Cache Logistics Trust

Transcription

1 Singapore Company Guide Version 8 Bloomberg: CACHE SP Reuters: CALT.SI Refer to important disclosures at the end of this report DBS Group Research. Equity 24 Jan 2017 HOLD Last Traded Price ( 23 Jan 2017): S$0.81 (STI : 3,025.48) Price Target 12-mth: S$0.77 (-5% downside and 9.5% yield) (Prev S$0.93) Potential Catalyst: Better property valuations Where we differ: Rental reversion assumptions are below consensus Analyst Singapore Research Team equityresearch@dbs.com Derek TAN derektan@dbs.com What s New FY16 DPU 7.73Scts missed expectations; down 9% y-o-y due to lower rents and enlarged unit base NAV fell 11.4%, lifting gearing to 43.1%. Divestment of DC3 to repay debt and potential equity fund raising to address high gearing TP revised down to S$0.77 from S$0.93, and DPU forecast trimmed by 3-5%. Maintain HOLD Price Relative S$ Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 (LHS) Relative STI (RHS) Relative Index Forecasts and Valuation FY Dec (S$m) 2015A 2016A 2017F 2018F Gross Revenue Net Property Inc Total Return (12.3) (24.0) Distribution Inc EPU (S cts) EPU Gth (%) (8) (5) 1 1 DPU (S cts) DPU Gth (%) 0 (9) (6) (2) NAV per shr (S cts) PE (X) Distribution Yield (%) P/NAV (x) Aggregate Leverage (%) ROAE (%) Distn. Inc Chng (%): (3) (5) Consensus DPU (S cts): Other Broker Recs: B: 2 S: 1 H: 7 Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P Net Asset Value Down, Gearing Up Maintain HOLD, TP revised down to S$0.77. We maintain our HOLD call due to the uncertainty of the outcome regarding the Schenker dispute, potential revaluation loss, and possible equity fund raising to address its high gearing. We have also trimmed DPU estimates for the next two years by 3-5% mainly due to the divestment of Cache Changi Districentre 3 (DC3). Our DPU estimate for FY17F is 7.26Scts (vs 7.51Scts previously). We think NAV could decline further. While yields are attractive at above 9%, we believe that uncertainties owing to the oversupply in the overall Singapore warehouse market and more pressure on Cache s organic growth outlook will cap re-rating opportunities. Interim solution to 51 Alps Avenue a key overhang. We expect pressure on earnings arising from the holding arrangement with Schenker in relation to 51 Alps Avenue until the Court s final judgement of the dispute. In the interim, Cache has agreed to receive in protest Schenker s rent of S$0.77 per square foot per month until further resolution. Under the worst-case scenario, FY17F DPU could drop by 4.0% to 7.0Scts. Need to address its gearing soon. As anticipated, further property write offs led to NAV being slashed by 11.4% in FY16, and this pushed gearing up to 43.1% (vs 45% regulatory cap). Assuming sales proceeds from DC3 is used to pay off debts, gearing would have only moderated to c.42% which is still above management s comfortable level of 35-40%. We believe that the Manager will undertake an equity fund raising and/or divest more assets to pare down its gearing. Depending on the strategy, DPU dilution is possible, and is factored in our model. Valuation: Our DCF-based TP was revised down to S$0.77 (0.99x P/NAV) from S$0.93 (1.12x P/NAV). FY17-18F DPU trimmed by 3-5%. Key Risks to Our View: Schenker s rent dispute. The rent dispute is pending the Court s resolution. Further price pressure ahead if the Court rules to settle the rent significantly below market price. At A Glance Issued Capital (m shrs) 898 Mkt. Cap (S$m/US$m) 727 / 513 Major Shareholders (%) Bank of New York Mellon Corp 4.4 CWT Ltd 4.3 Capital Group Companies Inc 4.3 Free Float (%) m Avg. Daily Val (US$m) 1.0 ICB Industry : Real Estate / Real Estate Investment Trusts ed: JS / sa: SM, PY

2 WHAT S NEW 4Q/FY16 Results: FY16 DPU declined by 9.1%, further NAV markdown 4Q16 distributable income fell 5.2% as acquisitions inadequate to compensate loss of income from tenant conversions and higher financing costs. Gross revenue for 4Q16 was S$27.3m, up S$3.2m or 13.5% y-o-y while net property income (NPI) was S$21.3m, up S$2.2m or 11.3%. The increase was mainly due to full year rental contribution from DHL Supply Chain Advanced Regional Centre (DSC ARC) and acquisition of Australian properties, offset by lower income received under protest for 51 Alps Ave (Schenker) and higher property related expenses (up 22.2%) from the acquisitions and recently converted multi-tenanted buildings. However, distributable income was down 5.2% at S$16.7m, primarily due to higher financing costs (up 10.1%) as a result of borrowings in relation to the new acquisitions and working capital as well as financing expenses incurred for DSC ARC that could not be capitalised after obtaining TOP in July Q16 DPU down 10.8% due to lower capital distribution and larger unit base. DPU for 4Q16 declined by 10.8% y-o-y to 1.85Scts mainly due to a payment of S$0.8m from capital this quarter versus S$2.1m a year ago. Excluding capital distribution from both periods, DPU would have fallen by 3.9%. FY16 DPU down 9.1% to 7.73Scts, a slight miss from our forecast. Gross Revenue for the full year FY16 was S$111.3m, up S$21.6m or 24.0% y-o-y. NPI was S$88.0m, up S$11.8m or 15.6%. The increase was due to the same reason described above. Full year FY16 DPU was 7.73Scts, down 9.1% from FY15. Considering that S$5.1m was paid from capital in FY15 whereas only S$2.4m was paid in FY16, DPU without capital distribution would have fallen by 5.4% in FY16. FY16 DPU represents 98.2% of our forecast, slightly below our expectations. Occupancy remained above market average with minimal leases due for expiry in FY17. The portfolio s committed occupancy remained higher than the industry average at 96.4%. Weighted Average Lease Expiry (WALE) was close to four years with only 5.3% of the portfolio s leases due for renewal in FY17. In FY18, c.22% of leases will be expiring mainly coming from the five master leases that were renewed in Out of the 22%, 13% comes from CWT Commodity Hub, Cache s largest asset. Divestment of DC3 to potentially repay debt. The Manager announced the divestment of Cache Changi Districentre 3 at a price of S$25.5m in Dec The divestment is in line with the Manager s objective to rebalance the portfolio and recycle capital into better performing assets. The sale is expected to complete in 1Q17. NAV was further revised down to S$0.78 due to a dim outlook for rentals and cap rates expansion. NAV per share fell to S$0.78, down 11.4% compared to S$0.88 a year ago. In the table on the next page, it can be seen that Singapore property valuation was down by 6.8% during the year, which is equivalent to a weighted decline of 5.7% in the portfolio context. Loss from Singapore assets revaluation was mainly dragged by 51 Alps Ave or Schenker Megahub (-30.7%; down S$35.9m) as well as Hi-Speed Logistics Centre (-13.4%; down S$11.0m), Cache Cold Centre (-6.9%; down S$9.6m) and Pandan Logistics Hub (-17.5%; down 10.6m). Properties in China and Australia, on the other hand, were revalued higher by 9.0% and 1.8% in their respective currency terms, and -3.1% and 2.8% after translation into SGD. Despite the upward revaluation in the Australia properties, it did not move the needle of the portfolio s valuation as the exposure is only less than 15%. High gearing of 43.1% needs to be addressed soon. As a result of the lower NAV, gearing ratio inched higher to 43.1% from 39.8% a year ago. Even after assuming that the entire sales proceeds from Cache Changi Districentre 3 will be used to pay down debt, gearing would have moderated to around 41.9%, which we believe is still at a rather uncomfortable level. Without other divestments, we believe the Manager will likely raise equity capital to bring down gearing to below 40%, with or without new acquisitions. Cost of financing was stable at 3.6%. We understand that c.70% of the SGD borrowings and 50% of the onshore AUD borrowings are hedged into fixed rates. Progress on Schenker dispute: There has been no update since the holding arrangement signed on 26 Sep See our report on the background of the dispute here. OUR VIEW TP revised down to S$0.77 (prev S$0.93). DPU for FY17-18F trimmed by 3-5%. Maintain HOLD. We have revised our TP down to S$0.77 from S$0.93 to account for NAV decline, and uncertain gearing levels with potential equity issuance which would be dilutive. We have also trimmed our DPU forecast for the next two years by 3-5% mainly as a result of the divestment of Cache Changi Districentre 3. DPU for FY17F is forecast to be 7.26Scts, representing a yield of c.9%. Maintain HOLD. Page 2

3 Table: Property Valuation by Independent Valuers and NAV in 2015 vs 2016 Property Country Valuation Change 31/12/ /12/ CWT Commodity Hub Singapore S$336.1 S$ % 2 Cache Cold Centre Singapore S$139.6 S$ % 3 Schenker Megahub Singapore S$116.8 S$ % 4 Hi-Speed Logistics Centre Singapore S$82.0 S$ % 5 Cache Changi Districentre 1 Singapore S$93.4 S$ % 6 Cache Changi Districentre 2 Singapore S$18.2 S$ % 7 Cache Changi Districentre 3 Singapore S$26.1 S$ % 8 Air Market Logistics Centre Singapore S$13.1 S$ % 9 Pan Asia Logistics Centre Singapore S$37.0 S$ % 10 Pandan Logistics Hub Singapore S$60.6 S$ % 11 Precise Two Singapore S$49.8 S$ % 12 DHL Supply Chain Advanced Regional Centre Singapore S$147.2 S$ % S$1,119.9 S$1, % 13 Jinshan Chemical Warehouse China % 77.3 (S$16.9*) (S$16.37*) 9.0% (-3.1%) 14 Chester Hill (NSW) Australia A$37.3 A$ % 15 Somerton (VIC) Australia A$25.0 A$ % 16 Coopers Plain (QLD) Australia A$9.6 A$ % 17 Wacol (QLD) Australia A$27.0 A$ % 18 Wacol 2 (QLD) Australia A$9.6 A$ % 19 Kidman Park (SA) Australia A$57.3 A$ % A$165.7 (S$171.2**) A$ (S$176.0**) 1.8% (+2.8%) Total S$1,308.0 S$1, % NAV S$0.88 S$ % * Based on exchange rate of S$1.00 ~ as at 31/12/2015 and S$1.00~ as at 31/12/2016 ** Based on exchange rate of S$1.00 ~ A$0.968 as at 31/12/2015 and S$1.00 ~ A$ as at 31/12/2016 Source: Corporate, DBS Bank Page 3

4 Quarterly / Interim Income Statement (S$m) FY Dec 4Q2015 3Q2016 4Q2016 % chg yoy % chg qoq Gross revenue (2.8) Property expenses (4.9) (6.0) (5.9) 22.2 (0.9) Net Property Income (3.3) Other Operating expenses (3.0) (3.0) (2.9) (2.7) (3.0) Other Non Opg (Exp)/Inc N/A N/A Net Interest (Exp)/Inc (4.7) (4.9) (5.1) (10.1) (5.4) Exceptional Gain/(Loss) N/A N/A Net Income (6.3) Tax (0.2) (0.3) (0.3) 14.6 (1.2) Minority Interest N/A N/A Net Income after Tax (6.4) Total Return (53.4) (22.2) (31.6) 40.8 (42.6) Non-tax deductible Items (32.0) 24.6 Net Inc available for Dist (5.2) 0.5 Ratio (%) Net Prop Inc Margin Dist. Payout Ratio Source of all data: Corporate, DBS Bank Page 4

5 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Company Guide CRITICAL DATA POINTS TO WATCH Earnings Drivers: Well-spread out lease profile offers strong income visibility. (Cache) offers investors strong income visibility supported by a weighted average lease to expiry (WALE) of close to four years. Cache has renewed a majority of leases up till 2017 and is actively managing these expiries in order to limit disruption to distributions. The REIT has a stable occupancy rate of over 95%, above the industry average. S$ m Net Property Income and Margins (%) 99.7% 94.7% 89.7% 84.7% 79.7% 74.7% 69.7% 2014A 2015A 2016A 2017F 2018F Net Property Income Net Property Income Margin % Stable underlying occupancy for expiring master-leases. The underlying occupancies for both properties (Schenker Megahub and Hi-Speed Logistics Centre) are fairly high given the strategic location at the airport logistics hub where there is minimal new supply. Hence, demand for the space should remain resilient, despite the current weak operating climate, which is made worse by high supply from completions. The non-renewal of the master lease at Hi-Speed Logistics Centre (40 Alps Ave) is not expected to impact earnings significantly. We anticipate that net property income (NPI) for the property will dip on the back of lower rents and efficiency for the property. However, given that the property only contributes c.5% of top line, actual impact to distributions is marginal. The court case regarding the renewal of the lease at Schenker Megahub from anchor tenant (Schenker) is expected to take some time to resolve. Given this uncertainty, we have assumed that rental from this property will fall to the pre-agreed rent levels, which reflects a worst-case scenario, in our view. Deepening its presence in Australia to diversify and grow earnings stream. Cache has been able to diversify its earnings base through an acquisition of six properties in Australia, which now contribute close to 14% of top line. The acquisition of these properties in Australia has enabled the REIT to weather the downturn in Singapore better as the long leases from Australia helps provide the REIT with strong income visibility (x) Net Property Income and Margins (%) Net Property Income Net Property Income Margin % Distribution Paid / Net Operating CF Interest Cover (x) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% (x) 2014A 2015A 2016A 2017F 2018F DHL project a key driver of growth from FY16 onwards. Revenue contribution from the DHL property will be a key earnings driver for Cache from its first full year contribution in The weighted average occupancy for the property is >85% (100% for block 1 by DHL and the tenant is expected to take up the remaining space at block 2 in two years' time). The long 10-year lease, coupled with extension options to the end of the land lease offers strong income visibility for the REIT A 2015A 2016A 2017F 2018F Source: Company, DBS Bank Page 5

6 Balance Sheet: Gearing over optimal level of 40%; limited capacity to acquire further. Cache s gearing is expected to hover around 40% in FY17-18F. We note that this is at the higher end of management s comfortable range of 35-40%, and will likely mean that further acquisition capacity will be limited. However, given more acquisition opportunities on the horizon, we believe that new deals will be partly funded by raising new equity. No refinancing required in Cache has a weighted average debt to maturity close to 3 years with no refinancing requirements till It has more than 60% of its borrowings hedged into fixed rates. Share Price Drivers: Acquisition of assets in its ROFR. Cache has been granted the Rights of First Refusal (ROFR) to 15 properties by its Sponsor (CWT) and C&P in the Asia Pacific. These 15 properties can approximately contribute 5.7m square feet in gross floor area which when acquired, is expected to significantly increase its portfolio size, earnings and thus provide uplift to share price. 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Aggregate Leverage (%) 2014A 2015A 2016A 2017F 2018F ROE (%) 2014A 2015A 2016A 2017F 2018F Beating market outlook. While the warehouse market has been seeing a deluge of new supply completions over , a majority of Cache s leases are MNCs and 3PLs, and hence we believe occupancy rates should remain steady. Higher rents achieved given its quality portfolio could outperform market expectations that rents would moderate. Key Risks: Equity fund raising. As at end-dec 2016, gearing has shot above 43%. After debt repayment from the divestment of DC3, gearing would still be close to 42%. We believe equity fund raising is on the way to pare down its gearing, and this is likely to have a dilutive impact. NAV markdown. After a 11% slash to NAV in FY16, property valuations continue to face downward pressure as valuers apply wider cap rates on a back of a dimmer outlook in the industrial space due to oversupply and slow growth. Interest rate risk. Any increase in interest rates will result in higher interest payments for the REIT, hence reducing the income available for distribution, which will result in lower distribution per unit (DPU) for unitholders. Company Background Cache is a REIT whose investment mandate is to invest primarily in logistics properties located in the Pan Pacific region. Source: Company, DBS Bank Distribution Yield (%) (%) sd: 10.1% sd: 9% 8.2 Avg: 8% 7.2-1sd: 6.9% 6.2-2sd: 5.8% PB Band (x) (x) sd: 1.41x sd: 1.27x 1.1 Avg: 1.13x -1sd: 0.99x 0.9-2sd: 0.85x 0.7 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Page 6

7 Income Statement (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F Gross revenue Property expenses (4.9) (13.6) (23.3) (30.2) (31.4) Net Property Income Other Operating expenses (8.6) (9.5) (11.0) (7.6) (7.6) Other Non Opg (Exp)/Inc Net Interest (Exp)/Inc (12.2) (13.7) (19.5) (19.1) (19.6) Exceptional Gain/(Loss) Net Income Tax (0.5) (0.6) (0.8) (0.8) (1.0) Minority Interest Preference Dividend Net Income After Tax Total Return 65.7 (12.3) (24.0) Non-tax deductible Items Net Inc available for Dist Growth & Ratio Revenue Gth (%) N Property Inc Gth (%) 1.5 (2.4) 15.6 (3.3) 1.7 Net Inc Gth (%) (0.4) (7.7) Dist. Payout Ratio (%) Net Prop Inc Margins (%) Net Income Margins (%) Dist to revenue (%) Managers & Trustee s fees ROAE (%) ROA (%) ROCE (%) Int. Cover (x) Source: Company, DBS Bank Page 7

8 Quarterly / Interim Income Statement (S$m) FY Dec 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Gross revenue Property expenses (4.9) (5.8) (5.5) (6.0) (5.9) Net Property Income Other Operating expenses (3.0) (2.6) (2.6) (3.0) (2.9) Other Non Opg (Exp)/Inc Net Interest (Exp)/Inc (4.7) (4.8) (4.7) (4.9) (5.1) Exceptional Gain/(Loss) Net Income Tax (0.2) (0.4) 0.12 (0.3) (0.3) Minority Interest Net Income after Tax Total Return (53.4) (22.2) (31.6) Non-tax deductible Items Net Inc available for Dist Growth & Ratio Revenue Gth (%) (3) N Property Inc Gth (%) (2) (3) Net Inc Gth (%) (9) (11) (6) Net Prop Inc Margin (%) Dist. Payout Ratio (%) Balance Sheet (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F Investment Properties 1,122 1,311 1,214 1,189 1,190 Other LT Assets Cash & ST Invts Inventory Debtors Other Current Assets Total Assets 1,137 1,326 1,258 1,227 1,228 Investment properties were written down by 11.4% over FY16. ST Debt Creditor Other Current Liab LT Debt Other LT Liabilities Unit holders funds Minority Interests Total Funds & Liabilities 1,137 1,326 1,258 1,227 1,228 Non-Cash Wkg. Capital (17.0) (8.9) Net Cash/(Debt) (338) (515) (525) (500) (501) Ratio Current Ratio (x) Quick Ratio (x) Aggregate Leverage (%) Z-Score (X) Source: Company, DBS Bank Gearing is above 40% and needs to be addressed soon, likely through equity fund raising. Page 8

9 Cash Flow Statement (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F Pre-Tax Income Dep. & Amort Tax Paid (0.3) (0.6) (0.9) 0.0 (0.8) Associates &JV Inc/(Loss) Chg in Wkg.Cap (8.1) (25.7) 2.72 (0.3) Other Operating CF Net Operating CF Net Invt in Properties (63.5) (263) (7.2) 24.7 (0.6) Other Invts (net) Invts in Assoc. & JV Div from Assoc. & JVs Other Investing CF Net Investing CF (63.3) (263) (7.2) 24.7 (0.6) Distribution Paid (66.7) (74.2) (63.1) (65.6) (64.7) Chg in Gross Debt (23.3) 2.00 New units issued Other Financing CF (15.5) (12.8) (18.5) Net Financing CF (40.1) 185 (68.7) (88.8) (62.7) Currency Adjustments Chg in Cash (29.5) (3.2) Operating CFPS (S cts) Free CFPS (S cts) 1.33 (23.9) Source: Company, DBS Bank Target Price & Ratings History S$ S.No. Date of Report Closing Price 12-mth T arget Price Rating 1: 26 Jan BUY 2: 25 Apr BUY 3: 31 May BUY 4: 21 Jul BUY 5: 22 Aug BUY 6: 28 Sep HOLD 7: 24 Oct HOLD Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Note : Share price and Target price are adjusted for corporate actions. Source: DBS Bank Analyst: Singapore Research Team Derek TAN Page 9

10 DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame) Share price appreciation + dividends Completed Date: 24 Jan :17:58 (SGT) Dissemination Date: 24 Jan :23:07 (SGT) GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the DBS Group )) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. 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11 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 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. As of 24 Jan 2017, the analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities recommended in this report ( interest includes direct or indirect ownership of securities). 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. COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates have a proprietary position in recommended in this report as of 30 Dec DBS Bank Ltd does not market make 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. 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 Hong Kong This report is being distributed in Australia by DBS Bank Ltd. ( DBS ) or DBS Vickers Securities (Singapore) Pte Ltd ( DBSVS ), both of which are 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. Both DBS and DBSVS are 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. This report is being distributed in Hong Kong by or on behalf of, and is attributable to DBS Vickers (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission and/or by DBS Bank (Hong Kong) Limited which is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission. Where this publication relates to a research report, unless otherwise stated in the research report(s), DBS Bank (Hong Kong) Limited is not the issuer of the research report(s). This publication including any research report(s) is/are distributed on the express understanding that, whilst the information contained within is believed to be reliable, the information has not been independently verified by DBS Bank (Hong Kong) Limited. This report is intended for distribution in Hong Kong only to professional investors (as defined in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any rules promulgated thereunder.) For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at equityresearch@dbs.com. Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. Page 11

12 Malaysia 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 United Kingdom This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No E) or DBSVS (Company Regn No G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at for matters arising from, or in connection with the report. This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only intended for institutional clients only and no other person may act upon it. This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore. 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 United States Other jurisdictions This research report is being distributed in The Dubai International Financial Centre ( DIFC ) by DBS Bank Ltd., (DIFC Branch) having its office at PO Box , 3 rd 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 was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate. In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. DBS Bank Ltd 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore Tel equityresearch@dbs.com Company Regn. No E Page 12