See important disclosures at the end of this report

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1-Jul-2013


Daily



Morning Matters









While You Were Sleeping

US markets: Negative
Dow futures: -4 (as at 8am Singapore Time)

US Wrap: U.S. stocks fell on Friday as reports showed that business activity in
the U.S declined more than forecast in June. The S&P500 fell 0.43% to 1,606.28.
The Nasdaq closed flat, up 0.04% to 3,403.25 while the Dow Jones Industrial
Average lost 0.76% to 14,909.60. The Chicago Purchasing Managers Index
pointed to a deterioration in business conditions in the Chicago area, declining to
a worse-than-expected 51.6 in June from 58.7 in May. The University of Michigan
Consumer Sentiment Index came in better than expected at 84.1 in June as
compared to the prior estimate of 82.7. Economists had predicted no changes in
the final estimate. The benchmark 10-year Treasury gained 1 basis point to yield
2.49%.

The Day Ahead

Scoop of the Day: The Monetary Authority of Singapore (MAS) announced over
the weekend a new Property Financing framework for individuals that all financial
institutions need to adhere to with immediate effect. Known as the new Total
Debt Servicing Ratio (TDSR), it seeks to close loopholes in the recent property
cooling measures announced in Jan-13, whereby individuals used proxies
(usually younger and less financially matured family members) and succeeded in
circumventing tighter LTV limits and avoiding payment on Additional Buyers
Stamp Duties (ABSD).

Impact on Property Market - mildly negative

Overall, we think the new TDSR will have a slight negative impact on the
property market in the near term as we believe the most severe measures were
already announced in the Jan13 measures and these are merely extensions to
cover buyers trying to exploit loopholes in the system.

Impact on Listed Developers -negative

The developers are likely to take a hit when the market opens, but we do expect
the correction to be less than in Jan13 when the 7th set of measures was
announced. The likes of City Dev, Capitaland and Keppelland should see a bit of
downside in the near term.

Impact on Singapore Banks - neutral

We think the aim of the TDSR framework, for a start, is to standardise and
ensure consistency in the application of debt servicing ratios by banks. We
believe the current practices of the banks under our coverage are broadly in line
with the TDSR framework. However, we do not discount the possibility that MAS
may reduce the maximum TDSR in the future, which could then help serve as an
additional cooling measure. For instance, if the maximum TDSR is lowered in the
future, home buyers may need to come up with higher upfront cash payments to
make up for the smaller loan resulting in the TDSR caps, thus lowering LTVs.



Figure of the Day

Source: STproperty.com



New property loans rules make investors think twice? See
'Scoop of the Day'.


Key Market Indices


Value Chg % Chg
Dow Jones 14,909.60 -114.89 -0.76
S&P 500 1,606.28 -6.92 -0.43
Nasdaq 3,403.24 +1.38 +0.04
FTSE 100 6,215.47 -27.93 -0.45
Nikkei 13,677.32 +463.77 +3.51
Hang Seng 20,803.29 +363.21 +1.78
Shanghai 1,979.20 +29.19 +1.50
KOSPI 1,863.32 +28.62 +1.56
STI 3,150.44 +32.41 +1.04


KLCI 1,773.54 +21.97 +1.25

Key Statistics
Value Chg % Chg
Oil Price*
(USD/bbl)
96.56 -0.49 -0.50
Gold Price**
(USD/oz)
1234.57 +33.92 +2.83
USD/SGD 1.2679 +0.00 +0.10


* WTI Crude Future
** Gold Spot
1-Jul-13

See important disclosures at the end of this report 2

WHATS INSIDE

On the Platter

Singapore Banks: MAS Introduces TDSR Framework (NEUTRAL)

XMH: Strong Growth Priced In After Sizzling 160% Run (NEUTRAL,
SGD0.455, TP: SGD0.44)

Diary of Events
1-Jul-13

See important disclosures at the end of this report 3

On The Platter

Singapore Banks: MAS Introduces TSDR Framework (NEUTRAL)
Singapore Research (+65 6533 0781, research@sg.oskgroup.com)

MAS has introduced a TDSR framework for property loans, which, for
starters, is to ensure better consistency in the application of debt
servicing ratios by banks. The TDSR cap of 60% may be lowered in the
future, which would then help serve as an additional cooling measure.
We believe the existing practices of the banks under our coverage are in
line with the framework. DBS remains as our top pick.

MAS introduces TDSR framework, but impact not expected to be too
significant for now. Last Friday, MAS introduced a Total Debt Servicing Ratio
(TDSR) framework for all types of property loans, loans secured on property
and the refinancing of such loans. Under the framework, MAS considers
home loans that exceed a TDSR of 60% to be imprudent. We think the aim of
the TDSR framework, for a start, is to standardize and ensure consistency in
the application of debt servicing ratios by banks. We believe the current
practices of the banks under our coverage are broadly in line with the TDSR
framework. However, we do not discount the possibility that MAS may reduce
the maximum TDSR in the future, which could then help serve as an
additional cooling measure. For instance, if the maximum TDSR is lowered in
the future, home buyers may need to come up with higher upfront cash
payments to make up for the smaller loan resulting in the TDSR caps, thus
lowering LTVs.

DBU + ACU loans up 16% y-o-y. Loan growth momentum picked up in May
with m-o-m growth at +2.2% m-o-m (DBU: +1.2% m-o-m; ACU: +3.3% m-o-
m), as compared to +0.7% m-o-m in Apr. Y-o-Y, DBU + ACU loans expanded
by 15.8% y-o-y vs. Apr 2013: +16.4% y-o-y, with DBU loans growing by
+18.8% y-o-y while ACU loans rose 12.3% y-o-y. Overall growth was driven
by loans to businesses (+2.5% m-o-m; +16.3% y-o-y) while loans to
consumers expanded by a slower pace of +1.2% m-o-m/+14.4% y-o-y.

DBU loans to businesses still strong. May 2013 DBU loan growth was still
driven by business loans (+22% y-o-y; +1.6% m-o-m), particularly loans to
businesses in the manufacturing (+20.8% y-o-y) and general commerce
(+30.4% y-o-y) sectors. Meanwhile, consumer loan growth momentum slowed
down to +14.5% y-o-y/+0.6% m-o-m vs. Apr 13: +15% y-o-y/+0.7% m-o-m,
reflecting the slowdown in housing loan growth (+15.2% y-o-y/+0.5% m-o-m
vs. Apr 13: +16% y-o-y/+0.9% m-o-m). Potentially, the earlier property market
cooling measures could be starting to filter through the system.

Deposit growth picked up m-o-m. May 13 deposit growth stood at +9.7% y-o-
y (+0.7% m-o-m), as compared to +9.7% y-o-y/+0.1% m-o-m in Apr 13. With
the slower deposit growth (vs. loan growth), LDR inched up to 97.8% from
97.3% at end-Apr 13.

Investment case. DBS (Buy; FV=SGD18.70) is our top pick given: i) Stronger
earnings growth relative to peers, ii) Cheaper valuations vs. peers; and iii)
Robust loan and capital market pipelines. DBS is also less vulnerable to
policy changes on the property market sector, given its relatively smaller
exposure to the segment.

1-Jul-13

See important disclosures at the end of this report 4


XMH: Strong Growth Priced In After Sizzling 160% Run (NEUTRAL,
SGD0.455, TP: SGD0.44)
Lee Yue Jer (+65 6232 3898, yuejer.lee@sg.oskgroup.com)
Jason Saw (+65 6232 3871, jason.saw@sg.oskgroup.com)

XMHs FY13 results were in line with forecasts, beating our estimates by
just 2%. Looking ahead, organic growth may come from India and
Vietnam while the bulk of earnings growth should emanate from an
acquisition we expect to materialise within two months. However, after a
sizzling 160% share price run-up since we initiated coverage on 28 Nov
2012, we think the growth has largely been priced in, and hence
downgrade the stock to NEUTRAL, with a higher TP of SGD0.44.

Results in line. XMH's FY13 results pipped our estimates by just 2%. FY13
revenue jumped 57% y-o-y due to organic growth and a surge in revenue in
4QFY13. Margins were slightly compressed by its product mix and the effects
of a weaker Yen, while overheads expenses rose 20% as XMH added more
staff. Net profit for the full year grew 20% to SGD11.4m. (please see Figure 1
for details)

1.2 cent dividend nearly meets expectations. XMH declared a 1.2 cent
dividend (1 cent ordinary, 0.2 cent special) that is 0.2 cent higher y-o-y versus
our original expectation of 1.3 cents. We expect a payout ratio of about 40%
going forward, in line with historical experience.

Already dominant in Indonesia, eyes regional growth. Based on its strong
core operations in Indonesia, XMH is looking to expand its sales network to
Vietnam and India. The completion of its new facility in FY16 will give XMH
the capacity to serve more markets in the region.

An acquisition likely within 2 months. In tandem with our expectation as
stated in our 20 May report, we envisage the company making an acquisition
within a three-month call option period. Our figures already include a SGD3m
net profit contribution from this acquisition for FY14F-15F to incorporate our
growth expectations.

No longer a value stock after 160% return over 7 months. While XMHs
operations remain robust, the stock is now trading at 12.5x FY14F EPS and
yield of 3.2%, for a P/BV of nearly 4.0x today. Since we deem its growth
expectations largely been priced in, we downgrade the stock to NEUTRAL,
with SGD0.44 TP based on 12x FY14F EPS.

1-Jul-13

See important disclosures at the end of this report 5


Diary of Events





6

DMG & Partners Research Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage


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objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate particular
investments and consult an independent financial adviser before making any investments or entering into any transaction in relation to any securities or
investment instruments mentioned in this report.

The information contained herein has been obtained from sources we believed to be reliable but we do not make any representation or warranty nor
accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions and views expressed in this report are subject to change
without notice.

This report does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities.

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proprietary positions in the subject companies, except for:
a) Nil
b) Nil

As of the day before 1 July 2013, none of the analysts who covered the stock in this report has an interest in the subject companies covered in this report,
except for:
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