Rapid Growth for 1Q18 Power Generation, "Accumulate" 2018 年 1 季度发电量维持高速增长, 收集

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1 - Datang Renewable (01798 HK) Clean Energy Sector - Wind & Others Equity Research 股 票 研 究 公 司 报 告 证 券 研 究 报 告 清洁能源行业 风电及其它 大唐新能源 Equity Research Report Company Report Company Report: Datang Renewable (01798 HK) 公司报告 : 大唐新能源 (01798 HK) [Table_Summary] Rapid Growth for 1Q18 Power Generation, "Accumulate" 2018 年 1 季度发电量维持高速增长, 收集 DTR's 1Q18 wind power generation increased 46.4% YoY to 4,892GWh. The estimated wind utilisation hours for 1Q18 was up by 40.4% YoY to 566 hours. We expect the Company's accumulated wind power generation growth for 2018 to be around 19.3% on a YoY basis. The Company's profit attributable to owners of the parent in 2017 surged 267.1% YoY to RMB728 million, in line with our expectations. The significant profit increase was primarily contributed by the enhancement of utilisation hours, which led to the 23.2% YoY increase in electricity sales revenue. Target capacity additions for 2018 is set at 500MW-700MW, which we think is still acceptable given the recent policy changes and the Company's current total capacity scale. Further revise up wind utilisation assumptions for 2018/2019/2020 to 2,061 hrs/2,118 hrs/2,152 hrs, respectively. We expect to see gradual recovery in utilisation performance in southwest areas. Also, the utilisation hours for Inner Mongolia and Gansu will further benefit from the commencement of inter-provincial UHV transmission lines. Maintain "Accumulate" rating but raise TP from HK$1.22 to HK$1.65 for DTR. We revise up our EPS forecasts to RMB0.185/RMB0.217/RMB0.240 for 2018/2019/2020 on the estimates of higher total power generation and lower operating expenses. We expect the Company's earnings growth in 2018 to notably outperform its peers considering its capacity layout in the "three norths" areas. 大唐新能源 2018 年 1 季度风电发电量同比增长 46.4% 至 4,892 吉瓦时 2018 年 1 季度测 算的利用小时数同比升 40.4% 至 566 小时 我们预计公司 2018 年累计风电发电量将同比 上升约 19.3% 公司 2017 年归母净利润同比大幅上涨 267.1% 至人民币 7.28 亿元, 符合我们预期 利润的 显著增长主要是由于利用小时的提升, 致使售电收入同比增加 23.2% 公司 2018 年的新增 装机目标为 500 兆瓦 -700 兆瓦, 考虑到近期的一些政策变化以及公司目前的总装机规模, 我们认为该数字是可接受的 将 2018/2019/2020 年风电利用小时预测分别进一步上调至 2,061 小时 /2,118 小时 /2,152 小时 我们预计公司西南地区的利用小时数表现将出现逐步的回升 另外, 公司位于内蒙 古以及甘肃地区的利用小时也将继续受益于跨省特高压线路的投运 维持 收集 评级并将大唐新能源的目标价从 1.22 港元上调至 1.65 港元 由于更高的总发 电量和更低的经营费用预测, 我们将 2018/2019/2020 年每股盈利预测分别上调至人民币 元 /0.217 元 /0.240 元 考虑到公司在 三北 地区的装机布局, 我们认为其 2018 年的 盈利增速可能会明显高于同业 Rating: Jake Wang 汪昌江 (86755) wangchangjiang@gtjas.com Accumulate Maintained 评级 : 收集 ( 维持 ) 6-18m TP 目标价 : HK$1.65 Revised from 原目标价 : HK$1.22 Share price 股价 : Stock performance 股价表现 [Table_PriceChange] Change in Share Price 股价变动 Abs. % 绝对变动 % Rel. % to HS Index 相对恒指变动 % Avg. share price(hk$) 平均股价 ( 港元 ) 1 M 1 个月 3 M 3 个月 HK$ Y 1 年 [Table_ 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) (%) (%) 2016A 5, , A 7, F 8,330 1, F 8,938 1, F 9,573 1, [Table_BaseData] Shares in issue (m) 总股数 (m) 7,273.7 Major shareholder 大股东 China Datang Corp Ltd. 65.6% Market cap. (HK$ m) 市值 (HK$ m) 9,892.2 Free float (%) 自由流通比率 (%) month average vol. 3 个月平均成交股数 ( 000) 5,780.4 FY18 Net gearing (%) FY18 净负债 / 股东资金 (%) Weeks high/low (HK$) 52 周高 / 低 / FY18 Est. NAV (HK$) FY18 每股估值 ( 港元 ) 2.7 Source: the Company, Guotai Junan International % of return (10.0) Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 HSI Index Datang Renewable Seethe last page for disclaimer Page 1 of 7

2 Datang Renewable's ( DTR or the Company ) wind power generation in 1Q18 increased 46.4% YoY to 4,892GWh. The estimated wind utilisation hours for 1Q18 was up by 40.4% YoY to 566 hours (403 hours for 1Q17). The Company s capacity weighted average wind speed increased 6.8% YoY to 5.91m/s for 1Q18 and overall wind conditions were better than last year. In addition, due to the improvement in wind curtailment rate and capacity increase, regional cumulative wind power generation for Jilin, Gansu and Shanxi recorded sharp YoY increase (up by 103.0%, 61.3% and 100.8%, respectively). We think the sharp increase in wind power generation for 1Q18 was partly due to better wind resources and the poor base last year. Subsequent YoY growth rate for the Company's wind power generation in 2018 might be lower compared with the first quarter, and we currently assume that accumulated wind power generation growth for 2018 will be around 19.3% on a YoY basis. The Company's profit attributable to owners of the parent in 2017 surged 267.1% YoY to RMB728 million, in line with our expectation. The significant profit increase was primarily contributed by the enhancement of utilisation hours, which led to the 23.2% YoY increase in electricity sales revenue. Operating expenses increased 15.0% YoY because of higher D&A cost incurred by capacity increase, as well as the provision of impairment losses from the relocation of Long Gan Lake wind power project. Net finance expense was up by 7.8% YoY, mainly due to the increase in interest bearing bank loans and other loans. In 2017 the Company added 301.5MW of wind capacity and 27.0MW of solar capacity, lower than the previous guidance of 500.0MW, as some of the Company's constructions from projects in the red alert areas stagnated due to policy effects. We expect these projects to gradually commence operations during 2018 and 2019 given that the development restrictions for new projects in wind curtailed areas were partially lifted. Table-1: Company results review for DTR 2016A 2017A YoY/ppt Comments Operating Result Consolidated wind capacity (MW) 8,498 8, % Added 301.5MW/27.0MW wind/solar capacity in 2017 Average operating wind capacity (MW) 6,881 7, % Wind curtailment rate 21.2% 15.3% -5.9ppt Utilisation hour for wind capacity (hrs) 1,755 1, % Wind power generation (GWh) 12,077 15, % Mainly driven by higher utilisation hours Wind power sold (GWh) 11,609 14, % Average Tariff (VAT Incl.) (RMB/MWh) % Market trading discount was 0.117RMB/KWh Unit COGS of power sold (RMB/MWh) % Unit financial cost of power sold (RMB/MWh) % Resulted from higher wind power sold Unit EBT of power sold (RMB/MWh) % Financial Result (RMB Mn) Revenue 5,786 7, % Electricity sales revenue was up by 23.2% YoY Other net income and other gains % Due to higher VAT rebate Construction cost (6) (7) 26.2% Depreciation and amortization (2,830) (3,159) 11.6% Operating capacity expanded Staff cost (449) (465) 3.7% Repair & maintenance (204) (186) -9.3% Material cost (40) (56) 40.8% Other expenses (332) (567) 70.9% Operating cost (3,861) (4,441) 15.0% Operating profit 2,115 2, % Net finance expenses (1,735) (1,870) 7.8% Est. average borrowing rate was 4.51% for 2017 Share of profit of Asso. & JV % Profit before taxation 401 1, % Taxation (108) (156) 44.3% Profit after taxation % Minority interest % Shareholder's profit % EPS % Exclusive of perpetual MTN interests for 2017 EPS Margins & Ratios Operating Margin 36.6% 40.4% 3.8ppt PBT Margin 6.9% 14.9% 8.0ppt Effective Tax Rate 27.0% 14.8% -12.2ppt PAT Margin 5.1% 12.7% 7.6ppt MI / PAT 32.3% 19.4% -12.9ppt Net Margin 3.4% 10.2% 6.8ppt Source: the Company, Guotai Junan International. Seethe last page for disclaimer Page 2 of 7

3 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q A 2012A 2013A 2014A 2015A 2016A 2017A 2018F 2019F 2020F Figure-1: Quarterly Wind Power Generation for DTR Figure-2: Utilisation Hours of Wind Capacity for DTR GWh Quarterly wind power generation YoY 6,000 5,000 4, % -6.0% -13.4% 3,000 2,000 1,000 2,491 2,561 1, % 8.6% 3,235 2, % 3, % -9.2% 1, % 19.5% 13.6% 18.9% 8.8% 4.6% 3,251 2,943 2,938 2,149 3,734 3,342 3, % 3, % 46.4% 4,829 4, % 30.0% 10.0% -10.0% -30.0% -50.0% -70.0% -90.0% Hrs 3,000 2,500 2,000 1,500 1, % 21.4% 14.9% Realised utilisation hours Estimated non-curtailment utilisation hours Wind curtailment ratio 12.9% 21.2% 19.7% 15.3% 10.0% 7.5% 6.0% 25.0% 20.0% 15.0% 10.0% 5.0% % 0 0.0% Key notes from DTR's FY17 results conference 1) Market trading electricity sales volume in 2017 recorded approximately 3.0MMWh (representing nearly 21.0% of total electricity sales volume), with an average discount of 18.4% to the benchmark tariff. The management expects the percentage of direct power sales to slightly increase during 2018, but the discount will narrow as the percentage of direct power supply for major consumers (which is entitled to a larger discount) remains basically flat YoY. 2) Target capacity additions for 2018 is set at 500MW-700MW, including approximately 90MW solar capacity. DTR is actively seeking high-quality PV projects (both centralized and distributed). Meanwhile, the Company plans to accelerate the development of distributed and off-shore wind power projects to diversify its power generating assets. 3) The Company's wind curtailment rate for 2017 decreased by 5.9 ppt YoY to 15.28%. Considering the increase of inter-provincial power transmission in the "three norths" areas, the management expects the Company's 2018 wind curtailment rate to further decrease to 10.0% or below. The corresponding wind utilisation is expected to be 2,000 hours. 4) As at 2017 end, the Company's accounts receivables that relate to renewable energy subsidies amounted to RMB3.8 bn. Most of the receivables were from the 6 th and 7 th batch of government grants. The collection of receivables was basically in line with the Company's expectation, and the management believes that the situation will continue to improve in 1H18. 5) The Company's estimated capital expenditure for 2018 is between RMB7.0 billion-rmb8.0 billion, with an average cost of borrowing of around 4.5%-4.6%. The impairment provision for wind power projects was non-recurring and the Company's overall financial situation remains healthy. Key adjustments for DTR 1) Revise newly installed wind capacity assumptions to 0.6GW/0.7GW/0.8GW for 2018/2019/2020, respectively to match the Company's guidance. Although the Company's newly installed capacity guidance for 2018 has been revised down from 1.0GW to 500MW-700MW, we think the capacity addition is still acceptable given recent policy changes and the Company's current total capacity scale. The Company had about 2,060MW capacity under construction as at the end of 2017; projects that had been held back by policy restrictions are likely to be operational within For the majority of the rest, however, we expect those projects to commence operation no earlier than 1Q19 considering the relatively long construction cycle in forest lands and mountainous regions. 2) Further revise up wind utilisation assumptions for 2018/2019/2020 to 2,061 hrs/2,118 hrs/2,152 hrs, respectively. Wind curtailment rate forecasts have been revised down to 10.0%/7.5%/6.0%, respectively. The Company's wind utilisation performance for the southwest areas in 2017 (as well as 1Q18) was slightly lower than expected due to the temporary delay in the connection between regional power grids and the change in capacity scope. We expect to see a gradual recovery in the utilisation performance for these areas during Also, the utilisation hours for Inner Mongolia and Gansu will further benefit from the commencement of inter-provincial UHV transmission lines, which helps to increase the Company's overall wind utilisation. Seethe last page for disclaimer Page 3 of 7

4 3) Revise down average tariff (VAT incl.) estimates for 2018/2019/2020 to RMB555/RMB542/RMB532 per MWh, respectively. Benchmark tariff for new wind farm projects after 2018 will constantly trend down towards grid parity. In addition, DTR is planning to re-initiate project development in the "three norths" areas (with lower benchmark tariff). But we don't expect the Company's electricity sales revenue to be significantly affected as the decrease in average tariff will be compensated by higher power sold. 4) Revise up net finance expense estimates for 2018/2019/2020 by 3.6%/3.9%/4.4% to reflect the slight increase in the Company's cost of borrowing. We now assume the Company's average borrowing rate for 2018/2019/2020 to be 4.55%/4.60%/4.65%, respectively. We maintain Accumulate rating and revise up TP to HK$1.65 for DTR. 2018/2019/2020 EPS forecasts have been revised up by 18.8%/9.5%/25.5% to RMB0.185/RMB0.217/RMB0.240, respectively, mainly due to: 1) higher power generation forecasts, and 2) lower operating expenses forecasts. DTR's 1Q18 power generation indicated sound momentum of rapid growth. As the wind curtailment situation in the three norths areas continues to alleviate, the Company s inferior capacity layout in earlier years would gradually convert to an advantage for future profit growth, and we expect the Company's earnings growth in 2018 to notably outperform its peers. TP is revised up from HK$1.22 to HK$1.65 to reflect the adjustments in our EPS forecasts, which represents 7.2x/6.1x/5.6x 2018/2019/2020 PER and 0.8x/0.7x/0.6x 2018/2019/2020 PBR. Table-2: Key operating factors and earnings adjustments for DTR Operation Old New Change %/ppt 2018F 2019F 2020F 2018F 2019F 2020F 2018F 2019F 2020F Newly installed wind capacity (MW) 1, % -6.7% 33.3% Consolidated operating wind capacity (MW) 9,845 10,595 11,195 9,247 9,947 10, % -6.1% -4.0% Avg. consolidated operating wind capacity (MW) 8,867 9,708 10,478 8,703 9,266 9, % -4.6% -5.3% Non-curtailment wind utilisation hours 2,200 2,200 2,200 2,320 2,320 2, % 5.5% 5.5% Availability factor of wind capacity 98.7% 98.7% 98.7% 98.7% 98.7% 98.7% 0.0ppt 0.0ppt 0.0ppt Wind curtailment ratio 11.7% 10.2% 9.2% 10.0% 7.5% 6.0% -1.7ppt -2.7ppt -3.2ppt Utilisation hours of wind capacity 1,917 1,950 1,972 2,061 2,118 2, % 8.6% 9.2% Avg. Tariff (VAT incl.) (RMB/MWh) % -4.7% -6.6% Unit COGS of power sold (RMB/MWh) % -10.5% -10.6% Unit financial cost of power sold (RMB/MWh) % 1.1% 1.2% Unit EBT margin of power sold (RMB/MWh) % 4.6% -4.3% Total electricity generation (MMWh) 17,358 19,326 21,098 18,282 20,082 21, % 3.9% 3.8% Total electricity sold (MMWh) 16,715 18,650 20,360 17,414 19,128 20, % 2.6% 2.7% Financial (RMB Mn) Revenue 8,215 9,154 9,988 8,330 8,938 9, % -2.4% -4.2% Other income & net gains % 4.0% -8.9% Service concession construction costs (15) (12) (12) (15) (16) (17) -2.1% 41.4% 40.3% D&A (3,323) (3,575) (3,813) (3,331) (3,432) (3,665) 0.3% -4.0% -3.9% Labor costs (596) (662) (725) (496) (509) (526) -16.9% -23.1% -27.5% R&M (268) (303) (332) (192) (206) (221) -28.4% -32.2% -33.4% Material costs (48) (51) (54) (66) (76) (88) 37.9% 48.3% 61.8% Other operating expenses (449) (472) (488) (383) (423) (469) -14.7% -10.4% -4.0% Operating Profit 3,703 4,305 4,819 4,091 4,510 4, % 4.8% 0.1% Net Finance Expense (1,998) (2,099) (2,163) (2,069) (2,182) (2,257) 3.6% 3.9% 4.4% Profit from Asso. & JV % 0.0% 0.0% Profit before tax 1,729 2,229 2,680 2,045 2,352 2, % 5.5% -3.4% Income tax (164) (238) (769) (270) (292) (335) 64.9% 22.3% -56.4% Profit after tax 1,565 1,990 1,912 1,775 2,061 2, % 3.5% 17.9% Non-controlling interests % -33.6% -24.7% Net profit 1,131 1,444 1,390 1,459 1,697 1, % 17.6% 33.9% EPS (RMB) % 9.5% 25.5% Margins and ratios Operating Margin 45.1% 47.0% 48.2% 49.1% 50.5% 50.4% 4.0ppt 3.4ppt 2.1ppt Average borrowing rate 4.45% 4.45% 4.45% 4.55% 4.60% 4.65% 0.10ppt 0.15ppt 0.20ppt Effective Tax Rate 9.5% 10.7% 28.7% 13.2% 12.4% 12.9% 3.7ppt 1.7ppt -15.7ppt Net Profit Margin 13.8% 15.8% 13.9% 17.5% 19.0% 19.4% 3.7ppt 3.2ppt 5.5ppt ROE 9.5% 11.2% 9.9% 12.2% 12.8% 12.7% 2.6ppt 1.6ppt 2.8ppt Net Debt/Equity 402.4% 379.8% 363.1% 380.5% 371.8% 363.9% -21.8ppt -8.0ppt 0.8ppt Seethe last page for disclaimer Page 4 of 7

5 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Table-3: Sensitivity analysis for DTR EPS Sensitivity Analysis EPS (RMB) 2018F 2019F 2020F Base Case EPS (RMB) Base Case Assumptions: Non-curtailed wind utilisation hours 2,320 2,320 2,320 Wind curtailment rate 10.0% 7.5% 6.0% Average borrowing rate 4.55% 4.60% 4.65% EPS (RMB) Non-curtailed wind utilisation hours +5% Wind curtailment rate +0.5ppt Average borrowing rate +25bps EPS change (RMB) Non-curtailed wind utilisation hours +5% Wind curtailment rate +0.5ppt (0.0349) (0.0338) (0.0093) Average borrowing rate +25bps (0.0417) (0.0406) (0.0168) EPS change (%) Non-curtailed wind utilisation hours +5% 5.0% 5.7% 17.6% Wind curtailment rate +0.5ppt -18.9% -15.6% -3.9% Average borrowing rate +25bps -22.6% -18.7% -7.0% Figure-3: Estimated PER Curve of DTR Figure-4: Estimated PBR Curve of DTR (x) Datang Renewable PER (historical mean) PER (current) PER (High) PER (Low) PER curve (x) Datang Renewable PBR (historical mean) PBR (current) PBR (High) PBR (Low) PBR curve Table-4: Peers valuation for clean energy IPPs Mkt cap PER (x) PB (x) ROE (%) Company Ticker Currency Price (HK$ Mn) 2017A 2018F 2019F 2020F 2017A 2018F 2019F 2020F 2018F Hong Kong Market CHINA LONGYUAN POWER GROUP-H 916 HK HKD , HUANENG RENEWABLES CORP-H 958 HK HKD , CHINA DATANG CORP RENEWABL-H 1798 HK HKD , HUADIAN FUXIN ENERGY CORP -H 816 HK HKD , CGN NEW ENERGY HOLDINGS CO L 1811 HK HKD , CGN POWER CO LTD-H 1816 HK HKD , BEIJING JINGNENG CLEAN ENE-H 579 HK HKD , Hong Kong Market Mean (Simple) Hong Kong Market Mean (Weighted) Hong Kong Market Median Seethe last page for disclaimer Page 5 of 7

6 Financial Statements and Ratios [Table_IncomeStatement] Income Statement [Table_CashFlowStatement] Cash Flow Statement Year end 31 Dec (RMB m) 2016A 2017A 2018F 2019F 2020F Total Revenue 5,786 7,104 8,330 8,938 9,573 Other net income & other gains Concession construction costs (6) (7) (15) (16) (17) D&A (2,830) (3,159) (3,331) (3,432) (3,665) Labor costs (449) (465) (496) (509) (526) Repairs & maintenance (204) (186) (192) (206) (221) Material costs (40) (56) (66) (76) (88) Other expenses (332) (567) (383) (423) (469) Operating Profit 2,115 2,868 4,091 4,510 4,822 Finance income Finance expenses (1,753) (1,889) (2,083) (2,198) (2,269) Income from associates & JV Profit Before Tax 401 1,059 2,045 2,352 2,588 Income Tax (108) (156) (270) (292) (335) Profit After Tax ,775 2,061 2,254 Non-controlling Interest (95) (175) (316) (363) (393) Shareholders' Profit / Loss ,459 1,697 1,861 Basic EPS Balance Sheet Year end 31 Dec (RMB m) 2016A 2017A 2018F 2019F 2020F PP&E 57,914 58,088 62,055 66,753 71,450 Land use rights Intangible assets Investments in associates and JVs Others 3,278 2,821 3,615 4,384 5,564 Total Non-current Assets 63,161 62,826 67,766 73,296 79,238 Cash & Cash Equivalents 1,166 1,224 1,466 1,087 1,249 Inventories Receivables 2,801 5,042 3,423 3,673 3,934 Prepayments 1,537 1, Others Total Current Assets 5,631 7,722 5,826 5,723 6,171 Total Assets 68,792 70,548 73,592 79,019 85,409 Trade and bills payable 2,362 1,429 1, Current borrowings 10,166 13,315 12,368 13,219 14,388 Current tax liabilities Others 7,928 6,429 6,570 7,250 7,468 Total Current Liabilities 20,511 21,262 20,162 21,613 22,916 Net current liabilities (14,880) (13,540) (14,336) (15,890) (16,745) Total assets less current liabilities 48,281 49,286 53,430 57,406 62,493 Non-current borrowings 34,160 34,507 37,104 39,656 43,164 Finance leases obligations Total Non-current Liabilities 34,576 34,917 37,680 40,290 43,816 Total Liabilities 55,086 56,179 57,842 61,903 66,732 Total Shareholders' Equity 10,879 11,394 12,616 13,928 15,473 Minority Interest 2,826 2,975 3,135 3,188 3,204 Total Equity 13,706 14,369 15,750 17,116 18,677 Year end 31 Dec (RMB m) 2016A 2017A 2018F 2019F 2020F Operating activities PBT 401 1,059 2,045 2,352 2,588 D&A 2,830 3,159 3,331 3,432 3,665 Net interest expense 1,727 1,878 2,069 2,182 2,257 Other adjustments (11) 105 (22) (22) (23) Changes in WC (949) (2,898) 1,270 (284) (353) Interest received Income tax paid (128) (110) (270) (292) (335) Cash from Operating Activities 3,883 3,205 8,434 7,379 7,808 Investing activities Capital investment (6,082) (4,503) (7,352) (8,190) (9,266) Others 465 (10) Cash from Investing Activities (5,616) (4,513) (7,346) (8,184) (9,261) Financing activities Share issue Interest paid (1,902) (1,838) (2,169) (2,344) (2,432) New borrowings, net 3,973 3,446 1,634 3,370 4,631 Dividend paid 0 0 (131) (269) (316) Others (248) (242) (179) (332) (267) Cash from Financing Activities 1,824 1,366 (846) 426 1,615 Net Changes in Cash (379) 162 Cash at Beg of Year 1,078 1,166 1,224 1,466 1,087 Foreign exchange changes (2) Cash at End of Year 1,166 1,224 1,466 1,087 1,249 [Table_FinancialRatio] Financial Ratios 2016A 2017A 2018F 2019F 2020F Margins & Efficiency: EBITDA margin (%) Operating margin (%) Net profit margin (%) Dividend payout ratio (%) Inventory days Receivable days Payable days Growth%: Turnover EBITDA Operating profit Net profit 1, Dividend n.a Profitability: ROE (%) ROA (%) ROCE (%) Financial Ratios: Net debt/equity (%) Long-term debt/equity (x) Current ratio (x) Interest coverage (x) Source: the Company, Guotai Junan International. [Table_CompanyRatingDefinition] Seethe last page for disclaimer Page 6 of 7

7 Company Rating Definition The Benchmark: Time Horizon: 6 to 18 months Rating Hong Kong Hang Seng Index Definition Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable. Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable. [Table_IndustryRatingDefinition] Sector Rating Definition The Benchmark: Time Horizon: 6 to 18 months Rating Hong Kong Hang Seng Index Definition Outperform 跑赢大市 Relative Performance>5%; or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable. [Table_DISCLOSUREOFINTERESTS] 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 GREENLAND BROAD (01253 HK),KAISA GROUP (01638 HK),GUOTAI JUNAN I (01788 HK),BINHAI INVESTMENT (02886 HK),GFI MSCI A I (03156 HK),CAM SCSMALLCAP (03157 HK),ZHENRO PPT (06158 HK),LINK HOLDINGS (08237 HK),MR CSI300 ETF-R (CNY) (83127 HK),GFI MSCI A I-R (CNY) (83156 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. 2018GuotaiJunan 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: Seethe last page for disclaimer Page 7 of 7