Investment Banking Class Project

STRICTLY CONFIDENTIAL
Rainforest
capital
Rainforest Capital Transportation M&A
Discussion of Possible Acquisition for SIA
March 2013
Agenda
Section!
1. Overview of the Global Aviation Industry"
2. Our Understanding of SIAs Current Position"
3. Investment Opportunity in China"
4. Deal Motivation"
5. Preliminary Valuation on China Eastern Airlines"
6. Transaction Structure and Considerations"
7. Deal Team"
Appendix!
A. Our Understanding of SIA"
B. Our Understanding of China Eastern Airlines"
C. List of Overlapping Routes"
D. List of Acquisition Targets Profiles"
E. Valuations"
Proposed Transaction
An opportunity for SIA to invest a significant stake in China Eastern Airlines to
become a major strategic shareholder!
Shareholding Profile!
China National" Jin Jiang 3.0%"
Aviation Fuel,"
3.7%"
Business Profile!
Proposed Transaction!
One of the Big Three airlines in China"
50% Cash, 50% Debt"
Primarily focus on domestic flights: 70%

Domestic and 30% International"
Base mainly out Shanghai Pudong Airport and
Hongqiao Airport"
Operates a fleet of 334 aircrafts"
Fly to over 120 destinations in China
around the world"
Structure can be negotiated, here we assume:"

50% Cash, 50% Debt"
Stake of China Eastern is acquired
through a private placement"
Existing A and H
Shareholding Base !
New Issued
Shares to SIA!
67%
25%
CEA!
Industry trends!
Others"
29.6%"
Shanghai"
Alliance "
3.8%"
and
Private Placement"
CEA "
Holding"
59.9%"
China Eastern Air Holding Company!

Controlling Shareholders of CEA"
Owned by Government of China"
Likely to require control after proposed
transaction"
Shanghai Alliance Investment Company!
Private equity/Venture Capital Arm of
Shanghai Municipal Government "
China National Aviation Fuel!
Invested in CEA in 2009 through private
placement"
"
Rising competition from middle eastern carriers

likely to erode market share of other full service
carriers"
Liberalization of industry continues to fuel
competition in the aviation space, particularly
affecting short to medium haul routes"
Global aviation outlook to remain pessimistic as
poor business climate in Europe continues to
drag down demand of business travel"
Travel demand of emerging market continues to
grow as these countries continue to drive the
global recovery "
8%
25% stake to be acquired. Singapore Airlines

would be the 2nd largest shareholder in China
Eastern"
Board and management representation for
Singapore Airlines is very likely"
A collaboration agreement can be set up with
China Eastern group to cross-refer business"
Pro forma shareholding!
Others"
24%"
CEA
Holding"
51%"
SIA"
25%"
SECTION 1"
Overview of the Global Aviation

Industry"
Rainforest
capital
Overview of Global Aviation Industry

Airlines face weak profitability and growth!
Global aviation revenues rebounded from trough!
Despite revenue growth, airline profitability remains depressed

by high fuel costs. Jet fuel prices increased 79% from their low
in 2009 to 2011"
The adverse economic environment has affected the premium
segment the most. Growth in passengers remains subdued
due to weak business confidence levels and depressed
corporate travel spending budgets"
US$ bn"
600"
500"
Industry value"
Airline revenues declined 15.6% y-o-y in 2009 due to the

economic recession. Sales have since rebounded but future
growth remains uncertain"
400"
300"
200"
100"
0"
2007"
2008"
2009"
2010"
2011"
Source: MarketLine!
Airline profitability facing pressures from fuel price!

US$/bbl"
140"
US$ bn"
30"
%"
20"
120"
10"
80"
0"
2007"
2008"
-10"
-20"
-30"
Source: IATA, Bloomberg!
2009"
2010"
2011"
60"
40"
10"
YoY growth"
100"
Jet fuel price"
20"
Industry net profit"
Tepid growth in premium passengers!
0"
Jan 2007"
May 2008"
Sep 2009"
Feb 2011"
Jun 2012"
-10"
-20"
20"
0"
-30"
Source: IATA!
5
Intensifying Competition from Middle Eastern Carriers

Middle Eastern carriers are gaining market share !
These airlines have rapidly increased the number of

destinations served over the past 5 years, especially within
Asia and Europe. Flight destinations within Asia and Europe
have increased by 33% and 63% respectively"
With their home bases in close proximity to these regions,
Middle Eastern carriers are able to capitalize on strong travel
demand from their home countries to destinations in Asia and
Europe"
These carriers are also the main beneficiaries of transfer traffic
from other regions to various parts of Asia and Europe"
Middle Eastern carriers have made strong orders of new
generation aircraft such as the Boeing 777-300 ER and Airbus
A380 Super jumbo, making their fleet younger and more fuel
efficient "
YoY growth in traffic"
Middle Eastern carriers compete aggressively in the long haul

segment by offering consumers lower prices for premium
seats. This has allowed them to gain market share in markets
like Australia at the expense of competitors"
%"
14"
12"
10"
8"
6"
4"
2"
0"
Africa"
Asia Pacific" Europe"

Nov-12"
Source: IATA!
Latin
Middle East" North
America"
America"
Dec-12"
Destinations served by Middle Eastern carriers!

160"
No. of destinations"
Middle Eastern carriers have experienced strong growth in

recent years. In 2012, they contributed 33% of the growth in
international travel demand"
Highest growth in international passenger traffic!
140"
120"
100"
80"
60"
40"
20"
0"
Africa"
Asia"
Europe"
2007"
North
Oceania" South
America"
America"
2012"
Source: CAPA!
6
Liberalization of Industry has Fueled Competition

Open Sky Policy increases price competition!
Surge in number of new LCCs since OSP proposal !
The ASEAN Open Sky Policy (OSP) is likely to spur greater

price competition, forcing airlines to look for new sources of
growth"
It is on track to be implemented in 2015 and member countries

in ASEAN are likely to agree to lower price controls and
capacity constraints on flight routes. Countries are also likely to
agree to greater freedom of rights for airlines"
8"
No. of New LCCs"
The OSP was proposed during the ASEAN Economic Summit

in 2003. This initiative seeks to promote trade and competition
in the regions airline industry"
9"
"
5"
4"
3"
1"
0"
2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012"
Source: Company data!
Traffic growth lagging for national carriers!
Since the OSP was announced, the number of new low cost
carriers set up each year has increased substantially"
%!
30"
YoY growth in traffic"
While passenger traffic at ASEAN airports are expected to

increase, individual airline market shares are going to
decrease with more competition. This trend will also affect
national carriers who dominate key air hubs in their respective
countries"
6"
2"
The introduction of the OSP will further increase competition

on flight routes within ASEAN, especially in the budget
segment"
Greater competition has led to lower prices in the budget

segment. Airline carriers such as AirAsia and Tiger Airways
will face greater pressures to improve productivity and aircraft
utilization, or risk declining profitability as prices get depressed"
7"
20"
10"
0"
2001"
2003"
2005"
2007"
2009"
2011"
-10"
National Airports"
National Carriers"
-20"
Source: Airport International Council, company data!
7
The Emerging Markets Growth Story

Positive macro trends point to growth!
Decoupling of GDP growth rates!
With increasing income levels, growth in demand for both

domestic and international air travel in emerging markets like
China and India is expected to outweigh growth in developed
countries "
10%"
8%"
GDP growth"
Air travel demand is driven by increases in income levels.

Since 2000, real GDP growth in emerging economies has
averaged 6%, far outpacing the 2% annual growth for
developed countries"
6%"
4%"
2%"
0%"
-2%"
Total RPK market share for developing countries is expected to

increase 51% by 2029"
-4%"
2000"
2002"
2004"
2006"
2008"
2010"
Emerging Economies"
Mature Economies"
2012"
Source: CEIC!
Further growth headroom for in flights per capita!
Emerging economies expected to dominate RPK!

8"
100%"
7"
6"
5"
4"
3"
2"
1"
0"
IN" CH" PH" ID" TH" MY" SK" NZ" BR" JP" SG" AY"
Global RPK market share"
50"
45"
40"
35"
30"
25"
20"
15"
10"
5"
0"
Flights/head"
GDP per capita"
US$"
32%
80%"
60%"
76%
Source: National Bureau of Statistics!
55%
40%"
20%"
68%
24%
37%
45%
0%"
1970"
2011 per capita GDP"
63%
2011 flights per capita"
1990"
Emerging Economies"
Source: Airbus!
2012"
2029E"
Mature Economies"
8
SECTION 2"
Our Understanding of SIAs Current

Position"
Rainforest
capital
Lackluster Performance Following the Economic Crisis (1)

Recovery has failed to meet managements expectations!
Passenger base has recovered slightly post crisis..!
Since 2007, SIA passenger base has been recovering from the
2009 low of 16.5mn albeit at a gradual pace"
This capacity underutilization problem can be mainly attributed

to the East Asia route, which saw the greatest fall of 2.4% in
passenger load factor between 2010 and 2011"
20"
19.1"
Passengers Carried"
However, passenger recovery has fallen short of

managements expectation as evident in the lag of FY 2011
RPK growth against ASK growth "
mn"
19"
18.3"
18"
17.2"
17"
16.5"
16.6"
2009"
2010"
16"
"
15"
"
2007"
2008"
2011"
..with 2011 PLF falling the most for East Asia route(1)!
..but 2011 RPK has lagged behind ASK growth!
5%"
3.4%"
2.6%"
1.2%"
2.3%"2.3%"
5.0%"
3.6%"
0%"
2007"
-5%"
2008"
-1.5%"
-10%"
-15%"
2009"
2010"
2011"
-8.0%"
-10.3%"
: RPK growth"
2011 Fall in Passenger

Load Factor"
10%"
SWP"
0.1%"
WAA"
0.5%"
EUR"
0.5%"
AMR"
1.6%"
2.4%"
EAS"
: ASK growth"
0%"
1. SWP: South West Pacific; WAA: West Asia and Africa; EUR: Europe; AMR: Americas; EAS: East Asia!
1%"
2%"
3%"
10
Lackluster Performance Following the Economic Crisis (2)

Underutilization compounded by compressing margins!
However, over the last 5 years, this premium has narrowed as

evident in the difference between its passenger yield and that
of its regional competitors "
While this decrease in passenger yield may be attributed to
SIAs discount marketing strategy that is aimed to boost its
falling passenger load factor, this may be unsustainable in the
long run"
US cents / RPK"
10
9.3
Passenger Yield "
SIA has traditionally enjoyed a pricing premium edge over its

regional competitors due to its strong branding and effective
marketing strategy"
Narrowing passenger yield premium!
8.4
9.0
8.6
7.4
7.8
This is especially so as cost continue to rise, driven by the

volatile fuel prices and rising regional airport and handling
charges"
9.1
8.7
7.7
7.2
6
2007"
2008"
: SIA"
"
2009"
2010"
2011"
: Regional Competitors(1)"
Rising costs driven by volatile fuel prices!

SGD mn"
20"
"
SIA Expenditure"
"
:Fuel"
: Depreciation/Lease"
: Staff"
: Handling/Airport"
: Others"
16"
12"
11.1"
8"
2.4"
1.3"
1.8"
1.5"
4"
4.1"
13.3"
12.2"
2.2"
1.4"
1.5"
1.8"
5.4"
10.2"
2.1"
1.3"
1.4"
1.9"
2.6"
1.6"
2.2"
2.3"
14.6"
2.7"
1.7"
2.2"
2.2"
3.5"
4.6"
5.8"
2009"
2010"
2011"
11
0"
2007"
2008"
1. Average passenger yield of Emirates, Qantas, Cathay Pacific, Thai Airways and China
Airlines!
Industry Driving the Poor Performance of SIA

Volume and margin pressure driven by industry!
Fall in business travel spending in Europe due to the poor
business climate has forced SIA to shift its focus on the more
profitable and growing its East Asia routes while cutting down
on its Europe routes "
Facing rising competition from the Middle Eastern airlines as
well as LCCs in this segment, SIA has embarked on a
promotional marketing strategy to maintain its market share
amidst the tough operating conditions "
Sale of Virgin to realign SIAs focus in growth markets..!

Substantial investments in Virgin Atlantic has yielded limited
returns given its marginal profitability and the failure to realize
synergies"
Divestment of its asset in its non-core market will continue to
allow SIA to channel more investments into its core market in
Asia"
Growing pessimism about the aviation sector!

We do not see SIA making any significant headway until the corporate
world that is the cornerstone of premium travel demand begins to change its
travel policies shrinking to focus on profitable and defendable routes
might actually be the most appropriate response to the prevailing
competitive environment.!
Credit Suisse (14 Feb 2013)"
Promotional activities continue to prop up the Group in the near-term!
but SIA still lacks a clear catalyst to revive its fortunes. With competing
airlines aggressively expanding their footprint e.g. Eithad Airways et al, SIA
has responded with greater frequency of flights to protect their market
share, and this could lead to further deterioration in passenger yields.!
OCBC (8 Feb 2013)"
..and frees up capital for a potential inorganic acquisition!

SGD bn"
10"
8"
6"
4"
2"
0"
2008"
2009"
2010"
Net Reinvestment"
2011"
BS Cash"
2012"
12
Options to Improve Competitive Position

Load factors for premium
sector expected !
to remain weak!
Intensifying competition from

Middle-Eastern airlines in
Europe and Asia !
Organic growth !
Hard to execute as airport landing spots are difficult to
secure from international airports due to limited supply of
airspace"
In addition, flying licenses are tightly controlled by
government regulators such as the Civil Aviation
Administration of China, which has the right to approve new
companies and grant them routes"
Current underperformance of East Asia route points out
that achieving organic growth in an increasingly competitive
but growing sector will take time"
"
Sales of Virgin allows for focus

and expansion on Asia Pacific!
Inorganic growth !
Sale of 49% stake in Virgin for SGD440 mn adds to
growing cash pile amounting to c. SGD4.85 bn"
An acquisition of an airline with exposure to a fast growing
aviation market allows for quick access to new pool of
passengers"
Reputation as an award winning international carrier makes
it an attractive partner for other airlines companies to work
with"
13
SECTION 3"
Investment Opportunity in China"
Rainforest
capital
14
Chinas Aviation Sector Remains Attractive

Country!
Macroeconomics!
pGDP
Regulations!
growth expected to
rebound in 1Q13 to an
annualized 8.0%, with CPI
remain at a low 2.6%"
pGovernment plans to shift to
a more consumption based
economy"
pCAAS
pGDP
growth expected
continue growing at c. 6.0%,
driven by strong consumer
and government spending"
pInflation expected to dip to
3.1% in 2013 due to a robust
economy with higher capacity"
Infrastructure!
pConsolidation
in the sector
has resulted with only the big
4 aviation carriers in
oligopolistic control of the key
domestic routes "
qRegional LCCs has
intensified competition in the
SE Asia-China routes"
pAddition
pCAB
approved rules to open

skies to foreign airlines,
specifically to any airports but
Ninoy Aquino International
Airport (NAIA)"
pASEAN open skies
agreement to take effect from
2015 onwards"
qRegional
qMassive
pGDP
growth expected to
rebound in 1Q13 to an
annualized 6.7%"
qCPI expected to ease but will
remain high at c. 6.6%"
qINR to weaken as central
bank keeps interest rates
high to combat inflation"
pEU-India
bilateral agreement
in place to allow any EU
airline to operate flights
between India "
qOpen skies agreement
between ASEAN and India
yet to be established"
qEntry
of regional LCCs, with

the latest being a JV between
AirAsia and Tata Group, has
intensified competition"
qMany Indian airlines,
including Kingfisher, have
made massive losses due to
the highly competitive market"
qAirport
pGDP
pASEAN
pCompetition
qMajor
growth projected to
expand to 6.3% in 2013,
driven by strong domestic
consumption and investment
growth"
qInflation pressures is building
up as producers pass costs
resulting from a weak rupiah
to consumers"
"
announced that
airspace regulations will be
relaxed from 2013 and
encourages private
investment in aviation
industry"
Competition!
"
open skies
agreement to take effect from
2015 onwards"
qASEAN open skies to limit
access to only 5 airports as
government declares that it is
not ready to fully open its
skies"
LCCs currently hold

c. 60% of the market,
resulting in a very price
sensitive market "
still not as
intense as the other aviation
markets as it is partially
mitigated by a surging
demand for air travel"
qNew entrance of LCCs, such
as Pacific Royale and Batik
Air, may intensify competition
going forward "
Source: Wall Street Journal India, Central Statistics Office of India, Bangko Sentral ng Pilipinas, World Bank!
Score!
of 78 new airports
over the next 10 years, along
with the spending of RMB250
bn in aviation infrastructure,
under Chinas 12th 5-year
plan "
congestion in the
countrys airspace currently
as its main airport, NAIA,
currently serves more than
90% of all traffic"
fees has increased

significantly, with New Delhi
Airport raising its fees by
342%, resulting in several
foreign airlines postponing its
capacity increase in India"
airports in Jakarta and

Surabaya are currently
operating at 250% above
capacity, resulting in flight
delays and increased aircraft
waiting time"
"
15
Positive Macro Supporting Chinese Aviation Activity

Chinese data points to increasing air travel!
Rising GDP per capita !
China has seen its GDP per capita double over the past five
years, and Is poised to reach US$11,040 per capita by 2017"
The governments attempt to shift towards a consumption

based economy has seen forecasted consumption reaching
41% of GDP by 2017, pointing to a rise in discretionary
spending which includes air travel"
Chinas GDP per Capita"
Average annual wage has increased by a CAGR of 12% over

the past five years, and is estimated to increase to US$976
monthly for the next five years, indicating a trend of rising
affluence amongst Chinese nationals"
US$"
12,000"
10,000"
8,000"
6,000"
4,000"
2,000"
0"
2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"
Source: EIU!
Consumption will continue to drive GDP growth !
Steadily increasing wage rate!

US$/annum"
42%"
Chinese average wage level"
Consumption as a % of GDP"
1200"
40%"
38%"
36%"
34%"
32%"
1000"
800"
600"
400"
200"
0"
30%"
2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"
Source: EIU!
2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016"

16
Source: EIU!
Domestic Market has Driven International Traffic

International travel an indirect beneficiary"
More than half of Chinese are urbanized !
As a result of increased affluence, Chinese residents departure

for private purpose in the past five years has increased at a
CAGR of 14%, and they often seek international destinations
as well in the process"
Therefore, the positive impact from Intra China air travel is
seen on international passengers, which is poised to increase
by 34 million international passengers in the next five years"
% of Total Population"
54%"
52%"
Urbanization Rate"
Chinas urban population has increased rapidly to 53% of total

population, driving demand for transportation facilities and
services, including air travel"
50%"
48%"
46%"
44%"
42%"
40%"
2008"
Source: CEIC!
Number of leisure travelers"
80"
75"
70"
65"
60"
55"
50"
45"
40"
35"
30"
2010"
2011"
2012"
Domestic passengers aids growth of international !
Chinese residents are increasingly travelling for leisure !

mn"
2009"
mn"
2008"
Source: CEIC!
2009"
2010"
2011"
2012"
300"
60
250"
50
200"
40
150"
30
100"
20
50"
10
0
0"
2008"
2009"
Domes2c Passengers
Source: CAAC!
2010"
2011"
2012"
Interna2onal Passengers
17
Business Travel Spending Well Supported

Ranked 2nd but poised to overtake US by 2015!
China the trade partner of the world !

Chinas exports has hit the US$2 bn mark, making it a major
trade partner of the world. Forecasted exports and imports are
estimated to increase at an average of 8% y-o-y until 2017 "
CA"
China also has achieved industrial outputs of around RMB910

bn, and the figure is poised to grow to RMB1.3 t by 2013"
Therefore, trade activities level are set to drive business
spending, with business travel spending set to increase by
21% in 2013 to US$245 bn, overtaking the US by 2015 as the
country spending the highest on corporate travel "
22"
BR"
28"
SK"
30"
IT"
33"
FR"
34"
UK"
40"
GR"
50"
JP"
65"
CN"
182"
US"
250"
50
100
150
200
250
300 bn"
Source: Global Business Travel Foundation !
Exports and imports poised to grow 8% y-o-y!
Industrial output rapidly reaching the RMB trillion mark!

bn"
3"
2.5"
2"
1.5"
1"
0.5"
0"
2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"
Source: EIU!
Imports
Exports
140"
Chinas industrial output"
Chinas imports and exports"
bn"
3.5"
120"
100"
80"
60"
40"
20"
0"
2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"
Source: EIU!
18
China Remains as Main Driver of Global RPK Growth

RPK has grown at an average of 11.6% the past five years.
This is accompanied by an increase in load factor to 80% in
2012"
China is estimated to grow at an average rate of 7% the next
20 years, and will account for 15.1% of the worlds RPK by
2031"
Domestic PRC routes is set to be the highest passenger
volume route by 2031, amounting to 10.4% of market share of
the worlds RPK. This will lead to better accessibility to the
hubs in Shanghai, Guangzhou and Beijing for international
aviation travel"
RPK growth has outpaced ASK growth !

Chinas RPK and ASK growth rate"
Positive outlook for the Chinese aviation sector !

25%"
20%"
15%"
10%"
5%"
0%"
2008"
Source: CAAC!
2 PRC routes to make up top 10 routes by 2031!
2010"
ASK"
2011"
2012"
RPK"
Load factors has picked up steadily since 2008!

82%"
Chinas passenger load factor"
Domestic Brazil"
Asia to Western Europe"
Intra Asia"
Asia to PRC"
Western Europe to South America"
Domestic India"
Western Europe to US"
Intra Western Europe "
Domestic US"
Domestic PRC"
81%"
80%"
79%"
78%"
77%"
76%"
75%"
74%"
73%"
72%"
0"
Source: Airbus!
2009"
2011"
200" 400" 600" 800" 1000"1200"1400"1600"

2031"
2008"
Source: CAAC!
2009"
2010"
2011"
2012"
19
12th 5-Year Plan Supports Aviation Infrastructure Spending

Increase in airports/aircrafts under 12th 5-Year Plan!
RMB1.5 bn to be spent developing the sector!

The focus on improving domestic consumption should help
drive demand for air travel both domestically and
internationally"
The Civil Administration Administration of China is also set to
open up part of its low altitude airspace to promote the
countrys aviation sector, and also to facilitate the training of
pilots"
An estimated RMB1.5 bn is to be spent developing Chinas
aviation industry by the Chinese Government. These
measures include increasing the number of airport by 26% to
220 and increasing the number of aviation aircrafts by 60% to
4,500 aircrafts nationwide"
Airports!
175"
220"
Aircrafts!
2,500"
4,500"
Chinese aviation market to reach US$240 bn by 2020!

US$bn"
250"
In the 12th 5-Year Plan, China will continue extending its rail
network, investing RMB700 bn annually in rail projects, and
connecting every city with a population of at least 500,000.
Greater rail connectivity will allow greater accessibility to
international hubs such as Beijing, Shanghai and Guangzhou,
which will facilitate greater air travel"
200"
"
2017!
Source: China 12th 5 Year Plan!
A second airport is also expected to be built in Beijing, in order

to cater to the rising passenger volume"
As such, the total commercial aviation market is set to reach

US$238.96 bn of revenues by 2020 from US$62.15 bn in 2011,
rising at a CAGR of 16.15%.This is driven by mostly airlines
which will account for 87% of the total commercial aviation
market in 2020"
2012!
150"
100"
50"
0"
2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017" 2018" 2019" 2020"
Airports"
Airlines"
General Aviation"
Source: Frost and Sullivan!
20
Unique Opportunities for Growth

Big 4 places have successfully established their own hubs!
CAAC encouraged consolidation in past decade!

The Chinese Airline industry is highly regulated by the Civil
Aviation Administration of China (CAAC), which has the right
to approve new airlines companies and grant them routes"
CAAC encourage major carriers to build dominance in their
respective hubs, so as to avoid pricing wars. Hence, the Big 4
places are well dispersed geographically in their aviation hubs"
Beijing!
The top three players (CEA, CSA and Air China) have control
of 90% of key flight routes, which possess the highest yield,
and more importantly, are the gateways to the international
travel which most Chinese will demand in the coming years"
"
Big 4 have dominance over most key routes!
Shanghai!
Guangzhou!
Shanghai- Shenzhen"
Shanghai- Guangzhou"
Beijing- Guangzhou"
Beijing- Chengdu"
Beijing- Shenzhen"
Beijing- Shanghai"
Air China !
"
China Eastern Airline
China Southern Airlines!

0%" 10%" 20%" 30%" 40%" 50%" 60%" 70%" 80%" 90%"100%"
Hainan Airlines!
Source: CAAC!
Air China"
CEA"
CSA"
Hainan"
Others"
21
China Eastern: An Ideal Partner for SIA

Target!
Operational Strength!
pExtensive
domestic and
international routes network,
offering excellent connectivity
and access to new customers"
Strength of Hub!
pBased
out of Shanghai, a
major transportation hub for
both international and
domestic travel in China"
Synergic Potential!
pOverlapping
routes to
Shanghai and Kunming, with
over 35 flights to common
destinations weekly "
Availability!
Score!
pActively
looking for strategic

partner. Held talks with SIA
for possible tie-up previously"
"
China
Eastern!
pMost
extensive domestic
network in China, flying to
over 110 destination. 6th
largest airline in the world
with excellent customer base"
China
Southern!
qSingaporeGuangzhou
being
only overlapping routes
operated by CSA and SIA.
With 14 weekly flights
operated by SIA, there is
limited syneric potential"
"
airline to be awarded 5
stars by Skytrax"
qLess extensive domestic
network compared to Big
Three provides limited
connectivty and customer
base "
"
qPrimarily
pLargest
pBased
"
"
exposure to the
international market among
the Big Three airlines,
allowing extensive code
sharing opporunities"
Air China!
out of Guangzhou, the

3rd busiest air travel hub in
China"
"
pOnly
Hainan!
pBased
Source: Companies Data!
operates out of
Haikou, which is not among
the major hub in China. "
of existing
overlapping routes with SIA
limits opprtunties for
operational synergies"
shareholding held
under unlisted holding
company, limiting any option
to friendly deals"
"
qAbsence
pDispersed
"
"
"
out of Beijing, the

busiest air transportation hub
for both domestic and
international air travel in
China"
qMajority
pSingapore-Beijing
being the
major overlapping routes.
With SIA operating 28 flights
weekly, significant synergic
opportunities exist "
shareholding
structure allows for the
additional option for a hostile
move"
qStrategic
partnership with
Cathay Pacific and complex
cross-shareholding effectively
removing availability"
"
22
SECTION 4"
Deal Motivation"
Rainforest
capital
23
Investing in China Eastern to Plug Strategic Gap

Competitive positioning map underscores existence of performance gap!
25"
Tiger Airways"
5-year revenue passenger CAGR"
20"
China Eastern"
SilkAir"
15"
CEA + SIA"
10"
5"
0"
No Frills"
Premium Service"
-5"
-10"
Source: Capital IQ!
SIA"
Underperformance highlights need for growth avenues!
Investment into China Eastern to fill strategic gap!
SIA has exposure to the entire aviation spectrum through its

subsidiaries and associate companies. These include shorthaul budget carriers like Tiger Airways to regional premium
carriers like SilkAir"
An investment into China Eastern will complement SIA

strategically and elevate growth in its core business"
From 2007 to 2011, operational performance at SIAs core

business has lagged behind companies in its portfolio"
There exists a performance and operational gap which SIA can
fill with a strategic acquisition"
SIA can leverage on China Easterns foothold in a key

international air hub like Shanghai and gain access to Chinas
burgeoning demand for air travel services"
With its premium long-haul services and extensive
international route network, a cooperation with China Eastern
will yield substantial operational synergies for SIA"
24
Shanghais Status as an Aviation Hub

Shanghais development into an international hub!
Shanghai is one of the three international aviation hubs in
China and there are two major airports in the city Shanghai
Pudong International Airport and Shanghai Hongqiao
International Airport"
Key economic reforms and infrastructure development have
cemented the city as Chinas financial centre. It represents the
gateway to China for both international and business travelers "
Total passenger traffic at both Shanghai airports increased at a
CAGR of 9.04% over the past 5 years, driven events such as
the World Expo in 2010. Growth in total passenger throughout
was stronger relative to Beijing, Guangzhou and Singapore"
Further growth in passenger numbers expected!

The Shanghai government is planning to expand the size of
Terminal One at Shanghai Pudong Airport by 80% in order to
cater to the expected increase in passenger traffic"
When completed in 2014, total passenger handling capacity in
Shanghai is expected to reach 130 million passengers
annually, an increase of 30% from current levels"
Going forward, gaining access into Shanghai as a base of
operations will allow Singapore Airlines to benefit from strong
growth in both inbound and outbound travel demand in China"
Strong growth in passengers throughput!
Airport handling capacity set to expand!

mn"
140"
Passenger handling capacity"
mn"
90"
Passengers handled"
80"
70"
60"
50"
40"
30"
20"
10"
0"
2008"
2009"
Shanghai"
Source: ACI, CAPA!
2010"
2011"
Beijing" Guangzhou"
2012"
120"
100"
80"
60"
40"
20"
0"
2004"
2008"
Source: Shanghai Airport Authority!
2014"E"
25
China Easterns Presence in Shanghai

China Easterns foothold in Shanghai air market!
Total passengers carried by China Eastern has experienced

strong growth in line with traffic at both Shanghai airports.
From 2008 - 2011, total passengers carried by China Eastern
grew at a CAGR of 16.6%"
China Eastern is currently the dominant player in Shanghai,
with leading market shares of 50% and 37% of all passenger
traffic at Shanghai Hongqiao Airport and Shanghai Pudong
Airport respectively"
80"
70"
Revenue passengers"
China Easterns represents the best point of entry into the

Shanghai market, with dominant shares in both Shanghai
airports"
Keyed into Shanghais growth as an air hub!

mn"
60"
50"
40"
30"
20"
10"
0"
2008"
2009"
2010"
2011"
Dominant airline in Shanghai Hongqiao!
similar dominance in Shanghai Pudong!
Air China
21%
Air China
23%
China Eastern
50%
China Southern
22%
China Eastern
37%
China Southern
18%
Others
24%
Others
5%
26
China Easterns Presence in Shanghai

China Eastern has developed extensive route network from strategic base in Shanghai !
Potential for cooperation on flight route planning and aircraft utilization underpins deal attractiveness!
Gaining access to China Easterns base of operations in Shanghai will also give SIA greater flexibility in terms of planning its routes and
capitalizing on demand disparities between different regions. SIA and China Eastern can maximize aircraft utilization and passenger
yield on flight routes by coordinating travel demand from their respective home markets "
"
With its proximity to Europe and North America, Shanghai can act as a launching pad for Singapore Airlines to key destinations such as
Los Angeles and New York and allow it to capitalize on increasing travel demand to these regions from China. This opens up
opportunities for SIA in terms of demand for new destinations"
27
Operational Synergy Through Code Sharing

Code-sharing on existing overlapping routes!
SingaporeShanghai"
35 Flights Weekly"
SingaporeKunming"
5 Flights Weekly"
Enhancing competitiveness on non-overlapping routes!
Singapore-"
Beijing"
SingaporeShanghai"
28 Flights Weekly"
SingaporeKunming"
4 Flights Weekly"
SingaporeGuangzhou"
Singapore- "
Beijing"
SingaporeGuangzhou"
Source: Company!
*See Appendix C for Flight Details!
High-frequency of flights connecting Shanghai and Singapore

provides excellent opportunity for significant cost saving through
code-sharing and elimination of redundant flights (East Asia load
factor for SIA in 2012: 82% and International load factor for CEA
in 2012: 79%)!
Potential to consolidate flights on Singapore-Shanghai with the
use of larger aircraft, like A380, which enhance further cost
saving (SIA uses B777 and CEA uses A330/B767)."
Flexibility to eliminate redundant flights connecting SingaporeKunming by adjusting flight timings"
Source: Company!
Existing regulation by CAAC disallow more than one of the big

three airline to operate a common international flight routes"
Air China and China Southern Airlines has the exclusive rights
for operating Singapore-Beijing and Singapore-Guangzhou
routes respectively."
SIA operates 28 and 14 weekly flights connecting SingaporeBeijing and Singapore-Guangzhou respectively."
Potential for SIA to gain unique competitive advantage over
other international airlines by leveraging CEAs domestic
connections to Beijing and Guangzhou. "
28
Operational Synergy Through New Routes/Customers

Maximize aircraft utilization by combining flight routes!
Gaining access to CEA customer pool!
Common SE Asia Destinations for

SIA and CEA:"
Kuala Lumpur"
Phuket"
Bangkok"
13 Destinations"
135 Flights Weekly"
Source: Company!
Source: Company!
SIA and CEA currently fly to several common SE Asia

Destinations like Phuket, Bangkok and Kuala Lumpur."
SIA operates 135 weekly direct flights to 13 destinations in

China, including many tier two cities like Chongqing and Tianjin."
SIA operates over 35 weekly flights to each of the above three

destinations from Singapore,"
CEA has a strong customer base, with over 15 mn members

part of its Eastern Miles frequent flyer program."
Excellent opportunity for combination of flight route (i.e.

Singapore to Shanghai via Bangkok) to maximize utilization of
aircraft and achieving other cost synergies like reducing staff
cost and airport charges."
The combination of the two airlines will allow SIA to gain

valuable access to a ready customer pool that is unmatched by
its international airlines competitors."
Potential to add new flight routes connecting other destinations

in South-East Asia (like Bali and Jakarta) with synergies created
from the combination"
Transferability of frequent flyers miles between CEAs Eastern

Mile program and SIAs Krisflyer program will significantly
increase the attractiveness of SIAs flight offering in China and
brings added revenue synergies."
29
Additional Non-routes Operational Synergy

Superior bargaining power in aircraft purchases!
Strong growth in the Chinese MRO market!
Airlines!
1st"
ILFC"
Outstanding orders!
719"
2nd" Air Asia"
475"
3rd"
GECAS"
426"
4th"
China Eastern + SIA!
354!
5th " Lufthansa"
337"
Key Customers of Boeing (by outstanding orders)!

Airlines!
Outstanding orders!
6th"
American Airlines"
373"
7th"
Delta Air Lines"
304"
8th"
China Eastern + SIA!
277!
9th"
GOL"
205"
10th"
Norwegian "
203"
Source: Airbus & Boeing!
The combination of SIA and CEA will allow them to have

increased bargaining power in the purchase of aircrafts"
CEA can combined its future order of wide-bodied aircraft with
SIAs purchases, and SIA can combined the purchase of narrowbodied aircraft by its subsidiaries (Silkair/Tiger) with CEAs
purchase to lower purchasing price through increased volume"
Increase in MRO Sales (2011-2021)"
Key Customers of Airbus (by outstanding orders)!
US$ bn"
7.0"
6.0"
5.0"
4.0"
3.0"
2.0"
1.0"
0.0"
China"
Source: ICF!
APAC Middle Eastern Latin

Africa" Western North
ex
East" Europe" America"
Europe" America"
China"
The MRO market in China is expected to grow strongly along

with the civil aviation industry boom in the country"
The MRO industry in China is expected to grow by US$6 bn in
the 10 year period at a CAGR of 9.5%"
CEA currently operates a couple of MRO operation through
joint-ventures with Boeing, Pratt & Whitney and Rockwell Collins"
SIA Engineering currently has no exposure to the MRO market
with the closest facility to the region being located in Hong Kong"
A combination of the two airline may present SIA Engineering an
unique opportunity to enter the lucrative MRO market in China "
30
Threat of Opposition to SIA Bid is Minimal

Air China no longer poses a threat to SIA bid!
China Eastern still seeking for strategic partner!
HKD"
Market Share of Available Seats to Europe!
10"
9"
8"
7"
6"
5"
4"
SIA Oer Price: HKD3.80
3"
2"
Apr"
May" Jun"
Jul"
Aug" Sep"
Oct"
Nov" Dec"
Jan"
Feb"
Source: Bloomberg!
In 2008, Air Chinas parent holding, China National Aviation

Holding Company, made an offer of HKD5.00 dollar per share
prior to the shareholding meetings to decide on SIA bid for a
24% stake in China Eastern"
China Eastern and Chinese Authorities were against Air
China as a Strategic Partner: China Eastern management
rejected Air Chinas offer citing lack of sincerity as well as
synergies. Civil Aviation Administration of China opposed the
deal due to lack of competition"
Air China is unlikely to make a counter-bid for any offers for
China Eastern given the CEA management and regulators
preference for a foreign strategic investors"
Air China No Longer Has a Significant Stake in China
Eastern: China Airline had a 12% stake in China Eastern in
2007, allowing it to have significant influence in opposing SIAs
bid. It has since reduced its stake in China Eastern, lacking any
significant shareholding to oppose any bid for China Eastern"
Air China"
Cathay Pacific"
Lufthansa"
Air France"
KLM Royal Dutch"
Aeroflot Russian"
China Southern"
China Eastern!
British Airways"
Finnair"
Available Seats"
1,241,684"
1,153,587"
874,199"
682,573"
509,998"
468,587"
459,903"
432,517!
422,493"
367,131"
Market Share"
16.10%"
15.00%"
11.30%"
8.90%"
6.60%"
6.10%"
6.00%"
5.60%!
5.50%"
4.80%"
Source: RoutesOnline!
Note: As of 01 Jan 2013"
According to China Business News, China Easterns Chairman,

Liu Shaoyong, is still looking for strategic investors to invest in
China Eastern"
Low Exposure in the International Scene: Amongst the
Chinese airlines, China Eastern is one of the least exposed to
international routes, capturing only 5.6% of market share of flights
to Europe"
Modest Service Quality: SkyTrax rates China Eastern as a 3
star airline, making it the least preferred airline of the big 4 airlines
in China"
China Eastern would welcome Singapore Airlines as a strategic
partner, given its strength in service quality and its experience in
international aviation travel"
31
China Eastern in Need of Financing

China Eastern needs to acquire to expand regionally!
China Eastern looking to reduce debt!
Operating
Leased"
Long"
5"
-"
A340 - 300"
Long"
5"
-"
A330 - 300"
Medium"
8"
7"
A330 - 200"
Medium"
4"
3"
A300 600R"
Short/Medium"
7"
-"
A321"
Short/Medium"
22"
-"
A320"
Short/Medium"
88"
24"
A319"
Short/Medium"
5"
10"
B767"
Long"
6"
1"
B757 - 200"
Short/Medium"
5"
5"
B737 800"
Short/Medium"
16"
48"
B737 -700"
Short/Medium"
35"
19"
B737 - 200"
Short/Medium"
16"
-"
Range!
A340 - 600"
200%"
190.9%"
180%"
LT debt to equity ratio"
Self-Owned !
Aircraft Model!
160%"
140%"
121.6%"
120%"
114.1%"
100%"
81.3%"
80%"
60%"
40%"
7.2%"
20%"
0%"
CEA"
AirChina"
CSA"
Cathay"
SIA"
Source: CapitalIQ!
Note: As of 31 Dec 2011!
Source: Company !
Management has plans to expand its international presence

and boast its market share in key lucrative international routes"
China Eastern has one of the highest LT Debt to Equity ratio in

the region at 190.9% "
Most Aircrafts are Short to Medium Haul Aircrafts:

Currently, most of its aircrafts are suited for short to medium
haul flights that serves the domestic and regional flight route,
lacking the capability to compete on longer haul routes"
Raising Equity to Lower Debt: Management has set a target

of reducing debt to asset to below 70% by 2015 by raising
funds through capital injections"
Acquisition of Long Haul Aircraft Needed: To expand

internationally, especially into key markets such as North
America, China Eastern has to acquire more longer haul
aircrafts"
Financing Required to Meet Management Objective:
Singapore Airlines will be able to provide the necessary capital
injection required to fund China Easterns growth"
Government Has Been Injecting Capital: Main shareholder,

China Eastern Air Holdings, injected 4.6 bn yuan (SGD 920
mn) in Sep 12 through a private placement"
Strategic Stake Help Meet Management Expectations: A
strategic stake by Singapore Airlines will help China Eastern
reduce it debt and move in line with management expectation
to reduce debt to asset ration to 70%"
32
SECTION 5"
Preliminary Valuation of China Eastern"
Rainforest
capital
33
Valuation Summary of CEA

Min to Max"
Range"
Precedent
Transactions
Comparable"
Public
Companies
Trading
Comparable"
Metric"
EV/EBITDAR"
2.5x 5.1x"
LTM EBITDAR"
HK$17,280m"
P/BV"
1.3x - 4.0x"
FY2012 Q3 BV"
HK$2.66/Share"
P/E"
12.6x 23.5x"
LTM EPS"
HK$0.27/ Share"
EV/EBITDAR"
4.3x 7.0x"
LTM EBITDAR"
HK$17,280m"
P/BV"
1.1x 1.3x"
FY2012 Q3 BV"
HK$2.66/Share"
P/E"
13.0x 19.4x"
LTM EPS"
HK$ 0.27/Share"
Recommended Offer Price: HK$3.98 !

4.90!
0.91!
10.64!
2.66!
6.45!
3.40!
7.48!
3.73!
2.89!
3.44!
5.24!
3.50!
Discounted Cash Flow"
2.99!
52 Weeks Trading Range"
2.12!
$- "
$2.00 "
5.71!
3.73!
$4.00 "
$6.00 "
$8.00 "
$10.00 "
34
SECTION 6"
Transaction Structure and

Consideration"
Rainforest
capital
35
Transaction Structure
Key transactional terms!
Transaction structure!
Private placement is likely to be the preferred choice by
China Eastern management as it requires capital injection to
tackle its high debt level"
Current Chinese regulations allows a single foreign
shareholder to hold no more than 25% of an airline"
Additional placement of shares to CEA Holdings is needed to
maintain its controlling interest in China Eastern"
Existing A and H
Shareholding Base !
67%
Singapore Airlines"
New Issued
Shares to SIA!
25%
Regulatory!
Requires approvals from state agencies,

including the Assets Supervision and
Administrative Commission "
Minimum !
acceptance !
level!
66.7% of minority shares by each of the

groups of shareholders: "
A Shares, H Shares and Both"
Delisting!
No delisting intent, Singapore Airlines to

become a strategic partner alongside
controlling shareholder, CEA Holdings!
CEA!
8%
New Shares Issued

via Private Placement
of H Shares"
China Eastern"
China Eastern Shareholders"
Offer price!
Offer price of HKD3.98, representing "

a 20% premium over its 1 month "
VWAP H Shares"
3 Rounds of
Shareholder Approval
by H Shareholders, A
Shareholders and Both"
Maximum !
Shareholding!
Chinese regulations only allows 49% of an

airlines to be foreign owned, of which not
more than 25% is held by a single foreign
shareholder"
36
Funding Options
1!
Equity Offer!
2!
Cash Offer via Raising Debt!
3!
Cash Offer by Using Existing

Cash!
Description: Shares of SIA to be

offered to China Eastern based on
the exchange ratio determined by
the offer price / SIA price"
Description: Cash offer via raising

debt"
Description: Cash offer using

existing cash as well as funds from
sale of Virgin Atlantic"
Dilution Accretion Analysis

(50% Equity, 50% Cash):
FY15 EPS Accretion: $0.09 (16%)"

(50% Debt, 50% Cash):

(100% Cash):
Key Considerations:!
1. No initial cash outlay from
Singapore Airlines, however, given
Singapore Airlines strong cash
position and low debt level, dilution
impact caused by issuance of
equity may be unnecessary "
2. Key majority shareholder will be
able to maintain its controlling
interest in SIA"
3. China Eastern prefers a cash offer
as it requires capital injections to
significantly reduce its debt level"
1. More accretive mode of funding
than issuance of shares"
2. No dilution to existing SIA
shareholders"
3. SIA has a low debt to equity level
of 9%, issuance of debt is likely to
help optimize its currently
underleverage capital structure"
4. SIA has a relatively low cost of
debt, its latest bond offering
stands at 2.15% yield, below the
3% corporate bond yield level"
1. Most accretive mode of funding "
2. Strong cash position of S$4.85 bn
as of 31 Dec 12"
3. Impending sale of Virgin Atlantic to
Delta to further increase high cash
level"
4. No dilution effect to existing SIA
shareholders"
5. Least complex method of funding
the deal"
100% Cash Offer via Raising Debt and Using Existing Cash is the Recommended Method of Funding!
37
Recommended Deal Structure

Proposed deal structure!
Cash funded
by existing
cash!
50%"
Underlying rationale of recommendation !

A 100% cash deal would be a preferred option for the
management of China Eastern, given its need of capital
injection to reduce its high debt level as well as to acquire
aircraft to fuel its international growth expectations"
SGD
2.4 Bn
50%"
Cash funded
via raising
debt!
Proposed shareholding structure of China Eastern!
25%!
!
51%!
CEA Holding!
24%!
Others!
It is likely to be a more beneficial move for SIA due to its high

cash balance as well as its low cost of borrowing"
In addition, it eliminates the effect of any potential dilution
associated with an equity deal"
Dilution / Accretion analysis!

FY15!
Revenue"
Cost of Sales"
Gross Profit!
Associates (ex CEA)"
Non-Op Exceptional"
Pre Tax Profit!
Tax"
Extraordinary"
Reported Net Profit!
Add Share of China Eastern Net
Profits!
Less Interest Expense!
Adjusted Net Profits!
Weighted Average ordinary shares"
Post Acquisition EPS!
Pre Acquisition!
16,000"
-15,370"
630!
150"
80"
856!
-146"
-61"
649!
Post Acquisition!
16,000"
-15,370"
630!
150"
80"
856!
-146"
-61"
649!
-"
-"
649!
179"
-21"
807!
1,187"
0.55!
1,187"
0.68!
38
Associated Transaction Risks

Risks!
Opposition by
Regulators"
Rejection by
Minority
Shareholders!
Competing
Bids Made by
SIAs
Competitors!
Overview!
Mitigants!
Multiple rounds of regulatory approvals required"

At least 5 rounds of regulatory approvals are required before
Singapore Airlines have the go-ahead to table an offer for a
stake in China Eastern Airlines"
Regulatory body include Assets Supervision and Administrative
Commission and Civil Aviaition Authority of China"
Current Head of Civil Aviation Authority of China is Li Jiaxiang,
a former head at Air China. He is known to favour a
consolidation of the Chinese aviation industry and may reject
Singapore Airlines bid in preference of a local bidder "
Regulators previously approved SIA

bid for China Eastern!
Singapore Airlines previous bid
was approved by authorities and it
is likely that SIA will not faced any
political oppositions"
Minority shareholders may reject Singapore Airline bid!

Previously, minority shareholders rejected Singapore Airlines
bid for China Eastern as then key shareholder, Air China,
rejected Singapore Airlines offer and subsequently made a
competing offer, prompting other shareholders to reject
Singapore Airline offer"
Air China no longer a shareholder of

China Eastern!
Air China does not has a vested
interest in China Eastern and is
unlikely to make a competing bid
as China Eastern management
and regulators are not in favour of
an acquisition by Air China"
Stagnating growth in local market prompts partnership and

acquisition in emerging markets!
Singapore Airlines key competitors may be interested in
acquiring China Eastern for its growth potential"
Airlines such as Qantas and Etihad are partnering China
Eastern in JVs and code-sharing"
Qantas will be setting up a Jetstar with China Eastern and
Etihad has code-share agreements with China Eastern"
SIA is likely to be the preferred choice

amongst its competitors!
Backed by its experience in
international routes, Singapore
Airlines is likely to be preferred
choice as it can offer key expertise
to China Eastern"
Moreover, SIA is likely to be the
only bidder given its operational
synergies in the region and its
strong financial position"
39
Proposed Transaction Timeline

April!
Process
Management"
Preparation
of Pitch-book"
Meeting with
SIA senior
management"
Documentation"
"
Advisors Role"
Preparation of
proposed term sheet"
Meetings with
CEA
ManagementAccess interest"
Confidentiality" Confidentiality"
Agreement"
Agreement"
With SIA "
with CEA"
Collect
information
from SIA"
June!
May!
Meet and Propose

deal to CEA "
July!
Prepare Meeting"
Prepare Due
Diligence Materials" Minutes "
Due Diligence
Meetings with
CEA"
Revise Term
Sheet "
Act on CEA/SIAs
comments "
Negotiations
between SIA
and CEA"
August!
Prepare Offer
Documents"
Full Scale Due

Diligence on
CEA"
Deliver
Final Bid"
Finalize"
Private
Placement"
Finalize "
Term Sheet"
Facilitate
Negotiations"
Facilitate Legal,
Commercial and "
Accounting Due "
Diligence"
Finalize Deal"
Consummation "
40
SECTION 7"
Deal Team"
Rainforest
capital
41
M&A Deal Team

Senior Management!
ANG SER KENG!
!
Managing Director!
!
Head of Investment
Banking!
Project Team Leaders!

JOSHUA NG!
!
Director!
!
Head of
Transportation
Sector Coverage !
LEE LIN ZE!

!
Director!
!
Head of South
East Asian !
M&A!
CHAN JING!
!
Director!
!
Head of
Greater China
M&A!
Project Team Members!

TAN MING XIAN!
!
Vice-President!
!
Investment Banking
Department
(Corporate Finance)!
ADWYN CHONG!
!
Associate!
!
Investment Banking
Department
(Corporate Finance)!
42
EUR transactions!
Rainforest Capital has continued to play a

leadership role in many of the key
transportation transactions globally in the last 5
years, "
Closed a total of US$15 bn worth of deal
transaction so far"
"
"
"
APAC transactions!
Rainforest Capital Strong Track Record!
US transactions!
Leading Transportation M&A Advisory Franchise
US$1.6 billion!
US$7.1 billion!
US$6.6 billion!
Buyside Advisor in
the sale of AirTran
Holdings stake"
Sep 2010"
Buyside Advisor in
the sale of
Continental Airlines"
May 2010"
Buyside Advisor in
the sale of Northwest
Airlines stake"
Apr 2008"
US$1.0 billion!
US$1.3 billion!
Buyside Advisor in
the sale of Aer Lingus
stake"
Jun 2012"
Buyside Advisor in
the sale of Austrian
Airlines stake"
Feb 2009"
Buyside Advisor in
the sale of Iceland
Airlines stake"
Nov 2008"
US$360 million!
US$673 million!
US$2.2 billion!
Sellside Advisor in
the sale of Virgin
Atlantic stake"
Sep 2012"
Sellside Advisor in
the sale of Cathay
Pacific stake"
Aug 2009"
Buyside Advisor in
the sale of Shanghai
Airlines stake"
Jun 2009"
US$1.5 billion!
43
Appendix A"
Our Understanding of SIA"
Rainforest
capital
44
Company Profile of Singapore Airlines

Overview of SIA!
Flies to more than 60 destinations in 30 countries!
SIA is the flag carrier of Singapore, providing passenger, cargo

air transportation and engineering services "
"
The company operates mainly in the premium long haul
business segment, but has exposure to the mid haul segment
through its wholly owned subsidiary Silkair"
The company also has exposure to the budget segment through
its low cost carrier Scoot and a 33% equity stake in Tiger Airways "
In the financial year ending 2012, SIAs net revenue increased
by 5.7% y-o-y to $1.17 bn, yielding a net profit of $269 mn "
Recent corporate news!

Oct 30, 2012: Announced the sale of Tiger Australia to Virgin for
$33.2 million"
Dec 12, 2012: Announced the divestment of its 49% stake in
Virgin for $440 million"
Total amount of passengers carried in FY 2012: 17.1 million!

Total RPK in FY 2012: 87,824 million!
45
Geography and Financials

Profitability ratios!
Geographical revenue!
East Asia recorded a revenue growth of 1.5% y-o-y, on the back

of stronger economic growth in the region"
Europe fell by approximately 1% y-o-y, with austerity measures
in Europe curbing aviation travels "
16%"
Return on Assets/Equity"
53% of SIAs revenue is attributed to East Asia, with South West

Pacific making the next biggest contributor at 17%"
14%"
12%"
10%"
8%"
6%"
4%"
2%"
0%"
2007"
2008"
Return on Assets %"

Source: Company Report!
2009"
2010"
2011"
Return on Equity %"
Financial summary!
SGD mn!
Total Cash"
Total Assets"
East Asia" Europe" South West Pacific" Americas" West Asia and Africa"
Total Equity"
Basic EPS"
Net Income"
FY12!
"
4,702.7 "
"
22,043.0 "
"
12,893.4 "
"
0.28 "
"
335.9 "
FY11!
"
7,434.2 "
"
24,544.5 "
"
14,204.4 "
"
0.91 "
"
1,092.0 "
46
Product Segmentation
Gross profit margin!
Segmental revenue!
SIA recorded revenues of S$14.87 bn after intra company
eliminations, resulting in a 5 year CAGR of 0.32%"
SIAs gross profit margins has fell from 23.6% in 2007 to 19.3%
in 2011"
The company is dependant on airline operations, which made

up 76% of its revenue in 2011. "
This is largely attributed to the fall in passenger yield, which has

fallen from 12.1 cents to 11.8 cent per RPK for the same time
period, a 2.5% decrease"
Revenue from airline operations have fallen at a CAGR of 3.5%

over the past 5 years, due to competition from LCCs"
S$ mn"
20,000"
Fuel cost also spiked by 29.1% y-o-y due the 31.7% increase in
jet fuel prices to US$133 per barrel, contributing to the fall in
gross profit margin"
18,000"
29%"
28.2% "
16,000"
27%"
12,000"
25%"
Gross Margin"
Revenue"
14,000"
10,000"
8,000"
6,000"
4,000"
23.6% "
23.0% "
23%"
20.3% "
21%"
19.3% "
19%"
2,000"
17%"
0"
2007"
2008"
Airport Terminal and Food Operations"

Cargo Operations"
Airline Operations"
2009"
2010"
Others"
Engineering Services"
2011"
15%"
2007"
2008"
2009"
2010"
2011"

47
SIA Airline Operating Performance

Decline in revenue passengers carried!
Load factors have stagnated !

85%"
19.0 "
80%"
18.5 "
Load Factors
Revenue Passengers Carried"
19.5 "
18.0 "
75%"
17.5 "
70%"
17.0 "
16.5 "
65%"
16.0 "
60%"
15.5 "
FY 08"
15.0 "
FY 08"
FY 09"
FY 10"
FY 11"
FY 11"
FY 12"
Load Factor (%)"
%"
13.0 "
RPK y-o-y growth has dropped 4 of the last 5 years !

12%"
12.5 "
8%"
12.0 "
4%"
RPK Growth"
Passenger Yield
FY 10"
Breakeven Load Factor"
FY 12"
Unit yield has rebounded but remains under pressure!
11.5 "
11.0 "
10.5 "
0%"
FY 08"
FY 09"
FY 10"
FY 11"
FY 12"
-4%"
-8%"
10.0 "
FY 08"
FY 09"
FY 09"
FY 10"
FY 11"
FY 12"
-12%"
48
Shareholders Profile
SIAs majority shareholder is Temasek Holdings, Singapores
sovereign wealth fund, who holds 55.9%"
The public makes up the second largest group of shareholders,
making up 31% "
The institutional profile shareholders who control 12% of SIA are
fragmented, with the largest institutional investor holding
approximately only 3.1%"
"
Type of Shareholders!
Institutions"
Corporations (Private)"
Top 10 Shareholders!
Rank!
Name!
% of shareholdings!
1"
Temasek Holdings (Private)

Limited"
55.9%"
2"
DBS Group Holdings Limited,

Asset Management Arm"
3.1%"
3"
4"
1.9%"
1.7%"
5"
BlackRock, Inc. (NYSE:BLK)"
0.93%"
6"
The Vanguard Group, Inc."
0.46%"
7"
Norges Bank Investment

Management"
0.33%"
8"
Dimensional Fund Advisors LP"
0.27%"
9"
Sparinvest
Fondsmglerselskab A/S"
0.26%"
10"
Merrill Lynch & Co. Inc., Asset

Management Arm"
0.22%"
Individuals/Insiders"
Sovereign Wealth Funds

(>5% stake)"
Aberdeen Asset Management

PLC (LSE:ADN)"
BNP Paribas, Private &
Investment Banking
Investments"
Public and Other"
49
Fleet Operations
Fleet Type!
In Service!
Airbus A330-330"
19"
Chinese Destination!
Shanghai Pudong "
Weekly Freq!
35"
Airbus A340-500"
5"
Beijing "
28"
Airbus A319-100"
6"
Guangzhou "
14"
Airbus A320-200"
16"
Tianjin**"
8"
Airbus A380-800"
19"
Chongqing *"
7"
Boeing 777-200"
19"
Wuhan *"
7"
Boeing 777-200 ER"
13"
Xiamen *"
7"
Boeing 777-300"
7"
Qingdao**"
6"
Boeing 777-300 ER"
19"
Shenyang (via Qingdao)**"
6"
Chengdu*"
5"
Kunming*"
5"
Shenzhen*"
4"
Changsha*"
3"
Fleet type and size customized to SIA and Silk Airs Need !
SIAs has a fleet mainly of wide body aircraft such as Boeing
777-300 ER and Airbus 380-800 to allow it to ply its long haul
routes which make up a large proportion of its flying portfolio "
SIA currently has orders for 40 A350 Fleets from Airbus as they
are more fuel efficient than a Boeing 787, and have the potential
to bring SIAs fuel expense down by 8% "
Silk Air, on the other hand, is SIAs medium haul carrier in the
region, and is more accustomed to narrow body aircraft such as
Airbus A319-100 and A320-200"
"
SIA has limited route exposure to China as compared to other

regional carriers such as DragonAir, but has most routes to
Shanghai, Beijing and Guangzhou!
50
Singapore Airlines Share Performance

mn"
15%"
8"
Singapore Airlines Volume"
Straits Times Index"
Singapore Airlines Share Pricing"
7"
10%"
6"
5%"
0%"
4"
3"
-5%"
2"
-10%"
1"
-15%"
3/16/12"
0"
4/16/12"
5/16/12"
6/16/12"
7/16/12"
8/16/12"
9/16/12"
10/16/12"
11/16/12"
12/16/12"
1/16/13"
2/16/13"
Source: Capital IQ!

51
Volume "
Share Return"
5"
Appendix B"
Our Understanding of China Eastern

Airlines"
Rainforest
capital
52
China Eastern Company Profile

Overview !
China Eastern Route Map !
China Eastern Airlines offers a wide range of

services which includes passenger, cargo, mail
delivery and other transportation services"
It boast an extensive domestic network, flying to
over 109 destination across China"
The Company operates mainly out of its key hub of
Shanghai, with Kunming and Xian serving as key
regional hubs"
"
The company is headquartered in Shanghai, China
and has over 59,000 employees as of 31 December
2011"
Recent corporate news!

Dec 20, 2012: Purchased a 29.7% stake in Shanghai
Eastern Logistics Co from China Ocean Shipping
group"
Nov 09 2012: Announced a private placement of
698,865,000 A shares at CNY 3.28 per share and
698,865,000 H at HKD 2.32 per share "
Total amount of passengers carried in FY 2012: 68.7 mn!

Total RPK in FY 2012: 100,895 mn!
53
Financial Performance
Revenue!
Profitability Ratios !
CEAs revenue has increased at a CAGR of 15.1% over the

past five years, leveraging on the strong economic GDP
growth of China. "
"
The company has continued to dominate the Shanghai
market following its merger with Shanghai airlines, and the
increasingly wealthy home market has continued to underpin
the companys earning growth "
As a member of the Skyteam Global Alliance, CEA has been
able to capture high yield international premium traffic, and
still maintains a high ROE of 23.9%"
70%" Source: Company Report!

60%"
50%"
40%"
30%"
20%"
10%"
0%"
-10%"
FY 07"
FY 08"
FY 10"
FY 11"
-20%"
Return on Assets %"
Revenue has increased at CAGR of 15% !

18000"
FY 09"
Return on Equity %"
Financials Snapshot!
16000"
14000"
Total Cash"
12000"
10000"
Total Assets"
8000"
Total Equity"
6000"
4000"
Basic EPS"
2000"
0"
FY 07
FY 08
FY 09
FY 10
FY 11
Net Income"
FY12!
"
793.3"
"
23,573.5"
"
4,479.2"
"
0.08"
"
940.1"
FY11!
"
598.2"
"
20,082.8"
"
3,218.8"
"
0.09"
"
963.6"
54
Airline Operating Performance

Revenue Passengers have steadily increased!
80"
Load Factors growth remains robust!

80%"
79%"
70"
78%"
60"
77%"
50"
76%"
40"
75%"
30"
74%"
73%"
20"
72%"
10"
71%"
0"
FY 07"
FY 08"
FY 09"
FY 10"
FY 11"
Capturing the Shanghai Market allows for Margin Expansion!

15"
70%"
FY 07"
FY 09"
FY 10"
FY 11"
Volatile RPK y-o-y growth due to high growth in FY 10 !

60%"
14"
FY 08"
50%"
14"
13"
40%"
13"
30%"
12"
20%"
12"
11"
10%"
11"
0%"
FY 07"
10"
FY 07"
FY 08"
FY 09"
FY 10"
FY 11"
-10%"
FY 08"
FY 09"
FY 10"
FY 11"
55
Shareholders Profile
Top 10 Shareholders!
China Easterns major shareholder is China Eastern Air
Shareholding Company, a parent company of 21 subsidiaries of
air transportation and related aviation services company who
holds 60% of the total shareholdings"
Corporations make up the biggest group of shareholders,
accounting for almost 69% of the company"
The largest institutional shareholder is JP Morgan Asset
Management Holdings, making up just 2.1% of the company"
Rank!
1"
Shanghai Alliance Investment Ltd"
5"
6"
Aerospace Capital Holdings Ltd"
0.9%"
Sinotrans & CSC Holdings Co Ltd"
0.7%"
JP Morgan & Chase Private Banking

& Investment Banking Operations"
0.7%"
Harvest Fund Management Co Ltd"
0.5%"
China International Fund

Management Limited"
0.4%"
3"
7"
8"
9"
10"
Individuals/Insiders"
Public and Other"
3.8%"
China National Aviation Fuel Group

Corporation"
Jin Jiang International Holdings Co
Ltd"
JP Morgan Asset Management
Holdings Inc"
Type of Shareholders!
Corporations (Private)"
60.0%"
2"
4"
Institutions"
Name!
China Eastern Air Shareholding
Company "
% of
shareholding
s!
3.7%"
3.0%"
2.1%"
56
Fleet Operations
Fleet Type!
A340 - 600"
A340 - 300"
A330 - 300"
A330 - 200"
A300 600R"
A321"
A320"
A319"
B767"
B757 - 200"
B737 800"
B737 -700"
B737 - 200"
In Service!
5"
5"
15"
7"
7"
22"
112"
15"
7"
10"
64"
54"
16"
Fleet Optimised for Domestic Routes!

CEA operates one of the largest fleet in World, with over 300
aircraft in operation"
The majority of CEAs fleet consist of narrow body aircraft, such as
Airbus A320s and Boeing 737s that are designed to serve short/
medium haul flights"
Limited number of wide body aircraft serve as constraints to
growth in international/long haul flights "
Selected International Destinations!
Weekly Freq!
Singapore"
32"
Bangkok"
21"
Frankfurt"
14"
Los Angeles"
14"
Vancouver"
11"
Melbourne"
7"
Paris"
7"
Sydney "
5"
Hamburg"
4"
London "
3"
New York"
3"
Moscow"
2"
Phuket"
2"
Kuala Lumpur"
1"
Despite having a strong international network, connecting

China to South-East Asia, Europe and USA, CEAs flight
network is remains limited compared to Air China!
57
China Eastern Share Performance

50%
100
30%
CEA Volume
Hang Seng Index
CEA Share Pricing
China Airlines Index
90
80
70
10%
60
0%
50
-10%
40
-20%
30
Stock Return
20%
-30%
-40%
20
Components of China Airlines Index (Equal Weighted):!

China Eastern Airlines"
China Southern Airlines"
Air China"
Hainan Airlines"
-50%
3/13/12
4/13/12
5/13/12
6/13/12
7/13/12
8/13/12
10
9/13/12
10/13/12
11/13/12
12/13/12
1/13/13
2/13/13
0
58
Volime (mns)
40%
Appendix C"
List of Overlapping Routes"
Rainforest
capital
59
Flight Details for Overlapping Routes

SIA Flight Details for Singapore-Kunming!
SIA Flight Details for Singapore-Shanghai!

Flight No.!
Departure Timing!
Weekly Frequency!
Aircraft!
Flight No.!
Departure Timing!
Weekly Frequency!
Aircraft!
SQ826"
0110 "
7"
B777"
MI912"
0820 "
3"
A320"
SQ828 "
0730"
7"
B777"
MI916 "
1110"
2"
A320"
SQ830 "
1015"
7"
B777"
SQ832"
1245"
7"
B777"
SQ836"
1725"
7"
B777"
Source: Company
Source: Company
CEA Flight Details for Singapore-Kunming!
CEA Flight Details for Singapore-Shanghai!

Flight No.!
Departure Timing!
Weekly Frequency!
Aircraft!
Flight No.!
Departure Timing!
Weekly Frequency!
Aircraft!
MU546"
1010"
7"
A330"
MU5094"
0300"
4"
A320"
MU548"
1635"
7"
B767"
MU566 "
2325"
7"
B767"
MU544"
0055"
7"
B767"
Source: Company
Source: Company
60
Appendix D"
List of Acquisition Targets Profile"
Rainforest
capital
61
China Eastern Airlines (SEHK:000670)

(SGD m)!
FY09!
FY10!
FY11!
Revenue"
8,286.8 "
14,471.7 "
17,148.1 "
Gross Profit"
2,053.0 "
4,904.1 "
5,260.5 "
685.8 "
2,331.3 "
2,390.7 "
(379.4) "
1,024.0 "
970.6 "
Net Income"
34.7 "
963.6 "
940.1 "
EPS (cents)"
0.01 "
0.09 "
0.08 "
EBITDA"
EBIT"
China Eastern Airlines, together with its subsidiaries, operate as one of the three major
players in Chinas civil aviation industries"
The Company offers a wide range of services which includes passenger, cargo, mail
delivery and other transportation services"
The Company owned controlling stakes in over 21 subsidiaries including Shanghai
Airlines, Yunan Airlines and China United Airlines "
China Eastern Airlines boast an extensive domestic network, flying to over 109
destination across China"
The company also has a wide international network, operating weekly flights to
destinations in North America, Europe, Asia and Oceania"
The Company operates mainly out of its key hub of Shanghai, with Kunming and Xian
serving as key regional hubs"
The Company command a strong market position in Shanghai, account for over 52%
and 39% of all traffic out of Shanghai Honqqiao Airport and Shanghai Pudong Airport
respectively in 2011"
China Eastern Airlines operates a fleet of 339 aircrafts, with Airbus A320 and Boeing
737 accounting for the majority of the fleet"
The company is headquartered in Shanghai, China and has over 59,000 employees as
of 31 December 2011"
"
Source: Capital IQ!
Stock Ticker: SEHK:000670"

52 Week Range: HK$2.12 HK$3.73"
Market Capitalization: S$6,730.5m"
Enterprise Value: S$11,872.7m"
Price/Earnings (LTM): 11.7x"
Price/Book (LTM): 1.2x"
EV/EBITDA (LTM): 5.5x"
EV/EBITDAR (LTM): $3,125.8"
Source: Company, Capital IQ!

50%"
40%"
30%"
20%"
10%"
0%"
-10%"
-20%"
-30%"
-40%"
-50%"
100"
90"
80"
70"
60"
50"
40"
30"
20"
10"
0"
Hang Seng Index

Source: Capital IQ!
Shareholding Structure!
2011 Revenue Breakdown!
CEA Share Pricing
Shareholders!
Volime (millions)!
Stock Returns!
Stock Performance against HSI!
China
International
Source: Company!
Taiwan
Shareholdings!
China Eastern Holding Company"
59.9%"
Shanghai Alliance Investment Ltd."
3.8%"
China National Aviation Fuel Group"
3.7%"
Jin Jiang International Holding Co."
3.0%"
JP Morgan Asset Management"
2.1%"
Aerospace Capital Holdings"
0.8%"
Sinotrans & CSC Holdings"
0.7%"
Others"
26.0%"
Source: Company
62"
China Southern Airlines (SHSE:600029)

(SGD m)!
FY09!
FY10!
FY11!
Revenue"
11,275.0 "
14,866.7 "
18,572.0 "
Gross Profit"
2,446.5 "
4,149.0 "
4,557.6 "
EBITDA"
1,522.3 "
2,643.7 "
2,571.9 "
EBIT"
278.4 "
1,263.9 "
984.5 "
Net Income"
67.3 "
1,125.7 "
1,049.9 "
EPS (cents)"
0.01 "
0.14 "
0.11 "
China Southern Airlines, together with its subsidiaries, operate as one of the three major
players in Chinas civil aviation industries"
The Company primarily operates commercial flights within Greater China, but also
provide cargo transports and other international flights "
The Company owned controlling/significant stakes in many smaller domestic airlines
including Xiamen Airlines, Chongqing Airlines and Sichuan Airlines"
China Southern Airlines has the most extensive domestic network among the three
major domestic airlines, flying to 117 destinations across China"
The company also has a wide international network, operating weekly flights to
destinations in four continents"
The Company operates mainly out of its key hubs of Guangzhou and Beijing, with
Chongqing and Urumuqi serving as the regional hubs for the company"
The Company command a strong market position in Guangzhou, operating more than
425 flights out of Guangzhou Baiyun International Airport every week"
China Southern Airlines operates a fleet of over 425 aircrafts, with Airbus A320 and
Boeing 737 accounting for majority of the fleet"
China Southern Airlines is also the first airline in China to operate the Airbus A380 "
The company is headquartered in Guangzhou, China and has over 71,000 employees
as of 31 December 2011"
Source: Capital IQ
Stock Ticker: SHSE:600029"

52 Week Range: RMB 3.26 RMB 5.35"
EV/EBITDAR (LTM): $3343.8m "

200"
180"
160"
140"
120"
100"
80"
60"
40"
20"
0"
Stock Returns!
30%"
20%"
10%"
0%"
-10%"
-20%"
-30%"
-40%"
Hang Seng Index"

Source: Capital IQ!
CSA Share Pricing"
Shareholders!
Volume (millions)!
40%"
China
Other Asia
Source: Company!
International
Shareholdings!
China Southern Air Holding Company"
53.1%"
Fidelity Investments"
4.2%"
Anhui Conch Venture Investment Co."
1.8%"
Zhong Hang Xin Gang Guarantee Co.,"
1.6%"
Wuhu RuiJian Investment Co. Ltd."
1.5%"
AEGON-Industrial Fund Management "
1.2%"
Zhao, Xiao Dong"
1.2%"
Others"
35.4%"
Source: Company!
63
Air China (SEHK:000753)

(SGD m)!
FY09!
FY10!
FY11!
Revenue"
10,560.9 "
15,794.7 "
19,906.6 "
Gross Profit"
2,850.6 "
4,391.5 "
4,515.3 "
EBITDA"
2,579.6 "
3,582.1 "
2,960.1 "
EBIT"
1,128.9 "
1,916.7 "
995.8 "
Net Income"
998.7 "
2,333.2 "
1,455.1 "
EPS (cents)"
0.08 "
0.2 "
0.12 "
Air China is the official exclusive flag carrier airline of China. It take the responsibility to
provide flight services for national leaders on official trips"
The Company compete with China Eastern Airlines and China Southern Airlines to
provide domestic flights services, international flight services and cargo services"
The Company has several domestic airlines subsidiary including Air Macau, Dalian
Airlines and Shenzhen Airlines"
Air China is also a major shareholder in Cathay Pacific, holding 29.99% stake in the
company"
Air China has a very extensive domestic flight network in China, flying to 95 destinations
across the country"
The company has a wide international network, flying to destinations in 5 continents. Air
China is also the only airline in China that provide flights to South America"
The Company operates mainly out of its key hubs of Beijing, with Chengdu and
Shanghai Pudong serving as important secondary hubs for the company"
The Company command a strong market position in Beijing, operating more than XXX
flights out of Beijing Capital International Airport every week"
Air China operates a fleet of over 432 aircrafts, with Airbus A320 and Boeing 737
accounting for majority of the fleet"
The company is headquartered in Beijing, China and has over 54,000 employees"
Source: Capital IQ
Stock Ticker: SEHK:000753"

52 Week Range: HK$4.40 HK$7.41"
EV/EBITDAR (LTM): $3,697.0m"

200"
180"
160"
140"
120"
100"
80"
60"
40"
20"
0"
Stock Returns!
30%"
20%"
10%"
0%"
-10%"
-20%"
-30%"
-40%"
Hang Seng Index "

Source: Capital IQ!
Air China Share Pricing"
Shareholders!
Volume (millions)!
40%"
China
Greater China
Source: Company!
Interna2onal
Shareholdings!
China National Aviation Holding "
53.6%"
Cathay Pacific Airways Ltd. "
19.3%"
BlackRock, Inc. "
1.5%"
Fidelity Investments"
0.7%"
New China Life Insurance Co., Ltd."
0.7%"
China National Aviation Fuel Group "
0.7%"
SINOTRANS & CSC Holdings Co., Ltd."
0.7%"
Others"
23.0%"
Source: Company!
64
Hainan Airlines (SHSE:600221)

(SGD m)!
FY09!
FY10!
FY11!
Revenue"
3,198.9 "
4,151.8 "
5,277.2 "
Gross Profit"
471.6 "
1,140.8 "
1,271.3 "
EBITDA"
504.0 "
1,253.3 "
1,277.1 "
EBIT"
134.4 "
779.4 "
829.3 "
Net Income"
68.9 "
585.8 "
540.6 "
EPS (cents)"
0.02 "
0.14 "
0.13 "
Hainan Airlines in the fourth largest airline in China behind the the three main players in
the civil aviation industry"
The Company provide air passenger transportation services, cargo transportation
services and plane chartering services"
Hainan Airlines is one of the six airlines being awarded a five-star rating by Skytrax, and
is the only Chinese airline to receive the honour"
The Company owned controlling/significant stakes in several domestic airlines like Hong
Kong Airlines, Changan Airlines and Beijing Capital Airlines"
Hainan Airlines has a commendable domestic flight network in China, flying to 63
destinations across the country"
The company also offers international flights solutions to over 90 international cities in 4
continents "
The Companys main operating hub is in Haikou, with a secondary hub in Beijing
international airport"
The Company has also been named as the best airline in China by Skytrax in their
annual customer survey in 2012"
Hainan Airlines operates a fleet of over 113 aircrafts, with Boeing 737 accounting for
majority of the fleet"
The company is headquartered in Haikou, China and has over 9,500 employees"
Source: Capital IQ
Stock Ticker: SHSE:600221"

52 Week Range: RMB 3.65 RMB 5.28"
Price/Earnings (LTM): 8.9xx"
EV/EBITDAR (LTM): $1,199.5m

5.0"
4.5"
4.0"
3.5"
3.0"
2.5"
2.0"
1.5"
1.0"
0.5"
0.0"
Share Returns!
30%"
20%"
10%"
0%"
-10%"
-20%"
-30%"
-40%"
Hang Seng Index"

Source: Capital IQ!
Hainan Airlines Share Pricing"
Shareholders!
Volume (millions)!
40%"
China
Interna2onal
Source: Company!
Shareholdings!
Grand China Airlines Holding Corp. Ltd."
28.2%"
Haikou Meilan International Airport Co."
7.1%"
HNA Group Limited"
4.9%"
Hainan Development Holdings Co."
4.9%"
Changjiang Leasing Co., Ltd."
4.2%"
Soros Fund Management LLC"
1.8%"
Everbright Pramerica Fund "
0.5%"
Grand China Airlines Holding Corp. Ltd."
48.5%"
Source: Company!
65
Appendix E"
Valuations"
Rainforest
capital
66
Comparable Companies (1/2)

Company
Name!
Air China
Limited
(SEHK:
753)"
Geographic
Locations!
China
(Primary)"
Business Description!
Market
Cap(1) (2)!
15,226.0 "
18.6 "
1.3 "
EV/
EBITDA!
1.4 "
9.2 "
Cathay
Pacific
Airways
Ltd.
(SEHK:
293)"
Hong Kong
(Primary)"
Cathay Pacific Airways Limited, operates as an international

airline that offers scheduled passenger and cargo services.
The company conducts airline operations principally to and
from Hong Kong. As of July 24, 2012, it offered scheduled
passenger and cargo services to approximately 160
destinations in Asia, North America, Australia, Europe, and
Africa through a fleet of 136 aircrafts. The company was
founded in 1946 and is headquartered in Lantau, Hong
Kong."
9,428.1 "
32.7 "
1.1 "
0.9 "
9.2 "
28.1 "
6.0 "
China
Eastern
Airlines
Corp. Ltd.
(SEHK:
670)"
China
(Primary)"
China Eastern Airlines Corporation Limited, operates in the

civil aviation industry. It provides passenger, cargo, mail
delivery, and other transportation services. The company
operates a fleet of passenger aircrafts and freighters, as well
as approximately 11,216 scheduled flights per week. It has
operations in China, Hong Kong, Macau, Taiwan, and
internationally. The company was founded in 1988 and is
based in Shanghai, the Peoples Republic of China. "
7,640.3 "
12.4 "
1.3 "
0.7 "
5.7 "
15.7 "
3.8 "
China
China
Southern
(Primary)"
Airlines Co.
Ltd.
(SHSE:
600029)"
China Southern Airlines Company Limited, provides

commercial airline services in Mainland China, Hong Kong,
Macau, Taiwan, southeast Asia, and internationally. It also
offers air cargo and mail services. As of December 31, 2011,
the company operated 720 routes, of which 576 were
domestic, 106 were international, and 38 were regional; and
had a fleet of 444 aircraft. China Southern Airlines Company
Limited is headquartered in Guangzhou, China."
7,810.8 "
19.7 "
1.1 "
1.1 "
8.2 "
22.7 "
6.1 "
Air China Limited, provides airline, airline-related services

primarily in the Mainland China, Hong Kong, and Macau. It
offers air passenger and air cargo services; and aircraft
engineering services, air catering services, and airport
ground handling services. As of December 31, 2011, it
owned and operated 432 aircrafts primarily Boeing and
Airbus aircrafts. The company was founded in 1988 and is
headquartered in Beijing, the Peoples Republic of China. "
P/E!
P/B! EV/Sales!
EV/
EV/
EBIT! EBITDAR!
28.7 "
7.3 "
67
Comparable Companies (2/2)

Company
Name!
PT Garuda
Indonesia
(Persero)
Tbk
(JKSE:GIA
A)"
Geographic
Locations!
Indonesia
(Primary)"
Market
Cap (1) (2)!
1,846.9 "
14.6 "
Market
Cap!
P/E!
Mean!
6,929.5 "
17.9 "
5.8 "
1.1 "
23.3 "
19.8 "
6.1 "
Median!
7,640.3 "
16.6 "
1.3 "
1.0 "
8.3 "
19.2 "
6.1 "
25th Percentile!
3,610.2 "
13.0 "
1.1 "
0.8 "
7.5 "
13.3 "
4.9 "
75th Percentile!
8,619.5 "
19.4 "
1.4 "
1.2 "
9.2 "
26.8 "
7.5 "
PT. Garuda Indonesia (Persero) Tbk provides passenger and

cargo airline services in Indonesia and internationally. The
company also provides computerized reservation system,
aircraft maintenance and overhaul, catering and ticketing,
information technology, travel agency and transportation, and
ground handling services, as well as operates and manages
hotels. As of October 06 2012, it had a fleet of 94 aircraft.
The company was founded in 1949 and is headquartered in
Jakarta, Indonesia."
Note:
1. Denoted in SGD millions
2. As of 11 March 2013
P/E!
P/B! EV/Sales!
EV/
EBITDA!
0.6 "
6.8 "
EV/
EV/
EBIT! EBITDAR!
11.0 "
2.8 "
EV/
P/B! EV/Sales! EBITDA!
EV/
EV/
EBIT! EBITDAR!
1.6 "
68
Comparable Transactions (1/4)

Transaction
Value (1) (2)!
7,100.4 "
P/E!
22.5"
Northwest
Delta Air
Northwest Airlines Corporation, through its principal
Airlines
Lines Inc.
subsidiary, Northwest Airlines, Inc., operates
Corporation" (NYSE:DAL)" passenger and cargo airlines worldwide. The company
serves countries principally in North America, Asia,
and Europe. The company was founded in 1926 and is
based in Eagan, Minnesota."
6,607.9 "
-"
1.0 "
0.57 "
5.5 "
9.2 "
5.5"
Aug 10"
TAM S.A."
LATAM
Airlines
Group S.A.
(SNSE:LAN)"
TAM S.A. provides passengers and cargo air

transportation services in Brazil and internationally. It
also engages in the aircraft acquisition, financing, and
debt issuance activities. It operates a fleet of
approximately 156 aircrafts. The company was
founded in 1961 and is based in So Paulo, Brazil. "
5,276.3 "
-"
7.7 "
1.2 "
13.6 "
33.9 "
5.9"
Jun 09"
Shanghai
China
Airlines Co., Eastern
Ltd."
Airlines Corp.
Ltd. (SEHK:
670)"
As of January 29, 2010, Shanghai Airlines Co., Ltd.

was acquired by China Eastern Airlines Corp. Ltd.
Shanghai Airlines Co., Ltd. operates as a commercial
airline in China. It offers domestic, international, and
regional air passenger, cargo, mail transport, and
agent services. The company operates a fleet of 59
aircrafts, which features Boeing 737, 757, 767, CRJ,
HAWKER, and MD-11. It operates approximately 130
air routes covering 48 Chinese cities and 5
international cities. The company was incorporated in
1985 and is headquartered in Shanghai, China."
2,208.6 "
-"
25.1 "
1.54 "
-"
-"
-"
Date!
May 10"
Target!
Buyer!
Continental United
Airlines, Inc." Continental
Holdings, Inc.
(NYSE:UAL)"
April 08"
Continental Airlines, Inc. transports people and cargo.
As of December 31, 2012, the company operated 348
mainline aircrafts and 276 regional aircrafts. It
operates flights to destinations in the United States,
Canada, and Latin America, as well as in the Atlantic
and Pacific regions. The company was founded in
1934 and is based in Chicago, Illinois."
EV/
EV/
P/B! Sales! EBITDA!
6.37 " 0.48 "
12.4 "
EV/
EV/
EBIT! EBITDAR!
12.8"
2.0"
69

Transaction
Value (1) (2)!
1,593.8 "
P/E!
37.4 "
Austrian Airlines AG operates scheduled airline

services. The company operates a network of flights
and serves various destinations worldwide; and
charter and holiday flights. Austrian Airlines AG was
founded in 1957 and is headquartered in Vienna,
Austria."
1,294.5 "
-"
1.5 "
0.5 "
5.8 "
-"
4.5"
Ryanair
Holdings plc
(ISE:RY4B)"
Aer Lingus Group plc, an Irish airline, provides air

travel services. It offers passenger and cargo
transportation services.As of September 21, 2012, the
company operated a fleet of 56 aircrafts. It has
operations in the United Kingdom, rest of Europe, and
North America. The company was founded in 1936
and is headquartered in Dublin, Ireland."
1,059.4 "
10.4 "
0.88 "
0.30 "
2.9 "
7.6 "
2.2"
Swire Pacific
Ltd. (SEHK:
19); Air China
Limited
(SEHK:753)"
Cathay Pacific Airways Limited, operates as an

international airline that offers scheduled passenger
and cargo services. The company conducts airline
operations principally to and from Hong Kong. As of
July 24, 2012, it offered scheduled passenger and
cargo services to approximately 160 destinations in
Asia, North America, Australia, Europe, and Africa
through a fleet of 136 aircrafts. The company was
founded in 1946 and is headquartered in Lantau, Hong
Kong."
673.5 "
10.8 "
1.3 "
1.1 "
8.1 "
18.2 "
5.1"
Date!
Sep 10"
Target!
AirTran
Holdings,
LLC"
Buyer!
Southwest
Airlines Co.
(NYSE:LUV)"
Feb 09"
Austrian
Deutsche
Airlines AG" Lufthansa
Aktiengesells
chaft
(DB:LHA)"
Jun 12"
Aer Lingus
Group plc
(ISE:EIL1)"
Aug 09"
Cathay
Pacific
Airways Ltd.
(SEHK:293)"
As of January 31, 2011, AirTran Holdings, LLC
operated 86 Boeing B717-200 aircraft B717 and 52
Boeing B737-700 aircraft B737 offering approximately
700 scheduled flights per day to 69 locations. The
company was founded in 1992 and is based in
Orlando, Florida."
EV/
EV/
P/B! Sales! EBITDA!
2.2 "
0.6 "
9.3 "
EV/
EV/
EBIT! EBITDAR!
15.6 "
2.8"
70

Transaction
Value (1) (2)!
366.9 "
P/E!
12.6 "
EV/
EV/
P/B! Sales! EBITDA!
2.7 "
1.5 "
7.2 "
Midwest Air Group, Inc., through its subsidiaries,

provides scheduled passenger service in the United
States and internationally.The company was
incorporated in 1996 and is headquartered in Oak
Creek, Wisconsin. "
351.8 "
23.5 "
6.5 "
0.46 "
12.1 "
27.9 "
3.0"
Sociedad de
Promocin y
Participacin
Empresarial
Caja de
Madrid, S.A."
Iberia Lineas Aereas de Espana SA, provides air

transportation of passengers and cargo on routes
worldwide, between Spain and Europe, and between
Europe and Latin America.The company was founded
in 1927 and is based in Madrid, Spain."
239.9 "
16.1 "
1.8 "
0.21 "
2.4 "
4.7 "
1.1"
Kal Airways
Private
Limited"
SpiceJet Limited operates as a low fare commercial

airline in India. The company provides passenger and
cargo air transport services under the SpiceJet brand
name. As of March 31, 2012, it operated a fleet of 47
aircrafts covering 39 destinations. SpiceJet Limited
was incorporated in 1984 and is based in Gurgaon,
India."
130.9 "
31.1 "
4.0 "
0.87 "
45.0 "
52.4 "
7.0"
Date!
Feb 10"
Target!
Buyer!
LATAM
Costa Verde
Airlines
Aeronautica
Group S.A. SA
(SNSE:LAN)" (SNSE:CVA)"
LATAM Airlines Group S.A., provides passenger and
cargo air transportation services primarily in South
America. As of June 22, 2012, the company operated
a fleet of 310 aircrafts. It offers passenger transport
services to approximately 150 destinations in 22
countries; and cargo services to approximately 169
destinations in 27 countries. LATAM Airlines Group
S.A. was founded in 1929 and is based in Santiago,
Chile."
Aug 07"
Midwest Air
Group Inc."
TPG Capital,
L.P.;
Northwest
Airlines
Corporation"
Nov 07"
Iberia
Lineas
Aereas de
Espana SA"
Jun 10"
SpiceJet
Limited
(BSE:
500285)"
EV/
EV/
EBIT! EBITDAR!
12.1 "
3.1"
71

Transaction
Value (1) (2)!
118.1 "
P/E!
15.9 "
107.0 "
-"
Transaction
Value (1) (2)!
P/E!
1,937.8 "
20.0 "
4.5 "
0.75 "
10.6 "
19.1 "
3.6 "
Median"
866.5 "
16.1 "
2.0 "
0.60 "
7.2 "
14.2 "
3.0 "
25th Percentile"
267.9 "
12.6 "
1.4 "
0.5 "
5.8 "
11.4 "
2.5 "
75th Percentile"
2,054.9 "
23.5 "
5.8 "
1.0 "
12.1 "
23.7 "
5.1 "
Date!
Apr 12"
Target!
Buyer!
PT Garuda PT Trans
Indonesia
Airways"
(Persero)
Tbk
(JKSE:GIAA
)"
PT. Garuda Indonesia (Persero) Tbk provides
passenger and cargo airline services in Indonesia and
internationally. As of October 06 2012, it had a fleet of
94 aircraft. The company was founded in 1949 and is
headquartered in Jakarta, Indonesia."
Jan 11"
Virgin
Australia
Holdings
Limited
(ASX:VAH)"
Virgin Australia Holdings Limited provides domestic

and international airline services. It offers domestic
airline services in Australia, as well as international
airline services primarily to North America, Europe,
Asia, the Middle East, and South Africa. It operates
approximately 80 aircraft. Virgin Australia Holdings
Limited was founded in 2000 and is headquartered in
Bowen Hills, Australia."
Air New
Zealand
Limited
(NZSE:AIR)"
EV/
EV/
P/B! Sales! EBITDA!
1.7 " 0.54 "
6.7 "
1.0 "
0.63 "
6.6 "
EV/
EV/
EBIT! EBITDAR!
12.2 "
2.5"
22.3 "
2.6"
Note:
1. Denoted in SGD millions
2. As of 11 March 2013
Mean"
EV/
EV/
P/B! Sales! EBITDA!
EV/
EV/
EBIT! EBITDAR!
72
Beta and WACC Calculation

Company Name!
Air China "
Cathay Pacific Airways "
China Eastern Airlines"
China Southern Airlines"
Hainan Airlines"
Levered Beta!
1.44"
1.01"
1.84"
0.77"
0.82"
Beta Calculation!
Cost of Equity Calculation!
Risk Free Rate"
1.26%
Equity Risk Premium"
6.18%
CEA Levered Beta"
1.43"
Cost of Equity!
10.08%!
Marginal Tax Rate!

20.0%"
16.5%"
20.0%"
20.0%"
20.0%"
Total Debt/Equity % !
185.8%"
103.9%"
285.7%"
168.5%"
363.4%"
Mean"
Median"
Max"
Min"
Unlevered Beta!
0.58"
0.54"
0.56"
0.33"
0.21"
0.41"
0.43"
0.58"
0.21"
Beta Calculation!
Median Unlevered Beta"
CEA Debt/Equity Ratio"
Marginal Tax Rate"
CEA Levered Beta!
0.43"
2.857"
20.0%"
1.43!
WACC Calculation!
Cost of Equity"
Cost of Debt"
Marginal Tax Rata"
Target Debt/Equity"
WACC!
10.8%"
4.95%"
20.0%"
70.0%"
7.56%!
73
Valuation of CEA
HKD Millions"
FY 12F !
EBIT "
Less: Tax "
Add: Depreciation &
Amortization "
Less: Capital Expenditure "
Less: Changes in Non-Cash
Working Capital "
FCFF "
Discount Period "
Discount Factor "
Present Value "
4,669.3 "
(933.9)"
5,159.7 "
(1,031.9)"
5,703.0 "
(1,140.6)"
6,305.3 "
(1,261.1)"
6,973.2 "
(1,394.6)"
7,520.7 "
8,273.2 "
9,101.1 "
10,011.8 "
11,013.8 "
(10,767.3)"
(11,844.9)"
(13,030.3)"
(14,334.4)"
(15,769.2)"
3,595.1 "
1,924.5 "
2,119.9 "
2,335.4 "
2,573.0 "
4,083.8 "
- "
1.0 "
4,083.8 "
2,480.6 "
0.8 "
1.0 "
2,379.1 "
2,753.1 "
1.8 "
1.1 "
2,511.5 "
3,057.0 "
2.8 "
1.2 "
2,652.4 "
3,396.2 "
3.8 "
1.2 "
2,802.7 "
PV of Forecasted CF "
14,429.5 "
Terminal Value "

PV of Terminal Value "
76,711.5 "
63,305.7 "
Forecasted Enterprise Value "
77,735.3 !
Add: Cash "

Less: Total Debt "
Less: NCI "
Forecasted Equity Value "
10,533.5 "
(41,141.6)"
(2,294.4)"
44,832.8 !
Outstanding No. of Shares "
11,276.5 millions"
Price Per Share !
$3.98 !
FY 13F !
FY 14F !
FY 15F !
FY 16F !
Key Assumption for DCF!

Terminal Growth Rate"
3.0%"
WACC"
7.6%"
Marginal Tax Rate"
20%"
74
Income Statement of CEA

HKD Millions!
!
Revenue"
Other Revenue"
Total Revenue!
!
FY 07!
!
FY 08!
!
FY 09!
!
FY 10!
FY 11!
42,533.9 "
487.6 "
43,021.5 !
41,072.6 "
405.2 "
41,477.7 !
38,989.7 "
1,288.0 "
40,277.7 !
73,803.7 "
658.6 "
74,462.3 !
82,403.1 "
1,061.5 "
83,464.6 !
90,643.4 " 99,707.8 " 109,678.6 " 120,646.4 " 132,711.1 "
1,240.1 "
1,448.9 "
1,692.9 "
1,977.9 "
2,310.8 "
91,883.6 ! 101,156.7 ! 111,371.4 ! 122,624.3 ! 135,021.9 !
Cost Of Goods Sold"

Gross Profit!
31,609.7 "
11,411.8 !
36,280.3 "
5,197.4 !
30,298.9 "
9,978.8 !
49,228.5 "
25,233.7 !
57,860.2 "
25,604.4 !
64,517.0 "
27,366.6 !
71,028.2 "
30,128.5 !
78,200.6 "
33,170.9 !
86,101.9 "
36,522.4 !
94,807.0 "
40,214.9 !
Selling General & Admin Exp."

Depreciation & Amort."
Other Operating Expense/(Income)"
Other Operating Exp., Total!
5,639.3 "
4,719.7 "
711.8 "
11,070.8 !
5,618.6 "
4,781.6 "
7,089.9 "
17,490.1 !
5,755.2 "
5,177.1 "
890.3 "
11,822.7 !
11,942.5 "
6,726.7 "
1,295.6 "
19,964.8 !
12,635.2 "
6,923.8 "
1,321.4 "
20,880.4 !
13,722.0 "
7,520.7 "
1,454.7 "
22,697.3 !
15,094.2 "
8,273.2 "
1,601.5 "
24,968.8 !
16,603.6 "
9,101.1 "
1,763.2 "
27,467.9 !
18,263.9 "
10,011.8 "
1,941.3 "
30,217.1 !
20,090.3 "
11,013.8 "
2,137.6 "
33,241.7 !
340.9 ! (12,292.7) !
(1,843.9) !
5,269.0 !
4,724.0 !
4,669.3 !
5,159.7 !
5,703.0 !
6,305.3 !
6,973.2 !
(2,328.1) "
89.3 "
(2,238.9) !
(1,754.6) "
109.9 "
(1,644.7) !
(1,501.9) "
80.6 "
(1,421.3) !
(1,462.7) "
151.6 "
(1,311.1) !
(713.2)"
-"
(376.3)"
-"
(982.4)"
-"
(557.2)"
-"
(436.2)"
-"
(713.2)"
(376.3)"
(982.4)"
(557.2)"
(436.2)"
Income/(Loss) from Affiliates"

Currency Exchange Gains (Loss)"
Other Non-Operating Inc. (Exp.)"
EBT Excl. Unusual Items!
88.4 "
93.7 "
2,057.8 "
1,891.4 "
-"
-"
605.4 ! (12,546.4) !
(22.8) "
153.9 "
3,716.2 "
358.6 !
67.4 "
1,100.4 "
807.8 "
5,823.2 !
106.9 "
1,882.8 "
76.4 "
5,479.0 !
-"
-"
-"
-"
-"
-"
-"
-"
-"
-"
-"
-"
-"
-"
-"
3,956.1 !
4,783.4 !
4,720.6 !
5,748.1 !
6,537.0 !
Impairment of Goodwill"
Gain (Loss) On Sale Of Invest."
Gain (Loss) On Sale Of Assets"
Asset Writedown"
Other Unusual Items"
EBT Incl. Unusual Items!
-"
-"
-"
-"
-"
267.1 "
(227.5) " (2,976.7) "
-"
-"
377.9 ! (15,256.0) !
-"
-"
(109.4) "
-"
-"
249.2 !
-"
-"
(405.4) "
-"
-"
5,417.8 !
-"
-"
(638.3) "
-"
-"
4,840.7 !
-"
-"
-"
-"
-"
3,956.1 "
-"
-"
-"
-"
-"
4,783.4 "
-"
-"
-"
-"
-"
4,720.6 "
-"
-"
-"
-"
-"
5,748.1 "
-"
-"
-"
-"
-"
6,537.0 "
23.8 "
73.9 "
354.2 ! (15,329.9) !
52.5 "
196.7 !
133.5 "
5,284.3 !
264.2 "
4,576.5 !
215.9 "
3,740.1 !
261.1 "
4,522.3 !
257.7 "
4,462.9 !
313.8 "
5,434.3 !
356.8 "
6,180.2 !
Operating Income!
Interest Expense"
Interest and Invest. Income"
Net Interest Exp.!
Income Tax Expense"

Net Income!
(1,978.6) "
96.8 "
(1,881.7) !
FY 12!
FY 13!
Forecast!
FY 14!
FY 15!
FY 16!
75
Balance Sheet of CEA

!
!
FY 07!
!
FY 08!
!
FY 09!
!
FY 10!
FY 11!
FY 12!
FY 13!
Forecast!
FY 14!
FY 15!
FY 16!
ASSETS!
Cash And Equivalents"
Short Term Investments"
Total Cash & ST Investments!
1,655.2 "
80.0"
1,735.2 !
3,451.0 "
33.1 "
3,484.1 !
1,735.2 "
28.5 "
1,763.7 !
3,078.2 "
462.8 "
3,541.0 !
3,861.0 "
2,616.1 "
6,477.0 !
17,391.9 "
2,616.1 "
18,396.4 "
2,616.1 "
34,412.0 "
2,616.1 "
36,689.0 "
2,616.1 "
37,123.2 "
2,616.1 "
20,008.0 !
21,012.4 !
37,028.0 !
39,305.1 !
39,739.3 !
Accounts Receivable"
Other Receivables"
Total Receivables!
2,161.5 "
1,355.6 "
3,517.0 !
1,165.3 "
1,345.1 "
2,510.4 !
1,764.7 "
618.5 "
2,383.2 !
2,280.2 "
1,299.7 "
3,579.9 !
2,447.4 "
526.9 "
2,974.2 !
2,694.2 "
580.0 "
3,274.2 !
2,966.1 "
638.6 "
3,604.7 !
3,265.6 "
703.0 "
3,968.7 !
3,595.6 "
774.1 "
4,369.7 !
3,959.1 "
852.3 "
4,811.5 !
Inventory"
Prepaid Exp."
Other Current Assets"
Total Current Assets!
1,124.9 "
280.9 "
3,134.1 "
9,792.2 !
871.4 "
428.5 "
3,105.7 "
10,400.1 !
932.3 "
549.8 "
1,234.0 "
6,863.1 !
1,286.9 "
1,188.5 "
2,483.8 "
12,080.1 !
1,555.5 "
1,437.6 "
1,263.6 "
13,708.0 !
2,215.4 "
1,582.6 "
1,391.1 "
28,471.3 !
2,439.0 "
1,742.3 "
1,531.5 "
30,329.9 !
2,685.2 "
1,918.3 "
1,686.1 "
47,286.4 !
2,956.5 "
2,112.1 "
1,856.5 "
50,599.9 !
3,255.5 "
2,325.6 "
2,044.2 "
52,176.0 !
HKD Millions!
Gross Property, Plant & Equipment"

Accumulated Depreciation"
Net Property, Plant & Equipment!
Long-term Investments"
Goodwill"
Other Intangibles"
Deferred Tax Assets, LT"
Deferred Charges, LT"
Other Long-Term Assets"
Total Assets!
67,916.6 " 76,930.1 " 83,929.6 " 101,737.3 " 109,659.3 " 120,426.7 " 132,271.5 " 145,301.8 " 159,636.3 " 175,405.4 "
(20,646.8) " (24,251.6) " (27,226.1) " (32,915.0) " (35,901.5)" (43,422.2)" (51,695.4)" (60,796.4)" (70,808.3)" (81,822.1)"
47,269.8 ! 52,678.5 ! 56,703.6 ! 68,822.3 ! 73,757.8 ! 77,004.5 ! 80,576.2 ! 84,505.4 ! 88,828.0 ! 93,583.3 !
997.4 "
993.1 "
1,219.1 "
113.2 "
-"
7,356.3 "
67,741.1 !
1,374.9 "
-"
1,161.4 "
81.9 "
-"
7,355.1 "
73,051.9 !
1,153.1 "
1,507.9 "
1,505.5 "
1,505.5 "
1,505.5 "
1,505.5 "
1,505.5 "
1,505.5 "
-"
11,269.7 " 11,269.7 " 11,269.7 " 11,269.7 " 11,269.7 " 11,269.7 " 11,269.7 "
1,040.5 "
1,469.8 "
1,555.2 "
1,555.2 "
1,555.2 "
1,555.2 "
1,555.2 "
1,555.2 "
83.7 "
75.2 "
44.4 "
44.4 "
44.4 "
44.4 "
44.4 "
44.4 "
-"
-"
- -""
-"
-"
-"
-"
6,007.5 "
8,108.7 " 12,898.3 " 12,898.3 " 12,898.3 " 12,898.3 " 12,898.3 " 12,898.3 "
71,851.4 ! 103,333.7 ! 114,738.9 ! 132,748.8 ! 138,179.1 ! 159,064.8 ! 166,700.9 ! 173,032.4 !
76
Balance Sheet of CEA

!
!
FY 07!
!
FY 08!
!
FY 09!
!
FY 10!
FY 11!
FY 12!
FY 13!
Forecast!
FY 14!
FY 15!
FY 16!
LIABILITIES!
Accounts Payable"
Accrued Exp."
Short-term Borrowings"
Curr. Port. of LT Debt"
Curr. Port. of Cap. Leases"
Curr. Income Taxes Payable"
Unearned Revenue, Current"
Other Current Liabilities"
Total Current Liabilities!
3,769.3 "
7,821.9 "
15,189.0 "
3,323.5 "
2,545.2 "
90.9 "
1,211.2 "
1,939.1 "
35,890.0 !
5,496.5 "
10,432.4 "
19,473.8 "
7,081.2 "
1,917.0 "
39.0 "
1,013.9 "
8,404.5 "
53,858.3 !
6,494.5 "
9,869.5 "
8,406.6 "
3,991.2 "
2,125.4 "
21.1 "
1,420.2 "
3,182.2 "
35,510.6 !
4,289.2 "
11,620.2 "
11,193.1 "
4,080.5 "
2,137.8 "
64.8 "
2,577.9 "
3,300.3 "
39,263.8 !
2,702.1 "
12,503.6 "
11,453.9 "
6,768.3 "
2,459.3 "
172.3 "
3,197.6 "
4,129.6 "
43,386.7 !
3,013.0 "
17,807.4 "
12,333.1 "
5,730.2 "
2,386.7 "
0.0 "
3,520.2 "
3,192.1 "
47,982.7 !
3,317.1 "
19,604.5 "
10,728.3 "
7,051.9 "
2,769.6 "
0.0 "
3,875.5 "
3,514.3 "
50,861.1 !
3,652.0 "
21,584.2 "
13,202.9 "
7,769.1 "
3,174.9 "
0.0 "
4,266.8 "
3,869.2 "
57,519.1 !
4,021.0 "
23,765.0 "
11,636.6 "
6,225.3 "
3,606.4 "
0.0 "
4,697.9 "
4,260.1 "
58,212.3 !
4,427.5 "
26,167.7 "
9,324.2 "
6,225.3 "
3,606.4 "
0.0 "
5,172.9 "
4,690.8 "
59,614.9 !
Long-Term Debt"
Capital Leases"
Pension & Other Post-Ret Benefits"
Def. Tax Liability, Non-Curr."
Other Non-Current Liabilities"
Total Liabilities!
11,390.9 "
13,907.0 "
1,370.7 "
50.4 "
2,199.6 "
64,808.5 !
8,729.4 "
18,891.9 "
1,469.1 "
57.6 "
2,685.2 "
85,691.4 !
13,092.0 "
17,244.8 "
1,798.7 "
51.5 "
2,477.5 "
70,175.2 !
23,483.4 "
17,070.5 "
2,556.0 "
51.8 "
4,346.3 "
86,771.8 !
23,820.3 " 27,206.5 " 21,598.9 " 27,490.4 " 24,851.3 " 18,675.9 "
17,801.6 " 19,182.9 " 22,260.5 " 25,517.6 " 28,986.3 " 33,162.5 "
2,859.9 "
2,859.9 "
2,859.9 "
2,859.9 "
2,859.9 "
2,859.9 "
29.3 "
0.0 "
0.0 "
0.0 "
0.0 "
0.0 "
5,035.9 "
5,543.9 "
6,103.4 "
6,719.7 "
7,398.6 "
8,146.6 "
92,933.8 ! 102,775.9 ! 103,683.9 ! 120,106.7 ! 122,308.5 ! 122,459.8 !
Common Stock"
Additional Paid In Capital"
Retained Earnings"
Treasury Stock"
Comprehensive Inc. and Other"
Total Common Equity!
4,867.0 "
4,867.0 "
9,581.7 " 11,276.5 "
1,028.6 "
1,006.5 " 10,347.9 " 17,747.8 "
(2,813.7) " (18,082.3) " (17,913.5) " (12,955.5) "
-"
-"
-"
-"
(721.3) "
(888.5) "
(781.5) "
(797.5) "
2,360.6 ! (13,097.4) !
1,234.6 ! 15,271.3 !
HKD Millions!
Minority Interest"
Total Equity!
Total Liabilities And Equity!
572.0 "
11,276.5 "
18,161.3 "
(8,379.8)"
- -""
(932.2)"
20,125.9 !
15,704.2 "
18,161.3 "
15,704.2 "
18,161.3 "
15,704.2 "
18,161.3 "
15,704.2 "
18,161.3 "
15,704.2 "
18,161.3 "
(4,639.7)"
-"
(932.2)"
(117.3)"
-"
(932.2)"
4,345.5 "
-"
(932.2)"
9,779.9 "
-"
(932.2)"
15,960.1 "
28,293.6 !
32,816.0 !
37,278.8 !
42,713.2 !
48,893.4 !
(932.2)"
457.9 "
441.6 "
1,290.6 "
1,679.2 "
1,679.2 "
1,679.2 "
1,679.2 "
1,679.2 "
1,679.2 "
2,932.6 ! (12,639.5) !
1,676.2 !
16,561.9 !
21,805.1 !
29,972.9 !
34,495.2 !
38,958.1 !
44,392.4 !
50,572.6 !
67,741.1 !
73,051.9 !
71,851.4 ! 103,333.7 ! 114,738.9 ! 132,748.8 ! 138,179.1 ! 159,064.7 ! 166,700.9 ! 173,032.4 !
77
Cash Flow Statement of CEA

!
!
FY 07!
!
FY 08!
!
FY 09!
!
FY 10!
!
Net Income"
Total Depreciation & Amort."
Other Amortization"
(Gain) Loss From Sale Of Assets"
Asset Writedown & Restructuring Costs"
(Income) Loss on Equity Invest."
Provision & Write-off of Bad debts"
Other Operating Activities"
Change in Acc. Receivable"
Change In Inventories"
Change in Acc. Payable"
Change in Unearned Rev."
Change in Other Net Operating Assets"
Cash from Ops.!
378.6 "
4,694.9 "
24.8 "
(55.1) "
227.5 "
(88.4) "
10.5 "
740.5 "
(470.1) "
(409.4) "
(1,625.3) "
319.6 "
(667.8) "
3,080.3 !
(15,268.5) "
4,755.6 "
25.9 "
(280.7)"
2,976.7 "
(93.7) "
39.3 "
7,869.9 "
922.4 "
(529.1) "
1,792.6 "
(197.3) "
842.3 "
2,855.5 !
168.8 "
5,177.1 "
25.7 "
-"
109.4 "
22.8 "
8.8 "
(2,393.1) "
(210.2) "
(465.6) "
1,021.4 "
406.3 "
(441.9) "
3,429.4 !
4,958.0 "
6,726.7 "
31.2 "
(28.3) "
405.4 "
(67.4) "
1.5 "
1,459.2 "
(202.7) "
(776.7) "
(3,418.1) "
846.5 "
705.8 "
10,641.2 !
4,575.7 "
6,912.0 "
41.8 "
(38.7) "
638.3 "
(106.9) "
161.0 "
1,409.7 "
105.0 "
(1,023.4) "
(1,601.5) "
619.8 "
1,930.2 "
13,623.0 !
Capital Expenditure"
Sale of Property, Plant, and Equipment"
Net Cash Acquisitions"
Invest. in Marketable & Equity Sect."
Other Investing Activities"
Cash from Investing!
(5,329.4) "
70.7 "
411.0 "
(92.4) "
3,183.8 "
(1,756.3) !
(4,893.2) "
1,856.4 "
(83.1) "
(347.5) "
2,542.6 "
(924.9) !
(7,612.6) "
32.9 "
(30.0) "
210.0 "
163.7 "
(7,236.1) !
(9,984.7) "
532.0 "
1,157.9"
(432.6) "
94.8 "
(8,632.7) !
(13,548.5) "
445.4 "
(106.5) "
(1,958.3) "
228.8 "
(14,939.1) !
5,416.60 (10,998.60)
(1,768.13)
(114.16)
-"
-"
-"
14,056.2 "
(3,740.2) "
(857.7) "
(91.8) !
2,085.6 !
(1,139.53)
2,828.56
-"
-"
(2,341.4) "
(652.4) !
1,132.92
747.20
-"
-"
255.4 -"
"
2,135.6 !
HKD Millions!
Net Short Term Debt Issued/(Repaid)"

Long-Term Debt Net Issued/(Repaid)"
Capital Lease Net issued/(Repaid)"
Issuance of Common Stock"
Other Financing Activities"
Cash from Financing!
2,444.40
(2,576.85)
-"
-"
(1,507.5) "
(1,639.9) !
FY 11!
FY 12!
FY 13!
Forecast!
FY 14!
FY 15!
FY 16!
3,740.1 "
11,260.8 "
-"
-"
-"
-"
-"
-"
4,522.3 "
12,795.5 "
-"
-"
-"
-"
-"
-"
4,462.9 "
13,564.0 "
-"
-"
-"
-"
-"
-"
5,434.3 "
15,446.2 "
-"
-"
-"
-"
-"
-"
6,180.2 "
17,194.0 "
-"
-"
-"
-"
-"
-"
(246.9)"
(659.8)"
310.9 "
322.5 "
4,347.0 "
15,334.5 !
(271.9)"
(223.6)"
304.1 "
355.3 "
2,320.2 "
15,279.5 !
(299.5)"
(246.3)"
335.0 "
391.3 "
2,555.8 "
16,300.2 !
(330.0)"
(271.3)"
369.0 "
431.1 "
2,815.5 "
18,460.5 !
(363.5)"
(298.9)"
406.5 "
475.0 "
3,101.9 "
20,515.0 !
(10,767.3)"
-"
-"
-"
-"
(10,767.3)!
(11,844.9)"
-"
-"
-"
-"
(11,844.9)!
(13,030.3)"
-"
-"
-"
-"
(13,030.3)!
(14,334.4)"
-"
-"
-"
-"
(14,334.4)!
(15,769.2)"
-"
-"
-"
-"
(15,769.2)!
879.2 "
2,348.1 "
1,308.8 "
4,427.6 "
-"
8,963.8 !
(1,604.8)"
(4,285.9)"
3,460.5 "
-"
2,474.6 "
6,608.7 "
3,662.3 "
-"
(1,566.3)"
(4,183.0)"
3,900.3 "
-"
(2,312.4)"
(6,175.4)"
4,176.2 "
-"
-"
(2,430.2)!
-"
12,745.7 !
-"
(1,849.0)!
(4,311.6)!
Foreign Exchange Rate Adj."

Net Change in Cash!
(16.3) "
(332.2) !
(43.1) "
1,795.8 !
5.3 "
(1,715.8) !
(13.1) "
1,343.0 !
(36.8) -""
782.7 !
-"
13,530.9 !
-"
1,004.5 !
-"
16,015.6 !
-"
2,277.0 !
434.2 !
Cash at beginning!
Ending balance!
1,987.4 !
1,655.2 !
1,655.2 !
3,451.0 !
3,451.0 !
1,735.2 !
1,735.2 !
3,078.2 !
3,078.2 !
3,861.0 !
3,861.0 !
17,391.9 !
17,391.9 !
18,396.4 !
18,396.4 !
34,412.0 !
34,412.0 !
36,689.0 !
36,689.0 !
37,123.2 !
78
Contact Information
Lee Lin Ze
Managing Partner,
Head of M&A (South East Asia)
Tel: +65 9827 2723
Email: linze.lee@rainforest.com

Rainforest Capital Pte Ltd
976A Raes Place
07-01 North Lobby
Singapore 039393
Tel: +65 6732 9847

www.rainforestcapital.com

Rainforest
capital
This presentation has been prepared by Rainforest Capital (RFC) for the exclusive use of recipient (together with its subsidiaries and affiliates, the company) using information provided by the company and other publicly
available information. RFC has not independently verified the information contained herein, nor does RFC make any representation or warranty, either express or implied, as to the accuracy, completeness or reliability of the
information contained in this presentation. Any estimates or projections as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based upon the best judgment of
RFC from the information provided by the company and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will
vary from the projections and such variations may be material. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. RFC expressly disclaims any and all liability relating or
resulting from the use of this presentation. "
"
This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The company should not construe the
contents of this presentation as legal, tax, accounting or investment advice or a recommendation. The company should consult its own counsel, tax and financial advisors as to legal and related matters concerning any transaction
described herein. This presentation does not purport to be all-inclusive or to contain all of the information which the company may require. No investment, divestment or other financial decisions or actions should be based solely
on the information in this presentation."
"
This presentation has been prepared on a confidential basis solely for the use and benefit of the company; provided that the company and any of its employees, representatives, or other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to the company relating to such tax treatment and tax
structure. Distribution of this presentation to any person other than the company and those persons retained to advise the company is unauthorized. This material must not be copied, reproduced, distributed or passed to others at
any time without the prior written consent of RFC."
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Rainforest Capital Transportation M&A

Discussion of Possible Acquisition for SIA

One of the Big Three airlines in China"

50% Cash, 50% Debt"

Primarily focus on domestic flights: 70%

Structure can be negotiated, here we assume:"

China Eastern Air Holding Company!

Rising competition from middle eastern carriers

25% stake to be acquired. Singapore Airlines

Overview of the Global Aviation

Overview of Global Aviation Industry

Global aviation revenues rebounded from trough!

Despite revenue growth, airline profitability remains depressed

Airline revenues declined 15.6% y-o-y in 2009 due to the

Airline profitability facing pressures from fuel price!

Jet fuel price"

Tepid growth in premium passengers!

Intensifying Competition from Middle Eastern Carriers

These airlines have rapidly increased the number of

YoY growth in traffic"

Middle Eastern carriers compete aggressively in the long haul

Asia Pacific" Europe"

Destinations served by Middle Eastern carriers!

Middle Eastern carriers have experienced strong growth in

Highest growth in international passenger traffic!

Liberalization of Industry has Fueled Competition

Surge in number of new LCCs since OSP proposal !

The ASEAN Open Sky Policy (OSP) is likely to spur greater

It is on track to be implemented in 2015 and member countries

The OSP was proposed during the ASEAN Economic Summit

Traffic growth lagging for national carriers!

While passenger traffic at ASEAN airports are expected to

The introduction of the OSP will further increase competition

Greater competition has led to lower prices in the budget

The Emerging Markets Growth Story

Decoupling of GDP growth rates!

With increasing income levels, growth in demand for both

Air travel demand is driven by increases in income levels.

Total RPK market share for developing countries is expected to

Further growth headroom for in flights per capita!

Emerging economies expected to dominate RPK!

Global RPK market share"

GDP per capita"

Source: National Bureau of Statistics!

2011 per capita GDP"

2011 flights per capita"

Our Understanding of SIAs Current

Lackluster Performance Following the Economic Crisis (1)

Passenger base has recovered slightly post crisis..!

This capacity underutilization problem can be mainly attributed

However, passenger recovery has fallen short of

Source: Company data!

..but 2011 RPK has lagged behind ASK growth!

2011 Fall in Passenger

Lackluster Performance Following the Economic Crisis (2)

However, over the last 5 years, this premium has narrowed as

SIA has traditionally enjoyed a pricing premium edge over its

Narrowing passenger yield premium!

This is especially so as cost continue to rise, driven by the

Rising costs driven by volatile fuel prices!

Industry Driving the Poor Performance of SIA

Sale of Virgin to realign SIAs focus in growth markets..!