Industry Outlook

Midstream Consumer (Singapore)

Refer to important disclaimers at the end of this report

DBS Group Research . Asian Insights Office 17 September 20

2015
May 2016

Overall Outlook
GDP growth to slow in 2016. Singapore’s GDP growth forecast for 2016 is 1.5%, slower than 2.0% last year. It will be
the weakest since the global financial crisis in 2008/09. The main drag is in the manufacturing sector with risks of
services slowing down as well. Traction in the manufacturing sector has been poor. Key issues include 1) a down cycle
in electronics segment; 2) consolidation in O&G industry on the back of weak oil price; 3) rise in manufacturing costs;
and 4) offshoring of MNCS. There is also downside risk in the coming quarters for the services sector particularly in
Financial Services, which is exposed to China slowdown, Fed rate hike, and slower loan growth.

Sluggish consumption growth, unemployment to trend slightly higher. Amid anticipated economic headwinds, our
economics desk has forecasted 2016 private consumption growth to remain flat at 4.6% before tapering down to 3.8%
in 2017. Unemployment rate is expected to trend up slightly from 1.9% in 2015 to 2.4% in 2017.

GDP growth rate: y-o-y change Remarks

Growth %
16 1. GDP growth is
headed towards its
14 slowest in seven
12 years
10 2. 2016 GDP growth is
8 forecasted to be at
1.5%
6
4 3. GDP growth is
2 expected at 1.9% in
2017
0
-2
-4
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F
Source: ThomsonReuters, DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

Singapore retail sales (ex-motor vehicles) Remarks

% chg
15 1. Overall retail sales (ex
motor vehicles) since
10 2012, has trended on
a gentle decline. This
5 is largely in line with
decelerating GDP
growth
0

2. Shift in consumption
-5
to motor vehicles
apparent as vehicle
-10 sales increased in
2015
-15 1.
Mar-12

Mar-14

Mar-15
Mar-13

Sep-13

Sep-15
Sep-12

Sep-14
Jan-12

Jan-14

Jan-16
Jan-13

Jan-15
May-12

May-13

May-14

May-15
Jul-12

Jul-13

Nov-13

Jul-14

Jul-15

Nov-15
Nov-12

Nov-14

Source: Bloomberg Finance L.P., DBS Bank

Private consumption has remained robust since 2010. Recovery post financial crisis has led to growth in consumption
expenditure. However, the decline in 2012 was due to a reduction in tourist arrivals and non-residents expenditure, as
well as recreation and culture. In 2015, consumption growth expanded sharply on increase in transportation costs,
attributable to high cost of COEs and the number of new and used car sales.

Private consumption expenditure growth Remarks

Growth %
5.0 1. Increase in 2015’s
private consumption
4.5 was led by the
4.0 transportation sector

3.5 2. In 2015, the number

3.0 of new vehicle
registrations
2.5 increased 54% while
2.0 vehicle transfers
increased 20% at a
1.5 time when COE
1.0 prices ranged
between S$54,000
0.5
and S$78,000
0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F
Source: DBS Bank

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Midstream Consumer (Singapore)

The age distribution of cars in Singapore is lumpy. A hundred thousand cars are due to be scrapped each year for the
next three years, compared to 30-50k per year for cars aged six years and below. More replacement supply coming up
may help ease COE price, provided the authorities do not attempt to smooth out the lumpiness.

COE price Category A (S$) Remarks

100000
1. Private car companies
90000
such as Uber and
80000 Grab have been
70000 competing with
60000 private car buyers for
50000
COEs, supporting
COE prices
40000
30000
20000
10000
0

Source: Bloomberg Finance L.P., DBS Bank

Singaporean’s nominal and real wage continues to increase. According to Ministry of Manpower statistics, median
monthly wage has grown from S$2,543 in 2007 to close to S$4,000 in 2015. Nominal wage has never declined.
th th
Workers between the 25 and 75 percentile generally draw between S$2,000 and S$6,999 per month.

Mean gross monthly income (RHS) and wage increase (LHS) Remarks
Growth % S$
16% 4800 1. Real wage growth
was 3% between
14% 4200 2010-2025 and
5.3% from 2014-
12% 3600
2015
10% 3000
2. Slowing wage
8% 2400 growth has led to
slowing retail sales
6% 1800
2.
4% 1200

2% 600

0% 0
2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Ministry of Manpower, DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

According to MAS’ Financial Stability Review 2015, our household debt-to-GDP was close to 80% in 2014, the second
highest behind Malaysia among Asia-10 nations. High-ticket items such as home purchases and cars require loans.
Driven partially by low interest rates, property market price increase during 2010-2013 had also caused the increase in
household indebtedness. TDSR (total debt servicing ratio) introduced in 2013 will help to keep household leverage in
check.

Household Debt-to-GDP ratio Remarks

%
90% 1. Higher than Thailand,
Taiwan, Philippines,
80% Korea, Indonesia,
India Hong Kong and
70%
China
60%
2. Lower than
50% Malaysia’s debt-to-
40% GDP ratio
3.
30%
20%
10%
0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Singstat, DBS Bank

Property cooling measures had led to the property market peaking in 2013. A series of property cooling measures were
introduced since 2010 including adjustments to LTV (loan-to-value) ratios. Two key measures were the ABSD
(additional buyer stamp duty) and TDSR (total debt servicing ratio) introduced in December 2011 and June 2013
respectively. Additional buyer stamp duties were imposed on second and subsequent properties, while debt and
mortgage servicing ratios (MSR) limit how much buyers can borrow and repay to fund their property purchases in
relation to their income and total indebtedness.

Singapore housing index Remarks

Index 1998=100
220 1. ABSD currently
ranges between 10-
200 15% depending on
citizenship status and
180 the number of
properties already
160 owned

140 2. TDSR cannot exceed

60% of buyer’s net
120
income while MSR
cannot exceed 30%
of income
100
Mar-97

Mar-03

Mar-09

Mar-12
Mar-94

Mar-00

Mar-06
Sep-95

Sep-98

Sep-01

Sep-07

Sep-13
Sep-04

Sep-10
Dec-97

Dec-00

Dec-03

Dec-06

Dec-12
Dec-94

Dec-09
Jun-96

Jun-02

Jun-08

Jun-14
Jun-99

Jun-05

Jun-11

Source: Bloomberg Finance L.P., DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

Singapore’s interest rates in particular 3-month Swap Offer Rate (SOR), is an FX-implied rate that takes into account the
USD/SGD Forward Swap. The SOR is used as a benchmark to price commercial loans. The forwards typically reflect
short-term interest rate differentials between Singapore and the US. As an FX implied rate, the SOR is susceptible to
changes in demand and supply for SGD, and usually comes under downward pressure when SGD strengthens against
the USD, and vice versa. When SGD is strengthening, demand for SGD results in narrowing forward points and a lower
SOR. Essentially, if a foreign investor can profit from a narrower USD/SGD forward swap points (strengthening SGD),
he/she will be able to accept lower returns from the SGD interest rates (SOR).

Singapore interest rates Remarks

Index 1998=100
4.5 1. Interest rate
4.0
increase had also
led to sluggish
3.5 retail sales in
3.0 2015

2.5 2. Low interest costs

2.0 also fuelled the
property market
1.5
from 2009 to
1.0 2013
0.5

0.0

Source: Bloomberg Finance L.P., DBS Bank

1.5% population growth rate. Singapore is targeting a population of 6.9m by 2030, according to its latest planning
parameter. Based on June 2015’s population of 5.54m, Singapore’s population growth rate would have to be at a
CAGR of 1.5% p.a. for the population to reach 6.9m by 2030.

Singapore’s resident population pyramid 2015 Remarks

85 & Over
1. There are close to 4m
80-84 Males
75-79 Singapore residents
70-74 Females in 2015
65-69
60-64 2. Over 50% of
55-59
50-54
Singapore’s
45-49 population are
40-44 between 30-60 years
35-39 of age
30-34
25-29
20-24 3. Gender split is 51%
15-19 to 49% in favour of
10-14 females
5-9 4.
0-4
200,000 100,000 0 100,000 200,000

Source: Singstat, DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

Singapore’s inflation is typically imported. Singapore does not have natural resources and a huge agriculture
community. As such most goods and raw materials are imported for manufacturing or consumption. Inflation is
typically led by supply and less commonly from the demand side. The MAS manages the Singapore dollar to keep
inflation in check.

Inflation rate: y-o-y change Remarks

% chg
9 1. Decline in oil prices is
8 expected to keep
7 inflation low going
forward
6
5
2. Inflation increase in
4 2008 due to food,
3 transport and
2 housing, before
1 declining to negative
0
in 2009 due to GFC
-1
3. 2010 inflation was
-2 largely due to
Jan-02

Jan-03

Jan-04

Jan-07

Jan-08

Jan-09

Jan-10

Jan-13

Jan-14

Jan-15

Jan-16
Jan-05

Jan-06

Jan-11

Jan-12
Jul-03

Jul-04

Jul-05

Jul-06

Jul-09

Jul-10

Jul-11

Jul-12

Jul-15
Jul-02

Jul-07

Jul-08

Jul-13

Jul-14 increasing COE prices

Source: Bloomberg Finance L.P., DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

Sub segment Outlook

1) Dairy

Dairy market is projected to grow at a 3.8% CAGR for the next five years. Driving growth will be the Yoghurt and sour
milk product category (4.8% CAGR), followed by drinking milk segment (3.6% CAGR).

3.8% CAGR for Singapore dairy market Remarks

S $m
Drinking milk products Yoghurt and sour milk products 1. Drinking milk
600
Cheese Other dairy products includes
flavoured milk drinks,
500 powder milk and milk
products
400
2. Other dairy products
300 include chilled and
shelf-stable desserts,
snacks, coffee
200 whiteners, condensed
milk, cream, fromage
100 frais and quark

0
2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F

Source: Euromonitor, DBS Bank

Close to 95% of dairy products are distributed through grocery retailers, with supermarkets and hypermarkets
distributing close to 80% of all Singapore’s dairy products. Other channels include convenience stores, independent
small grocers, traditional grocery retailers, direct selling and internet retailing.

Singapore's dairy market composition 2015 Remarks

Other dairy
7% 1. 80% of the dairy
market in Singapore is
Yoghurt and sour
milk products
dominated by milk
26% and yoghurt products

2. Other dairy products

include chilled and
shelf-stable desserts,
chilled snacks, coffee
whiteners, condensed
milk, cream, fromage
Drinking milk Cheese frais and quark
products 13%
54%

Source: Euromonitor, DBS Bank

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Industry Outlook
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Research, marketing, product portfolio a key focus among players in Singapore. Larger players are seen expanding their
product range. Kraft Foods, with its R&D centre located in Singapore, will focus on R&D to innovate in packaged food
as well as marketing and promotions to drive growth. F&N Foods is looking to strengthen and expand its product
portfolio. It continues to seek acquisitions for expansion into new markets. Nestlé has a goal to improve the nutritional
value and health and wellness without compromising on taste in its products through its R&D centre in Singapore.
Hanwell Holdings Ltd will strengthen its marketing and promotional efforts and product quality.

2015 market share of dairy players Remarks

Others Malaysia Dairy 1. Six key players

22% Industries command 75% of
18%
Singapore’s dairy
market
Royal
FrieslandCampina 2. Due to short shelf life
NV F&N / Thai of dairy products, key
3% Beverage
15%
players including MDI,
Nestle F&N, Meiji and Yakult
8%
have factory presence
in Singapore
Fonterra Co-
operative Meiji Holdings
9% 13%
Yakult Honsha
12%

Source: Euromonitor, DBS Bank

Players in Singapore
Malaysia Dairy Industries Pte Ltd
Thai Beverage PCL
Meiji Holdings Co Ltd
Yakult Honsha Co Ltd
Fonterra Co-operative Group Ltd
Nestle SA
Royal FrieslandCampina NV
Kraft Heinz Co
Lactalis Groupe
QAF Ltd
Mondelez International Inc.
Greenfields Indonesia PT
Regal Cream Products Pty Ltd
General Mills Inc
Hanwell Holdings Ltd
Yeo Hiap Seng Ltd
Hay Dairies Pte Ltd
Vitasoy International Holdings Ltd
Bel Groupe
Source: Euromonitor, DBS Bank

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Industry Outlook
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2) Alcoholic beverages

Most of the increase in Singapore’s alcohol market continues to be delivered by beer. Beer is forecast to grow at 3.4%
CAGR till 2019. Growth for other alcoholic drinks including Cider, Perry, RTDs and high strength premixes are expected
to grow at 11%, albeit at a lower base. Spirits and wine are projected to grow at 3.5% and 6.8% CAGR respectively.

4.1% CAGR for Singapore alcoholic beverages market driven by beer Remarks
S $m
6000
1. Beer continues to be a
Beer Spirits Wine Others key driver of
5000 Singapore’s alcoholic
beverage market
4000
2. Malaysia, Vietnam
and Netherlands beer
3000
make up more than
half of imported beer
2000 volumes

1000

0
2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F

Source: Euromonitor, DBS Bank

Majority (>90%) of Singapore alcoholic beverage sales comprise beer and wine. Excise duties range from S$60 per litre
to S$88 per litre of alcohol. In addition, customs duties are also applicable for Stout, porter, and other beer including
ale at S$16 per litre of alcohol. For a typical can of beer, 33% of the selling price goes to the manufacturer, 7.4% to
the distributor, 18.7% to the retailer, and 40.2% goes to the government in the form of taxes including value added,
excise tax and customs duties.

Singapore alcoholic beverage product categories 2014 Remarks

Wine
16% 1. Singapore’s drinking
culture comprises
both beer and spirits,
where sales account
for over 80% of the
alcoholic drinks
market

Spirits 2. Envisage beer

28% Beer
55% volumes to be higher
given the lower
pricing of beer
compared to wine
and spirits
Others
1%

Source: Euromonitor, DBS Bank

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Industry Outlook
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Tiger, Heineken and Carlsberg are key brands in Singapore. Tiger Beer continues to be the most popular beer in
Singapore with more than 50% market share. A distant second is Carlsberg with about 18%. This is followed by
Heineken with 11% market share. Approximately 80% of Singapore’s alcoholic drinks are sold on-trade at modern
channels such as pubs/bars/hotels, while 20% are sold off-trade at traditional outlets including coffeeshops.

Singapore beer market share 2014 Remarks

Others
18% 1. Heineken is now the
largest beer player in
Thai Beverage Singapore after it
2%
acquired Asia Pacific
Boon Rawd
Brewery Brewery in 2012
3%
Diageo Heineken 2. Others include Asahi
4% 46%
Group and Tsingtao
Anheuser-Busch Brewery
InBev
5%

Carlsberg
22%
Source: Euromonitor, DBS Bank

Beer players and manufacturing capacities in Singapore. Asia Pacific Brewery (APB), owned and controlled by Heineken
NV, is a major alcohol manufacturer in Singapore. Apart from APB, there are other small restaurants, pubs and bars
such as Brewerkz, RedDot Brewhouse, Tawandang Microbrewery, LeVel 33, and Paulaner Brauhaus with in-house
microbreweries onsite in their outlets in Singapore. Other players are mainly alcohol importers, which bring in brands
from all over the world.

Singapore wine market share 2014 Remarks

Treasury Wine 1. Half of Singapore’s

Estates
22% wine market
comprises red wine.

2. Wine sales are evenly

split between off-
trade and on-trade
Pernod Ricard
Groupe
9%

Others
65% LVMH Moet
Hennessy
4%

Source: Euromonitor, DBS Bank

New developments. Consumers now cannot purchase as well as consume alcohol in public areas from 10.30pm to
7.00am. On-trade alcohol sales are still permissible during this time. Flavoured beer and new packaging have been
recent product trends in Singapore. New products are expected to be led by flavouring trends going forward.

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Industry Outlook
Midstream Consumer (Singapore)

3) Non-alcoholic beverages

Non-alcoholic beverages (soft drinks) are expected to grow at a CAGR of 2.7% till 2020, led by Juice, RTD Tea, Sports
drinks, and bottled water. Carbonates will only grow at a rate of 0.4% as the market is already mature and larger
players such as Coca-cola, Fraser and Neave, and Yeo Hiap Seng continue to dominate the market. The shift to
healthier choice and sporting events (SEA Games 2015, etc.) has also driven growth for Sports and Energy drinks as
well as healthy options like Coke Light and Zero.

2.7% CAGR for Singapore soft drinks market Remarks

S $m
Juice Carbonates 1. New brands of sports
800
RTD Tea Sports and Energy drinks drinks have included
700 Bottled water Others Aquaris (Coca-cola)
and Pokka sports
600 water, in addition to
conventional 100
500
Plus, H-TWO-O and
400 Pocari sports drinks

300 2. Juice growth to be

driven by healthier
200 high vitamins, fruit
and vegetable
100 products
0
2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F
Source: Euromonitor, DBS Bank

In 2015, 60% of soft drinks volumes were sold off-trade, but on-trade sales revenue only accounted for 40%. On-
trade prices for soft drinks are 2.3x higher than off-trade prices, attributed to higher pricing at restaurants, cafes etc.
Categories with high proportion of on-trade sales include bottled water, carbonates, TRD Tea, and Asian Specialty
Drinks.

Singapore soft drinks market composition 2015 Remarks

Asian Specialty
RTD Coffee Concentrates Drinks 1. Growth in coconut
2% 2% 1%
water has driven
Bottled water growth of Juice
7%
Juice
category in 2015
Sports and Energy
drinks 32%
11% 2. New coconut brands
include UFC Refresh,
F&N Coco Life,
CocoMax, and Vita
Coco

RTD Tea
20%

Carbonates
25%
Source: Euromonitor, DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

Singapore soft drinks market share 2015 Remarks

Others F&N Foods

23% 22% 1. Larger soft drink
players
dominate >75% of
the market

TC Pharmaceutical 2. Players with

(Red Bull) manufacturing
4% facilities include Coca-
Cola, Pokka, Malayan
Yeo Hiap Seng
8%
Dairy Industries, Yeo
Coca-Cola
Singapore
Hiap Seng, F&N
21%
Malaysia Dairy
Industries
9% Pokka Corp
13%
Source: Euromonitor, DBS Bank

Players in Singapore
F&N Foods (S) Pte Ltd
Coca-Cola Singapore Pte Ltd
Pokka Corp (S) Pte Ltd
Malaysia Dairy Industries Pte Ltd
Yeo Hiap Seng Ltd
TC Pharmaceutical Industry Co Ltd
GlaxoSmithKline Singapore Pte Ltd
Danone Asia Holdings Asia
Citrus World Inc
Nestle Singapore Pte Ltd
Dr Pepper Snapple Group Inc
Allswell Trading Pte Ltd
Monster Energy Singapore Pte Ltd
Universal Food PCL
JJ Drinks Mfg Pte Ltd
Australian Fruit Juice (S) Pte Ltd
National Foods Pty Ltd
Otsuka Pharmaceutical Pte Ltd
Starbucks Coffee Singapore Pte Ltd
Sunsweet Growers Inc
Ceres Fruit Juices (Pty) Ltd
PepsiCo International Pte Ltd
Sheng Sheng F&B Industries Pte Ltd
Bundaberg Brewed Drinks Pty Ltd
Aoria PT
Monarch Beverage Co, The
Del Monte Asia Pte Ltd
Campbell Soup Asia Ltd
Source: Euromonitor, DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

4) Hot drinks

The Singapore hot drinks market is expect to grow at a rate of 3.1% CAGR from 2016 to 2020. Growth is largely led
by tea and other hot drinks while coffee’s growth rate will be relatively slower due to health-conscious consumers
cutting down on caffeine consumption. Instead this will drive growth of other hot drinks as coffee consumers switch to
other healthier options.

3.1% CAGR for Singapore off trade hot drinks market Remarks
S $m
300
1. Market size does not
Coffee Tea Other hot drinks include on-trade
foodservice sales
250
2. In 2015, retail volume
200 vs. foodservice
volume split was 67%
to 33%.
150

100

50

0
2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F

Source: Euromonitor, DBS Bank

In Singapore, there is a mix of both brand owners with and without manufacturing capabilities. While those with
manufacturing facilities for hot drinks including Nestle, Super Group and Pokka Corp conduct production and sales
here in Singapore, others import their brands manufactured from all over the world into the market. Some companies
import key ingredients to pack the products locally before exporting or selling in the local market. The level
manufacturing capabilities differ from firm to firm. Super Group is an integrated player with upstream manufacturing
capabilities for non-dairy creamer and soluble coffee powder. Viz brands and Food Empire however, are packers where
they mainly pack inputs into finished products.

Singapore hot drinks market composition 2015 Remarks

Others Fresh coffee
1% 9% 1. Over 80% of malt-
Malt based hot
based hot drinks is
drinks dominated by Nestle’s
27% Milo

2. Coffee dominates tea

in Singapore

Instant coffee
44%

Tea
19%

Source: Euromonitor, DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

Recent developments. Premiumisation has been a key development in Singapore’s coffee market. With intense
competition in the instant 3-in-1 space, companies like Super Group have developing new product categories. It has
built capacities (capex and R&D) over the last few years and is launching new products such as Milk Tea, Nutritional
products, Cereals and Tea Infusion product categories. It has already launched premium Essenso microground coffee
into the market last year.

Singapore hot drinks off-trade distribution channels 2015 Remarks

Convenience
stores, mixed
retailers & non 1. Over 95% of hot
store retailing drinks are distributed
5%
Traditional grocery
over the grocery retail
retailers channel
18%

2. Does not include on-

trade sales

Hypermarkets
13% Supermarkets
64%

Source: Euromonitor, DBS Bank

Players in Singapore Coffee Tea Others

Nestle Singapore Pte Ltd ✔ ✔
Super Group Ltd ✔
Unilever Singapore Pte Ltd ✔
Gold Roast Food Industry Pte Ltd ✔
Boncafe International Pte Ltd ✔
GlaxoSmithKline Singapore Pte Ltd ✔
Boh Plantations Sdn Bhd ✔
Associated British Foods Plc ✔
Twining & Co Ltd ✔
Odani Kokufun Co Ltd ✔
Pokka Corp (S) Pte Ltd ✔
Sarika Coffee Co (S) Pte Ltd ✔
Hiang Kie Pte Ltd ✔
Dilmah (S) Pte Ltd ✔
21st Century Healthcare Pte Ltd ✔
Sari Incofood Corp PT ✔
Cadbury Singapore Pte Ltd ✔
Ten Ren Tea Co Ltd ✔
Teo Lian Yew Enterprise ✔
Illycaffe SpA ✔
Crimsons Pharma Inc ✔
DE Master Blenders 1753 NV ✔
UCC Ueshima Coffee (S) Pte Ltd ✔
Eouro International ✔
Source: Euromonitor, DBS Bank

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Industry Outlook
Midstream Consumer (Singapore)

Companies We Cover
Buy Thai Beverage

Hold Super, Delfi Ltd, Del Monte

Fully Valued / -
Sell

Our In-House Experts

Andy Sim
andysim@dbs.com
+65 66823718

Alfie Yeo
alfieyeo@dbs.com
+65 66823717

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Industry Outlook
Midstream Consumer (Singapore)

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

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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,
has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past
twelve months and does not engage in market-making.

ANALYST CERTIFICATION
The research analyst(s) 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(s) 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 20 May 2016, the analyst(s) and
his/her spouse and/or relatives who are financially dependent on the analyst(s), 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 have a proprietary position in Thai
Beverage, Sheng Shiong recommended in this report as of 30 Apr 2016

2. DBS Bank Ltd does not market make in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.

3. Compensation for investment banking services:

DBS Bank Ltd., DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for
Courts Asia in the past 12 months as of 30 Apr 2016.

DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a
manager or co-manager or in any other investment banking transaction 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.
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Industry Outlook
Midstream Consumer (Singapore)

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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 located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use
would be contrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd
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Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS and DBSVS are
regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws.
Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the
Hong Kong Securities and Futures Commission.

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). 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

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn
No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by
the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective
foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the
Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited
Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the
report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327
2288 for matters arising from, or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are
only intended for institutional clients only and no other person may act upon it.

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of the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in
the UK is intended only for institutional clients.

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person may act upon it.

United States This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s)
named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA.
The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a
subject company, public appearances and trading securities held by a research analyst. This report is being distributed in
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referred to herein should contact DBSVUSA directly and not its affiliate.

Other jurisdictions 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

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