China / Hong Kong Company Focus Bloomberg: 2618 HK EQUITY Reuters: 2618.HK DBS Group Research. Equity 13 August 2015 Refer to important disclosures at the end of this report HOLD Last Traded Price: HK$5.73 (HSI : 23,916) Price Target: HK$ 5.50 (4% downside) (Prev HK$7.4) Potential Catalyst: Stronger smartphone shipment and monetisation of new mobile internet businesses Where we differ: We are more conservative on near-term earnings Analyst Tsz Wang TAM CFA, +852 2971 1772 tw_tam@hk.dbsvickers.com Price Relative 11.4 9.4 7.4 5.4 3.4 HK$ 1.4 27 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 (LHS) Relative Index Relative HSI INDEX (RHS) Forecasts and Valuation FY Dec (HK$ m) 2014A 2015F 2016F 2017F Turnover 30,691 34,210 37,950 41,370 EBITDA 1,413 1,507 1,540 1,558 Pre-tax Profit 1,149 1,199 1,224 1,222 Net Profit 1,093 1,127 1,151 1,149 Net Pft (Pre Ex) 1,093 1,127 1,151 1,149 EPS (HK$) 0.92 0.91 0.91 0.89 EPS Gth (%) 233.0 (0.4) (0.3) (2.6) Diluted EPS (HK$) 0.88 0.88 0.88 0.86 DPS (HK$) 0.39 0.32 0.31 0.31 BV Per Share (HK$) 3.35 3.76 4.26 4.73 PE (X) 6.3 6.3 6.3 6.5 P/Cash Flow (X) 3.3 3.3 3.1 2.9 P/Free CF (X) 4.9 3.6 3.4 3.2 EV/EBITDA (X) 6.0 5.8 5.8 5.7 Net Div Yield (%) 6.8 5.5 5.5 5.3 P/Book Value (X) 1.7 1.5 1.3 1.2 Net Debt/Equity (X) 0.4 0.3 0.3 0.2 ROAE (%) 31.2 25.6 22.7 19.7 Earnings Rev (%): (1) (2) Consensus EPS (HK$) 1.00 1.08 1.22 Other Broker Recs: B: 11 S: 2 H: 7 ICB Industry: Technology ICB Sector: Technology Hardware & Equipment Principal Business: TCLC is a global-oriented handset manufacturer with production based in China Source of all data: Company, DBSV, Thomson Reuters, HKEX 207 187 167 147 127 107 87 67 47 Slow 1H15 results reaffirms cautious outlook 1H15 earnings growth of 5% was below market expectations Management revised down full year sales growth guidance to 10%, from 30% previously Uncertain outlook from ASP and margin pressure Maintain HOLD with a lower TP of HK$5.5 1H15 results below market expectations. Revenue grew by 8% y-o-y to HK$13,267m in 1H15, with net profit increasing by 5% to HK$453m. The results were below market expectations, in our view. Sales growth momentum was behind the previous full year guidance of 30% growth. We note that 2Q15 revenue declined by 2% y-o-y. Management has revised down its sales growth target to 10%. The results also included an exchange gain of HK$131m due to ineffective hedging, which is nonrecurring in nature. The company has proposed an interim DPS of HK$0.128, representing 35% payout ratio. Uncertain outlook with ASP and margin pressure. Smartphone shipments grew by 31% y-o-y to 19.7m in 1H15. We estimate that smartphone ASP decreased by 12% y-o-y, due to higher contribution from entry level products. The company has failed to upgrade its overall product mix, in the absence of any flagship models or products. Blended ASP fell to US$50.3, from 1H14 s US$52.3. Group gross margin was slightly lower at 19.3% (vs. 19.5% in 1H14). Overall margin was stable, but we expect pressure going forward due to product commoditisation. Business outlook is uncertain in the nearterm. Maintain HOLD with a lower TP of HK$5.5. We have revised down our FY15-16F earnings slightly by 1% and 2% after lowering our ASP assumptions. We now expect earnings to grow by 3% and 2% in the coming 2 years. In view of the uncertain business outlook, we maintain our HOLD recommendation, but lower our TP to HK$5.5, based on 6x FY16F PE (from 8x FY15F PE previously), representing a down cycle PE (around 1SD below average PE). The stock offers 5%+ dividend yield (based on 35% payout ratio), which should provide downside protection at current level. At A Glance Issued Capital (m shrs) 1,259 Mkt. Cap (HK$m/US$m) 7,216 / 930 Major Shareholders TCL Corporation (%) 62.4 Free Float (%) 37.6 3m Avg. Daily Val. (US$m) 3.6 www.dbsvickers.com ed- JS / sa- DL
INVESTMENT THESIS Profile TCL Comm is a China-based, global-oriented mobile handset provider which currently manages two brands, namely TCL and ALCATEL. It is now one of the top ten global handset manufacturers in terms of shipment volume. Rationale Unfavourable supply- and demand-side factors Global smartphone shipment growth is slowing down. Commodisation of smartphone is also leading to margin pressure. Valuation We rate Technology Holdings a HOLD. Our target price is based on 6x FY16 price-earnings. Risks Slow innovation Failure to develop flagship products, which would negatively impact shipment volumes and margins. Inability to keep up with any technology transition in the industry. Source: DBS Vickers Page 2
Results highlights HK$ m 1H14 1H15 YoY YoY QoQ 2Q14 1Q15 2Q15 chg chg chg Revenue 12,218 13,227 8% 6,677 6,690 6,537-2% -2% Gross profit 2,381 2,555 7% 1,294 1,278 1,276-1% 0% Gross margin (%) 19.5% 19.3% 19.4% 19.1% 20 Other income 209 382 83% 112 155 227 102% 46% Research and development costs (517) (813) 57% -262-420 -393 50% -7% Selling and distribution expenses (1,033) (897) -13% -567-451 -446-21% -1% Administrative expenses (527) (621) 18% -293-315 -306 5% -3% Other operating expenses (9) (67) 633% 7-23 -44-758% 93% Finance costs (42) (69) 62% -18-35 -34 88% -4% Profit before income tax 461 467 1% 273 188 279-31% 48% Net profit 431 453 5% 254 185 268-27% 45% Source: Company PE band chart PB band chart Share Price (HK$) 12 10 8 6 4 2 0 12x 10x 7x 5x 3x Share Price (HK$) 18 16 14 12 10 8 6 4 2 0 4.0x 3.2x 2.3x 1.5x 0.7x Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Source: Thomson Reuters, DBS Vickers Source: Thomson Reuters, DBS Vickers Page 3
Peer Table Mkt PE PE Yield Yield P/Bk P/Bk EV /EBITDA ROE ROE Currency Price Cap Fiscal 15F 16F 15F 16F 15F 16F 15F 16F 15F 16F Company Name Code Local$ US$m Y r x x % % x x x x % % TCL Comm* 2618 HK HKD 5.73 931 Dec 6.3 6.3 5.5 5.5 1.5 1.3 5.8 5.8 25.6 22.7 Apple AAPL US USD 113.5 647,202 Sep 12.4 11.6 1.8 1.9 5.0 4.2 7.4 7.2 42.9 38.5 HTC 2498 TT TWD 55 1,442 Dec n.a. n.a. 0.1 0.0 0.7 0.8 (2.8) (6.7) (15.0) (12.6) Coolpad Group 2369 HK HKD 1.65 926 Dec 13.9 11.6 1.0 1.2 1.6 1.4 9.9 8.2 14.1 14.4 Nokia NOK1V FH EUR 5.86 23,752 Dec 18.7 17.4 2.8 3.0 2.5 2.2 9.8 8.8 15.3 15.9 Sim Technology Gp. 2000 HK HKD 0.425 140 Dec n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Blackberry# BB CN CAD 9.91 4,040 Feb n.a. n.a. 0.0 0.0 1.2 1.1 n.a. n.a. (2.4) 2.5 Samsung Electronics 005930 KS KRW 1,154,000 169,370 Dec 8.3 7.8 1.7 1.8 1.0 0.9 2.8 2.7 14.5 17.1 ZTE 'H'* 763 HK HKD 17.68 11,130 Dec 17.3 15.2 1.4 1.6 2.2 1.9 10.0 9.0 13.1 13.4 # FY15: FY16; FY16: FY17 Source: Thomson Reuters, *DBS Vickers Page 4
Key Assumptions FY Dec 2013A 2014A 2015F 2016F 2017F Sensitivity Analysis Unit shipment (m) 55.2 73.5 81.0 87.0 93.0 2015 Smartphone shipment Smartphone +/- 17.6 41.5 55.0 65.0 75.0 Net Profit +/- 9% (m) 1% Gross margin +/- ASP (US$) 45.0 53.5 54.1 55.9 57.0 Net Profit +/- 29% 1% Gross Margin % 19.0 19.3 19.1 18.9 18.7 Key Assumption Name 5 N/A N/A N/A N/A N/A Income Statement (HK$ m) FY Dec 2013A 2014A 2015F 2016F 2017F Revenue 19,362 30,691 34,210 37,950 41,370 Cost of Goods Sold (15,690) (24,774) (27,676) (30,773) (33,622) Gross Profit 3,672 5,918 6,534 7,178 7,748 Other Opng (Exp)/Inc (3,380) (4,737) (5,300) (5,918) (6,491) Operating Profit 292 1,180 1,234 1,259 1,257 Other Non Opg (Exp)/Inc 0 0 0 0 0 Associates & JV Inc (2) 0 0 0 0 Net Interest (Exp)/Inc 8 (31) (35) (35) (35) Dividend Income 0 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 0 Pre-tax Profit 298 1,149 1,199 1,224 1,222 Tax 18 (41) (72) (73) (73) Minority Interest (3) (15) 0 0 0 Preference Dividend 0 0 0 0 0 Net Profit 313 1,093 1,127 1,151 1,149 Net Profit before Except. 313 1,093 1,127 1,151 1,149 EBITDA 482 1,413 1,507 1,540 1,558 Growth Revenue Gth (%) 60.9 58.5 11.5 10.9 9.0 EBITDA Gth (%) N/A 193.5 6.6 2.2 1.2 Opg Profit Gth (%) N/A 304.2 4.5 2.1 (0.2) Net Profit Gth (%) N/A 248.6 3.1 2.1 (0.2) Margins & Ratio Gross Margins (%) 19.0 19.3 19.1 18.9 18.7 Opg Profit Margin (%) 1.5 3.8 3.6 3.3 3.0 Net Profit Margin (%) 1.6 3.6 3.3 3.0 2.8 ROAE (%) 12.0 31.2 25.6 22.7 19.7 ROA (%) 2.3 6.4 5.3 4.7 4.2 ROCE (%) 4.0 15.7 13.0 12.3 11.4 Div Payout Ratio (%) 37.4 43.3 35.0 35.0 35.0 Net Interest Cover (x) NM 38.5 35.2 36.0 35.9 Source: Company, DBS Vickers Margins Trend 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 2013A 2014A 2015F 2016F 2017F Operating Margin % Net Income Margin % Page 5
Interim Income Statement (HK$ m) Revenue Trend FY Dec 1H2013 2H2013 1H2014 2H2014 1H2015 Revenue 6,407 12,955 12,218 18,473 13,227 Cost of Goods Sold (5,278) (10,412) (9,837) (14,937) (10,672) Gross Profit 1,129 2,543 2,381 3,537 2,555 Other Oper. (Exp)/Inc (1,366) (2,014) (1,907) (2,830) (2,056) Operating Profit (237) 529 474 706 498 Other Non Opg (Exp)/Inc 0 0 0 0 0 Associates & JV Inc (1) (1) 0 0 (2) Net Interest (Exp)/Inc 11 (3) (13) (18) (29) Exceptional Gain/(Loss) 0 0 0 0 0 Pre-tax Profit (227) 526 461 688 467 Tax 18 (1) (20) (21) (14) Minority Interest 2 (5) (10) (5) (1) Net Profit (207) 520 431 662 453 Net profit bef Except. (207) 520 431 662 453 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2H2010 1H2011 2H2011 1H2012 2H2012 1H2013 2H2013 1H2014 2H2014 Revenue Revenue Growth % (YoY) 1H2015 120% 100% 80% 60% 40% 20% 0% Growth Revenue Gth (%) 25.8 86.7 90.7 42.6 8.3 Opg Profit Gth (%) N/A N/A N/A 33.5 5.2 Net Profit Gth (%) N/A N/A N/A 27.2 5.1 Margins Gross Margins (%) 17.6 19.6 19.5 19.1 19.3 Opg Profit Margins (%) (3.7) 4.1 3.9 3.8 3.8 Net Profit Margins (%) (3.2) 4.0 3.5 3.6 3.4 Source: Company, DBS Vickers Page 6
Balance Sheet (HK$ m) Asset Breakdown FY Dec 2013A 2014A 2015F 2016F 2017F Net Fixed Assets - 8.2% Net Fixed Assets 1,070 1,555 1,482 1,401 1,301 Invts in Associates & JVs 5 53 53 53 53 Other LT Assets 1,482 2,083 2,247 2,392 2,534 Cash & ST Invts 1,933 2,807 2,723 2,778 2,912 Inventory 2,649 3,293 4,117 4,940 5,681 Debtors 6,036 8,244 10,212 12,180 13,952 Other Current Assets 1,248 1,661 2,034 2,407 2,743 Total Assets 14,423 19,696 22,868 26,152 29,175 Debtors - 56.2% Inventory - 22.7% Assocs'/JVs - 0.3% Bank, Cash and Liquid Assets - 12.7% ST Debt 2,690 4,312 4,312 4,312 4,312 Creditors 3,875 5,167 6,458 7,750 8,913 Other Current Liab 4,656 5,929 7,198 8,438 9,552 LT Debt 196 0 0 0 0 Other LT Liabilities 93 109 109 109 109 Shareholder s Equity 2,909 4,089 4,700 5,452 6,199 Minority Interests 4 90 90 90 90 Total Cap. & Liab. 14,423 19,696 22,868 26,152 29,175 Non-Cash Wkg. Capital 1,402 2,103 2,707 3,340 3,911 Net Cash/(Debt) (953) (1,505) (1,589) (1,535) (1,400) Debtors Turn (avg days) 87.8 84.9 98.5 107.7 115.3 Creditors Turn (avg days) 74.2 67.2 77.4 85.0 91.3 Inventory Turn (avg days) 46.1 44.2 49.3 54.2 58.2 Asset Turnover (x) 1.4 1.8 1.6 1.5 1.5 Current Ratio (x) 1.1 1.0 1.1 1.1 1.1 Quick Ratio (x) 0.7 0.7 0.7 0.7 0.7 Net Debt/Equity (X) 0.3 0.4 0.3 0.3 0.2 Net Debt/Equity ex MI (X) 0.3 0.4 0.3 0.3 0.2 Capex to Debt (%) 16.8 15.9 4.6 4.6 4.6 Z-Score (X) 2.0 2.2 2.3 2.2 2.2 Source: Company, DBS Vickers Cash Flow Statement (HK$ m) FY Dec 2013A 2014A 2015F 2016F 2017F Pre-Tax Profit 298 1,149 1,199 1,224 1,222 Dep. & Amort. 1,136 1,351 1,697 1,850 2,011 Tax Paid (16) (83) (41) (72) (73) Assoc. & JV Inc/(loss) 2 0 0 0 0 (Pft)/ Loss on disposal of FAs 0 0 0 0 0 Chg in Wkg.Cap. (762) (184) (634) (634) (571) Other Operating CF (17) (150) (65) (65) (65) Net Operating CF 640 2,083 2,155 2,303 2,524 Capital Exp.(net) (484) (684) (200) (200) (200) Other Invts.(net) (1,005) (1,471) (1,588) (1,715) (1,853) Invts in Assoc. & JV (3) (47) 0 0 0 Div from Assoc & JV 0 0 0 0 0 Other Investing CF 229 (63) 65 65 65 Net Investing CF (1,263) (2,264) (1,723) (1,850) (1,988) Div Paid 0 (274) (516) (399) (402) Chg in Gross Debt (3,467) 1,426 0 0 0 Capital Issues 78 161 0 0 0 Other Financing CF 3,158 (880) 0 0 0 Net Financing CF (230) 434 (516) (399) (402) Currency Adjustments 25 79 0 0 0 Chg in Cash (828) 331 (84) 54 134 Opg CFPS (HK$) 1.23 1.90 2.26 2.32 2.39 Free CFPS (HK$) 0.14 1.17 1.58 1.66 1.79 Source: Company, DBS Vickers Capital Expenditure HK$ 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 2013A 2014A 2015F 2016F 2017F Capital Expenditure (-) Page 7
Target Price & Ratings History HK$ 11.0 10.0 9.0 8.0 1 2 3 4 5 6 S.No. Date Closing Target Rating Price Price 1: 15-Aug-14 HK$10.52 HK$13.70 Buy 2: 24-Oct-14 HK$7.78 HK$11.90 Buy 3: 26-Nov-14 HK$7.92 HK$11.90 Buy 4: 5-Jan-15 HK$7.19 HK$11.90 Buy 5: 9-Jun-15 HK$7.76 HK$ 7.40 Hold 6: 8-Jul-15 HK$7.25 HK$7.40 Hold 7.0 6.0 5.0 Aug-14 Oct-14 Jan-15 Mar-15 May-15 Aug-15 Source: DBS Vickers Page 8
DBSV 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 DBS Vickers (Hong Kong) Limited ( DBSVHK ), a direct wholly-owned subsidiary of DBS Vickers Securities Holdings Pte Ltd ("DBSVH"). This report is intended for clients of DBSV Group 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 DBSVHK. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBSVHK and/or DBSVH) 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. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. DBSVHK accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. DBSVH is a wholly-owned subsidiary of DBS Bank Ltd. DBS Bank Ltd along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. DBSVHK, DBS Bank Ltd and their associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. 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 DBSVHK and/or DBSVH (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. 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. DBS Vickers Securities (USA) Inc ("DBSVUSA"), a U.S.-registered broker-dealer, 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. ANALYST CERTIFICATION The research analyst 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 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 the date the report is published, the analyst and his / her spouse and/or relatives and/or associate who are financially dependent on the analyst, do not hold interests in the securities recommended in this report ( interest includes direct or indirect ownership of securities, directorships and trustee positions). Page 9
COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBSVHK and its subsidiaries do not have a proprietary position in the securities recommended in this report as of the date the report is published. 2. DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates may beneficially own a total of 1% or more of any class of common equity securities of the subject company mentioned in this document as of the latest available date of the updated information. 3. Compensation for investment banking services: DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates may have received compensation, within the past 12 months, and within the next 3 months may receive or intends to seek compensation for investment banking services from the subject company mentioned in this document. 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 document should contact DBSVUSA exclusively. 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 document is being distributed in Australia by DBSVHK, which 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. DBSVHK is regulated by the Securities and Futures Commission under the laws of Hong KONG, which differ from Australian laws. Distribution of this report is intended only for wholesale investors within the meaning of the CA. Hong Kong Indonesia This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission. This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia. Malaysia 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 United Kingdom Dubai United States Other jurisdictions 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. Research reports distributed are only intended for institutional clients only and no other person may act upon it. This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK is intended only for institutional clients. This research report is being distributed in The Dubai International Financial Centre ( DIFC ) by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3 rd 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. Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations. It is being distributed in the United States by DBSV US, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBS Vickers Securities (USA) Inc ( 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. DBS Vickers (Hong Kong) Limited 18 th Floor Man Yee building, 68 Des Voeux Road Central, Central, Hong Kong Tel: (852) 2820-4888, Fax: (852) 2868-1523 Page 10