Malaysia Company Guide Version 2 Bloomberg: SKP MK Reuters: SKPR.KL Refer to important disclosures at the end of this report DBS Group Research. Equity 18 Jul 2016 BUY Last Traded Price: RM1.23 (KLCI : 1,668.40) Price Target : RM1.55 (26% upside) (Prev RM1.78) Potential Catalyst: New projects; higher utilisation at Senai, Johor plant Where we differ: Higher cost assumptions in FY17 Analyst Inani ROZIDIN +603 2604 3905 inanirozidin@alliancedbs.com What s New Bags new RM2bn Dyson hairdryer contract RM500m p.a. revenue contribution over 4-years Axes previous RM400m p.a. Dyson vacuum dryer contract due to labour shortages Trim FY17F earnings by 15%; maintain BUY Price Relative 1.7 1.5 1.3 1.1 0.9 0.7 0.5 RM Relative Index 0.3 69 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 (LHS) Relative KLCI INDEX (RHS) Forecasts and Valuation FY Mar (RM m) 2016A 2017F 2018F 2019F Revenue 1,051 1,783 2,354 2,781 EBITDA 125 201 270 328 Pre-tax Profit 105 167 226 279 Net Profit 82.1 129 174 211 Net Pft (Pre Ex.) 82.1 129 174 211 Net Pft Gth (Pre-ex) (%) 94.0 57.5 34.6 21.3 EPS (sen) 7.12 10.3 13.9 16.9 EPS Pre Ex. (sen) 7.12 10.3 13.9 16.9 EPS Gth Pre Ex (%) 51 45 35 21 Diluted EPS (sen) 6.55 10.3 13.9 16.9 Net DPS (sen) 3.56 5.16 6.95 8.43 BV Per Share (sen) 29.4 32.2 39.2 47.6 PE (X) 17.3 11.9 8.9 7.3 PE Pre Ex. (X) 17.3 11.9 8.9 7.3 P/Cash Flow (X) nm 12.0 7.1 6.7 EV/EBITDA (X) 11.2 7.4 5.1 3.9 Net Div Yield (%) 2.9 4.2 5.6 6.9 P/Book Value (X) 4.2 3.8 3.1 2.6 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 33.4 34.8 38.9 38.9 Earnings Rev (%): (15) 0 N/A Consensus EPS (sen): 11.7 13.8 16.5 Other Broker Recs: B: 5 S: 0 H: 1 Source of all data: Company, AllianceDBS, Bloomberg Finance L.P 419 369 319 269 219 169 119 Up and still running Earnings visibility intact despite near-term headwinds. SKPRES has clinched a four-year Dyson contract totalling RM2bn - RM500m p.a. for the manufacturing of hairdryers. However, SKPRES would be foregoing the previous RM400m p.a. contract, for the manufacturing of the V6 cordless vacuum cleaners. The move is to optimize and shift the existing limited labour resources to work on the higher valued product, following government s decision to freeze the hiring of foreign labour in Feb 2016. We cut our FY17F earnings by 15%, due to the half-year impact (Apr-Sep 2016) from the increased in labour cost and modification of the production lines. We also introduced our FY19 figures. Despite these short-term challenges, we are assured of the group s mid-term prospects from the accretion of the sizeable contracts. The recent price weakness has priced in these short term challenges and offers long-term investors accumulation opportunity. New celebrated product. The cordless vacuum cleaner is Dyson s most popular product which contributed approximately half of its revenue in 2014. Consequently, the recent launch of the Supersonic (V9) hairdryer has the potential to be the next best-selling product with glowing reviews from the Japan and UK launches. It is still premature to gauge the product s performance until the US launch in Sept 2016. Nonetheless, we are positive of the developments as SKPRES is currently the sole manufacturer for this product. Vertical integrated manufacturer. SKPRES intends to go into the production of PCBA in the mid-term. This will complement its present tooling, plastic moulding and full-assembly operations, namely for the manufacturing of Dyson products. There will be cost-saving opportunity as SKPRES will no longer need to purchase PCBA for the assembly of Dyson vacuum cleaners and hairdryers. Valuation: Following the earnings revision, we cut our TP to RM1.55 (previously RM1.78) which is based on 15x fully-diluted FY17F EPS, inline with the sector s weighted average PE valuation excluding SKPRES. The stock is currently trading at an undemanding 12x FY17F PE. Moreover, given its strong earnings growth potential at 3-year EPS CAGR of c.37%, it is trading at PEG of c.0.3x. Key Risks to Our View: High customer concentration risk. In FY16, c.55% of revenue is derived from Dyson. Looking forward, we forecast Dyson to contribute an even higher portion, c.72% in FY17F. In the event that Dyson reduces or terminates contracts with SKPRES, SKPRES earnings could be materially and adversely affected. At A Glance Issued Capital (m shrs) 1,170 Mkt. Cap (RMm/US$m) 1,439 / 361 Major Shareholders (%) Dato Gan Kim Huat 51.7 EPF 5.4 Free Float (%) 42.9 3m Avg. Daily Val (US$m) 0.47 ICB Industry : Basic Materials / Chemicals ed: BC / sa:bc
WHAT S NEW Earnings visibility intact despite near-term headwinds New hairdryer contract SKPRES has clinched a four-year contract totalling RM2bn - RM500m p.a. from its major customer Dyson for the manufacturing of the Supersonic (V9) hairdryers. However, SKPRES would be foregoing the RM400m p.a. Dyson contract awarded in May 2015, for the manufacturing of the V6 cordless vacuum cleaners. The second Dyson contract awarded in Sept 2015 (contract value of RM600m/p.a. over 5 years) for the manufacturing of the V8 cordless vacuum cleaners remains in production. The move is to optimize and shift the existing limited labour resources to work on the higher valued product. The group is currently facing labour issues, following government s decision to freeze the hiring of foreign labour in Feb 2016. To ensure continued production, the group has resorted to hiring significantly higher-costing contract workers. This issue has been resolved with new workers expected to come in by end- 2QFY17. However, we cut our FY17F earnings by 15%, due to the half-year impact (Apr-Sep 2016) from the increased in labour cost and modification of the production lines. Despite these short-term challenges, we are assured of the group s mid-term prospects from the accretion of the sizeable contracts with strong earnings growth at 3-year EPS CAGR of c.37%. OUTLOOK Proxy to Dyson s aggressive expansion plans. We are positive of SKPRES long term prospects as it continues to see some spillover effect from Dyson s aggressive expansion plan. It secured sizeable contracts from Dyson for the manufacturing of cordless vacuum cleaners and hairdryers totalling RM1.1bn p.a. over the next 4 years. We foresee more contract flows for SKPRES in the future as Dyson progresses along its expansion plan. New celebrated product. The cordless vacuum cleaner is Dyson s most popular product which contributed approximately half of its revenue in 2014. Consequently, the recent launch of the Supersonic (V9) hairdryer has the potential to be the next best-selling product following glowing reviews from the Japan and UK launches. It s still premature to gauge the product s performance until the US launch in Sept 2016. Nonetheless, we are positive of the developments as SKPRES is currently the sole manufacturer for this product. Vertical integrated manufacturer. SKPRES intends to go into the production of PCBA in the mid-term. This will complement its present tooling, plastic moulding and fullassembly operations, namely for the manufacturing of Dyson products. There will be a cost-saving opportunity as SKPRES will no longer need to purchase PCBA for the assembly of Dyson vacuum cleaners and hairdryers. Well positioned for further contract awards. Only c.25% of the capacity at SKPRES new plant in Senai, Johor has been utilised. With ample spare capacity, we believe the group is well prepared to take on more contracts, which can come from both Dyson and non-dyson related parties. We forecast the utilization rate to increase steadily with the addition of two assembly lines p.a. to cater for the expected increase in order volume. Expanding clientele base. Growth is also by SKPRES initiative to expand its clientele base and management has targeted 8% annual growth for non-dyson contracts. Page 2
CRITICAL DATA POINTS TO WATCH Earnings Drivers: Longstanding relationship with Dyson. SKPRES has proven to be a capable and reliable world-class manufacturer for Dyson. SKPRES is one of Dyson s four key contract manufacturers. The other three contract manufacturers are Flextronics (US), Meiban Group (Singapore) and ATA Industrial (Singapore). Dyson is also the group s main client. The bulk of SKPRES business (c.55% in FY16), is from Dyson-related contracts. Benefitting from Dyson s expansion plans. Given the group s enduring partnership with Dyson, we are positive of SKPRES long term prospects as we expect it to gain further contracts from Dyson s aggressive expansion plan. SKPRES secured substantial contracts from Dyson for the manufacturing of cordless vacuum cleaners and hairdryers totalling RM1.1bn p.a. for the next four years. After imputing the new contract wins into our model, revenue from Dyson-related contracts is forecasted at c.72% in FY17F. We foresee more contract flows for SKPRES in the future as Dyson progresses along its expansion plan. 79.5 68.1 56.8 45.4 34.1 22.7 11.4 0.0 122 98 73 49 24 0 Dyson-related weightage (%) 76.7 78.7 71.5 55 55.2 Dyson-related growth (%) 120 70 50 42 21 Non-dyson related weightage (%) Tecnic s contribution. In 2015, SKPRES acquired the entire issued and paid-up share capital of all the wholly-owned subsidiaries of Tecnic. The acquisition has mitigated Dyson s high contribution to revenue by the sizeable inclusion of Tecnicrelated contracts worth RM350m (weightage c.30%) in FY16. Without the inclusion of Tecnic, Dyson s revenue contribution would have risen to c.77% in FY16. This would have exposed SKPRES to a higher single customer dependency risk. Expanding clientele base. Growth is also supported by SKPRES initiative to expand its clientele base and management has targeted 8% annual growth for non-dyson contracts. Among the areas management is looking into is the F&B packaging segment, with plans to supply more plastic packaging to existing customers such as Unilever, Nestle, Suntory, and Shell. The recent acquisition of Tecnic has not only increased SKPRES production capacity but also enabled the group to leverage on Tecnic s existing clientele to grow its customer base. Well positioned for more contract awards. Taking into account the projects at hand, only c.25% of the floor capacity in SKPRES new plant in Senai, Johor has been utilised. Furthermore, the new plant has a potential capacity for 20 assembly lines. The remaining c.75% of floor capacity is currently unutilised. With ample spare capacity, we believe the group can take on further contracts, both from Dyson and non-dyson related parties. We forecast the utilization rate to increase steadily with the addition of two assembly lines p.a. to cater for the expected increase in order volume. 45.9 45 44.8 36.7 28.5 27.5 23.3 21.3 18.4 9.2 0.0 Source: Company, AllianceDBS Non-dyson related growth (%) 69.5 68.8 55.6 50 41.7 27.8 13.9 8 8 8 0.0 New plant utilisation (%) 50 50.5 40 40.4 30 30.3 25 20.2 10.1 0 0.0 Page 3
Balance Sheet: Strong balance sheet in net cash position. Despite rapid expansion in the past few years, SKPRES has been able to maintain a net cash position due to its strong earnings and healthy cash-flows. In addition, SKPRES has minimal debt and prior to FY15, the group had no debt. The group took up a long term debt of c.rm24m to partly finance the construction of the new plant in Senai, Johor with estimated capex of RM40m and additional short term debt of c.rm25m to finance the capex of RM20m for equipment and machineries for the new plant and other working capital purposes. However, we expect total capex to normalise to RM25m p.a. from FY17F onwards mainly for maintenance works. We estimate SKPRES to be in net cash position in FY17F-FY19F. Share Price Drivers: New contract awards. SKPRES s price movement is highly sensitive to new contract announcements, as seen in the past when the share price rose by c.40% from the date of the announcement of the first Dyson contract in May 2015. Margin expansion. Margins fell in FY14-FY15 mainly due to the shift in customer mix as SKPRES undertook more Dyson related projects which incurred high costs for purchasing specific components to support Dyson s orders. Nevertheless, the shortfall in margins has been compensated by the increase in contract values. We note that any slight improvement in margins will considerably improve SKPRES s earnings as the contract values are significant. Key Risks: Relatively high customer concentration risk. In FY16, c.55% of revenue is derived from Dyson. Looking forward, we forecast Dyson to contribute an even higher portion, c.72% in FY17F. In the event that Dyson reduces or terminates contracts with SKPRES, SKPRES earnings could be materially and adversely affected. However, we are not overtly alarmed by this risk, as the contract wins are on a mid-term basis. Leverage & Asset Turnover (x) 0.25 2.6 0.20 2.4 2.2 0.15 2.0 0.10 1.8 0.05 1.6 0.00 1.4 Gross Debt to Equity (LHS) Asset Turnover (RHS) Capital Expenditure RMm 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Capital Expenditure (-) ROE (%) 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 20.8 18.8 16.8 14.8 12.8 Forward PE Band (x) (x) +2sd: 16.1x +1sd: 13.4x Downturn of the E&E industry. SKPRES, as an EMS provider, is primarily dependent on the global demand for E&E products. In FY16, almost 100% of its revenue was generated from the E&E industry. Hence, any unfavourable macro factors such as a global economic slowdown or another financial crisis will negatively impact demand for SKPRES products. Company Background SKPRES is principally involved in manufacturing plastic components, precision mould making, advance secondary processes, sub-assembly of electronics equipment and full turnkey contract manufacturing. 10.8 8.8 6.8 4.8 Jul-12 Jul-13 Jul-14 Jul-15 PB Band (x) (x) 7.6 6.6 5.6 4.6 3.6 2.6 1.6 0.6-0.4Jul-12 Jul-13 Jul-14 Jul-15 Avg: 10.7x 1sd: 8.1x 2sd: 5.4x +2sd: 6.59x +1sd: 4.81x Avg: 3.03x 1sd: 1.25x Source: Company, AllianceDBS Page 4
Key Assumptions FY Mar Dyson-related weightage (%) 55.0 55.2 71.5 76.7 78.7 Dyson-related growth (%) 50.0 70.5 120 41.6 21.2 Non-dyson related weightage 45.0 44.8 28.5 23.3 21.3 Non-dyson related growth (%) 50.0 68.8 8.00 8.00 8.00 New plant utilisation (%) 0.0 25.0 30.0 40.0 50.0 Income Statement (RMm) FY Mar Revenue 619 1,051 1,783 2,354 2,781 Cost of Goods Sold (532) (902) (1,533) (2,025) (2,392) Gross Profit 87.1 149 250 330 389 Other Opng (Exp)/Inc (32.1) (42.6) (80.9) (102) (113) Operating Profit 55.0 106 169 227 277 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc 0.83 (1.6) (1.9) (1.1) 1.07 Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 55.8 105 167 226 279 Tax (13.5) (22.6) (37.6) (52.0) (66.7) Minority Interest 0.0 0.0 0.0 0.0 0.0 Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Profit 42.3 82.1 129 174 211 Net Profit before Except. 42.3 82.1 129 174 211 EBITDA 64.6 125 201 270 328 Growth Revenue Gth (%) 50.0 69.7 69.6 32.0 18.1 EBITDA Gth (%) 37.8 94.1 60.5 34.2 21.6 Opg Profit Gth (%) 42.9 93.2 58.9 34.6 21.8 Net Profit Gth (Pre-ex) (%) 44.3 94.0 57.5 34.6 21.3 Margins & Ratio Gross Margins (%) 14.1 14.2 14.0 14.0 14.0 Opg Profit Margin (%) 8.9 10.1 9.5 9.6 9.9 Net Profit Margin (%) 6.8 7.8 7.3 7.4 7.6 ROAE (%) 22.7 33.4 34.8 38.9 38.9 ROA (%) 9.8 14.3 18.6 18.6 18.2 ROCE (%) 21.9 28.0 28.9 33.4 34.7 Div Payout Ratio (%) 50.2 50.0 50.0 50.0 50.0 Net Interest Cover (x) NM 68.0 89.8 208.3 NM Sensitivity Analysis Dyson +/- 1% Net Profit +/- 0.7% Non-Dyson +/- 1% Net Profit +/- 0.3% Utilization rate to steadily increase Margins to gradually improve, following decline in FY15 from labour issues Source: Company, AllianceDBS Page 5
Quarterly / Interim Income Statement (RMm) FY Mar 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Revenue 194 243 261 315 232 Cost of Goods Sold (174) (209) (225) (271) (197) Gross Profit 20.4 33.9 36.3 43.8 34.8 Other Oper. (Exp)/Inc (4.6) (9.9) (11.7) (11.5) (9.5) Operating Profit 15.8 24.1 24.6 32.3 25.3 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc 0.21 (0.5) (0.4) (0.5) (0.2) Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 16.0 23.5 24.2 31.8 25.1 Tax (4.7) (5.6) (5.8) (7.6) (3.5) Minority Interest 0.0 0.0 0.0 0.0 0.0 Net Profit 11.3 17.9 18.4 24.2 21.6 Net profit bef Except. 11.3 17.9 18.4 24.2 21.6 EBITDA 18.3 28.7 29.3 37.1 30.3 Growth Revenue Gth (%) 29.4 25.0 7.5 20.5 (26.3) EBITDA Gth (%) 11.5 56.6 2.0 26.6 (18.2) Opg Profit Gth (%) 13.1 52.2 2.3 31.1 (21.5) Net Profit Gth (Pre-ex) (%) 7.3 58.3 3.0 31.0 (10.5) Margins Gross Margins (%) 10.5 14.0 13.9 13.9 15.0 Opg Profit Margins (%) 8.1 9.9 9.4 10.2 10.9 Net Profit Margins (%) 5.8 7.4 7.1 7.7 9.3 Balance Sheet (RMm) FY Mar Net Fixed Assets 179 193 186 168 143 Invts in Associates & JVs 0.0 0.0 0.0 0.0 0.0 Other LT Assets 3.23 1.82 1.57 1.33 1.08 Cash & ST Invts 83.4 73.1 112 218 318 Inventory 74.9 89.8 140 185 218 Debtors 219 220 366 484 572 Other Current Assets 6.00 4.37 4.37 4.37 4.37 Total Assets 565 582 810 1,060 1,256 ST Debt 0.0 38.2 38.2 38.2 38.2 Creditor 398 173 336 499 590 Other Current Liab 0.45 0.0 0.0 0.0 0.0 LT Debt 0.0 15.3 15.3 15.3 15.3 Other LT Liabilities 14.6 16.7 16.7 16.7 16.7 Shareholder s Equity 152 339 404 491 596 Minority Interests 0.0 0.0 0.0 0.0 0.0 Total Cap. & Liab. 565 582 810 1,060 1,256 Non-Cash Wkg. Capital (98.6) 141 175 174 204 Net Cash/(Debt) 83.4 19.6 58.3 164 265 Debtors Turn (avg days) 92.9 76.2 60.0 65.9 69.2 Creditors Turn (avg days) 165.0 117.9 61.9 76.9 84.9 Inventory Turn (avg days) 35.1 34.0 27.9 29.9 31.4 Asset Turnover (x) 1.4 1.8 2.6 2.5 2.4 Current Ratio (x) 1.0 1.8 1.7 1.7 1.8 Quick Ratio (x) 0.8 1.4 1.3 1.3 1.4 Net Debt/Equity (X) CASH CASH CASH CASH CASH Net Debt/Equity ex MI (X) CASH CASH CASH CASH CASH Capex to Debt (%) N/A 62.9 46.7 46.7 46.7 Z-Score (X) 3.4 6.7 6.1 5.6 NA Net cash position Source: Company, AllianceDBS Page 6
Cash Flow Statement (RMm) FY Mar Pre-Tax Profit 55.8 105 167 226 278 Dep. & Amort. 9.61 19.1 32.5 42.9 50.6 Tax Paid (13.5) (22.6) (37.6) (52.0) (66.7) Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. (29.2) (138) (33.4) 0.93 (30.7) Other Operating CF 0.15 (0.2) 0.0 0.0 0.0 Net Operating CF 22.8 (37.4) 128 218 231 Capital Exp.(net) (40.7) (33.6) (25.0) (25.0) (25.0) Other Invts.(net) 71.4 (19.4) 0.0 0.0 0.0 Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 Other Investing CF 16.2 1.25 0.0 0.0 0.0 Net Investing CF 47.0 (51.7) (25.0) (25.0) (25.0) Div Paid (21.2) (41.0) (64.7) (87.0) (106) Chg in Gross Debt 0.0 53.5 0.0 0.0 0.0 Capital Issues 0.0 18.3 0.0 0.0 0.0 Other Financing CF 5.93 27.4 0.0 0.0 0.0 Net Financing CF (15.3) 58.2 (64.7) (87.0) (106) Currency Adjustments 0.26 (0.1) 0.0 0.0 0.0 Chg in Cash 54.8 (31.1) 38.7 106 100 Opg CFPS (sen) 5.79 8.76 12.9 17.3 20.9 Free CFPS (sen) (2.0) (6.2) 8.25 15.4 16.4 Source: Company, AllianceDBS Target Price & Ratings History 1.58 1.48 1.38 RM 2 4 S.No. Date Closing Price Target Price Rating 1: 15 Feb 16 1.24 1.78 BUY 2: 22 Feb 16 1.36 1.78 BUY 3: 02 Mar 16 1.31 1.78 BUY 4: 18 Apr 16 1.35 1.78 BUY 5: 31 May 16 1.29 1.78 BUY 1.28 1 3 5 1.18 1.08 Jul-15 Nov-15 Mar-16 Jul-16 Note : Share price and Target price are adjusted for corporate actions. Source: AllianceDBS Page 7
AllianceDBS recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame) Share price appreciation + dividends GENERAL DISCLOSURE/DISCLAIMER This report is prepared by AllianceDBS Research Sdn Bhd. This report is solely intended for the clients of DBS Bank Ltd and 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 AllianceDBS Research Sdn Bhd. 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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DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making. ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 18 Jul 2016, the Page 8
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). COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 30 Jun 2016. 2. Compensation for investment banking services: DBS Bank Ltd., DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for investment banking services from Flextronics as of 30 Jun 2016. 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