1Q17 Results Beat Expectations, Strong Online Games, Buy 2017 年第 1 季度业绩超预期, 在线游戏强劲, 买入

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1 Internet Sector Equity Research 股票研究 Company Report: Ricky Lai 黎柏坚 公司报告 : 腾讯控股 (00700 HK) ricky.lai@gtjas.com.hk 1Q17 Results Beat Expectations, Strong Online Games, Buy 2017 年第 1 季度业绩超预期, 在线游戏强劲, 买入 公司报告证券研究报告 Equity Research Report Company Report 1Q17 results beat market and our expectations by 10.5%/ 9.0%, respectively, driven by better-than-expected online game revenue. Non-GAAP net profit to shareholders was RMB14.2 billion, up 42% yoy. Weixin MAU reached 930 million, which surpassed QQ MAU of 860 million for the first time. We lift FY17-FY19 online game revenue by 12.0%/ 11.0%/ 7.0%, respectively, due to better-than-expected online game revenue contribution. 1Q17 online game revenue grew 34% yoy to RMB12.9 billion, better than our expectation by 9.3%, driven by popular mobile game titles (Honor of Kings, Cross Fire Mobile). By launching expansion packs with new features, we expect that Tencent can extend the life cycle of its game titles and boost users spending. FY17-FY19 gross profit margin is expected to be 50.7%/ 49.9%/ 49.1%, respectively. 1Q17 gross profit margin declined by 6.7 ppt yoy to 51.4% due to content costs on video platforms, traffic acquisition costs and larger mobile game contribution. We expect Tencent s gross margin will be further dragged down by the launch of more quality videos and stronger mobile game contribution. Maintain the investment rating of Buy and lift the TP from HK$ to HK$ We revise up FY17-FY19 EPS by 6.1%/ 5.7%/ 3.0%, respectively. The new TP implies 47.0x FT17 PER, 38.0x FY18 PER and 32.9x FY19 PER 年第 1 季度业绩分别好于市场和我们的预期 10.5%/ 9.0%, 因好于市场预期的游戏收 入 非 GAAP 的股东净利润为人民币 142 亿元, 同比增长 42% 微信活跃用户达 9.3 亿, 首次超过了 QQ 活跃用户的 8.6 亿 Rating: Buy Maintained 评级 : 买入 ( 维持 ) 6-18m TP 目标价 : HK$ Revised from 原目标价 : HK$ Share price 股价 : Stock performance 股价表现 % of return HK$ May-16 Aug-16 Nov-16 Feb-17 May-17 HSI Index Tencent 互联网 由于在线游戏收入贡献好于预期, 我们分别上调 年在线游戏收入 12.0%/ 11.0%/ 7.0% 第 1 季度网络游戏收入同比增长 34% 至人民币 129 亿元, 高于我们预期 9.3%, 因受到流行手机游戏 ( 王者荣耀, 穿越火线 ) 的推动 通过推出具有新功能的升级版本, 我们预计腾讯可以延长其游戏的生命周期, 并提升用户的支出 预期 年毛利率分别为 50.7%/ 49.9%/ 49.1% 2017 年第 1 季度毛利率同比下降 6.7 个百分点至 51.4%, 是由于视频平台的内容成本 流量获取成本和较高的手机游戏贡献 我们预期随着更多优质视频的推出和更强的手机游戏贡献, 腾讯的毛利率将进一步下滑 Change in Share Price 股价变动 1 M 1 个月 3 M 3 个月 1 Y 1 年 Abs. % 绝对变动 % Rel. % to HS index 相对恒指变动 % Avg. share price(hk$) 平均股价 ( 港元 ) Source: Bloomberg, Guotai Junan International. 行业 维持公司的投资评级为 买入 及目标价从 港元上调至 港元 我们分别上调 年每股盈利预测 6.1%/ 5.7%/ 3.0% 新目标价相当 47.0 倍 2017 年市盈率 38.0 倍 2018 年市盈率及 32.9 倍 2019 年市盈率 腾讯控股 Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年结 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 12/31 (RMB m) (RMB m) (RMB) ( %) (x) (RMB) (x) (RMB) (%) (%) 2015A 102,863 28, A 151,938 41, F 229,333 57, F 291,930 70, F 344,686 81, Shares in issue (m) 总股数 (m) 9,477.3 Major shareholder 大股东 Naspers Ltd 34.0% Market cap. (HK$ m) 市值 (HK$ m) 2,610,048.4 Free float (%) 自由流通比率 (%) month average vol. 3 个月平均成交股数 ( 000) 18,943.0 FY17 Net gearing (%) FY17 净负债 / 股东资金 (%) Net cash 52 Weeks high/low (HK$) 52 周高 / 低 / FY16-19 PEG (x) 1.6 See the last page for disclaimer Page 1 of 9

2 1Q17 Results Review 1Q17 results beat market and our expectations by 10.5%/ 9.0%, respectively, driven by better-than-expected online game revenue. Non-GAAP net profit to shareholders was RMB14.2 billion, up 42% yoy. Weixin MAU reached 930 million, which surpassed QQ MAU of 860 million for the first time. Gross profit margin was dragged down by 6.7 ppt yoy to 51.4% in 1Q17 due to higher video content costs, payment service fees and traffic acquisition costs. 1Q17 mobile game and PC game revenue grew 57%/ 24% yoy, respectively, thanks to the launch of popular game titles and expansion packs for old titles. Social networks revenue grew by 56% yoy due to better digital content subscriptions. Online advertising grew 47% yoy driven by Weixin Moments and Weixin official accounts with a larger Weixin user base. Table-1: Tencent s Income Statement Analysis RMB (Million) 1Q17 1Q16 YoY Comments Total revenue 49,531 31, % -VAS revenue 35,108 24, % -Online advertising revenue 6,888 4, % Contributed by a number of popular mobile game titles and PC expansion packs Thanks to stronger advertising revenue contributions from Weixin Moments and Weixin Official Accounts -Others revenue 7,556 2, % Due to payments and cloud services Cost of revenue (24,109) (13,406) 79.8% Gross profit 25,443 18, % Interest income % Other gains, net 3, % S&M expenses (3,158) (2,032) 55.4% G&A expenses (7,012) (4,368) 60.5% Operating profit 19,272 13, % Finance costs, net (691) (491) 40.7% Share of (losses)/profits of associates and JV (375) (1,089) (65.6%) Profit before tax 18,206 11, % Income tax (3,658) (2,550) 43.5% Shareholders profit 14,476 9, % EPS (RMB) % Gross profit margin 51.4% 58.1% (6.7 ppt) Operating profit margin 38.9% 41.9% (3.0 ppt) Net profit margin 29.2% 28.7% (0.5 ppt) Contributed by disposal gains and dividend income offset by charity funds and impairment provision charges Higher S&M expenses for promotional activities to improve product utilization rates Higher R&D expenses for developing new mobile games GPM affected by higher video content costs and traffic acquisition costs We lift FY17-FY19 online game revenue by 12.0%/ 11.0%/ 7.0%, respectively. 1Q17 online game revenue grew 34% yoy to RMB12.9 billion, better than our expectation by 9.3%, driven by popular mobile game titles (Honor of Kings, Dragon Nest Mobile and Cross Fire Mobile). Mobile game revenue surged 57% yoy in 1Q17, contributed by Honour of Kings, CF Mobile and Dragon Nest Mobile. Honour of Kings ranked the top position in China s ios mobile game chart thanks to the launch of expansion packs and new game features. Tencent frequently injects new characters and features into mobile games to refresh gamers experiences, and also encourages users to invite friends to join teams within the game through social network platforms (QQ, Weixin) to earn virtual tokens and gifts. We expect that Honour of Kings can maintain its strong revenue contribution to Tencent through the launch of expansion packs, activities and upgraded versions to improve users experiences and boost user engagement. 1Q17 PC game revenue grew by 24% yoy due to the launch of expansion packs and promotional activities for key titles of LoL, DnF and FIFA Online 3. Tencent s active PC game players recorded a decline in 1Q17 due to a cannibalization effect from mobile games. Although there was a decline in active game players on the PC platform, the average ARPU per game improved due to higher user retention in games and longer game playing times. We expect more self-developed and licensed game titles to be launched to fuel game revenue growth rate. There are three major See the last page for disclaimer Page 2 of 9

3 drivers for Tencent s online game business which includes (1) self-developed games, (2) licensed games and (3) investments such as Supercell and Paradox. Tencent is shifting its focus from casual gamers to the mid-core and hard-core segments. We noticed that there was no impact to contribution from Korean game titles in 1Q17 and we think Korean game titles are still playing an important role in China s online game market due to their strong developing ability. Figure-1: Tencent s Quarterly Online Game Revenue and YoY Growth Figure-2: Tencent s Annual Online Game Revenue and YoY Growth RMB(Million) 25,000 22,000 19,000 Online game revenue (LHS) 32.2% 28.3% 26.7% 18, , ,142.0 YoY growth (RHS) 22, % 18, % 20% RMB (Billion) Online game revenue (LHS) % % 25.2% YoY growth (RHS) 50% % 30% 16,000 13, % % 13.5% 20% 10% 10,000 1Q16 2Q16 3Q16 4Q16 1Q17 0% 0 FY15A FY16A FY17F FY18F FY19F 0% Table-2: China s ios Top 10 Online Grossing Games Chart in May 2017 Ranking Grossing Games Developers 1 Honor of Kings ( 王者荣耀 ) Tencent 2 Onmyouji ( 阴阳师 ) Netease 3 TLBB ( 天龙八部手游 ) Tencent 4 Fantasy Westward Journey ( 梦幻西游 ) Netease 5 Maruto ( 火影忍者 ) Tencent 6 New Ghost ( 新倩女幽魂 ) Netease 7 Eternal Myth ( 神话永恒 ) CMGE 8 Dragon Nest ( 龙之谷 ) Tencent 9 Re Xue Jiang Hu ( 热血江湖 ) Longtu Game 10 The Epoch of Eternity ( 永恒纪元 ) 37games Source: App Annie. Table-3: Tencent s Online Game Pipeline in 2017 English Name Chinese Name Charging Model Developers PC Games Lost Saga 王牌对决 2D MMOG Licensed Master of Meteor Blades 新流星搜剑录 MMORPG Licensed Path of Exile 流放之路 3D Action RPG Licensed Mobile Games Stone Age 石器时代 RPG Licensed DnF Mobile (2D) 地下城与勇士 TBC Licensed Contra Mobile 魂斗罗 TPS Licensed Legacy TLBB 3D 天龙八部 RPG Licensed The Legend of Sword and Fairy 仙剑奇侠传 online RPG Licensed DDTank Mobile 弹弹堂 Action Licensed See the last page for disclaimer Page 3 of 9

4 Lineage II Revolution 天堂 II: 革命 Action Licensed Xuan Yuan Mobile 轩辕剑手游 RPG Licensed We revise up FY17-FY19 social networks revenue by 3.5%/ 4.7%/ 5.1%, respectively. 1Q17 social networks revenue surged 56% yoy, thanks to better subscription services contribution and sales from virtual items. Tencent managed to boost its subscription services by launching quality content for digital music, video and literature. Users are more willing to pay for good content to skip advertisements for a better experience. Tencent s revenue growth tripled for its video subscription services in 1Q17, driven by self-produced drama series (Candle in the Tomb) and licensed content (Country Romance 9). Weixin users reached over 930 million, which can support better virtual items sales growth. We project FY17-FY19 social networks revenue to grow by 42.0%/ 20.0%/ 13.0%, respectively. Figure-3: Tencent s Quarterly Social Networks Revenue and YoY Growth Figure-4: Tencent s Annual Social Networks Revenue and YoY Growth RMB(Million) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 7, % Social networks revenue (LHS) YoY growth (RHS) 51.1% 56.1% 57.9% 56.8% 10, , , , % 45% 25% 5% -15% RMB (Billion) % Social Networks Revenue (LHS) 53.5% % % YoY Growth (RHS) 60% % 40% 30% 20% 10% 13.0% 0 1Q16 2Q16 3Q16 4Q16 1Q17-35% 0 FY15A FY16A FY17F FY18F FY19F 0% Gross profit margin in FY17-FY19 is estimated to decline by 4.9 ppt/ 0.8 ppt/ 0.8ppt, respectively. 1Q17 gross profit margin declined by 6.7 ppt yoy to 51.4% due to content costs for video platforms, traffic acquisition costs and larger mobile game contributions. We expect that Tencent s gross margin will be further dragged down with the launch of more quality videos, licensed content and stronger mobile game contributions. FY17-FY19 gross profit margin is estimated to be 50.7%/ 49.9%/ 49.1%, respectively. Figure-5: Tencent s Quarterly Gross Profit Margin 60% Figure-6: Tencent s Annual Profit Margins Gross Profit Margin Operating Profit Margin Net Profit Margin 56% 52% 70% 60% 50% 40% 59.5% 55.6% 39.5% 36.9% 50.7% 49.9% 49.1% 31.6% 30.9% 30.5% 30% 48% 20% 10% 28.0% 27.0% 24.9% 24.3% 23.8% 44% 1Q16 2Q16 3Q16 4Q16 1Q17 0% FY15A FY16A FY17F FY18F FY19F See the last page for disclaimer Page 4 of 9

5 Profit Revision We lift FY17-FY19 EPS by 6.1%/ 5.7%/ 3.0%, respectively. FY17-FY19 VAS revenue is raised by 10.2%/ 10.0%/ 5.5%, respectively, due to revisions in online game and social network revenue estimations. FY17-FY19 EPS is revised up by 6.1%/ 5.7%/ 3.0%, respectively. Table-4: Financial Estimation Revisions OLD RMB (Million) 2017F 2018F 2019F 2017F NEW 2018F 2019F 2017F CHANGE 2018F Total revenue 215, , , , , , % 6.1% 3.2% -VAS revenue 138, , , , , , % 10.0% 5.5% -Advertising revenue 37,488 45,136 51,229 37,488 45,136 51, % 0.0% 0.0% -Others revenue 39,463 63,536 85,775 39,463 63,536 85, % 0.0% 0.0% Net profit 53,763 67,079 79,566 57,043 70,902 81, % 5.7% 3.0% EPS (RMB) % 5.7% 3.0% Source: Guotai Junan International. 2019F Valuation Maintain the investment rating of Buy and raise the TP from HK$ to HK$ The life cycle of popular game titles can be extended through the launch of new game features and expansion packs to improve user experience and engagement. Due to improvement in ARPU of online game players and longer playing time, we expect that Tencent can maintain its robust online game revenue growth. We lift the TP from the HK$ to HK$ The new TP implies 47.0x FT17 PER, 38.0x FY18 PER and 32.9x FY19 PER. Figure-7: Tencent s PE Graph SD 25 Average 20-1 SD 15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Source: Bloomberg. See the last page for disclaimer Page 5 of 9

6 Table-5: Peers Comparison PER (x) PBR (x) ROE(%) ROA(%) Company Ticker Currency Price 17F 18F 19F 17F 18F 19F 17F 17F US Online Game Companies Changyou CYOU US USD Electronic Arts Inc EA US USD Activision Blizzard Inc ATVI US USD Netease NTES US USD Simple Average Weighted Average HK Online Game Companies Tencent HK HKD Boyaa Interactive Int HK HKD n.a IGG HK HKD Netdragon HK HKD n.a (0.0) 0.1 Simple Average Weighted Average Advertising Companies Sohu.Com Inc SOHU US USD n.a. n.a. n.a n.a. (9.2) Weibo WB US USD Bitauto BITA US USD Cheetah Mobile CMCM US USD n.a com WUBA US USD n.a. 2.1 Soufun SFUN US USD n.a. 2.6 Phoenix New Media FENG US USD n.a (3.7) (1.9) Sina SINA US USD Facebook FB US USD Simple Average Weighted Average E-commerce Companies Alibaba BABA US USD n.a VIPSHOP VIPS US USD n.a Jumei JUMEI US USD n.a. 3.9 n.a. n.a. n.a. n.a. n.a. n.a. EBay EBAY US USD n.a JD.com JD US USD (0.2) (0.2) AMAZON MZN US USD Gome Electrical Appliances HK HKD n.a Simple Average Weighted Average Search Engine Companies Alphabet Inc GOOG US USD Baidu Inc - Spon Adr BIDU US USD Simple Average Weighted Average Overall Average Overall Weighted Average Source: Bloomberg. See the last page for disclaimer Page 6 of 9

7 Table-6: Technical Terms Glossary Abbreviation Definitions 定义 IVAS Internet Value-Added Services 互联网増値服务 MVAS Mobile and Telecommunication Value-Added Services 移动及电讯増値服务 VAS Value-Added Services 増値服务 LOL League of Legends 英雄联盟 DNF Dungeon and Fighter 地下城与勇士 ACU Average Concurrent User Accounts 平均同时在线用戸数 PCU Peak Concurrent User Accounts 最高同时在线用戸数 TAC Traffic Acquisition Cost 流量获得成本 ACG Advanced Casual Game 高级休闲游戏 MCG Mini Casual Game 小型休闲游戏 ARPU Average Revenue Per User 平均每月用户收入 DAU Daily Active User Accounts 日活跃用户数 FPS First Person Shooting 第一人称射击游戏 MMO Racing Massive Multiplayer Online Racing 大型多人在线赛车游戏 MMOFPS Massive Multiplayer Online First-Person Shoot 大型多人在线第一人称射击游戏 MMOG Massive Multiplayer Online Game 大型多人在线音乐游戏 MM ORGS Massive Multiplayer Online Role-Playing Game 大型多人在线角色扮演游戏 MMORTS Massive Multiplayer Online Real-Time Strategy 大型多人在线实时战略游戏 SNS Social Network Site 社交网站 See the last page for disclaimer Page 7 of 9

8 Financial Statements and Ratios Income Statement Balance Sheet Year end Dec, RMB m 2015A 2016A 2017F 2018F 2019F Year end Dec, RMB m 2015A 2016A 2017F 2018F 2019F Total Revenue 102, , , , ,686 PPE 9,973 13,900 24,104 33,151 42,110 VAS 80, , , , ,683 Intangible assets 13,439 36,467 41,937 60,809 85,132 Online advertising 17,468 26,970 37,488 45,136 51,229 Investment in JCE & associates 60,715 70,672 90, , ,703 Others 4,726 17,158 39,463 63,536 85,775 Others 67, , , , ,260 Cost of revenues (41,631) (67,439) (113,061) (146,257) (175,445) Total non-current assets 151, , , , ,205 Gross profit 61,232 84, , , ,241 Accounts receivable 7,061 10,152 11,269 12,508 14,885 Interest Income 2,327 2,619 2,008 2,160 2,609 Other receivables 11,397 14,118 15,671 17,551 20,535 Other gains, net 1,886 3,594 2,550 2,828 3,026 Cash and cash equivalents 43,438 71,902 48,970 63,760 76,425 S&M (7,993) (12,136) (16,053) (19,851) (22,749) Others 93,482 52,982 88,723 95, ,977 G&A (16,825) (22,459) (32,336) (40,578) (46,877) Total current assets 155, , , , ,822 Operating profit 40,627 56,117 72,440 90, ,249 Total assets 306, , , , ,026 Finance cost, net (1,618) (1,955) (2,294) (2,943) (4,263) Note payable 37,092 36,204 41,635 51,211 62,989 Share of associate / JC (2,793) (2,522) 1,570 1,853 2,049 Long term borrowings 12,922 57,549 66,181 86, ,054 Profit before income tax 36,216 51,640 71,717 89, ,035 Others 10,298 14,702 18,717 21,784 12,278 Income tax (7,108) (10,193) (14,156) (17,595) (20,338) Total non-current liabilities 60, , , , ,320 Minority interests (302) (352) (518) (644) (744) Net profit 28,806 41,095 57,043 70,902 81,953 Accounts payable 15,700 27,413 28,784 30,223 31,734 Basic EPS (RMB) Other payables and accruals 70,199 20,873 22,960 24,797 25,789 Short term borrowings 11,429 12,278 16,575 22,377 39,159 Cash Flow Statement Note payable 3,886 3,466 3,986 5,062 6,429 Year end Dec, RMB m 2015A 2016A 2017F 2018F 2019F Others 23,192 37,167 42,661 49,985 58,588 Profit before taxation 36,216 51,640 71,717 89, ,035 Total current liabilities 124, , , , ,699 Depreciation & Amortization of intangible assets 6,674 12,741 13,723 14,781 15,921 Total liabilities 184, , , , ,019 Changes in working capital 6,389 10,967 (8,352) (5,610) (43,045) Income tax paid (5,047) (10,516) (13,503) (15,972) (18,445) Shareholders' equity 120, , , , ,293 Others 1, (12,855) 1, Share capital & Share premium 12,167 17,324 18,710 20,207 21,823 Net cash generated from operating activities 45,431 65,518 50,730 83,440 57,859 Shares held for share award scheme (1,817) (3,136) (3,387) (3,556) (3,698) Other reserves 9,673 23,693 25,573 28,158 31,743 CAPEX (5,440) (8,399) (7,475) (6,653) (5,921) Retained earnings 100, , , , ,425 Financial assets purchases (13,001) (33,556) (34,898) (36,294) (37,746) MI 2,065 11,623 12,555 13,715 13,715 Associates & JV investments (11,923) (8,996) (10,550) (8,440) (6,752) Total equity 122, , , , ,007 Financial for sale investments (13,001) (33,556) (34,898) (36,294) (37,746) BPS (RMB) Others (20,240) 13,584 (1,783) (13,000) (24,544) Net cash used in investing activities (63,605) (70,923) (89,604) (100,680) (112,708) Payments for repurchase of shares (652) (1,936) (2,130) (2,279) (2,438) Dividends paid to the Company's shareholders (2,640) (3,699) (3,699) (5,134) (6,382) Financial Ratios Change in borrowings 28,565 43,824 12,930 25,656 59,800 Year end Dec 2015A 2016A 2017F 2018F 2019F Others (6,745) (6,746) 6,318 11,164 13,804 Profitability Net cash generated from financing activities 18,528 31,443 13,419 29,407 64,785 Gross margin (%) Operating margin (%) Net increase in cash and equivalents ,038 (25,455) 12,166 9,936 Net margin (%) Cash at beginning of year 42,713 43,438 71,902 48,970 63,760 ROE (%) Exchange losses 371 2,426 2,523 2,624 2,729 ROA (%) Cash at end of year 43,438 71,902 48,970 63,760 76,425 Net gearing (%) Net cash Net cash Net cash 0.9% 15.6% See the last page for disclaimer Page 8 of 9

9 Company Rating Definition The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Buy Relative Performance >15%; or the fundamental outlook of the company or sector is favorable. Accumulate Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable. Sell Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable. Sector Rating Definition The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform Relative Performance >5%; or the fundamental outlook of the sector is favorable. Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform Relative Performance <-5%; or the fundamental outlook of the sector is unfavorable. DISCLOSURE OF INTERESTS (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for SMI Holdings Group Limited (00198 HK), Guotai Junan International Holdings Limited (01788 HK), Binhai Investment Company Limited (02886 HK), Link Holdings Limited (08237 HK), GFI MSCI A I-R (CNY) (83156 HK), GFI MSCI A I (03156 HK) and CAM SCSMALLCAP (03157 HK), Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies. DISCLAIMER This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily). Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan. Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen s Road Central, Hong Kong. Tel.: (852) Fax: (852) Website: See the last page for disclaimer Page 9 of 9