Tech Sector. Updated key sells: None. Company Ticker Share price at Market Year end 22-Mar-17 cap FY17a/CY17e FY18e/CY18e FY17a/CY17e FY18e/CY18e

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1 22 March 2017 Analyst Chris Savage Authorisation TS Lim Tech Sector Key picks unchanged: IRI, APX, ADA & IFM Stock Price Target Rating ADA $2.37 $3.25 Buy ALU $7.41 $7.90 Hold APX $2.58 $3.60 Buy CAT $2.15 $3.00 Buy (Spec) EPD $0.47 $0.70 Buy IFM $0.775 $0.90 Buy IRI $2.81 $3.50 Buy MLB $2.14 $2.75 Buy PSZ $0.325 $0.30 Hold SEN $0.091 $0.14 Buy SMP $0.20 $0.23 Buy TNE $4.91 $5.50 Hold WTC $5.65 $6.25 Buy Disclosure: Bell Potter Securities acted as comanager of WTC s IPO in April 2016 and received fees for that service. Key picks unchanged: IRI, APX, ADA & IFM We have updated our key picks in the tech sector post last month s reporting season but overall there is no change and our key picks remain the following: Integrated Research (IRI): CEO departure was a surprise but a strong 1HFY17 result and good momentum in the business keeps the stock as our number one pick in the sector; Appen (APX): Stronger than expected 2017 guidance of mid to high teens growth in EBITDA yet the stock has been sold off by >10% since the result and so now looks value on 2017 PE ratio of c.20x; Adacel Technologies (ADA): Relatively weak 1HFY17 result now in the past and outlook is for a record 2HFY17 result yet the stock has not bounced materially since the result and looks value on an FY17 PE ratio of c.18x ; and Infomedia (IFM): Better than expected 1HFY17 result and sales momentum continues to grow yet the stock still looks value on an FY17 PE ratio of c.20x. We last updated our key picks in December post the AGM season and made one change replacing Melbourne IT with Appen. Since then the Appen share price has fallen by around 5% (and the Melbourne IT share price has risen by around 10%!) while the share price of our three other key picks Integrated Research, Adacel Technologies and Infomedia have all risen modestly. Updated key sells: None We currently have no Sell recommendations in the sector. We have three Hold recommendations Altium, PS&C and Technology One but the share prices of all three stocks are either consistent with or below our price targets. Figure 1 - PE ratios and EV/EBITDA multiples for tech stocks under coverage Company Ticker Share price at Market Year end PE ratio EV/EBITDA 22-Mar-17 cap FY17a/CY17e FY18e/CY18e FY17a/CY17e FY18e/CY18e Adacel ADA $2.37 $187m Jun 18.4x 15.5x 12.8x 10.1x Altium ALU $7.41 $977m Jun 26.7x 20.6x 20.9x 16.5x Appen APX $2.58 $252m Dec 20.0x 17.4x 11.6x 9.8x Catapult Group Int'l CAT $2.15 $334m Jun NM >100x 86.2x 26.8x Empired EPD $0.47 $57m Jun 13.8x 8.3x 5.3x 4.0x Infomedia IFM $0.775 $232m Jun 20.1x 17.6x 8.6x 7.5x Integrated Research IRI $2.81 $461m Jun 26.1x 20.9x 12.1x 10.0x Melbourne IT MLB $2.14 $217m Dec 13.7x 10.5x 7.3x 6.6x PS&C PSZ $0.325 $21m Jun NM 4.9x 6.1x 5.7x Senetas SEN $0.091 $101m Jun 29.7x 16.6x 14.7x 10.5x Smartpay Holdings SMP $0.20 $33m Mar 16.9x 5.7x 6.1x 4.8x Technology One TNE $4.91 $1,570m Sep 32.7x 27.5x 22.8x 19.1x Wisetech Global WTC $5.65 $1,634m Jun 52.5x 38.0x 28.5x 20.5x SOURCE: BELL POTTER SECURITIES ESTIMATES BELL POTTER SECURITIES LIMITED ACN AFSL DISCLAIMER AND DISCLOSURES THIS REPORT MUST BE READ WITH THE DISCLAIMER AND DISCLOSURES ON PAGE 11 THAT FORM PART OF IT. Page 1

2 Contents Key Picks... 3 Company Summaries... 7 Page 2

3 Key Picks We have updated our key picks in the tech sector and these are detailed below. Integrated Research (BUY, PT $3.50) Integrated Research (IR) is a key pick for the following key reasons: Strong outlook: In our view the short to medium term outlook for IR is very good and we forecast strong EPS growth of between 15-25% in each of the next three years (FY17-FY19). The strong forecast growth in FY17 has already been set up by strong EPS growth in 1HFY17 of 24% while the strong forecast growth in FY18 and FY19 is due to an expected high level of renewals (particularly in FY18) as well as the rollout of the Cisco FedRamp contract. CEO departure does not change outlook: The departure of the CEO in February was a surprise to us but we do not believe it changes the outlook for the company. We did have high regard for the CEO but the strong momentum in the business means we did not see any need to change our forecasts when his departure was announced. We note the high calibre of some of the senior managers in IR (e.g. Andre Cuenin and Jason Barker) which gives us confidence the momentum in the business will continue. Protection against Avaya risk: IR has taken provisions against all of its net exposure to Avaya so there is no risk of a write-off if the customer does not pay off its receivable with the company. Rather, there is now upside risk if Avaya does successfully refinance its debt and pays off the amount owing over time. Note Avaya has continued to make payments to IR since it entered Chapter 11 earlier this year so IR appears to have taken a very conservative approach by providing against all of the net exposure. CEO appointment could be a catalyst: We expect the process of appointing a new CEO will take three to four months and so, in theory, a new CEO could be announced before 30 June. We see this as a potential catalyst for the stock given it will provide some clarity and certainty over who will take the company forward even though the momentum in the business means there is already a strong growth trajectory in place. Overall view: The sudden departure of the CEO offset the impact of a strong 1HFY17 result and the stock has traded sideways since the result. The appointment of a new CEO could therefore be the catalyst the stock needs given the earnings outlook is unchanged. Avaya emerging from Chapter 11 could also provide another catalyst even though the company has fully provided against its net exposure to the customer. Figure 2 - Financial summary for Integrated Research (@ $2.81 share price) Year end 30 June e 2018e 2019e Total revenue (A$m) EBITDA (A$m) NPAT (A$m) EPS (diluted) (cps) EPS grow th (%) 12% 15% 25% 19% PER (x) Price/CF (x) EV/EBITDA (x) Dividend ( ps) Yield (%) 2.3% 2.3% 3.2% 4.1% ROE (%) 39.1% 38.2% 39.4% 40.5% Franking (%) 58% 70% 75% 75% SOURCE: COMPANY DATA AND BELL POTTER SECURITIES ESTIMATES Page 3

4 Appen (BUY, PT $3.60) Appen is a key pick for the following key reasons: Strong guidance: Appen provided 2017 guidance of mid to high teens growth in EBITDA at the release of its 2016 result last month which was stronger that the 2016 guidance of low double digit earnings growth provided at the release of the 2015 result. The guidance was also stronger than we were expecting we thought Appen would start with low double digit again given the company is unlikely to have the benefit of much higher revenues from Facebook in 2017 as it did in This means the earnings growth in 2017 will likely come from a mix of revenue growth and margin expansion which is a better outcome that the earnings growth in 2016 which came from strong revenue growth but was offset by margin decline. Potential for guidance upgrade: Despite the better than expected 2017 guidance we still see potential for an upgrade to the guidance sometime around the AGM or 1H2017 result. In each of the last two years Appen has upgraded its guidance at or around the AGM and then also at the interim result and this has coincided with a successful renewal of contracts with key clients (e.g. Facebook and Microsoft) and an increasing order book. We see potential for the same to occur this year though, given the stronger than expected guidance at the start of the year, we would only expect one potential upgrade in Attractive value: In our view Appen deserves to trade on a PE ratio between 20-25x and at present the stock is trading at the bottom end of that range based on our 2017 forecasts. The obvious potential catalyst to drive a re-rating of the PE ratio towards the higher end of the range is an upgrade to the guidance which we believe may occur sometime around mid year. Potential for M&A: Appen had cash of $16.5m at 31 December 2016 and no debt. The company made its first acquisition as a listed company in 2016 when it acquired Mendip Media Group for c.$2.5m. We expect Appen to make more acquisitions going forward and, following a successful first acquisition, we expect some of these to be larger and potentially much larger in size. We also expect any acquisition to be EPS accretive given the ability to partly or wholly fund the acquisition out of cash and/or debt as well as the reasonable multiple of Appen s shares. Overall view: Despite the positive outlook for 2017 the Appen share price has fallen around 10% since the result and in our view the fall is unwarranted given the better than expected guidance. The obvious potential catalyst for the stock is an upgrade to the 2017 guidance which we believe may come around the AGM or at the 1H2017 result. Figure 3 - Financial summary for Appen (@ $2.58 share price) Year end 31 December e 2018e 2019e Total revenue (A$m) EBITDA (A$m) NPAT (A$m) EPS (diluted) (cps) EPS grow th (%) 23% 23% 15% 12% PER (x) Price/CF (x) EV/EBITDA (x) Dividend ( ps) Yield (%) 1.9% 2.3% 2.7% 3.1% ROE (%) 29.6% 28.4% 26.5% 24.7% Franking (%) 100.0% 100.0% 100.0% 100.0% SOURCE: COMPANY DATA AND BELL POTTER SECURITIES ESTIMATES Page 4

5 Adacel Technologies (BUY, PT $3.25) Adacel Technologies (Adacel) is a key pick for the following key reasons: Share price fall looks overdone: The Adacel share price has fallen by >30% over the past several months and the key driver of this fall appears to have been a relatively weak 1HFY17 result which was driven by a fall in Systems sales relative to the pcp. The outlook now, however, is for a rebound in Systems sales and a relatively strong 2HFY17 result which, according to the company s guidance, will help drive growth in pre-tax profit of 10% or more for the full year. The large fall in the share price does not, therefore, seem consistent with the year-on-year double digit profit growth in FY17. Recurring services revenue now 60-65% of total: We do recognise that the lumpiness in Systems sales is of some concern and can cause earnings volatility between results. But we also highlight that Systems sales are now only between 35-40% of total sales and the remaining 60-65% is Services revenue which is recurring and is expected to grow. We do therefore expect the lumpiness in Systems sales to become less of an issue going forward and for there to be less earnings volatility between results. Attractive value: The fall in the share price has reduced the FY17 PE ratio from c.25x to c.18x based on our forecasts which are modestly ahead of the guidance. In our view this is an attractive PE ratio for a global software company with a leading market position and a relatively high level of recurring revenue. Potential catalysts: We see some potential catalysts for Adacel over the next few months including contract wins (e.g. French Territories and US Navy) and a reiteration of the guidance. Note we do not believe the French Territories and/or US Navy contracts are necessary to achieve the guidance thought winning one or both would make it easier to achieve and potentially exceed. Potential capital management: Adacel had cash of c.$15m at 31 December 2016 and the company has no debt. Adacel has indicated it would like to make acquisitions if it is able to find suitable companies with complementary software and/or services at a reasonable price but has also indicated that, in the absence of any acquisitions, it will consider various capital management initiatives. Overall view: The fall in the share price looks overdone given the guidance of double digit growth for the full year but there appears to be some doubt in the market this will be achieved following the relatively weak 1HFY17 result. The reiteration of the FY17 guidance towards financial year end is therefore a key potential catalyst for the stock which may coincide with contract wins which could also serve as catalysts. Figure 4 - Financial summary for Adacel Technologies (@ $2.37 share price) Year end 30 June e 2018e 2019e Total revenue (A$m) EBITDA (A$m) NPAT (A$m) EPS (diluted) (cps) EPS grow th (%) 135% 11% 18% 11% PER (x) Price/CF (x) EV/EBITDA (x) Dividend ( ps) Yield (%) 1.3% 1.9% 2.6% 3.4% ROE (%) 45.5% 35.5% 31.7% 28.0% Franking (%) 0% 0% 0% 0% SOURCE: COMPANY DATA AND BELL POTTER SECURITIES ESTIMATES Page 5

6 Infomedia (BUY, PT $0.90) Infomedia is a key pick for the following key reasons: Turnaround continues: Infomedia has now won two key contracts Nissan Global and Nissan Europe since the loss of the JLR contract early last calendar year. This suggests the loss of the JLR contract was an anomaly and is unlikely to be repeated. The two new contracts offset the financial impact of the loss of the JLR contract particularly the EPC contract with Nissan globally albeit there is a timing difference of around a year. Pipeline remains strong: Infomedia said in its 1HFY17 result presentation that there is a solid pipeline in all products and regions and it also expected the contract sales momentum to continue. We therefore expect more contract wins going forward though these may not necessarily be of a size that warrant an ASX announcement. But we expect these contract wins to help drive top and bottom line growth over the medium term and supplement the large contract rollouts with Nissan globally and in Europe. Attractive value: The Infomedia share price rallied up to around $0.80 on the back of a better than expected 1HFY17 result but has subsequently dropped back to around $0.75. We believe the stock represents value at current levels given the FY17 PE ratio is back around 20x and drops to around 17x based on our FY18 forecasts. Note our FY17 forecasts are consistent with the guidance. Timing difference may provide opportunity: The only caveat on our key pick rating of Infomedia is that, as mentioned, there is a timing difference of about a year between the roll off of the JLR contract and the rollout of the Nissan Global contract. This timing difference will be most evident in the 1HFY18 result when the former is gathering pace and nearing its completion while the latter is only in its infancy. This will likely cause some weakness in the 1HFY18 result relative to 1HFY17 and we expect growth to only be modest at best. This may cause some weakness in the share price but we would view this as an opportunity given we expect the growth to be much better in 2HFY18 as the contract rollout for Nissan Global gathers steam. Overall view: Looks value again on an FY17 PE ratio of c.20x with the recent pullback in the share price after the rally which occurred on the back of a better than expected 1HFY17 result. Our confidence in the medium term outlook has increased with the winning of the Nissan Global contract which effectively offsets the loss of the JLR contract and the likelihood of more contract wins to come given the solid pipeline. Potential for some weakness in 1HFY18 result is the only area of concern but this is more due to a timing difference so does not change our view on the outlook for the company. Figure 5 - Financial summary for Infomedia (@ $0.775 share price) Year end 30 June e 2018e 2019e Total revenue (A$m) EBITDA (A$m) NPAT (A$m) EPS (diluted) (cps) EPS grow th (%) -23% 16% 14% 17% PER (x) Price/CF (x) EV/EBITDA (x) Dividend ( ps) Yield (%) 3.4% 3.8% 4.2% 4.8% ROE (%) 23.4% 24.8% 25.8% 27.3% Franking (%) 38% 100% 100% 100% SOURCE: COMPANY DATA AND BELL POTTER SECURITIES ESTIMATES Page 6

7 Company Summaries Integrated Research (IRI) Company Description Integrated Research (IR) is a leading global provider of performance management software for business-critical computing environments. The core product of the company Prognosis is an integrated suite of products that provides availability and performance management, diagnostics and insight for systems including Unified Communications, Payments and IT Infrastructure. Prognosis is used by many of the world s largest organisations including major stock exchanges, banks and telecommunication companies. Investment Thesis We maintain our BUY recommendation on IR. Our investment thesis is based on: Valuation: Our 12 month price target for IR is $3.50. The PT is generated from a blend of three valuation methodologies we apply to the company: PE ratio, EV/EBITDA and DCF. The price target is a 25% premium to the current share price and the total expected return (which includes the forecast dividend yield) is 27%. High level of recurring revenue: IR generates most of its revenue through licence and maintenance fees which combined represent >90% total revenue. The maintenance fees (c.31% of total revenue) are by nature highly recurring but the licence fees (c.55% of total revenue) are also highly recurring as the licences are typically sold on a fixed term and the company has a very high renewal rate (>95%). Tier one global customers: IR is a truly global company (>95% of total revenue is generated outside of Australia) and has a tier one customer base including many of the world s largest organisations. Companies that use IR s software include ten of the top ten US banks, six of the top ten automotive companies, six of the ten biggest telcos, and six of the top ten financial services companies globally. Key Risks Key downside risks to our estimates and valuation include (but are not limited to): Technology risk: IR is a technology company that designs, develops and distributes software. The risk with any such company is that the software does not perform to the clients expectations or is flawed in some way. Such an occurrence would negatively impact the company s reputation and provide downside risk to our estimates. Competition risk: IR operates in a competitive market and there is the risk of aggressive or irrational behaviour from one or more competitors who could force down prices and reduce operating margins across the entire market. Key product risk: IR has one key product Prognosis and so has key product risk if demand or the outlook for that product changes or, worse, the product becomes superseded or obsolete. IR aims to mitigate this risk by regularly updating the product and adding new functionality and features to the software (e.g. mobile access and interface, cloud-based delivery, etc.) as well as developing various versions for different platforms, vendors and applications. Page 7

8 Appen (APX) Company Description Appen Ltd (Appen) is a leading global provider of language technology data and services to enterprise and government customers. The company has a unique combination of proprietary technology, experienced management and an extensive network of native language evaluators. The company has two operating divisions: Content Relevance: Provides smart data to increase online discovery and search relevance of global search engines and e-commerce and social media platforms; and Language Resources: Provides training data for speech-recognition technologies in devices such as mobile phones, computer games and TV consoles. Appen was established in 1996 and has a long track record of revenue growth and strong margins. The company currently has circa 280 staff across offices in Australia, the US, the UK, China and the Philippines. Investment Thesis We maintain our BUY recommendation on Appen. Our investment thesis is based on: Valuation: Our 12 month price target on Appen is $3.60. The PT is generated from a blend of three valuation methodologies we apply to the company: PE ratio, EV/EBITDA and DCF. The price target is a 40% premium to the current share price and the total expected return (which includes the forecast dividend yield) is 42%. Long track record: Appen was established in 1996 and has a long track record of revenue growth and strong margins. In 2016 the company recorded revenue and EBITDA growth of 34% and 24% respectively. Strong customer relationships: The key competitive advantage of Appen is the longstanding relationships it has with many of its customers. For instance, Appen has been working with Microsoft Research for over 21 consecutive years. Further, the majority of revenue is from repeat customers as they update and upgrade their products. Key Risks Key downside risks to our estimates and valuation include (but are not limited to): Concentration of customer base: The customer base of Appen is relatively concentrated with the largest five clients representing c.73% of 2015 revenue. The loss of any one of these large clients or a meaningful shortfall in the forecast level of revenue from one or more would negatively impact the financial performance of the company. Unpredictability of revenue model: Appen generates most of its revenue from individual projects rather than long term contracts. The award of these projects can be lumpy and unpredictable and there is also no guarantee a customer will re-engage with Appen on future projects. Level of competition: Appen competes in the global Language Services industry which is competitive but fragmented with around 18,000 service providers. An increase in the level of competition through consolidation or vertical integration could negatively impact the financial performance of the company. Page 8

9 Adacel Technologies (ADA) Company Description Adacel Technologies (Adacel) is a leading global provider of simulation and control systems for the civil aviation and defence sectors. The core products of the company are air traffic control (ATC) simulation systems (where it is the leading global provider) and air traffic management (ATM) automation systems (where it is more of a niche provider). Adacel has also developed speech recognition technology which it uses in its ATC simulation systems as well as other products. Investment Thesis We maintain our BUY recommendation on Adacel. Our investment thesis is based on: Valuation: Our 12 month price target on Adacel is $3.25. The PT is generated from a blend of three valuation methodologies we apply to the company: PE ratio, EV/EBITDA and DCF. The price target is a 37% premium to the current share price and the total expected return (which includes the forecast dividend yield) is 39%. Diversified with a high level of recurring revenue: Adacel has undergone a significant transformation over the past five years and today is a much more diversified company with less volatility in earnings and improved visibility. The company generates revenue from two key areas systems and services where the latter is recurring and underpinned by long term contracts. The current split between systems and services (i.e. non-recurring and recurring) is approximately 35%/65%. High barriers to entry: Adacel has a large installed base of both ATC simulation and ATM automation systems and, once installed, these systems tend to be in service for years or more. Over this time the systems need maintenance and upgrades and, because Adacel owns the source code behind the systems, it is the only one that can provide these services. The large installed base of systems is therefore a barrier to entry for new entrants and also provides Adacel with long term recurring revenue. Key Risks Key downside risks to our estimates and valuation include (but are not limited to): Lumpiness in revenue: Adacel generates around 35% of its revenue from systems sales which are non-recurring and can cause lumpiness in revenue. Adacel has attempted to reduce the lumpiness of revenue in the business by increasing the level of recurring services revenue but systems sales will always remain a key part of the business and so there will always be some level of non-recurring revenue. Customer concentration risk: Adacel generates more than 50% of its revenue from three key customers: FAA, the US Department of Defence and Leidos. All three have been long term customers of Adacel (i.e. >10 years) and all have recently signed new long term contracts with the company. There is still risk, however, given the contracts tend to have multiple one-year options and the customers or contracts are government funded and so there is risk of cuts or volatility in funding levels. Key product risk: Adacel has two key products ATC simulation systems and ATM automation systems and most of its services revenue is derived from the sale and support of these two products. There is risk, therefore, if the demand or outlook for one or both of these products changes. Page 9

10 Infomedia (IFM) Company Description Infomedia is a leading provider of software solutions to the parts and service sector of the global automotive industry. The key products of the company are online parts selling systems and sophisticated service selling systems. The company also provides data analysis and information research for the automotive and lubricant industries. Investment Thesis We maintain our BUY recommendation on Infomedia. Our investment thesis is based on: $0.90 price target: Our 12 month price target on Infomedia is $0.90. The PT is generated from a blend of three valuation methodologies we apply to the company: PE ratio, EV/EBITDA and DCF. The price target is a 16% premium to the current share price and the total expected return (which includes the forecast dividend yield) is 20%. One mature product, one immature product: Infomedia has one mature product Microcat which is used by a large number of customers and generates approximately 75% of the company s revenue. Infomedia also has one immature product Superservice which is gaining traction in a fragmented market and generates approximately 20% of the company s revenue. The outlook is for continued modest growth in the mature product and potentially strong growth in the immature product. High level of recurring revenue: All of Infomedia s products are sold on a subscription basis so almost all of the revenue is recurring. Infomedia is currently in the process of moving towards reporting monthly recurring revenue but has yet to disclose what the amount is. We estimate that around 95% of total revenue is recurring and this easily exceeds the cost base of the company. Key Risks Key downside risks to our estimates and valuation include (but are not limited to): Loss of key licence agreements: Continued access to OEM parts information is integral to several of Infomedia s product lines. Loss of this access through the loss of one or more key licence agreements would therefore have an adverse impact on one or more of the company s product lines and negatively impact the financial performance. Infomedia attempts to mitigate this risk by managing key account relationships, continually investing in its products and focusing on customer service. Loss of key customers: The relatively concentrated motor manufacturing industry means there is a degree of customer and revenue concentration for Infomedia. The loss of a key customer, therefore, would have an adverse impact on the company s revenue and negatively impact the financial performance. Infomedia attempts to mitigate this risk by, again, managing key account relationships, focusing on identification of new OEM licence agreements and participating in industry forums. Product obsolescence or substitution: Infomedia operates in a competitive market and a risk is that its products do not keep up with developments in market needs or competitors (including OEMs) may develop superior products. Either outcome would have an adverse impact on demand for the company s products and negatively impact the financial performance. Infomedia attempts to mitigate this risk by closely monitoring market developments, direction and OEM strategies and continually investing in R&D. Page 10

11 Recommendation structure Buy: Expect >15% total return on a 12 month view. For stocks regarded as Speculative a return of >30% is expected. Research Team Staff Member TS Lim Sam Haddad Jonathon Higgins Title/Sector Head of Research Phone tslim shaddad jhiggins Hold: Expect total return between -5% Chris Savage csavage and 15% on a 12 month view Jonathan Snape jsnape Sell: Expect <-5% total return on a 12 month view Tim Piper John Hester Tanushree Jain Healthcare Healthcare/Biotech tpiper jhester tnjain Speculative Investments are either start-up enterprises with nil or only prospective operations or recently commenced operations with only forecast cash flows, or companies that have commenced operations or have been in operation for some time but have only forecast cash flows and/or a stressed balance sheet. Financials TS Lim Lafitani Sotiriou Resources Peter Arden David Coates Quantitative James Filius Banks/Regionals Diversified Resources Resources Associate Analyst tslim lsotiriou parden dcoates jfilius Such investments may carry an exceptionally high level of capital risk and volatility of returns. Bell Potter Securities Limited ACN Level 38, Aurora Place 88 Phillip Street, Sydney 2000 Telephone The following may affect your legal rights. Important Disclaimer: This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. In the USA and the UK this research is only for institutional investors. It is not for release, publication or distribution in whole or in part to any persons in the two specified countries. In Hong Kong this research is being distributed by Bell Potter Securities (HK) Limited which is licensed and regulated by the Securities and Futures Commission, Hong Kong. This is general investment advice only and does not constitute personal advice to any person. Because this document has been prepared without consideration of any specific client s financial situation, particular needs and investment objectives ( relevant personal circumstances ), a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the representative of such licensee, who has provided you with this report by arraignment with Bell Potter Securities Limited) should be made aware of your relevant personal circumstances and consulted before any investment decision is made on the basis of this document. While this document is based on information from sources which are considered reliable, Bell Potter Securities Limited has not verified independently the information contained in the document and Bell Potter Securities Limited and its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility for updating any advice, views opinions, or recommendations contained in this document or for correcting any error or omission which may become apparent after the document has been issued. Except insofar as liability under any statute cannot be excluded. Bell Potter Limited and its directors, employees and consultants do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this document or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this document or any other person. Disclosure of interest: Bell Potter Securities Limited, its employees, consultants and its associates within the meaning of Chapter 7 of the Corporations Law may receive commissions, underwriting and management fees from transactions involving securities referred to in this document (which its representatives may directly share) and may from time to time hold interests in the securities referred to in this document. Bell Potter Securities acted as co-manager of WTC s IPO in April 2016 and received fees for that service. ANALYST CERTIFICATION Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. Page 11