2011 Feb 18 - CIMB - Mapletree Ind Trust

Please read carefully the important disclosures at the end of this publication.

INITIATING COVERAGE

18 February 2011

OUTPERFORM Mapletree Industrial Trust S$1.09 @17/02/11

Low-risk yields Target: S$1.24 REIT

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MINT SP / MAPI.SI Janice Ding +(65) 6210 8609 – [email protected]

• Initiate with Outperform and target price of S$1.24. Sponsored by Mapletree Investments, MIT is a REIT that invests in income-producing industrial assets in Singapore. With an 11.2% market share of Singapore’s flatted factory space, MIT’s S$2.1bn portfolio is a good proxy for Singapore’s SME space, we believe. We anticipate a 3-year DPU CAGR of 5.3% for the next two years as existing rental caps on its non-business park space are lifted by June. Using DDM valuation (discount rate 8.4%), we arrive at a target price of S$1.24. Trading at 1.24x P/BV and a 2010 yield of 6.6%, MIT is not cheaper than industrial leader AREIT (1.25x P/BV; 7% yield). However with a under-rented portfolio, pure Singapore exposure, and large tenant base point, rental downside is limited whilst upside is conversely strong. We expect catalysts from announcements of accretive acquisitions or development projects.

• Demand to outpace supply. A healthy Singapore economy and manufacturing growth backed by the global electronics and semiconductor recovery are likely to boost take-up for flatted factories as firms expand to increase demand. Net new demand for flatted factories could surpass net new supply at least till 2013. The resultant rise in occupancy should lend support to rents and capital values.

• JTC’s trade sale could represent acquisition opportunity. JTC’s Phase 2divestment of assets is likely to be finalised in 1H11. Its 3.5m sf portfolio will have no rental cap imposed, representing good opportunities for upward rental reversions at the onset, in our opinion. This represents a good acquisition opportunity for MIT to acquire a portfolio of similar asset quality and positioning as its existing one.

Financial summary FYE Mar 2009 2010F 2011F 2012F Revenue (S$ m) 178.6 202.7 214.4 226.9 Net property income (S$ m) 124.2 140.2 149.1 157.7 Net property income margins (%) 69.5% 69.2% 69.6% 69.5% Pretax profit (S$ m) 144.9 102.4 111.6 119.8 Net profit (S$ m) 144.9 102.4 111.6 119.8 Distributable profit (S$ m) 88.3 104.5 113.7 121.9 EPU (S cts) 9.9 7.0 7.6 8.2 EPU growth (%) N/A (29%) 9% 7% P/E (x) 11.0 15.6 14.3 13.3 Core EPU (S cts) 5.9 7.0 7.6 8.2 Core EPU growth (%) N/A 18% 9% 7% Core P/E (x) 18.4 15.6 14.3 13.3 Gross DPU (S cts) 6.0 7.1 7.8 8.3 Dividend yield (%) 5.5% 6.6% 7.1% 7.6% P/BV (x) 1.3 1.3 1.3 1.3 ROE (%) 11.5% 8.1% 8.9% 9.5% Asset leverage (%) 38.5% 38.7% 38.7% 38.7% EV/EBITDA (x) 22.1 19.4 18.1 17.0 CIMB/Consensus (x) 1.01 1.02 0.97

Note: FY2010F refers to the year ended 31 March 2011 Source: Company, CIMB Research, Bloomberg

Price chart Market capitalisation & share price info Market cap S$1,594m/US$1,250m Share price perf. (%) 1M 3M 12M 12-mth price range S$1.16/S$0.93 Relative 5.4 2.8 6.2 3-mth avg daily volume 5.7m Absolute 0.0 (0.9) 17.2 # of shares (m) 1,463 Major shareholders % held Est. free float (%) 62.6 Temasek Holdings 31.3 Conv. secs (m) AIG 5.4 Conv. price ( ) APG Tactical 5.2

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Volume 100m (R.H.Scale) Mapletree Industrial Trust

Source: Bloomberg Source: Company, CIMB Research, Bloomberg

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Background Closest proxy for SME industrial space. Listed on the SGX on 21 Oct 10, MIT is a

REIT that invests in income-producing industrial assets in Singapore. Its investment mandate excludes buildings and properties used primarily for logistics purposes. MIT’s initial Singapore-centric property portfolio was valued at S$2.1bn at 31 Aug 10, comprising 70 properties in 23 clusters with 12.1m sf of net lettable area. The portfolio was essentially made up of: 1) Mapletree’s private trust portfolio (whole portfolio except for Light Industrial) which the sponsor had acquired from the public industrial landlord JTC in 2008; and 2) Mapletree Singapore Industrial Trust’s (MSIT) portfolio which consisted of five single-user buildings acquired from various third parties and one building (Tata Communications Exchange) developed by the sponsor. Essentially,the six buildings made up the full Light Industrial segment in MIT’s portfolio.

MIT is sponsored by Mapletree Investments Pte Ltd (MIPL), an indirect wholly-owned subsidiary of Temasek Holdings. Both the REIT and property managers of MIT are wholly owned subsidiaries of the sponsor.

Figure 1: Asset breakdown by net property income (NPI) and asset value

Contribution to NPI for the year ended Mar 10 Contribution to asset value as at Jun 10*

Warehouse1%Light Industrial

5%

Stack-up / Ramp-up

18%

Flatted factories

57%

Business Park19%

Business Park21%

Flatted Factories

53%

Stack-up / Ramp-up

16%

Light industrial9%

Warehouse1%

*Asset values used are the average of two sets of valuation. Source: Company, CIMB Research

Figure 2: Contribution to gross rental income by tenant type

SME56%

MNCs44%

Source: Company

Differentiating factory and warehouse space. In the industrial property space, there are two broad categories: 1) factories (including business and science parks, data centres, hi-tech space, flatted factories, stack up factories); and 2) warehouses (including distribution centres and ramp-up warehouses). Factories are much higher in value than warehouses due to their specifications (usually referring to extent of electrical powering, and presence of other fit-outs such as air-conditioning, raised flooring etc). Conversely, warehouses tend to be much more bare and lower in specifications and fit-out. For this reason, factory rents are higher than warehouse rents, in general. MIT’s portfolio is almost pure factory space except for one warehouse in Clementi.

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Single largest owner of flatted factory space. Two things differentiate MIT from the other industrial SREITs: • MIT’s large exposure to multi-tenanted flatted factories (57% of net property

income) and SME tenants (56% of gross rental income), a result of having acquired the bulk of its portfolio from JTC. MIT also has the single largest share of the flatted factory market in Singapore, giving it some autonomy in setting standards in pricing, leasing and management practices.

• Its focus on factory space (or non-logistics use space) means it could avoid conflictsof interest with its sister company Mapletree Logistics Trust. It is the only industrial REIT with no exposure to logistics.

Closest comparables are JTC and AREIT. JTC would be MIT’s single largest competitor in terms of scale and product offerings. However, JTC has shifted its focus from providing and managing conventional industrial space to providing strategic infrastructure for Singapore’s economic growth. Commensurate with this, it has plans to exit from ready-built facilities through trade sales of these assets. In the private sector, AREIT would be the closest comparable with also a pure Singapore portfolio (for now) and a significant portion (about 45%) of multi-tenanted space. Nonetheless, the two are still different: MIT with its SME-focused portfolio has a large market share of flatted factories (11.2% vs. 4%); while AREIT is MNC-focused with a leading share of business park space (24.3% vs. 8.3%).

Figure 3: Major players in Singapore’s factory market as at 2Q10 (NLA = 30.3m sq m)

Source: Colliers International

Figure 4: MIT is the single largest flatted factory player by market share


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Figure 5: AREIT is the single largest business park player by market share


Centralised location a plus. MIT’s portfolio is located in established industrial clusters and in close proximity to major expressways. Well-sought-after industrial clusters include Redhill/Tiong Bahru, Toa Payoh, Kallang and Tai Seng.

Figure 6: Location of assets

Source: Company

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Figure 7: MIT’s IPO assets

Type Property Address NLA

Market Value(Avg of 2valuers)

MarketValue on

NLA(sm) (S$ m) (S$/psf)

Business Park The Signature 51 Changi Business Park Central 2 33,166 108 304 Business Park The Strategy 2 International Business Park 52,993 234 409 Business Park The Synergy 1 International Business Park 26,001 102 363 Flatted factories Changi North 11 Changi North Street 1 6,833 18 249 Flatted factories Kaki Bukit 2,4,6,8 &10 Kaki Bukit Avenue 1 89,201 147 153 Flatted factories Kallang Basin 4 26, 26A, 28 & 30 Kallang Place 35,603 55 145 Flatted factories Kallang Basin 5 19,21 & 23 Kallang Avenue 26,118 45 161 Flatted factories Kallang Basin 6 25 Kallang Avenue 19,346 34 163 Flatted factories Kampong Ampat - KA Foodlink 171 Kampong Ampat 27,387 63 213 Flatted factories Kolam Ayer 1 8, 10 & 12 Lorong Bakar Batu 31,560 55 161 Flatted factories Kolam Ayer 2 155, 155A & 161 Kallang Way 32,480 51 146 Flatted factories Kolam Ayer 5 1,3,& 5 Kallang Sector 41,565 66 147 Flatted factories Loyang 1 30 Loyang Way 35,182 44 115 Flatted factories Loyang 2 2,4,& 4A Loyang Lane 21,952 26 110 Flatted factories Redhill 1 1001, 1001A & 1002 Jalan Bukit Merah 29,036 47 149 Flatted factories Redhill 2 1, 3 & 3752 Bukit Merah Central 21,250 38 167 Flatted factories Serangoon North 6 Serangoon North Avenue 5 54,698 139 237 Flatted factories Tanglin Halt 115A 115B Commonwealth Drive 15,996 33 189 Flatted factories Telok Blangah 1160, 1200 & 1200A Depot Road 26,500 48 170 Flatted factories Tiong Bahru 1 1090 Lower Delta Road 10,273 16 146 Flatted factories Tiong Bahru 2 1080, 1091, 1091A, 1092 & 1093 Lower Delta Road 31,717 50 148 Flatted factories Toa Payoh North 1 970, 970A & 998 Toa Payoh North 32,619 51 144 Flatted factories Toa Payoh North 2 1004 Toa Payoh North 10,095 16 143 Flatted factories Toa Payoh North 3 1008 & 1008A Toa Payoh North 12,739 19 139 Flatted factories Woodlands Central 33 & 35 Marsiling Industrial Estate Road 3 32,444 45 128

Stack-up/ramp-up Woodlands Spectrum 1 & 22 Woodlands Sector 1 and 201, 203, 205,207, 209 & 211 Woodlands Avenue 9 280,990 325 108

Light industrial 19 Changi South Street 1 19 Changi South Street 1 6,958 12 163 Light industrial 19 Tai Seng Drive 19 Tai Seng Drive 8,607 14 147 Light industrial Tata Communications Exchange 35 Tai Seng Street 13,405 95 657 Light industrial 65 Tech Park Crescent 65 Tech Park Crescent 9,975 13 122 Light industrial 45 Ubi Road 1 45 Ubi Road 1 13,992 23 154 Light industrial 26 Woodlands Loop 26 Woodlands Loop 14,476 22 140 Warehouse Clementi West 1 Clementi Loop 19,750 25 116 Total 1,124,906 2,079 172 Multi-tenanted only 1,057,492 1,900 167 Single-tenanted only 67,413 179 247 Source: Company, CIMB Research

Multi-tenanted industrial space yields lower margins but higher upward reversion potential. MIT’s portfolio is dominated by multi-tenanted factory space which contributes 94% of its net property income (NPI) and 90% of its portfolio asset value. Multi-tenanted industrial space refers to properties that can be subdivided into small units for several users which share common facilities such as cargo lifts and loading areas. Multi-user facilities used to take the form of conventional flatted factories/warehouses but have evolved in sophistication over the years to hi-tech,stack-up/ramp-up factories and business park space.

Unlike single-user factory space (the dominant industrial type at 83% of islandwidefactory space) which is often characterised by high NPI margins, multi-user factory space typically offers much lower NPI margins as property-related expenses such as insurance, property tax and maintenance are borne by landlords. NPI margins for multi-user space with more common facilities (such as business parks) including food courts and ancillary retail space are also much lower than those with fewer common facilities.

Despite the lower margins, multi-tenanted industrial landlords are better positioned to capture upward rental reversions particularly in a rising leasing market as lease periods are typically much shorter (three years vs. five or more for single-user sale-and-leaseback facilities), and allowable uses are more generic than their single-user

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counterparts.

Strong organic growth potential with lifting of rental caps, short weighted average lease to expiry (WALE) and tenant mix. MIT’s acquisition of the MIT Private Trust Portfolio had come with rental caps imposed on all non-business park buildings, affecting 76% of its net property income. These rental caps – which limit rental increases of non-business park space to 5% p.a. since the acquisition of the portfolio from JTC in 2008 - will be lifted from 30 Jun 11. A comparison done by Colliers International shows that current portfolio rents are 18-36% below current market rates.Portfolio WALE is also short at 2.7 years (against the 5-year average for industrialREITs) and more than half of its leases are due for renewal over FY11-12. We believe there is much opportunity for organic growth for MIT over the next two years through increasing rents to market levels, and reconfiguring its tenant mix to high-growth sectors so as to maximise rental growth.

Figure 8: MIT’s portfolio average rent is 18-36% below market levels

IPO portfolio average rent Market rent % DifferenceS$ psf/mth S$ psf/mth

(Apr- Jun 2010) (Apr- Jun 2010)Business Park $3.01 $3.64 20.9%Flatted Factories / Stack-up / Ramp-up Buidlings $1.20 $1.42 18.3%Light Industrial Buildings $1.43 $1.93 35.0%Warehouse $0.99 $1.35 36.4%


Figure 9: Lease expiry profile as at 31 Dec 10

Source: Company

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Figure 10: Increase in rents for renewals and new leases as at Dec 10

Source: Company

Consistent performance of portfolio attests to successful asset management. Alargely multi-tenanted portfolio is innately much more demanding on asset managers than a largely single-tenanted portfolio that is mainly triple-net leased. MIT’s portfoliohistorically boasts consistent occupancy (92.3% as at Dec 10), high retention rates of above 80% and increasing rental rates (+11% yoy) since it was acquired from JTC in 2008. This is no mean feat in view of the economic downturn in 2008-09. We areparticularly impressed that occupancy at its multi-tenanted buildings was in line with itslarger competitor AREIT (91.1%) at the end of Dec 10. We attribute this to successful asset management, which is led by MIT’s current Head of Asset Management, Mr Lee Seng Chee. Management tracks the promptness of rental payments and lowers risks by increasing tenants’ security deposits and screening prospective tenants thoroughly.We are comfortable that the management team will be able to manage its large 1,537tenant base.

Figure 11: Stable occupancy and increasing rental rates since acquisition of portfolio from JTC

Source: Company

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Figure 12: MIT’s top 10 tenants as at 31 Dec 10

Source: Company

JTC’s trade sale could be source of major acquisition growth. MIT would have three main sources of acquisition opportunities: 1) JTC’s trade sale of its ready-built facilities; 2) its sponsor’s pipeline where it has right first of refusal; and 3) third-party assets in Singapore. In our view, there is limited scope for MIT for acquire both from the sponsor and third parties as there is no ready pipeline from the parent suitable for injection in the immediate future. Mapletree Business City and Comtech, both owned by the sponsor, although suitable, have been excluded from first rights of refusal. Also,there is fierce competition for third-party industrial assets from four industrial REITs (excluding MapleLog and Cache Logistics as both are logistics REITs), other private funds and investors. As such, with JTC’s long-term plan to divest all of its ready-built facilities, we see this as a major source of acquisitions for MIT. Future acquisition opportunities from JTC are more likely to be paced out and bite-sized, in our view.

JTC’s discouragement of monopolistic ownership to restrict acquisition growth. JTC’s Phase 2 divestment of its ready-built facilities will be carried out through a tender process that will close on 1 Mar 11. This exercise will comprise nine property clusters with a total of 15 flatted factory blocks, six amenity centres and 1,749 car-park lots totalling 3.5m sf of net rentable area. Average occupancy is high at 96% and the assets can be found in established industrial estates close to major roads and expressways. Most importantly, we understand that there would be no rental capsimposed on this portfolio (unlike Phase 1 divestment), representing good opportunities for upward rental reversions. Phase 2 would be sold in two tranches. We believe this is an indication of JTC’s unwillingness to see monopolistic ownership of SME facilities, in which case MIT is likely only to acquire one tranche. We have a ballpark estimate of S$600m for the Phase 2 portfolio, or about S$300m for a single tranche.

Assuming that MIT acquires S$300m worth of assets at 7% NPI yields with 50:50 debt/equity funding and its current cost of debt of 2.4%, MIT’s DPU could grow by 1.4%.

Figure 13: JTC’s Phase 2 divestment portfolio

Source: DTZ

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Figure 14: Location of JTC’s Phase 2 divestment assets

Source: DTZ

More build-to-suit projects may follow. MIT’s sister REIT MapleLog earlierexpressed its intention to grow via build-to-suit developments. We believe MIT would follow suit in the mid-term by tapping the building capabilities of its sponsor, which has demonstrated its skills so far with the development of Tata Communications Exchange. Yields from development projects could be 9-12%, more attractive than the 6.5-8% yields from acquisitions. With the 10% regulatory cap on development for REITs, MIT can undertake about S$200m of such work.

Strong business-park performance through the economic downturn. Its business park portfolio, comprising The Signature in Changi Business Park, and The Strategy and The Synergy in International Business Park, has been sustaining occupancy at above 92% since 3Q08 and strong double-digit rental-growth rates in spite of low retention rates of 48-54% in 4Q08 and 1Q09. This indicates the demand resilience of its Business Park portfolio.

Figure 15: Business parks’ performances from 3Q08

Source: Company IPO prospectus

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Flatted factories’ performances healthy. Flatted factories, the largest component ofMIT’s portfolio, has been sustaining occupancy at above 85% since 3Q08 with steady rental increases of 5% p.a. We believe the high retention rates for this segment can be partially attributed to the highly-sought locations of some assets, including Redhill, Toa Payoh and Kallang.

Figure 16: Flatted factories’ performances from 3Q08


Stack-up / ramp-up factories boast high occupancy rates of above 90%, since 3Q08, with annual rental increases of slightly under 5% p.a. Their high occupancy rates can be attributed to the popularity of such buildings which offer ground-floor convenience for the loading and unloading of cargo to users and enable landlords to charge ground-floor rents for upper-floor units.

Figure 17: Stack-up/ramp-up factories’ performances from 3Q08


Light Industrial portfolio. This segment consists of all single-tenanted buildings where maintenance, insurance and property taxes are borne by the tenants rather than landlord. With typical long leases of 5-15 years, occupancy is typically 100%. 2Q10 occupancy dipped to 99.3% as the newly completed Tata Communications Exchange Building – a data centre facility in Tai Seng − was added to the portfolio. Nonetheless, the sustainability of rental inflow is highly dependent on tenants’ business viability. To mitigate the higher negative impact on the REIT in times of default, security deposits collected are much longer, from 10 months onwards. Due to their long leases and the small number of tenants, average rents from 3Q08 have remained stable since 3Q08. The spike in rents to S$1.43psf/month in 2Q10 reflected largely the addition of the Tata Communications Exchange building with much higher specifications and rents.

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Figure 18: Light Industrial’s performances from 3Q08


Outlook Manufacturing continues to power Singapore’s economy. Despite the strong

growth of the financial and business sectors in Singapore, manufacturing continues to be the single largest driver of GDP in Singapore, accounting for 25.9% of GDP in the 12 months ended 30 Jun 10. The country’s rebound from recession in 2009 was also led by manufacturing, with growth of 37.9% and 44.5% yoy in the first and secondquarters of 2010. Notably, the strong manufacturing rebound was led by a surge in output from higher value-add industries such as electronics, biomedical manufacturing and precision engineering. Further, manufacturing value-added per worker (proxy for workforce productivity) had jumped 6x over the last three decades to S$108,257 in 2009 from S$18,400 in 1979. This reflected the evolution of Singapore’s manufacturing sector towards higher value-added manufacturing and its importance to Singapore’s economic productivity. The manufacturing sector is poised for continued growth as the government has an output target of S$300bn by 2018, double that of 2005. Further, the Economic Strategies Committee highlighted in its Feb 10 report that manufacturing shall remain a key pillar of the Singapore economy, accounting for 20-25% of its GDP, with the accompanying investment by manufacturers.

Figure 19: Manufacturing contributes a quarter of Singapore’s GDP


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Demand for flatted factory space dependent on SMEs’ role in manufacturing sector. In Singapore, SMEs are defined as companies with at least 30% local equityand fixed productive assets including buildings, machinery and equipment not exceeding S$15m, and staff strengths of not more than 200 for the commerce and service sectors. SMEs form the backbone of Singapore’s economy in creating economic growth and employment. Of the 170,000 enterprises in Singapore, 99% are SMEs. This ratio has remained stable since 2003-09, but their value-addedcontribution to the economy had climbed to 50% from 46%, while employment share had remained around 60% in the same period. The growing productivity of SMEs ensures their continuing importance and relevance to the government’s master plan to move towards high value-added manufacturing. Recognising the importance of SMEs, the government continues to support their growth and development through incentive programmes targeted at productivity/capability development (Technology Innovation and Business Capabilities schemes), financing schemes (Bridge Loan programmes, and Local Enterprise Finance Scheme) and industry promotion programmes (Capability Development Programme and Local Enterprise and Association Development). The growth of SMEs should continue to support demand for MIT’s portfolio.

Resilient industrial’s performance vs. offices. Over the last decade, industrialproperties have performed better in terms of occupancy and rents than their office peers, particularly in an economic downturn. Net new demand for industrial space has been climbing steadily from 2002, through the major crises of the dot.com bust (2001-2), SARs (2003) and global financial crisis (2009), while demand for retail and office space had shrank accordingly. By rentals and values, industrial properties are alsostable. In the 2009 financial crisis, islandwide industrial rents slipped only 13.4% vs.the 24.6% plunge for office space in the central area. Similarly, prices of industrial properties fell 14.4% in the same period vs. a 22.3% decline for office properties.

Figure 20: Net new demand and occupancy rates for industrial, office and retail space


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Figure 21: Rental indices across the segments


Demand to outpace supply. Moving forward, a healthy Singapore economy and manufacturing growth are likely to boost take-up for flatted factories. Real estate consultancy Colliers International forecasts that net new demand for flatted factories will surpass net new supply at least till 2013. The resultant rise in occupancy would lend support to rents and capital values. Colliers expects rents and capital values to grow at annual averages of 7% and 7.5% respectively till 2013.

Figure 22: Rents and capital values to rise up to 10% p.a. over 2011-13


Figure 23: Net new demand and occupancy of flatted factory space as at 2Q10


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Figure 24: SWOT analysis

Strengths Opportunities

• Pure Singapore mandate ensures full tax transparency and low geographical risks

• Sizeable portfolio with many tenants, eliminating concentration risks • Risks for rental trends very low as rents are below market levels. • Government’s support for manufacturing sector and SMEs is positive for

demand for MIT’s portfolio. • Strong asset management team which has worked with the JTC portfolio

since it was acquired from JTC in 2008. • Strong sponsor which is able to support the REIT in terms of branding and

financing

• Short WALE, below market rents, and lifting of rental caps represent

potential for strong rental reversions in the short term and higher propensity of capturing rental upside in an improving economy

• Opportunity to grow via the acquisition of JTC’s Phase 2 trade sale • Opportunities to improve margins from an under-managed public portfolio • Asset enhancement and development opportunities within a sizeable

portfolio.

Weaknesses Threats

• Acquisition growth is limited with no visible pipeline from sponsor and intense competition for third-party assets.

• Relatively high gearing indicates the likelihood of requiring equity for upcoming acquisitions

• Defaults and arrears ratio could rise in an economic downturn from a high concentration of SME tenants

• If inflation rises seriously, profit margins could be hurt more than peers as

almost all property-related expenses are borne by the REIT. • MIT’s strong reliance on borrowings makes it vulnerable to interest-rate

fluctuations.

Source: Company, CIMB Research

Risks Inflation may hit profit margins. Concerns of inflation are raging through Asia and rising utility costs could affect MIT’s profit margins. MIT is especially vulnerable as it bears most property-related expenses (maintenance, insurance and property taxes) while other industrial REIT peers have a greater portion of triple-net leases which move most of their operational costs to tenants.

Acquisition growth limited. JTC will be running a trade sale of another batch of factories this year and MIT is expected to be a keen participant. However, the quantum is expected to be much smaller than Phase 1 as JTC has decided to split the sale into two tranches. This is telling of its concerns with the rise of monopoly, in our view. Separately, although sponsor Mapletree Investments has granted MIT a general right of first refusal for its industrial assets (excluding logistics), there is actually nothing in the pipeline with Mapletree Business City and ComTech excluded from this scheme. Competition for third-party assets is also intense from other industrial RETIs and funds actively looking for industrial assets. Hence, MIT’s ability to grow via acquisitions may be muted.

Arrears and defaults could rise in an economic downturn. With MIT’s greater concentration of SME tenants, we expect defaults and arrears to be much higher in an economic downturn. Nonetheless, this risk is attenuated by the large number of tenants of more than 1,500 in its portfolio, reducing concentration risks.

Gearing is relatively high. MIT’s gearing is 39% vs. the sector average of 33%. Even though it is quite a long way from its gearing limit of 60%, the invisible ceiling is more realistically at about 45%. At this level, debt headroom is about S$241m. We believe that any acquisition in excess of S$200m is likely to require equity fund-raising, which would be less accretive than a wholly debt-funded acquisition.

Strong reliance on borrowings. As with all the other SREITs, MIT relies strongly onborrowings, which makes it vulnerable to interest-rate fluctuations.

Financials Balance sheet healthy but gearing is above sector average. As at Dec 10, MIT had a reported asset leverage of 39%, above the sector average of 33%. With a BBB+ credit rating from Fitch, MIT can gear up to 60% of its asset size. Other financial indicators look healthy: interest cover is high at 6.6x; all-in blended cost of debt at 2.4% is one of the lowest among SREITs, though in line with its sister REIT MLT. At the point of listing, MIT had taken on total debt of S$848m at 2-5-year tenures. Hence,it has no loans due for refinancing over the next two years. About 68% of its debt is subject to fixed interest rates and 85% of its asset value subject to negative pledge.

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Figure 25: MIT’s debt maturity profile

$209

$251 $251

$126

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50

100

150

200

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2011 2012 2013 2014 2015

S$ m


Debt headroom of S$241m, assuming 45% asset leverage. We take the view that management will not leverage up beyond 45%. Based on its current asset leverage of 39%, MIT has debt headroom of about S$241m before reaching that level. This seems to point to near-term equity issuance, if there are new acquisitions exceeding S$200m in value.

Key assumptions. We assume stable occupancy for MIT’s portfolio but with rentreversions growing at up to 30% for the next three years. We do not assume any acquisitions or asset-enhancement work. The manager’s fees and interest costs(2.4%) are assumed to be stable, with dividend payouts at 100%.

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Figure 26: Key assumptions used in our model

Rental growth forecast (%) 2009 2010 2011Business Park 25% 5%Flatted Factories 0% 20%Stack-up/ramp-up 0% 30%Light industrial 0% 3%Light industrial - Tata Communications 0% 0%Warehouse 0% 10%

Renewal rents S$psf/mth 2009 2010 2011Business Park 3.01 3.76 3.95 Flatted Factories 1.37 1.37 1.64 Stack-up/ramp-up 0.85 0.85 1.11 Light industrial 1.43 1.43 1.47 Warehouse 0.99 0.99 1.09

NLA (sqm) 2009 2010 2011Business Park 112,160 112,160 112,160 Flatted Factories 644,592 644,592 644,592 Stack-up/ramp-up 280,990 280,990 280,990 Light industrial 54,008 54,008 54,008 Light industrial - Tata Communications 13,405 13,405 Warehouse 19,750 19,750 19,750 Portfolio 1,111,500 1,124,906 1,124,906

Occupancy Rates (%) 2009 2010 2011Business Park 93.5% 94.0% 94.0%Flatted Factories 86.3% 91.5% 92.5%Stack-up/ramp-up 92.5% 96.0% 96.0%Light industrial 100.0% 100.0% 100.0%Light industrial - Tata Communications 100.0% 100.0%Warehouse 100.0% 97.0% 98.0%

PROJECTED GROSS REVENUE(Existing) S$m 2009 2010 2011

Business Park 37.581 43.578 46.645 Flatted Factories 94.636 110.465 116.155

Stack-up/ramp-up 27.767 28.920 31.794 Light industrial 6.764 6.767 6.767

Light industrial - Tata Communications 10.389 10.389 Warehouse 2.465 2.598 2.654

TOTAL PROJECTED REVENUE 169.213 202.717 214.403

NPI margin 2009 2010 2011Business Park 57.5% 58.0% 59.0%Flatted Factories 70.7% 69.0% 69.0%Stack-up/ramp-up 80.0% 77.0% 77.0%Light industrial 85.0% 86.0% 89.0%Warehouse 66.6% 65.0% 65.0%

Other assumptions 2009 2010 2011Cost of debt 2.44% 2.44% 2.44%REIT manager fees (paid in cash)

Base fees (% of Deposited Property) 0.50% 0.50% 0.50%Performance fees (% of Net Property Income) 3.60% 3.60% 3.60%

REIT manager fees (paid in units)Acquisition fees (of purchase price) 1.00% 1.00% 1.00%Divestment fees (of divestment price) 0.50% 0.50% 0.50%

Trustee fees (paid in units) (% of Deposited Property) 0.02% 0.02% 0.02%Property manager fees (% of Gross Revenue) 2.00% 2.00% 2.00%Lease management fees (% of Gross Revenue) 1.00% 1.00% 1.00%

Source: CIMB Research

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Valuation and recommendation DDM-derived valuation of S$1.24. We have used DDM to value MIT, the

methodology we use to value all REITs under our coverage. We use a discount rate of 8.1%, derived from a risk-free rate of 4%, an equity risk premium of 4.4% and a beta of 1.0. The discount rate used is in line with that used for AREIT and Cache Logistics, which are equally Singapore-centric. We have also assumed a terminal growth rate of 1.8%. We arrive at a DPU estimate of 7.14 cts for FY3/10 and 7.77cts for FY3/11. This translates to prospective dividend yields of 6.6% for FY10 and 7.2% for FY11.

At 1.2x P/BV and trading yield of 6.6%, MIT is not cheaper than industrial leader AREIT (1.26x P/BV; 7% yield). However with a under-rented portfolio, pure Singapore exposure, and large tenant base point, rental downside is limited whilst upside is conversely strong. We expect catalysts from announcements of accretive acquisitions or development projects

Figure 27: Measuring up against other industrial peers

REITsAsset size

(S$ m)

Portion of rentalfrom Factory

component

Portion of rentalfrom Warehouse

componentWALE

(years)Portfolio

occupancy

Contributionfrom top 10

tenantsApprox. no of

tenants% of Sgassets

% ofoverseas

assets

Developmentheadroom

(S$ m)

MINT 2,092.5 99% 1% 2.6 92.3% 21% 1,537 100% 0% 209AREIT 4,819.1 97% 3% 4.8 95.6% 28% 950 100% 0% 482MLT 3,459.2 0% 100% 5.0 98.1% 29% 235 50% 50% 346CACHE 744.0 0% 100% 6.4 100.0% 100% 2 100% 0% 74CREIT 928.5 47% 53% 4.1 99.0% 57% 83 100% 0% 93


Figure 28: NPI yields vs implied yields

REITs NPI yield*Implied NPI

yieldPremium of implied

yields over NPI yields

MINT 7.0% 9.2% 2.16 AREIT 6.9% 8.8% 1.87 MLT 6.2% 9.6% 3.37 CACHE 7.7% 9.4% 1.70 CREIT 6.8% 12.2% 5.38

*Annualised from last quarter’s net property income Source: CIMB Research

[ 18 ]

Figure 29: SREIT overview

SREITBloomberg

TickerPrice as of

17 Feb 2011Mkt Cap

(S$m)

Lastreported

assetleverage

Laststated

NAV

Price /Stated

NAV

TargetPrice

(DDM-based) Rec.

2010Yield

2011Yield

2012Yield

Total return(Prospective

price upside +2010 yield)

HospitalityAscott Residence Trust ART SP $1.22 $1,354 39.6% 1.28 0.95 1.24$ U 6.2% 6.6% 6.8% 8.5%CDL Hospitality Trust CDREIT SP $2.03 $1,946 20.4% 1.52 1.34 2.21$ N 5.0% 6.0% 6.4% 15.1%

Hospitality simple average 30.0% 1.14 5.6% 6.3% 6.6%IndustrialAscendas Reit AREIT SP $2.02 $3,786 34.6% 1.60 1.26 2.09$ U 6.8% 7.0% 7.4% 10.3%Cache Logistics Trust CACHE SP $0.96 $609 23.0% 0.91 1.05 1.30$ O 8.1% 9.8% 9.8% 44.8%Cambridge Industrial Trust CREIT SP $0.52 $550 34.7% 0.61 0.86 0.60$ NR 9.4% 9.4% 9.8%Mapletree Logistics Trust MLT SP $0.93 $2,244 37.5% 0.86 1.08 1.05$ O 6.6% 7.0% 7.5% 20.6%Mapletree Industrial Trust MINT SP $1.09 $1,594 38.7% 0.87 1.25 1.24$ O N.A 6.6% 7.1% 20.3%

Industrial simple average 33.7% 1.10 7.7% 8.0% 8.3%OfficeFraser Commercial Trust FCOT SP $0.85 $531 38.0% 1.35 0.63 0.96$ NR 5.9% 6.9% 7.9%CapitaCommercial Trust CCT SP $1.40 $3,955 28.3% 1.51 0.93 1.38$ U 5.6% 5.4% 5.4% 3.9%K-Reit KREIT SP $1.33 $1,805 37.0% 1.52 0.88 1.50$ N 4.8% 5.6% 5.4% 18.4%Suntec REIT SUN SP $1.54 $3,402 38.4% 1.80 0.86 1.61$ N 5.4% 6.1% 6.3% 10.4%

Office simple average 34.6% 0.82 5.4% 6.0% 6.2%RetailCapitaMall Trust CT SP $1.82 $5,797 36.1% 1.55 1.17 1.98$ N 5.1% 5.5% 5.9% 14.1%Frasers Centrepoint Trust FCT SP $1.51 $1,161 30.6% 1.29 1.17 1.86$ O 5.4% 5.5% 6.1% 28.7%Starhill Global REIT SGREIT SP $0.66 $1,273 29.3% 0.82 0.80 0.74$ NR 6.0% 6.4% 6.4%

Retail simple average 32.0% 1.05 5.5% 5.8% 6.1%HealthcareParkway Life REIT PREIT SP $1.76 $1,065 34.4% 1.41 1.25 1.96$ O 5.0% 5.9% 6.6% 17.3%

Healthcare simple average 34.4% 1.25 5.0% 5.9% 6.6%S-REIT simple average 33.4% 1.03 6.1% 6.7% 7.0%

Source: CIMB Research

[ 19 ]

Financial tables PROFIT & LOSS KEY RATIOS

(S$ m, FYE Mar) 2008 2009 2010F 2011F 2012F (FYE Mar) 2008 2009 2010F 2011F 2012F Revenue N/A 179 203 214 227 Revenue growth (%) N/A N/A 13.5 5.8 5.8 Operating expenses N/A (54) (63) (65) (69) EBITDA growth (%) N/A N/A 14.7 7.5 6.3 Net property income N/A 124 140 149 158 Pretax margins (%) N/A 81.1 50.5 52.0 52.8 Management fees N/A (15) (16) (16) (16) Net profit margins (%) N/A 81.1 50.5 52.0 52.8 Trustee's fees N/A 0 0 0 0 Interest cover (x) N/A 5.3 6.0 6.5 6.9 Net interest & invt income N/A (20) (20) (20) (20) Effective tax rates (%) N/A 0.0 0.0 0.0 0.0 Associates' contribution N/A 0 0 0 0 Net dividend payout (%) N/A 61.0 102.0 101.9 101.7 Exceptional items & revaluation N/A 58 0 0 0 Debtors turnover (days) N/A 12.4 10.9 10.3 9.7 Others N/A (2) (2) (1) (1) Stock turnover (days) N/A 0.0 0.0 0.0 0.0 Pretax profit N/A 145 102 112 120 Creditors turnover (days) N/A 115.3 101.6 96.0 90.7 Tax N/A 0 0 0 0 Minority interests N/A 0 0 0 0 Net profit N/A 145 102 112 120 Distributable profit N/A 88 105 114 122 Adj. wt. units (m) N/A 1,463 1,463 1,463 1,463 Unadj. year-end units (m) N/A 1,463 1,463 1,463 1,463 BALANCE SHEET KEY DRIVERS (S$ m, end Mar) 2008 2009 2010F 2011F 2012F (FYE Mar) 2009 2010F 2011F 2012FInvestment properties N/A 2,093 2,095 2,096 2,097 Occupancy (%) 94.5% 96.4% 96.8% 96.8% Intangible assets N/A 0 0 0 0 Avg rent growth (%) 4.2% 11.3% 4.7% Other long-term assets N/A 0 0 0 0 Total non-current assets N/A 2,093 2,095 2,096 2,097 Cash and equivalents N/A 65 49 48 46 Stocks N/A 0 0 0 0 Trade debtors N/A 6 6 6 6 Other current assets N/A 0 0 0 0 Total current assets N/A 71 55 54 52 Trade creditors N/A 56 56 56 56 Short-term borrowings N/A 0 0 0 0 Other current liabilities N/A 14 0 0 0 Total current liabilities N/A 70 56 56 56 Long-term borrowings N/A 833 833 833 833 Other long-term liabilities N/A 3 3 3 3 Total long-term liabilities N/A 836 836 836 836 Shareholders' funds N/A 1,257 1,257 1,257 1,257 Minority interests N/A 0 0 0 0 NTA/unit (S$) N/A 0.86 0.86 0.86 0.86 CASH FLOW CURRENT P/BV(X) (S$ m, FYE Mar) 2008 2009 2010F 2011F 2012FPretax profit N/A 145 102 112 120Depreciation & non–cash adj. N/A 0 0 0 0Working capital changes N/A 21 (6) 15 10Cash tax paid N/A 0 0 0 0Others N/A (8) 18 18 18Cash flow from operations N/A 158 114 145 148Capex N/A 0 (2) (1) (2)Net investments & sale of FA N/A 0 0 0 0Others N/A (236) 0 0 0Cash flow from investing N/A (236) (2) (1) (2)Debt raised/(repaid) N/A (176) 0 0 0Equity raised/(repaid) N/A 1,159 0 0 0Dividends paid N/A (6) (105) (114) (122)Cash interest & others N/A (20) (20) (20) (20)Cash flow from financing N/A 958 (125) (134) (142)Change in cash N/A 880 (12) 10 4Change in net cash/(debt) N/A 1,056 (12) 10 4Ending net cash/(debt) N/A (768) (784) (785) (787)

1.20

1.25

1.30

1.35

1.40

Oct-10 Feb-11

Source: Company, CIMB Research, Bloomberg

[ 20 ]

APPENDICES…

[ 21 ]

1. Management profile

Mr Tham Kuo Wei Chief Executive Officer

Mr Tham Kuo Wei is both an Executive Director and the CEO of the Manager. Prior to joining the Manager, he was the Deputy Chief Executive Officer (from August 2009) and Chief Investment Officer (from April 2008 to August 2009) of the Sponsor’s Industrial Business Unit where he was responsible for structuring, setting up, and managing real estate investment platforms in Singapore and the region. Prior to this, Mr Tham was the Chief Investment Officer of CIMB-Mapletree Management Sdn Bhd in Malaysia from July 2005, and he was responsible for setting up and managing the private equity real estate fund. He was instrumental in securing investments from institutional investors in Malaysia and overseas. Mr Tham holds a Bachelor of Engineering degree from the National University of Singapore.

Ms Loke Huey Teng Chief Financial Officer

Ms Loke is CFO of the Manager. Prior to joining the Manager, she was CFO of the Sponsor’s Industrial Business Unit, overseeing its finance, accounting, corporate finance and treasury activities. She had also been Vice-President (Finance) of the Sponsor’s Singapore Investments Divisions and Deputy CFO / Vice-President (Corporate Finance) of Mapletree Logistics Trust. Ms Loke holds a Bachelor of Accountancy (Second Class Upper Honours) degree from the Nanyang Technological University, Singapore.

Mr Lee Seng Chee Head of Asset Management

Mr Lee is Head of Asset Management of the Manager. Prior to joining the Manager, he was the head of Asset Management of the Sponsor’s Industrial Business Unit, leading a team of asset managers in managing the MIT private Trust Portfolio. Mr Lee holds a Bachelor of Engineering (Second Class Upper Honours) degree from the National University of Singapore.

Ms Tan Ling Cher Head of Investment

Ms Tan is the Head of Investment n the Manager. Prior to joining the Manager, Ms Tan was Senior Investment Manager in the Sponsor’s Industrial division, where she was responsible for acquisitions of industrial assets in Singapore and the region. She was also part of the team responsible for MIT’s acquisition of the MIT Private Trust Portfolio from JTC in 2008. and concurrently, asset manager for the Singapore properties in the portfolio of MIF. Ms Tan holds a Bachelor of Science (Real Estate) (Second Class Upper Honours) degree from the National University of Singapore and is also a Chartered Financial Analyst.


[ 22 ]

2. Trust structure

Source: Company

[ 23 ]

4. Fees payable by MIT

Fee structure

1. Manager’s management fees (a) Base fee 0.5% per annum of the value of consolidated assets.

(b) Performance fee 3.6% per annum of the net property income of MIT in the relevant

financial year.

2. Trustee's fee 0.02% per annum of the value of the deposited property, subject to a minimum of S$12,000 per month, excluding out-of-pocket expenses and GST.

3. Other fees or charges (i) Acquisition fee 1.0% of the acquisition price of any real estate purchased, whether

directly or indirectly through one or more SPVs of MIT, plus any other payments in connection with the purchase of the real estate (pro-rated if applicable, to MIT’s interest);

(ii) Divestment fee 0.5% of the sale price of any real estate sold or divested, whether

directly or indirectly through one or more SPVs of MIT, plus any other payments in connection with the sale or divestment of the real estate (pro-rated if applicable to MIT’s interest)

(iii) Property management fee (a) Property management fee of 2.0% per annum of Gross Revenue of each property, payable to the Property Manager (b) Lease management fee of 1% per annum of Gross Revenue of each property, payable to the Property Manager The property management fee and lease management fee are payable to the Property Manager in the form of cash.

Source: Company

[ 24 ]

5. Mapletree Investments

Wholly-owned subsidiary of Temasek Holdings. The sponsor, Mapletree Investments (MIPL), is an Asian-focused real estate capital management company thatis based in Singapore. As at 31 Mar 10, Mapletree Investments and its subsidiaries owned and managed S$12.9bn of office, logistics, industrial, residential and retail / lifestyle properties, comprising S$6.8bn of owned real estate assets and S$6.1bn of third-party assets under management in two REITs and four private equity real estate funds. To support its regional business, the Mapletree Group has established a network of offices in Singapore, China, Hong Kong, India, Japan, Malaysia and Vietnam. MIPL is an indirect, wholly-owned subsidiary of Temasek Holdings, through its wholly-owned subsidiary, Fullerton Management Pte Ltd.

Recurrent fee-based income. MIPL’s business model is to incubate real estate assets where value can be created by either developing, rejuvenating or performing asset enhancement and subsequently unlocking the value of these assets by bundling suitable asset to originate, or sell to, REITs and private real estate funds. Essentially, this business model moves towards a recurrent fee-based income model which should be better able to weather the cyclical nature of the real estate market.

Private fund business. The Mapletree Group is experienced in structuring, originating and managing a number of real estate-related financial products. Investors in Mapletree Group’s private real estate funds include, among others, Singapore Industrial Investments Limited (controlled by Arcapita Bank B.S.C and its affiliates), Ahli United Bank’s AUB Pan Asian Industrial Fund Limited, Temasek, HSBC Emerging Growth Real Estate Investments Limited and CIM Real Estate Sdn. Bhd. The funds currently or previously managed by the Group include: • Mapletree India China Fund (MIC): MIC closed with US$1,157m of committed

capital in 2008. As at 31 Mar 10, MIC’s portfolio comprised one investment property and two mixed development properties, all of which are located in China. MIC is a 10-year private fund established with the objective of maximising total returns by acquiring, development and realising real estate projects in India and China. The fund primarily invests in commercial, residential and mixed development projects in Tier 1 and 2 cities. MIPL is the sponsor for MIC with a 43.2% interest in the fund. MIC is managed by Mapletree MIC Fund Management Pte Ltd, a wholly-owned subsidiary of MIPL.

• MIF: MIF closed with US$310m of committed capital in Nov 06 and with Bahrain-based Ahli United Bank’s AUB Pan Asian Industrial Fund Limited as a cornerstone investor. MIF is a 7-year private fund established with the objective of investing in industrial properties in Asia. The MIF portfolio had an asset size of US$516m as at 31 Mar 10, consisting of 13 properties in Singapore (being the MSIT portfolio), Japan, Malaysia and China, and prior to the listing date, an 18.4% interest in MIT.MIPL has a 40.2% interest in MIF, which is managed by Mapletree Industrial Fund Management Pte Ltd, a wholly-owned subsidiary of MIPL.

• CIMB-Mapletree Real Estate Fund 1 (CMREF 1): MIPL jointly manages CMREF1, a Malaysia-focused real estate fund, through a joint venture with ICMB in Malaysia. With a mandate to make direct investments in properties in Malaysia, including investments in distress assets, real estate investment products and listed real estate securities, CMREF1 has committed capital of RM402m. As at 31 Mar 10, committed investments totalled about RM991m. CMREF1 is developing a Grade A office and a shopping mall in KL and has formed a joint venture with listed Malaysian developer E&O Berhad, and Al Salam Bank Bahrain to develop bungalow lots in Penang. CMREF1 has acquired Patimas Computers Berhad’s headquarter in Technology Park Malaysia, underwritten two residentialcondominium projects in KL and invested in real estate investment trusts in Malaysia and the region.

• Mapletree Real Estate Mezzanine Fund 1: This is a pan-Asia real estate fund that focuses on originating and executing real estate mezzanine loans. It had completed and divested three mezzanine investments aggregating S$51m as at 31 Mar 07.


[ 25 ]

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[ 26 ]

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However, the delivery of this research report to any person in the United States of America shall not be deemed a recommendation to effect any transactions in the securities discussed herein or an endorsement of any opinion expressed herein. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc. Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

RECOMMENDATION FRAMEWORK #1*

STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS OUTPERFORM: The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 12 months.

OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 12 months.

NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant benchmark's total return.

NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months.

UNDERPERFORM: The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 12 months.

UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 12 months.

TRADING BUY: The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 3 months.

TRADING BUY: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 3 months.

TRADING SELL: The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 3 months.

TRADING SELL: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 3 months.

* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

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RECOMMENDATION FRAMEWORK #2 **

STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS OUTPERFORM: Expected positive total returns of 15% or more over the next 12 months.

OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +15% or better over the next 12 months.

NEUTRAL: Expected total returns of between -15% and +15% over the next 12 months.

NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i) an equal number of stocks that are expected to have total returns of +15% (or better) or -15% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +15% to -15%; both over the next 12 months.

UNDERPERFORM: Expected negative total returns of 15% or more over the next 12 months.

UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -15% or worse over the next 12 months.

TRADING BUY: Expected positive total returns of 15% or more over the next 3 months.

TRADING BUY: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +15% or better over the next 3 months.

TRADING SELL: Expected negative total returns of 15% or more over the next 3 months.

TRADING SELL: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -15% or worse over the next 3 months.

** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

2011 Feb 18 - CIMB - Mapletree Ind Trust

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