Indonesia Company Guide Version 1 Bloomberg: LINK IJ Reuters: LINK.JK Refer to important disclosures at the end of this report DBS Group Research. Equity 26 Mar 2018 BUY Last Traded Price ( 23 Mar 2018): Rp5,000 (JCI : 6,210.70) Price Target 12-mth: Rp6,200 (24% upside) (Prev Rp6,000) Analyst Sachin MITTAL +65 6682 3699 sachinmittal@dbs.com What s New 4Q17 EBITDA of Rp522bn (+13% y-o-y, +3.6% q-o-q) was in line with expectations Trading at a 30% discount to peers EV/EBITDA despite projected 13% revenue and 11% EBITDA growth in FY18 Expect broadband penetration to rise in FY18 to allay market concerns Maintain BUY with a revised target price of Rp.6,200 Price Relative Forecasts and Valuation FY Dec (Rpbn) 2016A 2017A 2018F 2019F Revenue 2,954 3,399 3,842 4,271 EBITDA 1,727 2,001 2,230 2,504 Pre-tax Profit 1,089 1,339 1,516 1,757 Net Profit 819 1,007 1,140 1,321 Net Pft (Pre Ex.) 819 1,007 1,140 1,321 Net Pft Gth (Pre-ex) (%) 28.0 23.1 13.2 15.9 EPS (Rp) 272 341 386 447 EPS Pre Ex. (Rp) 272 341 386 447 EPS Gth Pre Ex (%) 29 25 13 16 Diluted EPS (Rp) 277 341 386 447 Net DPS (Rp) 96.8 50.8 193 223 BV Per Share (Rp) 1,339 1,531 1,866 2,120 PE (X) 18.4 14.7 13.0 11.2 PE Pre Ex. (X) 18.4 14.7 13.0 11.2 P/Cash Flow (X) 9.7 9.6 8.0 7.1 EV/EBITDA (X) 8.5 7.1 6.0 5.2 Net Div Yield (%) 1.9 1.0 3.9 4.5 P/Book Value (X) 3.7 3.3 2.7 2.4 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 21.5 23.7 22.7 22.4 Earnings Rev (%): 0 2 Consensus EPS (Rp): 389 447 Other Broker Recs: B: 7 S: 1 H: 0 Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P Penetration levels to dictate the share price Trading at a valuation discount despite strong growth potential. Link Net is set to benefit from rising broadband adoption in Indonesia and its strategy of cherry picking affluent households. We expect competition to remain stable given lower returns on invested capital (ROIC) for new network rollouts, limiting the number of players in a region to two. Management expects 13%-14% revenue growth in FY18, higher than our previous projection of ~10%. We project revenue and EBITDA CAGR of 11.5% and 11.2% respectively over FY17-20F. The stock is trading at 29% and 30% discounts in terms of PE and EV/EBITDA vs. peers, respectively. Where we differ. Rise in broadband penetration and rational competition. The sluggish share price performance can be explained by flattish broadband penetration (28.5%) in Link Net s coverage area in FY17, versus expectations of a rise. However, we expect the penetration to rise to 28.7% in FY18 and 29.2% in FY20 as majority of its subscribers are on stricter billing criteria already. We also foresee stable competition as we estimate that ROIC on a new rollout is just 7% with 30% penetration. This may explain why MyRepublic, a new entrant, is rolling out its network in Tier-2 cities instead of competing in the areas of Link Net. In areas where Link Net is present (40% overlap with IndiHome fibre of Telkom), competition is rational. Link Net enjoys >100% ROIC in existing areas but <7% ROIC in new areas, sustaining its aggregate ROIC above 25%. Potential Catalyst. Increased penetration rates over the next 2-3 quarters could allay market concerns. Potential growth in penetration levels over the next 2-3 quarters (Link Net s FY18 projected broadband penetration rate is 28.7%) would signal Link Net s ability to effectively market its services. Valuation: Maintain BUY with a revised TP of Rp6,200. Our FY18F/19F EBITDA has been raised 0.5%/2% on the back of better than expected revenue growth guidance. Our revised TP is based on DCF with WACC of 10.2% and terminal growth of 3%. Key Risks to Our View: Broadband penetration in existing coverage areas may not rise. If Link Net is not able to improve broadband penetration in its existing areas, it will lead to lower growth than our estimates. At A Glance Issued Capital (m shrs) 3,043 Mkt. Cap (Rpbn/US$m) 15,213 / 1,103 Major Shareholders (%) PT First Media 33.8 Asia Link Dewa Pte Ltd 33.5 Free Float (%) 32.7 3m Avg. Daily Val (US$m) 0.20 ICB Industry : Telecommunications / Fixed Line Telecommunications ed: JS / sa:ma, PY, CS
WHAT S NEW Higher home passes and flat penetration. The company added 174K home-passes in FY17 versus our estimate of 153K and much higher than 153K in FY16. As a result, penetration of homes passed remained stable at 28.5% in FY17 (our estimate 28.9%) with addition of ~49,000 subscribers versus 64,000 in FY16. 4Q17 EBITDA was in line, net profit ahead of our estimates. Revenue of Rp894bn (+10.5% y-o-y, +4.6%) in 4Q17 was marginally below our estimate. This was due to lower subscriber additions of 9,000 (-40% y-o-y) in 4Q17 vs. ~13,000 subscribers added on average over the past four quarters due to the impact of stricter billing period of 60 days versus 90 days previously. This also reflected FY17 ARPU rising 3.4% y-o-y to Rp421K as low ARPU customers churned out. 4Q17 EBITDA of Rp522bn (+13% y-o-y, +3.6% q-o-q) was in line and was supported by lower content cost partially offsetting the impact of higher marketing and other expenses. Management guidance for revenue growth and capex is higher than our estimates. FY18 guidance of 180K new home passes is ahead of our earlier 170K estimate. FY18F capex guidance of Rp1.0-1.2tn is also ahead of our previous Rp1tn estimate. More importantly, the company has guided 13-14% revenue growth in FY18F versus our 10% estimate previously. Link Net expects a pick up in subscriber additions in FY18, as majority of its subscriber base is already cleaned up. We estimate 56K subscriber additions in FY18. With stable EBITDA margins and rising depreciation expenses, we estimate 13% earnings growth in FY18F. Quarterly / Interim Income Statement (Rpbn) FY Dec 4Q2016 3Q2017 4Q2017 % chg yoy % chg qoq Revenue 809 855 894 10.5 4.6 Cost of Goods Sold (181) (181) (186) 3.1 3.1 Gross Profit 628 674 708 12.7 5.0 Other Oper. (Exp)/Inc (326) (332) (354) 8.5 6.6 Operating Profit 302 342 354 17.2 3.4 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 - - Associates & JV Inc 0.0 0.0 0.0 - - Net Interest (Exp)/Inc (16.7) (9.4) 1.98 nm nm Exceptional Gain/(Loss) 0.0 0.0 0.0 - - Pre-tax Profit 285 333 355 24.8 6.9 Tax (71.5) (82.4) (88.5) 23.8 7.4 Minority Interest 0.0 0.0 0.0 - - Net Profit 213 250 267 25.1 6.8 Net profit bef Except. 213 250 267 25.1 6.8 EBITDA 461 504 522 13.2 3.6 Margins (%) Gross Margins 77.7 78.9 79.2 Opg Profit Margins 37.3 40.0 39.6 Net Profit Margins 26.4 29.3 29.9 Source of all data: Company, DBS Bank Page 2
CRITICAL DATA POINTS TO WATCH Penetration levels to increase as network matures. Penetration, defined as the number of subscribers using Link Net s services within areas of coverage, still hovers around ~28.5%, suggesting ample room for subscriber growth in the future. According to the company, areas with new network roll-outs have recorded penetration levels of ~10% in the first year, which could rise to 20%-30% over the next 2-3 years. So there is a lag in subscriber additions and revenue generation after the initial deployment of the network. Link Net has provided coverage to ~806,000 homes over the past four years, representing 40.0% of its current coverage base. As Link Net beefs up its marketing efforts in these regions, we could see faster growth in Link Net s subscriber base. As ~70% of capex is incurred on providing blanket coverage to new regions, new subscriber additions in existing regions recorded incremental ROICs of over 100%, according to our calculations. Hence, the increase in penetration via subscriber additions in regions with existing coverage remains a critical factor for Link Net to maintain its growth momentum. Our projections of EBITDA CAGR of 11.2% from FY17A-FY20F assume penetration levels to rise by 70bps to 29.2% in FY20. Link Net may fall short of our expectations if it fails to penetrate deeper in regions with existing coverage going forward. Broadband Penetration Bundled ARPU Total RGUs Penetration levels have edged up except in 2017 29.0% 28.5% 28.0% 27.5% 27.0% 26.5% 26.0% Link Net Penetration 27.6% 27.3% 27.2% 27.1% 27.3% 28.7% 28.9% 28.5% 28.7% 28.3% 28.3% 28.5% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Source: Company, DBS Bank Source: Company Data, DBS Bank ARPU to edge up in the near term. Given the low penetration of fixed broadband and high capex involved in providing fixed coverage in Indonesia, we do not expect more than two players to compete in the same geographical markets. As a result, we believe much of the competition Link Net is likely to face would come from TLKM s IndiHome, which is marketed at a slight discount to Link Net s services. First-mover advantage, Link Net s superior quality of service and above-average purchasing power of customers in areas that have already been provided with blanket coverage, should translate to improving ARPU for Link Net. We have projected a 2% growth in ARPU for FY18 to reflect this. Page 3
Appendix 1: Broadband Penetration and ARPU are most critical factors. In the critical factor analysis, we have conducted using quarterly data since 2014, and we have seen Link Net share price movements follow penetration rates and blended ARPU. We believe penetration has had a higher impact on share prices than blended ARPU however. Higher penetration generally indicates better asset utilisation (due to higher % of households using Link Net network) without a significant increase in capex which has a positive impact on ROICs of the company. In addition, higher ARPU also has a positive impact on earnings as it drives better revenues and margins. Share price vs penetration 8,000 29.0% Share price (IDR) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 28.5% 28.0% 27.5% 27.0% 26.5% Penetration 0 26.0% Oct-17 Jul-17 Apr-17 Jan-17 Oct-16 Jul-16 Apr-16 Jan-16 Oct-15 Jul-15 Apr-15 Jan-15 Oct-14 Share price Penetration Share price vs ARPU 8,000 425,000 7,000 420,000 Share price (IDR) 6,000 5,000 4,000 3,000 2,000 415,000 410,000 405,000 400,000 IDR/User/Month 1,000 395,000 0 390,000 Oct-17 Jul-17 Apr-17 Jan-17 Oct-16 Jul-16 Apr-16 Jan-16 Oct-15 Jul-15 Apr-15 Jan-15 Oct-14 Share price ARPU Sources: Company data, Reuters, DBS Bank Page 4
Balance Sheet: Strong balance sheet and cash flow generation. Link Net has consistently maintained a net cash position with fairly low levels of debt, providing room for future expansions. For FY18, Link Net has guided for capex of ~Rp 1.0-1.2tn which we believe the company should be able to fund comfortably through its operating cash flows. Link Net started paying dividends in FY15 with a payout ratio of 20% which increased to 35% in FY16 but decreased to 15% in FY17. With strong cash generation, we expect the management will be able to meet its guided payout ratios (~50%) over the next 1-2 years. Share Price Drivers: Rising adoption and premium positioning to drive share price. The carrier's strategy of cherry picking affluent households and its premium branding has allowed Link Net to secure premium ARPU. We believe competition is also likely to remain stable given the relatively lower ROIC of new network rollouts potentially limiting the number of competitors in a region to two. Management expects robust growth in revenues of 13%- 14% in FY18 as Link Net continues to accelerate roll outs and penetration in regions with existing coverage. We expect Link Net to record a revenue and EBITDA CAGR of 11.5% and 11.2% respectively over FY 17 to 20F. Despite strong growth prospects, the counter is trading at 29%/30 discount in PE and EV/EBITDA vs peers. Bull-case TP of Rp7,150. In our bull-case scenario, we have assumed higher demand growth for high-speed broadband and pay TV in Indonesian metros along with lower-thanexpected competition levels in areas of new roll-outs. We believe this would lead to a faster uptake of Link Net s services with surging penetration rate of 29% in FY18F. Benign competition in roll-out areas would also translate to faster growth in blended ARPU to Rp431k in FY18. This would result in a TP of Rp7,150 Leverage & Asset Turnover (x) Capital Expenditure ROE (%) Forward PE Band (x) Bear-case TP of Rp4,800. In our bear-case scenario, we have assumed lower growth for high-speed broadband and pay TV along with escalated competition in new rollout regions. We believe this would lead to a slight drop in penetration levels by FY18 from current year while escalated competition in new regions would lead to a faster contraction of blended ARPUs to Rp417k in FY18 This would result in a TP of Rp4,800 Key Risks: Broadband penetration in existing coverage areas may not rise depressing growth. If Link Net is unable to improve broadband penetration in existing areas due to competition or poor marketing, EBITDA growth will lag our projections. PB Band (x) Company Background Link Net is a leading residential fixed broadband and Pay TV operator in Indonesia. Source: Company, DBS Bank Page 5
Link Net is trading at 29% to its regional peers in PER terms Source: Thomson Reuters, DBS Bank Link Net is trading at 30% to its regional peers in EV/EBITDA terms Source: Thomson Reuters, DBS Bank Page 6
Key Assumptions FY Dec 2015A 2016A 2017A 2018F 2019F Broadband Penetration 0.03 0.03 0.03 0.03 0.03 Bundled ARPU 415 407 421 429 433 Total RGUs 890 1,024 1,120 1,227 1,346 Segmental Breakdown FY Dec 2015A 2016A 2017A 2018F 2019F Revenues (Rpbn) Broadband Internet 1,460 1,670 1,920 2,161 2,392 Pay Tv 940 1,086 1,243 1,400 1,549 Others 165 199 236 280 330 Total 2,564 2,954 3,399 3,842 4,271 Income Statement (Rpbn) FY Dec 2015A 2016A 2017A 2018F 2019F Revenue 2,564 2,954 3,399 3,842 4,271 Cost of Goods Sold (570) (637) (707) (811) (904) Gross Profit 1,994 2,317 2,693 3,031 3,367 Other Opng (Exp)/Inc (1,060) (1,195) (1,336) (1,501) (1,621) Operating Profit 935 1,122 1,357 1,530 1,745 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc (20.9) 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc (57.5) (32.7) (17.5) (14.4) 11.2 Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 856 1,089 1,339 1,516 1,757 Tax (217) (271) (332) (376) (436) Minority Interest (0.2) 0.0 0.0 0.0 0.0 Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Profit 640 819 1,007 1,140 1,321 Net Profit before Except. 640 819 1,007 1,140 1,321 EBITDA 1,429 1,727 2,001 2,230 2,504 Growth Revenue Gth (%) 20.1 15.2 15.1 13.0 11.2 EBITDA Gth (%) 20.3 20.8 15.9 11.4 12.3 Opg Profit Gth (%) 11.6 20.0 21.0 12.8 14.1 Net Profit Gth (Pre-ex) (%) 14.7 28.0 23.1 13.2 15.9 Margins & Ratio Gross Margins (%) 77.8 78.4 79.2 78.9 78.8 Opg Profit Margin (%) 36.5 38.0 39.9 39.8 40.9 Net Profit Margin (%) 24.9 27.7 29.6 29.7 30.9 ROAE (%) 19.1 21.5 23.7 22.7 22.4 ROA (%) 15.6 17.2 18.6 18.2 18.4 ROCE (%) 19.6 20.8 22.6 21.9 21.5 Div Payout Ratio (%) 20.0 35.0 14.9 50.0 50.0 Net Interest Cover (x) 16.3 34.3 77.5 106.4 NM Source: Company, DBS Bank Page 7
Quarterly / Interim Income Statement (Rpbn) FY Dec 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 Revenue 809 809 842 855 894 Cost of Goods Sold (181) (169) (171) (181) (186) Gross Profit 628 640 671 674 708 Other Oper. (Exp)/Inc (326) (322) (327) (332) (354) Operating Profit 302 318 344 342 354 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc (16.7) (3.8) (6.3) (9.4) 1.98 Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 285 314 338 333 355 Tax (71.5) (77.6) (83.6) (82.4) (88.5) Minority Interest 0.0 0.0 0.0 0.0 0.0 Net Profit 213 236 254 250 267 Net profit bef Except. 213 236 254 250 267 EBITDA 461 473 503 504 522 Growth Revenue Gth (%) 7.5 0.0 4.0 1.6 4.6 EBITDA Gth (%) 6.3 2.6 6.3 0.2 3.6 Opg Profit Gth (%) 7.0 5.3 8.3 (0.6) 3.4 Net Profit Gth (Pre-ex) (%) 2.4 10.7 7.6 (1.6) 6.8 Margins Gross Margins (%) 77.7 79.1 79.7 78.9 79.2 Opg Profit Margins (%) 37.3 39.2 40.9 40.0 39.6 Net Profit Margins (%) 26.4 29.2 30.2 29.3 29.9 Balance Sheet (Rpbn) FY Dec 2015A 2016A 2017A 2018F 2019F Net Fixed Assets 3,493 3,807 4,117 4,410 4,767 Invts in Associates & JVs 0.0 0.0 0.0 0.0 0.0 Other LT Assets 341 340 415 429 443 Cash & ST Invts 325 547 766 1,408 1,800 Inventory 0.0 0.0 0.0 0.0 0.0 Debtors 242 324 399 451 501 Other Current Assets 37.3 36.1 68.8 68.8 68.8 Total Assets 4,438 5,055 5,766 6,767 7,580 ST Debt 69.8 48.9 37.1 37.1 37.1 Creditor 177 233 314 355 395 Other Current Liab 401 569 664 683 705 LT Debt 31.4 130 94.3 45.6 45.6 Other LT Liabilities 91.6 111 132 132 132 Shareholder s Equity 3,667 3,963 4,524 5,514 6,265 Minority Interests 0.15 0.0 0.0 0.0 0.0 Total Cap. & Liab. 4,438 5,055 5,766 6,767 7,580 Non-Cash Wkg. Capital (299) (441) (511) (519) (530) Net Cash/(Debt) 224 368 635 1,326 1,717 Debtors Turn (avg days) 29.8 35.0 38.8 40.4 40.7 Creditors Turn (avg days) 965.8 2,315.6 1,599.5 1,099.3 942.5 Inventory Turn (avg days) N/A N/A N/A N/A N/A Asset Turnover (x) 0.6 0.6 0.6 0.6 0.6 Current Ratio (x) 0.9 1.1 1.2 1.8 2.1 Quick Ratio (x) 0.9 1.0 1.1 1.7 2.0 Net Debt/Equity (X) CASH CASH CASH CASH CASH Net Debt/Equity ex MI (X) CASH CASH CASH CASH CASH Capex to Debt (%) 1,095.1 416.5 738.7 1,217.2 1,365.5 Z-Score (X) 14.2 10.7 10.7 10.7 10.9 Source: Company, DBS Bank Page 8
Cash Flow Statement (Rpbn) FY Dec 2015A 2016A 2017A 2018F 2019F Pre-Tax Profit 856 1,089 1,339 1,516 1,757 Dep. & Amort. 515 605 644 700 759 Tax Paid (271) (243) (352) (357) (414) Assoc. & JV Inc/(loss) 20.9 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. 107 119 90.0 (11.0) (10.7) Other Operating CF (46.5) (9.2) (175) 0.0 0.0 Net Operating CF 1,182 1,561 1,547 1,847 2,091 Capital Exp.(net) (1,108) (746) (971) (1,006) (1,129) Other Invts.(net) 0.0 0.0 0.0 0.0 0.0 Invts in Assoc. & JV (19.2) 1.79 0.0 0.0 0.0 Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 Other Investing CF 0.0 0.0 0.0 0.0 0.0 Net Investing CF (1,128) (745) (971) (1,006) (1,129) Div Paid 0.0 (128) (286) (150) (570) Chg in Gross Debt (96.8) (68.7) (48.7) (48.7) 0.0 Capital Issues 0.0 (386) (15.4) 0.0 0.0 Other Financing CF (7.9) (8.1) (7.2) 0.0 0.0 Net Financing CF (105) (591) (358) (199) (570) Currency Adjustments 17.3 (4.0) 0.37 0.0 0.0 Chg in Cash (33.2) 221 219 642 392 Opg CFPS (Rp) 353 478 493 629 711 Free CFPS (Rp) 24.1 270 195 285 325 Source: Company, DBS Bank Target Price & Ratings History Source: DBS Bank Analyst: Sachin MITTAL Page 9
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: 26 Mar 2018 12:40:04 (SGT) Dissemination Date: 26 Mar 2018 12:42:21 (SGT) Sources for all charts and tables are DBS Bank unless otherwise specified. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. 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DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making. ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate 1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests 2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group. COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), DBSV HK or their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 28 Feb 2018. 2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report. Compensation for investment banking services: 3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively. Disclosure of previous investment recommendation produced: 4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months. 1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant. Page 11
RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Australia This report is being distributed in Australia by DBS Bank Ltd. ( DBS ) or DBS Vickers Securities (Singapore) Pte Ltd ( DBSVS ). DBS holds Australian Financial Services Licence no. 475946. DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 ( CA ) in respect of financial services provided to the recipients. DBSVS is regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended only for wholesale investors within the meaning of the CA. Hong Kong This report has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at equityresearch@dbs.com. Indonesia Malaysia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies. Wong Ming Tek, Executive Director, ADBSR Singapore Thailand This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report. This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Page 12
United Kingdom This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore. This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom. In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication. Dubai International Financial Centre United Arab Emirates United States Other jurisdictions This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it. This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent. This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate. In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. Page 13
DBS Regional Research Offices HONG KONG DBS Vickers (Hong Kong) Ltd Contact: Paul Yong 18th Floor Man Yee Building 68 Des Voeux Road Central Central, Hong Kong Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: equityresearch@dbs.com Participant of the Stock Exchange of Hong Kong MALAYSIA AllianceDBS Research Sdn Bhd Contact: Wong Ming Tek (128540 U) 19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia. Tel.: 603 2604 3333 Fax: 603 2604 3921 e-mail: general@alliancedbs.com SINGAPORE DBS Bank Ltd Contact: Janice Chua 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: equityresearch@dbs.com Company Regn. No. 196800306E INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: Maynard Priajaya Arif DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: 62 21 3003 4900 Fax: 6221 3003 4943 e-mail: research@id.dbsvickers.com THAILAND DBS Vickers Securities (Thailand) Co Ltd Contact: Chanpen Sirithanarattanakul 989 Siam Piwat Tower Building, 9th, 14th-15th Floor Rama 1 Road, Pathumwan, Bangkok Thailand 10330 Tel. 66 2 857 7831 Fax: 66 2 658 1269 e-mail: research@th.dbs.com Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand Page 14