UEM Sunrise. Malaysia Company Guide

Transcription

1 Malaysia Company Guide Version 7 Bloomberg: UEMS MK Reuters: UEMS.MK Refer to important disclosures at the end of this report DBS Group Research. Equity 22 Mar 2018 HOLD Last Traded Price ( 21 Mar 2018): RM0.99 (KLCI : 1,865.80) Price Target 12-mth: RM1.05 (7% upside) (Prev RM1.10) Analyst QUAH He Wei, CFA hewei@alliancedbs.com What s New Expect weak 1H18 results due to the absence of overseas contribution pursuant to adoption of MFRS15 Cut FY18-19F earnings by 20%/3% No imminent turnaround in Iskandar Malaysia property market Maintain Hold with lower TP of RM1.05 Price Relative RM Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 (LHS) Relative KLCI (RHS) Relative Index Forecasts and Valuation FY Dec (RMm) 2017A 2018F 2019F 2020F Revenue 2,903 2,706 3,023 1,104 EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) Net Pft Gth (Pre-ex) (%) (28.9) (50.0) EPS (sen) EPS Pre Ex. (sen) EPS Gth Pre Ex (%) (29) (50) Diluted EPS (sen) Net DPS (sen) BV Per Share (sen) PE (X) PE Pre Ex. (X) P/Cash Flow (X) nm EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): (20) (3) N/A Consensus EPS (sen): Other Broker Recs: B: 3 S: 2 H: 11 Source of all data on this page: Company, AllianceDBS, Bloomberg Finance L.P Headwinds ahead Weak sentiment in Iskandar Malaysia. (UEMS) continues to be severely affected by the weak sentiment towards Iskandar Malaysia s properties with its Johor sales plunging from RM1.9bn in FY13 to RM290m/RM690m/RM408m in FY15-FY17. Also, the market has started to grapple with increasing property supply, especially high-end condos, which have been exacerbated by the aggressive entry of Chinese developers with their condo projects being completed progressively. Maintain HOLD as we do not foresee any recovery in Iskandar Malaysia property market in the near term. Where we differ? Our earnings forecast is much lower than consensus, probably due to our more conservative stance on the property market in Iskandar Malaysia. Strong sales replenishment is critical to sustain UEMS earnings momentum. Potential catalyst? As 75% of UEMS land bank is located in Iskandar Malaysia due to its role as the master developer, a recovery in the sentiment towards the property market in the area will be the much-needed catalyst for the company. We believe the commencement of works for Malaysia-Singapore High Speed Rail and Rapid Transit System will be the next rerating catalyst. Valuation: We maintain our HOLD call for UEMS with a lower TP of RM1.05, based on unchanged 70% discount to our RNAV. UEMS may not be able to monetise the deep value of its Johor land bank anytime soon given the weak sentiment towards Iskandar Malaysia properties. Key Risks to Our View: Potential oversupply of high-end condos in Iskandar Malaysia. Property prices there are also comparable to more matured areas (KL and Penang), which may not be sustainable. At A Glance Issued Capital (m shrs) 4,537 Mkt. Cap (RMm/US$m) 4,469 / 1,141 Major Shareholders (%) UEM Group 66.1 Lembaga Tabung Haji 6.9 Free Float (%) m Avg. Daily Val (US$m) 0.88 ICB Industry : Financials / Real Estate ed: JS / sa:bc, PY, CS

2 Company Guide WHAT S NEW No imminent turnaround Is the worst over? We believe UEMS 1H18 results will remain weak in view of the absence of profit contribution from its Australian projects. Effective Jan 2018, UEMS has adopted the Malaysian Financial Reporting Standards (MFRS) 15 which will only allow revenue recognition for its international projects upon completion of the projects. This is in contrast to UEMS prior practice of progressive recognition for both its local and overseas development projects. Therefore, both its on-going Australian projects, namely Aurora Melbourne Central, Melbourne (RM2.4bn GDV) and Conservatory, Melbourne (RM991m GDV) which have attained construction progress of ~60% as at Jan 2018 will only contribute from 2H18 onwards as per its completion schedule. Note that overseas projects contributed RM1.34bn revenue in FY17, which is 46% of FY17 revenue of RM2.9bn. This is expected to result in a much weaker 1H18 financial performance given the smaller revenue recognition merely from Malaysian projects which may not commensurate with the operating expenses to be incurred. This led us to revise down our FY18-19F earnings by 20%/3% respectively as we incorporate the impact of MFRS 15 in our forecast. Dependent on overseas market: UEMS unbilled sales stood at RM4.8bn as at Dec 2017, of which only 29% or RM1.37bn came from its Malaysian projects. While the remaining 71% or RM3.4bn unbilled sales from Australia will provide lumpy profit recognition upon completion of the respective projects, sales replenishment from its local market remains a key concern as >99% of its land bank is located in Malaysia. Breakdown of unbilled sales Australia 71% Johor 12% Klang Valley 17% RM1.2bn sales target in FY18. UEMS has set its FY18 sales target at RM1.2bn (FY17: RM1.5bn) while launch pipeline stands at RM1bn. It is also actively working on selling its completed inventory which stood at RM610m as at Dec Nevertheless, we believe that the uncertainty arising from the upcoming general election which has to be held by Aug 2018 will continue to be a drag for property sales as potential buyers will likely defer their purchase decision until election is over. Johor market remains lacklustre. We believe the overall market conditions in Iskandar Malaysia remains subdued as the concern of oversupply in high-rise projects continues to dampen market sentiment. Supply-demand dynamics remains the worst in Johor relative to other states in Malaysia due to the large incoming supply, no thanks to the frenzied launches in Iskandar Malaysia prior to We are of the view that it may take several years for the market to absorb the excess supply in Johor, hence UEMS may find it challenging to develop its massive landbank despite being the master developer of Iskandar Puteri. Also, it is set to launch only RM275m worth of new projects in Johor in 2018, out of its launch pipeline of RM1bn. UEMS property sales in Johor RMm 2,000 1,800 1,600 1,400 1,200 1, UEMS overall property sales RMm 3,500 3,000 2,500 2,000 1,500 1, Page 2

3 Huge incoming supply in Johor (units) 2016 KL Selangor Johor Penang Melaka Others Malaysia 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% *Includes data from serviced apartments which is classified under commercial properties Maintain Hold. We reiterate our HOLD recommendation with a lower TP of RM1.05 after incorporating our earnings revision. This is based on 70% discount to our RNAV as a stiffer competition amid a challenging property market in Malaysia may affect its property sales replenishment. Page 3

4 RNAV Stake Land Value Value Eff Value Acres RMpsf RMm RMm Puteri Harbour 100% ,043 1,043 CS-3, Puteri Harbour 50% SILC 100% East Ledang 100% Horizon Hills 50% , Afiat Healthpark 100% Nusa Idaman 100% Nusa Bayu 100% Residential North 40% Bio Xcell 40% Lifestyle Retail Mall & Residences 55% Residential South 80% Gerbang Nusajaya - Motorsports City 30% Gerbang Nusajaya - Eco-Industrial Par 40% , Gerbang Nusajaya 40% Gerbang Nusajaya 100% 3, ,631 5,631 Nusajaya remaining landbank 100% ,503 1,503 6, ,932 12,619 Reserves area 1, Total Nusajaya 7, ,932 12,619 Desaru 51% Frasers Metropolis 60% 2, Symphony Cyberjaya 100% Bangi Land, Selangor 100% Seremban Forest Heights 50% Sinaran Hills, Kajang 100% Angkasa Raya, KLCC 100% 2 3, Floresta Solaris 3 62% Jelutong Commercial Center 50% Undeveloped landbank 2, Klang Valley 100% Mersing 100% Tapah 100% 2, Canada 100% Total Outside Nusajaya 4,381 2,403 1,934 Grand Total 12,055 18,335 14,553 NTA ex-land & JV/associates 1,198 NPV of unbilled sales (10% WACC) 238 UEML RNAV 15,989 No of shares 4,537 RNAV/share 3.52 Page 4

5 CRITICAL DATA POINTS TO WATCH Critical Factors Weak sales momentum in Iskandar Puteri. UEMS is predominantly the master developer of Iskandar Puteri, one of the flagship zones within Iskandar Malaysia. Its properties in Iskandar Puteri were selling like hot cakes a few years ago but the trend has reversed since three years ago when Iskandar Puteri property sales in FY15-17 dipped to RM290m/RM690m/RM408m from RM1.9bn in FY13. The weak sentiment in the property market in Iskandar Malaysia, brought about by a deluge of competing property launches by other developers, coupled with the tightening measures implemented by the government, has resulted in much slower sales for UEMS property projects in Iskandar Puteri. RM1.2bn sales target in FY18. UEMS achieved FY17 sales of RM1.49bn, exceeding its sales target of RM1.2bn, thanks to the overwhelming response from its sales in Solaris Parq due to the strategic location. Nevertheless, at Iskandar Puteri, we remain cautious given the weak market sentiment and oversupply situation. Good product offerings are critical to kick off sales. Given the challenging outlook for Iskandar Malaysia s property market, UEMS may have to review its product offerings and be strategic and discerning in the timing of future launches to beat the competition. We believe that luxury high-rise buildings in Iskandar Malaysia will face a much tougher time in view of the current supply glut and high prices, which are unsustainable Property sales A 2017A 2018F 2019F 2020F property revenue A 2017A 2018F 2019F 2020F EBIT margin RM4.8bn unrecognised revenue. This will offer near-term earnings visibility, from progress billing for several projects that have been sold. Nevertheless, UEMS will need to achieve its sales target in order to sustain its growth momentum going forward. Potential land sales to boost earnings. Given UEMS large land bank in Iskandar Puteri, there could be strategic land sales to third parties, which would help to expedite the overall development and de-risk its exposure progressively. We have not included any potential strategic land sales in our earnings forecast, although we understand management is talking to some parties, which may present upside surprises to our numbers A 2017A 2018F 2019F 2020F pretax margin A 2017A 2018F 2019F 2020F Page 5

6 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Company Guide Appendix 1: A look at Company's listed history what drives its share price? Share price vs FBM KLCI RM A B C 0.00 Index Remarks A Iskandar Malaysia was the property hotspot in Malaysia as the government poured in massive investments and introduced various incentives to make it the destination of choice for locals and investors. UEMS benefited as it is the master developer of Iskandar Puteri one of the flagship zones of Iskandar Malaysia B Concern on property oversupply in Iskandar Malaysia affected the sentiment, and the entry of aggressive developers from China exacerbated the situation Source: Bloomberg L.P., AllianceDBS UEMS (LHS) FBM KLCI (RHS) C Share price remains undervalued given the absence of potential recovery in Johor property market Share price vs property sales RM RMm Remarks There is little correlation between share price performance and property sales. UEMS property sales have been coming under pressure due to the challenging property market in Johor though it has started to diversify into the Australian property market. UEMS (LHS) Property sales (RHS) Source: Bloomberg L.P., AllianceDBS Page 6

7 Balance Sheet: Healthy gearing enables the group to land bank strategically. UEMS balance sheet remains healthy with 44% net gearing as at end-dec The group has embarked on cash consolidation exercise to divest its non-core assets and land to strengthen its balance sheet Leverage & Asset Turnover (x) Share Price Drivers: Improved property sales at Iskandar Puteri could re-rate stock. Given the challenging outlook for Iskandar Malaysia properties because of excess supply, UEMS would have to come up with innovative and differentiated products to boost demand, which remains weak. Strong property sales in Iskandar Malaysia will be a key catalyst for UEMS as this will underline buyers confidence in its products. This will also bode well for its growth prospects as the bulk of its land bank is located within Iskandar Puteri. Key Risks: Oversupply of high-end condos. There could be a potential oversupply of high-end condos in Iskandar Malaysia with a slew of launches over the past three years. Property prices are now comparable to more matured areas (KL and Penang), which may not be sustainable. Iskandar Malaysia lacks critical mass. While the infrastructure is in place, more economic drivers and crowd-pulling aspects are required to improve vibrancy. Company Background UEMS is the largest landowner in Iskandar Malaysia and Mont Kiara. It also has land bank in other parts of Greater KL (Bangi and Cyberjaya) and Melbourne A 2017A 2018F 2019F 2020F Gross Debt to Equity (LHS) Asset Turnover (RHS) Capital Expenditure RMm A 2017A 2018F 2019F 2020F Capital Expenditure (-) ROE (%) 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2016A 2017A 2018F 2019F 2020F Forward PE Band (x) (x) sd: 53.7x sd: 46.1x Avg: 38.4x -1sd: 30.8x -2sd: 23.2x 18.1 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 (x) 2.0 PB Band (x) sd: 1.48x sd: 1.19x 1.0 Avg: 0.89x sd: 0.59x 0.4-2sd: 0.3x 0.2 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Page 7

8 Key Assumptions FY Dec 2016A 2017A 2018F 2019F 2020F Property sales 1,369 1, , property revenue 1,602 2,249 2,214 2, EBIT margin pretax margin Lower than management s target Income Statement (RMm) FY Dec 2016A 2017A 2018F 2019F 2020F Revenue 1,841 2,903 2,706 3,023 1,104 Cost of Goods Sold (1,629) (2,580) (2,443) (2,683) (919) Gross Profit Other Opng (Exp)/Inc (24.0) (25.3) (30.2) (34.8) (39.0) Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc (46.9) (60.7) (72.3) (53.7) (38.7) Exceptional Gain/(Loss) Pre-tax Profit Tax (69.3) (157) (116) (85.2) (43.1) Minority Interest 0.0 (1.5) (2.0) (2.0) (2.0) Preference Dividend Net Profit Net Profit before Except EBITDA Growth Revenue Gth (%) (6.8) 11.7 (63.5) EBITDA Gth (%) (18.0) 21.3 (16.6) 27.5 (40.6) Opg Profit Gth (%) (29.4) 57.7 (22.0) 31.4 (52.1) Net Profit Gth (Pre-ex) (%) (32.3) (28.9) (50.0) Margins & Ratio Gross Margins (%) Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%) Net Interest Cover (x) Expect low earnings due to weak property sales replenishment Page 8

9 Quarterly / Interim Income Statement (RMm) FY Dec 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 Revenue Cost of Goods Sold (569) (454) (834) (612) (692) Gross Profit Other Oper. (Exp)/Inc (4.6) (6.2) (7.5) Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc (7.0) (16.7) (16.6) (15.2) (12.2) Exceptional Gain/(Loss) Pre-tax Profit Tax (29.6) (27.9) (44.3) (40.1) (44.8) Minority Interest 0.07 (0.6) (0.5) (0.4) 0.0 Net Profit Net profit bef Except (6.5) EBITDA Growth Revenue Gth (%) 48.3 (13.3) 65.7 (20.3) 4.5 EBITDA Gth (%) (30.4) 61.0 (48.0) Opg Profit Gth (%) (17.1) 74.0 (28.1) 54.8 (50.7) Net Profit Gth (Pre-ex) (%) (85.6) (113.0) Margins Gross Margins (%) Opg Profit Margins (%) Net Profit Margins (%) Mainly from land sales Thin margin Balance Sheet (RMm) FY Dec 2016A 2017A 2018F 2019F 2020F Net Fixed Assets Invts in Associates & JVs 1,614 1,553 1,583 1,616 1,652 Other LT Assets 5,665 5,109 5,355 5,405 5,455 Cash & ST Invts ,291 1,554 2,909 Inventory Debtors 1,731 2,640 2,255 2, Other Current Assets 2,866 3,175 2,766 2,400 1,997 Total Assets 13,550 14,397 14,310 14,321 13,593 ST Debt 1,310 1,486 1,486 1,486 1,486 Creditor Other Current Liab LT Debt 2,404 2,734 2,534 2,334 2,134 Other LT Liabilities 1,342 1,361 1,361 1,361 1,361 Shareholder s Equity 6,832 7,069 7,267 7,397 7,446 Minority Interests Total Cap. & Liab. 13,550 14,397 14,310 14,321 13,593 Non-Cash Wkg. Capital 3,882 5,041 4,350 3,884 2,245 Net Cash/(Debt) (2,926) (3,287) (2,729) (2,266) (711) 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) Healthy gearing Page 9

10 Cash Flow Statement (RMm) FY Dec 2016A 2017A 2018F 2019F 2020F Pre-Tax Profit Dep. & Amort Tax Paid (69.3) (157) (116) (85.2) (43.1) Assoc. & JV Inc/(loss) (75.8) (27.0) (29.7) (32.7) (36.0) Chg in Wkg.Cap. (994) (1,280) ,639 Other Operating CF (196) Net Operating CF (710) (150) ,742 Capital Exp.(net) (25.2) (87.6) (87.6) (87.6) (87.6) Other Invts.(net) 0.0 (125) Invts in Assoc. & JV Div from Assoc & JV (248) 0.0 (50.0) (50.0) (50.0) Other Investing CF 62.2 (15.2) Net Investing CF (211) (178) (138) (138) (138) Div Paid (85.3) 0.0 (70.0) (67.0) (49.2) Chg in Gross Debt (200) (200) (200) Capital Issues Other Financing CF (151) (175) Net Financing CF (270) (267) (249) Currency Adjustments (5.0) (19.2) Chg in Cash (217) ,355 Opg CFPS (sen) Free CFPS (sen) (16.2) (5.2) Target Price & Ratings History RM S.No. Date of Report Closing Price 12-mth Target Rating Price 1: 18 May HOLD 2: 13 Jun HOLD 3: 24 Aug HOLD 4: 31 Oct HOLD 5: 01 Nov HOLD 6: 21 Nov HOLD 7: 13 Dec HOLD 8: 03 Jan HOLD 9: 28 Feb HOLD 0.92 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 Note : Share price and Target price are adjusted for corporate actions. Source: AllianceDBS Analyst: QUAH He Wei, CFA Page 10

11 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: 22 Mar :40:28 (MYT) Dissemination Date: 22 Mar :37:09 (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''). 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12 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 28 Feb 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 12

13 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 13

14 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 14

15 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 15