Singapore Company Guide Version 9 Bloomberg: CRCT SP Reuters: CRCT.SI Refer to important disclosures at the end of this report DBS Group Research. Equity 24 Apr 2017 BUY Last Traded Price ( 21 Apr 2017): S$1.52 (STI : 3,139.83) Price Target 12-mth: S$1.68 (11% upside) (Prev S$1.60) Potential Catalyst: Acquisitions; strategic repositioning of certain assets Where we differ: Highest TP due to more optimistic long-term earnings forecast, despite being more conservative in the next couple of years Analyst Singapore Research Team equityresearch@dbs.com Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com Derek TAN +65 6682 3716 derektan@dbs.com What s New 1Q17 NPI rose 15.1%, mainly contributed by Xinnan acquisition; DPU higher by 1.1%, exceeding our forecast Healthy reversion rate of 3.5% and high occupancy maintained at around 96% Raised FY17F DPU by 5% and TP by 5%; BUY Price Relative 1.9 1.8 1.7 1.6 1.5 1.4 1.3 S$ Relative Index 1.2 70 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 (LHS) Relative STI (RHS) Forecasts and Valuation FY Dec (S$m) 2015A 2016A 2017F 2018F Gross Revenue 220 214 243 248 Net Property Inc 141 140 158 161 Total Return 114 107 88.6 86.4 Distribution Inc 89.2 86.7 95.0 93.8 EPU (S cts) 8.28 7.62 10.0 9.53 EPU Gth (%) 70 (8) 31 (5) DPU (S cts) 10.6 9.97 10.6 10.2 DPU Gth (%) 8 (6) 6 (4) NAV per shr (S cts) 177 164 160 156 PE (X) 18.3 19.9 15.1 15.9 Distribution Yield (%) 7.0 6.6 7.0 6.8 P/NAV (x) 0.9 0.9 0.9 1.0 Aggregate Leverage (%) 27.5 35.1 35.6 35.9 ROAE (%) 4.9 4.5 6.2 6.0 Distn. Inc Chng (%): 5 2 Consensus DPU (S cts): 11.1 11.2 Other Broker Recs: B: 5 S: 1 H: 2 Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P. 210 190 170 150 130 110 90 Key assets performed better than expected TP raised to S$1.68. While (CRCT) will face headwinds in the form of a weaker RMB exchange rate, higher property taxes in Beijing, and an increase in interest rates over the next few quarters, we believe these risks are largely priced in. The steady performance in 1Q17 leads us to believe that the market had underestimated the impact of positive rental reversions at key assets, namely Xizhimen and Wangjing, in the previous quarters. We have increased FY17F DPU from 10.1Scts to 10.6Scts, and raised our TP to S$1.68 from S$1.60. Earnings still gestating. The potential of CRCT s malls has not been maximised as several properties are still ramping up or are in a transition phase. These include (i) Grand Canyon (acquired in 2014) which is generating annualised net property income (NPI) yield of only c.5.3% (based on the original acquisition price) versus target of 7-8%, (ii) Minzhongleyuan and Wuhu which are incurring losses due to road closures nearby and repositioning works respectively, and (iii) the recently announced acquisition of Galleria mall whose margins are sub-optimal owing to previous management by third-party operators. Upside from acquisitions. Post the acquisition of Galleria mall, CRCT s gearing is around 37%, still be below the 45% limit imposed by MAS. CRCT has some debt headroom to leverage on increasing acquisition opportunities. Our understanding is that price expectations from potential sellers are now lower and some retail mall operators are looking to exit the sector given challengers in managing a retail asset. Valuation: We increased FY17F DPU by 5% from 10.1Scts to 10.6Scts, and revised our DCF-based TP to S$1.68. At current levels, CRCT offers 11% capital upside and an attractive 7% yield. Key Risks to Our View: Downside risk to our view would come from a significant depreciation of the RMB versus SGD, and downturn in Chinese consumption. At A Glance Issued Capital (m shrs) 889 Mkt. Cap (S$m/US$m) 1,346 / 964 Major Shareholders (%) Capitaland Ltd 25.3 CapitaMall Trust 13.8 Matthews International Capital 6.5 Free Float (%) 49.0 3m Avg. Daily Val (US$m) 0.97 ICB Industry : Real Estate / Real Estate Investment Trust ed: JS / sa: YM, PY
WHAT S NEW 1Q17 DPU up 1.1%, beating our expectations Top line improvement thanks to Xinnan acquisition, as well as stronger performance from Xizhimen. 1Q17 gross revenue was RMB290.9m, 13.4% higher y-o-y, mainly due to the new contribution from CapitaMall Xinnan acquired on 30 Sep 2016. Stripping this out, gross revenue would have increased by 0.8%. Top revenue contributors were CapitaMall Xizhimen (from RMB68.4m to RMB71.6m, up 4.7%) and CapitaMall Mingzhongleyuan (from RMB4.1m to RMB7.0m, up 69%). The latter is gradually recovering from a weak performance in the last two years due to the road closure, though it will still take another two renewal cycles for rents to recover to preclosure levels. The main drag to performance was CapitaMall Qibao; its revenue was 6.0% lower y-o-y (from RMB26.4m to RMB24.8m) due to weaker sales due to strong competition in the vicinity. The Manager is changing the tenant mix to position the mall to concentrate on children and education offering, and near-term volatility will be expected. Portfolio net property income (NPI) in RMB terms went up by 15.1%, or by 1.2% without CapitaMall Xinnan. Organic portfolio NPI growth was flattish due to the higher property tax provision at Beijing malls that was effective from 1 July 2016. In SGD terms, gross revenue and NPI was up by 8.2% to S$60.1m and by 9.8% to S$40.3m, respectively. The increase was lower than RMB terms due to a weaker RMB against SGD (1Q17 vs 1Q16: SGD/RMB 4.84 vs 4.62). Distributable income increased by a lesser 5.0%, primarily due to higher management fees, higher interest expenses and higher taxation, all arising from the acquisition of CapitaMall Xinnan. With an enlarged unit base, DPU increased by 1.1% to 2.74Scts. Performance beat our expectations. After a dull FY16 mainly dragged by weaker RMB, introduction of the additional property tax in Beijing, and slow pick up in the underlying performance, we had been overly conservative in our forecast, and were pleasantly surprised by this quarter s results as it exceeded our expectations. We believe CRCT will continue to benefit from the strong performance at CapitaMall Xizhimen and CapitaMall Wangjing, thanks to positive rental reversions in most of the previous quarters as well as high occupancy maintained. As such, we revised up our DPU and TP forecasts. Healthy reversion and occupancy. CRCT registered a satisfactory average rental reversion of 3.5%, albeit only 5.3% of the portfolio net lettable area (NLA) was renewed over the quarter. Occupancy saw a slight improvement to 96.2% from 95.9% over the quarter. The only mall that experienced negative rental reversion was CapitaMall Grand Canyon, as it replaced a previous fashion retailer with a Xiaomi shop in the tech and gadgets trade category, which typically pays lower fixed rentals than apparels, but we can expect tenant sales to be higher. This new tenant, together with improvement at CapitaMall Xinnan (from 98.2% to 99.6%), were the main malls to lift portfolio occupancy. Occupancy at Minzhongleyuan still hovers around 65% as the mall recovers post the completion of the road closure. Change in the REIT s CEO. On 31 March 2017, the REIT announced the cessation of Tony Tan as CEO of the REIT, to be replaced by the deputy CEO, Tan Tze Wooi. Mr Tan Tze Wooi was appointed deputy CEO since 1 December 2016. Prior to that, he held various roles at CapitaMalls Asia Ltd and CRCT and spent the last six years focusing on North China. We are confident that Mr Tan Tze Wooi s background and knowledge of the China market will be an asset to the REIT. OUR VIEW Since we upgraded CRCT from HOLD to BUY on 1 December 2016, the stock price has increased by 10.6% from S$1.37 to S$1.52. We believe that fears over RMB and higher property tax impact in Beijing was overdone, and CRCT is still in the recovery process. In addition, 1Q17 results beat our expectations as our previous underlying earnings forecasts were too conservative. As a result, we raised FY17F DPU by 5% and also adjusted longer-term earnings growth assumption higher. As such, we raised our TP p by 5% from S$1.60 to S$1.68. At the latest closed price of S$1.52, the stock offers a forward yield of 7% and a price upside potential of 11%. Maintain BUY. Page 2
Quarterly / Interim Income Statement (S$m) FY Dec 1Q2016 4Q2016 1Q2017 % chg yoy % chg qoq Gross revenue 55.6 56.7 60.1 8.2 6.0 Property expenses (18.9) (21.9) (19.8) 4.9 (9.7) Net Property Income 36.7 34.8 40.3 9.8 15.9 Other Operating expenses (3.6) (4.0) (4.1) 12.7 3.5 Other Non Opg (Exp)/Inc (0.3) (0.4) (0.1) 81.0 (88.1) Net Interest (Exp)/Inc (4.9) (5.2) (6.0) (21.7) (14.2) Exceptional Gain/(Loss) (0.1) 0.0 0.13 - - Net Income 27.8 25.2 30.3 9.1 20.4 Tax (7.9) (15.6) (9.5) 19.5 (39.4) Minority Interest 0.46 1.52 0.21 (55.7) (86.5) Net Income after Tax 20.4 11.1 21.1 3.5 89.7 Total Return 20.4 34.0 21.1 3.5 (37.9) Non-tax deductible Items 2.82 (13.3) 3.28 16.1 (124.6) Net Inc available for Dist. 23.2 20.6 24.4 5.0 18.1 Ratio (%) Net Prop Inc Margin 66.0 61.3 67.1 Dist. Payout Ratio 100.0 100.0 100.0 Source of all data: Company, DBS Bank Page 3
4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 Company Guide CRITICAL DATA POINTS TO WATCH Earnings Drivers: Still delivering positive rental reversions. CRCT s malls had previously delivered growth in tenant sales of 10-20% and rental reversions above 20%. Given a higher-base effect, tenant sales have slowed to the low single-digit range; CRCT continues to deliver positive rental reversions in the mid-single-digit range. This should continue to underpin growth in CRCT s rental income in RMB terms. In addition, the moderating rental reversions are partially a function of CRCT s strategic decision to attract certain brands to better enhance the overall shopping experience and retail offering. While this has resulted in a more modest near-term growth outlook, it maintains CRCT s relevance to its customers and provides for a more sustainable earnings stream going forward. Couple of malls yet to make meaningful contribution. Two of CRCT s malls, Minzhongleyuan (MZLY) and Wuhu are currently incurring small losses. MZLY had been impacted by road closures to facilitate the construction work of a new subway line, and finally resumed normal operations from end-december 2016. Meanwhile, the Wuhu mall is being repositioned given a softer operating environment in Wuhu (impact of change in catchment area and heightened completion). We estimate that the increased accessibility at MZLY from 2017 and successful repositioning of Wuhu should boost CRCT s earnings in the medium term. AEI to strengthen long-term positioning. To strengthen the competitive positioning of CRCT s portfolio and provide incremental earnings, CRCT periodically undertakes asset enhancement initiatives (AEI) at its malls such as the recent refurbishment works at Wangjing which involved the construction of a link way to the new MRT station and rejuvenation of the mall façade. We believe these renovations ensure that CRCT s malls are well positioned and can generate sustainable NPI growth in the long term. Earnings boost from the acquisition of CapitaLand Xinnan (previously known as Galleria mall). In FY17, CRCT should receive an earnings boost from the full-year contribution from the acquisition of Galleria mall (completed in early October 2016). CRCT should also benefit from the potential uplift in margins for the malls as Galleria's management will revert to CRCT from a third-party operator. S$ m 200 180 160 140 120 100 80 60 40 20 0 41 39 37 35 33 31 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 (x) 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Source: Company, DBS Bank Net Property Income and Margins (%) 2014A 2015A 2016A 2017F 2018F Net Property Income and Margins (%) Distribution Paid / Net Operating CF Interest Cover (x) 70.8% 68.8% 66.8% 64.8% 62.8% 60.8% Net Property Income Net Property Income Margin % Net Property Income Net Property Income Margin % (x) 70% 68% 66% 64% 62% 60% 58% 56% 2014A 2015A 2016A 2017F 2018F 2014A 2015A 2016A 2017F 2018F Income stability from master-leased properties. CRCT s three master-leased properties, Anzhen, Erqi and Shuangjing, contributed c.16% of FY16 group NPI. The three malls provide significant cash flow visibility and income stability for the REIT. Page 4
Balance Sheet: Gearing. Following the acquisition of Galleria mall, CRCT s gearing is expected to settle around 36-37%, although this will still be comfortably below MAS's new 45% gearing limit. Temporary dip in proportion of fixed rate debt. As at the end of March 2017, the proportion of fixed rate debt fell to c.53% from c.75% at end-2q16 as CRCT drew down on a bridge loan to fund the acquisition of Galleria mall. Nevertheless, we understand this is temporary as CRCT will look to increase the proportion of fixed loans when it refinances its bridge loan. Consequently, the finance costs will edge back up to around 2.9%, all else constant, from the current level of 2.5%. We have already incorporated it in our model. Share Price Drivers: Positive rental revisions. Despite the concerns over the economic outlook for China weighing on CRCT, we believe delivery of positive rental reversions and DPU growth should allay such concerns. In our view, uplift in rents will be underpinned by continued tenant sales growth. Furthermore, continued DPU growth over the medium term should also be boosted by increased contributions from CapitaMall Grand Canyon as the full benefits from tenant remixing have yet to be realised. 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Aggregate Leverage (%) 2014A 2015A 2016A 2017F 2018F ROE (%) 2014A 2015A 2016A 2017F 2018F Potential strengthening of RMB versus SGD. While the weakening of the RMB is a near-term headwind, a stronger RMB would not only be a boost to DPU as CRCT does not hedge its income, but would also boost CRCT s NAV per share which currently stands at S$1.55 (net of distributions). Key Risks: Threat from e-commerce. As consumers are now purchasing more goods online, sales at shopping malls may decline, causing rents at CRCT s properties to be negatively impacted. This threat is partially mitigated by the fact that c.42% of CRCT s GRI is sourced from tenants in the F&B (23% of GRI), supermarket (10%), leisure & entertainment (3%), education (3%) and beauty & healthcare (3%) sectors which are more immune to the e-commerce threat. New mall supply in Beijing. An increase in new malls in Beijing may potentially put pressure on rents at CRCT s malls. This risk is partially mitigated by the fact that c.80% of the new supply is located out of the core retail areas where CRCT s malls are situated. In addition, approximately 20% of CRCT s Beijing NPI is underpinned by master leases. Currency risk. As 100% of CRCT's income is derived in RMB and it does not hedge its income, depreciation of the RMB against the SGD would result in a lower DPU to unitholders. Source: Company, DBS Bank PB Band (x) (x) 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 Apr-13 Apr-14 Apr-15 Apr-16 +2sd: 1.12x +1sd: 1.03x Avg: 0.94x -1sd: 0.85x -2sd: 0.75x Company Background (CRCT) is a real estate investment trust which invests in income-producing retail properties located mainly in China, Hong Kong and Macau. Page 5
Income Statement (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F Gross revenue 203 220 214 243 248 Property expenses (70.9) (79.3) (74.5) (84.9) (86.9) Net Property Income 132 141 140 158 161 Other Operating expenses (14.0) (14.6) (13.8) (17.3) (17.5) Other Non Opg (Exp)/Inc 1.33 0.55 (2.0) 0.0 0.0 Net Interest (Exp)/Inc (21.1) (19.2) (19.4) (28.4) (30.8) Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Net Income 98.6 108 105 113 113 Tax (57.1) (43.4) (41.6) (22.5) (25.5) Minority Interest (1.8) 4.70 2.61 (1.4) (1.4) Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Income After Tax 39.8 69.2 65.5 88.6 86.4 Total Return 145 114 107 88.6 86.4 Non-tax deductible Items 41.1 20.1 (19.9) 6.33 7.46 Net Inc available for Dist. 80.9 89.2 86.7 95.0 93.8 Growth & Ratio Revenue Gth (%) 27.0 8.4 (2.8) 13.5 2.1 N Property Inc Gth (%) 28.5 6.6 (1.0) 13.2 2.1 Net Inc Gth (%) 17.8 73.9 (5.4) 35.4 (2.6) Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 Net Prop Inc Margins (%) 65.1 64.0 65.2 65.1 65.0 Net Income Margins (%) 19.6 31.4 30.6 36.5 34.8 Dist to revenue (%) 39.8 40.5 40.5 39.1 37.8 Managers & Trustee s fees 6.9 6.6 6.5 7.1 7.0 ROAE (%) 3.1 4.9 4.5 6.2 6.0 ROA (%) 1.8 2.8 2.4 3.2 3.1 ROCE (%) 2.6 3.7 3.5 4.9 4.8 Int. Cover (x) 5.6 6.6 6.5 5.0 4.7 Source: Company, DBS Bank Improvement in earnings on the back of positive rental reversion, ramp-up of Grand Canyon Mall, revival of Minzhongleyuan and acquisition of Xinnan mall in Chengdu Page 6
Quarterly / Interim Income Statement (S$m) FY Dec 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 Gross revenue 55.6 51.5 50.6 56.7 60.1 Property expenses (18.9) (16.0) (17.8) (21.9) (19.8) Net Property Income 36.7 35.5 32.8 34.8 40.3 Other Operating expenses (3.6) (2.9) (3.4) (4.0) (4.1) Other Non Opg (Exp)/Inc (0.3) (1.7) 0.51 (0.4) (0.1) Net Interest (Exp)/Inc (4.9) (4.6) (4.7) (5.2) (6.0) Exceptional Gain/(Loss) (0.1) 0.0 0.0 0.0 0.13 Net Income 27.8 26.3 25.2 25.2 30.3 Tax (7.9) (11.0) (7.1) (15.6) (9.5) Minority Interest 0.46 0.50 0.13 1.52 0.21 Net Income after Tax 20.4 15.8 18.2 11.1 21.1 Total Return 20.4 34.1 18.2 34.0 21.1 Non-tax deductible Items 2.82 (11.7) 2.34 (13.3) 3.28 Net Inc available for Dist. 23.2 22.4 20.6 20.6 24.4 Growth & Ratio Revenue Gth (%) (1) (7) (2) 12 6 N Property Inc Gth (%) 4 (3) (8) 6 16 Net Inc Gth (%) 14 (23) 15 (39) 90 Net Prop Inc Margin (%) 66.0 68.9 64.7 61.3 67.1 Dist. Payout Ratio (%) 100.0 100.0 100.0 100.0 100.0 Balance Sheet (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F Investment Properties 2,251 2,413 2,628 2,636 2,643 Other LT Assets 7.76 5.91 4.03 4.03 4.03 Cash & ST Invts 86.6 126 136 143 156 Inventory 0.0 0.0 0.0 0.0 0.0 Debtors 11.4 12.8 12.8 13.6 13.9 Other Current Assets 1.55 12.6 2.11 2.11 2.11 Total Assets 2,358 2,570 2,783 2,799 2,819 ST Debt 0.0 0.0 0.0 0.0 0.0 Creditor 51.1 59.5 64.5 61.2 62.5 Other Current Liab 216 246 241 241 241 LT Debt 672 706 978 995 1,012 Other LT Liabilities 41.2 43.4 48.8 48.8 48.8 Unit holders funds 1,350 1,491 1,432 1,432 1,432 Minority Interests 28.1 24.3 19.9 21.3 22.7 Total Funds & Liabilities 2,358 2,570 2,783 2,799 2,819 Non-Cash Wkg. Capital (254) (280) (290) (286) (287) Net Cash/(Debt) (585) (580) (842) (852) (857) Ratio Current Ratio (x) 0.4 0.5 0.5 0.5 0.6 Quick Ratio (x) 0.4 0.5 0.5 0.5 0.6 Aggregate Leverage (%) 28.5 27.5 35.1 35.6 35.9 Z-Score (X) 1.1 1.1 0.9 0.9 1.0 Source: Company, DBS Bank Increased gearing due to acquisition of Xinnan mall in Sep 2016 Page 7
Cash Flow Statement (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F Pre-Tax Income 98.6 108 105 113 113 Dep. & Amort. 2.75 2.64 2.40 2.40 2.40 Tax Paid (18.5) (20.2) (41.6) (22.5) (25.5) Associates &JV Inc/(Loss) 0.0 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. 2.02 2.50 12.7 (4.1) 1.02 Other Operating CF 26.5 22.3 42.0 3.93 5.06 Net Operating CF 111 115 120 92.2 96.2 Net Invt in Properties (14.6) (16.1) (313) (7.3) (7.5) Other Invts (net) 0.0 0.0 0.0 0.0 0.0 Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Div from Assoc. & JVs 0.0 0.0 0.0 0.0 0.0 Other Investing CF (2.1) 0.14 0.0 0.0 0.0 Net Investing CF (16.7) (16.0) (313) (7.3) (7.5) Distribution Paid (49.0) (66.1) (52.5) (95.0) (93.8) Chg in Gross Debt (43.9) 30.0 277 17.3 17.5 New units issued 0.0 0.0 0.0 0.0 0.0 Other Financing CF (17.0) (25.9) (13.5) 0.0 0.0 Net Financing CF (110) (62.0) 211 (77.7) (76.4) Currency Adjustments (3.7) (3.8) (8.1) 0.0 0.0 Chg in Cash (18.8) 33.3 9.78 7.28 12.4 Operating CFPS (S cts) 13.4 13.5 12.5 10.9 10.5 Free CFPS (S cts) 11.9 11.8 (22.5) 9.60 9.80 Source: Company, DBS Bank Target Price & Ratings History 1.71 1.66 1.61 1.56 1.51 1.46 S$ 1 2 3 S.No. Date of Report Closing Price 12-mth T arget Price Rating 1: 28 Jul 16 1.54 1.60 HOLD 2: 22 Aug 16 1.61 1.65 HOLD 3: 26 Oct 16 1.55 1.60 HOLD 4: 01 Dec 16 1.39 1.60 BUY 5: 27 Jan 17 1.41 1.60 BUY 1.41 1.36 4 5 1.31 1.26 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Note : Share price and Target price are adjusted for corporate actions. Source: DBS Bank Analyst: Singapore Research Team Mervin SONG CFA Derek TAN Page 8
DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame) Share price appreciation + dividends Completed Date: 24 Apr 2017 10:22:35 (SGT) Dissemination Date: 24 Apr 2017 10:29:50 (SGT) Sources for all charts and tables are DBS Bank unless otherwise specified. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. 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 DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the DBS Group ) 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. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. 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Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein. Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. Page 9
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