Version 9 Bloomberg: GENP MK Reuters: GENP.KL Refer to important disclosures at the end of this report Malaysia Equity Research 24 Nov 2016 BUY (Upgraded from HOLD) Last Traded Price ( 23 Nov 2016): RM10.52 (KLCI : 1,630.38) Price Target 12-mth: RM12.40 (18% upside) Shariah Compliant: Yes Potential Catalyst: Strong 4Q16 earnings and FY17 output recovery Where we differ: Higher than consensus on higher FFB output assumption Analyst Malaysian Research Team +603 2604 3333 general@alliancedbs.com What s New 3Q16 earnings above our/consensus expectations Better-than-expected PK/CPO ASP; strong rebound in FFB output boosted 3Q16 earnings FY16F/17F earnings raised by 17%/13%, as we adjust FFB output and CPO/PK ASP higher Upgrade to BUY for 18% upside to revised TP Price Relative Forecasts and Valuation FY Dec (RM m) 2015A 2016F 2017F 2018F Revenue 1,375 1,403 1,675 1,883 EBITDA 302 413 548 671 Pre-tax Profit 247 381 518 632 Net Profit 190 281 382 466 Net Pft (Pre Ex.) 190 281 382 466 Net Pft Gth (Pre-ex) (%) (49.7) 48.1 36.0 21.9 EPS (sen) 24.2 35.9 48.8 59.5 EPS Pre Ex. (sen) 24.2 35.9 48.8 59.5 EPS Gth Pre Ex (%) (50) 48 36 22 Diluted EPS (sen) 24.2 35.9 48.8 59.5 Net DPS (sen) 5.48 8.11 11.0 13.4 BV Per Share (sen) 539 569 609 657 PE (X) 43.4 29.3 21.6 17.7 PE Pre Ex. (X) 43.4 29.3 21.6 17.7 P/Cash Flow (X) 55.8 21.4 19.5 15.9 EV/EBITDA (X) 29.5 21.2 16.1 13.2 Net Div Yield (%) 0.5 0.8 1.0 1.3 P/Book Value (X) 2.0 1.8 1.7 1.6 Net Debt/Equity (X) 0.1 0.0 0.1 0.1 ROAE (%) 4.7 6.5 8.3 9.4 Earnings Rev (%): 17 13 12 Consensus EPS (sen): 31.3 42.9 50.8 Other Broker Recs: B: 2 S: 5 H: 15 Source of all data on this page: Company, AllianceDBS, Bloomberg Finance L.P Expect year-end output boost Helped by depreciating ringgit. Next year, a rebound in global palm oil supply should meet tepid food demand growth. But higher exports also means higher collection of levies used to fund biodiesel in Indonesia. This should provide support for palm oil prices. For (GENP), rising output in its Indonesian estates will be the main source of growth. Combined with forecast of a weaker ringgit, we expect GENP to book 22% earnings CAGR between FY16F and FY19F driven in part by 11% FFB output CAGR over the same period. In this report, we upgrade our rating to BUY for 18% upside potential. Recovering output. GENP booked a 3Q16 net profit of RM97.8m (+195% y-o-y; +139% q-o-q) better than the RM60.5m-64.1m range we had anticipated. The strong performance was attributable to 118% q-o-q jump (+107% y-oy) in Plantations EBITDA and 73% q-o-q rise in Property contribution (partly helped by one-off land sale). Rebounds in fresh fruit bunch (FFB) production as well as crude palm oil (CPO) and palm kernel (PK) ASP helped to propel Plantations profitability. FY16F FFB output growth guidance of 5-6%y-o-y decline means that there should be a >20% q-o-q output boost in 4Q16 as El Nino impact dissipates. Accounting for the higherthan-expected PK prices and our previously conservative output estimates, we adjust FY16F/17F earnings by +17%/+13% and raise our TP to RM12.40. Securing volume, penetrating genome and venturing downstream. Having expanded aggressively in Indonesia since CY07, GENP has concurrently embarked upon improving its planting material through genome filtering and recently moved towards downstream projects through partnerships with Musim Mas Group and Elevance Renewable Sciences for its long-term strategy. From recent acquisition the group also recently added c.9k ha of net plantable land bank for future growth. Valuation: We raise GENP s SOP-based TP (FY17F base year; Plantations segment is valued using DCF) to RM12.40 after imputing better-than-expected FFB yields and PK/CPO ASP this year and a strong rebound in FFB yield plus new maturities next year. Key Risks to Our View: A strong recovery in CPO prices (either data, weather or regulatory-driven) would lift the share price above our fair value, and vice versa. At A Glance Issued Capital (m shrs) 793 Mkt. Cap (RMm/US$m) 8,347 / 1,896 Major Shareholders (%) Genting Berhad 51.4 Employees Provident Fund 12.9 Kumpulan Wang Persaraan 5.1 Free Float (%) 30.6 3m Avg. Daily Val (US$m) 0.87 ICB Industry : Consumer Goods / Food Producers Refer to important disclosures at the end of this report ed: CK / sa:bc
WHAT S NEW Expect year-end output boost Highlights Strong 3Q16 results boosted by output and ASP GENP booked a 3Q16 net profit of RM97.8m (+195% y-o-y; +139% q-o-q) better than the RM60.5m-64.1m range we had anticipated. The strong performance was attributable to 118% q-o-q jump (+107% y-o-y) in Plantations EBITDA and 73% q-oq rise in Property contribution (partly helped by one-off land sale). Both rebounds in fresh fruit bunch (FFB) production and PK and CPO ASP helped to propel Plantations contribution. Rebounds in fresh fruit bunch (FFB) output, as well as betterthan-expected crude palm oil (CPO and palm kernel (PK) ASP helped to boost Plantations contribution. Realised 3Q16 CPO ASP of RM2,617/MT and PK ASP of RM2,629/MT were in line with spot averages for the period; but higher than our conservative expectations. Also, our initial FY16 estimates imputed 10% y-o-y decline in FFB output, which were steeper than management guidance of 5-6% drop y-o-y. CPO cost eased on yield recovery and higher PK credit GENP reported all-in 3Q16 CPO production cost of RM1,195/MT (including PK credit) down significantly from 2Q16 cost of RM1,700/MT. The decline was primarily driven by higher FFB output and higher PK credit. For 9M16, GENP CPO cost came in at RM1,530/MT. We understand fertiliser costs are expected to come down further next year (-5% y-o-y in Malaysia and -17% y-o-y in Indonesia); mainly due to lower global fertiliser prices as well as planned switch from compound to straight fertiliser (in Indonesia). For the quarter, GENP sold 6.5k MT of biodiesel under the B7 mandate. This brings its 9M16 sales to c.21k MT. The group is still awaiting government confirmation on implementation of B7 for industrial and B10 for transportation, which had been delayed twice. Meanwhile, the group s refinery complex has been completed and is now at pre-commissioning stage. Maintaining guidance of 5-6% decline FFB output The group is maintaining its overall FFB output growth guidance of 5-6% decline for the year; as it expects 4Q16 FFB production in Malaysia to sequentially expand by 2%; while that in Indonesia is expected to jump by >80% q-o-q (partly helped by c.4k ha of maturing estates). We understand October and November 2016 FFB output in Indonesia had registered 72k MT per month as compared to 109k MT for 3Q16 before starting to seasonally decline again in December 2016. As implied by its target for the year, the group thus anticipates its FFB output to jump by >20% q-o-q in 4Q16. Imputing YTD performance, we now anticipate GENP to produce 1.618m MT of FFB this year (-6% y-o-y). We also adjusted our CPO and PK ASP higher to bring them in line with YTD averages. The group expects FFB output to rebound 5-10% in Malaysia next year; while Indonesia should return to previous doubledigit growth rates seen prior to El Nino event. Based on our revised forecasts, we expect Malaysian FFB output to rebound by 7%; while the group s Indonesian estates should jump 52% y-o-y (helped by new maturities). Better-than-expected Property contribution GENP s Property segment booked an adjusted EBITDA of RM11.4m (-9% y-o-y; +73% q-o-q) translating to EBITDA margin of 35%. The sequential jump represented one-off profit recognition from land sales. However, margin was slightly better than expected. We adjusted FY16F EBIT contribution from this segment lower by 9% to RM44m to account for 9M16 results. FY16F/17F earnings adjusted 17%/13%; TP raised Imputing higher FFB output, higher CPO and PK ASP; we reduce our FY16F and FY17F earnings by 17% and 13%, respectively. The group s DCF-based TP (FY17F base year) was likewise raised by 7% to RM12.40 as a result. We expect the recovery in FY17F FFB yields to make up for the drop this year. Expansion slower than expected GENP undertook new planting of c.250 ha in 3Q16, bringing its 9M16 new planting to 1.4k ha (or only 47% of our initial fullyear target). The group again lowered its target for the full year to 2k ha from 3k ha previously (and 4k ha at beginning of the year). We have likewise adjusted our forecast to match the lower guidance. Our revised TP offers 18% upside potential from the current level. We recommend investors to accumulated the counter and upgrade our rating to BUY. Page 2
Quarterly / Interim Income Statement (RMm) FY Dec 3Q2015 2Q2016 3Q2016 % chg yoy % chg qoq Revenue 320 309 397 23.8 28.3 Cost of Goods Sold (220) (212) (213) (3.1) 0.6 Gross Profit 100 97.1 183 83.1 88.8 Other Oper. (Exp)/Inc (36.0) (33.8) (40.7) 13.0 20.4 Operating Profit 64.1 63.3 143 122.5 125.3 Other Non Opg (Exp)/Inc (4.5) (3.8) (3.1) 31.6 18.8 Associates & JV Inc 5.28 5.36 5.78 9.5 7.9 Net Interest (Exp)/Inc (18.8) (16.5) (12.7) 32.4 22.8 Exceptional Gain/(Loss) 4.50 3.79 3.08 (31.6) (18.8) Pre-tax Profit 50.6 52.2 136 168.3 159.9 Tax (16.0) (14.7) (39.2) 144.9 167.1 Minority Interest (1.4) 3.29 1.26 nm (61.7) Net Profit 33.2 40.8 97.8 194.8 139.5 EBITDA 64.1 63.3 143 122.5 125.3 Margins (%) Gross Margins 31.2 31.4 46.2 Opg Profit Margins 20.0 20.5 36.0 Net Profit Margins 10.4 13.2 24.6 Source of all data: Company, AllianceDBS Page 3
CRITICAL DATA POINTS TO WATCH CPO price Earnings Drivers: CPO price. As a commodity producer, GENP is a price-taker. Movements in international CPO prices would directly impact the group s profitability. We currently expect CPO prices (FOB Pasir Gudang) to average US$633/MT (+13% y-o-y) in CY16 and US$618/MT in CY17 (-2% y-o-y). Volume output. Approximately 70% of GENP s planted area in Malaysia is located in Sabah representing c.35% of its total planted area. The remainder is primarily located in West and Central Kalimantan. The group s Malaysian estates are 95% mature, but only half of GENP s Indonesian estates have matured. Given the dry weather in Sabah, GENP s Malaysian CPO output is forecast to remain flat at 321k MT in FY16 (vis-àvis 27% y-o-y jump in Indonesian output to 152k MT). GENP has undertaken an aggressive new planting programme in Indonesia since CY07, and the group has started seeing significant increases in its FFB output from Indonesia although Indonesia is estimated to contribute only 32% of total FFB output in FY16F (rising from 25% in FY15). GENP s capex outlay in Indonesia would not only focus on new planting, but also on adding mills (from 135 MT/hour capacity currently). Beware of export levies in Indonesia. GENP has started supplying biodiesel in Sabah with the rollout of B7 programme since FY15 from its 300k MT p.a. biodiesel plant. 3Q16 volumes reached 7k MT (thanks to the B7 mandate). While the positive impact of B7 in Malaysia remains insignificant, Indonesia s B20 programme would do more harm to GENP. The group currently does not have any biodiesel capacity in Indonesia; the US$50/MT CPO export levy works to lower Indonesia s domestic CPO prices by roughly the same amount. Demand seasonality. As a major vegetable oil with 38% market share globally, palm oil is an important food staple. The other major vegetable oils are soybean oil with 29% market share, followed by rapeseed/canola oil and sunflower oil with 16% and 10% market shares respectively. There is generally demand substitutability between vegetable oils (high price elasticity of demand), although certain vegetable oils are more suitable than others for certain applications. Relative to other oil crops, palm oil has the highest productivity per hectare (i.e. c.5 MT/ha), while soybean oil s productivity is typically 0.5 MT/ha. Demand for palm oil is dominant in Asia where local festivities drive higher demand in certain months of the year, for example, Ramadan month, Chinese New Year, and Divali are typically high-demand periods in Asia. Mature palm oil hectarage CPO sales volume PK sales volume Average MYR/USD Source: Company, AllianceDBS Page 4
Balance Sheet: Net cash position. As at end-september 2016, GENP had a net gearing ratio of 22%, including USD debts amounting to US$276m, which represented debts incurred by its Indonesian subsidiaries to fund its ongoing capex programme there (interest expense and FX losses are partly capitalised). The group s 4-quarter rolling cash conversion cycle shortened to negative 15 days from two days, due to longer payable days. Negative free cash flow in FY16F and FY17F. GENP is forecast to book negative free cash flow in FY16F through FY17F, primarily reflecting relatively constant capex outlay and reduced output (due to replanting and lagged impact of FY15 El Nino). With higher output, CY18F free cash flow is forecast to rebound to RM80m. GENP s cash balances should remain sufficient for any opportunistic acquisitions thanks to issuance of RM1bn sukuk issued in 2Q15. Share Price Drivers: Offering growth, despite higher multiple. Among its upstream peers, GENP is trading at a relatively higher forward PE. We believe the market has incorporated the valuation of the group s property land bank in addition to its plantation segment s 22% earnings CAGR (CY16F-18F) potential from favourable maturity pipeline in Indonesia and stable CPO prices. Key Risks: Volatility in CPO prices and USD exchange rate. Continued strength in CPO prices may deliver better-than-expected earnings, while lower energy prices from expansion of US shale gas would have an adverse impact on demand for vegetable oils for biofuels. Likewise, volatility in USD would affect the profitability of planters in general. Setback in expansion plans. Our forecasts are based on assumed hectarage for new planting and replanting. Any setback on these plans would negatively affect our valuation due to slower volume growth. Leverage & Asset Turnover (x) Capital Expenditure ROE (%) Forward PE Band (x) Regulatory changes. Any further increase in Indian import duty of refined oils or changes in the structure of Indonesian/ Malaysian export taxes would impact the demand for CPO/refined oils. Market sentiment. Changes in fund flows towards or out of emerging markets would affect the valuations of plantation counters. Weather. Changes in rainfall pattern (caused by either El Nino or La Nina) would affect FFB yields with some time lag. Company Background GENP is in the palm oil plantation business with over 220k ha of plantations in Malaysia and Indonesia, and nine palm oil mills currently. Its other/non-core businesses are biotechnology and property development. PB Band (x) Source: Company, AllianceDBS Page 5
Key Assumptions FY Dec 2014A 2015A 2016F 2017F 2018F CPO price (RM/MT) 2,413 2,168 2,600 2,610 2,720 Mature palm oil hectarage 87,485 91,117 107,331 109,864 112,474 CPO sales volume 399,394 441,261 418,304 512,484 568,168 PK sales volume 87,979 96,120 90,269 108,536 118,642 Average MYR/USD 3.31 4.08 4.10 4.22 4.37 Segmental Breakdown FY Dec 2014A 2015A 2016F 2017F 2018F Revenues (RMm) Plantation 1,170 1,093 1,271 1,536 1,740 Property 372 189 132 139 143 Others 101 93.1 0.0 0.0 0.0 Total 1,643 1,375 1,403 1,675 1,883 EBIT (RMm) Plantation 393 142 342 462 568 Property 155 61.1 43.9 46.3 47.9 Others (54.9) 78.7 2.10 2.21 2.32 Total 493 282 388 510 619 EBIT Margins (%) Plantation 33.6 13.0 26.9 30.1 32.7 Property 41.7 32.3 33.2 33.4 33.5 Total 30.0 20.5 27.7 30.5 32.9 Income Statement (RMm) FY Dec 2014A 2015A 2016F 2017F 2018F Revenue 1,643 1,375 1,403 1,675 1,883 Cost of Goods Sold (960) (924) (867) (976) (1,057) Gross Profit 683 451 536 698 825 Other Opng (Exp)/Inc (201) (219) (204) (244) (263) Operating Profit 481 232 332 454 563 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 17.7 22.0 32.2 42.4 50.8 Net Interest (Exp)/Inc 20.7 (6.0) 16.4 21.3 18.4 Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 520 247 381 518 632 Tax (136) (70.8) (95.2) (130) (158) Minority Interest (6.5) 13.2 (4.8) (6.5) (7.9) Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Profit 377 190 281 382 466 Net Profit before Except. 377 190 281 382 466 EBITDA 545 302 413 548 671 Growth Revenue Gth (%) 18.7 (16.3) 2.0 19.4 12.4 EBITDA Gth (%) 73.6 (44.7) 37.0 32.7 22.3 Opg Profit Gth (%) 85.4 (51.9) 43.6 36.7 23.8 Net Profit Gth (Pre-ex) (%) 65.6 (49.7) 48.1 36.0 21.9 Margins & Ratio Gross Margins (%) 41.6 32.8 38.2 41.7 43.8 Opg Profit Margin (%) 29.3 16.8 23.7 27.1 29.9 Net Profit Margin (%) 23.0 13.8 20.0 22.8 24.7 ROAE (%) 10.3 4.7 6.5 8.3 9.4 ROA (%) 7.2 3.0 3.8 5.0 5.8 ROCE (%) 7.3 2.7 3.6 4.7 5.5 Div Payout Ratio (%) 20.5 22.6 22.6 22.6 22.6 Net Interest Cover (x) NM 38.3 NM NM NM Source: Company, AllianceDBS Page 6
Quarterly / Interim Income Statement (RMm) FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 Revenue 320 424 261 309 397 Cost of Goods Sold (220) (295) (170) (212) (213) Gross Profit 100 129 90.7 97.1 183 Other Oper. (Exp)/Inc (36.0) (38.8) (41.5) (33.8) (40.7) Operating Profit 64.1 90.2 49.2 63.3 143 Other Non Opg (Exp)/Inc (4.5) 9.10 9.13 (3.8) (3.1) Associates & JV Inc 5.28 6.40 6.18 5.36 5.78 Net Interest (Exp)/Inc (18.8) (17.3) (16.9) (16.5) (12.7) Exceptional Gain/(Loss) 4.50 (9.1) (9.1) 3.79 3.08 Pre-tax Profit 50.6 79.3 38.5 52.2 136 Tax (16.0) (18.8) (10.4) (14.7) (39.2) Minority Interest (1.4) 7.93 (1.1) 3.29 1.26 Net Profit 33.2 68.5 27.0 40.8 97.8 Net profit bef Except. 28.7 77.6 36.1 37.0 94.7 EBITDA 64.1 90.2 49.2 63.3 143 Growth Revenue Gth (%) 4.8 32.5 (38.5) 18.5 28.3 EBITDA Gth (%) (2.1) 40.8 (45.5) 28.7 125.3 Opg Profit Gth (%) (2.1) 40.8 (45.5) 28.7 125.3 Net Profit Gth (Pre-ex) (%) (43.4) 170.6 (53.5) 2.6 155.6 Margins Gross Margins (%) 31.2 30.4 34.8 31.4 46.2 Opg Profit Margins (%) 20.0 21.3 18.9 20.5 36.0 Net Profit Margins (%) 10.4 16.1 10.3 13.2 24.6 Balance Sheet (RMm) FY Dec 2014A 2015A 2016F 2017F 2018F Net Fixed Assets 1,339 1,562 1,851 2,104 2,344 Invts in Associates & JVs 62.4 70.2 102 145 196 Other LT Assets 2,532 3,131 2,992 3,081 3,168 Cash & ST Invts 1,177 1,925 2,055 1,978 1,974 Inventory 105 98.1 86.9 97.4 105 Debtors 265 334 211 251 280 Other Current Assets 110 125 126 127 127 Total Assets 5,590 7,246 7,424 7,782 8,194 ST Debt 27.4 56.9 56.9 56.9 56.9 Creditor 324 361 289 328 357 Other Current Liab 18.0 6.33 13.5 15.2 16.5 LT Debt 1,000 2,233 2,233 2,233 2,233 Other LT Liabilities 68.3 84.0 84.0 84.0 84.0 Shareholder s Equity 3,898 4,219 4,458 4,770 5,144 Minority Interests 255 285 290 297 305 Total Cap. & Liab. 5,590 7,246 7,424 7,782 8,194 Non-Cash Wkg. Capital 139 190 121 132 140 Net Cash/(Debt) 149 (365) (234) (312) (315) Debtors Turn (avg days) 55.4 79.6 70.9 50.3 51.4 Creditors Turn (avg days) 129.3 146.4 151.1 127.6 131.5 Inventory Turn (avg days) 39.6 43.4 43.0 38.1 38.9 Asset Turnover (x) 0.3 0.2 0.2 0.2 0.2 Current Ratio (x) 4.5 5.8 6.9 6.1 5.8 Quick Ratio (x) 3.9 5.3 6.3 5.6 5.2 Net Debt/Equity (X) CASH 0.1 0.0 0.1 0.1 Net Debt/Equity ex MI (X) CASH 0.1 0.1 0.1 0.1 Capex to Debt (%) 39.6 17.3 26.2 18.8 18.8 Z-Score (X) 5.1 3.1 3.2 3.2 3.2 Source: Company, AllianceDBS Page 7
Cash Flow Statement (RMm) FY Dec 2014A 2015A 2016F 2017F 2018F Pre-Tax Profit 520 247 381 518 632 Dep. & Amort. 64.1 70.1 80.8 94.0 108 Tax Paid (136) (70.8) (95.2) (130) (158) Assoc. & JV Inc/(loss) (17.7) (22.0) (32.2) (42.4) (50.8) Chg in Wkg.Cap. (34.5) (24.3) 62.4 (11.8) (8.4) Other Operating CF 95.7 (52.8) (12.4) (5.8) (4.5) Net Operating CF 491 148 384 423 518 Capital Exp.(net) (407) (395) (599) (430) (430) Other Invts.(net) 0.0 (400) 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 17.9 11.5 387 0.0 0.0 Net Investing CF (389) (784) (211) (430) (430) Div Paid (23.1) (73.5) (42.5) (70.3) (92.0) Chg in Gross Debt 138 1,233 0.0 0.0 0.0 Capital Issues 93.1 198 0.14 0.0 0.0 Other Financing CF (64.7) (373) 0.0 0.0 0.0 Net Financing CF 144 984 (42.3) (70.3) (92.0) Currency Adjustments 0.0 0.0 0.0 0.0 0.0 Chg in Cash 246 348 131 (77.7) (3.8) Opg CFPS (sen) 68.2 22.0 41.1 55.5 67.3 Free CFPS (sen) 10.9 (31.6) (27.4) (0.9) 11.3 Source: Company, AllianceDBS Target Price & Ratings History Source: AllianceDBS Analyst: Malaysian Research Team Page 8
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