Sector Commodities Page 2 Cobalt demand expected to continue growing despite Tesla s announcement.

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1 PLEASE CLICK ON THE PAGE NUMBER TO MOVE TO THE RELEVANT PAGE. CHINA Sector Commodities Page 2 Cobalt demand expected to continue growing despite Tesla s announcement. Update Geely Auto (175 HK/BUY/HK$21.8/Target: HK$3.) Page 5 Apr 18 sales in line; potential increase in sales target on strong growth momentum. INDONESIA Results Indofood CBP (ICBP IJ/HOLD/Rp8,575/Target: Rp8,4) Page 8 1Q18: Net income exceeds expectations. Indofood Sukses Makmur (INDF IJ/BUY/Rp6,375/Target: Rp7,9) Page 11 1Q18: Results in line but shares trading now at -1SD; upgrade to BUY. MALAYSIA Update Inari Amertron (INRI MK/BUY/RM1.79/Target: RM2.45) Page 14 Expecting weaker hoh earnings in 2HFY18 on softer RF demand and unfavourable forex impact; medium- to long-term prospects remain promising. SINGAPORE Sector Banking Page 17 1Q18 round-up: New normal of lower credit cost. Results Oversea-Chinese Banking Corp (OCBC SP/BUY/S$13.17/Target: S$16.5) Page 19 1Q18: Let down by flat NIM. THAILAND Results PTT Global Chemical (PTTGC TB/BUY/Bt96./Target: Bt125.) Page 22 1Q18: Core profit in line with our forecast; expect sustained strong core earnings in 2Q18. KEY INDICES Prev Close 1D % 1W % 1M % YTD % DJIA (1.5) S&P (.) FTSE (1.6) AS CSI (.5) (4.9) FSSTI (.4) (1.2) HSCEI (.8) (.) 2.2 HSI (.9).5.3 JCI (.6) (4.7) (7.4) KLCI (.7) (1.9) (.5) 1.7 KOSPI (1.) (.6) 1.3 (.2) Nikkei (.) (1.3) SET (.) TWSE (2.) (.4) BDI CPO (RM/mt) 2341 (.8) (1.6) (4.1) (2.1) Brent Crude (US$/bbl) Source: Bloomberg TOP PICKS Ticker CP (lcy) TP (lcy) Pot. +/- BUY (%) Baoshan Iron & Steel 619 CH Beijing CapIntl Airport 694 HK Gudang Garam GGRM IJ 7,. 83, PP Persero PTPP IJ 2,19. 3, V.S. Industry VSI MK Gabungan AQRS AQRS MK OCBC OCBC SP SingTel ST SP Siam Cement SCC TB SELL Great Wall Motor 2333 HK (41.) Hartalega HART MK (31.) KEY ASSUMPTIONS GDP (% yoy) F 219F US Euro Zone Japan Singapore Malaysia Thailand Indonesia Hong Kong China CPO (RM/mt) 2,783 2,4 2,5 Brent (Average) (US$/bbl) Source: Bloomberg, UOB ETR, UOB Kay Hian CORPORATE EVENTS Venue Begin Close Roadshow with Chiho Hong Kong 8 May 8 May Environmental Group (976 HK) Analyst Presentation on Indonesia US/Canada 7 May 1 May Outlook and Strategy Roadshow with Chiho Environmental Shanghai 9 May 1 May Group (976 HK) Group Luncheon with Hong Kong 14 May 14 May China Grand Pharmaceutical and Healthcare Holdings Limited (512 HK) Analyst Presentation on Bangkok 15 May 16 May Greater China Automobiles Sector Analyst Presentation on Taipei 17 May 18 May Greater China Automobiles Sector Analyst Presentation on Kuala Lumpur 22 May 23 May China Auto Sector Singapore 24 May 24 May Roadshow with Singtel Toronto 24 May 24 May Telecommunications (ST SP) Half Day Roadshow with Singapore 24 May 24 May Xin Point Holdings (1571 HK) Roadshow with Toronto 24 May 24 May Top Glove (TOPG MK) Montreal 25 May 25 May Roadshow with Singapore Montreal 24 May 24 May Post (SPOST SP) Toronto 25 May 25 May Roadshow with Advanced Info Taipei 28 May 29 May Service PCL (ADVANC TB) Analyst Presentation on Taipei 3 May 31 May Thailand Telecommunications Sector 1

2 SECTOR UPDATE Commodities China Cobalt Demand Expected To Continue Growing Despite Tesla s announcement We foresee continued growth in cobalt demand despite Tesla s announcement of reduced usage of the metal in its Model 3. We have flagged that the new tech trend (NCM moves from to 8-1-1) will be one of major risks to moderate cobalt demand, but the adoption will take time, and we expect that NCM811 will not have a material impact on the lithium ion battery industry until 222. Cobalt supply remained tight in 1Q18. We maintain our cobalt S&D forecasts, and estimate 218 cobalt prices to rise 5% yoy. China Molybdenum remains our preferred player. WHAT S NEW Tesla announced reduced usage of cobalt in its latest batteries for Model 3 Tesla said in its 1Q18 result report last Wednesday, that they are significantly reducing cobalt content per battery pack while increasing nickel content and still maintaining superior thermal stability... the cobalt content of our Nickel-Cobalt-Aluminum cathode chemistry is already lower than next-generation cathodes that will be made by other cell producers with a Nickel-Manganese-Cobalt ratio of 8:1:1". OVERWEIGHT (Maintained) EV BATTERY TECH DEVELOPMENT TREND 4 Power Specific Energy 3 2 Low T power 1 Energy Density Safety Charging Current Lifetime Cost Today Source: UOB Kay Hian but this does not come as a surprise to us. In our previous reports (see report published on 6 Mar 18), we had flagged many times that the new tech trend (of using more nickel and less cobalt in batteries) is one of the major risks that could moderate cobalt demand. We have partially incorporated this risk into our current S&D model (see next page). Given the cobalt price hike has accelerated since 218 (up 17% ytd), battery end-users are becoming more active in seeking methods to hedge against cost hikes. ESSENTIALS Adoption of new tech takes time. Electric vehicles (EV) are focusing on two battery technologies: nickel-cobalt-aluminum (NCA), which has been favoured by Tesla, and nickel-cobalt-manganese (NCM), which are used by most of Tesla s rivals currently. According to an EV battery study, it is estimated that NCM batteries will account for about 7% of the total lithium-ion battery market by 226. From the chemistry NCM523 (5 parts nickel, 2 cobalt and 3 manganese) currently to NCM811, cobalt usage would decline from 2% to 1%, and we expect that NCM811 will not have a material impact on the lithium ion battery industry until 222 when we forecast it to account for 1% of the market. Cobalt demand is set to rise significantly as EV momentum is on track. In 1Q18, China EV sales regained growth momentum and recorded a strong volume growth of 155% yoy to 141k units (217: 53% yoy), of which sales volume growth of battery electric vehicle (BEV) rose 131% yoy, while that of plug-in hybrid vehicle (PHEV) rose 246% yoy. Globally, sales volume of Passenger Vehicles EV grew 42% yoy to 3k units. We note that domestic EV sales were hardly affected by the new subsidy policy which lowered subsidies for lowerranged models (effective from 12 Feb 18 with a 4-month transition period:.4x to.7x 217 subsidy level) and believe the EV momentum is on the right track. Cobalt supply remained tight in 1Q18. We note that the top producers (which have released their 1Q results) have failed to increase production as quickly as we expected. Glencore delivered only 7, tonnes (c.18% of 218F target) in the first quarter, while we highlight that it expects to ramp up production from Katanga Mine starting from 2Q18 (1Q18: 5 tonnes), which would be the key to impacting global cobalt supply. ANALYST(S) Sandra Huang Jie Qiong ext.84 sandrahuang@uobkayhian.com Neo Chen ext.81 neochen@uobkayhian.com 2

3 KEY COBALT SUPPLIERS PRODUCTION SUMMARY (Tonne) F 1Q18 % of 218F Glencore 2,7 23, 28,3 27,4 38,4 7, 18.2 CMOC ,515 16,419 17, 4, Sherritt 6,125 7,198 6,967 6,7 7,7 1,8 14. Vale 3,658 4,356 5,657 5,8 5,8 1, Jinchuan 5,185 5,944 5,91 6,5 7,3 n.a n.a Freeport 13,154 15,876 Sold to - - CMOC Top 5_ Total 35,668 4,498 6,53 62,819 76,2 Global Total 92, 98, 15,56 116, 128, Top 5 % Source: Antaike; Respective companies; UOB Kay Hian We maintain our global cobalt S&D forecasts, as we think: a) the new tech's applicability and adoption will take time, b) current forecasts have partially taken into account moderated demand growth as a result of reduced cobalt dependency on EV battery. In the foreseeable future, cobalt will continue to be a key ingredient in EV batteries industry. We estimate 218 cobalt prices to rise 5% yoy to US$85, (or US$38-42/lb) to reflect 1) cost increase as a result of DR Congo tax adjustment; 2) tight market persists. COBALT S&D MODEL (kt) E 218E 219E 22E Supply yoy % growth 7% 8% 9% 11% 1% 11% Demand yoy % growth 6% 1% 11% 11% 9% 9% Batteries yoy % growth 6% 1% 11% 11% 14% 12% EV batteries yoy % growth 15% 7% 53% 54% 4% 32% Portable devices (IT) yoy % growth 5% 5% 12% 4% 6% 4% Others (ESS) Superally % 1% 11% 6% 11% 5% Carbide alloy Ceramics Catalyst Other material S-D Cobalt price (US$/lb) Source: Antaike, Respective companies, Bloomberg, UOB Kay Hian STOCK IMPACT CHINA EV SALES (' units) (%) (5) 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 EV sales yoy growth (RHS) Source: CAAM COBALT PRICES (US$/tonne) 1, 8, 6, 4, 2, Source: Bloomberg; UOB Kay Hian China Molybdenum (3993 HK/BUY) reported solid 1Q18 results. China Molybdenum, the second largest cobalt producer worldwide, reported 159.5% yoy net profit growth in 1Q18, mainly driven by strong metals prices (cobalt +89% yoy, copper +19% yoy in 1Q18) which was partially offset by copper production decline from Tenke and NPM (- 27% and -7.6% yoy respectively). Its cobalt production increased 35% yoy, ahead of its full-year guidance of 28.5%. The company expects to record significant increase in 1H18 net profit due to significant yoy increase in market prices of its major metal products. 3

4 CHINA MOLY 1Q18 RESULTS 1Q17 1Q18 yoy % chg 4Q17 qoq % chg Revenue 5,783 7, , Gross profit 2,138 3, , SG&A (261) (24) (7.8) (455) (47.2) Operating profit 1,877 2, , Net finance cost (41) (294) (28.2) (45) 552. PBT 1,493 2, , Tax (494) (723) 46.2 (654) 1.5 Net Profit 597 1, , Gross margin (%) EBIT margin (%) Net profit margin (%) Source: China Moly; UOB Kay Hian EARNINGS REVISION/RISK We trim earnings forecasts by 4% and 3% for respectively to factor in: a) higher cobalt ASP estimates (218: +15%, 219:1%), b) higher unit cost estimates for copper, cobalt, molybdenum and tungsten, and c) lower production of copper, molybdenum and tungsten. CHINA MOLY QUARTERLY GROSS PROFIT AND GROSS MARGIN Source: China Moly; UOB Kay Hian EARNINGS FORECAST CHANGES % chg (Rmbm) 218E 219E 218E 219E Rev 29,159 3, NI 4,946 5, EPS (fen) Source: UOB Kay Hian VALUATION/RECOMMENDATION Maintain BUY. We reduce our target price to HK$6.5 (from HK$6.78), based on the lifeof mine DCF methodology, indicating 16% upside. Thus, maintain BUY. The stock is currently trading at 19.2x 219F PE and 2.3x 219F P/B respectively. Key risks: a) Lower-than-expected ASPs for its products, b) lower output from major mines due to weather or other disruptions, and higher unit production costs, c) lower grid spending and thus weaker copper demand in China, d) slower-than-expected development of EVs, the adoption of high-nickel and low cobalt EV batteries is faster than expected; eg NMC chemistry moves from to earlier than expected. KEY ASSUMPTIONS E Molybdenum concentrate output tonne 16,32 16,717 15, yoy% -4% 3% -1% Ferro-moly ASP RMB/t 67,412 86,476 95,123 yoy % -1% 28% 1% Molybdenum cash cost RMB/t 55,279 54,638 6,12 yoy % 3% -1% 1% Tungsten production tonne 1,118 11,744 11,4 yoy % 3% 16% -3% Tungsten concentrate ASP RMB/tonne 69,269 9, ,286 yoy % 9% 3% 24% Tungsten cash cost RMB/tonne yoy% -16% 42% 18% Copper price_lme, spot US$/tonne 4,861 6,145 7,1 yoy % -12% 26% 16% Tenke - copper production tonne 27, ,866 2, yoy % 685% -7% Tenke_unit cash cost US$/tonne 2, yoy % -87% 5% Cobalt - ASP US$/tonne 25,548 44,912 68, yoy % 12% 76% 51% Tenke cobalt - production volume tonne 1,825 15,326 17, yoy % 74% 11% Tenke _ by-product unit cost US$/tonne 12,676 2,679 23,781 yoy% 63% 15% Source: UOB Kay Hian 4

5 COMPANY UPDATE Geely Auto (175 HK) Apr 18 Sales In Line; Potential Increase In Sales Target On Strong Growth Momentum Geely s April sales grew 48% yoy to more than 128, units, driven by strong growth for Emgrand brands and Lynk and Co 1. Lynk & Co 1 sales reached >9, units in Apr 18 and we expect production to ramp up further. We are positive on Geely s outlook and management is likely to raise their 218 sales target by mid-18 based on 4M18 s robust sales momentum. Maintain BUY. Target price: $3.. WHAT S NEW Apr 18 sales up 48% yoy to >128, units, in line with expectations. Sales growth was mainly driven by Emgrand EC7/GL/GS, which sold more than 19,, 12, and 12 units, representing 24%/41%/36% yoy growth respectively. Lynk & Co 1 sales ramped up further to >9, units from 8,5 units in March, and we expect sales to ramp up further to ~1, units. 4M18 sales grew 41% yoy to >365, units, accelerating from 39% in 3M18. Based on the strong sales momentum, we believe management may raise their 218 sales target in mid-18, as it did last year. Also, management stated that the internal sales target for 218 is higher than 1.58m units. 4M18 sales represents 33% of the full-year guidance for sales will be backed by strong product pipelines. Geely plans to launch 14 new models in 218 (vs six launches in 217) - five SUV models, three sedan models, one MPV models, four BEV models and one PHEV model. Major launches include the Lynk & Co 2 (Jun 18), Borui PHEV (2H18), and facelifts of Boyue, Emgrand GS and Vision SUV. Lynk & Co 2 will be launched in June. Lynk & Co 2 was showcased at the Beijing Auto Show at end-april, and it will be launched in Jun 18. The PHEV version of the 1 model was also showcased and will be launched in 2H18. Lynk and Co 3 was not showcased, but it is likely to be launched in 2H18 as well. Lynk & Co 2 is a compact crossover SUV while Lynk & Co 3 is a sedan. Sales target for the Lynk & Co brand is 15, units (includes 1, 2, 3 and PHEV models). STOCK IMPACT Maintain sales assumptions at 1.58m units, 1.72m units and 1.88m units respectively, given strong product pipeline. Maintain profit per vehicle assumptions for at Rmb83,9 (+13% yoy), Rmb88,7 (+6% yoy) and Rmb91,2 (+3% yoy), and assumptions on net profit per vehicle at Rmb9, (+13% yoy), Rmb11,8 (+3% yoy) and Rmb12,2 (+4% yoy) for respectively, given rising ASP. KEY FINANCIALS Year to 31 Dec (Rmbm) F 218F 219F Net turnover 53,722 92,761 11,95 131,46 15,38 EBITDA 7,278 14,17 2,86 27,315 31,64 Operating profit 5,624 12,79 17,454 24,58 27,153 Net profit (rep./act.) 5,112 1,634 14,29 2,233 22,98 Net profit (adj.) 4,494 9,945 14,29 2,233 22,98 EPS (fen) PE (x) P/B (x) EV/EBITDA (x) Dividend yield (%) Net margin (%) Net debt/(cash) to equity (%) (6.9) (35.2) 1.4 (43.2) (24.5) Interest cover (x) n.a. n.a. n.a. n.a. n.a. ROE (%) Consensus net profit ,68 17,725 21,479 UOBKH/Consensus (x) Source: Geely, Bloomberg, UOB Kay Hian BUY (Maintained) Share Price HK$21.8 Target Price HK$3. Upside +37.6% COMPANY DESCRIPTION Geely manufactures and sells automobiles under its proprietary brands GEELY and Lynk & Co in China and overseas. STOCK DATA GICS sector Automobile Bloomberg ticker: 175 HK Shares issued (m): 8,81 Market cap (HK$m): 191,871 Market cap (US$m): 24, mth avg daily t'over (US$m): Price Performance (%) 52-week high/low HK$29.8/HK$1.2 1mth 3mth 6mth 1yr YTD (2.2) (.2) (16.6) (19.6) Major Shareholders % Li Shu Fu FY17 NAV/Share (HK$) 4.53 FY17 Net Cash/Share (HK$).9 PRICE CHART (lcy) GEELY AUTOMOBILE HOLDINGS LT GEELY AUTOMOBILE HOLDINGS LT/HSI INDEX May 17 Jul 17 Sep 17 Nov 17 Jan 18 Mar 18 May 18 Source: Bloomberg Volume (m) ANALYST(S) Ken Lee ken.lee@uobkayhian.com.hk Johnny Yum johnny.yum@uobkayhian.com.hk (%)

6 EARNINGS REVISION/RISK We maintain our net profit forecasts at Rmb14.3b, Rmb2.2b and Rmb23.b respectively, implying yoy core net profit growth of 44%, 42% and 14%. Our net profit forecasts are 4%, 14% and 7% above consensus, given our higher margin assumptions. VALUATION/RECOMMENDATION Maintain BUY as we believe Geely is on secular growth trend driven by an upgrading of brand positioning with the launch of Lynk & Co. Given the prospective higher-thanhistorical average earnings growth in 218-2, we believe Geely deserves a higher-thanhistorical average PE multiple. Our target price is kept at HK$3. based on 15x (1SD above historical mean) 218F PE. KEY ASSUMPTIONS AND PROFIT FORECASTS Year to 31 Dec F 219F 22F New Emgrand 239,665 2, 2, 18, Emgrand GL 124,112 15, 15, 15, Emgrand GS 15,584 24, 27, 3, Emgrand EV/HEV/PHEV 24,866 3, 4, 5, New Vision 145,5 1, 1, 9, Vision SUV 127,42 15, 17, 19, A-class SUV 62,474 9, 1, 1, Borui (GC9) 42,76 4, 4, 4, Boyue (NL-4) - 2, 6, 1, Lynk & Co 6,12 15, 25, 3, Old models 37, Sales volume (units) 1,247,116 1,58, 1,9, 2,14, yoy % chg 62.8% 26.7% 2.3% 12.6% ASP (Rmb/unit) 74,38 77,587 79,673 81,728 yoy % chg 6.% 4.3% 2.7% 2.6% Core net profit (Rmbm) 9,945 14,29 2,233 22,98 yoy % chg 121.3% 43.7% 41.6% 13.6% Net margin 1.7% 12.9% 15.4% 15.3% Net profit per vehicle (Rmb) 7,975 9,44 1,649 1,738 Source: Geely, UOB Kay Hian JAN 18 SALES (units) Apr 18 yoy % chg mom % chg Emgrand 19, Emgrand GL 12, Emgrand GS 12, Emgrand EV 2, Emgrand HEV Emgrand PHEV Vision 12, Vision SUV 1, Vision X Vision X3 1, Vision S1 7, Borui (GC9) 3, Boyue (NL-3) 23, Lynk & Co 9, Others 2, Total 128, Source: Geely 6

7 PROFIT & LOSS Year to 31 Dec (Rmbm) F 219F 22F Net turnover 92, ,51 152,56 171,4 EBITDA 14,17 2,461 28,76 32,87 Depreciation & amortization EBIT 12,79 18,46 26,124 3,139 Total other non-operating income 688 () () () Associate contributions Net interest income/(expense) (35) Pre-tax profit 12,774 18,118 26,254 3,475 Tax (2,39) (3,8) (4,463) (5,181) Minorities (12) (748) (1,558) (2,314) Net profit 1,634 14,29 2,233 22,98 Net profit (recurrent) 9,945 14,29 2,233 22,98 BALANCE SHEET Year to 31 Dec (Rmbm) F 219F 22F Fixed assets 14,53 14,98 15,853 16,675 Other LT assets 17,92 18,777 19,522 2,17 Cash/ST investment 13,415 41,185 5,767 82,262 Other current assets 39,594 81,42 57,875 98,58 Total assets 84, , ,17 217,687 ST debt 1,296 3, 3, 3, Other current liabilities 48,65 12,387 71, ,55 LT debt 3, 3, 3, Other LT liabilities Shareholders' equity 34,467 46,598 63,972 82,96 Minority interest 344 1,91 2,649 4,963 Total liabilities & equity 84, , ,17 217,687 CASH FLOW Year to 31 Dec (Rmbm) F 219F 22F Operating 11,994 29,354 16,511 39,46 Pre-tax profit 12,774 18,118 26,254 3,475 Tax (1,759) (3,8) (4,463) (5,181) Depreciation/amortization Associates (42) Working capital changes (51) 11,973 (7,732) 11,717 Non-cash items 788 1,47 1,525 1,418 Other operating cashflows Investing (11,911) (3,927) (3,74) (3,535) Capex (growth) (3,452) (1,8) (1,8) (1,8) Investments (5,679) (2,4) (2,4) (2,4) Proceeds from sale of assets Others (2,781) Financing (1,685) 2,343 (3,188) (4,377) Dividend payments (96) (2,16) (2,858) (4,47) Issue of shares Proceeds from borrowings 1,122 4, Loan repayment Others/interest paid (2,16) (21) (33) (33) Net cash inflow (outflow) (1,62) 27,77 9,582 31,495 Beginning cash & cash equivalent 15,45 13,415 41,185 5,767 Ending cash & cash equivalent 13,415 41,185 5,767 82,262 KEY METRICS Year to 31 Dec (%) F 219F 22F Profitability EBITDA margin Pre-tax margin Net margin ROA ROE Growth Turnover EBITDA Pre-tax profit Net profit Net profit (adj.) EPS Leverage Debt to total capital Debt to equity Net debt/(cash) to equity (35.2) (75.5) (7.) (92.) Interest cover (x) n.a. n.a. n.a. n.a. 7

8 COMPANY RESULTS Indofood CBP (ICBP IJ) 1Q18: Net Income Exceeds Expectations 1Q18 net income was Rp1,213b, up 11.1% yoy and 61.4% qoq, exceeding our and consensus expectations. The performance was mainly driven by margin expansion in the noodle segment and improvement in beverage earnings. Despite the strongerthan-expected performance, losses from its beverage segment could widen starting from 2Q18 post acquisition of Asahi s stake (ownership). Maintain HOLD and target price of Rp8,4. Entry price: Rp7,8. 1Q18 RESULTS Year to 31 yoy qoq Dec (Rpb) 1Q18 1Q17 % chg % chg 4Q17 Remarks Revenue 9,88.6 9, ,176 Gross Profit 3,24.9 2, ,427 Op Income 1, , ,63 Driven primarily by noodle segment and improvement in beverage earnings Net Income 1, , EPS (Rp) Gross Margin (%) Op Margin (%) Net Margin (%) Source: ICBP, UOB Kay Hian RESULTS 1Q18 net income rose 11.1% yoy, exceeding expectations. Indofood CBP (ICBP) reported 1Q18 net income of Rp1,213b, up 11.1% yoy and 6.7% qoq. With historical 1Q contributing an average 27.2% over the past three years, 1Q18 net income is ahead of both our (at 29.5%) forecast of Rp4,118b and street s (29%) forecast of Rp4,177b. 1Q18 core net income came in at Rp1,197b, rising 8% yoy (1Q17: Rp1,18b). Noodle and beverage segments are profit growth drivers. By analysing the segment results, we note that the noodle and beverage divisions are the main profit growth drivers. Noodle recorded 19.6% yoy growth in profit while beverage losses narrowed from Rp64b in 1Q17 to Rp46b in 1Q18. HOLD (Maintained) Share Price Rp8,575 Target Price Rp8,4 Upside -2.% COMPANY DESCRIPTION Market leading producer of diverse consumer branded products including noodles, dairy, snack food, food seasoning, nutrition and special foods. STOCK DATA GICS sector Consumer Staples Bloomberg ticker: ICBP IJ Shares issued (m): 11,661.9 Market cap (Rpb): 1,.9 Market cap (US$m): 7, mth avg daily t'over (US$m): 2. Price Performance (%) 52-week high/low Rp9,275/Rp8,5 1mth 3mth 6mth 1yr YTD 4.9 (2.8). (.6) (3.7) Major Shareholders % Indofood Sukses Makmur 8.5 FY18 NAV/Share (Rp) 1,876 FY18 Net Cash/Share (Rp) 757 PRICE CHART (lcy) INDOFOOD CBP SUKSES MAKMUR T INDOFOOD CBP SUKSES MAKMUR T/JCI INDEX (%) KEY FINANCIALS Year to 31 Dec (Rpb) F 219F 22F Net turnover 34,375 35,67 39,355 41,719 44,51 EBITDA 5,673 6,344 6,814 7,187 7,725 Operating profit 4,864 5,222 5,78 6,53 6,553 Net profit (rep./act.) 3,6 3,797 4,118 4,432 4,843 Net profit (adj.) 3,6 3,797 4,118 4,432 4,843 EPS (Rp) PE (x) P/B (x) EV/EBITDA (x) Dividend yield (%) Net margin (%) Net debt/(cash) to equity (%) (36.) (32.9) (4.4) (45.3) (47.2) Interest cover (x) n.a. n.a. n.a. n.a. n.a. ROE (%) Consensus net profit - - 4,167 4,497 4,841 UOBKH/Consensus (x) Source: ICBP, Bloomberg, UOB Kay Hian Volume (m) May 17 Jul 17 Sep 17 Nov 17 Jan 18 Mar 18 May 18 Source: Bloomberg ANALYST(S) Stevanus Juanda stevanusjuanda@uobkayhian.com 8 8

9 STOCK IMPACT 1Q18 RESULTS ANALYSIS Year to 31 Dec (Rpb) 1Q18 1Q17 YoY (%) QoQ (%) 4Q17 UOBKH % Street % Revenue 9,88.6 9, % 2.8% 8, , % 38, % Gross Profit 3,24.9 2, % 32.1% 2, , % 12, % Op Income 1, , % 61.4% 1,62.7 5, % 5, % Net Income 1, , % 6.7% , % 4, % EPS % 6.7% % % Source: ICBP, UOB Kay Hian 1Q18 Segmental Analysis Noodles: 1Q18 EBIT rose 19.6% yoy to Rp1,397b from Rp1.168b in 1Q17. Noodle margin improved from 19.1% in 1Q17 to 21.3% in 1Q18. Dairy: 1Q18 EBIT declined by 23.6% yoy to Rp22b from Rp287bin 1Q17. EBIT margin decline 38bp from 15.5% to 11.7%. Snack: 1Q18 EBIT declined from Rp55b in 1Q17 to Rp4b in 1Q18. This was due to intense competition in snack. We note that the snack division has been suffering losses at EBIT level since 2Q17. Seasoning: 1Q18 EBIT came in flat at Rp3b. Sales declined by 17% but margin rose 163bp. Nutrition: 1Q18 EBIT of Rp8b was flat on a yoy basis. Sales rose 2.4% while EBIT margin declined by 81bp. Beverage: EBIT loss narrowed from Rp64b in 1Q17 to Rp45b in 1Q18. This is an improvement from Rp9b loss in 4Q17. We view losses could rise post the acquisition of Asahi share in 2Q GUIDANCE AND UOBKH FORECAST 218 Guidance UOBKH Volume Growth EBIT Margin Volume Growth EBIT Margin Noodle 2 4% 17 19% 3.% 19.5% Dairy 7% 11 13% 6.6% 12.% Snack 32% 3 5% 32.% 4.% Seasoning 2 4% 5 7% 3.% 6.5% Nutrition 3 4% 1 3% 35.% 2.5% Beverage 5 7% 19 21% 6.% 2.% Bogasari 2 4% 5 7% 3.% 6.6% FFB 5 1% CPO Production 5% Source: ICBP, UOB Kay Hian 5-YEAR PE BAND Source: Bloomberg 1Q18 SEGMENTAL ANALYSIS Sales EBIT (Rp B) EBIT Margin (%) 1Q17 1Q18 YoY (%) 1Q17 1Q18 YoY (%) 1Q17 1Q18 bp Noodle 6,12 6, % 1,168 1, % 19.1% 21.3% 223 Dairy 1,859 1, % % 15.5% 11.7% 38 Snack Food % % 7.2%.6% 664 Seasoning % % 7.5% 9.2% 163 Nutrition % 8 8.% 4.8% 4.% 81 Beverage % (64) (46) 27.7% 15.8% 11.1% 469 Elimination (253) (237) 6.2% 2 (2) 195.2%.8%.8% 167 Unallocated Income % Net Sales 9,458 9, % 1,517 1, % 16.% 17.4% 133 Source: ICBP, UOB Kay Hian EARNINGS REVISION/RISK At this point, we are not making any changes to our model. Note that in 217, 1Q17 net income accounted for 29% of our full-year forecast. In addition, we foresee EBIT losses of the beverage segment starting to rise in 2Q18, post acquisition of Asahi s stake. We will revisit post 2Q18 results, if necessary. VALUATION/RECOMMENDATION Maintain HOLD and PE-based target price of Rp8,4. By applying the historical average 23.8x PE to 218F EPS, we derive a target price of Rp8,4. With a slight downside, maintain HOLD. We will be more bullish if 1H18 net income comes in above our forecasts. Entry price is Rp7,8. 9

10 PROFIT & LOSS BALANCE SHEET Year to 31 Dec (Rpb) F 219F 22F Year to 31 Dec (Rpb) F 219F 22F Net turnover 35,67 39,355 41,719 44,51 Fixed assets 8,12 9,238 1,4 11,667 EBITDA 6,344 6,814 7,187 7,725 Other LT assets 6,92 6,613 6,322 6,44 Deprec. & amort. 1,123 1,16 1,134 1,172 Cash/ST investment 8,797 11,47 13,194 14,921 EBIT 5,222 5,78 6,53 6,553 Other current assets 7,783 8,138 8,626 9,188 Total other non-operating income (265) (311) (259) (279) Total assets 31,62 35,36 38,542 41,82 Associate contributions.... ST debt 1,4 1,237 1,214 1,23 Net interest income/(expense) Other current liabilities 5,427 6,597 7,615 8,16 Pre-tax profit 5,27 5,611 6,39 6,599 LT debt Tax (1,663) (1,543) (1,661) (1,815) Other LT liabilities 3,511 3,634 3,761 3,892 Minorities Shareholders' equity 19,564 21,878 24,353 27,9 Net profit 3,797 4,118 4,432 4,843 Minority interest Net profit (adj.) 3,797 4,118 4,432 4,843 Total liabilities & equity 31,62 35,36 38,542 41,82 CASH FLOW KEY METRICS Year to 31 Dec (Rpb) F 219F 22F Year to 31 Dec (%) F 219F 22F Operating 5,174 6,11 6,65 5,99 Profitability Pre-tax profit 5,27 5,611 6,39 6,599 EBITDA margin Tax (1,663) (1,543) (1,661) (1,815) Pre-tax margin Deprec. & amort. 1,123 1,16 1,134 1,172 Net margin Working capital changes (212) ROA Non-cash items (336) ROE Other operating cashflows Investing (2,95) (1,94) (2,27) (2,184) Growth Capex (growth) (1,629) (1,725) (1,795) (1,939) Turnover Investments (1,162) (185) (199) (21) EBITDA Others (159) (31) (33) (35) Pre-tax profit Financing (1,816) (1,821) (1,89) (1,998) Net profit Dividend payments (1,493) (1,84) (1,957) (2,16) Net profit (adj.) Issue of shares EPS (29.7) Proceeds from borrowings 314 (14) (61) (23) Others/interest paid (642) Leverage Net cash inflow (outflow) 49 2,25 2,147 1,727 Debt to total capital Beginning cash & cash equivalent 8,372 8,797 11,47 13,194 Debt to equity Changes due to forex impact Net debt/(cash) to equity (32.9) (4.4) (45.3) (47.2) Ending cash & cash equivalent 8,797 11,47 13,194 14,921 Interest cover (x) n.a. n.a. n.a. n.a. 1

11 COMPANY RESULTS Indofood Sukses Makmur (INDF IJ) 1Q18: Results In Line But Shares Trading Now At -1SD; Upgrade To BUY 1Q18 net income was merely down by 1.1% yoy, primarily driven by a 1.2% yoy earnings rise at ICBP and 1.7% yoy rise at Bogasari. IFAR s 1Q18 EBIT declined 49.7% yoy. INDF s share price has fallen 21% since 2H17, in anticipation of the flat results. After reducing our target prices for ICBP and IFAR and widening the conglomerate discount from 15% to 2%, our new target price still holds 14% upside. INDF now trades at an attractive -1SD forward PE. Upgrade to BUY with target price of Rp7,9. 1Q18 RESULTS Year to 31 yoy qoq Dec (Rpb) 1Q18 1Q17 % chg % chg 4Q17 Remarks Revenue 17, , ,66 Gross Profit 5, , ,568 Op Income 2, , ,947 ICBP rose 1.2% yoy while Bogasari rose 1.7% Net Income 1, , EPS Gross Margin Op Margin Net Margin Source: INDF, UOB Kay Hian RESULTS 1Q18 net income in line with our expectation but slightly below street s. Indofood Sukses Makmur s (INDF) 1Q18 net income came in at Rp1,189b, rising 1.1% yoy. With 1Q historically contributing 28% of full-year profit, 1Q18 net income is in line with our (26.8% level) forecast of Rp4,432b but slightly below that of the street s (25.5% level) Rp4,62b. 1Q18 core net income came in Rp1,215b, up 4.7% yoy (1Q17: Rp1,16b). Driven by ICBP and Bogasari. 1Q18 results were driven by ICBP, whose EBIT profit rose 1.2% yoy from Rp1,427b to Rp1,573b. Bogasari s EBIT profit rose 1.7% yoy from Rp36b to Rp339b. Agribusiness profit declined 49.7% yoy (from Rp695b in 1Q17 to Rp349b in 1Q18) on the back of lower CPO prices. Distribution profit rose 3.7% yoy from Rp39b to Rp4.4b. BUY (Upgraded) Share Price Rp6,375 Target Price Rp7,9 Upside +23.9% COMPANY DESCRIPTION Indofood Sukses Makmur is a verticallyintegrated food producer. It is also the largest instant noodle and wheat flour producer in Indonesia. STOCK DATA GICS sector Consumer Staples Bloomberg ticker: INDF IJ Shares issued (m): 8,78.4 Market cap (Rpb): 55,975.2 Market cap (US$m): 3, mth avg daily t'over (US$m): 3.9 Price Performance (%) 52-week high/low Rp8,925/Rp6,35 1mth 3mth 6mth 1yr YTD (1.2) (19.6) (21.5) (24.8) (16.4) Major Shareholders % First Pacific Investment Management 5.1 FY18 NAV/Share (Rp) 4,1 FY18 Net Debt/Share (Rp) 686 PRICE CHART (lcy) INDOFOOD SUKSES MAKMUR TBK P INDOFOOD SUKSES MAKMUR TBK P/JCI INDEX (%) KEY FINANCIALS Year to 31 Dec (Rpb) F 219F 22F Net turnover 66,75 7,187 73,53 77,887 82,39 EBITDA 9,777 11,187 11,733 12,6 12,891 Operating profit 8,285 8,748 9,116 9,465 1,29 Net profit (rep./act.) 4,145 4,168 4,432 4,79 5,32 Net profit (adj.) 4,145 4,168 4,432 4,79 5,32 EPS (Rp) PE (x) P/B (x) EV/EBITDA (x) Dividend yield (%) Net margin (%) Net debt/(cash) to equity (%) (.5) Interest cover (x) ROE (%) Consensus net profit - - 4,589 4,952 5,276 UOBKH/Consensus (x) Source: INDF, Bloomberg, UOB Kay Hian Volume (m) May 17 Jul 17 Sep 17 Nov 17 Jan 18 Mar 18 May 18 Source: Bloomberg ANALYST(S) Stevanus Juanda stevanusjuanda@uobkayhian.com 6 11

12 STOCK IMPACT 1Q18 RESULTS ANALYSIS Year to 31 Dec (Rpb) 1Q18 1Q17 YoY (%) QoQ (%) 4Q17 UOBKH % Var Street % Var Revenue 17,631 17, % 3.3% 17,66 73,53 24.% 75, % Gross Profit 5,261 5,277.3% 15.2% 4,568 2, % 21, % Op Income 2,482 2,479.1% 27.5% 1,947 9, % 9, % Net Income 1,189 1, % 28.4% 926 4, % 4, % EPS % 28.4% % % Source: INDF, UOB Kay Hian ICBP. ICBP reported 1.2% rise in EBIT to Rp1,573b in 1Q18 from Rp1,427b in 1Q17. This was primarily driven by margin expansion in noodle division and improvement in beverage earnings. ICBP s operating margin improved from 15.9% in 1Q17 to 16.5% in 1Q18. Bogasari. Bogasari s EBIT rose by Rp36b to Rp339b. rising 1.7% yoy. EBIT margin expanded by 2bp as price increase was enacted. Agribusiness. Agribusiness EBIT declined 49.7% yoy with EBIT margin declining from 15.8% to 11%. The main cause of this decline was CPO price declining from US$67 per tonne in 1Q17 to US$593 per tonne in 1Q18. Distribution. Distribution EBIT rose from Rp39b in 1Q17 to Rp4.4b in 1Q18. 1Q18 SEGMENTAL ANALYSIS Sales EBIT (Rp B) Division 1Q17 1Q18 YoY (%) 1Q17 1Q18 YoY (%) 1Q17 1Q18 ICBP 8,964 9, % 1, , % 15.9% 16.5% Bogasari 4,6 4, % % 6.7% 6.9% Agribusiness 4,384 3, % % 15.8% 11.% Distribution 1,345 1, % % 2.9% 2.7% Sub Total 19,293 19,98 1.% 2, , % 12.8% 12.% Elimination (1,459) (1,467).6% %.1%.% Unallocated Income Net 17,835 17, % 2, , % 13.9% 14.1% Source: INDF UOB Kay Hian EARNINGS REVISION/RISK With 1Q18 results in line with UOBKH s expectation, we maintain our forecast on INDF. VALUATION/RECOMMENDATION 21% decline in share price. Since 2H17, INDF s share price has declined by more than 21% from the high of Rp8,775 to Rp6,925 currently. This is due to the expectation of lower earnings from ICBP and Bogasari as well as the expected decline in CPO prices. However, in our valuation, despite increasing the conglomerate discount from 15% to 2% and lowering our TP on IFAR and ICBP, we still have 14% upside to our target price. Currently, INDF is trading at -1SD below its historical mean, which indicates a fairly attractive valuation. Upgrade to BUY with SOTP target price of Rp7,9, based on our target prices of Rp8,4 for ICBP and S$.42 for IFAR, as well as 2% conglomerate discount. Considering the current deep discount, we upgrade INDF to BUY. INDF MKT CAP DISC VS (ICBP + IFAR MKT CAP).% 1.% 2.% 3.% 4.% 5.% 6.% Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Premium (Discount) to ICBP 2SD 1SD Average Premium (Discount) to ICBP +1SD +2SD Source: Bloomberg, UOB Kay Hian 5-YEAR PE BAND (BEST) Source: Bloomberg, UOB Kay Hian Apr 18 12

13 PROFIT & LOSS BALANCE SHEET Year to 31 Dec (Rpb) F 219F 22F Year to 31 Dec (Rpb) F 219F 22F Net turnover 7,187 73,53 77,887 82,39 Fixed assets 39,476 4,31 4,993 41,892 EBITDA 11,187 11,733 12,6 12,891 Other LT assets 15,949 16,683 17,322 17,973 Deprec. & amort. 2,44 2,617 2,595 2,61 Cash/ST investment 13,69 16,48 17,923 2,15 EBIT 8,748 9,116 9,465 1,29 Other current assets 18,825 2,292 21,542 22,615 Total other non-operating income (13) (18) (114) (12) Total assets 87,939 93,324 97,78 12,586 Net interest income/(expense) (986) (93) (592) (475) ST debt 12,711 11,625 13,521 1,78 Pre-tax profit 7,659 8,14 8,759 9,696 Other current liabilities 8,927 1,352 11,5 11,539 Tax (2,513) (2,634) (2,847) (3,151) LT debt 11,65 1,448 7,496 9,169 Minorities (977) (1,38) (1,122) (1,242) Other LT liabilities 7,94 8,281 8,644 9,26 Net profit 4,168 4,432 4,79 5,32 Shareholders' equity 31,179 36,1 39,376 43,164 Net profit (adj.) 4,168 4,432 4,79 5,32 Minority interest 15,578 16,616 17,738 18,981 Total liabilities & equity 87,94 93,324 97,78 12,586 CASH FLOW KEY METRICS Year to 31 Dec (Rpb) F 219F 22F Year to 31 Dec (%) F 219F 22F Operating 6,58 7,369 7,224 7,658 Profitability Pre-tax profit 7,659 8,14 8,759 9,696 EBITDA margin Tax (2,513) (2,634) (2,847) (3,151) Pre-tax margin Deprec. & amort. 2,617 2,595 2,61 2,442 Net margin Working capital changes (2,696) 1. (555) (496) ROA Other operating cashflows 1,442 (698) (733) (833) ROE Investing (6,58) (1,997) (3,13) (3,71) Capex (growth) (7,2) (3,465) (3,324) (3,375) Growth Investments (334) (135) (128) (121) Turnover Proceeds from sale of assets EBITDA Others 1,215 1, Pre-tax profit Financing (156) (3,15) (2,246) (2,45) Net profit Dividend payments (1,243) (1,251) (1,33) (1,437) Net profit (adj.) Issue of shares EPS Proceeds from borrowings 1,96... Loan repayment. (2,245) (1,56) (1,14) Leverage Others/interest paid (845) Debt to total capital Net cash inflow (outflow) 294 2,358 1,875 2,182 Debt to equity Beginning cash & cash equivalent 13,362 13,69 16,48 17,923 Net debt/(cash) to equity (.5) Changes due to forex impact Interest cover (x) Ending cash & cash equivalent 13,69 16,48 17,923 2,15 13

14 COMPANY UPDATE Inari Amertron (INRI MK) Looking Beyond 2HFY18 We expect Inari s earnings to be weaker hoh in 2HFY18 in view of softer demand for RF products and unfavourable forex impact. Despite the near-term softness, Inari s medium- to long-term prospects remain promising. We expect sales contribution from OSRAM to increase over the next three years, given the project line-up in the near to medium term. We still expect solid sales growth from Broadcom. Maintain BUY. Target price: RM2.45. WHAT S NEW RF: Weaker hoh in 2HFY18; production ramp-up expected in Jul-Aug 18. Inari Amertron s (Inari) RF segment is expected to be weaker hoh in 2HY18 due to seasonality and weaker-than-expected demand for its US end-customer s premium smartphone models. We estimate utilisation rate for RF testing capacity at 5% in 2HFY18 (1HFY18F: 75-8%). Production ramp-up for the RF segment is expected in Jul-Aug 18, in preparation for the US end-customer s launch of new smartphone models in September. Another RF client, Broadcom, also guided its wireless segment is expected to be weak in 2QFY18 (February-April) and 3QFY18 (May-July). New projects with OSRAM on the way. Inari is poised to bring in more new jobs from OSRAM, which could capitalise on Inari s existing infra-red (IR) platform for iris scanner. We gather that these new jobs are related to facial recognition (for biometric authentication) as well as health sensors for smart devices. These new products are expected to boost the utilisation rate of iris scanner capacity, which is currently only at about 45%. Inari could also be securing new LED-related businesses from OSRAM. Commercial production of these new products could start in early-19 at plant P21. Completion of Philippines operations consolidation delayed to Aug 18. The consolidation of Inari s Philippines operations (transferring operations in Paranaque, Manila to Clark Field) is expected to complete by Aug 18, from the original guidance of May 18. We understand that the delay is due to Inari s need to fulfil client s additional order volume. The Philippines operations cater mainly to lower-margin legacy products. While current net margin is rather decent at high-single-digit (vs mid-single-digit 2-3 years ago), we expect this to further improve to low- to mid-teen on a normalised basis, post consolidation. KEY FINANCIALS Year to 3 Jun (RMm) F 219F 22F Net turnover 1,43 1,176 1,485 1,84 2,93 EBITDA Operating profit Net profit (rep./act.) Net profit (adj.) EPS (sen) PE (x) P/B (x) EV/EBITDA (x) Dividend yield (%) Net margin (%) Net debt/(cash) to equity (%) (25.8) (47.3) (31.1) (27.8) (27.9) Interest cover (x) ROE (%) Consensus net profit UOBKH/Consensus (x) Source: Inari, Bloomberg, UOB Kay Hian BUY (Maintained) Share Price Target Price RM1.79 RM2.45 Upside +36.8% (Previous ex-bonus TP RM2.72) COMPANY DESCRIPTION Inari is the largest semiconductor company in Malaysia and a top OSAT supplier for Broadcom's radio frequency (RF) components. It also manufactures and assembles optoelectronics and fibre-optics related components. STOCK DATA GICS sector Information Technology Bloomberg ticker: INRI MK Shares issued (m): 3,115.3 Market cap (RMm): 5,576.4 Market cap (US$m): 1, mth avg daily t'over (US$m): 6.8 Price Performance (%) 52-week high/low RM2.53/RM1.33 1mth 3mth 6mth 1yr YTD 2.1 (18.6) (7.7) 3.6 (21.) Major Shareholders % Insas Berhad 18.1 Kumpulan Wang Persaraan 14. FY18 NAV/Share (RM).31 FY18 Net Cash/Share (RM).1 PRICE CHART (lcy) INARI AMERTRON BHD INARI AMERTRON BHD/FBMKLCI INDEX (%) Volume (m) 4 2 May 17 Jul 17 Sep 17 Nov 17 Jan 18 Mar 18 May 18 Source: Bloomberg ANALYST(S) Yeoh Bit Kun bitkun@uobkayhian.com 14

15 STOCK IMPACT Long-term positive on RF. Despite the near-term softness, the RF segment s long-term growth remains promising on the commercialisation of 5G networks which requires more RF content per smartphone. In terms of capacity, Inari currently has 97 units of testers (Aug 17: 85 units). Inari s new project with Osram may include 3D facial recognition. We believe Inari s new projects with OSRAM to not only include 2D facial recognition but also 3D facial recognition for premium smart devices. OSRAM recently announced the acquisition of US-based Vixar, which has specialised capabilities in the vertical cavity surface emitting lasers (VSCEL). OSRAM said the acquired capabilities will pave the way for ultracompact 3D facial recognition and Vixar s technology in capturing 3D environmental data has a broad set of applications, which include augmented reality for lidar and autonomous driving. Still in factory expansion mode. To cater for future expansion, Inari plans to build a RM6m factory with four blocks and total floor space of 6,sf (55% of current total floor space) at its Batu Kawan land, which has been lying vacant for years. The construction will be carried out in stages with first block (17,sf) to be ready by Oct 18. While there is no disclosure on the utilisation plan of this new plant, we do not discount the possibility that this plant could tap into potential businesses from OSRAM and Broadcom. Expecting dividend payout to remain at 6-7%. Inari is sitting on net cash of RM454m (15sen/share). We believe Inari is unlikely to increase its dividend payout as it needs to reserve cash for investments in new businesses should opportunities arise. Having said that, with a dividend policy of at least a 4% payout, Inari expects to maintain dividend payout at 6-7%. We estimate Inari s yields to be decent at % in FY18-19, based on 65% payout. EARNINGS REVISION/RISK We cut our FY18 net profit forecast by 8%, mainly on a lower utilisation rate assumption for the RF segment at 65% (previously 72%). No change to FY19-2 net profit forecasts. VALUATION/RECOMMENDATION Maintain BUY but lower target price to RM2.45 (from ex-bonus target price of RM2.72) as we revise our valuation lower to 2x 219F PE (previously 22x) due to uncertainties surrounding the sector as tensions between the US and China dampen the sector s valuation. Our 2x PE valuation represents 1SD above mean, which we deem as reasonable, given that Inari has the strongest revenue prospects among Malaysian OSAT companies and its dominant position in its clients supply chain for the product that it is focused on. Its two key clients, Broadcom and OSRAM, have massive expansion plans in Malaysia that are expected to benefit Inari in the longer term. REVENUE BY SEGMENT (RMm) 2,5 2, 1,5 1, 5 New Income Streams Others Amertron RF FY16E FY17E FY18F FY19F FY2F Note: New income streams include fibre optic chip fabrication and wafer certification jobs (under ISL), switch testing job (under IIS) and iris scanning component job (under IoT) Source: UOB Kay Hian NET PROFIT (RMm) (%) Net Profit (LHS) Growth (RHS) FY12 FY13 FY14 FY15 FY16 FY17 FY18F FY19F FY2F Source: Inari, UOB Kay Hian NET CASH AND NET GEARING (RMm) (%) 5 Net Cash (LHS) FY12 FY14 FY16 FY18F FY2F Source: Inari, UOB Kay Hian Net Gearing Ratio (RHS) (1) (2) (3) (4) (5) 15

16 PROFIT & LOSS Year to 3 Jun (RMm) F 219F 22F Net turnover 1,176 1,485 1,84 2,93 EBITDA Deprec. & amort EBIT Net interest income/(expense) (2) (4) (4) (4) Pre-tax profit Tax (12) (15) (2) (25) Minorities (1) (1) (1) (1) Net profit Net profit (adj.) BALANCE SHEET Year to 3 Jun (RMm) F 219F 22F Fixed assets Other LT assets Cash/ST investment Other current assets Total assets 1,22 1,29 1,457 1,645 ST debt Other current liabilities LT debt Other LT liabilities Shareholders' equity ,79 1,223 Minority interest (2) (3) (4) (5) Total liabilities & equity 1,22 1,29 1,457 1,645 CASH FLOW Year to 3 Jun (RMm) F 219F 22F Operating Pre-tax profit Tax (8) (15) (2) (25) Deprec. & amort Working capital changes 38 (133) (65) (59) Other operating cashflows (25) 1 (7) (8) Investing (53) (16) (15) (15) Capex (growth) (121) (16) (15) (15) Investments Proceeds from sale of assets 68 Others Financing (15) (165) (228) (279) Dividend payments (95) (165) (228) (279) Issue of shares 73 Proceeds from borrowings 7 Loan repayment Others/interest paid Net cash inflow (outflow) 243 (115) 1 42 Beginning cash & cash equivalent Changes due to forex impact 3 Ending cash & cash equivalent KEY METRICS Year to 3 Jun (%) F 219F 22F Profitability EBITDA margin Pre-tax margin Net margin ROA ROE Growth Turnover EBITDA Pre-tax profit Net profit Net profit (adj.) EPS 22.3 (18.1) Leverage Debt to total capital Debt to equity Net debt/(cash) to equity (47.3) (31.1) (27.8) (27.9) Interest cover (x)

17 SECTOR UPDATE Banking Singapore 1Q18 Round-up: New Normal Of Lower Credit Cost All three Singapore banks beat expectations with earnings growing more than 2% yoy in 1Q18. NIM expanded 5bp qoq for DBS and 3bp qoq for UOB due to higher SIBOR and SOR. Wealth management fees of DBS, OCBC and UOB grew 49%, 18.6% and 3% yoy respectively. Credit costs have fallen to just 13.1bp for DBS, 2.bp for OCBC and 13.3bp for UOB as the banks have already recognised lots of NPL during 2H17 due to transition to SFRS (I) 9. We see upside risk for interest rates. Prefer DBS as it is most sensitive to rising interest rates. Maintain OVERWEIGHT on the sector. WHAT S NEW 1Q18 earnings from all three Singapore banks beat expectations. Pick-up in loan growth to high single-digit yoy expansion. Loan growth was healthy at 1.6% qoq for DBS, 3.9% qoq for OCBC and 2% qoq for UOB. Key areas of growth were trade loans and residential property projects. OCBNC and UOB registered growth in Malaysia and Greater China. On a yoy perspective, loan growth was at high single-digit of 9.9% for DBS and 9.7% for OCBC. NIMs generally on an upward trend. NIM expanded 5bp qoq for DBS and 3bp qoq for UOB due to higher 3-month SIBOR and SOR, which gained 32bp and 48bp respectively in February and March. NIM was flat qoq for OCBC due to NIM compression of 17bp qoq for OCBC NISP. Double-digit growth in fees powered by wealth management. DBS, OCBC and UOB achieved double-digit growth in fees of 11.9%, 11.4% and 17.8% yoy respectively. The growth was powered by wealth management fees, which grew 49%, 18.6% and 3% yoy respectively. There was also healthy growth in contributions from fund management (OCBC: +16% yoy, UOB: +25.9% yoy), loan-related fees (UOB: +23.7% yoy) and credit cards (DBS +26.8% yoy). Provisions receded to pre-oil & gas levels. New NPL have eased 63% yoy for DBS, 24% yoy for OCBC and 1.9% yoy for UOB. The banks have also cleaned up by recognising more NPL during 2H17 due to the transition to SFRS (I) 9. Credit costs dropped to just 13.1bp for DBS, 2.bp for OCBC and 13.3bp for UOB. Rock solid capital base. DBS and UOB are extremely well capitalised with CET-1 CAR at 14.% and 14.9% respectively. OCBC s CET-1 CAR was slightly lower at 13.1% but could be boosted if it divests 3% of Great Eastern Life (Malaysia) through an IPO or trade sale in 2H18 to comply with the limit on foreign ownership. OCBC plans to implement IRBA for OCBC Wing Hang in 219. ACTION Maintain OVERWEIGHT. We see upside risk for interest rates. The Fed continues to monitor for signs of pick-up in inflation. While Fed Chairman Jerome Powell maintained that he sees no evidence that the US economy is overheating, there are quarters within the Fed that are concerned that the labour market is tight and wage inflation could pick up, necessitating a faster pace of hikes for the FED funds rate. SECTOR CATALYSTS Rising interest rates and bond yields. Moderation of credit costs. OVERWEIGHT (Maintained) TOP BUYS Share Target Company Rec Price Price (S$) (S$) DBS BUY OCBC BUY Source: UOB Kay Hian P/B DBS (x) SD +1 SD Mean: 1.33x SD.5-2 SD Source: UOB Kay Hian P/B OCBC (x) SD +1 SD -1 SD Mean: 1.64x -2 SD Source: UOB Kay Hian ANALYST(S) Jonathan Koh, CFA jonathankoh@uobkayhian.com PEER COMPARISON Target Market PE P/B P/PPOP Yield ROE Company Ticker Rec 8 May 18 Price Cap FY 218F 219F 218F 219F 218F 219F 218F 219F 218F 219F (S$) (S$) (US$m) (x) (x) (x) (x) (x) (x) (%) (%) (%) (%) DBS DBS SP BUY ,57 12/ OCBC OCBC SP BUY ,214 12/ UOB# UOB SP NR n.a. 36,431 12/ # Forecast based on consensus estimates. Source: Bloomberg, UOB Kay Hian 17

18 ASSUMPTION CHANGES As per results notes. RISKS Rapid increase in the federal funds target rate (steep rate hikes) that may trigger capital outflows from countries in Southeast Asia. PROFIT & LOSS 1Q18 DBS OCBC UOB Net Interest Income S$2,128m S$1,415m S$1,47m +16.2% yoy +11.2% yoy +12.8% yoy +1.5% qoq -.6% qoq +.6% qoq Fee Income S$744m S$536m S$517m +11.9% yoy +11.4% yoy +17.8% yoy +17.% qoq +9.2% qoq +1.6% qoq Insurance n.a. S$26m n.a. n.a % yoy n.a. n.a % qoq n.a. Net Trading Income S$368m S$94m S$175m +36.3% yoy -4.5% yoy -33.% yoy +61.4% qoq -5.1% qoq -5.9% qoq Other Non-Interest Income S$12m S$82m S$68m -74.5% yoy yoy +38.8% yoy +27.7% qoq -74.1% qoq -9.3% qoq Provisions S$164m S$12m S$8m 19.9bp 2.bp 13.3bp Net Profit S$1,511m S$1,112m S$978m +21.4% yoy +29.2% yoy +21.2% yoy +26.5% qoq +7.6% qoq +14.4% qoq Source: Respective companies, UOB Kay Hian KEY RATIOS 1Q18 DBS OCBC UOB Net Interest Margin (NIM) 1.83% 1.67% 1.84% +5bp qoq Unchanged +3bp qoq Loan Growth +9.9% yoy +9.7% yoy +5.1% yoy +1.6% qoq +3.9% qoq +2.% qoq Deposit Growth +9.7% yoy +9.% yoy +5.4% yoy +.6% qoq +1.8% qoq +.4% qoq NPL Ratio 1.62% 1.38% 1.72% -6bp qoq -6bp qoq -6bp qoq Loan Loss Coverage 87.5% % +2.8ppt qoq +.4ppt qoq -9.9ppt qoq Core Equity Tier-1 CAR 14.% 13.1% 14.9% +.1ppt qoq Unchanged +.2ppt qoq Book Value Per Share (BVPS) S$18.29 S$9.21 S$ % yoy +6.1% yoy +8.6% yoy +2.5% qoq +2.8% qoq +3.1% qoq Source: Respective companies, UOB Kay Hian 18

19 COMPANY RESULTS Oversea-Chinese Banking Corp (OCBC SP) 1Q18: Let Down By Flat NIM The flat NIM in 1Q18 was primarily caused by NIM compression of 17bp qoq at OCBC NISP due to the Indonesian government's push for single-digit lending rate. Investors should not be unduly concerned with the significant drop in provisions as NPL formation has eased, there was aggressive clean-up in 4Q17 and the bank received S$3m repayment for oil & gas NPL. Maintain BUY and target price of S$16.5, based on 1.66x 218F P/B. RESULTS Oversea-Chinese Banking Corporation (OCBC) reported net profit of S$1,112m for 1Q18, up 29.2% yoy, and 4% above our forecast of S$1,67m. Broad-based sequential expansion in loans. Loans expanded 9.7% yoy and 3.9% qoq. The sequential expansion was driven by trade loans (general commerce: +4.1% qoq), including financing of commodities, building & construction (+8.6% qoq) and OCBC Wing Hang (+5% qoq). NIM under pressure. NIM was unchanged qoq at 1.67%. Management explained that the flat NIM was due to: a) trade loans, which command lower margins, accounted for a substantial portion of new loans in 1Q18; and b) Indonesian subsidiary OCBC NISP's NIM contracted 17bp qoq to 4.24% due to the government's push for single-digit lending rate. Net interest income grew 11.2% yoy. Wealth management maintained stellar rise. Fees & commissions increased 11.4% yoy, driven by an 18.6% yoy growth from wealth management. Contribution from fund management also grew 16% yoy. Bank of Singapore (BOS) collaborated with global fund houses to launch many new funds in 1Q18. AUM has also grown 19% yoy to US$12b. Accounting changes at GEH had negative impact on net trading income. Life insurance contributed S$166m, up 242% yoy. 1Q17 numbers were restated based on SFRS (I) 9 and accounting changes at Great Eastern Holdings (GEH). Its investments in bonds are held for collection of contractual cash flows and measured at amortised cost. However, equity investments for GEH s shareholders funds caused a negative mark-tomarket of S$4m-5m, classified under net trading income. Provisions dropped precipitously after aggressive clean-up in 4Q17. NPL balance declined.5% qoq while NPL ratio improved 6bp to 1.38%. New NPL dropped 24% yoy to S$297m. Provisions, determined by expected credit loss (ECL) methodology based on SFRS (I) 9, dropped 93% yoy to just S$12m, or credit cost of 2bp. BUY (Maintained) Share Price S$13.17 Target Price S$16.5 Upside +25.3% (Previous TP S$16.2) COMPANY DESCRIPTION OCBC has longstanding presence in Singapore and Malaysia and entered the Indonesia market through acquisition of Bank NISP in 24. It owns 87% of life insurer Great Eastern and 2% of Bank of Ningbo. STOCK DATA GICS sector Financials Bloomberg ticker: OCBC SP Shares issued (m): 4,182.7 Market cap (S$m): 55,86.2 Market cap (US$m): 41, mth avg daily t'over (US$m): 65.7 Price Performance (%) 52-week high/low S$13.96/S$1.3 1mth 3mth 6mth 1yr YTD Major Shareholders % Selat P/L 11.5 Lee Foundation 5.1 FY18 NAV/Share (S$) 9.95 FY18 CAR Tier-1 (%) PRICE CHART (lcy) OVERSEA-CHINESE BANKING CORP OVERSEA-CHINESE BANKING CORP/FSSTI INDEX (%) KEY FINANCIALS Year to 31 Dec (S$m) F 219F 22F Net interest income 5,52 5,423 5,848 6,416 7,22 Non-interest income 3,437 4,213 4,381 3,93 4,151 Net profit (rep./act.) 3,473 4,146 5,25 4,747 5,149 Net profit (adj.) 3,473 4,146 4,417 4,747 5,149 EPS (S cent) PE (x) P/B (x) Dividend yield (%) Net int margin (%) Cost/income (%) Loan loss cover (%) Consensus net profit - - 4,718 5,195 5,619 UOBKH/Consensus (x) Source: OCBC, Bloomberg, UOB Kay Hian Volume (m) May 17 Jul 17 Sep 17 Nov 17 Jan 18 Mar 18 May 18 Source: Bloomberg ANALYST(S) Jonathan Koh, CFA jonathankoh@uobkayhian.com

20 STOCK IMPACT Outlook brightens for loan growth. Management guides high-single-digit growth for loans (loan growth could hit low-teens if there is no outbreak of trade war) and fee income for 218. It sees asset quality as benign and risk from the O&G sector contained. Management guides normalised credit cost at 15-2bp. Unlocking value through divestment of 3% stake in GELM. OCBC have regular discussions with the relevant authorities on IPO or trade sale for Great Eastern Life (Malaysia). Management has complied with the time schedule and milestones stipulated by Bank Negara Malaysia (BNM). OCBC has appointed a manager for IPO and advisor for trade sale to concurrently explore both routes to comply with the limits on foreign ownership. The sale of a 33.3% stake in Hong Kong Life Insurance is waiting for regulatory clearance. Management expects the divestment to be completed this year. Focus on reinvesting in core businesses. OCBC aims to provide steady and sustainable dividends. Management plans to maintain dividend payout at 4-5% of core earnings, which can support growth of 6-7% for risk-weighted assets and 1-12% for total assets. It sees sufficient opportunities for organic growth in key pillars of its businesses. Management intends to maintain CET-1 CAR at %. The bank will consider reinstating its scrip dividend scheme as a tool for capital management. Doing so would help OCBC support a higher dividend payout ratio. EARNINGS REVISION/RISK We raise our net profit forecast for 218 marginally by.7% as: a) we lower NIM to 1.67% (previously 1.7%), and b) lower credit cost to 16.6bp (previously 22.2bp). VALUATION/RECOMMENDATION Maintain BUY. Our target price of S$16.5 is based on 1.66x 218F P/B, derived from the Gordon Growth Model (ROE: 1.9%, COE: 7.75% (beta: 1.5x), growth: 3.%). SHARE PRICE CATALYST Continued investment in core commercial banking with proceeds from restructuring at Great Eastern Malaysia. Non-interest income from wealth management, fund management and life insurance will expand in tandem with growing affluence in Asia. 1Q18 RESULTS KEY ASSUMPTIONS F 219F 22F Loan Growth (%) NIM (%) Fees, (.2) % chg NPL Ratio (%) Credit Costs (bp) Net Profit 3,473 4,146 5,42 4,747 5,149 (S$m) % chg (11.) (5.9) 8.5 Source: UOB Kay Hian Profit & Loss (S$m) 1Q18 1Q17 yoy % chg UOBKH Est. Deviation (%) Comments Net Interest Income 1,415 1, , NIM expanded 5bp yoy. Loans expanded 9.7% yoy Fees & Commissions Wealth management (+18.6% yoy) and fund management (+16% yoy) Insurance Net Trading Income Affected by mark-to-market losses from GEH s equity investments for shareholders funds Other Non-Interest Income Total Income 2,333 2, , Operating Expenses (1,57) (999) 5.8 (1,24) 3.2 Staff costs increased 1% yoy, other operating expenses unchanged PPOP 1,276 1, , Credit Costs (12) (168) (133) -91. Associates Growth mainly from Bank of Ningbo PBT 1,389 1, , Net Profit 1, , EPS (cents) Strong organic growth DPS (cents).. n.m.. n.m. BVPS (S$) Financial Ratios (%) 1Q18 1Q17 yoy chg (ppt) 4Q17 qoq chg (ppt) Comments NIM Pressure from higher costs of deposits, up 12bp qoq to 1.27% Loan Growth, yoy Singapore: +3.9% qoq, Malaysia: +3.3% yoy. Greater China: +6.2% yoy Deposit Growth, yoy Fixed deposits: +4.8% qoq Loan/Deposit Ratio Cost/Income Ratio ROE NPL Ratio New NPLs receded 24% yoy to S$297m Credit Costs (bp) Repayment of S$3m for NPL from the oil & gas sector Loan Loss Coverage CET-1 CAR Source: OCBC, UOB Kay Hian 2

21 PROFIT & LOSS BALANCE SHEET Year to 31 Dec (S$m) F 219F 22F Year to 31 Dec (S$m) F 219F 22F Interest income 9,118 1,384 11,4 12,475 Cash with central bank 19,594 19,953 21,598 23,378 Interest expense (3,695) (4,535) (4,983) (5,453) Govt treasury bills & securities 27,471 29,252 31,664 34,274 Net interest income 5,423 5,848 6,416 7,22 Interbank loans 49,377 44,585 48,26 52,238 Fees & commissions 1,952 2,26 2,37 2,561 Customer loans 234, ,215 28,442 33,42 Other income 2,261 2,175 1,56 1,59 Investment securities 25,329 25,375 25,375 25,375 Non-interest income 4,213 4,381 3,93 4,151 Derivative receivables 6,386 7,61 7,61 7,61 Total income 9,636 1,229 1,347 11,172 Associates & JVs 2,352 3,148 3,148 3,148 Staff costs (2,471) (2,571) (2,711) (2,927) Fixed assets (incl. prop.) 4,281 4,28 4,28 4,28 Other operating expense (1,667) (1,636) (1,755) (1,888) Other assets 86,7 94,25 12, ,317 Pre-provision profit 5,498 6,21 5,88 6,358 Total assets 454, , , ,941 Loan loss provision (62) (414) (55) (596) Interbank deposits 7,485 9,888 1,73 11,586 Other provisions (51) Customer deposits 283,642 36, ,76 359,49 Associated companies Derivative payables 6,454 7,883 7,883 7,883 Pre-tax profit 5,215 6,82 5,843 6,316 Debt equivalents 32,235 28,88 28,88 28,88 Tax (83) (843) (876) (947) Other liabilities 83,346 89,533 97,538 16,222 Minorities (266) (214) (22) (22) Total liabilities 413, ,63 476,71 513,62 Net profit 4,146 5,25 4,747 5,149 Shareholders' funds 39,8 42,138 45,2 48,268 Net profit (adj.) 4,146 4,417 4,747 5,149 Minority interest - accumulated 2,768 2,819 2,933 3,52 Total equity & liabilities 454, , , ,941 OPERATING RATIOS KEY METRICS Year to 31 Dec (%) F 219F 22F Year to 31 Dec (%) F 219F 22F Capital Adequacy Tier-1 CAR Net interest income, yoy chg Total CAR Fees & commissions, yoy chg Total assets/equity (x) Pre-provision profit, yoy chg (2.3) 8.1 Tangible assets/tangible common Net profit, yoy chg (5.5) 8.5 equity (x) Net profit (adj.), yoy chg Asset Quality Customer loans, yoy chg NPL ratio Customer deposits, yoy chg Loan loss coverage Profitability Loan loss reserve/gross loans Net interest margin Increase in NPLs Cost/income ratio Credit cost (bp) Adjusted ROA Reported ROE Liquidity Adjusted ROE Loan/deposit ratio Valuation Liquid assets/short-term liabilities P/BV (x) Liquid assets/total assets P/NTA (x) Adjusted P/E (x) Dividend Yield Payout ratio Growth 21

22 COMPANY RESULTS PTT Global Chemical (PTTGC TB) 1Q18: Core Profit In Line; Expect Sustained Strong Core Earnings In 2Q18 PTTGC s strong 1Q18 results were backed by a rise in petrochemical prices and spreads, and benefitted from asset injections. We expect core earnings to remain strong in 2Q18, underpinned by high HDPE prices and full-quarter contribution from the start-up of new project mlldpe. With an attractive yield of 4.5%, PTTGC remains as one of our top picks in the O&G space. Maintain BUY. Target price: Bt Q18 RESULTS Year to 31 Dec yoy qoq (Btm) 1Q17 4Q17 1Q18 % chg % chg Revenue 111,63 121, , Operating cost (94,927) (13,631) (17,39) SG&A expense (3,157) (4,569) (3,229) EBITDA 19,16 16,593 16, Depn & Amort (4,514) (5,64) (4,663) EBIT 14,547 13,86 11, FX gain/(loss) Tax expense (1,623) (1,4) (1,237) Recurring income 11,16 11,581 11, Net income 13,182 9,559 12, EPS (Bt) Gross margin (%) EBITDA margin (%) Net profit margin (%) Source: PTTGC, UOB Kay Hian RESULTS 1Q18 results were good, as expected. PTT Global Chemical (PTTGC) posted Bt12.4b net profit in 1Q18 (-6% yoy, +29.6% qoq), in line with our estimate but 1% higher than market expectations. The stronger qoq performance was due to: a) high-density polyethylene (HDPE) prices and spread rising 12.6% qoq and 22% qoq respectively, backed by China s reform to ban polyethylene (PE) scrap imports, and b) higher contributions from subsidiaries, including HMC and PTTAC. The weaker yoy performance was mainly due to lower forex and inventory gains as well as lower aromatic product prices and spread. Butadiene prices have normailised from the abnormally high levels in 1Q17. KEY FINANCIALS Year to 31 Dec (Btm) F 219F 22F Net turnover 349,11 439, , , ,325 EBITDA 45,312 65,267 7,961 74,173 75,151 Operating profit 28,7 45,817 49,741 52,187 52,552 Net profit (rep./act.) 25,61 39,298 47,37 5,2 5,537 Net profit (adj.) 21,334 37,911 47,37 5,2 5,537 EPS (Bt) PE (x) P/B (x) EV/EBITDA (x) Dividend yield (%) Net margin (%) Net debt/(cash) to equity (%) Interest cover (x) ROE (%) Consensus net profit - - 4,69 41,299 42,987 UOBKH/Consensus (x) Source: PTTGC, Bloomberg, UOB Kay Hian BUY (Maintained) Share Price Target Price Bt96. Bt125. Upside +3.2% COMPANY DESCRIPTION PTT Global Chemical is a fully integrated petrochemical and chemical company. The company s products are derived from its main product, olefins, namely ethylene and propylene. STOCK DATA GICS sector Materials Bloomberg ticker: PTTGC TB Shares issued (m): 4,58.3 Market cap (Btm): 432,797.8 Market cap (US$m): 13, mth avg daily t'over (US$m): 58.1 Price Performance (%) 52-week high/low Bt13./Bt67.5 1mth 3mth 6mth 1yr YTD Major Shareholders % PTT 48.9 NDVR 6.1 FY18 NAV/Share (Bt) 67.4 FY18 Net Debt/Share (Bt) 1.93 PRICE CHART 11 1 (lcy) Volume (m) PTT GLOBAL CHEMICAL PCL PTT GLOBAL CHEMICAL PCL/SET INDEX (%) May 17 Jul 17 Sep 17 Nov 17 Jan 18 Mar 18 May 18 Source: Bloomberg ANALYST(S) Chaiwat Arsirawichai chaiwat@uobkayhian.co.th Tanaporn Visaruthaphong tanaporn@uobkayhian.co.th

23 KEY VALUE DRIVERS 1Q17 4Q17 1Q18 yoy % chg qoq % chg Refinery Business CDU Utilisation rate (%) Marketing GRM (US$/bbl) (excluding stock gains/losses) Refinery EBITDA Margin (%) Aromatics Business BTX Utilisation rate (%) Market Product-to-Feed (P2F) (US$/ton) Aromatics EBITDA Margin (%) Olefins Business Polyethylene Utilisation rate (%) Olefins EBIDA Margin (%) Source: PTTGC, UOB Kay Hian STOCK IMPACT The positive 1Q18 core earnings were no surprise. Excluding inventory gains, forex impact and other non-recurring items, 1Q18 core profit was Bt11.4b (-2.% qoq, +1.7% yoy), largely in line with our estimate. The qoq decline was mainly due to softer refining margins (1Q18: US$6.2/bbl, 4Q17: US$6.8/bbl) and lower product-to-feed (P2F) in the aromatic business, which was affected by lower prices of by-products, especially LPG and naphtha. Expect core earnings to remain strong in 2Q18. Management is still confident of its earnings performance for 2Q18, backed by sustained high HDPE prices and full-quarter contribution from the start-up of new mlldpe plant from Mar 18, offsetting the negative impact from high crude premium prices and declining aromatic spreads. Moreover, management maintains benefits from Project Max at Bt6b in 218 despite the low contribution of Bt347m in 1Q18, while more contributions from asset injections should support PTTGC s core earnings in 2Q : Another good year. This would be backed by: a) higher utilisation rates at both the olefins (218F: 99%, 217: 96%) and aromatics plants (218F: 91%, 217: 8%); b) fullyear contribution from asset injections (218F: Bt5b, 217: Bt2.1b); c) stronger benefits (before advisory fees and tax) from Project Max (218F: Bt6.4b, 217: Bt3.5b); and d) commercial run of the new mlldpe project from Mar 18. PRICES AND SPREADS (US$/tonne) 1Q17 4Q17 1Q18 2Q18 (qtd) Dubai price (US$/bbl) HDPE price 1,176 1,225 1,379 1,373 HDPE Spread PX spread over condensate BZ spread over condensate Source: PTTGC, UOB Kay Hian REVENUE & ADJUSTED EBITDA STRUCTURE IN 1Q18 Source: PTTGC ASSUMPTION IN F (US$/tonne) F 219F Refinery - Utilisation rate 13% 12% 12% - GRM (US$/bbl) Aromatic - BTX rate 8% 91% 91% - PX Spread BZ Spread Olefins - Olefin Utilisation rate 96% 99% 1% - HDPE Price 1,168 1,3 1,3 Source: PTTGC, UOB Kay Hian FORWARD CORE PE BAND Positive on HDPE prices. PTTGC also expects HDPE benchmark prices to stay at US$1,3/tonne in 218, up 11.3% from 217. HDPE prices in 2Q18 were supported by the seasonal plant maintenance shutdown in the region before operations resume in late- 2Q18. So, HDPE prices could remain firm in 2Q18 before softening slightly in 2H18. EARNINGS REVISION/RISK None. 1Q18 core profit accounted for 24% of our full-year forecast. HDPE price sensitivity. Our sensitivity analysis indicates that every US$1/tonne increase from our HDPE price assumption of US$1,3/tonne will raise our 218 core profit forecast by Bt3.1b. Source: Bloomberg, UOB Kay Hian MAINTENANCE SHUTDOWN SCHEDULE GRM sensitivity. Our sensitivity analysis shows that every US$1/bbl decline in GRM from our base assumption of US$6.6/bbl will lower our core profit forecast for 218 by Bt2.b. VALUATION/RECOMMENDATION Maintain BUY and target price of Bt125., based on regional peers 12x PE 218F. PTTGC is currently trading at 9.2x 218F core PE. PTTGC is one of our top picks in the O&G segment. Source: PTTGC 23