Weekly Review. Outlook. Pakistan Weekly Update StockSmart. AKD Equity Research / Pakistan. 11 January AKD Research. Index & Volume Chart

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1 Jan-19 AKD Equity Research / Pakistan AKD Research research@akdsecurities.net Indices KSE-100 KSE-30 This week 39,049 18,615 Last week 37,547 17,595 Change 4.00% 5.80% Indices KMI-30 Allshare This week 65,911 28,739 Last week 62,179 28,000 Mkt Cap. PkRbn bn This week 7, Last week 7, Avg. Daily Turnover ('mn shares) This week Last week Change 29.7% Weekly Review Index propelled during the week to close at 39,049pts (+4.0%WoW) at the back of, i) visit of Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan, ii) report released by Fitch stating that SBP can keep rates at 10% for the rest of FY19, and iii) FATF showing satisfaction over the steps taken by Pakistan to avoid black-list which proved to be a breath of fresh air against the negative developments over the issue in last 6-8 months. The visit of Abu Dhabi Crown Prince put stamp on a 6bn package for Pakistan including a 3bn deferred oil facility which caused an adrenaline rush as the market increased by 1015pts on the first day of the week. Additionally, upward movement in oil, WTI increased by ~8.7% during the week, provided support to the oil stocks. Other news flow impacting the market during the week included: i) the PTI-led government deciding to slap additional taxes for the purpose of achieving import compression and enhance revenue base, and ii) Govt. notifying ban on import of furnace oil asking refineries to enter into contracts with IPPs for furnace oil sales. Trading volumes for the week increased by 29.7%WoW as market activity was led by Mutual funds (net buy 6.72mn) where insurance companies continued to offload their equity portfolio (net sell 3.12mn). Performance wise, top gainers in AKD Universe were: i) PPL (+14.5%WoW), ii) POL (+12.1%WoW), iii) FFBL (+11.1%WoW), iv) GWLC (+10.1% WoW), and v) OGDC (+9.4%WoW) while KAPCO (-2.2%WoW) turned out to be the only negative performer in our universe. Index & Volume Chart Universe Gainers & Losers Top-5 Volume Leaders Symbol Volume (mn) KEL : PAEL : TRG : SSGC : BOP : (share mn) (Index) , , , , , ,000 Volume (LHS) KSE-100 Index Source: PSX & AKD Research (Shrs'000) 180, , , , ,000 80,000 60,000 40,000 20,000 - Source: PSX & AKD Research Outlook 39,053 38,562 38,922 39,090 39,049 7-Jan 8-Jan 9-Jan 10-Jan 11-Jan Ready Volume (LHS) KSE100 Index (RHS) (Index) 39,200 39,100 39,000 38,900 38,800 38,700 38,600 38,500 38,400 38,300 38, % 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% Moving forward, a keen eye should be kept on the indications of an IMF program where an early announcement will provide a serious boost to the market and mini budget-related news flow. The govt. is planning to introduce a mini-budget in a bid to meet the revenue requirement likely to be announced in the latter part of next week. However, adverse developments over the on-going cases involving political bigwigs of the country can keep the market under pressure. We advise investors to play defensive, with exposure tilted towards macro hedged defensive plays. PPL POL FFBL GWLC OGDC PTC PIOC APL CHCC KAPCO Important disclosures Important disclosures including investment banking relationships and analyst certification at end of this report. AKD Securities does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision. AKD Securities TREC Holder & Registered Broker Pakistan Stock Exchange REP-019 Find AKD research on Bloomberg (AKDS<GO>), firstcall.com and Reuters Knowledge Copyright All rights reserved. The information provided on this document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject AKD Securities or its affiliates to any registration requirement within such jurisdiction or country. Neither the information, nor any opinion contained in this document constitutes a solicitation or offer by AKD Securities or its affiliates to buy or sell any securities or provide any investment advice or service. AKD Securities does not warrant the accuracy of the information provided herein.

2 Jan 11, ,340 39,260 39,180 39,100 39,020 38,940 38,860 38,780 38,700 Jan 10, ,270 39,230 39,190 39,150 39,110 39,070 39,030 38,990 38,950 Jan 09, 2019 Jan 08, :15 9:39 10:02 10:26 10:49 11:13 11:36 12:00 12:23 12:47 13:10 13:33 13:57 14:20 14:44 15:07 15:31 15:54 16:18 9:30 9:54 10:19 10:44 11:08 11:33 11:58 12:22 12:47 13:12 13:36 14:01 14:26 14:50 15:15 39,340 39,260 39,180 39,100 39,020 38,940 38,860 38,780 38,700 39,220 39,140 39,060 38,980 38,900 38,820 38,740 38,660 38,580 38,500 9:30 9:54 10:17 10:41 11:04 11:28 11:51 12:15 12:38 13:02 13:25 13:48 14:12 14:35 14:59 15:22 9:30 9:54 10:19 10:44 11:08 11:33 11:58 12:22 12:47 13:12 13:36 14:01 14:26 14:50 15:15 9:30 9:53 10:17 10:40 11:04 11:27 11:51 12:14 12:38 13:01 13:25 13:48 14:12 14:35 14:59 15:22 Jan 07, ,840 38,660 38,480 38,300 38,120 37,940 37,760 37,580 37,400 Source: PSX & AKD Research This Week s Daily Reports Pakistan Autos: For sales, CY18 ends on a sugar high, (AKD Daily, Jan 11, 2019) Dec 18 total industry sales of 19,915 vehicles (+10%MoM), consisting of 16,141 passenger cars (+5%MoM) and 3,304 LCVs (+52%MoM/+7%YoY), wrapping up a year of drastic operational shifts and coalescing headwinds CY18 total industry sales of 264,091 units are constituted by 217,392 passenger vehicles (+7%YoY), 37,544 LCVs (+3.1%YoY), 8,175 trucks (-3.2%YoY) and 980 bus units (+14%YoY), where PC sales were reliant on hefty growth in low-mid segment vehicle market (800/1000/1300+ segments moves +8/+21/-5%YoY) Amongst major OEMs, PSMC/INDU/HCAR sold 138,003/65,565/50,992 vehicles during the period, rising +6/+7/+8%YoY, implying annual plant utilization of 92/131/102% vs. 87/123/95% for CY17, as quarterly sales data was evenly split throughout the year, deviating from seasonal trends, as the sector dealt with heightened adversity (PkR devaluation, ban on sales to non-filers) as the year unfolded OEMs were faced with tough choices in CY18, where we saw their response relegated to the sphere of pricing (INDU/PSMC/HCAR hiked prices by 19.4/17.4/18.9%YoY) and minor variant upgrades (automatic Cultus launched, manual BRV, 2.8L Fortuner) which have to be augmented with new model launches in CY19 to keep growth momentum intact Pakistan Strategy: US-Pak ties take a turn for the better, (AKD Daily, Jan 10, 2019) Political transitions remain flashpoints for Pak-US ties, where the current occupant of the White House has a unique, overtly transactional approach to foreign relations (USMCA negotiations, US-China relations, Khashoggi incident) which seem to be turning favorable towards Pakistan Awaiting clarity on key measures undertaken for improved relations, we see a range of pro-pakistan statements from US policymakers comingled with developing security dynamics on the ground in Afghanistan, where President Trump has set out to fulfil a campaign promise, US troop withdrawal from Afghanistan (longest US deployment in history) Detailing a timeline of the fluid dynamics prevailing in Pak-US ties since the Trump presidency which senior US administration officials and the President have employed in dealing with Pakistan, where we believe our regional clout (improving ties with Iran, Russia, Afghanistan, China) makes us increasingly relevant in maintaining status quo Investors are likely to disregard rhetorical developments (from both sides) in favor of concrete actions, where key litmus tests include developments surrounding the IMF, FATF and any possible Washington-Islamabad summit delivering additional catalysts for FDI, FPI, and non-binding arrangements Pakistan Energy: RFO s future; of lemons & lemonade, (AKD Daily, Jan 09, 2019) Recent developments surrounding the procurement (ban on imports imposed Dec 18), storage (proposed storage/hospitality arrangements with IPPs) and refining (allowance of exports with possible freight concessions) of RFO has ruffled mid-stream petroleum dynamics. At first glance, on the basis of prevailing negative cracks between HSFO 180CST (global benchmark for FO pricing domestically) when matched by the likelihood of diminished spreads continuing (global demand for FO receding, international regulations) make for hampered profitability, even without maritime freight or handling charges. Taking a comprehensive view of prevailing refinery production slates, refining yields for major products and FO in particular between major refiners highlighting players being better off in terms of cutting lower FO refining yields, all the while From a global context, we were hard-pressed to find regional markets where FO im- 2

3 This Week s Daily Reports ports are expected to climb (Bangladesh and Saudi Arabia), further signifying the cratering global landscape of FO fuel demand. In this backdrop, selective preference for downstream players with stable market shares (APL where 25% of total FO sales are to Attock Gen) and HUBC (geographical importance if export storage plans are enacted) are advised. Pakistan Economy: Another fiscal adjustment at the doorstep, (AKD Daily, Jan 08, 2018) Policy action and material developments have centered on the external side, where we expect the GoP to now shift focus on the fiscal side (possibly nudged by IMF negotiations), with another mini-budget on the horizon. The last round of fiscal adjustment (i.e. mini-budget in Sep 18, 2.1% of GDP) seems insufficient, considering interest and exchange rate have greatly adjusted since. Also, the latest data read on tax collection suggests revenue shortfall of PkR111bn in 5MFY19, signifying the need for sturdier fiscal measures. Accommodating the last fiscal adjustment and current macro-backdrop, our estimates for FY19F fiscal deficit comes at 6.3% of GDP, where debt servicing over-run (37.5% higher than budgeted) remains a major drag on fiscal discipline. With our estimates suggesting a primary deficit of 0.6% of GDP, we expect the next leg of fiscal adjustment would be in the range of % of GDP (PkR bn). Key fiscal measures likely to be part of upcoming adjustment include i) rationalization of GST & PL on POL products, ii) restoration of GST on cellular services (subject to SC approval), iii) further FED on cigarettes possibly on tier-ii category, iv) rollback of special exemptions awarded under several SROs, and v) withdrawal of untargeted subsidies. Pakistan Cement: North continues to be a drag,(akd Daily, Jan 07, 2019) Local sales for Dec 18 decreased by 1.4%YoY with North, witnessing a decline of 7.7% YoY in local sales, becoming a drag due to slow disbursement of PSDP and political headwinds taking a toll while South, on the other hand, has posted an increase of 15.2%YoY on the back of strong private sector demand. Exports have saved the day for South with an increase of 242.8%YoY for 1HFY18 as clinker demand from Bangladesh and Sri Lanka helped stack up the numbers though at the cost of lower margins. North lagged here as well with a decline of 17.9%YoY for 1HFY19. Overall, total cement sales for 1HFY19 are up by 3.9%YoY. Moving forward, North based players are going to face a tough year as 9.4mn tons of capacity is expected to come online in CY19 while demand slowdown is going to aggravate the situations. On the other hand, exports are expected to keep things calm in south. We have an underweight stance on the sector with FCCL (Dec 18TP: 19.7/sh) as top sell. 3

4 Jan-19 Sep-18 Regional Valuations (2019) EPS Growth PE(x) Pakistan 18.82% 7.78 Indonesia 8.42% Malaysia 11.71% Philippines 6.48% Vitenam 12.58% India 24.71% China 12.96% 8.33 % ROE Divd Yld Pakistan 15.8% 7.80 Indonesia Malaysia Philippines Vitenam India China Source: AKD Research & Bloomberg Major World Indices Performance Country Bloomberg Code 11-Jan-19 4-Jan-19 WoW CYTD Pakistan KSE100 Index 39,049 37, % 5.3% Srilanka CSEALL Index 5,967 6, % -1.4% Thailand SET Index 1,597 1, % 2.1% Indonesia JCI Index 6,361 6, % 2.7% Malaysia FBMKLCI Index 1,683 1, % -0.4% Philippines PCOMP Index 7,904 7, % 5.9% Vietnam VNINDEX Index % 1.1% Hong Kong HSI Index 26,667 25, % 3.2% Singapore FSSTI Index 3,199 3, % 4.2% Brazil IBX Index 38,905 38, % 6.6% Russia RTSSTD Index 16,346 16, % 3.5% India SENSEX Index 36,010 35, % -0.2% S&P SPX Index 2,597 2, % 3.6% DJIA INDU Index 24,002 23, % 2.9% UK UKX Index 6,926 6, % 2.9% Germany DAX Index 10,858 10, % 2.8% Qatar DSM Index 10,658 10, % 3.5% Abu Dhabi ADSMI Index 4,962 4, % 1.0% Dubai DFMGI Index 2,546 2, % 0.6% Kuwait KWSEIDX Index 6,633 6, % 0.0% Oman MSM30 Index 4,311 4, % -0.3% Saudi Arabia SASEIDX Index 8,210 7, % 4.9% MSCI EM MXEF Index % 3.4% MSCI FM MXFM Index % 3.0% PkR/ Trend TRJ-CRB Index Source: Bloomberg Source: Bloomberg International Major Currencies Source: Bloomberg SPOT 11-Jan-19 4-Jan-19 Chg +/- WoW CYTD Dollar Index % -0.95% USD/PkR % -0.01% USD/JPY % -1.27% EUR/USD % 0.58% GBP/USD % 0.48% AUD/USD % 2.58% NZD/USD % 1.80% CHF/USD % 0.04% CAD/USD % -3.18% USD/KRW 1,116 1, % 0.05% CNY/USD % -1.97% Source: Bloomberg Commodities SPOT Units 11-Jan-19 4-Jan-19 WoW CYTD TRJ-CRB Points % 5.18% Nymex (WTI) /bbl % 16.27% ICE Brent /bbl % 14.95% N. Gas Henry Hub /Mmbtu % -7.45% Cotton USd/Pound % 2.23% Gold /Tr.Oz % 0.84% Sliver /Tr.Oz % 1.39% Copper /MT % -0.69% Platinum /Oz % 3.70% Coal /MT % -5.19% Source: Bloomberg 4

5 Jan-19 Dec-17 Sep-18 Chart Bank Earnings Yield vs. T-Bill (12M) Differential Advance to Decline Ratio (%) Sep-18 Jan-19 Sep-18 Jan-19 FIPI Flows for the week LIPI Flows for the week ('000) 1,500 1, M.Funds, 6.72 Prop. Trading, , Others, (500) (1,000) (89) (496) (605) 7-Jan-19 8-Jan-19 9-Jan Jan Jan-19 - (2.00) (4.00) (6.00) Ind., (5.21) Co., (4.98) Bank/DFI, (3.52) NBFC, (0.08) Ins, (3.12) AKD Universe vs. KSE-100 Index KSE-100 vs. MSCI-EM & MSCI-FM 17% 12% 7% 2% 10% 5% 0% KSE100 MSCI EM MSCI FM -3% -5% -8% -10% -13% -18% -23% -15% -20% -25% KSE-All Share Index AKD Universe 5

6 Jul-07 Jun-08 Jun-09 May-10 May-11 Apr-12 Apr-13 Mar-14 Mar-15 Feb-16 Jan-17 Jul-07 Jun-08 Jun-09 May-10 May-11 Apr-12 Apr-13 Mar-14 Mar-15 Feb-16 Jan-17 AKD Universe Valuations 11-Jan F 2019F 2020F EPS (PkR) EPS chg (%) 1.46 (10.15) EPS chg (%) ex-e&p (22.28) (3.13) Book Value per Share (PkR) Payout (%) Valuations Price to Earnings (x) PER (ex-e&p) (x) Price to Book (x) Price to CF (x) Earnings Yield (%) Dividend Yield (%) EV / EBITDA (x) Profitability Return on Equity (%) Return on Assets (%) Chg in Sales (%) (16.06) Gross Margin (%) Operating Margin (%) Net Margin (%) Source: AKD Research Market PER Chart 2019 (x) Market P/BVS Chart 2019 (x) Source: AKD Research 6

7 AKD Universe Active Coverage Cluster s Valuations Stock Symbol Price TP Stance EPS(PkR) PE(x) PB(x) DY(%) UR Under Review (PkR) (PkR) 17 18F 19F 17 18F 19F 17 18F 19F 17 18F 19F Automobile and Parts Indus Motors INDU 1, , Buy Pak Suzuki Motors PSMC Buy Cements DG Khan Cement DGKC Buy Lucky Cement LUCK Buy Maple Leaf Cement Factory MLCF Buy Fauji Cement Company Ltd. FCCL Sell Pioneer Cement Limited PIOC Sell Cherat Cement Co Limited CHCC Sell Gharibwal Cement Ltd GWLC Buy Cable & Electrical Goods Pak Elektron Ltd PAEL Buy Engineering Amreli Steels Ltd. ASTL Buy Fertilizers Engro Corporation ENGRO Neutral Engro Fertilizers Limited EFERT Sell Fauji Fert. Bin Qasim Ltd. FFBL Sell Fauji Fertilizer Company FFC Sell Fatima Fertilizer FATIMA Sell Food Producers Engro Foods Limited EFOODS Sell Oil & Gas Oil & Gas Development Co. OGDC Buy Pak Oilfields POL Sell Pakistan Petroleum PPL Buy Hascol Petroleum HASCOL Buy (1.55) (96.90) Attock Petroleum APL Neutral Pakistan State Oil PSO Buy Power Hub Power Co. HUBC Buy K-Electric Co. KEL 5.82 UR UR UR UR UR UR UR UR UR UR UR UR UR UR Kot Addu Power Company KAPCO Sell Personal Goods Nishat Mills NML Buy Nishat Chunian Ltd. NCL Neutral Banks Allied Bank Limited ABL Neutral Bank AlFalah BAFL Sell Habib Bank Limited HBL Neutral MCB Bank Limited MCB Buy National Bank of Pakistan NBP Buy United Bank Ltd UBL Neutral Source: AKD Research 7

8 AKD Universe Coverage Cluster s Performance S toc ks S ymbol P ric e Absolute P e rforma nc e (%) 1 Y e a r 1 Y e a r 11- Ja n- 19 1M 3M 6M 12 M CYTD High Low KS E Inde x 3 9, , , Automobile a nd P a rts Indus Motors INDU Pak Suzuki Motors PSMC Ce me nts DG Khan Cement DGKC Lucky Cement LUCK Maple Leaf Cement Factory MLCF Fauji Cement Company Ltd. FCCL Pioneer Cement Limited PIOC Cherat Cement Limited CHCC Gharibwal Cement Limited GWLC Engine e ring Amreli Steel Ltd ASTL Fe rtilize rs Dawood Hercules DAWH Engro Fertilizers Ltd. EFERT Engro Chemical ENGRO Fatima Fertilizer FATIMA Fauji Fert. Bin Qasim Ltd. FFBL Fauji Fertilizer Company FFC Food P roduc e rs Engro Foods Limited EFOODS Ca ble & Ele c tric a l Goods Pak Elektron Limited PAEL Oil & Ga s Oil & Gas Development Co. OGDC Pak Oilfields POL Pakistan Petroleum Ltd. PPL Pakistan State Oil PSO Attock Petroleum Ltd. APL Hascol Petroleum HASCOL P owe r Hub Power Co. HUBC K- Electric Limited KEL Kot Addu Power Company KAPCO P e rsona l Goods Nisaht (Chunian) Ltd. NCL Nishat Mills NML Ba nks Allied Bank Limited ABL Bank AlFalah BAFL Habib Bank Limited HBL MCB Bank Limited MCB National Bank of Pakistan NBP United Bank Ltd UBL Source: PSX & AKD Research 8

9 Economic Snapshot End Month Data Monetary Rates T-Bills - 3M % T-Bills - 6M % T-Bills - 12M % PIB 10Y % KIBOR 6M % Discount rate % Policy rate % Inflation Headline inflation % Core inflation % Units Dec-17 Sep Food inflation % (0.20) External Indicators Export (PBS) (mn) 1,977 1,971 1,902 2,231 2,133 2, ,646 2,017 1,728 1,903 1,843 Import (PBS) (mn) 4,910 5,607 4,797 5,280 5,066 5, ,838 4,992 4,430 4,841 4,626 Trade Deficit (PBS) (mn) (2,933) (3,636) (2,895) (3,049) (2,933) (3,670) (3,807) (3,192) (2,975) (2,702) (2,938) (2,783) Export (SBP) 2,464 Import (SBP) 5,140 2,111 2, ,334 2,305 2,246 2,266 2,012 4,943 4,949 5,166 2, n.a 5,133 5,493 4,460 3,792 4,717 n.a Trade Deficit (SBP) (2,676) (2,763) (2,275) (2,638) (2,703) (2,900) (3,121) (3,484) (2,373) (1,991) (2,654) n.a 1,639 1,672 1,773 1,651 1,771 1,594 1,929 2,037 1, , ,609 Home Remittances (mn) 1,724 n.a Current Account (mn) (1,256) (1,617) (1,241) (1,237) (1,947) (2,011) (1,976) (2,200) (600) (909) (1,218) Banking Sector Deposits Advances Investments PkR (bn) PkR (bn) PkR (bn) W. A. lending rate % W. A. deposit rate % 12,362 12,002 11,933 12,571 12,277 12,258 13,063 12,551 12,692 13,032 n.a n.a 6,530 6,556 6,629 6,812 6,839 7,046 7,362 7,336 7,426 7,492 n.a n.a 8,542 7,637 8,127 6,853 7,784 6,733 8,179 7,785 6,893 6,677 n.a n.a Spread rate % Public Finance Tax collection PkR (mn) 416, , , , , , , , , , Direct taxes PkR (mn) 188,476 Indirect Taxes PkR (mn) 227,592 Currency Fx Reserves (mn) 95,706 89, ,524 95, , ,441 94,017 71, ,023 n.a n.a 177, , , , , , , , ,781 n.a n.a 20,154 18,957 18,317 17,796 17,540 15,977 16,407 16,891 16,370 14,921 14,016 USDPkR - Interbank PkR/USD n.a n.a n.a 13,996 Source: SBP, PBS & AKD Research 9

10 Analyst Certification We, the AKD Research Team, hereby individually & jointly certify that the views expressed in this research report accurately reflect our personal views about the subject securities and issuers. We also certify that no part of our compensation was, is,or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. We further certify that we do not have any beneficial holding of the specific securities that we have recommendations on in this report. AKD Research Team Analyst Tel no. Coverage Usman Zahid (693) Executive Director Research Hamza Kamal (603) Banking Ali Asghar Poonawala (646) Cable & Electrical, OMCs & Automobiles Umer Farooq (602) Textiles & Steel Shahrukh Saleem (685) Cement Sector Qasim Anwar (680) Technical Analysis Nasir Khan (639) Research Production Tariq Mehmood (643) Library Operations DISCLOSURES & DISCLAIMERS This publication/communication or any portion hereof may not be reprinted, sold or redistributed without the written consent of AKD Securities Limited. has produced this report for private circulation to professional and institutional clients only. The information, opinions and estimates herein are not directed at, or intended for distribution to or use by, any person or entity in any jurisdiction where doing so would be contrary to law or regulation or which would subject to any additional registration or licensing requirement within such jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable and complied by our research department in good faith. Such information has not been independently verified and we make no representation or warranty as to its accuracy, completeness or correctness. Any opinions or estimates herein reflect the judgment of at the date of this publication/ communication and are subject to change at any time without notice. This report is not a solicitation or any offer to buy or sell any of the securities mentioned herein. It is for information purposes only and is not intended to provide professional, investment or any other type of advice or recommendation and does not take into account the particular investment objectives, financial situation or needs of individual recipients. Before acting on any information in this publication/communication, you should consider whether it is suitable for your particular circumstances and, if appropriate, seek professional advice. Neither AKD Securities Limited nor any of its affiliates or any other person connected with the company accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained therein. Subject to any applicable laws and regulations,, its affiliates or group companies or individuals connected with AKD Securities Limited may have used the information contained herein before publication and may have positions in, may from time to time purchase or sell or have a material interest in any of the securities mentioned or related securities or may currently or in future have or have had a relationship with, or may provide or have provided investment banking, capital markets and/or other services to, the entities referred to herein, their advisors and/or any other connected parties. (the company) or persons connected with it may from time to time have an investment banking or other relationship, including but not limited to, the participation or investment in commercial banking transaction (including loans) with some or all of the issuers mentioned therein, either for their own account or the account of their customers. Persons connected with the company may provide corporate finance and other services to the issuer of the securities mentioned herein, including the issuance of options on securities mentioned herein or any related investment and may make a purchase and/or sale of the securities or any related investment from time to time in the open market or otherwise, in each case either as principal or agent. This document is being distributed in the United State solely to "major institutional investors" as defined in Rule 15a-6 under the U.S. Securities Exchange Act of 1934, and may not be furnished to any other person in the United States. Each U.S. person that receives this document by its acceptance hereof represents and agrees that it: is a "major institutional investor", as so defined; and understands the whole document. Any such person wishing to follow-up any of the information should do so by contacting a registered representative of. The securities discussed in this report may not be eligible for sale in some states in the U.S. or in some countries. Any recipient, other than a U.S. recipient that wishes further information should contact the company. This report may not be reproduced, distributed or published, in whole or in part, by any recipient hereof for any purpose. 10