Version 4 Bloomberg: CMMT MK Reuters: CAMA.KL Refer to important disclosures at the end of this report Malaysia Equity Research 20 Jul 2016 BUY Last Traded Price: RM1.60 (KLCI : 1,670.55) Price Target : RM1.70 (6% upside) Shariah Compliant: No Potential Catalyst: Higher rental reversion and occupancy Where we differ: Higher DPU accretion forecast compared to consensus Analyst Inani ROZIDIN +603 2604 3905 inanirozidin@alliancedbs.com What s New 2QFY16 earnings in-line; growth supported by Gurney Plaza (GP) and East Coast Mall (ECM) Sungei Wang Plaza s (SWP) difficult conditions have been incorporated in forecasts; group earnings are intact, supported by improvement in overall portfolio s visitor traffic Declares DPU of 4.20 sen, with ex-date of 29 Jul Maintain BUY and TP of RM1.70 Price Relative 2.1 2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 RM 1.1 69 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 (LHS) Relative KLCI INDEX (RHS) Relative Index Forecasts and Valuation FY Dec (RMm) 2015A 2016F 2017F 2018F Gross Revenue 345 389 416 431 Net Property Inc 226 272 285 296 Total Return 155 183 200 208 Distribution Inc 163 195 212 221 EPU (sen) 11.9 9.01 9.82 10.2 EPU Gth (%) (10) (24) 9 4 DPU (sen) 8.59 9.57 10.4 10.8 DPU Gth (%) (4) 11 9 4 NAV per shr (sen) 132 132 132 132 PE (X) 13.4 17.8 16.3 15.7 Distribution Yield (%) 5.4 6.0 6.5 6.7 P/NAV (x) 1.2 1.2 1.2 1.2 Aggregate Leverage (%) 31.7 34.8 34.7 34.8 ROAE (%) 9.1 6.8 7.4 7.7 Distn. Inc Chng (%): 0 0 0 Consensus DPU (sen): 8.8 9.5 9.9 Other Broker Recs: B: 3 S: 1 H: 7 Source of all data: Company, AllianceDBS, Bloomberg Finance L.P 209 189 169 149 129 109 89 Rise in shopper traffic Increase in shopper traffic a positive indicator. Excluding the newly acquired Tropicana City Property, CMMT s portfolio shopper traffic improved by c.9.6% y-o-y in 2Q16, marking a turnaround in the visitor footfall downtrend in previous quarters. This is attributable to the enhancement initiatives and tenant-mix improvements for GP, ECM and the Mines. This is positive and it signals a reassuring improvement in CMMT s malls popularity. Assets enhancement work in plan. Management plans to carry out asset-enhancement works for GP and Tropicana City Property with an estimated budget of RM30m. The enhancement work will be carried out in stages in FY16, with targeted full completion by 4Q16. We believe this will contribute positively to overall rental reversion in FY16/FY17. In particular, GP has expiring leases for c.10% of its total NLA. New growth avenue from Tropicana City Property. The Tropicana assets present CMMT with a good growth avenue, particularly Tropicana City Mall. The property s occupancy of c.91.9% has room to rise, while rental rates of c.rm6.5/psf/mth has upside potential in view of the impending asset-enhancement initiatives. While there is dilution in FY15 DPU from the c.13% increase in shares from its share placement exercise, its DPU growth should resume from FY16. Valuation: Our DDM-derived TP is RM1.70, with 7.6% cost of equity and 1.50% TG. We maintain our BUY call in anticipation of DPU growth from the recent acquisition of Tropicana assets and potential upside from further enhancement initiatives. The stock provides an FY17 yield of c.6.6%. Key Risks to Our View: Weak consumer sentiment. The soft retail spending outlook may impact CMMT, as it is largely retail-focused. Tenants capacity to absorb rental increases may be affected by their lower sales, and this would negatively impact CMMT as it also derives 3-4% of its top-line from turnover rent. At A Glance Issued Capital (m shrs) 2,028 Mkt. Cap (RMm/US$m) 3,245 / 816 Major Shareholders (%) CapitaMalls Asia Ltd (%) 35.4 Employee Provident Fund (%) 9.7 Skim Amanah Saham Bumiputera 6.6 Free Float (%) 42.7 3m Avg. Daily Val (US$m) 0.32 ICB Industry : Real Estate / Real Estate Investment Trusts Refer to important disclosures at the end of this report ed: CK / sa:bc
WHAT S NEW Still holding strong despite challenging environment Boosted by contribution from Tropicana assets 2Q16 NPI came in at RM60m (+14.5% y-o-y), which is in line with our and consensus expectations. The growth was mainly driven by contribution from Tropicana City Property upon its acquisition in 3Q15 and improved performance from Gurney Plaza (GP) and East Coast Mall (ECM) on the back of higher rental rates achieved from new and renewed leases. We also note a net revaluation surplus of RM2.57m in 2Q16. A DPU of 4.20 sen was declared for 1H16, implying full payout. Steady performance due to Gurney Plaza and East Coast Mall Organic growth came mainly from GP and ECM, which registered a 8.4% and 13.4% growth in NPI, respectively, due to the increase in gross rental revenue of RM33m (+5% y-o-y) and RM14m (+6% y-o-y), following the completion of major enhancement works in 2015 as well as reversions of expiring leases. We understand that GP and ECM registered positive reversions of 5% and 14.5% respectively. NPI margins in 2Q16 for GP/ECM also improved to c.70.6%/c.64.5% (2Q15: c.68.4%/c.60.4%) amid a stable occupancy level of c.98.7%/c.99.3%. Sungei Wang Plaza (SWP) continues to struggle, with NPI dropping 26% y-o-y as a result of the adjacent MRT station construction. However, occupancy improved to 91.2% from 90.7% last quarter, and management has revised rentals down by c.37% to keep tenants. As the construction works will only be completed in 2HFY17, we expect no recovery until then. That being said, we have incorporated the weak/negative reversions and poor occupancies of SWP in our forecasts. As such, we believe CMMT s fundamentals are intact given that major earnings risks have been accounted for. Excluding SWP, rental reversions for the portfolio rose a decent 7.5%, with overall occupancy including the new Tropicana assets at c.96%. There are remaining 22% of overall leases by NLA expiring in FY16. However, lease expiries from SWP are minimal at 1.9% of overall leases by NLA. We are positive about the upcoming reversions as a large portion of the remaining expiries are from GP/ECM, with 9.7%/5.6% of overall leases by NLA. Outlook Increase in shopper traffic a positive indicator. Excluding the newly acquired Tropicana City Property, CMMT s portfolio shopper traffic has improved by c.9.6% y-o-y in 2Q16, marking a turnaround in the visitor footfall downtrend in previous quarters. This is attributable to the enhancement initiatives carried out and improvements of the tenant mix for GP, ECM and the Mines. We note that SWP also experienced a rise in shopper traffic by c.3% y-o-y in 2Q16, mainly due to the introduction of new tenants and enhancement initiatives carried out, namely the renovation of Parkson. We are positive about this development as it signals a reassuring improvement in CMMT s malls popularity. Asset-enhancement work in plan. Management plans to carry out asset-enhancement works for GP and Tropicana City Property with an estimated budget of RM30m. The enhancement work will be carried out in stages in FY16, with targeted full completion by 4Q16. We believe this will contribute positively to overall rental reversion in FY16/FY17. In particular, GP has expiring leases for c.10% of its total NLA. New growth avenue from Tropicana City Property. The Tropicana assets present CMMT with a good growth avenue, particularly Tropicana City Mall. The property s occupancy of c.91.9% has room to rise, while rental rates of c.rm6.5/psf/mth has upside potential in view of the impending asset-enhancement initiatives. While there is dilution in FY15 DPU from the c.13% increase in shares from its share placement exercise, its DPU growth should resume from FY16. Page 2
Quarterly / Interim Income Statement (RMm) FY Dec 2Q2015 1Q2016 2Q2016 % chg yoy % chg qoq Gross revenue 79.6 93.6 92.0 15.6 (1.7) Property expenses (27.2) (33.1) (32.0) 17.6 (3.3) Net Property Income 52.4 60.6 60.0 14.5 (0.9) Other Operating expenses (5.7) (6.3) (6.5) 13.5 2.6 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 N/A N/A Net Interest (Exp)/Inc (10.2) (13.3) (13.4) (30.9) (1.0) Exceptional Gain/(Loss) 52.1 0.0 2.57 N/A N/A Net Income 88.6 41.1 42.8 (51.7) 4.2 Tax 0.0 0.0 0.0 N/A N/A Minority Interest 0.0 0.0 0.0 N/A N/A Net Income after Tax 88.6 41.1 42.8 (51.7) 4.2 Total Return 88.6 41.1 42.8 (51.7) 4.2 Non-tax deductible Items 0.0 0.0 0.0 nm nm Net Inc available for Dist. 38.8 43.0 42.3 8.9 (1.8) Ratio (%) Net Prop Inc Margin 65.9 64.7 65.3 Dist. Payout Ratio 98.1 0.0 99.9 Source of all data: Company, AllianceDBS Page 3
1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 Company Guide CRITICAL DATA POINTS TO WATCH Earnings Drivers: Positive rental reversion. In FY15, CMMT managed to secure positive rental reversion for four of its five malls, with reversions of c.7.9% (excluding SWP). SWP was the only drag with a negative reversion of 31.5%. But this is a strategic decision by management to retain key tenants, as the ongoing MRT construction works nearby has reduced shopper footfall. Looking at FY16F/FY17F, we expect reversion rates to average 8-10% (except for SWP) which is supported by asset enhancement works. Maintaining occupancy levels. Occupancy rates directly affect the income received by mall owners. It is also an indicator of the quality of the mall, which is determined by shopper footfall, pace of vacancy-replenishment, and general attractiveness of the asset as a retail hub. CMMT has a decent track record of securing c.96% to full occupancy of net lettable area (NLA). Occupancy at SWP has fallen over the last few quarters to c.90% because of the ongoing MRT construction works. Net Property Income and Margins (%) RM m 300 76.4% 250 74.4% 200 72.4% 150 70.4% 68.4% 100 66.4% 50 64.4% 0 62.4% 2014A 2015A 2016F 2017F 2018F Net Property Income Net Property Income Margin % Net Property Income and Margins (%) 69% 62 68% 60 58 67% 56 66% 54 65% 52 64% 50 48 63% Net Property Income Net Property Income Margin % Asset-enhancement initiatives. Besides regular rent increases, the REIT s earnings would also be boosted by enhancement works for its assets. This encompasses a wide range of actions, including increasing NLA, improving facilities and amenities, refreshing external appearances, and restructuring rentable space and tenant mix. CMMT has a good track record in this space, with successful enhancement works done on The Mines and East Coast Mall, leading to NPI growth of 24% and 15%, respectively, over two years. 0.8 0.7 0.6 0.5 0.4 0.3 (x) Distribution Paid / Net Operating CF 2014A 2015A 2016F 2017F 2018F Sensible financing rates, the bulk of which are already locked in. About 74% of CMMT s debts have fixed interest rates ranging from 4.1% to 4.6%, and the rest are at floating rates. Its average financing cost was c.4.4% in FY15, and we expect this to increase to 4.6% over the next few years due to rate fluctuations from floating-rate debts. (x) 6.00 5.00 4.00 3.00 2.00 Interest Cover (x) 1.00 0.00 2014A 2015A 2016F 2017F 2018F Source: Company, AllianceDBS Page 4
Balance Sheet: Staying conservative. CMMT has kept gearing at about 31% in recent years, and financed the purchase of the Tropicana assets with a 30:70 debt-equity mix to keep gearing within that limit. We expect its balance sheet to remain strong going forward. Decent maturity profile. Interest rates are fixed for 74% of its debt, with the remaining debts on floating rate. More than 70% of borrowings mature in 2022 and beyond. Share Price Drivers: DPU growth. Given steady occupancy levels, positive rental reversions will lift DPU, which would translate into a higher unit price. Key Risks: Weak consumer sentiment. The soft retail spending outlook may impact CMMT, as it is largely retail-focused. Tenants capacity to absorb rental increases may be affected by their lower sales, and this would negatively impact CMMT as it also derives 3-4% of its top-line from turnover rent. 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Aggregate Leverage (%) 2014A 2015A 2016F 2017F 2018F ROE (%) 2014A 2015A 2016F 2017F 2018F Post-acquisition sentiment. The RM540m acquisition price for the Tropicana assets involves a substantial placement of new units at an indicative RM1.32/unit (c.13% increase in unit base), plus some debt financing. As such, we feel that the market has reacted to the implied dilution (which is now largely priced in) with the selldown of CMMT shares since April. Nonetheless, the sentiment towards the stock might recover more gradually than expected. Deteriorating performance at SWP. SWP is currently affected by construction works for a new MRT station nearby. Footfall at SWP will be weak until 2HFY17, when the MRT works will be completed. Distribution Yield (%) (%) 7.3 6.8 +2sd: 6.9% 6.3 +1sd: 6.3% 5.8 Avg: 5.7% 5.3-1sd: 5.1% 4.8-2sd: 4.5% 4.3 3.8 2012 2013 2014 2015 2016 PB Band (x) (x) Company Background CMMT is a retail-focused real estate investment trust with malls in Kuala Lumpur, Selangor, Penang, and Pahang. Its malls employ a mass-market profile, but it is moving up to the middle- to upper-income segment. 1.7 1.5 1.3 1.1 0.9 +2sd: 1.56x +1sd: 1.39x Avg: 1.22x -1sd: 1.05x -2sd: 0.88x 0.7 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Source: Company, AllianceDBS Page 5
Key Assumptions FY Dec 2014A 2015A 2016F 2017F 2018F Lease expiry (% NLA) 53.2 20.5 33.7 42.7 20.9 Avg rental growth (%) 1.23 1.96 5.43 7.20 3.95 Segmental Breakdown FY Dec 2014A 2015A 2016F 2017F 2018F Revenues (RMm) Gurney Plaza 123 128 135 144 148 Mines 79.7 81.6 87.3 91.4 97.3 Sungai Wang Plaza 67.2 55.0 57.1 62.6 61.6 East Coast Mall 45.9 55.1 59.0 63.2 66.7 Others N/A 25.1 51.0 54.9 57.8 Total 315 345 389 416 431 NPI (RMm) Gurney Plaza 83.3 83.3 112 101 104 Mines 48.6 51.6 56.4 59.5 64.3 Sungai Wang Plaza 49.2 37.2 38.7 43.5 41.8 East Coast Mall 27.9 35.0 38.2 41.7 44.4 Others N/A 19.3 36.3 39.7 42.0 Total 209 226 282 285 296 NPI Margins (%) Gurney Plaza 67.9 65.0 83.0 70.1 70.0 Mines 60.9 63.3 64.7 65.1 66.0 Sungai Wang Plaza 73.1 67.6 67.7 69.5 67.9 East Coast Mall 60.8 63.5 64.8 66.0 66.6 Others N/A 76.9 71.1 72.3 72.7 Total 66.2 65.7 72.3 68.6 68.6 Lease expiries skewed towards 2017 NPI margins to be relatively stable Income Statement (RMm) FY Dec 2014A 2015A 2016F 2017F 2018F Gross revenue 315 345 389 416 431 Property expenses (106) (118) (117) (131) (135) Net Property Income 209 226 272 285 296 Other Operating expenses (22.5) (24.4) (27.9) (28.8) (29.5) Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc (36.7) (46.8) (61.5) (56.3) (58.1) Exceptional Gain/(Loss) 86.6 70.9 0.0 0.0 0.0 Net Income 236 227 183 200 208 Tax 0.0 0.0 0.0 0.0 0.0 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 Income After Tax 236 226 183 200 208 Total Return 150 155 183 200 208 Non-tax deductible Items 0.0 0.0 0.0 0.0 0.0 Net Inc available for Dist. 158 163 195 212 221 Growth & Ratio Revenue Gth (%) 3.4 9.3 12.9 6.8 3.7 N Property Inc Gth (%) 0.1 8.4 20.3 4.7 3.8 Net Inc Gth (%) 2.9 (4.4) (19.0) 9.4 4.1 Dist. Payout Ratio (%) 99.9 99.9 99.9 99.9 99.9 Net Prop Inc Margins (%) 66.2 65.7 70.0 68.6 68.6 Net Income Margins (%) 74.9 65.5 47.0 48.1 48.3 Dist to revenue (%) 50.2 47.3 50.0 51.0 51.2 Managers & Trustee s fees 7.1 7.1 7.2 6.9 6.8 to ROAE sales (%) %) 10.5 9.1 6.8 7.4 7.7 ROA (%) 7.1 6.0 4.4 4.6 4.8 ROCE (%) 5.8 5.5 6.0 6.1 6.3 Int. Cover (x) 5.1 4.3 4.0 4.6 4.6 Source: Company, AllianceDBS Page 6
Quarterly / Interim Income Statement (RMm) FY Dec 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 Gross revenue 79.6 90.9 93.3 93.6 92.0 Property expenses (27.2) (31.2) (32.7) (33.1) (32.0) Net Property Income 52.4 59.8 60.6 60.6 60.0 Other Operating expenses (5.7) (6.5) (6.6) (6.3) (6.5) Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc (10.2) (13.5) (13.4) (13.3) (13.4) Exceptional Gain/(Loss) 52.1 12.7 6.11 0.0 2.57 Net Income 88.6 52.5 46.7 41.1 42.8 Tax 0.0 0.0 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 0.0 0.0 Net Income after Tax 88.6 52.5 46.7 41.1 42.8 Total Return 88.6 52.5 46.7 41.1 42.8 Non-tax deductible Items 0.0 0.0 0.0 0.0 0.0 Net Inc available for Dist. 38.8 41.6 42.4 43.0 42.3 Growth & Ratio Revenue Gth (%) (2) 14 3 0 (2) N Property Inc Gth (%) (2) 14 1 0 (1) Net Inc Gth (%) 132 (41) (11) (12) 4 Net Prop Inc Margin (%) 65.9 65.7 65.0 64.7 65.3 Dist. Payout Ratio (%) 98.1 0.0 98.1 0.0 99.9 Balance Sheet (RMm) FY Dec 2014A 2015A 2016F 2017F 2018F Investment Properties 3,233 3,886 3,940 3,994 4,048 Other LT Assets 1.86 2.47 3.09 3.70 4.31 Cash & ST Invts 157 187 358 318 280 Inventory 0.0 0.0 0.0 0.0 0.0 Debtors 13.3 16.4 18.5 19.8 20.5 Other Current Assets 0.0 0.0 0.0 0.0 0.0 Total Assets 3,405 4,092 4,320 4,335 4,353 ST Debt 145 307 307 307 317 Creditor 70.0 61.7 69.7 74.5 77.2 Other Current Liab 33.2 38.9 43.9 46.9 49.7 LT Debt 817 951 1,151 1,151 1,151 Other LT Liabilities 51.3 58.0 58.0 58.0 58.0 Unit holders funds 2,287 2,675 2,690 2,698 2,701 Minority Interests 0.0 0.0 0.0 0.0 0.0 Total Funds & Liabilities 3,405 4,092 4,320 4,335 4,354 Non-Cash Wkg. Capital (89.9) (84.3) (95.2) (102) (106) Net Cash/(Debt) (806) (1,071) (1,100) (1,141) (1,188) Ratio Current Ratio (x) 0.7 0.5 0.9 0.8 0.7 Quick Ratio (x) 0.7 0.5 0.9 0.8 0.7 Aggregate Leverage (%) 29.3 31.7 34.8 34.7 34.8 Z-Score (X) 1.9 1.7 1.8 1.8 1.8 Source: Company, AllianceDBS Page 7
Page 8 Company Guide Cash Flow Statement (RMm) FY Dec 2014A 2015A 2016F 2017F 2018F Pre-Tax Income 236 226 183 200 208 Dep. & Amort. 1.16 1.11 1.11 1.11 1.11 Tax Paid 0.0 0.0 0.0 0.0 0.0 Associates &JV Inc/(Loss) 0.0 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. 3.91 19.0 10.9 6.49 3.74 Other Operating CF (41.3) (15.0) 72.0 67.2 69.2 Net Operating CF 200 231 267 275 283 Net Invt in Properties (52.2) (603) (55.8) (55.8) (55.8) 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 4.62 4.73 5.80 11.3 10.0 Net Investing CF (47.5) (598) (50.0) (44.5) (45.8) Distribution Paid (160) (160) (179) (203) (216) Chg in Gross Debt 13.8 245 133 (67.6) (58.1) New units issued 0.0 313 0.0 0.0 0.0 Other Financing CF 0.0 0.0 0.0 0.0 0.0 Net Financing CF (146) 398 (45.9) (271) (274) Currency Adjustments 0.0 0.0 0.0 0.0 0.0 Chg in Cash 6.08 30.5 171 (40.3) (37.6) Operating CFPS (sen) 11.0 11.2 12.6 13.2 13.6 Free CFPS (sen) 8.33 (19.6) 10.4 10.8 11.1 Source: Company, AllianceDBS Target Price & Ratings History 1.64 1.59 1.54 1.49 1.44 RM 3 4 5 S.No. Date Closing Price T arget Price Rating 1: 20 Jul 15 1.36 1.50 HOLD 2: 10 Aug 15 1.33 1.50 BUY 3: 19 Oct 15 1.40 1.50 BUY 4: 15 Apr 16 1.46 1.55 BUY 5: 28 Jun 16 1.56 1.70 BUY 1.39 1.34 1.29 1 2 1.24 1.19 Jul-15 Nov-15 Mar-16 Jul-16 Note : Share price and Target price are adjusted for corporate actions. Source: AllianceDBS
DISCLOSURE Stock rating definitions 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 > -10% over the next 12 months SELL - negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame Commonly used abbreviations Adex = advertising expenditure EPS = earnings per share PBT = profit before tax bn = billion EV = enterprise value P/B = price / book ratio BV = book value FCF = free cash flow P/E = price / earnings ratio CF = cash flow FV = fair value PEG = P/E ratio to growth ratio CAGR = compounded annual growth rate FY = financial year q-o-q = quarter-on-quarter Capex = capital expenditure m = million RM = Ringgit CY = calendar year M-o-m = month-on-month ROA = return on assets Div yld = dividend yield NAV = net assets value ROE = return on equity DCF = discounted cash flow NM = not meaningful TP = target price DDM = dividend discount model NTA = net tangible assets trn = trillion DPS = dividend per share NR = not rated WACC = weighted average cost of capital EBIT = earnings before interest & tax p.a. = per annum y-o-y = year-on-year EBITDA = EBIT before depreciation and amortisation PAT = profit after tax YTD = year-to-date Page 9
DISCLAIMER This report has been prepared for information purposes only by AllianceDBS Research Sdn Bhd ( ADBSR ), a subsidiary of Alliance Investment Bank Berhad ( AIBB ) and an associate of DBS Vickers Securities Holdings Pte Ltd ( DBSVH ). DBSVH is a wholly-owned subsidiary of DBS Bank Ltd. This report is strictly confidential and is meant for circulation to clients of ADBSR, AIBB and DBSVH only or such persons as may be deemed eligible to receive such research report, information or opinion contained herein. Receipt and review of this report indicate your agreement not to distribute, reproduce or disclose in any other form or medium (whether electronic or otherwise) the contents, views, information or opinions contained herein without the prior written consent of ADBSR. This report is based on data and information obtained from various sources believed to be reliable at the time of issuance of this report and any opinion expressed herein is subject to change without prior notice and may differ or be contrary to opinions expressed by ADBSR s affiliates and/or related parties. ADBSR does not make any guarantee, representation or warranty (whether express or implied) as to the accuracy, completeness, reliability or fairness of the data and information obtained from such sources as may be contained in this report. As such, neither ADBSR nor its affiliates and/or related parties shall be held liable or responsible in any manner whatsoever arising out of or in connection with the reliance and usage of such data and information or third party references as may be made in this report (including, but not limited to any direct, indirect or consequential losses, loss of profits and damages). The views expressed in this report reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendation(s) or view(s) in this report. ADBSR prohibits the analyst(s) who prepared this report from receiving any compensation, incentive or bonus based on specific investment banking transactions or providing a specific recommendation for, or view of, a particular company. This research report provides general information only and is not to be construed as an offer to sell or a solicitation to buy or sell any securities or other investments or any options, futures, derivatives or other instruments related to such securities or investments. In particular, it is highlighted that this report is not intended for nor does it have regard to the specific investment objectives, financial situation and particular needs of any specific person who may receive this report. Investors are therefore advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situations and particular needs and consult their own professional advisers (including but not limited to financial, legal and tax advisers) regarding the appropriateness of investing in any securities or investments that may be featured in this report. ADBSR, AIBB, DBSVH and DBS Bank Ltd, their directors, representatives and employees or any of their affiliates or their related parties may, from time to time, have an interest in the securities mentioned in this report. AIBB, DBSVH and DBS Bank Ltd, their affiliates and/or their related persons may do and/or seek to do business with the company(ies) covered in this report and may from time to time act as market maker or have assumed an underwriting commitment in securities of such company(ies), may sell or buy such securities from customers on a principal basis and may also perform or seek to perform significant investment banking, advisory or underwriting services for or relating to such company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report. AIBB, DBSVH, DBS Bank Ltd (which carries on, inter alia, corporate finance activities) and their activities are separate from ADBSR. AIBB, DBSVH and DBS Bank Ltd may have no input into company-specific coverage decisions (i.e. whether or not to initiate or terminate coverage of a particular company or securities in reports produced by ADBSR) and ADBSR does not take into account investment banking revenues or potential revenues when making company-specific coverage decisions. ADBSR, AIBB, DBSVH, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc ( DBSVUSA ), a U.S.-registered broker-dealer, may beneficially own a total of 1% or more of any class of common equity securities of the subject company mentioned in this report. ADBSR, AIBB, DBSVH, DBS Bank Ltd and/or other affiliates of DBSVUSA may, within the past 12 months, have received compensation and/or within the next 3 months seek to obtain compensation for investment banking services from the subject company. DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager 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 report should contact DBSVUSA exclusively. DBS Vickers Securities (UK) Ltd is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Services Authority. Research distributed in the UK is intended only for institutional clients. In reviewing this report, an investor should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the overriding issue of confidentiality, available upon request to enable an investor to make their own independent evaluation of the information contained herein. Wong Ming Tek, Executive Director Published by AllianceDBS Research Sdn Bhd (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 email : general@alliancedbs.com Page 10