailand) Public Company Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

Thailand

Vietnam

In association with

Saudi Arabia
In association with

Maybank Kim Eng Securities JSC 1st Floor, 255 Tran Hung Dao St. District 1 Ho Chi Minh City, Vietnam Tel : (84) 844 555 888 Fax : (84) 838 38 66 39

Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686 Fax: (966) 26068787

Kevin Foy kevinfoy@maybank-ke.com.sg Tel: (65) 6336-5157 US Toll Free: 1-866-406-7447

South Asia Sales Trading

Eddie LAU eddielau@kimeng.com.hk Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267

North Asia Sales Trading

www.maybank-ke.com | www.maybank-keresearch.com

17 December 2012

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