2009 Market Strategy
Put this Ox to the Plough
Analysts :
Stephanie WONG
+65 6432 1451
swong@kimeng.com
Rohan SUPPIAH
+65 6432 1455
rohan@kimeng.com
Gregory YAP
+65 6432 1450
gyap@kimeng.com
Wilson LIEW
+65 6432 1454
wilsonliew@kimeng.com
Pauline LEE
+65 6432 1453
paulinelee@kimeng.com
Anni KUM
+65 6432 1470
annikum@kimeng.com
2009 is the year to sow the seeds
We usher in the year of the Ox with optimism despite the global
economic recession. Following the unprecedented plunge of the STI by
50% in 2008, valuations for some of Singapore’s best managed
companies are close to distress levels, giving us greater confidence to
present our top stock ideas which are ‘must-haves’ in the inevitable
market recovery. Hopefully, by this time in 2010, investors would reap a
bountiful harvest from the seeds sown this year!
Most bullish on property stocks
The physical property market in Singapore is expected to remain weak in
1H09, but low interest rates could provide a foundation for recovery.
Some developers have been de-leveraging, putting them in good stead to
ride through uncertain times and capitalise on opportunities. We
advocate buying CapitaLand and City Developments. We also like CCT
in the S-REITs universe for its attractive valuations and prime assets.
SIA group of companies – Still a great way to fly!
For cyclical bottom-fishing, we like the SIA group of companies – SIA,
SATS and SIA Engineering. Given the weak outlook for the global
aviation industry, this call may sound counter-intuitive. However, these
companies have consistently bucked the trend, and will continue to do
so, owing to outstanding management, healthy balance sheets and
Singapore’s position as a regional aviation hub.
Go for defensive stocks only if catalysts exist
Having outperformed the market in 2008, we are not too hot on defensive
plays with the exception of those with some potential to engage in
corporate action that can provide a catalyst to surprise on the upside.
SPH, SingTel and ST Engineering all have sizeable war chests ready to
acquire cheap assets to position themselves for the next up-cycle.

Table of contents Page
Executive Summary
2008 - A year we’d rather forget .................................................................................................... 3
Go bullish on property stocks......................................................................................................... 6
Target the SIA group of companies for cyclical bottom-fishing...................................................... 6
Defensive is definitely not on our main course in 2009!................................................................. 7
Property – Grounds for Firm Foundation............................................................................ 8
City Developments – Cosy in Stormy Seas ................................................................................... 9
CapitaLand – Bullion in Cache..................................................................................................... 10
S-REITs - Not all REITs are created equal .................................................................................. 11
SIA Group of Companies ............................................................................................ 11
Singapore Airlines – Fuel Pressure Easing ................................................................................. 12
SIA Engineering – Steady as She Goes ...................................................................................... 15
SATS – Expanding the Menu....................................................................................................... 16
Defensive stocks with potential earnings catalyst
SingTel – Rationality Sets In........................................................................................................ 19
SPH – Cash is King! ................................................................................................................... 19
ST Engineering – Flight to Quality ............................................................................................... 22
Still too early to buy Banks and SGX
UOB – Best Choice for Now ........................................................................................................ 24
SGX – Short-term Pain, Long-term Gain ..................................................................................... 24
Marine & Offshore
From Hero to almost Zero, but repair remains robust.................................................................. 26