Keppel Infrastructure Trust - Credit Suisse

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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03 August 2015

Asia Pacific/Singapore

Equity Research

Multi Utilities

Keppel Infrastructure Trust

(KEPL.SI / CITY SP) INITIATION

In infrastructure we trust

■ Initiate coverage with OUTPERFORM. With assets valued at more than S$4

bn in the power generation, gas retailing, electricity transmission, water and

wastewater treatment, and waste management segments, we believe that

Keppel Infrastructure Trust has visible cash flows, potential organic and

inorganic growth opportunities, as well as an attractive dividend yield.

■ Defensive play on infrastructure spending. Created through the

combination of Keppel Infrastructure Trust and Cityspring Infrastructure Trust,

as well as the acquisition of a 51% stake in Keppel Merlimau Cogen, the

enlarged Keppel Infrastructure Trust is the largest Singapore infrastructure-

focused business trust. Most of its assets are backed by long-term concession

agreements of between 9.5 and 20 years with government-linked entities,

providing good visibility to its near-term distributable cash flow.

■ Growth drivers from recovery in Basslink and potential acquisitions.

Inorganic growth may come from acquisitions from Sponsor Keppel

Infrastructure or third parties. Its 0.40x net gearing implies about S$805 mn

debt headroom assuming a 50% leverage. In addition, there could be

potential upside to distributable cash flow from the review of Basslink

Commercial Risk Sharing Agreement (CRSM) in 2Q16.

■ Attractive dividend yield of 7.2%. Our target price of S$0.57 is based on a

discounted cash flow over the contract duration of assets, assuming cost of

equity of 6.25%. The implied dividend yield of 6.5% at our target price would

be in line with peers, as well as normalised spread over ten-year Singapore

government bond yield. Key risks include lower-than-expected availability of

assets and interest rate risks, amongst others.

Share price performance

80

90

100

110

120

0

0.5

1

1.5

2

Feb-14 Jun-14 Oct-14 Feb-15

Price (LHS) Rebased Rel (RHS)

The price relative chart measures performance against the

FTSE STRAITS TIMES IDX which closed at 3320.9 on

26/06/15

On 26/06/15 the spot exchange rate was S$1.36/US$1

Performance over 1M 3M 12M Absolute (%) -3.7 -6.7 8.3 — Relative (%) -1.3 0.2 12.0 —

Financial and valuation metrics

Year 12/14A 12/15E 12/16E 12/17E Revenue (S$ mn) 716.0 707.1 719.2 743.6 EBITDA (S$ mn) 250.4 249.8 250.6 262.9 EBIT (S$ mn) 133.7 145.3 149.0 164.1 Net profit (S$ mn) 16.7 37.0 41.6 50.8 EPS (CS adj.) (S$) 0.01 0.01 0.01 0.01 Change from previous EPS (%) n.a. Consensus EPS (S$) n.a. — — — EPS growth (%) n.a. 63.6 12.3 22.1 P/E (x) 88.6 54.2 48.2 39.5 Dividend yield (%) 0 7.2 7.2 7.2 EV/EBITDA (x) 14.0 14.1 14.0 13.3 P/B (x) 1.1 1.7 1.8 2.0 ROE (%) 1.3 2.9 3.6 4.8 Net debt/equity (%) 94.6 104.7 115.5 124.9

Source: Company data, our estimates

Rating OUTPERFORM* Price (30 Jul 15, S$) 0.52 Target price (S$) 0.57¹ Upside/downside (%) 9.6 Mkt cap (S$ mn) 2,006 (US$ 1,459) Enterprise value (S$ mn) 3,512 Number of shares (mn) 3,856.93 Free float (%) 100.0 52-week price range 0.58 - 0.47 ADTO - 6M (US$ mn) 0.81

*Stock ratings are relative to the coverage universe in each

analyst's or each team's respective sector.

¹Target price is for 12 months.

Research Analysts

Gerald Wong, CFA

65 6212 3037

[email protected]

Shih Haur Hwang

65 6212 3024

[email protected]

03 August 2015


(KEPL.SI / CITY SP) 2

Focus charts Figure 1: Keppel Infrastructure Trust is the largest infrastructure-focused business trust in Singapore

Asset Type of asset Location Age (years) Design

capacity

Contracted

capacity

Concession

expiry

Counterparty

(offtaker)

KMC Gas-fired power plant Singapore ~ 4* 1,300 MW n.a.

2030, with

option for 10Y

extension

Keppel

Electric

Senoko WTE Waste incineration plant Singapore 23 2,400 t/day 2,100 t/day 2024 NEA

Tuas DBOO Waste incineration plant Singapore 6 888 t/day 800 t/day 2034 NEA

Ulu Pandan NEWater plant Singapore 8 148,000 m

3/

day

148,000 m3/

day 2027 PUB

Singspring Seawater desalination

plant Singapore 9

136,380

m3/ day

136,380

m3/ day

2025, with

possibility of

extension

PUB

City Gas Town gas supplier Singapore >100 1.6 mn

m3/ day

n.a. n.a. Diversified

client base

Basslink Electricity interconnector Australia 8 n.a. n.a.

2031, with

option for 15Y

extension

Hydro

Tasmania

DataCentre One Data centre Singapore

To be

completed in

1Q16

n.a. n.a.

20 years from

completion,

with option for

8Y extension

1-Net

NB: Excludes CityNet where Keppel Infrastructure Trust acts as the trustee-manager. * Weighted average age Source: Company data as of

March 2015

Figure 2: Most of the assets are backed by long-term

concession agreements of 9.5 to 20 years

Figure 3: 0.40x net gearing implies about S$805 mn debt

headroom assuming 50% leverage

2015 2020 2025 2030 2035 2040 2045 2050

CityNet

Tuas DBOO

Ulu Pandan

Senoko Plant

Singspring

City Gas

Datacentre One

Basslink

KMC

Existing contract Existing contract extension option

n.a.

1688

351805

1358

2051

0

500

1000

1500

2000

2500

3000

3500

4000

0.40x FY15Eyear end net

gearing

0.45x 0.50x 0.55x 0.60x

Source: Company data NB: Company data

Figure 4: Our target price of S$0.57 is based on cost of equity of 6.25%

Beta Cost of equity Value per share (S$) Implied Yield

0.50 6.25% 0.57 (Target Price) 6.5%

0.50 6.3% 0.58 6.5%

0.54 6.5% 0.55 6.7%

0.56 6.6% 0.54 6.9%

0.58 6.8% 0.53 7.0%

0.60 6.9% 0.52 (Current Price) 7.2%

0.62 7.0% 0.51 7.3%

Source: Company data, Credit Suisse estimates

03 August 2015



In infrastructure we trust Largest Singapore infrastructure business trust

Created through the combination of Keppel Infrastructure Trust (KIT) and Cityspring

Investment Trust (CIT), as well as the acquisition of a 51% stake in Keppel Merlimau

Cogen (KMC), the enlarged Keppel Infrastructure Trust (Enlarged Trust) is the largest

Singapore infrastructure-focused business trust with total assets in excess of S$4 bn. The

enlarged KIT has assets in the power generation, gas retailing, electricity transmission,

water and wastewater treatment, as well as waste management segments. Keppel

Merlimau Cogen (KMC) is the largest asset of the Enlarged Trust, representing 43% of

total assets and 18% of adjusted EBITDA in CY2014. Most of KIT's assets have long-term

concession agreements of between 9.5 and 20 years with creditworthy counterparties

such as government-linked entities.

Proxy to rising infrastructure spending in Singapore

According to the Singapore Budget 2015, total infrastructure spending will increase to

S$20 bn (4.8% of GDP) in FY2015 and to S$30 bn by the end of the decade. As a result,

we expect an increase in investment in utilities infrastructure projects such as Singapore's

third desalination plant. In the water resourcing strategy announced in June 2010, PUB

(Singapore’s national water agency) laid out plans to triple the country’s water reuse

capacity and to increase the desalination capacity eight-fold over the next 50 years. Within

the Singapore power market, capacity addition is expected to slow down in 2015–16, with

only 563 MW of capacity growth expected. With demand growth expected to exceed

supply growth from 2015E, we expect the reserve margin to decline to 44% in 2015E.

Growth drivers from acquisitions and asset injection

With negative Basslink Commercial Risk Sharing Mechanism (CRSM) payments of A$11–

17 mn in FY11–14, we expect a review of the CRSM with HydroTasmania (HT) in April

2016 to drive potential upside to cash earnings. The CRSM is meant to be neutral to both

parties in the long run, and the maximum negative payments will adjust to 12.5% of base

fee (from 20% currently) if both parties cannot agree. We also expect growth in EBITDA

from the completion of DataCentre One in 1Q16, a datacentre which is signed on an initial

20-year lease with 1-Net, a wholly owned subsidiary of Mediacorp. KIT also has first rights

over the remaining 49% of KMC, and the right of first refusal (ROFR) to acquire assets

developed or incubated by Keppel Infrastructure. Based on a pro-forma net gearing of

0.40x in end-2015, we estimate a S$805 mn debt headroom assuming a 50% leverage.

This would also enable KIT to pursue third-party acquisitions with an initial focus on

existing energy, telecoms, waste and water sectors.

Initiate with OUTPERFORM

Our target price of S$0.57 for Keppel Infrastructure Trust is based on our DCF valuation.

Our DCF valuation uses detailed forecasts between over the existing contract life of the

assets, as well as over the extension period for contracts with options. We do not assign a

terminal value for all assets with the exception of City Gas. We also assume a cost of

equity of 6.25% derived based on a market risk premium of 6.5%, a risk-free rate of 3%

and beta of 0.5x, in line with peers. Our target price of S$0.57 would imply a dividend yield

of 6.5%, in line with the market cap weighted average 2016 yield of ten longest weighted

average lease expiry (WALE) REITS, as well as normalised spread over ten-year

Singapore government bond yield. Key risks would include lower-than-expected

availability of assets, changes to the KMC tolling fee in the event of material adverse

change, variability in City Gas cash earnings, change in regulatory structure of gas

industry in Singapore, interest rate and FX risks.

KIT is the largest Singapore

infrastructure-focused

business trust with total

assets in excess of S$4 bn

Total infrastructure spending

is expected to increase to

S$30 bn by 2020 from S$20

bn in 2015.

We expect a review of the

CRSM with HydroTasmania

in April 2016 to drive

potential upside to cash

earnings.

Our target price of S$0.57

for Keppel Infrastructure

Trust is based on our DCF

valuation.

03 August 2015



Figure 5: Keppel Infrastructure Trust: Summary of financials

S$'000 2014 2015E 2016E 2017E

Income statement

Revenue 715,954 707,099 719,166 743,611

Other income 4,110 2,920 2,920 2,920

Other (losses)/gains–net (4,342) - - -

Expenses (722,318) (693,845) (700,665) (709,783)

Share of results of JV (43) (43) (43) (43)

Operating income (6,639) 16,130 21,378 36,705

Tax (708) (4,250) (4,540) (4,663)

Profit after tax (7,347) 11,880 16,838 32,042

Attributable to:

Unitholders 16,696 37,035 41,577 50,753

NCI (24,043) (25,154) (24,739) (18,711)

EBITDA 232,912 249,782 250,580 262,854

Distributable cash flows 161,005 130,969 154,656 163,082

Total distributions 139,251 143,948 143,948 143,948

Payout ratio 86% 110% 93% 88%

Balance sheet

Current assets 641,188 613,188 600,108 614,964

Non-current assets 3,861,841 3,747,675 3,624,339 3,490,777

Total assets 4,503,029 4,360,864 4,224,447 4,105,742

Current liabilities 232,048 235,081 237,526 242,479

Non-current liabilities 2,697,173 2,686,594 2,677,394 2,668,194

Total liabilities 2,929,221 2,921,675 2,914,920 2,910,673

Minority interest 256,644 228,429 200,629 178,856

Equity 1,573,808 1,439,188 1,309,526 1,195,068

Cash flow statement

Net profit (25,638) 16,087 21,335 36,662

Operating CF before working capital changes 240,982 234,700 238,779 250,485

Changes in working capital (48,654) (77,471) (81,180) (80,022)

Net cash generated from operating activities 192,328 157,229 157,599 170,463

Net cash used in investing activities (300,958) (29,091) (17,000) (4,000)

Net cash provided by financing activities 41,009 (157,079) (155,700) (155,700)

Net increase in cash and cash equivalents (67,621) (28,941) (15,101) 10,763

Cash and cash equivalents at beginning of the period 271,937 203,759 174,818 159,717

Effect of currency translations of cash and cash equivalents (557) - - -

Cash and cash equivalents at end of the period (Cash flow) 203,759 174,818 159,717 170,480

NB: Year ending 31 Dec. Pro forma assuming acquisition and restructuring had occurred before 1 Jan 2014.

Adjusted EBITDA means reported EBITDA plus reduction in concession receivable and excluding non-

recurring expenses.

Source: Company data, Credit Suisse estimates.

03 August 2015


(KEPL.SI / C

ITY SP) 5

Figure 6: Valuation comparison Ticker Company Price Rating TP Up/Dn Mkt Cap Yield ROE (%) P/B Debt/ 6M ADT Tot. Assets (S$) (S$) % (S$mn) T+1 T+2 T+3 T+1 (x) Asset (%) (S$) (S$ mn)KIT SP Keppel Infrastructure Trust 0.52 O 0.57 10 2,006 7.2 7.2 7.2 2.9 1.7 40% 1,091,923 4,503 Retail 5.8 6.0 6.1 5.6 1.0 30%CT SP CapitaMall Trust 2.05 O 2.36 15 7,100 5.4 5.7 6.0 6.3 1.2 25% 19,914,540 9,858MCT SP Mapletree Comm. Trust 1.39 N 1.62 17 2,929 5.9 5.9 6.0 6.1 1.2 38% 2,903,576 4,945SPHREIT SP SPH REIT 1.02 N 1.10 8 2,580 5.3 5.4 5.5 4.7 1.1 24% 1,192,349 3,268MAGIC SP Mapletree Greater China 0.99 NR n.a. n.a. 2,705 7.1 7.3 7.3 4.7 1.0 36% 5,428,117 4,090FRT SP Fortune REIT 8.31 NR n.a. n.a. 2,774 5.5 5.7 5.9 4.2 0.7 29% 2,251,789 2,522FCT SP Frasers Centrepoint Trust 2.04 O 2.25 10 1,870 5.8 5.9 6.0 5.9 1.1 29% 2,806,242 2,947 Office 6.6 6.8 6.5 5.2 0.9 31% CCT SP CapitaCommercial Trust 1.43 U 1.43 0 4,202 6.0 6.2 6.4 4.5 1.0 18% 15,994,100 6,521SUN SP Suntec REIT 1.68 U 1.54 -8 4,214 5.8 5.9 6.1 5.0 0.8 34% 12,941,590 8,602KREIT SP Keppel REIT 1.07 N 1.15 7 3,422 6.7 6.6 6.6 3.8 0.9 36% 6,736,670 7,329 Industrial 7.5 7.7 7.9 7.4 1.1 33% AREIT SP Ascendas REIT 2.42 N 2.59 7 5,827 6.3 6.6 6.8 7.1 1.2 30% 24,508,540 7,932MLT SP Mapletree Logistics Trust 1.09 O 1.29 18 2,699 6.8 7.1 7.3 8.7 1.2 33% 4,095,887 4,593MINT SP Mapletree Industrial Trust 1.54 O 1.74 13 2,703 7.0 7.4 7.7 7.7 1.2 34% 4,901,207 3,302 DC 6.1 6.5 6.5 7.7 1.2 29% KDCREIT SP Keppel DC REIT 1.09 O 1.16 7 958 6.1 6.5 6.5 7.7 1.2 29% 2,344,957 1,096 Hospitality 7.1 7.2 7.2 5.6 0.9 32% ART SP Ascott Residence Trust 1.27 N 1.37 8 1,956 6.2 6.5 6.5 4.4 0.9 37% 2,025,496 4,122CDREIT SP CDL Hospitality Trust 1.56 N 1.74 12 1,535 6.8 6.9 7.1 6.4 1.0 30% 2,403,021 2,450OUEHT SP OUE Hospitality Trust 0.91 O 1.10 21 1,210 7.8 7.8 7.8 6.8 1.1 32% 1,143,252 1,796 Healthcare 5.9 5.8 69.7 7.5 1.5 31% PREIT SP ParkwayLife REIT 2.41 NR n.a. n.a. 1,458 5.4 5.0 132.6 7.0 1.5 30% 1,579,108 1,669FIRT SP First REIT 1.36 NR n.a. n.a. 1,014 6.4 6.5 6.8 8.0 1.5 33% 1,016,569 1,212 SG Business Trusts 8.2 8.9 9.5 6.7 1.1 29% HPHT SP Hutchison Port Holdings Trust 4.61 U 4.57 -1 7,125 7.5 8.7 9.1 3.9 1.1 29% 12,375,020 19,815APTT SP Asian Pay Television Trust 0.83 NR n.a. n.a. 1,185 9.8 9.8 9.9 6.4 1.0 43% 2,077,596 2,489 Asian Infra Trusts 5.6 7.0 7.2 11.0 2.4 27% 6823 HK Hkt Trust & Hkt Ltd. 9.56 N 11.00 15 12,833 6.0 7.0 7.5 11.1 2.1 46% 70,874,340 15,344TRUEIF TB True Telecom 12.70 O 13.60 7 2,885 7.1 7.3 7.4 6.8 1.0 0% 79,977,280 2,957BTSGIF TB Bts Rail Mass Transit 10.30 N 11.15 8 2,332 7.3 7.9 n.a. 6.8 0.9 0% 31,571,710 2,535 Australian Infra Trusts 6.1 6.3 6.5 16.5 3.9 59% APA AU Apa Group 9.07 U 8.10 -11 10,128 4.1 4.3 4.6 5.7 2.8 66% 27,509,090 9,369AST AU Ausnet Group 1.38 N 1.45 5 4,843 6.2 6.3 6.4 49.0 9.1 62% 8,657,181 12,358DUE AU Duet Group 2.21 N 2.35 7 4,527 7.9 8.2 8.4 3.2 2.0 74% 18,188,700 10,396SKI AU Spark Infrastructure Group 1.94 O 2.30 19 2,851 6.2 6.4 6.7 8.3 1.6 33% 11,893,350 3,429Note: O = OUTPERFORM, N = NEUTRAL, U = UNDERPERFORM, NC = NOT COVERED. Source: Company data, IBES estimates, Credit Suisse estimates for covered companies

03 August 2015



Largest Singapore infrastructure business trust Diversified portfolio of core infrastructure assets

Created through the combination of Keppel Infrastructure Trust (KIT) and Cityspring

Investment Trust (CIT), as well as the acquisition of a 51% stake in Keppel Merlimau

Cogen (KMC), the enlarged Keppel Infrastructure Trust (Enlarged Trust) is the largest

Singapore infrastructure-focused business trust with total assets in excess of S$4 bn. The

portfolio of assets include:

KIT's portfolio

■ Senoko Waste-to-Energy Plant, the only incineration plant outside of Tuas, servicing

the eastern, northern and central areas of Singapore.

■ Keppel Seghers Tuas Waste-to-Energy Plant, the newest of the four waste

incineration plants currently operating in Singapore.

■ Ulu Pandan NEWater Plant, the second largest NEWater plant in Singapore.

■ 51% stake in KMC, a 1,300 MW power plant in Singapore.

CIT's portfolio

■ City Gas, the sole producer and retailer of town gas in Singapore.

■ SingSpring, Singapore's first large-scale seawater desalination plant.

■ Basslink, the only electricity interconnector between Tasmania and mainland

Australia.

■ CityNet, trustee-manager of Netlink Trust, which owns, installs, operates and

maintains the fibre network for Singapore's Next Generation Nationwide Broadband

Network.

■ DataCentre One, an uptime Institute tier-3 datacentre (completion expected in 1Q16).

Figure 7: Portfolio of assets of the Enlarged Trust

Source: Company data

03 August 2015



Benefits from Keppel sponsorship

Keppel Infrastructure (KI) is the sponsor to the Enlarged Trust with Keppel Infrastructure

Fund Management (KIFM) as the trustee-manager. KI has an established track record of

developing, owning and operating infrastructure assets and will be able to support KIT in

its growth strategies. In our view, KIT could benefit from KI's sponsorship through its

expertise in sourcing for acquisitions, operational expertise in managing assets, as well as

through potential co-investment opportunities or Right of First Refusal to acquire assets

developed by KI.

Acquisition of core infrastructure assets with long-term cash flows

KIT aims to provide unitholders with long-term, regular and predictable distributions by

pursuing investments that exhibit the following characteristics:

■ Long-term, regular and/or predictable cash flows.

■ Long-term contracts or concessions/customer stability.

■ Creditworthy or reputable off-takers.

■ Diversification of asset class risks.

■ Jurisdictions with well-developed legal framework.

Figure 8: Summary of assets of the Enlarged Trust

Asset Type of asset Location Age (years) Design

capacity

Contracted

capacity

Concession

expiry

Counterparty

(offtaker)

KMC Gas-fired power plant Singapore ~ 4* 1,300 MW n.a.

2030, with

option for 10Y

extension

Keppel

Electric

Senoko WTE Waste incineration plant Singapore 23 2,400 t/day 2,100 t/day 2024 NEA

Tuas DBOO Waste incineration plant Singapore 6 888 t/day 800 t/day 2034 NEA

Ulu Pandan NEWater plant Singapore 8 148,000

m3/ day

148,000

m3/ day

2027 PUB

Singspring Seawater desalination

plant Singapore 9

136,380

m3/ day

136,380

m3/ day

2025, with

possibility of

extension

PUB

City Gas Town gas supplier Singapore >100 1.6 mn

m3/ day

n.a. n.a. Diversified

client base

Basslink Electricity interconnector Australia 8 n.a. n.a.

2031, with

option for 15Y

extension

Hydro

Tasmania

DataCentre One Data centre Singapore

To be

completed in

1Q16

N.A. N.A.

20 years from

completion,

with option for 8

year extension

1-Net

NB: Excludes CityNet where Keppel Infrastructure Trust acts as the trustee-manager. * Weighted average age

Source: Company data as of March 2015

03 August 2015



Most of KIT's assets have long-term concession agreements of between 9.5 and 20 years

with creditworthy counterparties such as government-linked entities. This is generally

longer than the weighted average lease expiry of S-REITs.

Figure 9: Asset maturity profile of Enlarged Trust Figure 10: S-REITs WALE

2015 2020 2025 2030 2035 2040 2045 2050

CityNet

Tuas DBOO

Ulu Pandan

Senoko Plant

Singspring

City Gas

Datacentre One

Basslink

KMC

Existing contract Existing contract extension option

n.a.

6.6

5.5

3.42.52.42.12.1

1.6

7.9

6.0

3.53.1

7.5

4.54.34.24.03.83.63.33.12.6

11.2

0.0

2.0

4.0

6.0

8.0

10.0

12.0

CR

CT

SG

RE

IT

LMR

T

MA

GIC

SP

H R

EIT

MC

T

CM

T

FC

T

CC

T

Kep

RE

IT

FC

OT

OU

EC

T

Kep

DC

RE

IT

Cac

he

MLT

Cam

brid

ge

SB

RE

IT

AR

EIT

Viv

a

AA

RE

IT

MIN

T

Sab

ana

Firs

t RE

IT

Retail Office DC Industrial Healthcare

Source: Company data Source: Company data, Credit Suisse estimates

Diversified portfolio across infrastructure assets

The enlarged KIT has assets in the power generation, gas retailing, electricity transmission,

water and wastewater treatment, as well as waste management segments. Keppel

Merlimau Cogen (KMC) is the largest asset of the Enlarged Trust, representing 43% of

total assets and 18% of adjusted EBITDA in CY2014. Basslink is the second largest asset,

representing 25% of total assets and 19% of adjusted EBITDA in CY2014.

Figure 11: Total assets by segment Figure 12: Adjusted EBITDA by segment

Power generation

43%

Gas retailing12%

Electricity transmission

25%

Water and wastewater treatment

7%

Waste management

13%

Power generation

18%

Water and wastewater treatment

8%

Waste management

18%

NCI20%

Gas retailing17%

Electricity transmission

19%

NB: Based on KIT and CIT's financial statements as at 31 December

2014 and KMC enterprise value of S$1,700 mn. Excludes total assets

attributable to corporate segment


NB: Adjusted EBITDA means reported EBITDA plus reduction in

concession receivable and excluding non-recurring expenses.

Excludes trust/corporate expenses and assume restructuring

implemented on 1 January 2014.


Keppel Merlimau Cogen Plant

Keppel Merlimau Cogen Plant is a gas-to-power project with a design life of approximately

25 years, with a generation licence of 30 years from 2003. It is located at 201 Jurong

03 August 2015



Island Highway, Singapore 627805 and the land lease expires in 2035, with an option to

extend by 30 years.

Prior to the acquisition by Keppel Infrastructure Trust, the Keppel Merlimau Cogen Plant

was wholly owned by Keppel Energy and was in operation since 2007 with an initial

generation capacity of 500 MW. In 2013, the generation capacity was expanded by 800

MW to 1,300 MW and is fuelled by both piped natural gas and liquefied natural gas (LNG)

supplied from the Jurong Island LNG terminal.

Figure 13: KMC—summary of asset details

Details Combined cycle gas turbine generation facility with a

licensed generation capacity of approximately 1,300 MW

Address 201 Jurong Island Highway, Singapore 627805

Land title Leasehold (expiring in 2035, with the option to extend

another 30 years)

Completion Phase I: April 2007 (capacity of 500 MW)

Phase II: March and July 2013 (additional capacity

of 400 MW each)

Design life 25 years

Weighted average age ~4 years

Generation licence 30 years from 2003

Appraised value (S$ mn) EV 1,700

Concession Capacity Tolling Agreement (CTA): 15 years, with option

to extend another ten years. Expires in 2030

Toller Keppel Electric

O&M operator KMC O&M, an indirect, wholly-owned subsidiary of KI

Source: Company data as at March 2015

Based on the acquisition cost of S$1.7 bn (US$1.32 bn), the implied EV/capacity ratio of

the KMC acquisition is 1.0x, which is in line with the median EV/capacity ratio of precedent

transactions as shown in Figure 14.

Figure 14: Implied valuation ratios of KMC precedent transactions

Date Acquiror Target Fuel type Stake

acquired

(%)

Gross

capacity

(MW)

Gas-fired

capacity

(MW)

Transacti

on value

(US$ mn)

Implied

100% EV

(US$ mn)

EV/

capacity

(US$

mn/MW)

EV/Gas-

fired

capacity

(US$

mn/MW)

EV/LTM

EBITDA

(x)

Mar-13 FPM Power GMR Energy Gas 70% 800 800 537 1,582 1.98 1.98 n.a.

Dec-08 YTL Power PowerSeraya Mix 100% 3,100 1490* 2,340 2,471 0.80 1.66 10.7

Sep-08 Lion Power Senoko Power Mix 100% 3,300 2,050 2,570 2,797 0.85 1.36 16.2

Mar-08 China Huaneng Tuas Power Mix 100% 2,670 1,470 3,056 3,108 1.16 2.11 13.0

Mean 1.20 1.78 13.3

Median 1.01 1.82 13.0

* Includes gas-fired capacity under construction of 758 MW at the transaction announcement. Source: Company data, SDC

Senoko WTE Plant

The Senoko Plant is one of four waste incineration plants currently operating in Singapore,

located at 30 Attap Valley, Singapore 759907. It was commissioned in 1992 and equipped

with six incineration-boiler units and two condensing turbine-generators with a power

generation capacity of 2 x 28 MW, occupying a land area of 7.5 ha.

On 31 August 2009, Senoko Plant was acquired by the Senoko Trust for S$454 mn, and

commenced operations under the Senoko Trust in accordance with the Senoko ISA.

Under the Senoko ISA, the contracted incineration capacity of Senoko Plant is 2,100 t/day

(based on a net calorific value of 9,000 kJ/kg) for 15 years starting from 1 September 2009.

The Senoko Trustee is entitled to receive monthly payments from the NEA, comprising of

fixed payments for the provision of incineration capacity and payable in full if the available

incineration capacity of Senoko Plant is greater than or equal to 2,100 t/day, as well as

variable payments comprising of an O&M component, an electricity generation incentive

payment, and a reimbursement for energy market charges payable.

03 August 2015



Figure 15: Senoko WTE: Summary of asset details

Details A waste incineration plant equipped with six incineration-

boiler units and two condensing turbine-generators offering

a power generation capacity of 2 x 28 MW

Address 30 Attap Valley, Singapore 759907

Land area 7.5 ha

Completion 1992, with flue gas treatment upgrade in June 2012

Age 23

Designed capacity 2,400 t/day

Contracted capacity 2,100 t/day (based on a net calorific value of 9,000 kJ/kg)

Concession Senoko ISA: 15 years starting from 1 September 2009.

Expires in 2024

Counterparty National Environment Agency

O&M operator Keppel Seghers


Tuas DBOO Plant

The Tuas DBOO Plant is one of four waste incineration plants currently operating in

Singapore, located at 96 Tuas South Avenue 3, Singapore 637366. It is operational since

October 2009 and equipped with two incineration-boiler units and one condensing turbine-

generator with a power generation capacity of 22 MW.

The Tuas DBOO Trustee owns and operates the Tuas DBOO Plant under the Tuas DBOO

ISA. Under the Tuas DBOO ISA, the contracted incineration capacity of Tuas DBOO Plant

is 800 t/day (based on a net calorific value of 9,000 kJ/kg) for 25 years starting from 30

October 2009.

The Tuas DBOO Trustee is entitled to receive monthly payments from NEA, comprising of

fixed payments for the provision of incineration capacity payable in full if the available

incineration capacity of Tuas DBOO Plant is greater than or equal to 800 t/day, fixed

electricity generation payments payable for making available the electricity generation

services of Tuas DBOO Plant, as well as variable payments comprising of an O&M

component, an electricity generation incentive, and a reimbursement for energy market

charges payable.

Figure 16: Tuas DBOO: Summary of asset details

Details A waste incineration plant equipped with two incineration-

boiler units and one condensing turbine-generator offering

a power generation capacity of 22 MW

Address 96 Tuas South Avenue 3, Singapore 637366

Land area 1.6 ha

Completion 2009

Age 6

Designed capacity 888 t/day

Contracted capacity 800 t/day (based on a net calorific value of 9,000 kJ/kg)

Concession Tuas DBOO ISA: 25 years starting from 30 October 2009.

Expires in 2034

Counterparty National Environment Agency



Ulu Pandan NEWater Plant

The Ulu Pandan Plant is one of the four operational NEWater plants in Singapore, located

at 61 Old Toh Tuck Road, Singapore 597656. It is operational since 2007.

The Ulu Pandan Trustee owns and operates the Ulu Pandan Plant under the NEWater

Agreement. Under the NEWater Agreement, the contracted warranted capacity of Ulu

Pandan Plant is 148,000 m3/day of NEWater for 20 years starting from 28 March 2007.

The Ulu Pandan Trustee is entitled to receive monthly payments from PUB, comprising of

fixed payments for the provision of production capacity payable in full if the available

03 August 2015



production capacity of Ulu Pandan Plant is greater than or equal to 148,000 m3/day, as well

as variable payments comprising of an O&M component and a power payment component.

Figure 17: Ulu Pandan: Summary of asset details

Details A NEWater plant featuring modular design, space saving

measures and energy saving features.

Address 61 Old Toh Tuck Road, Singapore 597656

Completion 2007

Age 8

Designed capacity 148,000 m3/day

Contracted capacity 148,000 m3/day

Concession NEWater Agreement: 20 years starting from 28 March

2007. Expires in 2027

Toller Public Utilities Board



SingSpring Desalination Plant

The SingSpring Plant is the first large-scale seawater desalination plant in Singapore,

located at 90 SingSpring Desalination Plant Tuas South Avenue 1, Tuas, Singapore

637493. It commenced commercial operations in December 2005, occupying land leased

from JTC for a 30-year term expiring in 2034.

SingSpring owns and operates the SingSpring Plant under the Water Purchase

Agreement (WPA) for a 20-year term commencing in December 2005 and expiring in

December 2025. Under the WPA, SingSpring must make available the SingSpring Plant's

capacity, and supply water from the SingSpring Plant, to PUB only. The SingSpring Plant

is capable of supplying up to 136,380 m3 of desalinated potable water per day.

SingSpring is entitled to receive monthly payments from PUB, comprising of capacity

payments payable for the fixed costs in making the full water capacity of the SingSpring

Plant available to PUB, as well as output payments payable for the variable costs in

supplying water to PUB, depending on the volume of water supplied.

Figure 18: Singspring: Summary of asset details

Details A seawater desalination plant utilising advanced, cost and

energy-efficient reverse osmosis technology

Address 90 Singspring Desalination Plant Tuas South Avenue 1,

Tuas, Singapore 637493

Land title Leasehold (expiring in 2034)

Completion 2005

Age 9

Designed capacity 136,380 m3/day

Concession Water Purchase Agreement: 20 years from December

2005. Expires in 2025, with possibility of extension.

Toller Public Utilities Board

O&M operator Hyflux Engineering


CityGas

CityGas is currently the sole producer and retailer of town gas in Singapore and the sole

user of the low-pressured piped town gas supply network in Singapore. CityGas is located

at 26 Senoko Avenue, Singapore 758312.

Senoko Gasworks, the production facility of town gas, has a capacity of 1.6 mn m3/day

with more than 700,000 customers located in Singapore. It holds the sole licence from

EMA to produce and retail town gas in Singapore and is regulated by EMA in respect to

such activities. Hence, any change in CityGas tariffs require approval from EMA. Tariffs for

town gas are determined via a tariff review process, taking into account the cost to

CityGas, such as fuel, transportation of gas, cost of production of gas, manpower and

after-sale services among others.

03 August 2015



Figure 19: CityGas: Summary of asset details

Details The sole producer and retailer of town gas and sole user

of low-pressure piped town gas supply network in

Singapore.

Address 26 Senoko Avenue, Singapore 758312

Designed capacity 1,600,000 m3/day

Number of customers >700,000

Gas supply Gas Purchase Agreement with GSPL and SEPL

Regulatory authority Sole licence from EMA to produce and retail town gas in

Singapore

Gas transportation PowerGas


Basslink

Basslink owns and operates a 370 km high voltage electricity interconnector between the

states of Victoria and Tasmania in Australia. It began commercial operations in April 2006,

allowing Tasmania to participate in the National Energy Market (NEM) Australia and

provides power stability.

In September 2007, Basslink was acquired by CitySpring for S$1,504 mn, and now

operates under the Basslink Services Agreement (BSA). The BSA is operating for a term

of 25 years starting from 28 April 2006 with the option of a 15-year extension.

Basslink is entitled to receive payments from Hydro Tasmania, comprising of:

■ Facility fees payable in full if Basslink's availability is equal to or greater than 97%.

■ Incentive availability adjustment paid by Hydro Tasmania to Basslink if the interconnector

is fully available during periods when Victorian electricity is at its highest.

■ The Floating Interest Rate Delta (FIRD), which is a 25-year interest rate hedge

provided by Hydro Tasmania.

■ The Commercial Risk Sharing Mechanism based on differences between high and low

Victorian electricity pool prices, subject to a limit of +25% and -20% of the facility fee.

Figure 20: Basslink: Summary of asset details

Details Operates the Basslink Interconnector, a 370 km 400 kV

DC high voltage direct current monopole electricity

interconnector between the electricity grids of the States of

Victoria and Tasmania in Australia.

Address Level 3, 410 Collins Street

Melbourne VIC 3000

Age 8

Concession Basslink Services Agreement: 25 years, with the option to

extend another 15 years. Expires in 2031

Toller Hydro Tasmania

O&M operator BPL


03 August 2015



Proxy to rising infrastructure spending in Singapore According to the Singapore Budget 2015, total infrastructure spending will increase to

SG$20 bn (4.8% of GDP) in FY2015, from SG$14 bn (3.6% of GDP) in FY2014 (see

Figure 21 and Figure 22), and to SG$30 bn by the end of the decade. While part of this

increase in infrastructure spending comes from higher spending on hospitals, public

transport and also the new Changi Airport, we also see investments in utilities

infrastructure projects such as Singapore's third desalination plant, which is scheduled to

be completed in 2017.

Figure 21: Singapore government's infrastructure

spending (% of GDP)

Figure 22: Public investment activity should provide some support for growth

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY20E

Total Development Health Transport Others

Government's estimate

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Nominal Public GFCF %yoy

Govt Development Expenditure

Source: Ministry of Finance, Credit Suisse estimates Source: CEIC, Ministry of Finance, Credit Suisse

Singapore power market

Power generation capacity in Singapore increased by 2.7 GW or 27% in 2013–14

following the completion of Singapore’s LNG terminal in 2Q13 which increased gas supply.

Figure 23: Planned installed capacity growth in 2013–14

Generation Company Installed

Capacity (MW)

Expected

commission

date

Update

Keppel Merlimau Cogen 800 Mid 2013 Commenced operations June 2013

ExxonMobil 220 Mid 2013

PacificLight Power 800 End 2013 Commenced operations in 1Q14

Tuas Power Generation 400 End 2013 Commenced operations in 2Q14

Sembcorp Cogen 400 End 2013 Commenced operations in August 2014 following delay due to lack of grid connection

Soxal 5 4Q14

SLNG 15.6 4Q14

CGNPC 9.9 4Q14

Biofuel Industries 9.9 4Q14

Source: Energy Market Authority, company data, Credit Suisse

Based on data from Energy Market Authority (EMA), capacity addition is expected to slow

down in 2015–16, with only 563 MW of capacity growth expected. With the exception of

Hyflux’s Tuaspring plant, which is likely to only commence operations in 2016, the

remaining additions are mainly embedded generation by industrial users.

03 August 2015



Figure 24: Project commercial operating date (COD) of the new capacities (2015–16)

Company Plant type Capacity change (MW) Period

Shell Embedded generation 67.8 Apr-15

SRC Embedded generation 42 1Q15

SRC Embedded generation 42 2Q15

Tuaspring CCGT 411 2Q16

Total 563

Source: Energy Market Authority, The Lantau Group

Reserve margin likely to peak in 2014

We base the Credit Suisse power generation model on the following:

■ Historical generation capacity is based on data from the Energy Market Authority,

while additions are based on announced completion dates of planned expansions. We

assume no further capacity changes from 2017 onwards.

■ Forecast peak demand is driven by Singapore GDP growth, which Credit Suisse

expects to be 3.2% in 2015 and 4.7% in 2016. Thereafter, GDP is expected to grow by

3.5% p.a., in line with the Singapore government’s planning parameter of 3–4%.

Figure 25 shows the annual installed capacity in Singapore from 2007–20. We believe that

the reserve margin (peak demand minus installed capacity as a percentage of installed

capacity) reached a low of about 34% in 2011, leading to higher electricity prices during this

period. However, with installed capacity growing by 19% in 2013 and 7% in 2014, the reserve

margin increased to 46%, above the 2007 level. With demand growth expected to exceed

supply growth from 2015E, we expect the reserve margin to decline to 44% in 2015E.

Figure 25: Credit Suisse power generation model suggests reserve margin would decline

in 2015E

0%

10%

20%

30%

40%

50%

60%

70%

0

2000

4000

6000

8000

10000

12000

14000

16000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total Generation Capacity - LHS Peak demand - LHS Reserve Margin - RHS

(MW)

Source: Energy Market Authority, company data, Credit Suisse estimates

Average USEP declined by 21% YoY in 2014

The expected increase in capacity has led to a decrease in the Uniform Singapore

Electricity Price (USEP) since 2013. USEP is the weighted average price in the wholesale

electricity market, and is determined through the interaction of offers made by generation

companies and consumer demand. The average USEP declined 21% from S$173/MWh in

2013 to S$137/MWh in 2014, and further to S$96/MWh YTD. However, we note that

Keppel Merlimau Cogen's tolling contract with Keppel Electric mitigates market risks

relating to potential further decline in power spreads.

03 August 2015



Figure 26: Uniform Singapore Electricity Price (USEP)—S$/MWh

0

50

100

150

200

250

300

Jan-

07

Apr

-07

Jul-0

7

Oct

-07

Jan-

08

Apr

-08

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

Oct

-11

Jan-

12

Apr

-12

Jul-1

2

Oct

-12

Jan-

13

Apr

-13

Jul-1

3

Oct

-13

Jan-

14

Apr

-14

Jul-1

4

Oct

-14

Jan-

15

Apr

-15

Uniform Singapore Electricity Price ($/MWh) (LHS)

Source: Energy Market Company

Singapore water market

In the water resourcing strategy announced on 28 June 2010, PUB (Singapore’s national

water agency) laid out plans to triple the country’s water reuse capacity and to increase the

desalination capacity eight-fold over the next 50 years. This will allow Singapore to become

self-sufficient in meeting its projected water demand of 760 MiGD (3.45 mn m3/day) by the

time its long-term water purchase agreement with Malaysia expires in 2061.

Figure 27: Overview of the Singapore water market

1,730

2,076

3,460

273

830

1,730

136

519

1,038

1,321

727 692

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2010 2020 2060

Total Water Demand NEWater Capacity Desalinated Water Capacity Water Catchment + Import Water

MLD

Source: PUB

NEWater Plants

According to PUB, the volume of water generated through reuse (NEWater) is expected to

triple by 2060 to meet 50% of Singapore’s future water demand. Various measures have

been planned to meet this target:

■ The Changi Water Reclamation Plant and the Changi NEWater Plant will be expanded

to meet the growing demand.

03 August 2015



■ The sixth NEWater Plant will be built at Tuas Water Reclamation Plant when Phase 2

of the Deep Tunnel Sewerage System is completed.

■ There are also plans to progressively ramp up the capacity of the future Tuas Water

Reclamation Plant and the Tuas NEWater Plant to meet demand.

Desalination

PUB plans to increase its desalination capacity eight-fold from 2010 to 1 mn cu m/day by

2060. The capacity increase is likely to meet up to 25% of Singapore projected water

demand. At least five coastal sites have been identified for future desalination plants.

Figure 28: Water source for Singapore—2014 Figure 29: Water source for Singapore—2060

Desalination25%

NEWater30%

Imported water & catchment water

45% 1.5 mil m3/dayTotal demand

(2014)

Desalination25%

NEWater55%

Catchment water*20%

3.4 mil m3/dayTotal demand

(2060)

Source: PUB * Assuming water supply agreement with Malaysia is not renewed

Source: PUB

Singapore WTE market

Due to space constraints in land-scarce Singapore, the National Environment Agency

(NEA) adopted waste-to-energy (WTE) incineration in the 1970s as an alternative method

to landfills for solid waste disposal as it is able to reduce waste volume by 90%. Between

1970 and 2014, Singapore's solid waste output increased from 1,260 t/day to 8,338 t/day.

The Ulu Pandan Incineration Plant, Singapore's first WTE plant, opened in 1979 and was

subsequently decommissioned in 2009. There are currently four operating WTE plants in

Singapore with two more in the pipeline, expected to be commissioned in 2016 and 2018.

Two of the plants, Senoko WTE and Tuas DBOO, operate on a public-private-partnership

(PPP) approach, with Keppel Seghers operating as the private operator.

Figure 30: WTE plants in Singapore

Facility Year commissioned Capacity (t/day) Expected lifespan

Tuas 1986 1,700 2018

Senoko WTE 1992 2,100 2024

Tuas South 2000 3,000 2030

Tuas DBOO 2009 800 2034

Sembcorp WTE 2016 1,000

Proposed 6th plant 2018


Total waste incinerated has been growing by 2.5% p.a. on average since 2005, and

represents 36% of total waste generated in 2013.

03 August 2015



Figure 31: Total waste incineration growing consistently

since 2005

Figure 32: Waste incineration represents 36% of total

waste generated in 2013 (mn tpa)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

2005 2006 2007 2008 2009 2010 2011 2012 2013

Total waste incinerated (mn tonnes/year) - LHS YoY Change - RHS

Waste recycled, 4.83

Waste incinerated , 2.82

Waste landfilled, 0.20

Source: NEA, Credit Suisse estimates Source: NEA, Credit Suisse estimates

03 August 2015



Growth drivers from acquisitions and asset injection Basslink recovery

Basslink's primary source of revenue is a facility fee paid monthly by Hydro Tasmania (HT)

for the operation of the interconnector. The facility fee is based on the interconnector's

availability and is payable in full if the cumulative availability, based on the calendar year,

is equal to or greater than 97%. Basslink operates under the Basslink Services Agreement

(BSA) with HT. The BSA includes a Commercial Risk Sharing Mechanism (CRSM) to

share the market risk associated with participating in the National Electricity Market of

Australia between HT and Basslink. The CRSM payments are based on the differences

between the high and low spreads of the Victoria electricity pool prices, subject to a cap of

+25% (i.e. when payment is made to Basslink by HT) and a floor of -20% (i.e. when

payment from Basslink is made to HT) to the unadjusted facility fee.

The CRSM is meant to be neutral to both parties in the long run, and is due for review in

April 2016 if aggregate cumulative negative payments over the preceding five years

exceeds a certain percentage of the base fee. As negative CRSM payments ranged

between 15–20% of base fee over the past five financial years, we believe that a review

may be triggered. In the event that both parties cannot agree, maximum negative

payments will adjust to 12.5% of base fee.

Figure 33: Negative CRSM payments by Basslink to HT since 2010

-1

-16.7

-15.5

-11

-13.4

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

FY10 FY11 FY12 FY13 FY14

CRSM (A$mn)


Refinancing of Basslink borrowing

In November 2014, Basslink refinanced its outstanding bonds of A$486 mn due August

2015, A$48.8 mn inflation-indexed bonds due August 2017 and A$232 mn inflation-

indexed bonds due August 2019 with an A$717 mn five-year senior, secured loan facility,

provided by a group of nine banks. As part of the refinancing, CIT will contribute an equity

injection of A$50 mn. Previously, Cityspring had announced that no cash distribution will

be received from Basslink until the financing has been completed. The refinancing facility

enables Basslink to pay down loans to reduce interest expense and make distributions if

certain coverage ratios are met. KIT could also use cash flows to pay down loans so that

Basslink will be able to make larger distributions to replace those of expiring concessions.

03 August 2015



CityGas growth

Through its predecessor entities, CityGas has had a long track record, having grown from

a gas producer and retailer of town gas to a retailer of both town gas and natural gas with

a customer base of about 700,000 customers in Singapore as at March 2015. With a

diverse customer base across the residential, commercial and industrial segment, the total

gas volume sold by CityGas has increased by 7.1% on average since FY09. This was

driven partially by an increase in number of customers from 622,000 in FY10 to 700,000.

Figure 34: Gas volume sold by CityGas (mn kWh) Figure 35: Total town gas sales to domestic and non-

domestic customers

1,629 1,767

1,699

1,944 2,066 2,082

2,421

-5%

0%

5%

10%

15%

20%

-

500

1,000

1,500

2,000

2,500

FY08 FY09 FY10 FY11 FY12 FY13 FY14

Gas volume sold -LHS YoY growth - RHS

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

0

50

100

150

200

250

300

350

400

450

500

1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14

Domestic consumers (mn units) Non-domestic consumers (mn units) YoY growth - RHS

Source: Company data, Credit Suisse estimates Source: Energy Market Authority, Credit Suisse estimates

Datacentre One

In June 2014, Cityspring and Shimizu established a new joint venture company,

DataCentre One (DC One), to develop and lease a data centre in Singapore. Cityspring

holds a 51% share in DC One, with the remaining 49% share held by Shimizu. The data

centre will be located at 2 Marsiling Lane on a land area of about 8,538 sq m. The building

will have four floors of data centre halls and one floor of office and ancillary space.

Construction commenced in 4Q14 and is expected to be completed by 1Q16.

1-Net, a wholly owned subsidiary of Mediacorp, signed a lease for the datacentre for a

period of 20 years, which may be renewed for approximately eight years at 1-Net's option.

The fees for the initial lease term of 20 years is approximately S$17 mn to S$21 mn

yearly. 1-Net is entitled to certain discounts on the fees during the first two years of the

lease term, and such fees after discount during the first two years will be approximately

S$11 mn to S$21 mn yearly.

Positive demand-supply dynamics for data centres in Singapore

A data centre is a building that houses information technology and telecommunication

systems. There is requirement for very high reliability and network availability, and the

building typically provides back-up power sources, redundant telecommunication

connections, strict building ambient controls and stringent security configuration.

The increased penetration of internet-enabled devices such as smartphones and tablets,

and the growing trend of digitalisation have led to an increase in growth in data creation

globally. BroadGroup expects internet-enabled devices and global internet users to

continue growing at a strong pace, reporting 2013–18F CAGR of 26.6% and 17.2% to 18.2

bn and 5.3 bn, respectively, all of which should continue to support the growth in data

creation/usage.

The increased compliance and regulatory requirements across various industries like the

banking and finance sectors, as well as healthcare industries, has helped boost demand

for data centre facilities. Increasingly, businesses are more open to the idea of outsourcing

their requirements to data centres, allowing them to focus on their core competencies and,

at the same time, not having to incur the upfront costs required for the data centre. With

03 August 2015



the growing focus on capital rationalisation and progression towards the 'asset light'

business model, this will continue to underpin demand for outsourced data centre space.

Figure 36: Forecast proportion of outsourced data centre

space by region (sq ft)

Figure 37: Proportion of third-party data centres (sq ft) in

2013

3.0

12.1

16.3 21.2

27.1

34.2

38.5

1.0

21.1 24.0

28.2

33.3

38.1

42.2

1.0

29.4 33.0

38.4

43.0

48.0

52.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2007 2013 2014F 2015F 2016F 2017F 2018F

Asia Pacific Western Europe US

%

38.3%

34.2%

24.2%

19.2%17.1%

9.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Singapore Australia UK Netherlands Ireland Malaysia

Source: BroadGroup Source: BroadGroup

The data centre sub-sector requires significant upfront costs and know-how, which may deter

or make it harder for new entrants. Track record is also an important element given the

mission-critical nature of the data centre business. It is also challenging to obtain the

appropriate site given considerations such as access to sufficient power and fibre connectivity

and generally low exposure to natural disasters, yet close enough to the businesses.

Overall utilisation in Singapore remains relatively high at about 85%-levels—higher than

many other markets, and BroadGroup forecasts utilisation rates will inch up to 92.1% in

2018F. Demand is expected mainly from financial institutions. As a result, rents are

expected to rise at a 4.9% CAGR over 2013–18F.

Figure 38: Demand, supply and utilisation in Singapore Figure 39: Wholesale co-location pricing in Singapore

(US$ per kW and sq ft)

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2007A 2009A 2011A 2013A 2015F 2017F

Incremental Space (sq ft) Absorption (sq ft) Utilisation %

sq ftUtilisation

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

2007A 2009A 2011A 2013A 2015F 2017F

Price per kW Price per sq ft

US$ per kW US$ psf

CAGR 2007-13 in price per kW = 2.6%CAGR 2007-13 in price psf = 5.3%

CAGR 2013-18F in price per kW = 4.8%CAGR 2013-18F in price psf = 4.9%

Source: BroadGroup Source: BroadGroup

03 August 2015



Non-organic growth

Pipeline from sponsor

The sponsor, Keppel Infrastructure, intends to support KIT by potentially warehousing

attractive greenfield projects until such projects achieve a more stable cash flow

generation capability and become suitable investments for KIT. This will facilitate the

creation of a pipeline of income-generation infrastructure projects for potential investment

by KIT. Keppel Infrastructure may also consider co-investing in assets with KIT.

KIT also has first rights over the remaining 49% of KMC, and the Right Of First Refusal

(ROFR) to acquire assets developed or incubated by Keppel Infrastructure. The pipeline of

projects include:

■ The Changi district cooling systems (DCS) plant, the first DCS plant in Singapore

since June 2000.

■ The Biopolis DCS plant, which is operational since July 2003.

■ The Mediapolis DCS plant, due for completion in 2015.

■ The Woodlands DCS plant, which is operational since July 2006.

Figure 40: ROFR assets

Name of plant Location Description Design capacity

Changi DCS Plant Changi Business Park,

Singapore

A district cooling system

wholly-owned by Keppel DHCS

37,000 refrigeration tonnes

(RT)

Biopolis DCS Plant Biopolis@one-north, Singapore A district cooling system


25,750 RT (expanding capacity

to almost 30,000 RT by 2015)

Mediapolis DCS Plant Mediapolis@one-north,

Singapore



28,000 RT

Woodlands DCS Plant Woodlands Wafer Fab Park,

Singapore



11,000 RT


Scenario analysis on acquisition of the 49% stake in KMC

Keppel Infrastructure Trust has first rights over Keppel Energy’s KMC shares in the event

that Keppel Energy wishes to divest its remaining 49% interest in KMC. Assuming a

potential injection at the same transaction multiples as the initial 51% stake, with a

continuation of the tolling agreement with Keppel Electric, we estimate that this could raise

distributable cash flows by about S$43 mn p.a.

Third-party acquisitions

KIT would also evaluate third-party acquisitions that meet its investment criteria, with an

initial focus on existing energy, telecoms, waste and water sectors. These acquisitions are

likely to be in jurisdictions with well-developed legal frameworks, including Asia (Australia,

Japan, Korea, Singapore and Taiwan), as well as select EU countries.

03 August 2015



Gearing of 0.4x implies debt headroom for

acquisition

Following the combination with Cityspring Infrastructure Trust and acquisition of a 51%

stake in Keppel Merlimau Cogen financed by an equity fund raising, we estimate that

Keppel Infrastructure Trust will have a pro-forma net gearing of 0.40x in end-2015. This

would be slightly higher compared to S-REITS' average of 0.35x, but lower than other

Asian infrastructure trusts and Australian infrastructure companies. There is no leverage

limit on business trusts in Singapore, compared to S-REITS’ regulatory limit of 45%

(effective 1 January 2016) based on the recently released MAS consultation paper.

Figure 41: Gearing relative to S-REITs and comparable business trusts

0.45

0.39

0.38

0.38

0.37

0.37

0.36

0.36

0.36

0.35

0.35

0.34

0.34

0.33

0.33

0.32

0.32

0.31

0.31

0.31

0.31

0.30

0.30

0.30

0.30

0.29

0.29

0.29

0.27

0.25

0.24

0.18

0.43

0.40

0.33

0.29

0.27

0.14

0.61

0.46

0.74

0.66

0.62

0.33

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

Viv

a

OU

EC

T

MC

T

Sab

ana

FC

OT

Asc

ott

MA

GIC

AH

T

Kep

RE

IT

Cam

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SB

RE

IT

Sun

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MIN

T

Firs

t RE

IT

MLT

AA

RE

IT

OU

EH

T

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T

Far

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t

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AR

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CD

LHT

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CT

PLi

fe R

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Kep

DC

RE

IT

FC

T

For

tune

SG

RE

IT

CM

T

SP

H R

EIT

CC

T

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TT

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arge

d K

IT

Acc

ordi

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dia

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n

HK

T T

rust

Due

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up

Apa

Gro

up

Aus

net G

roup

Spa

rk In

fra

SG REITS SG Business Trusts OtherAsianInfra

Trusts

Australian InfraTrusts

Net gearing Average

Source: Company data, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse estimates

Keppel Infrastructure Trust currently has a blended average interest rate of 4–5%, based

on Singapore average interest rates of 2–3%, and Australian average interest rates of 6–

7%. Management intends to enter into interest rate hedging contracts to hedge 70–80% of

its interest rate exposure, which should mitigate any near-term impact of interest rate

spikes, giving the higher visibility of distributable income. About 67% of KIT’s borrowing is

currently hedged, and management aims to bring its total amount hedged to about 80%.

03 August 2015



Figure 42: Weighted average term to expiry is

approximately 4.5 years

Figure 43: Gearing headroom (S$ mn) assuming

different gearing limits

3.5

142.3178.0

742.5700.0

86.5

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

Nov-15- Senoko

WTE*

Aug-17- KIT

Corporate*

Feb-19- City Gas*

Nov-19- Basslink*

Jun-20- KMC*

Oct-24-Singspring

Maturity profile (S$ mn)

1688

351805

1358

2051

0

500

1000

1500

2000

2500

3000

3500

4000

0.40x FY15Eyear end net

gearing

0.45x 0.50x 0.55x 0.60x

* Will be refinanced upon maturity. Source: Company data Source: Company data, Credit Suisse estimates

Figure 44: Debt breakdown by maturity (as at 30 June

2015)

Figure 45: Debt breakdown by currency (as at 30 June

2015)

< 1 yr0.2%

3-5 yrs57.4%

> 5 yrs42.4%

SGD59.9%

AUD40.1%

Source: Company data Source: Company data

Capex requirements in near term

The total consideration cost for DataCentre One is approximately S$130 mn, to be funded

50:50 by equity financing and long-term debt financing. Keppel Infrastructure Trust will

provide equity financing pro-rata to its 51% shareholding in the JV. It is expected that the

debt financing will be in the form of long-term project finance loans. In our estimates, we

forecast a S$22.1 mn equity injection into the JV in 2015, which leads to lower

distributable cash flows.

03 August 2015



Initiate with OUTPERFORM DCF-derived target price of S$0.57

Our target price for Keppel Infrastructure Trust of S$0.57 is based on our DCF valuation.

Our DCF valuation uses detailed forecasts between over the existing contract life of the

assets, as well as over the extension period for contracts with options. We do not assign a

terminal value for all assets with the exception of CityGas. We also assume a cost of

equity of 6.25% derived based on a market risk premium of 6.5%, a risk-free rate of 3%

and beta of 0.5x, in line with peers.

Figure 46: Beta relative to S-REITs and comparable business trusts

0.87

0.87

0.77

0.69

0.68

0.67

0.65

0.64

0.63

0.61

0.60

0.59

0.59

0.59

0.57

0.56

0.56

0.56

0.55

0.48

0.48

0.47

0.47

0.46

0.46

0.45

0.45

0.43

0.43

0.41

0.40

0.40

0.85

0.53

0.52

0.45

0.40

0.49

0.46

0.42

0.35

1.13

0.93

0.77

0.72

0.00

0.20

0.40

0.60

0.80

1.00

1.20

CM

T

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SG REITS SG Business Trusts Other AsianInfra Trusts

Australian Infra


In Error! Reference source not found. we show a DCF sensitivity to beta and cost of

equity. This highlights that the current share price is pricing in a cost of equity of closer to

6.9%.

Figure 47: Our target price of S$0.57 is based on cost of equity of 6.25%

Beta Cost of equity Value per share (S$) Implied Yield

0.50 6.25% 0.57 (Target Price) 6.5%

0.50 6.3% 0.58 6.5%

0.54 6.5% 0.55 6.7%

0.56 6.6% 0.54 6.9%

0.58 6.8% 0.53 7.0%

0.60 6.9% 0.52 (Current Price) 7.2%

0.62 7.0% 0.51 7.3%


Yield comparison versus peers

Due to its long-term concession agreements and relatively more resilient asset class, we

have compared KIT to the top-ten REITs with the longest WALE. Our target price of

S$0.57 would imply a dividend yield of 6.5%, in line with the market cap weighted average

yield of 6.5% in 2016.

03 August 2015



Figure 48: Yield comparison versus peers

Company Market cap DPU yield (%)

(S$ mn) Dec-15 Dec-16

S-REITS

PREIT 1,458 5.4 5.0

CCT 4,202 6.0 6.2

SGREIT 1,865 6.0 6.4

KREIT 3,422 6.7 6.6

KDCREIT 958 6.1 6.5

FCT 1,870 5.8 5.9

MLT 2,699 6.8 7.1

CACHE 855 8.0 8.6

SBREIT 786 7.6 7.6

AREIT 5,827 6.3 6.6

Market cap weighted average 6.3 6.5

Source: Company data, the BLOOMBERG PROFESSIONAL™ service

Figure 49: S-REITs and comparable business trusts: Market cap versus T+2 yields

5.7 5.95.4

7.3

5.75.9

6.4

7.0

8.5

6.25.9

6.6

8.5

7.2

6.67.1

7.4

8.6

7.9 7.7

8.6

7.6

6.5 6.56.9

7.2

7.8 7.6

8.8

5.0

6.5

7.2

8.7

9.8

8.8

6.2

7.07.3

7.9

5.7

4.3

6.3

8.2

6.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

CM

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Retail Office Industrial DC Hospitality Healthcare SG Biz Asian Infra Aust. Infra

Market Cap (S$ mn) - LHS 2016 yield (%) - RHS


Yield spread comparison

Using the yield spread between the top-ten longest WALE REITs plus Singapore business

trusts of 3.89% and the ten-year government bond yield of 2.66%, the implied yield is

6.55%. However, if we took a more normalised assumption to the ten-year bond yield and

assumed the historical average of 3%, we arrive at an implied yield of 6.48%.

03 August 2015



Figure 50: Enlarged trust yield versus other yield products Figure 51: Defensive (long WALE names & SG business

trusts) yield spread versus historical average

7.27.0 6.8

5.6 5.8 6.16.1 6.2

7.67.0

6.3

4.1 4.0

2.6 2.5 2.7

1.5

0.0

2.0

4.0

6.0

8.0

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F (

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acc

ount

)

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ear

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d

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ed d

epos

itInfra S-REITs Peers Residential Others

%

3.89

3.48

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14

Top 10 WALE REITs & SG Biz Trusts vs 10yr Govt bond

Subprime period

Normalised average

Yield spread% Yield spread%

Source: CBRE (for residential yields), CPF, company data, IBES,

Credit Suisse estimates

Source: Company data, the BLOOMBERG PROFESSIONAL™

service, Credit Suisse estimates

Figure 52: S-REITs and comparable business trusts by total assets

9.9

8.6

7.9

7.3

6.5

5.7

4.9

4.6

4.1

4.1

3.3

3.3

2.9

2.5

2.5

2.4

2.2

1.9

1.8

1.8

1.7

1.7

1.7

1.5

1.4

1.4

1.2

1.2

1.1

1.1

1.1

0.9

19.8

4.1

2.5

2.0

1.0

1.0

15.3

3.0

2.5

0.9

12.4

10.4

9.4

3.4

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

CM

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rk In

fra

SG REITS SG Business Trust Other AsianInfra Trust

AustralianInfra

S$

bn

NB: As of 31 December 2014. Source: Company data, Credit Suisse estimates

03 August 2015



Financial summary Figure 53: Keppel Infrastructure Trust: Summary of financials

S$'000 2014 2015E 2016E 2017E

Income statement

Revenue 715,954 707,099 719,166 743,611

Other income 4,110 2,920 2,920 2,920


Expenses (722,318) (693,845) (700,665) (709,783)



Tax (708) (4,250) (4,540) (4,663)

Profit after tax (7,347) 11,880 16,838 32,042

Attributable to:

Unitholders 16,696 37,035 41,577 50,753

NCI (24,043) (25,154) (24,739) (18,711)

EBITDA 232,912 249,782 250,580 262,854



Payout ratio 86% 110% 93% 88%

Balance sheet

Current assets 641,188 613,188 600,108 614,964


Total assets 4,503,029 4,360,864 4,224,447 4,105,742





Equity 1,573,808 1,439,188 1,309,526 1,195,068

Cash flow statement

Net profit (25,638) 16,087 21,335 36,662


Changes in working capital (48,654) (77,471) (81,180) (80,022)








NB: Year ending 31 Dec. Pro forma assuming acquisition and restructuring had occurred before 1 Jan 2014.

Adjusted EBITDA means reported EBITDA plus reduction in concession receivable and excluding non-

recurring expenses.

Source: Company data, Credit Suisse estimates.

03 August 2015



Figure 54: Keppel Infrastructure Trust: Pro-forma income statement

S$'000 2014 2015E 2016E 2017E

Revenue 715,954 707,099 719,166 743,611

Other income 4,110 2,920 2,920 2,920


Expenses

Fuel & electricity cost (220,425) (226,373) (231,556) (236,875)

Gas transportation costs (84,866) (86,883) (89,142) (91,459)

Depreciation & amortisation (116,671) (104,499) (101,578) (98,804)

Staff costs (26,505) (24,336) (24,868) (25,538)

O&M costs (75,965) (76,537) (76,789) (77,279)

Network operations and maintenance costs - - (2,408) (4,815)

Finance costs (131,413) (116,050) (117,922) (117,201)

Construction expenses - - - -

Trust management fees (8,868) (13,060) (9,658) (10,102)

Other operating expenses (57,605) (46,109) (46,744) (47,710)



Tax (708) (4,250) (4,540) (4,663)

Profit after tax (7,347) 11,880 16,838 32,042

Attributable to:

Unitholders 16,696 37,035 41,577 50,753

NCI (24,043) (25,154) (24,739) (18,711)

EBITDA 232,912 249,782 250,580 262,854

Concession receivable 47,140 47,467 47,807 48,161

Hydro Tasmania dispute settlement 6,900 - - -

Adjusted EBITDA 286,952 297,249 298,387 311,015



Payout ratio 86% 110% 93% 88%

NB: Year ending 31 Dec. Pro forma assuming acquisition and restructuring had occurred before 1 Jan 2014. Adjusted EBITDA means reported

EBITDA plus reduction in concession receivable and excluding non-recurring expenses. Source: Company data, Credit Suisse estimates.

03 August 2015



Figure 55: Keppel Infrastructure Trust: Balance sheet

S$'000 2014 2015E 2016E 2017E

Current assets 641,188 613,188 600,108 614,964

Cash and cash equivalents 381,465 352,524 337,423 348,186

Trade and other receivables 129,824 132,512 134,068 137,222

Service concession receivables 54,956 54,956 54,956 54,956

Derivative financial instruments 1,568 1,568 1,568 1,568

Finance lease receivables 8,638 8,638 8,638 8,638

Inventories 60,089 58,343 58,807 59,747

Other current assets 4,648 4,648 4,648 4,648



Finance lease receivables 133,137 133,137 133,137 133,137

Other non-current assets 1,736 1,736 1,736 1,736

Investment in JV 10,866 32,957 32,957 32,957

PPE 2,086,028 1,988,529 1,903,951 1,809,147

Intangibles 1,159,027 1,159,027 1,159,027 1,159,027

Total assets 4,503,029 4,360,864 4,224,447 4,105,742



Trade and other payables 182,207 185,240 187,685 192,638

Loan from a related party 3,479 3,479 3,479 3,479

Current tax liabilities 12,028 12,028 12,028 12,028

Borrowings 17,992 17,992 17,992 17,992



Borrowings 1,851,597 1,841,018 1,831,818 1,822,618

Notes payable to minority interest 260,000 260,000 260,000 260,000

Deferred tax liabilities 188,328 188,328 188,328 188,328

Provisions 22,465 22,465 22,465 22,465

Other non-current liabilities 289,079 289,079 289,079 289,079


Equity 1,573,808 1,439,188 1,309,526 1,195,068

Units in issue 2,061,585 2,061,585 2,061,585 2,061,585

Hedging reserve (205,888) (205,888) (205,888) (205,888)

Translation reserve (26,332) (26,332) (26,332) (26,332)

Capital reserve 38,710 38,710 38,710 38,710

Accumulated loss (550,911) (657,315) (759,177) (851,863)


NB: Pro forma assuming acquisition and restructuring had occurred on 31 Dec 2014


03 August 2015



Figure 56: Keppel Infrastructure Trust: Cash flow statement

S$'000 2014 2015E 2016E 2017E

Profit before tax (25,638) 16,087 21,335 36,662

Adjustments for: - - - -

Depreciation and amortisation 116,671 104,499 101,578 98,804

Finance costs 131,413 116,050 117,922 117,201

Interest income (2,294) (1,979) (2,101) (2,224)

Interest expense - - - -

FV gain on derivative financial instruments 3,467 - - -

PPE written off 33 - - -

Gain associated with purchase and cancellation of Basslink bonds (1,852) - - -

Gain on disposal of PPE (14) - - -

Transaction costs related to acquisition of subsidiaries 19,000 - - -

Share of results of JV 43 43 43 43

Unrealised translation loss 153 - - -


Changes in working capital

Inventories 677 1,746 (464) (940)


Trade and other receivables 11,579 (2,688) (1,557) (3,153)

Trade and other payables 20,093 3,033 2,445 4,953

Interest received 2,245 1,979 2,101 2,224

Interest paid (120,540) (116,050) (117,922) (117,201)

Income tax paid (1,466) (4,250) (4,540) (4,663)


CF from investing activities

Investment in and advance to JV (10,909) (22,091) - -

Purchase of PPE (17,331) (7,000) (17,000) (4,000)

Proceeds from sale of PPE 1,282 - - -

Acquisition on subsidiaries (255,000) - - -

Transaction costs related to acquisition of subsidiaries (19,000) - - -


CF from financing activities

Increase in restricted cash (7,318) - - -

Proceeds from notes issued by subsidiary to NCI 245,000 - - -

Proceeds from borrowings 1,796,846 - - -

Repayment of borrowings (1,112,405) (10,579) (9,200) (9,200)

Repayment of related party loan (1,200,000) - - -

Payment of loan upfront fees (20,526) - - -

Issuance of units, net of cost 517,000 - - -

Distributions paid to unitholders of the Trust (174,527) (143,439) (143,439) (143,439)

Distributions paid by subsidiary to minority unitholder (3,061) (3,061) (3,061) (3,061)






NB: Pro forma assuming acquisition and restructuring had occurred on 1 Jan 2014.


03 August 2015



Risks In assessing the risks, we look at a combination of industry as well as company-specific

risks. Keppel Infrastructure Trust’s cash earnings are exposed to availability of assets, and

higher-than-expected downtime could consequently affect our distributable cash flow

estimates.

Risks relating to enlarged KIT assets

Lower-than-expected availability of assets

If KMC does not ensure that the KMC Plant is able to meet certain availability and capacity

targets for Keppel Electric (the Toller), the Toller is not required to pay the fixed capacity

fee of S$9,000,000 per month to KMC in full, and may reduce the payments

proportionately. Therefore, while the CTA is designed to ensure that KMC does not take

on the market risks of owning and operating a power plant as an independent power

producer, KMC is still subject to the risks of the KMC Plant being unable to meet the

availability and capacity targets in order to receive the capacity fees in full. Assuming that

the CTA had been effective in 2014, the availability factor would have been 99.5%. This

was due to a single isolated incident involving one generating unit. Correspondingly, the

capacity fee if the CTA was in place in 2014 would have been S$107.3 mn. Operator

training and standard operating procedures have been improved to avoid recurrence.

Likewise, if the time required for repairs and maintenance of the plants exceeds the time or

frequency anticipated, the available incineration capacity for the Senoko Plant and the Tuas

DBOO Plant, or available production capacity for the Ulu Pandan Plant, or available

electricity generation capacity for the KMC Plant, may fall below their respective contracted

capacities. This could result in the Senoko Trustee, the Tuas DBOO Trustee, the Ulu

Pandan Trustee or KMC, not receiving the full payments due under the respective Senoko

ISA, the Tuas DBOO ISA, the NEWater Agreement or the CTA. As shown in Figure 57 and

Figure 58, both Senoko and Tuas DBOO have an availability factor above the requirement

since July 2010.

Figure 57: Senoko Time availability factor Figure 58: Tuas Time availability factor

50.00%

55.00%

60.00%

65.00%

70.00%

75.00%

80.00%

85.00%

90.00%

95.00%

100.00%

Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Senoko Time Availability Factor Requirement

50.00%

55.00%

60.00%

65.00%

70.00%

75.00%

80.00%

85.00%

90.00%

95.00%

100.00%

Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14

Tuas DBOO Availability Factor Requirement

Source: Company data Source: Company data

Changes to the tolling fee in the event of material adverse change

Both the Toller and KMC have the right to request a negotiation over an adjustment to the

tolling fee when a 'material adverse change' occurs, which includes changes to the vesting

contract level or vesting contract price. As the vesting contract price and level are subject

to change approximately every two years, there could be situations in which the tolling fee

03 August 2015



may reduce in the near future. However, although the Toller has the right to request an

adjustment of the tolling fee, it is not an automatic entitlement. KMC will be required to

negotiate with the Toller but it is not legally obliged to agree to any change to the tolling

fee if it is not in its best interests to do so.

Vesting contracts were implemented by the Energy Market Authority in January 2004 to

control the exercise of market power by the generation companies and promote efficiency

and competition in the electricity market. The vesting contracts commit the generation

companies to sell a specified amount of electricity (vesting contract levels) at a specified

price (the vesting contract price). As a result, it takes away incentives for the generation

companies to exercise their market power by withholding their generation capacity to push

up spot prices in the wholesale electricity market. Vesting contracts were allocated only to

generation companies that had made their planting decisions before the decision in 2001

to introduce vesting contracts. A generation company’s allocation is made in proportion to

the licensed capacity eligible for vesting contracts, as shown in Figure 59.

Figure 59: Maximum capacity eligible for vesting contracts

Genco Maximum capacity (MW)

Seraya 3,100

Senoko 3,300

Tuas 2,670

Sembcorp 785

Keppel 470

PacificLight Power 800

Source: Energy Market Authority

Following a biennial review, EMA has announced that the vesting contract level will be

progressively reduced from 40% to 30% for 1H15, 25% for 2H15, and 20% for 2016. This

was driven by the view that it can be lowered to the LNG vesting level (about 16%) for

2015–16 without market power concerns. The gradual reduction is intended to allow the

respective retail arms to adjust their hedging portfolios and contract cover as the vesting

contract level is reduced from 40% to 20%. In particular, it was noted that there is no intent

for vesting contracts 'to provide revenue certainty to the gencos nor is the sustainability of

gencos' revenue a factor that should be taken into account when setting the VCL.”

Figure 60: Vesting contract level to fall to 30% in 1H15, 25% in 2H15, and 20% in 2016

Period Vesting contract level

1 Jan 2011 - 31 Dec 2011 60%

1 Jan 2012 - 30 Jun 2013 55%

1 Jul 2013 - 31 Dec 2013 50%

1 Jan 2014 - 31 Dec 2014 40%

1 Jan 2015 - 30 Jun 2015 30%

1 Jul 2015 - 31 Dec 2015 25%

1 Jan 2016 - 31 Dec 2016 20%

Source: Energy Market Authority

As shown in Figure 61, the vesting contract price of S$160/MWh is at a 81% premium to

the USEP of S$89/MWh in 1Q15. While the average USEP rose above the vesting price

for certain periods in 2Q09-1Q12, the average USEP has been consistently below the

vesting price since 3Q12 as new generation capacity has been added to the market.

03 August 2015



Figure 61: Vesting contract levels will decline to 30% in 1H15, 25% in 2H15, and 20% in

2016, which is likely to lead to a fall in blended spreads

10%

20%

30%

40%

50%

60%

70%

0

100

200

300

400

500

600

Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15

Vesting Price ($/MWh) (LHS) Uniform Singapore Electricity Price ($/MWh) (LHS)

Source: Energy Market Authority, Energy Market Company

Contract renewal risk

After the initial 15-year term, the toller, Keppel Electric, has certain rights to provide a

matching offer if KMC proposes to source for a third party to enter into a new CTA. If KMC

cannot find a third party within a prescribed time period, the toller is given an option (but has

no obligation) to extend the duration of the CTA by a ten-year period on the same terms. If

the CTA is not renewed and KMC is unable to find other tollers, KMC is potentially exposed

to market risk. However given the strategic nature of power plants in Singapore, with

difficulties to replicate due to land constraints, construction cost and other restrictions, we

believe that the risk of KMC being exposed to market risk after 15 years is low.

Variability in CityGas' cash earnings

There is variability in CityGas' cash earnings and it can be affected by movements in fuel

costs. Fuel costs consist mainly of the cost of natural gas. This is, in turn, recoverable from

the fuel component of the town gas tariffs determined by the EMA. On a long-term basis,

changes in fuel costs are expected to have no impact on CityGas as fuel costs are passed

through to end-users. However, at any point in time, the actual tariff for town gas may not

exactly match fuel costs as tariff changes are subject to a periodic regulatory process

whereas fuel prices change daily. The short-term impact may therefore be evident if there

are changes in fuel prices.

In addition, if the conditions in the gas retailer licence granted by EMA to CityGas require

any change in town gas tariffs, they have to be approved by EMA. On certain occasions,

CityGas has been allowed by EMA to adjust the tariff to take into account increases in fuel

prices. In the event that EMA does not allow CityGas to increase its tariff for whatever

reason, CityGas may not be able to generate sufficient revenue to cover its increased

costs which would adversely affect its earnings.

CityGas may be impacted by change in regulatory structure of gas industry in

Singapore

There have been discussions between CityGas, SP PowerGrid and EMA on the proposed

conversion of the low-pressure piped town gas supply network in Singapore to carry

natural gas. If implemented, CityGas could incur substantial conversion costs. EMA has

started a public consultation on gas conversion. If approved, the conversion project is

expected to take six to seven years to complete, comprising approximately one-and-a-half

years for project preparation and a further five years for project implementation. Upon

03 August 2015



approval of the project it is expected that PowerGas will carry out the conversion of the

gas network from carrying town gas to natural gas, while CityGas will carry out the

conversion of the gas appliances of its customers. CityGas will be responsible for ensuring

that appliances operate satisfactorily and safely on natural gas at the point of conversion.

CityGas estimates that the costs of conversion to natural gas would be approximately

S$200 mn over an estimated period of six to seven years. If conversion occurs, CityGas

intends to explore ways to raise financing, including debt financing, to meet those costs.

CityGas faces price competition from retailers of LPG and electricity

CityGas faces price competition from retailers of LPG, which is an alternative product used

by consumers in Singapore for cooking. The price of CityGas’ town gas relative to the

price of LPG could affect the revenue which CityGas generates from certain segments of

the commercial market in Singapore if its customers decide to use LPG instead of town

gas due to the lack of price competitiveness on the part of town gas supplied by CityGas.

Figure 62: Town gas tariffs versus electricity tariffs

0

5

10

15

20

25

30

4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14

Town Gas (cents/kWh) Electricity (cents/kWh)

Source: EMA

SingSpring may be impacted by lower-than-expected offtake of desalinated water

PUB is not required to commit to any minimum offtake of desalinated water. If PUB

reduces its offtake, SingSpring’s variable revenue will be negatively impacted. The

Singspring Plant is designed to produce water cost-effectively within a certain range of the

plant’s daily production capacity. If PUB chooses to take desalinated water at a rate

outside of the design range, SingSpring’s cash flow would be negatively affected from the

reduced variable revenue and increased operational costs associated with producing

desalinated water in a less efficient manner. The reliability of the plant may also be

negatively impacted.

Commercial Risk Sharing Mechanism of Basslink

While the stated intention of this mechanism is to have a neutral impact on both parties

over the longer term, there could be short-term fluctuations in CRSM adjustments due to

periods of droughts or other seasonal variations, or other disruptions affecting Victorian

power generators or transmission network or the Victorian electricity market generally.

Such fluctuations may result in an outflow of payment from Basslink to Hydro Tasmania.

This may adversely affect the revenue of Basslink under the Basslink Services Agreement

and, hence, may consequently have a material adverse effect on the Enlarged Trust’s

financial results and, ultimately, distributions to unitholders of the Enlarged Trust.

03 August 2015



Fees payable to KMC O&M under the OMSA are not fixed

The OMSA is not a fixed price agreement and there is potential for the amount payable by

KMC to KMC O&M to exceed the budgeted amounts, such as costs incurred for

unplanned maintenance which is not due to the fault of KMC O&M. KMC O&M will not be

liable for outages or breakdowns if KMC does not meet unforeseen expenses outside

KMC O&M’s control. This may lead to KMC’s profits being eroded if it is unable to manage

KMC O&M’s expenses. However, cost control mechanisms have been included in the

OMSA to limit the extent of such costs increase, including:

■ KMC is able to reimburse all costs during an initial two-year period to achieve a better

understanding of the budgeting and cost structures of the project such that it is better

able to prevent cost overruns from the third year onwards;

■ All reimbursable expenses have to meet the requirements of the defined term

'reimbursable expenses items', except any costs caused by KMC O&M’s negligence or

breach of the OMSA; and

■ KMC O&M is only able to incur additional reimbursable expenses beyond the amounts

under the AOMP with KMC’s consent

FX risks

Keppel Infrastructure Trust is exposed to Australian Dollar (AUD) foreign currency risk as

its Australian subsidiaries make its distribution in AUD, which affects the amount of SGD

distributions that KIT is able to pay its unitholders. Borrowing in Australian currency

provides a natural currency hedge against FX exposure arising from business cash flows.

Credit Suisse has AUD/USD forecast of 0.71 in three months and 0.68 in 12 months.

According the Credit Suisse FX team, the market is currently pricing in a modest 18%

probability of an August RBA rate cut, which we think is too low and see scope for a

dovish surprise to weigh on the AUD. Iron ore and oil prices have fallen 20% and 15%,

respectively, since early June, putting renewed pressure on Australia’s terms of trade.

RBA Governor Stevens has also reiterated that additional rate cuts remain on the table,

but that they would need to create a sustained benefit to the economy. However, as cash

flow from Basslink is not used for distribution to unitholders currently, we do not expect a

further weakening in the AUD to have an impact on near-term DPU for KIT.

Figure 63: AUD versus USD and AUD versus SGD

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Series1 AUD/SGD

Source: the BLOOMBERG PROFESSIONAL™ service

03 August 2015



Appendix I: Management profile Key management personnel

Mr Khor Un-Hun, Chief Executive Officer (CEO)

Mr Khor joined Keppel Infrastructure Holdings Pte Ltd (KI) as Development Director in

April 2014, where he worked on KI’s various business development initiatives. He was

appointed CEO of the Trustee-Manager since May 2014, where he is responsible for

working with the Board to determine the strategy for Keppel Infrastructure Trust (KIT). He

works with other members of the Trustee-Manager’s management team to execute the

stated strategy of the Trustee-Manager. Prior to joining KI, Mr Khor spent most of his

career in banking, during which he was involved in a wide range of mergers and

acquisitions, financial advisory, capital markets and debt transactions across different

sectors throughout Asia.

Mr Koh Hee Song, Senior Adviser

As a Senior Adviser since June 2010, Mr Koh works with the other members of the

Trustee-Manager’s management team to evaluate potential acquisitions and/or

divestments and recommend and analyse potential asset enhancement initiatives from a

technical perspective. He also advises the management team on technical matters relating

to the business of KIT as and when circumstances require. Prior to this, Mr Koh was a

Senior Adviser to Keppel Seghers Engineering Singapore Pte Ltd in matters pertaining to

solid waste management projects.

Mr Lionel Chua, Chief Financial Officer (CFO)

Mr Chua, appointed CFO since May 2013, is responsible for the Trustee-Manager's and

KIT’s financial and reporting functions, including accounting, taxation, treasury and

compliance. Mr Chua has more than 17 years of experience in financial and management

accounting where he has held senior positions, including vice president (finance) of The

Ascott Group Limited and CFO of Mary Chia Holdings Limited. He has also worked at

CapitaLand Group and Singapore Airlines Limited. Prior to joining the Trustee-Manager,

Mr Chua was the financial controller at Keppel REIT Management Limited.

Ms Foo Chih Chi, Senior Investment Manager

As a Senior Investment Manager since June 2010, Ms Foo is responsible for identifying

and evaluating potential acquisitions with a view to enhance KIT’s portfolio. Ms Foo has

over ten years of experience in investment evaluation, corporate strategy and new

business development. She joined Keppel Corporation in 2000 where, as a part of Keppel

Corporation’s strategic development and planning division, she was responsible for

corporate strategy and new business development.

Mr Liew Yuen Cheng, Senior Asset Manager

As the Senior Asset Manager since June 2010, Mr Liew implements asset management

plans for KIT’s asset portfolio by engaging the Operations and Maintenance contractor to

ensure that the required levels of service standards are met and also to enhance

operational performance. He works with the Operations and Maintenance contractor in

asset enhancement and upgrading projects as well.

Mr Liew joined Keppel FELS Limited in 1998, where he held various positions in the

production, engineering and marketing departments. From 2004 to 2008, he was

seconded to Caspian Shipyard Company Ltd in Azerbaijan as a commercial manager.

Prior to joining the Trustee-Manager, he was a project manager for EPC rig construction

projects in Keppel FELS Limited in Singapore.

03 August 2015



Board of directors of the trustee-manager

Six of eight of the board members are independent. Board members and roles effective

from 1 August 2015.

Koh Ban Heng, Independent director and chairman of the board of directors of KIFM

Mr Koh is currently an independent director of Keppel Infrastructure Holdings Pte Ltd, Linc

Energy Ltd and Tipco Asphalt PLC. He served as CEO and executive director at SPC for

almost eight years (from August 2003 to June 2011) and subsequently as senior adviser

for SPC after his retirement.

Mr Mark Andrew Yeo Kah Chong, Independent Director and Chairman of the Audit

Committee of KIFM

Mr Yeo is currently an adviser to Al Fahim Holdings LLC and is a director of IP Global

Limited. Prior to that, he was Managing Director of the privately held IMC Pan Asia

Alliance. Mr Yeo was a former independent director of CitySpring Infrastructure

Management Pte Ltd, which is the former Trustee-Manager of CitySpring Infrastructure

Trust (CIT). He was also the former Chairman of CIT's Audit Committee and a member of

its Conflicts Resolution Committee.

Mr Kunnasagaran Chinniah, Independent Director

Mr Chinniah is currently a director of Changi Airport International, the international

subsidiary of Changi Airport Group, and sits on the boards of Edelweiss Financial Services

Limited (EFSL) and two of its subsidiaries. Mr Chinniah was previously the Managing

Director / Global Co-Head of Portfolio, Strategy and Risk group with GIC Special

Investments (GIC SI), the private equity arm of GIC Private Limited, before retiring from

the role in September 2013.

Ms Quek Soo Hoon, Independent director

Ms Quek is currently an Operating Partner at iGlobe Partners (II) Pte Ltd and a

Distinguished Fellow of the International Association of Insurance Supervisors, with

directorship with organisations such as Singapore Deposit Insurance Corporation Ltd,

Special Needs Trust Company Ltd, School of the Arts and Enactus Singapore.

Mr Thio Shen Yi, Independent Director and Chairman of the Nominating and

Remuneration Committee of KIFM

Mr Thio is a Senior Counsel and joint managing director of TSMP Law Corporation. He is

also the president of the Law Society of Singapore and member of its Ethics Committee.

Prior to this, he was admitted as an advocate and solicitor of the Supreme Court of

Singapore in 1993 before being appointed as a fellow of the Singapore Institute of

Arbitrators in 2006 and Senior Counsel by the Selection Committee under the Legal

Profession Act (Chapter 161) in 2008.

Mr Daniel Cuthbert Ee Hock Huat, Independent Director and Chairman of the

Conflicts Resolution Committee of KIFM

Mr Ee is currently chairman of CSIM and a director of Citibank Singapore Limited. He is

also the deputy chairman of the Securities Industry Council and a Fellow and Council

Member of the Singapore Institute of Directors. Prior to this, he was the Chairman of Gas

Supply Pte Ltd from 2002 to 2010, on the board of National Environment Agency from

2006 to 2012 and a Member of the Corporate Governance Council from 2010 to 2012.

Dr Ong Tiong Guan, Non-executive and Non-Independent Director of KIFM

Dr Ong is currently the CEO of Keppel Infrastructure Holdings Pte Ltd and is responsible

for KepCorp's power generation and gas business. Prior to this, he was appointed an

executive director of Keppel Energy in 1999 and became managing director of Keppel

03 August 2015



Energy in 2003. Dr Ong was chairman of the Singapore Electricity Pool Executive

Committee for its financial year 2002/2003.

Mr Alan Tay Teck Loon, Non-Executive and Non-Independent Director of KIFM

Mr Tay is Executive Director, Business Development of Keppel Infrastructure Holdings Pte

Ltd. Prior to joining Keppel Group, he was head of Southeast Asia for JPMorgan Asset

Management, Global Real Assets – Asian Infrastructure, a US$860 mn private equity fund

focused on infrastructure and related resources investments across Asia.

03 August 2015



Appendix II: Payment structure Payment structure

Figure 64 summarises the payment structure of key KIT assets.

Figure 64: Payment structure

Asset Counter

party

Type Amount/ Name Conditions/ Details Adjustments

KMC Keppel

Electric

Fixed S$108 mn p.a. Payable in full if KMC able to meet availability and capacity target

tests

No

Fixed S$25.24 mn p.a. Pass-through cost borne by Toller Singapore CPI

Senoko WTE NEA Fixed Capital cost Payable in full if the available incineration capacity of Senoko Plant is

greater than or equal to 2,100 t/day

No

Fixed O&M Covers payment to Keppel Seghers, property tax, trust management

fees, licensing fees and insurance costs incurred

Singapore CPI

Variable O&M Based on actual quantity of waste delivered to Senoko Plant Singapore CPI

Variable Electricity

generation

incentive payment

Based on % of revenues from the volume of electricity exported to

NEMS

No

Variable Reimbursement For energy market charges payable by Senoko Trustee as a

participant in the NEMS

No

Tuas DBOO NEA Fixed Capital cost Payable in full if the available incineration capacity of Tuas DBOO

Plant is greater than or equal to 800 t/day

No



Singapore CPI

Variable O&M Based on actual quantity of waste delivered to Tuas DBOO Plant Singapore CPI

Variable Electricity

generation

incentive payment

Based on % of revenues from the volume of electricity exported to

NEMS

No

Variable Reimbursement For energy market charges payable by Tuas DBOO Trustee as a

participant in the NEMS

No

Ulu Pandan PUB Fixed Capital cost Payable in full if the available production capacity of Ulu Pandan Plant

is greater than or equal to 148,000 m3 per day

No



Singapore CPI

Variable O&M Based on actual quantity of NEWater delivered to PUB Singapore CPI

Variable Power payment Based on usage power charges incurred Fuel price index

SingSpring PUB Fixed S$23.6 p.a. Payable in full for making available the full water capacity of 136,380

m3/ day

No

Fixed O&M Covers payment to Hyflux Engineering Singapore CPI

and forex

Fixed Energy cost To offset part of the energy costs incurred Singapore CPI

Variable O&M Payable to Hyflux Engineering, based on volume of water supplied Singapore CPI

and forex

Variable Energy cost Based on volume of water supplied Singapore CPI

Basslink Hydro

Tasmania

Fixed Basslink Facility

Fee

Payable in full if Basslink's cumulative availability is equal to or

greater than 97%

Quarterly to

reflect 65% of

Australia CPI

Fixed Incentive

availability

Payable if the interconnector is fully available during periods when

Victorian electricity prices are at their highest

No

Variable FIRD A 25-year interest rate hedge provided by Hydro Tasmania No

Variable CRSM Based on difference between high and low Victorian electricity pool

prices, subject to a limit of +25% and -20% of the Facility Fee

No

Source: Company data as of March 2015

03 August 2015



Appendix III: Fee structure Details of the proposed fee structure of the Trustee-Manager for the Enlarged Trust and

CSIM’s existing fee structure for CIT are shown in Figure 65.

Management fee comprises a base fee of S$2.0 mn p.a. subject to increase each year by

such percentage increase (if any) in the average of the monthly Singapore CPI for the 12

calendar months immediately preceding the beginning of each financial year over the

average of the monthly Singapore CPI for 2010. The base fee for the financial year ended

31 December 2014 was approximately S$2.25 mn.

Performance fee is charged at 4.5% p.a. of all the cash inflow received by the Enlarged

Trust from its sub-trusts and subsidiary companies.

Acquisition fee is charged at 0.5% of the enterprise value (“EV”) of any investment

acquired from Sponsor Group Entities and 1.0% of the EV of any investment acquired

from non-Sponsor Group Entities. Divestment fee is charged at 0.5% of the EV of any

investment sold by the Enlarged Trust.

Keppel Infrastructure, the sponsor of KIT, has agreed that the Trustee-Manager shall only

charge its acquisition fee of S$4.335 mn (being 0.5% of 51% of the enterprise value of the

KMC acquisition) and any applicable taxes for the KMC acquisition and shall waive its

divestment fee for the Cityspring Contract. Temasek, the sponsor of CIT and owner of

CSIM, has agreed that CSIM will not receive any compensation for relinquishing its role as

trustee-manager of CIT.

Figure 65: Fee structure of Enlarged Trust

Types of fees Current fee structure of CSIM for CIT Proposed fee structure of the replacement Trustee-

Manager for the Enlarged Trust

Base fee 1% p.a. of CIT's market capitalisation subject to a

minimum of S$3.5 mn p.a.

S$2.0 mn p.a. subject to increase each year by such %

increase (if any) in the average of the monthly Singapore

CPI for the 12 calendar months immediately preceding

the beginning of each financial year over the monthly

Singapore CPI for 2010. The base fee for the Trustee-

Manager for the financial year ended 31 December 2014

is approximately S$2.25 mn

Performance fee 20% of outperformance measured by comparing the total

return on CIT units against the total return of the MSCI

Asia Pacific ex-Japan Utilities Index, after taking into

account the underperformance in the prior period

4.5% p.a. of all the cash inflow received by the Enlarged

Trust from its subsidiaries, associates, sub-trusts and

investments.

Mergers and acquisitions,

and disposal fees

NA Acquisition fee of 0.5% of the EV of any investment

acquired from the Sponsor Group Entities, and 1.0% of

the EV of any investment acquired from non-Sponsor

Group Entities.

Divestment fee of 0.5% of the EV of any investment sold

by the Enlarged Trust.


03 August 2015



Appendix IV: Corporate structure Figure 66 shows the structure of the Enlarged Trust following the KMC acquisition and

combination with Cityspring Infrastructure Trust. Keppel Energy holds the remaining 49%

equity interest in KMC. Osaka Gas Singapore Pte Ltd holds the remaining 49% equity

interest in City OG. Hyflux holds the remaining 30% equity interest in SingSpring. WDC

Development Ptd Ltd, a wholly owned subsidiary of Shimizu Corporation, holds the

remaining 49% equity interest in DC One.

Figure 66: Structure of Enlarged Trust


Businesses under Keppel Corp

The Keppel Group of Companies includes Keppel Offshore & Marine, Keppel

Infrastructure, Keppel Telecommunications & Transportation (Keppel T&T) and Keppel

Land, among others.

Keppel Infrastructure Trust's sponsor, Keppel Infrastructure, will drive the Group's strategy

to invest in, own and operate competitive energy and related infrastructure. Keppel

Infrastructure aims to tap the expertise and technology of its engineering business to grow

its power and gas, environmental and energy efficiency businesses.

03 August 2015



Figure 67: Keppel Corporation's business divisions

NB: As of July 2015 Source: Company data

03 August 2015



Companies Mentioned (Price as of 30-Jul-2015)

AIMS AMP Capital (AART.SI, S$1.485) APA Group (APA.AX, A$8.97) APTT (ASIA.SI, S$0.825) Ascendas India (AINT.SI, S$0.925) Ascendas REIT (AEMN.SI, S$2.42) Ascott Residence Trust (ASRT.SI, S$1.27) AusNet Services (AST.AX, A$1.36) BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIFu.BK, Bt10.3) CDL Hospitality Trusts (CDLT.SI, S$1.56) Cache Logis (CALT.SI, S$1.09) Cambridge Ind (CMIT.SI, S$0.66) CapitaRetail (CRCT.SI, S$1.625) Capitaland Commercial Trust (CACT.SI, S$1.42) Capitaland Mall Trust (CMLT.SI, S$2.05) DUET Group (DUE.AX, A$2.19) Far East H-Trust (FAEH.SI, S$0.71) First REIT (FRET.SI, S$1.36) Fortune REIT (FORT.SI, HK$8.31) Frasers (FRHO.SI, S$0.815) Frasers Centrepoint Trust (FCRT.SI, S$2.04) Frasers Commercial Trust (FRCR.SI, S$1.435) HKBN (1310.HK, HK$8.3) HKT Trust (6823.HK, HK$9.56) Hutchison Port Holdings Trust (HPHT.SI, $0.6) Keppel DC REIT (KEPE.SI, S$1.08) Keppel Infrastructure Trust (KEPL.SI, S$0.52, OUTPERFORM, TP S$0.57) Keppel REIT (KASA.SI, S$1.07) LMIR Trust (LMRT.SI, S$0.355) MGCCT (MAPE.SI, S$0.99) Mapletree Commercial Trust (MACT.SI, S$1.38) Mapletree Industrial Trust (MAPI.SI, S$1.54) Mapletree Logistics Trust (MAPL.SI, S$1.09) OUE C-REIT (OUEC.SI, S$0.71) OUE Hospitality Trust (OUER.SI, S$0.91) PLife REIT (PWLR.SI, S$2.41) Religare Health (RELI.SI, S$1.04) SPH REIT (SPHR.SI, S$1.02) Sabana Shariah (SABA.SI, S$0.83) Soilbuild (SBSR.SI, S$0.845) Spark Infrastructure Group (SKI.AX, A$1.9) Starhill Global (STHL.SI, S$0.855) Suntec REIT (SUNT.SI, S$1.68) TRUEGIF (TRUEIFu.BK, Bt12.7) Viva Industrial (VIVA.SI, S$0.795)

Disclosure Appendix

Important Global Disclosures

I, Gerald Wong, CFA, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.

Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.

Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.

*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, wi th Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, wh ich was in operation from 7 July 2011.

03 August 2015



Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:

Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.

Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 50% (28% banking clients)

Neutral/Hold* 34% (41% banking clients)

Underperform/Sell* 13% (38% banking clients)

Restricted 3%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.

Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.html

Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Price Target: (12 months) for Keppel Infrastructure Trust (KEPL.SI)

Method: Our target price of S$0.57 for Keppel Infrastructure Trust is based on a discounted cash flow over the contract duration of assets, assuming a cost of equity of 6.25%

Risk: Key risks to our target price of S$0.57 for Keppel Infrastructure Trust include lower-than-expected availability of assets, changes to the KMC tolling fee in the event of material adverse change, variability in City Gas cash earnings, change in regulatory structure of gas industry in Singapore, interest rate and FX risks.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (KEPL.SI, CMLT.SI, OUER.SI, SPHR.SI, MACT.SI, CACT.SI, KEPE.SI, SUNT.SI, MAPL.SI, KASA.SI, AEMN.SI, FCRT.SI, ASRT.SI, 1310.HK, TRUEIFu.BK, SKI.AX, DUE.AX, HPHT.SI) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse provided investment banking services to the subject company (KEPL.SI, CMLT.SI, OUER.SI, SPHR.SI, MACT.SI, CACT.SI, KEPE.SI, KASA.SI, FCRT.SI, ASRT.SI, 1310.HK, TRUEIFu.BK) within the past 12 months.

Credit Suisse has managed or co-managed a public offering of securities for the subject company (KEPL.SI, KEPE.SI) within the past 12 months.

Credit Suisse has received investment banking related compensation from the subject company (KEPL.SI, CMLT.SI, OUER.SI, SPHR.SI, MACT.SI, CACT.SI, KEPE.SI, KASA.SI, FCRT.SI, ASRT.SI, 1310.HK, TRUEIFu.BK) within the past 12 months

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (KEPL.SI, CMLT.SI, CDLT.SI, OUER.SI, SPHR.SI, MACT.SI, CACT.SI, KEPE.SI, SUNT.SI, MAPL.SI, KASA.SI, AEMN.SI, FCRT.SI, ASRT.SI, 6823.HK, 1310.HK, TRUEIFu.BK, SKI.AX, DUE.AX, HPHT.SI) within the next 3 months.

As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (CDLT.SI, CACT.SI).

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For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (KEPL.SI, CMLT.SI, CDLT.SI, OUER.SI, SPHR.SI, MACT.SI, CACT.SI, KEPE.SI, MAPI.SI, SUNT.SI, MAPL.SI, KASA.SI, AEMN.SI, FCRT.SI, ASRT.SI, BTSGIFu.BK, 1310.HK, TRUEIFu.BK, SKI.AX, APA.AX, AST.AX, DUE.AX, HPHT.SI) within the past 12 months

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.

Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (KEPL.SI, OUER.SI, SPHR.SI, MACT.SI, CACT.SI, KEPE.SI, ASRT.SI, TRUEIFu.BK, SKI.AX, APA.AX, AST.AX) within the past 3 years.

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

For Thai listed companies mentioned in this report, the independent 2014 Corporate Governance Report survey results published by the Thai Institute of Directors Association are being disclosed pursuant to the policy of the Office of the Securities and Exchange Commission: BTS Rail Mass Transit Growth Infrastructure Fund () , TRUEGIF ()

To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Credit Suisse AG, Singapore Branch .......................................................................................................... Gerald Wong, CFA ; Shih Haur Hwang

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

03 August 2015



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