Singapore Company Guide Version 9 Bloomberg: AIT SP Reuters: AINT.SI Refer to important disclosures at the end of this report DBS Group Research. Equity 27 Apr 2017 BUY Last Traded Price ( 26 Apr 2017): S$1.14 (STI : 3,173.76) Price Target 12-mth: S$1.20 (6% upside and 5.6% yield) (Prev S$1.12) Potential Catalyst: Acquisitions and/or further redevelopments Where we differ: Above consensus on higher sales Analyst Mervin SONG CFA +65 6682 3715 mervinsong@dbs.com Derek TAN +65 6682 3716 derektan@dbs.com What s New 4Q17 DPU of 1.54 Scts (+10% y-o-y) in line with expectations Strong growth on the back of past acquisitions and positive rental reversions Exciting times ahead - potential acquisition of avance 5 and 6, and expansion into the warehouse market Price Relative Forecasts and Valuation FY Mar (S$m) 2016A 2017A 2018F 2019F Gross Revenue 144 157 198 211 Net Property Inc 93.7 104 124 134 Total Return 105 139 57.8 61.2 Distribution Inc 56.5 58.7 66.4 69.9 EPU (S cts) 0.93 5.49 6.19 6.51 EPU Gth (%) (69) 490 13 5 DPU (S cts) 5.50 5.69 6.40 6.70 DPU Gth (%) 13 3 12 5 NAV per shr (S cts) 67.3 79.3 79.5 79.7 PE (X) 121.9 20.7 18.3 17.4 Distribution Yield (%) 4.8 5.0 5.6 5.9 P/NAV (x) 1.7 1.4 1.4 1.4 Aggregate Leverage (%) 26.9 29.0 33.1 33.3 ROAE (%) 1.4 7.3 7.6 8.0 DPU Chng (%): 4 8 Consensus DPU (S cts): 5.90 6.30 6.30 Other Broker Recs: B: 3 S: 0 H: 1 Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P. Next leg of growth Still has legs to run. We maintain our BUY call on Ascendas India Trust (a-itrust), with a revised TP of S$1.20. While a-itrust has rallied over 30% since we upgraded the stock to BUY twelve months ago, and investor interest has picked up, we believe a- itrust s growth story has yet to gain recognition among investors at large. With Singapore-focused REITs increasingly facing headwinds translating into slowing DPU growth (average DPU CAGR of 1%), we anticipate investors will gravitate to a- itrust given its healthy 2-year DPU CAGR of 8%. Clear growth drivers with prospects of healthy rental reversions ahead. Over the past year, a-itrust has announced several developments including the construction of The V, a new 408k square feet (sqft) IT building, as well as acquisitions of CyberVale, avance 3 & 4, and BlueRidge Phase 2. Coupled with the potential for healthy rental reversions of 15-20% in Chennai and up to 5% in Hyderabad and Bangalore, we have confidence over a-itrust s ability to deliver robust 9% DPU CAGR over the next two years. Untapped land bank and move into the warehouse industry. Through its untapped land bank and sponsor pipeline, a-itrust has access to c.5.3m sqft of floor area. Combined with the potential expansion into the Indian modern warehouse space, the trust has a visible and sustainable source of growth over the long term. The ability to execute on these growth opportunities is also supported by its healthy balance sheet. Currently, a-itrust has a low gearing of 29%. Valuation: After incorporating our new SGDINR exchange rate assumptions, we raised our DDM-based TP to S$1.20 from S$1.12. Key Risks to Our View: The key risk to our bullish stance is a significant depreciation of the INR, downturn in the Indian economy which will depress rents or delays in the completion of announced acquisitions and development projects. At A Glance Issued Capital (m shrs) 931 Mkt. Cap (S$m/US$m) 1,056 / 758 Major Shareholders (%) TJ Holdings 24.0 Sun Life 12.6 Kabouter Management LLC 11.0 Free Float (%) 53.9 3m Avg. Daily Val (US$m) 0.31 ICB Industry : Real Estate / Real Estate Investment Trust ed: JS / sa: YM, PY
WHAT S NEW Robust end to the year 4Q17 DPU in line a-itrust delivered a 10% y-o-y increase in 4Q17 DPU to 1.54 Scts which was in line with expectations. However, this was stronger than the 6% y-o-y jump in DPU in INR terms, as a consequence of the appreciation of the INR versus SGD. Similar to the prior quarters, the uplift in income was attributed to positive rental reversions as well as acquisition of CyberVale 3, the recently completed Victor building in Bangalore and BlueRidge 2. Overall portfolio occupancy remains healthy at 92%, although this was marginally lower from the 96% level at end 3Q17. The dip in occupancy is attributed to the addition of BlueRidge 2 which had a starting occupancy of 55% (additional 14.5% of space under advanced discussions). Excluding BlueRidge 2, portfolio occupancy would have been 98%. Reiterates positive outlook Consistent with commentary in 3Q17, a-itrust remains bullish on the near term outlook due to favourable demand and supply fundamentals which have caused vacancy rates in a-itrust s key markets to drop. Consequently, a-itrust remains confident of achieving 5% rental reversions for its properties in Bangalore and Hyderabad with its properties in Chennai expected to deliver double digit rental reversions. This bodes well for a-itrust near term given its ability to take advantage of the near term strength in spot rents. Approximately 26% and 13% of leases are up for renewal for the remainder in FY18 and FY19 respectively. The improving rental market over the past year, had also resulted in place rents rising by 5.5% on average at its Bangalore properties, 8% in Chennai and 5-7% in Hyderabad. Uplift in property values Owing to higher rental income, a-itrust reported 5-15% increase in the value of its properties. Cap rates were stable at between 9.75%-10.7%. As a consequence of the higher property values, a- itrust s gearing dropped marginally to 29% from 30% at end December 2016. This provides ample debt headroom to fund the group s announced acquisitions and developments. Adjusted NAV per unit now stands at S$1.05 from S$0.90 as at end 3Q17. Average cost of debt also increased to 6.8% from 6.1% in 3Q17 arising from swapping floating rate debt into fixed rates. This also resulted in the proportion of fixed rate debt increasing from 85% in 3Q17 to 99% at end 4Q17. Additional acquisitions on the horizon a-itrust announced that it has entered into forward purchase agreements for avance 5 and 6, totaling 1.8m sqft of space. Details on the final purchase consideration and amount of construction loan to be invested has not been disclosed. Moving into the sunrise warehouse industry In addition, the trust provided more clarity over its plans to move into modern warehouse sector in India which it believes is a sunrise industry. a-itrust had earlier announced that it had signed a term sheet with Arshiya Limited in mid-april 2017 for the proposed acquisition of operating warehouses (totalling 832,000 sqft) at the Arshiya Free Trade Warehousing Zone located at Panvel, near Mumbai, India. Panvel is located 24km from Jawaharlal Nehru Port Trust, India s main commercial port. We understand the property is leased to blue chip tenants including international 3PL s (third party logistic providers). Arshiya Limited is an integrated supply chain and logistics infrastructure provider listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). It is a pioneer in the development of Free Trade Warehousing Zones and is among India s largest private container train operators. The proposed acquisition is subject to further due diligence, relevant approvals as well as negotiation and execution of definitive agreements. The indicative purchase consideration comprises (i) an upfront payment of INR 4.34bn (S$94.3m) and (ii) deferred consideration of up to INR 1bn (S$21.7m) to be paid over the next four years, linked to the achievement of certain performance milestones. Beyond the growth in modern warehouse space that is being driven by the e-commerce sector, demand should also pick up when India implements the GST. Currently, to navigate the different state taxes, smaller warehouses are used in each individual state close to the various state borders. Upon the introduction of GST, the state taxes will be eliminated, which should spur operators to consolidate their warehousing needs into more efficient and larger modern facilities that can serve multiple states. In addition, we understand yields for warehouse assets in India are higher than a-itrust existing business parks (in the low teens). Page 2
Currently, modern warehouses only represent 30% of total available warehouse space and according to Knight Frank, demand for warehouse space is projected to grow by 8% CAGR between 2016 and 2020. Maintain BUY with revised TP of S$1.20 With a healthy DPU outlook and visible acquisition pipeline, and 12-month total return in excess of 10%, we maintain our BUY call with a revised TP of S$1.20. Raised FY18-19 DPU by 4-8% On the back of the higher than expected occupancy at Atria, and to better reflect the strength of INR (we now assume SGDINR rate of 49 versus 51-52.50 previously), we raised our FY18-19F DPU by 4-8%. We also likewise raised our DDM-based TP to S$1.20 from S$1.12. Quarterly / Interim Income Statement (S$m) FY Mar 4Q2016 3Q2017 4Q2017 % chg yoy % chg qoq Gross revenue 35.9 39.3 44.2 23.1 12.3 Property expenses (12.7) (12.9) (15.2) 19.8 17.8 Net Property Income 23.2 26.4 29.0 24.9 9.6 Other Operating expenses (2.2) 3.55 (3.5) 62.1 (198.1) Other Non Opg (Exp)/Inc 0.0 0.0 0.0 - - Net Interest (Exp)/Inc (2.8) (2.7) (5.0) (78.4) (87.4) Exceptional Gain/(Loss) 0.13 0.10 0.0 - - Net Income 18.4 27.4 20.5 11.3 (25.4) Tax (30.2) (5.2) (9.7) (67.8) 88.0 Minority Interest (5.2) (1.2) (5.7) (9.8) 394.3 Net Income after Tax (17.0) 21.1 5.04 nm (76.1) Total Return 72.6 21.1 93.3 28.4 342.2 Non-tax deductible Items (4.0) (6.2) (4.6) 14.3 (26.3) Net Inc available for Dist. 14.4 14.7 15.9 10.5 8.2 Ratio (%) Net Prop Inc Margin 64.7 67.2 65.6 Dist. Payout Ratio 90.0 90.0 90.0 Source of all data: Company, DBS Bank Page 3
CRITICAL DATA POINTS TO WATCH Earnings Drivers: Leveraged on offshoring trends. a-itrust provides exposure to India, which remains a leading IT and offshoring hub. The growing demand for offshoring services is underpinned by the country's low-cost environment. According to PayScale, the average salary for IT/software, developers or programmers in India stands at US$6,630 p.a. which is way below that of other competing and/or developed countries such as the US (US$73,912), Australia (US$53,118), Hong Kong (US$28,437) and Malaysia (US$10,443). Net Property Income and Margins (%) Net Property Income and Margins (%) Balanced lease expiry to capture upside in rents. a-itrust s weighted average lease expiry (WALE) stands at 6.4 years, with 26% and 13% of leases up for renewal in FY18 and FY19 respectively. Given the favourable demand backdrop and limited supply in certain markets such as Chennai, we believe a-itrust s lease expiry profile provides it with ample opportunities to capture the upside in rents. Boost from recent acquisitions and developments. Over the past year, a-itrust announced the construction of The V, a new 408k sqft IT building, as well as the acquisitions of CyberVale, avance 3 & 4 and BlueRidge Phase II. These organic and inorganic developments should boost a-itrust s DPU, contributing to a healthy 8% DPU CAGR over the next two years. Additional increase in floor area. a-itrust currently has a portfolio of properties with 11.5m sqft of space with announced plans to take it to c.12.4m sqft (excluding additional 1.76m sqft of space from avance 5 and 6). Beyond this, through its sponsors and assuming a-itrust exercises its right of first refusal (ROFR), it could access c.2.3m sqft worth of properties. In addition, we understand the trust is also open to the acquisition of third party properties. Currently, it is exploring acquisition opportunities in Mumbai, Delhi and Gurgaon, thereby expanding its presence beyond its current core markets of Bangalore, Chennai, Hyderabad and Pune. Expansion into the warehouse sector. The trust is exploring opportunities to expand into the modern warehouse space given the increasing demand for this product on the back of growth in the e-commerce sector. The introduction of GST in India, should also drive demand for modern warehouses, as there will likely be consolidation of the older warehouses into larger, regional warehouses as well as companies to adopting a hub and spoke distribution model for operational efficiency. Near term, subject to further due diligence, the trust may complete the INR5.3bn acquisition of six warehouses in located in Panvel, near Mumbai. Source: Company, DBS Bank Distribution Paid / Net Operating CF Interest Cover (x) Page 4
Balance Sheet: Flexible balance sheet. a-itrust s current gearing remains low at 29%. However, we expect gearing to rise to 33-34% by end- FY18 after including the trust s existing development projects and announced acquisitions. This is within management s comfortable level of 35%-45%. Share Price Drivers: Stronger INR. Since a-itrust s IPO in 2008, net property income (NPI) in INR terms has grown at a CAGR of 12%. However, due to the weak INR, a-itrust s share price has been capped and net property income in SGD terms has only grown at c.6% CAGR. Should the INR appreciate, this will be a major tailwind for a- itrust s share price. Aggregate Leverage (%) ROE (%) Crystallisation of development and sponsor pipeline. The trust has a development and sponsor pipeline of c.3m sqft and 2.3m sqft respectively. The delivery of the development pipeline and acquisition of its sponsor s properties with resultant increase in earnings/dpu should drive the stock price higher over the medium term. Key Risks: Currency risk. a-itrust s distributions are generated in INR but paid in SGD. While the trust hedges each half-yearly distribution, DPU from the trust will be negatively impacted on a lagged basis if the INR depreciates. In addition, as 73% and 27% of the trust s borrowings are in INR and SGD respectively, while all its assets are in India, a depreciation of the INR would also be negative to its NAV per share. Economic risk. Deterioration in the Indian economic outlook and/or companies outsourcing their operations to India may negatively impact demand for space and rents at a-itrust s properties. Distribution Yield (%) PB Band (x) Interest rate risk. Increases in interest rates will result in higher interest payments which would reduce income available for distribution. This risk is partially mitigated by the fact that 85% of the trust s debt is fixed (rising to 100% soon on new hedges). Company Background ("a-itrust") was listed in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. a-itrust may also develop and acquire land or uncompleted developments to be used primarily as business space, with the objective of holding the properties upon completion. a-itrust is managed by Ascendas Property Fund Trustee Pte Ltd, a subsidiary of the Ascendas Group. Source: Company, DBS Bank Page 5
Income Statement (S$m) FY Mar 2015A 2016A 2017A 2018F 2019F Gross revenue 129 144 157 198 211 Property expenses (51.2) (50.2) (52.5) (74.4) (77.4) Net Property Income 77.6 93.7 104 124 134 Other Operating expenses (8.4) (16.1) (11.1) (14.6) (13.8) Other Non Opg (Exp)/Inc 0.0 (0.8) 4.59 0.0 0.0 Net Interest (Exp)/Inc (2.8) (9.2) (14.7) (25.5) (31.7) Exceptional Gain/(Loss) 4.31 0.0 0.0 0.0 0.0 Net Income 70.7 67.7 83.0 83.5 88.1 Tax (38.3) (51.1) (23.0) (22.2) (23.3) Minority Interest (5.1) (8.0) (9.1) (3.5) (3.6) Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Income After Tax 27.3 8.60 51.0 57.8 61.2 Total Return 65.9 105 139 57.8 61.2 Non-tax deductible Items (16.1) (11.9) (19.7) 8.53 8.72 Net Inc available for Dist. 49.8 56.5 58.7 66.4 69.9 Growth & Ratio Revenue Gth (%) 6.7 11.8 8.8 26.4 6.5 N Property Inc Gth (%) 7.6 20.8 11.2 18.6 8.1 Net Inc Gth (%) 59.8 (68.5) 492.8 13.5 5.8 Dist. Payout Ratio (%) 90.0 90.0 90.0 90.0 90.0 Net Prop Inc Margins (%) 60.3 65.1 66.5 62.4 63.3 Net Income Margins (%) 21.2 6.0 32.5 29.2 29.0 Dist to revenue (%) 38.7 39.2 37.5 33.5 33.1 Managers & Trustee s fees 6.5 11.2 7.1 7.4 6.5 ROAE (%) 4.6 1.4 7.3 7.6 8.0 ROA (%) 2.4 0.7 3.4 3.4 3.5 ROCE (%) 2.8 1.5 4.8 5.0 5.2 Int. Cover (x) 24.4 8.4 6.4 4.3 3.8 Source: Company, DBS Bank Improvement in earnings on the back of positive rental reversions and contributions from new properties/acquisitions Page 6
Quarterly / Interim Income Statement (S$m) FY Mar 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 Gross revenue 35.9 36.1 37.1 39.3 44.2 Property expenses (12.7) (12.4) (12.0) (12.9) (15.2) Net Property Income 23.2 23.6 25.2 26.4 29.0 Other Operating expenses (2.2) (2.5) (2.9) 3.55 (3.5) Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc (2.8) (3.6) (3.3) (2.7) (5.0) Exceptional Gain/(Loss) 0.13 (2.6) 3.00 0.10 0.0 Net Income 18.4 14.9 21.9 27.4 20.5 Tax (30.2) (4.6) (3.6) (5.2) (9.7) Minority Interest (5.2) (1.0) (1.2) (1.2) (5.7) Net Income after Tax (17.0) 9.39 17.1 21.1 5.04 Total Return 72.6 9.39 17.1 21.1 93.3 Non-tax deductible Items (4.0) (0.9) (3.0) (6.2) (4.6) Net Inc available for Dist. 14.4 14.0 14.2 14.7 15.9 Growth & Ratio Revenue Gth (%) (4) 1 3 6 12 N Property Inc Gth (%) (6) 2 6 5 10 Net Inc Gth (%) (275) (155) 82 23 (76) Net Prop Inc Margin (%) 64.7 65.6 67.7 67.2 65.6 Dist. Payout Ratio (%) 90.0 90.0 90.0 90.0 90.0 Balance Sheet (S$m) FY Mar 2015A 2016A 2017A 2018F 2019F Investment Properties 0.26 3.29 5.83 5.75 5.67 Other LT Assets 1,150 1,222 1,490 1,634 1,656 Cash & ST Invts 69.7 85.9 75.0 73.2 76.2 Inventory 0.74 0.69 1.32 1.52 1.62 Debtors 22.8 15.1 25.8 28.3 30.1 Other Current Assets 13.6 22.8 16.0 16.0 16.0 Total Assets 1,257 1,350 1,614 1,758 1,786 ST Debt 89.9 45.0 2.60 2.60 2.60 Creditor 42.6 57.4 77.4 82.5 87.9 Other Current Liab 0.71 0.51 1.02 1.02 1.02 LT Debt 225 318 450 580 591 Other LT Liabilities 222 238 265 265 265 Unit holders funds 627 639 754 761 768 Minority Interests 49.3 52.9 63.1 66.5 70.2 Total Funds & Liabilities 1,257 1,350 1,614 1,758 1,786 Non-Cash Wkg. Capital (6.1) (19.4) (35.4) (37.8) (41.2) Net Cash/(Debt) (246) (277) (378) (509) (518) Ratio Current Ratio (x) 0.8 1.2 1.5 1.4 1.4 Quick Ratio (x) 0.7 1.0 1.2 1.2 1.2 Aggregate Leverage (%) 25.1 26.9 29.0 33.1 33.3 Z-Score (X) 1.2 1.1 0.9 0.9 0.9 Source: Company, DBS Bank Increase in gearing due to debt funded acquisitions and developments Page 7
Cash Flow Statement (S$m) FY Mar 2015A 2016A 2017A 2018F 2019F Pre-Tax Income 70.7 67.7 83.0 83.5 88.1 Dep. & Amort. 0.08 0.08 0.08 0.08 0.08 Tax Paid (12.4) (51.1) (23.0) (22.2) (23.3) Associates &JV Inc/(Loss) 0.0 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. 3.73 13.3 15.7 2.39 3.44 Other Operating CF 17.4 67.2 19.1 8.53 8.72 Net Operating CF 79.6 97.1 94.9 72.3 77.1 Net Invt in Properties (17.7) (51.8) (93.1) (144) (22.4) Other Invts (net) (91.8) 0.0 (24.3) 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 0.08 0.0 0.0 0.0 0.0 Net Investing CF (109) (51.8) (117) (144) (22.4) Distribution Paid (43.4) (48.0) (51.0) (59.7) (62.9) Chg in Gross Debt 80.5 24.7 133 130 11.2 New units issued 0.0 0.0 0.0 0.0 0.0 Other Financing CF (16.3) (0.4) (74.2) 0.0 0.0 Net Financing CF 20.8 (23.7) 7.31 69.9 (51.7) Currency Adjustments 4.27 (5.4) 4.21 0.0 0.0 Chg in Cash (4.7) 16.3 (10.9) (1.8) 2.97 Operating CFPS (S cts) 8.25 9.08 8.53 7.49 7.84 Free CFPS (S cts) 6.73 4.91 0.20 (7.7) 5.82 Source: Company, DBS Bank Target Price & Ratings History Source: DBS Bank Analyst: Mervin SONG CFA Derek TAN Page 8
DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame) Share price appreciation + dividends Completed Date: 27 Apr 2017 01:10:00 (SGT) Dissemination Date: 27 Apr 2017 08:11:40 (SGT) Sources for all charts and tables are DBS Bank unless otherwise specified. GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the DBS Group ) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research 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. The DBS Group 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. The DBS Group, 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. The DBS Group, 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. 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Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein. Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. Page 9
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 Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 31 Mar 2017. 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 10
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