Malaysia Property. Malaysia Industry Focus. Still in the doldrums. DBS Group Research. Equity 3 Jan 2018 KLCI : 1,782.70

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1 Malaysia Industry Focus Malaysia Property Refer to important disclosures at the end of this report DBS Group Research. Equity 3 Jan 2018 Still in the doldrums Slow sales is the new norm due to weak affordability and large unsold inventory Subdued capital appreciation could cap investor interest Depleting unbilled sales the key risk Top pick: Yong Tai No signs of recovery. The market is expected to remain lacklustre in 2018 despite the downtrend over the past three years. Evidently, the take-up rate of 24% in 1H2017 is also the lowest over the past 10 years. We believe the concerns of low affordability, prolonged weak sentiment and large incoming supply continue to plague the market. Also, potential buyers may prefer to wait-and-see in 1H2018 given the looming general election which has to be held by Aug Meanwhile, the threat of interest rate hikes could be a bane when affordability is already a major concern among buyers. Sales replenishment is key. As more developers venture into the affordable housing segment amid the challenging operating environment, stiff competition in an increasingly crowded space is expected to result in weaker profitability. Sustaining sales momentum will be a key task for developers in 2018 as unbilled sales have been on a declining trend as new sales fail to catch up with their progressive recognition. Therefore, the geographical spread of land bank will be of paramount importance in these trying times, as monetisation of strategic land bank via sellable projects plays a key role in future earnings growth. Maintain high conviction BUY on Yong Tai. Yong Tai stands out as a one-of-its-kind developer that boast competitive advantages from its unique tourism appeal and synergistic property developments in Melaka via its 138-acre Impression City which has received overwhelming response for its maiden launches. The opening of Encore Melaka in Apr 2018 will be a major catalyst. We also like Eco World and Matrix Concepts which have strong unbilled sales from their township developments which offer clear earnings visibility. KLCI : 1, Analyst Quah He Wei, CFA, CFA hewei@alliancedbs.com STOCKS Increasing unsold residential units Unit 25,000 20,000 15,000 10,000 5,000 - *Only residential units completed and issued with certificate of fitness for occupation but remained unsold for more than 9 months H2017 Unit (LHS) 12-mth Price Mkt Cap Target Price Performance (%) RM US$m RM 3 mth 12 mth Rating SP Setia , (0.9) 10.5 HOLD Sunway Bhd , (5.6) 32.2 HOLD UEM Sunrise Bhd , (0.9) 4.8 HOLD Eco World , (8.6) 3.7 BUY Eastern & Oriental (8.9) (1.4) HOLD Matrix Concepts BUY MKH Berhad (22.9) (38.9) HOLD Yong Tai Bhd (5.5) 22.2 BUY Source: AllianceDBS, Bloomberg Finance L.P. Closing price as of 2 Jan 2018 Value (RHS) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - RMm ed:ck / sa:bc, PY, CS

2 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 Industry Focus Property market remains subdued in 2018 market has experienced three years of downturn since Nevertheless, there is unlikely to be a major reversal in 2018 given the persistently weak sentiment. More importantly, the issues of affordability and weak sentiment have continued to affect the property market, leading to the continuous y-o-y decline in the number of property transactions. While the pace of decline has stabilised, we believe it will still take some time for the sector to recover. The total number of property transactions in Malaysia dipped by 4.3% in 9M2017, which is mainly attributable to residential and commercial properties which account for 62% and 7% of the total transactions, respectively. This is not surprising as the property market remains in the doldrums due to low affordability. We believe the already poor sentiment will be further exacerbated by the looming general election which has be to be held by Aug 2018, as potential buyers are likely to remain on the side-lines until the uncertainty clears up. It will remain a buyer s market in 2018 given the huge unsold inventory which will cap property price appreciation. Worst still, buyers may continue to adopt a wait-and-see attitude in anticipation of lower selling prices. Low affordability remains one of the most common issues voiced out by property buyers, as property prices remain stubbornly high though appreciation growth has slowed down considerably. Y-o-y property transactions in negative territory 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% Weak sentiment since Source: AllianceDBS, BNM, MIER MIER consumer sentiment (LHS) Total approved property loan growth (RHS) 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Residential and non-residential property loan growth has shown a positive growth of 9% and 3.2%, respectively, as at Oct 2017 despite the lower number of transactions. We believe the positive figures are largely due to the rising property prices as the value of property transactions in 9M2017 grew by 6.7% despite the contraction of 4.3% in the number of property transactions. Property prices have continued to be on an uptrend although the price gains were more moderate compared to the heydays. Property prices have not come down despite the much-talked about gloom and doom in the market, largely driven by the poor sentiment in the property market. According to National Property Information Centre (NAPIC), 3Q17 property prices grew 5.1% y-o-y which marks the slowest growth since 2010, reflecting the weak sentiment in the Malaysian property market. Nevertheless, demand from genuine homebuyers remains robust, underpinned by relatively healthy economic growth which is projected at 5.8% and 5.4% for 2017 and 2018 respectively. Page 2

3 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 Industry Focus Quarterly house price index remains at elevated levels 2010= All Terraced High-rise Slower growth of house price index 2010= % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% All Terraced High-rise Residential loan approval rates 65% We believe the outlook in 2018 will not differ much from what we experienced in 2017 as most developers continue to focus on the affordable housing segment which is getting more crowded. This has also intensified the level of competition as developers strive to replenish their depleting unbilled sales which are critical for them to sustain their earnings growth momentum. Declining property sales is expected to be the same key challenge for the sector though individual developers with niche expertise and brand names could buck the trend. Developers have been facing difficulties in converting their initial high bookings into sales because of stricter bank lending policies, as banks get more cautious towards the property sector despite the keen interest shown by potential home buyers, especially genuine home-occupiers who may be purchasing properties for the first time or upgrading to better homes. In the near term, property price appreciation potential will be capped given the stiff competition and rising incoming supply which has been reflected in the slower growth over the past few quarters. The healthy consolidation has resulted in developers being more prudent and selective with their launches as well as product offerings in the current buyers market. Developers may suffer from lower margins as they will find it challenging to pass through incremental cost pressure via higher selling prices when the sentiment has been weak. At the same time, developers that have accumulated land bank during the booming times with high land prices may have to revise its master plan as high-end properties are not likely to fare well under current market conditions. 60% 55% 50% 45% 40% 35% 30% Source: AllianceDBS, BNM residential loan approval rates Page 3

4 Q17* H2017 Industry Focus Imbalance supply-demand dynamics Media has recently highlighted that the approvals for shopping complexes, offices, serviced apartments and luxury condominiums [in Kuala Lumpur] priced above RM1m will be halted effective 1 Nov While there has been much uncertainty on the implementation of the blanket ban, the news comes hot on the heels of Bank Negara Malaysia s (BNM) warning that Malaysia is facing an oversupply of property due to aggressive launches in recent years. We believe the tightening measure, if implemented, will do little to resolve the grave issue of supply glut in the near term given that newly delivered properties have progressively entered the market. As at end-1h2017, Malaysia s residential stocks have grown by 8% which is also the largest over the past 10 years. The huge incoming supply which is increasingly being converted into unsold inventories will continue to pressure the property market which has also resulted in weak property sales in 1H2017. For residential properties (including serviced apartments), we believe Johor and Penang will be more vulnerable given incoming supply that is higher-than-national-average relative to the respective state s existing stock. Meanwhile, the commercial markets in Klang Valley and Johor will be particularly more exposed to the high incoming supply. Increasing unsold residential units Unit 25,000 20,000 15,000 10,000 5, H2017 Unit (LHS) Value (RHS) *Only residential units completed and issued with certificate of fitness for occupation but remained unsold for more than 9 months 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - RMm Weak property sales in 1H ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - New launch (LHS) Sales (LHS) Take up (RHS) Newly-completed residential units entering market 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Residential stock (RHS) Growth (LHS) Taking cue from listed developers relatively flattish sales targets in 2017, we expect the trend to persist in 2018 as the impending general election, which is widely expected to take place in 1H18, will lead to potential buyers adopting a waitand-see attitude for their property purchase decisions. Also, developers new launches will face stiff competition from newly completed projects and public housing. Increasingly, property buyers may look at bargain sales from newlycompleted properties as there have been instances where existing owners could not afford the high monthly mortgage instalments. 50% 45% 40% 35% 30% 25% 20% Mil units Page 4

5 New supply coming onstream Comple tions % of stoc k Inc oming supply % of stoc k Existing stoc k HPI HPI growth , % 605, % 3,050, , % 627, % 3,287, % , % 641, % 3,467, % , % 637, % 3,680, % , % 619, % 3,864, % , % 573, % 4,063, % , % 557, % 4,220, % , % 538, % 4,338, % , % 533, % 4,446, % , % 533, % 4,547, % , % 628, % 4,640, % , % 696, % 4,718, % , % 769, % 4,848, % , % 766, % 4,852, % , % 829, % 4,945, % 1H , % 485, % 5,348,670 n.a. n.a. * Adjustment made for completed projects issued with CCC for incoming supply and existing stock in 2017 HPI House Price Index Huge incoming residential supply flooding the market in 2017 and KL Se la ngor Johor Pe na ng Me la ka Othe rs Ma la ysia Existing Stock 460,296 1,419, , , ,445 1,831,734 5,037,937 % of Msia 9% 28% 15% 8% 3% 36% 100% Incoming supply 80, , ,330 95,843 32, , ,448 % of stock 18% 14% 27% 23% 19% 20% 19% Planned supply 92, , ,818 50,968 14, , ,505 % of stock 20% 8% 25% 12% 9% 14% 14% *Including serviced apartments which are classified as commercial properties Page 5

6 Lower unbilled sales after slow sales in 2017 Developers unbilled sales have been declining over the past few years as the downturn in the sector continues to affect their sales replenishment. We believe unbilled sales in 1H18 will fall further as we expect a slow market due to the impending general election. Therefore, new sales in 2H18 will be of paramount importance for developers to sustain their earnings momentum. Also, strong earnings growth experienced over the past two years is unlikely to be repeated going forward. We believe the market sentiment could remain soft in 2018 as the market continues to digest the large unsold inventory. Property buyers have also become more price sensitive nowadays due to poor affordability and properties absolute pricing has become a major consideration for buyers. Developers have been trying to increase the density of their projects so that they could offer cheaper-priced units to potential buyers. Also, we notice an increasing trend of property buyers that purchase cheaper properties further away from city centres, especially in areas that have good public transport connectivity. Attractive product offerings with strong value proposition are critical to replenish unbilled sales. We believe larger developers with diversified geographical concentration and township exposure will be in a better position to weather the market downturn. This is especially so for those with large land banks acquired years ago at much lower prices which will enable them to price their products competitively. Unbilled sales need strong replenishment Company Property revenue Unbilled s ales FY14A FY15A FY16A FY17 as at Sep17 UEM Sunrise 1,783 1,750 1,842 1,752 2,900 74% foreign exposure SP Setia 3,510 6,223 4,484 3,572 7,050 53% foreign exposure Sunway 1,198 1,196 1, % foreign exposure E&O Include JV portions MKH Eco World 148 1,712 2,546 2,925 4,825 exclude EWI Matrix n.a ,088 Yong Tai n.a ,060 *Financial year end change for Matrix Source: Companies, AllianceDBS Property sales summary Property s ales RMm FY14A FY15A FY16A FY17 UEM Sunrise 2,443 2,357 1,369 1,200 SP Setia 4,623 *4320 3,823 4,000 Sunway 1,711 1,210 1,173 1,100 E&O , MKH Eco World 3,186 3,016 3,820 4,000 Matrix 630 ~974.2 n.a. 1,031 Yong Tai n.a. n.a. n.a. 823 *14-month period ended Dec15 ~15-month period ended Mar16 Source: Companies, AllianceDBS Page 6

7 H Industry Focus We believe the market has entered a phase of stagnation as the structural issue of low affordability will linger on in the coming years. It will require a long-term comprehensive plan to address this issue, and this could present a daunting task to the authorities. While demand remains healthy, thanks to the young demographics in Malaysia, the property market will go through a gestation period after the strong incoming supply since Breakdown of residential property transactions in 1H2017 >1m 4% 500k-1m 13% Affordability declines in recent years RM' (x) k 29% <250k 54% *Estimated affordability based on household monthly income/monthly instalment Affordable house price, BNM Affordability ratio The new incoming supply has dipped by 41% as at 1H2017 from 4Q2016, which reinforces our view that will see a lot of newly-completed units flooding the market. Coupled with the large unsold inventory, it will take quite a while for market conditions to stabilise. We expect the path to recovery will be on a very gradual basis with more improvements anticipated from 2019 onwards. Nevertheless, affordable landed properties with ready infrastructure and amenities remain in demand, as attested by some of the launches in Developments that are integrated with current or planned public rail stations continue to be sought after. Property buyers have been increasingly seeking value-adding properties as more affluent buyers continue to upgrade their lifestyle. Breakdown of residential property transactions by price range 100% 80% 60% 40% 20% 0% 87% 85%83%83%81%78%75% 72% 60% 53% 61% 57%55% 27% 31% 9% 11%12%12%14%15%16% 18% 25% 28% 29% 2% 3% 3% 4% 4% 5% 6% 7% 9% 11%11%11% 13% <250k k 500k-1m Page 7

8 Investment strategy Our key property picks in 2018 are Eco World, Matrix Concepts and Yong Tai which are township developers with niche expertise within local communities. The trio has achieved higher sales in 2017 despite a fair share of downward revisions by their peers amid the challenging environment. Eco World (BUY, RM1.65 TP). Eco World (ECW) remains the one-of-its-kind premium developer with aggressive expansion plans despite being a relatively new property developer with only three years of history. It has been able to sell properties at an unprecedented pace, reflecting property buyers confidence in the group s strong brand name. Its property gross sales have been growing from strength to strength over the past three years from RM3bn in FY15 to RM4bn in FY17 despite the sector downturn during a period where most of its peers posted disappointing sales performance. ECW has clearly been gaining more market share at the expense of its competitors We are projecting strong 2-year earnings CAGR of 26% over FY17-19F. This is supported by its high unbilled sales of RM4.8bn as at end-october Including ECW s effective share of sales from its 27%-owned Eco World International, total unbilled sales would be RM6.4bn which will provide strong earnings visibility until FY19. Matrix Concepts (BUY, RM2.40 TP). Matrix has bucked the trend with record-high property sales at its two flagship projects, Bandar Sri Sendayan (BSS) in Seremban and Bandar Sri Impian (BSI) in Kluang, despite the relatively weak market sentiment. The majority of its launches are priced below the RM600k/unit mark, leveraging on the robust demand for affordable homes. The sales momentum going forward is likely to remain on the uptrend as Matrix still has a large pipeline of affordable homes which are ready for launch. BSS remains its jewel in the crown given the low average land cost of RM7psf (with infrastructure in place) when its affordably-priced properties are already selling at ~RM200psf, leading to significantly higher-than-average profit margins. It achieved RM350m property sales in 2QFY18 (+18% q-o-q, +40% y-o-y), bringing 1HFY18 sales to RM645m (+27% y-oy). Accordingly, unbilled sales stood at a record-high level of RM1.1bn. Matrix has continued to chalk up unprecedented sales despite the challenging environment which has affected most of its peers. Therefore, we believe that its flagship projects in Bandar Sri Sendayan, Sembilan and Bandar Seri Impian, Kluang will continue to enjoy strong sales momentum thus enabling the company to most likely exceed its sales target of RM1bn in FY18. Yong Tai (BUY, RM2.10 TP). Yong Tai has successfully transformed into a Melaka-centric township property developer via its integrated 138-acre Impression City (RM7.7bn GDV), featuring the first-of-its-kind Encore Melaka an iconic tourist landmark that showcases large-scale live cultural music performances which will be officially opened in Apr As the first Impression Series project outside China, the Melaka Straits-fronting Encore Melaka is poised to be a resounding success by tapping into the booming Chinese tourism in Malaysia which has seen an impressive tourist arrivals CAGR of 11% over (vs 1% for Malaysia s overall tourist arrivals), making it the third-largest tourist source market. We are optimistic on the potentials of Encore Melaka given its compelling value proposition with an estimated ~20% IRR over the 30-year concession, thus transforming Yong Tai into an emerging cash cow with strong recurring income. This is set to be the next re-rating catalyst for Yong Tai. Given Yong Tai s unrivalled competitive advantages arising from its unique tourism appeal and synergistic property product offerings, it is expected to deliver an exponential EPS CAGR of 87% over FY17-20F. We envisage long-term earnings visibility for Yong Tai as its value-adding Impression City and Encore Melaka ride on booming Chinese tourism, reflecting the unprecedented close Malaysia-China ties. It is trading at an undemanding 7x FY19 PE, which is grossly unjustified in our view. Page 8

9 Risk Foreclosures. This would be largely driven by several completed schemes entering the market, for which the units were purchased with small down payments a few years ago. Buyers may not be able to flip at the high margins they had expected earlier, and they may not want to go ahead with the mortgage payments. Foreclosures could also arise from incidences of rentals not being able to cover mortgage payments. Buyers with weak holding power will face foreclosure risk. Margin compression. Developers may not be able to pass on incremental land and construction costs to property buyers, as the market may not be receptive to higher selling prices amid record-high house prices. Also, the steep depreciation of the MYR could result in higher cost of imported materials for some projects. Slowing sales. Property sales may slow down in some locations as property buyers may be deterred by the high entry price and tightening measures, with banks adopting more cautious lending practices for mortgage loans. Rising household debt. The currently elevated household debt level could strain purchasing power and the demand for future properties, in view of the rising inflationary pressure and unaffordability. Peer comparison Company Rating Price TP Mark et cap RNA V discount PE PB ROA E RM RM RMm F Y17 F Y18 F Y17 F Y18 F Y17 F Y18 SP Setia Hold ,192 40% % 5.2% Sunway Hold ,296 21% % 7.2% UEM Sunrise Hold ,991 70% % 3.1% Eco World Buy ,093 41% % 3.9% E&O Hold ,870 57% % 4.7% Matrix Concepts Buy ,631 35% % 19.3% MKH Hold % % 8.8% Yong Tai Buy % % 10.2% A v erage 46% % 7.8% *last price of 2 Jan 2018 Source: AllianceDBS, Bloomberg Finance L.P. Page 9

10 AllianceDBS 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: 3 Jan :35:36 (MYT) Dissemination Date: 3 Jan :21:30 (MYT) Sources for all charts and tables are AllianceDBS unless otherwise specified. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). 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 AllianceDBS Research Sdn Bhd (''AllianceDBS''). 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. 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11 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 30 Nov 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). 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. Page 12

13 United Kingdom This report is produced by AllianceDBS Research Sdn Bhd which is regulated by the Securities Commission Malaysia. 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 AllianceDBS Research Sdn Bhd (''AllianceDBS''). 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.dbs.com Company Regn. No Securities and Exchange Commission, Thailand Page 14