Malaysia Company Guide Version 4 Bloomberg: YTB MK Reuters: YONG.KL Refer to important disclosures at the end of this report DBS Group Research. Equity 9 Jan 2018 BUY Last Traded Price ( 8 Jan 2018): RM1.69 (KLCI : 1,832.15) Price Target 12-mth: RM2.10 (24% upside) (Prev RM2.10) Analyst Quah He Wei, CFA +603 2604 3966 hewei@alliancedbs.com What s New Ticketing sales agreement with six parties to sell 1m Encore Melaka tickets Strong vote of confidence for Encore Melaka to turn into cash cow Opening of Encore Melaka by May 2018 to be key rerating catalyst Maintain BUY and RM2.10 TP Price Relative Forecasts and Valuation FY Jun (RM m) 2017A 2018F 2019F 2020F Revenue 87.6 365 774 646 EBITDA 16.5 67.4 214 192 Pre-tax Profit 18.4 60.2 199 180 Net Profit 13.7 46.0 156 142 Net Pft (Pre Ex.) 11.5 46.0 156 142 Net Pft Gth (Pre-ex) (%) 990.4 299.8 238.3 (8.9) EPS (sen) 3.15 10.6 22.5 20.5 EPS Pre Ex. (sen) 2.64 10.6 22.5 20.5 EPS Gth Pre Ex (%) 302 300 113 (9) Diluted EPS (sen) 3.15 10.6 22.5 20.5 Net DPS (sen) 0.0 0.0 4.59 4.86 BV Per Share (sen) 111 122 99.3 115 PE (X) 53.7 16.0 7.5 8.2 PE Pre Ex. (X) 63.9 16.0 7.5 8.2 P/Cash Flow (X) nm 31.7 2229.5 5.5 EV/EBITDA (X) 40.3 11.8 6.0 6.0 Net Div Yield (%) 0.0 0.0 2.7 2.9 P/Book Value (X) 1.5 1.4 1.7 1.5 Net Debt/Equity (X) CASH 0.1 0.2 CASH ROAE (%) 4.8 9.1 25.6 19.1 Earnings Rev (%): (12) 0 0 Consensus EPS (sen): 10.1 22.3 24.7 Other Broker Recs: B: 3 S: 0 H: 0 Source of all data on this page: Company, AllianceDBS, Bloomberg Finance L.P Diamond in the rough High conviction BUY. Yong Tai has successfully transformed into a Melaka-centric township property developer via its integrated 138-acre Impression City (RM7.7bn GDV), featuring the first-ofits-kind Encore Melaka an iconic tourist landmark that showcases large-scale live cultural music performances. Best proxy to booming Chinese tourism. As the first Impression Series project outside China, the Melaka Straits-fronting Encore Melaka is poised to be a resounding success by tapping into the booming Chinese tourism in Malaysia which has seen an impressive tourist arrivals CAGR of 11% over 2000-2016 (vs 1% for Malaysia s overall tourist arrivals), making it the third-largest tourist source market. Where we differ. We are the first broker to cover Yong Tai. We believe its investment merit is under-appreciated by investors given the unique tourism-centric development in Melaka. Encore Melaka offers a compelling value proposition given its estimated ~20% IRR over the 30-year concession, which will transform Yong Tai into an emerging cash cow with strong recurring income. Potential catalyst. The official opening of Encore Melaka by May 2018 will be a major catalyst. In addition, there is immense potential in the Melaka property market which is targeting not just its 0.9m local population but also 16m tourists that visit the UNESCO World Heritage City annually. Yong Tai s impressive unbilled sales of RM1bn will underpin strong earnings visibility over the next two years. Valuation: Given Yong Tai s unrivalled competitive advantages arising from its unique tourism appeal and synergistic property product offerings, it is expected to deliver an exponential EPS CAGR of 87% over FY17-20F. We envisage long-term earnings visibility for Yong Tai as its value-adding Impression City and Encore Melaka ride on booming Chinese tourism, reflecting the unprecedented close Malaysia-China ties. Key Risks to Our View: Weaker tourist arrivals. Slower-than-expected tourist arrivals may negatively affect Impression Melaka s ticket sales, given that tourists are its main target market. At A Glance Issued Capital (m shrs) 481 Mkt. Cap (RMm/US$m) 812 / 203 Major Shareholders (%) Full Winning Development Ltd 24.6 Datuk Wira Boo Kuang Loon 14.2 Dato Sri Lee Ee Hoe 7.1 Free Float (%) 41 3m Avg. Daily Val (US$m) 0.89 ICB Industry : Financials / Real Estate Investment & Services ed: CK / sa:bc, PY, CS
WHAT S NEW Significant milestone Ticketing sales agreement: Yong Tai has signed ticket sales agreements for its Encore Melaka project with six travel agents, namely Majestic Express Holidays Sdn Bhd, Apple Impression Holiday Sdn Bhd, Levingo Travel Sdn Bhd, Coachliner 707 Travel Tour & Tour Sdn Bhd, WTS Travel & Tours Pte Ltd and Shanghai Ctrip International Travel Service Co Ltd. We understand that the agencies have to fulfil their respective ticket quota, failing which will result in certain penalty payments. This serves as a significant milestone for Yong Tai as the collective Encore Melaka s ticket sales of 1m has already made up 91% of our annual assumption of 1.1m which is based on 75% occupancy rate. While there is no disclosure on the ticket pricing under the ticketing sales agreement, it could be higher than our assumed RM125/ticket pricing as well. Management aims to further boost ticketing sales: After securing 1m ticket sales for Encore Melaka, Yong Tai may still look for other opportunities to further increase its ticketing sales via strategic tie-ups with other tourism-related parties. Currently, Yong Tai targets to stage two shows/day though its Encore Melaka s capacity can be increased by up to additional two shows/day should there be stronger demand. If Yong Tai stages an additional show in a year, we estimate that it will contribute additional annual earnings of RM25m, which translates into 16% growth to our FY19 bottom-line. Encore Melaka to be opened in May 2018. Encore Melaka is now set to be officially opened in May 2018 which is slightly later than our expectation. Due to the revised opening schedule, we therefore revise down our FY18 earnings projection by 12% as we impute higher pre-opening expenses for Encore Melaka. Nevertheless, we are not unduly worried about the delays as the topping-up of Encore Melaka theatre building has been completed and the performance team will have ample time to prepare for its official premier by May 2018. We are optimistic on the potentials of Encore Melaka given its compelling value proposition with an estimated ~20% IRR over the 30-year concession. Maintain BUY and RM2.10 TP. Given Yong Tai s unrivalled competitive advantages arising from its unique tourism appeal and synergistic property product offerings, it is expected to deliver an exponential EPS CAGR of 87% over FY17-20F. We envisage long-term earnings visibility for Yong Tai as its value-adding Impression City and Encore Melaka ride on booming Chinese tourism, reflecting the unprecedented close Malaysia-China ties. It is trading at an undemanding 8x FY19 PE, which is grossly unjustified in our view. Participation from Chinese bank and Hong Kong investor: Yong Tai has also secured RM100m worth of financing credit from Bank of China for the construction of Encore Melaka theatre. Meanwhile, Kirin Financial Group, a subsidiary of Hong Kong-listed Kirin Group Holdings Ltd has signed a heads of agreement with Yong Tai to undertake an investment of not less than RM400m in Impression City. Page 2
CRITICAL DATA POINTS TO WATCH Critical Factors Attractive value proposition for Impression Melaka. We estimate that Impression Melaka offers compelling value proposition given its estimated ~20% IRR over the 30-year concession, which will transform Yong Tai into an emerging cash cow with strong recurring income. The total cost for Impression Melaka is approximately RM303m (RM37m is for land acquisition) which could be easily funded by Yong Tai s strong balance sheet with a net cash position. First-mover advantage. Being the first Impression Series project outside China, Encore Melaka will have the first-mover advantage to gain competitive advantages in the Melaka tourism market. Yong Tai is targeting to stage two shows/day, translating into annual sales of 1.1m tickets (based on 75% utilisation) which could contribute ~RM50m earnings annually. This assumption is reasonable after taking into account foreign tourist arrivals of more than 26m, which is further underpinned by the local population of 32m. Best proxy to booming Chinese tourism. We understand that Yong Tai will be mainly targeting tourists from China (40%), ASEAN (20%) and Malaysia (30%) for Impression Melaka, which are expected to contribute 90% of its ticket sales collectively. We believe Impression Melaka is poised to be a resounding success by tapping into the booming Chinese tourism in Malaysia which has seen an impressive tourist arrivals CAGR of 11% over 2000-2016 (vs a mere 1% for Malaysia s total tourist arrivals). Yong Tai will also collaborate with travel agencies to sell more than half of the total Impression Melaka show tickets. Tapping into under-appreciated Melaka property market. In October 2016, Yong Tai sold en-bloc RM461m worth of retail properties in phase 1A of Impression City to Orient Venture Properties Bhd and locked in a fit-out contract worth RM412m with Orient Venture Properties to carry out renovation works on the 262 units of retail lots. This has boosted Yong Tai s unbilled sales to RM1bn, which will lead to strong earnings visibility over the next two years. Property sales (RMm) Ticket sales (mil) Property EBIT margin (%) Theater EBIT margin (%) Source: Company, AllianceDBS Page 3
Jan11 May11 Sep11 Jan12 May12 Sep12 Jan13 May13 Sep13 Jan14 May14 Sep14 Jan15 May15 Sep15 Jan16 May16 Sep16 Jan17 May17 Company Guide Appendix 1: A look at Company's listed history what drives its share price? Yong Tai s share price performance RM 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 A B C D E F G H Source: Bloomberg L.P., AllianceDBS A On 15 May 2013, Yong Tai announced that it is incorporating a new wholly-owned subsidiary known as YTB Development Sdn Bhd which will undertake property development and construction. B On 29 Apr 2014, Yong Tai entered into a project collaboration agreement with PTS Properties Sdn Bhd for the development of a 29-storey condominium hotel, The Pines in Melaka which will result in Yong Tai diversifying its textile business into property development business. C On 4 Dec 2014, Yong Tai proposed a renounceable rights issue on the basis of 2 rights shares for every 1 share held together with one free warrant for every 2 rights shares subscribed, which will result in significant expansion of its share base. D On 3 Aug 2015, Yong Tai announced Memorandum of Understanding for the proposed acquisition/joint venture of Impression City land amounting to 117 acres in Melaka. E On 26 Oct 2016, Yong Tai entered into conditional sale and purchase agreement and joint development agreement to formalise its proposed developments of Impression City and Impression Melaka. F On 5 Feb 2016, Yong Tai announced the entry of Sino Haijing as its substantial shareholder with a proposed special issue to raise funds for the company to undertake the development of Impression City and Impression Melaka. G On 15 Nov 2016, Yong Tai completed the special issue of shares to Sino Haijing. H On 8 Dec 2016, Yong completed a private placement that facilitated the entry of institutional investors. Page 4
Balance Sheet: Yong Tai currently is in a net cash position of RM26m which will be deployed for its mixed developments in Impression City as well as for the construction of Encore Melaka. Share Price Drivers: Opening of Encore Melaka in May 2018. As Encore Melaka is the first Impression Series project outside China, some quarters may be sceptical of the true potential of Encore Melaka. However, we believe the strong track record of various Impression shows in China will lend credence to the future success of Encore Melaka. Leverage & Asset Turnover (x) Capital Expenditure Strong demand for properties in Impression City. There is immense potential in the Melaka property market which is targeting not just its 0.9m local population but also 16m tourists that visit the World Heritage City annually. We believe Impression City s attractive investment merit is underappreciated by investors, and the official opening of Encore Melaka by May 2018 will be a major catalyst. Key Risks: Weaker tourist arrivals. Slower-than-expected tourist arrivals will negatively affect Impression Melaka s ticket sales, given that tourists are its main target market. Therefore, collaboration with travel agencies to market the tickets will help to mitigate the risk. Slowing sales. Property sales may slow down in certain locations as property buyers could be deterred by the high entry price as well as the tightening measures, where banks have adopted more cautious lending practices for mortgage loans. ROE (%) PB Band (x) Company Background Yong Tai has successfully transformed into a Melaka-based township property developer and operator of the Encore Melaka performance via a 30-year licensing agreement after disposing of its garment manufacturing business. Source: Company, AllianceDBS Page 5
Key Assumptions FY Jun 2016A 2017A 2018F 2019F 2020F Property sales (RMm) n.a. 824 442 442 547 Ticket sales (mil) n.a. n.a. 0.14 1.11 1.12 Property EBIT margin (%) n.a. 20.9 24.4 25.9 0.0 Theater EBIT margin (%) n.a. (15.4) 43.4 44.6 0.0 Segmental Breakdown FY Jun 2016A 2017A 2018F 2019F 2020F Revenues (RMm) Property development 17.9 87.6 348 631 500 Impression Melaka 0.0 0.0 17.1 143 145 Dyeing 12.2 0.0 0.0 0.0 0.0 Others 0.08 0.0 0.0 0.0 0.0 Total 30.2 87.6 365 774 646 EBIT (RMm) Property development 6.44 19.8 72.6 154 129 Impression Melaka 0.0 0.0 (2.6) 62.2 64.8 Dyeing 0.93 0.0 0.0 0.0 0.0 Others (4.5) (3.4) (2.7) (2.7) (2.7) Total 2.90 16.4 67.2 213 192 EBIT Margins (%) Property development 35.9 22.6 20.9 24.4 25.9 Impression Melaka N/A N/A (15.4) 43.4 44.6 Dyeing 7.7 N/A N/A N/A N/A En-bloc sales to Orient Venture Properties Bhd Driven by unbilled sales from The Apple and Impression City Dragged by pre-opening expenses Total 9.6 18.7 18.4 27.6 29.7 Income Statement (RMm) FY Jun 2016A 2017A 2018F 2019F 2020F Revenue 30.2 87.6 365 774 646 Cost of Goods Sold (17.1) (60.2) (286) (548) (441) Gross Profit 13.0 27.4 78.8 226 205 Other Opng (Exp)/Inc (10.1) (11.1) (11.5) (12.3) (13.2) Operating Profit 2.90 16.4 67.2 213 192 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 (0.2) (0.3) (7.0) (14.0) (12.0) Exceptional Gain/(Loss) 8.90 2.20 0.0 0.0 0.0 Pre-tax Profit 11.6 18.4 60.2 199 180 Tax (1.6) (4.7) (14.3) (43.9) (37.7) 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 9.95 13.7 46.0 156 142 Net Profit before Except. 1.06 11.5 46.0 156 142 EBITDA 3.85 16.5 67.4 214 192 Growth Revenue Gth (%) (54.6) 190.4 316.4 112.2 (16.6) EBITDA Gth (%) (25.8) 329.3 307.6 217.0 (10.3) Opg Profit Gth (%) (21.0) 464.5 310.2 217.5 (10.3) Net Profit Gth (Pre-ex) (%) (42.7) 990.4 299.8 238.3 (8.9) Margins & Ratio Gross Margins (%) 43.2 31.3 21.6 29.2 31.7 Opg Profit Margin (%) 9.6 18.7 18.4 27.6 29.7 Net Profit Margin (%) 33.0 15.6 12.6 20.1 22.0 ROAE (%) 11.6 4.8 9.1 25.6 19.1 ROA (%) 7.3 3.8 6.3 15.1 11.6 ROCE (%) 2.6 4.3 8.4 20.6 16.1 Div Payout Ratio (%) 0.0 0.0 0.0 20.4 23.7 Net Interest Cover (x) 12.0 66.9 9.6 15.2 16.0 Source: Company, AllianceDBS Page 6
Quarterly / Interim Income Statement (RMm) FY Jun 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 Revenue 4.06 3.01 13.3 67.2 26.5 Cost of Goods Sold (1.2) (2.0) (8.3) (48.8) (17.9) Gross Profit 2.91 1.04 5.01 18.5 8.59 Other Oper. (Exp)/Inc (1.8) (0.8) (4.3) (4.0) (4.5) Operating Profit 1.08 0.25 0.72 14.5 4.12 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 (0.1) (0.1) (0.1) (0.1) (0.1) Exceptional Gain/(Loss) 0.0 2.20 0.0 0.0 0.0 Pre-tax Profit 1.02 2.40 0.66 14.5 4.01 Tax (0.4) 0.19 (0.4) (4.1) (1.3) Minority Interest 0.0 0.0 0.0 0.0 0.0 Net Profit 0.65 2.58 0.30 10.4 2.70 Net profit bef Except. 0.65 0.38 0.30 10.4 2.70 EBITDA 1.08 0.25 0.72 14.5 4.12 Growth Revenue Gth (%) (6.4) (25.9) 342.3 405.6 (60.5) EBITDA Gth (%) (77.9) (77.2) 191.9 1,913.3 (71.6) Opg Profit Gth (%) 463.5 (77.2) 191.9 1,913.3 (71.6) Net Profit Gth (Pre-ex) (%) (88.7) (40.9) (23.0) 3,408.5 (73.9) Margins Gross Margins (%) 71.7 34.7 37.7 27.5 32.4 Opg Profit Margins (%) 26.7 8.2 5.4 21.6 15.5 Net Profit Margins (%) 16.0 85.9 2.2 15.4 10.2 Below expectation due to slower progress billings from Impression City Steady margins Balance Sheet (RMm) FY Jun 2016A 2017A 2018F 2019F 2020F Net Fixed Assets 3.33 225 375 425 475 Invts in Associates & JVs 24.5 24.5 24.5 24.5 24.5 Other LT Assets 0.0 0.0 0.0 0.0 0.0 Cash & ST Invts 3.80 69.2 142 92.9 222 Inventory 0.09 0.0 1.10 2.34 1.95 Debtors 53.8 174 122 258 215 Other Current Assets 31.1 105 202 386 311 Total Assets 117 598 867 1,188 1,249 ST Debt 2.20 0.0 0.0 0.0 0.0 Creditor 24.8 108 122 258 215 Other Current Liab 1.76 4.49 14.3 43.9 37.7 LT Debt 0.0 0.0 200 200 200 Other LT Liabilities 0.0 0.0 0.0 0.0 0.0 Shareholder s Equity 87.9 485 531 686 797 Minority Interests 0.0 0.0 0.0 0.0 0.0 Total Cap. & Liab. 117 598 867 1,188 1,249 Non-Cash Wkg. Capital 58.4 166 189 344 275 Net Cash/(Debt) 1.60 69.2 (57.6) (107) 22.5 Debtors Turn (avg days) 512.5 473.9 147.7 89.5 133.8 Creditors Turn (avg days) 826.9 404.7 146.8 126.4 195.9 Inventory Turn (avg days) 77.9 0.3 0.7 1.1 1.8 Asset Turnover (x) 0.2 0.2 0.5 0.8 0.5 Current Ratio (x) 3.1 3.1 3.4 2.4 3.0 Quick Ratio (x) 2.0 2.2 1.9 1.2 1.7 Net Debt/Equity (X) CASH CASH 0.1 0.2 CASH Net Debt/Equity ex MI (X) CASH CASH 0.1 0.2 CASH Capex to Debt (%) (786.2) N/A 75.0 25.0 25.0 Z-Score (X) 5.9 4.2 4.2 2.4 3.0 Strong balance sheet Source: Company, AllianceDBS Page 7
Cash Flow Statement (RMm) FY Jun 2016A 2017A 2018F 2019F 2020F Pre-Tax Profit 11.6 18.4 60.2 199 180 Dep. & Amort. 0.95 0.14 0.16 0.17 0.19 Tax Paid (1.5) (2.5) (4.5) (14.3) (43.9) Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. (44.8) (143) (32.7) (185) 75.5 Other Operating CF (12.1) (4.8) 0.0 0.0 0.0 Net Operating CF (45.9) (131) 23.2 0.52 211 Capital Exp.(net) 17.3 (149) (150) (50.0) (50.0) Other Invts.(net) 0.0 0.0 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 0.94 1.14 0.0 0.0 0.0 Net Investing CF 18.2 (148) (150) (50.0) (50.0) Div Paid 0.0 0.0 0.0 0.0 (31.8) Chg in Gross Debt (7.3) 0.0 200 0.0 0.0 Capital Issues 0.0 355 0.0 0.0 0.0 Other Financing CF (0.2) (8.6) 0.0 0.0 0.0 Net Financing CF (7.4) 347 200 0.0 (31.8) Currency Adjustments (3.6) (2.1) 0.0 0.0 0.0 Chg in Cash (38.7) 65.4 73.2 (49.5) 130 Opg CFPS (sen) (0.6) 2.57 12.8 26.8 19.6 Free CFPS (sen) (17.8) (64.4) (29.1) (7.2) 23.3 Capex for Encore Melaka and Impression City Source: Company, AllianceDBS Target Price & Ratings History Source: AllianceDBS Analyst: Quah He Wei, CFA Page 8
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 Completed Date: 8 Jan 2018 20:02:01 (MYT) Dissemination Date: 9 Jan 2018 08:06:43 (MYT) Sources for all charts and tables are AllianceDBS unless otherwise specified. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). This report is solely intended for the clients of DBS Bank 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 (''AllianceDBS''). 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 ) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. 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DBSVUSA, a US-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 the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate 1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests 2 in relation to an issuer or a new listing applicant that the analyst reviews. 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. 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. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group. COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), DBSV HK or their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 30 Nov 2017. 2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes 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. 1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant. Page 10
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 This report is being distributed in Australia by DBS Bank Ltd. ( DBS ) or DBS Vickers Securities (Singapore) Pte Ltd ( DBSVS ). DBS holds Australian Financial Services Licence no. 475946. DBSVS is 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. DBSVS is 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. Hong Kong This report has been prepared by an entity(ies) which is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at equityresearch@dbs.com. Indonesia Malaysia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. 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 603-2604 3333 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 This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), 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 6327 2288 for matters arising from, or in connection with the report. This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Page 11
United Kingdom This report is produced by AllianceDBS Research Sdn Bhd which is regulated by the Securities Commission Malaysia. 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 International Financial Centre United Arab Emirates United States Other jurisdictions This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd 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 is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent. This report was prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). 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. Page 12
DBS Regional Research Offices HONG KONG DBS Vickers (Hong Kong) Ltd Contact: Paul Yong 18th Floor Man Yee Building 68 Des Voeux Road Central Central, Hong Kong Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: equityresearch@dbs.com Participant of the Stock Exchange of Hong Kong MALAYSIA AllianceDBS Research Sdn Bhd Contact: Wong Ming Tek (128540 U) 19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia. Tel.: 603 2604 3333 Fax: 603 2604 3921 e-mail: general@alliancedbs.com SINGAPORE DBS Bank Ltd Contact: Janice Chua 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: equityresearch@dbs.com Company Regn. No. 196800306E INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: Maynard Priajaya Arif DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: 62 21 3003 4900 Fax: 6221 3003 4943 e-mail: research@id.dbsvickers.com THAILAND DBS Vickers Securities (Thailand) Co Ltd Contact: Chanpen Sirithanarattanakul 989 Siam Piwat Tower Building, 9th, 14th-15th Floor Rama 1 Road, Pathumwan, Bangkok Thailand 10330 Tel. 66 2 857 7831 Fax: 66 2 658 1269 e-mail: research@th.dbs.com Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand Page 13