Mitra Adiperkasa. Indonesia Company Guide

Transcription

1 Indonesia Company Guide Version 8 Bloomberg: MAPI IJ Reuters: MAPI.JK Refer to important disclosures at the end of this report DBS Group Research. Equity 2 Nov 2017 BUY Last Traded Price ( 1 Nov 2017): Rp6,650 (JCI : 6,038.10) Price Target 12-mth: Rp8,500 (28% upside) (Prev Rp7,300) Analyst Tiesha PUTRI tiesha.narandha@id.dbsvickers.com Andy SIM CFA andysim@dbs.com What s New In-line results; core profit grew 137% y-o-y in 3Q17 SSSG improved in Aug-Sep, growing by 6%-7% Expecting further profitability improvement in 2018 as MAPI continued its multi-year restructuring programme Maintain BUY with higher TP Price Relative Expecting further profitability improvement In-line 3Q17 results; Aug-Sep SSSG improved. MAPI s 3Q17 results came in line with our forecast, with core profit growing by 96% y-o-y to Rp81bn. SSSG decelerated slightly to 3% in 9M17 but store expansion supported revenue growth (+9%/+14%y-o-y in 3Q17/9M17). EBIT margin declined sequentially but this is mainly due to operating deleverage in the absence of a Lebaran boost in 3Q17. Aug and Sep samestore sales improved, growing by 6% and 7% respectively. We like MAPI s growing exposure in the F&B business and selective expansion in its backbone specialty store division which we believe is more insulated from the e-commerce threat. Where we differ: Multi-year restructuring efforts to support margins. Consensus lower margin assumption implies that the improvement in specialty store s margin in 9M17 would not last in FY18, which should not be the case given the healthy inventory level. In addition, the company would continue to limit store expansion, focusing only on highly profitable brands. Our FY17F/18F net profit is 1%-5% higher than consensus on the back of higher margin assumptions. Forecasts and Valuation FY Dec (Rp m) 2016A 2017F 2018F 2019F Revenue 14,150 15,707 17,658 20,015 EBITDA 1,532 1,755 2,117 2,377 Pre-tax Profit ,020 1,285 Net Profit Net Pft (Pre Ex.) Net Pft Gth (Pre-ex) (%) 1, EPS (Rp) EPS Pre Ex. (Rp) EPS Gth Pre Ex (%) 1, Diluted EPS (Rp) Net DPS (Rp) BV Per Share (Rp) 1,930 2,123 2,400 2,741 PE (X) PE Pre Ex. (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): 1 7 N/A Consensus EPS (Rp): Other Broker Recs: B: 18 S: 1 H: 1 Source of all data on this page: Company, DBSVI, DBS Bank, Bloomberg Finance L.P Potential catalysts: Further profitability improvement. Further improvement in specialty stores performance as a result of selective expansion and changes in sales mix towards more profitable brands should help to support margin improvement. In the near term, stronger sales during year-end holidays would help to improve MAPI s operating leverage and margins. Valuation: Raise TP to Rp8,500. We roll over our valuation base to 2018 and raise our SOP-based TP to Rp8,500 (from Rp7,300 previously). Our TP implies 7.8x 18F EV/EBITDA. Key Risks to Our View: Rupiah depreciation. 60% of MAPI s COGS is imported, making its margins susceptible to rupiah depreciation. At A Glance Issued Capital (m shrs) 1,660 Mkt. Cap (Rpbn/US$m) 11,039 / 815 Major Shareholders (%) Satya Mulia Gema G 55.0 Map Premier Indo (%) 6.0 Free Float (%) m Avg. Daily Val (US$m) 0.82 ICB Industry : Consumer Services / General Retailers ed: CK / sa:ma, PY

2 WHAT S NEW In-line 3Q17 results; maintain BUY with higher TP In line results; core profit grew 137% y-o-y. MAPI s 3Q17 results came in line with our forecast, with core profit growing by 96% y-o-y to Rp81bn. 9M17 core profit stood at Rp260bn (+137% y-o-y), forming 72% of our full-year forecast. 3Q17 EBIT margin declined to 5.9% in 3Q17 (-40 bps y-o-y; -300 bps q-o-q) on lower operating leverage in the absence of a Lebaran boost in 3Q17. We combined 2Q17 and 3Q17 EBIT to eliminate the impact of Lebaran shift and found that EBIT margin still expanded to 7.5% in the period vs. 5.1% in 1Q17. Segment-wise, the most notable margin improvement was seen in specialty stores, expanding to 9.5% in 2Q17-3Q17 from. 5.3% in 1Q17, supported by MAPI s selective expansion and store rationalisation. MAPI s net interest expense also declined by 23% y-o-y to Rp78bn in 3Q17 on lower interest-bearing debt. In-line revenue; SSSG improved in Aug-Sep. MAPI s SSSG decelerated slightly to 3% in 9M17 vs. 4% in 1H17 (where MAPI s revenue boosted by Lebaran season). However, samestore sales trend improved after Lebaran with Aug and Sep same store-sales growing by 6% and 7% respectively. We note that the slowdown was more notable on the F&B segment whose same-store sales declined by 2% in 9M17 vs. 1% in 1H17. On the other hand, Starbucks store expansion help to support the segment s revenue growth. restructure its underperforming department stores by doing a more aggressive store closure in 4Q17. Following its strategic review, management has decided to discontinue Lotus and Debenhams, and focus on strengthening its well-performing department stores i.e. Sogo and Seibu. Management has indicated that the one-off cost of store closure in 4Q17 would have minimal impact to earnings. Revise up FY18F net profit by 7%. We raise our margin assumption for FY18 to 7.8% from 7.5% previously, resulting in a 7% increase in our FY18F net profit forecast. We believe the company is moving in the right direction by focusing its expansion on the higher-margins brands and segments and scale down the non-performing department store chains all of which should pave the way for further margin expansion in We now forecast MAPI s EBIT and net profit to grow by 29% and 47%, respectively, in FY18F. Our FY17F/18F net profit is 1%/5% higher than consensus on the back of higher margin assumptions. Maintain BUY with higher TP of Rp8,500. We roll over our valuation base to FY18 and raise our TP to Rp8,500 from Rp7,300 previously. Our SOP-based TP implies 7.8x EV/EBITDA (27% discount to peers, given MAPI s higher gearing profile) and 27x FY18F PE. Scaling down the underperforming department store business. MAPI has recently stepped up its efforts to Page 2

3 Quarterly / Interim Income Statement (Rpbn) FY Dec 3Q2016 2Q2017 3Q2017 % chg yoy % chg qoq Revenue 3,629 4,096 3, (3.1) Cost of Goods Sold (1,947) (2,076) (2,060) 5.8 (0.8) Gross Profit 1,682 2,020 1, (5.4) Other Oper. (Exp)/Inc (1,450) (1,654) (1,674) Operating Profit (35.5) Other Non Opg (Exp)/Inc (28.5) (5.9) (6.1) Associates & JV Inc (3.7) (12.9) (4.7) (29.1) (63.5) Net Interest (Exp)/Inc (101) (102) (77.6) Exceptional Gain/(Loss) 32.9 (20.9) (7.3) nm (65.1) Pre-tax Profit (37.4) Tax (57.7) (108) (59.9) 3.8 (44.5) Minority Interest (7.1) nm nm Net Profit (0.7) (36.9) Net profit bef Except (41.2) EBITDA (45.2) (55.9) Margins (%) Gross Margins Opg Profit Margins Net Profit Margins Sum-of-parts valuation MAPI's effective shareholding Adj. EV (Rp bn) Adj. EV per share (Rp) Value contribution Remarks Specialty stores 100% 13,797 8, % 10x 18F EV/EBITDA; 10% discount to regional avg. Department stores 100% 1, % 5x 18F EV/EBITDA Food & beverages 79% 3,958 2, % 11x 18F EV/EBITDA Others 100% % 5x 18F EV/EBITDA Net cash (debt) (2,462) (1,483) Holding company discount (15%) (2,498) (1,505) Equity value 14,156 8,500 Implied EV/EBITDA 18F (x) 7.8 Implied PE 18F (x) 26.5 Source of all data: Company, DBSVI, DBS Bank Page 3

4 CRITICAL DATA POINTS TO WATCH Critical Factors: Critical Factors Growth of discretionary spending. leads in Indonesia s retail store segment with a presence in 30-40% of major shopping malls nationwide. Its stores mainly cater to the mid-high/ high-income earners. Demand for its products normally picks up when the economy is growing and the macro front (i.e. interest rates, exchange rate, government policies) is not clouded by uncertainties. When there are too many uncertainties, consumers tend to reduce discretionary purchases. 14% 12% 10% 8% 6% 4% 2% 0% Same store sales growth trend 12% 9% 10% 9% 6% 5%5%5% 4%4% 4% 3%3% 3% 2% 3M14 6M14 9M14 12M14 3M15 6M15 9M15 12M15 3M16 6M16 9M16 12M16 3M17 6M17 9M17 Contribution by segment (2016) Strength of the rupiah against the US dollar. More than 60% of MAPI s costs are in US dollars, meaning a rapidly depreciating rupiah will hurt margins and earnings. MAPI applies a 10-15% buffer in its selling prices, on top of its cost price that is based on the prevailing rupiah spot rate when the products arrive at the ports. This measure is effective when the rupiah depreciates moderately. But, in periods when the rupiah depreciates rapidly, margins will contract. When the rupiah weakened by 22% in the second half of 2013, MAPI s operating margin averaged 4.5% in 2014 vs 7.6% in % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0.4% 9% 53% 38% 2% 1% 12% 19% 19% 3% 76% 67% Others F&B Department store Specialty store Starbucks expansion. In F&B segment, MAPI would continue to concentrate its expansion on its most profitable brand, Starbucks. It looks to add 60 Starbucks outlet p.a. (vs stores p.a. in the past), equally spread among malls, rest areas, office building, terminals and airports (for outside Java expansion). Interestingly, the company sells the products at up to 10% higher than regular price at several outlets (in airports, for instance). Therefore, some outlets would have significantly higher margins, which may ease concerns over the potential rise in opex, as MAPI s F&B division enters a more aggressive expansion phase. - Retail space Revenue EBIT New Stores (sqm) Department store restructuring ongoing. Following its decision to close down Debenhams and Lotus stores, MAPI will focus on strengthening the remaining department stores that it operates, particularly Seibu and Sogo. MAPI looks to strengthen the integration between department stores and F&B and specialty store business to increase traffic and improve its department store s profitability. Same-Store Sales Growth (%) Source: Company, DBSVI, DBS Bank Page 4

5 Appendix 1: A look at Company's listed history what drives its share price? MAPI s share price performance vs. USDIDR ,000 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 Remarks Around 60% of MAPI s COGS is imported with c.18% linked to USD. A sharp depreciation in rupiah hurts MAPI s profitability and may also cause a drop in consumers purchasing power, particularly among the upper-middle income segment, which is MAPI s main target market. MAPI vs. JCI (LHS) USDIDR (RHS) MAPI s share price performance vs. inventory days MAPI s share price performance correlates negatively with its inventory days. MAPI had expanded rapidly between 2012 and 2014, growing store space by more than 40% and almost doubling its store count. That caused inventory level to be elevated. MAPI had to discount its products heavily to reduce inventory at the expense of margins. MAPI vs. JCI (LHS) Inventory days (RHS) MAPI s share price performance vs. quarterly gross margin MAPI vs. JCI (LHS) Source: DBSVI, DBS Bank, Bloomberg Finance L.P. Gross margin, % (RHS) Page 5

6 Balance Sheet: Rp1.86tr zero-coupon bonds to pare down debt. MAPI has two zero-coupon bonds in its balance sheet with a face value of Rp1.86tr. The proceeds were used to pare down the company s debt as well as to fund its expansion in F&B segment. MAPI s net gearing stood at 1x in 9M17. Excluding the zero-coupon bonds, net gearing stood at 0.5x as at the end of 9M17. Leverage & Asset Turnover (x) Share Price Drivers: Pick-up in the economy, stable rupiah. Factors that will support MAPI s share price include: (1) faster-than-expected economic recovery (i.e. stronger GDP growth), (2) a stronger rupiah on the back of an improving macro environment, and (3) taking on new initiatives/brands that will lift margins. Rpbn Capital Expenditure Key Risks: Rapid depreciation of rupiah will crimp margins. More than 60% of MAPI s costs are in foreign currency and it does not hedge its foreign currency exposure. These make margins highly susceptible to a weak rupiah. The company applies a 10-15% buffer in its selling prices to address a moderate depreciation of the rupiah, but would be hurt by a sudden weakness of the rupiah. The sharp 22% depreciation of the rupiah against USD in 2H13 crimped margins by over 300bps between 2013 and ROE (%) Company Background operates department stores and specialty stores selling a broad range of goods including clothing, toys, food, and other merchandise. 16 Forward EV/EBITDA Band (x) sd +1sd Avg. -1sd -2sd 4 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 PB Band (x) Source: Company, DBSVI, DBS Bank Page 6

7 Key Assumptions FY Dec 2015A 2016A 2017F 2018F 2019F New Stores (sqm) 28,901 10,210 38,000 40,000 40,000 Same-Store Sales Growth Segmental Breakdown FY Dec 2015A 2016A 2017F 2018F 2019F Revenues (Rpbn) Specialty stores 8,307 9,496 10,737 12,474 14,307 Department stores 2,762 2,681 2,718 2,452 2,452 F&B 1,557 1,756 2,053 2,525 3,038 Others Total 12,833 14,150 15,707 17,658 20,015 Operating Profit (Rpbn) Specialty stores ,060 1,216 Department stores F&B Others Total ,061 1,369 1,570 Operating Profit Margins Specialty stores Department stores F&B Others Total Income Statement (Rpbn) FY Dec 2015A 2016A 2017F 2018F 2019F Revenue 12,833 14,150 15,707 17,658 20,015 Cost of Goods Sold (6,831) (7,277) (8,002) (8,821) (9,998) Gross Profit 6,002 6,873 7,705 8,838 10,017 Other Opng (Exp)/Inc (5,480) (5,985) (6,644) (7,469) (8,448) Operating Profit ,061 1,369 1,570 Other Non Opg (Exp)/Inc 18.1 (44.7) Associates & JV Inc (25.9) (31.0) (31.0) (26.0) (21.0) Net Interest (Exp)/Inc (388) (411) (346) (323) (264) Exceptional Gain/(Loss) Pre-tax Profit ,020 1,285 Tax (118) (193) (308) (459) (578) Minority Interest (13.7) (28.5) (34.1) Preference Dividend Net Profit Net Profit before Except EBITDA 1,086 1,532 1,755 2,117 2,377 Growth Revenue Gth (%) EBITDA Gth (%) (0.7) Opg Profit Gth (%) (1.6) Net Profit Gth (Pre-ex) (%) (63.6) 1, Margins & Ratio Gross Margins (%) Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%) Net Interest Cover (x) Source: Company, DBSVI, DBS Bank Page 7

8 Quarterly / Interim Income Statement (Rpbn) FY Dec 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 Revenue 3,629 3,860 3,617 4,096 3,970 Cost of Goods Sold (1,947) (1,721) (1,857) (2,076) (2,060) Gross Profit 1,682 2,139 1,761 2,020 1,910 Other Oper. (Exp)/Inc (1,450) (1,828) (1,578) (1,654) (1,674) Operating Profit Other Non Opg (Exp)/Inc (28.5) (10.6) (5.7) (5.9) (6.1) Associates & JV Inc (3.7) 1.40 (4.1) (12.9) (4.7) Net Interest (Exp)/Inc (101) (110) (96.9) (102) (77.6) Exceptional Gain/(Loss) 32.9 (10.4) 16.7 (20.9) (7.3) Pre-tax Profit Tax (57.7) (93.1) (34.2) (108) (59.9) Minority Interest (7.1) Net Profit Net profit bef Except EBITDA Growth Revenue Gth (%) (6.3) 13.2 (3.1) EBITDA Gth (%) (20.7) 53.9 (55.9) Opg Profit Gth (%) (41.1) (35.5) Net Profit Gth (Pre-ex) (%) (20.3) (57.5) (41.2) Margins Gross Margins (%) Opg Profit Margins (%) Net Profit Margins (%) Balance Sheet (Rpbn) FY Dec 2015A 2016A 2017F 2018F 2019F Net Fixed Assets 2,674 2,869 2,875 2,826 2,719 Invts in Associates & JVs Other LT Assets 927 1,006 1,006 1,006 1,006 Cash & ST Invts 504 1,526 1,325 1,589 1,989 Inventory 3,357 3,007 3,398 3,746 4,246 Debtors Other Current Assets 1,268 1,506 1,506 1,506 1,506 Total Assets 9,483 10,683 10,906 11,538 12,407 ST Debt 936 1,888 1,888 1,888 1,888 Creditor 1,767 1,638 1,872 2,015 2,284 Other Current Liab LT Debt 2,719 2,510 2,164 2,164 2,164 Other LT Liabilities Shareholder s Equity 2,975 3,204 3,525 3,985 4,550 Minority Interests Total Cap. & Liab. 9,483 10,683 10,906 11,538 12,407 Non-Cash Wkg. Capital 2,838 2,797 3,012 3,310 3,638 Net Cash/(Debt) (3,152) (2,872) (2,727) (2,462) (2,063) Debtors Turn (avg days) Creditors Turn (avg days) Inventory Turn (avg days) Asset Turnover (x) Current Ratio (x) Quick Ratio (x) Net Debt/Equity (X) Net Debt/Equity ex MI (X) Capex to Debt (%) Z-Score (X) Source: Company, DBSVI, DBS Bank Page 8

9 Cash Flow Statement (Rpbn) FY Dec 2015A 2016A 2017F 2018F 2019F Pre-Tax Profit ,020 1,285 Dep. & Amort Tax Paid (118) (193) (308) (459) (578) Assoc. & JV Inc/(loss) Chg in Wkg.Cap. (438) 263 (215) (298) (328) Other Operating CF Net Operating CF 255 1, ,037 1,206 Capital Exp.(net) (611) (743) (700) (700) (700) Other Invts.(net) 11.3 (179) Invts in Assoc. & JV 0.0 (10.9) Div from Assoc & JV Other Investing CF (65.0) (54.8) Net Investing CF (651) (973) (700) (700) (700) Div Paid (41.3) (72.5) (107) Chg in Gross Debt (346) Capital Issues Other Financing CF (145) (129) Net Financing CF (387) (72.5) (107) Currency Adjustments (152) Chg in Cash (8.8) 1,022 (201) Opg CFPS (Rp) Free CFPS (Rp) (214) Source: Company, DBSVI, DBS Bank Target Price & Ratings History Source: DBSVI, DBS Bank Analyst: Tiesha PUTRI Andy SIM CFA Page 9

10 DBSVI, DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame) Share price appreciation + dividends Completed Date: 2 Nov :18:05 (WIB) Dissemination Date: 2 Nov :52:46 (WIB) Sources for all charts and tables are DBSVI, DBS Bank unless otherwise specified. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by PT DBS Vickers Sekuritas Indonesia (''DBSVI''), DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PT DBS Vickers Sekuritas Indonesia (''DBSVI''), DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the DBS Group ) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. 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Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein. Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Page 10

11 Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making. ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate 1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests 2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group. COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), DBSV HK or their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 29 Sep Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report. Compensation for investment banking services: 3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively. Disclosure of previous investment recommendation produced: 4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months. 1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant. Page 11

12 RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Australia This report is being distributed in Australia by DBS Bank Ltd. ( DBS ) or DBS Vickers Securities (Singapore) Pte Ltd ( DBSVS ). DBS holds Australian Financial Services Licence no DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 ( CA ) in respect of financial services provided to the recipients. DBSVS is regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended only for wholesale investors within the meaning of the CA. Hong Kong This report has been prepared by an entity(ies) which is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at equityresearch@dbs.com. Indonesia Malaysia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies. Wong Ming Tek, Executive Director, ADBSR Singapore Thailand This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No E) or DBSVS (Company Regn No G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at for matters arising from, or in connection with the report. This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only intended for institutional clients only and no other person may act upon it. Page 12

13 United Kingdom This report is produced by PT DBS Vickers Sekuritas Indonesia which is regulated by the Otoritas Jasa Keuangan (OJK). This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom. In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication. Dubai International Financial Centre United Arab Emirates United States Other jurisdictions This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box , 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it. This report is provided by DBS Bank Ltd (Company Regn. No E) which is an Exempt Financial Adviser as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent. This report was prepared by PT DBS Vickers Sekuritas Indonesia (''DBSVI''), DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate. In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. Page 13

14 DBS Regional Research Offices HONG KONG DBS Vickers (Hong Kong) Ltd Contact: Paul Yong 18th Floor Man Yee Building 68 Des Voeux Road Central Central, Hong Kong Tel: Fax: Participant of the Stock Exchange of Hong Kong MALAYSIA AllianceDBS Research Sdn Bhd Contact: Wong Ming Tek ( U) 19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah Kuala Lumpur, Malaysia. Tel.: Fax: general@alliancedbs.com SINGAPORE DBS Bank Ltd Contact: Janice Chua 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore Tel: Fax: equityresearch@dbs.com Company Regn. No E INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: Maynard Priajaya Arif DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: Fax: research@id.dbsvickers.com THAILAND DBS Vickers Securities (Thailand) Co Ltd Contact: Chanpen Sirithanarattanakul 989 Siam Piwat Tower Building, 9th, 14th-15th Floor Rama 1 Road, Pathumwan, Bangkok Thailand Tel Fax: research@th.dbsvickers.com Company Regn. No Securities and Exchange Commission, Thailand Page 14