Refer to important disclosures at the end of this report Version 11 Bloomberg: GENP MK Reuters: GENP.KL AllianceDBS Research, Malaysia Equity 23 Nov 2017 HOLD Last Traded Price ( 22 Nov 2017): RM10.48 (KLCI : 1,723.54) Price Target 12-mth: RM10.95 (4% upside) (Prev RM11.05) Shariah Compliant: Yes Analyst Marvin KHOR +60 32604 3911 marvinkhor@alliancedbs.com What s New 3Q17 earnings decline y-o-y, trailing expectations Inventory build-up at refinery division, group sales volume came in below potential FFB volume still growing from Indonesian contribution, expect more double-digit growth in FY18 from new acquisitions Cut FY17/18/19F earnings 15%/7%/5% for milder refining performance, TP to RM10.95 maintain HOLD Gestation period Refinery operation getting on its feet. GENP s 9M17 core earnings were 54% higher y-o-y on stronger CPO prices and a substantial volume rebound yet remained below potential, as inter-segment sales to its newly started refinery operations were not translated into external sales, leading to an inventory buildup. We expect improvements in the coming year as refinery utilisation is bumped up to above 50%, while group volumes get a boost from newly acquired estates however, we believe the market may price in execution risks from its refining division. Maintain HOLD. Where we differ. Imputing full impact of downstream venture. We have imputed GENP s new refinery operations into our forecasts, resulting in higher topline assumptions than the street however, due to the thinner margins, there is less bottomline accretion. Price Relative 13.0 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.0 8.5 RM 8.0 79 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 (LHS) Relative KLCI (RHS) Relative Index Forecasts and Valuation FY Dec (RM m) 2016A 2017F 2018F 2019F Revenue 1,480 1,728 2,240 2,434 EBITDA 577 498 614 655 Pre-tax Profit 501 417 526 563 Net Profit 367 335 382 408 Net Pft (Pre Ex.) 301 335 382 408 Net Pft Gth (Pre-ex) (%) 53.8 11.5 13.9 6.8 EPS (sen) 46.3 41.6 46.7 45.4 EPS Pre Ex. (sen) 37.9 41.6 46.7 45.4 EPS Gth Pre Ex (%) 52 10 12 (3) Diluted EPS (sen) 40.9 37.3 42.5 45.4 Net DPS (sen) 21.0 9.15 10.3 9.99 BV Per Share (sen) 589 600 630 614 PE (X) 22.6 25.2 22.5 23.1 PE Pre Ex. (X) 27.7 25.2 22.5 23.1 P/Cash Flow (X) 23.6 20.2 18.3 19.9 EV/EBITDA (X) 15.9 19.1 15.9 16.0 Net Div Yield (%) 2.0 0.9 1.0 1.0 P/Book Value (X) 1.8 1.7 1.7 1.7 Net Debt/Equity (X) 0.1 0.2 0.2 0.1 ROAE (%) 8.3 7.0 7.6 7.6 Earnings Rev (%): (15) (7) (5) Consensus EPS (sen): 43.2 46.5 50.7 Other Broker Recs: B: 8 S: 1 H: 13 Source of all data on this page: Company, AllianceDBS, Bloomberg Finance L.P 219 199 179 159 139 119 99 Potential catalyst. Faster-than-expected ramp-up of refinery. GENP aims to reach 50% utilisation by end-2017 at its 600k MT p.a. refinery in Lahad Datu, Sabah, a collaboration with the Musim Mas Group. Faster or further ramp-up of utilisation will allow for bottom-line accretion as breakeven is reached and more external CPO is processed. Valuation: After earnings adjustments, our SOP-based TP (FY18F base year; Plantations segment valued using DCF) drops to RM10.95. 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) 803 Mkt. Cap (RMm/US$m) 8,418 / 2,037 Major Shareholders (%) Genting Berhad 51.2 Employees Provident Fund 13.1 Kumpulan Wang Persaraan 5.1 Free Float (%) 35.7 3m Avg. Daily Val (US$m) 2.1 ICB Industry : Consumer Goods / Food Producers Refer to important disclosures at the end of this report ed: CK / sa:bc, PY
WHAT S NEW Softer-than-expected 3Q, as refinery gestation keeps lid on volume sales Earnings softened. GENP announced a 3Q17 net profit of RM76.5m (-19% y-o-y, +8% q-o-q), which after stripping out forex and other non-recurring items resulted in core earnings of RM79.1m (-13% y-o-y, +2% q-o-q) including restatements for FRS116. Thus, 9M17 core earnings came to RM232.6m, which is up 54% y-o-y on a small 1H base but missed our/street expectations. Group sales volume not at potential as refinery remains in teething stage. In its earnings call, management highlighted volume movement issues, which came in the aftermath of its foray into downstream refining this year. It was revealed that c.25k MT of additional (refined) palm oil sits in inventory visà-vis previous year levels primarily an issue of securing sufficient shipments/month out, rather than marketing. The group estimates c.rm32m in unrecognised earnings from this in 9M17 (as sales have been made internally from Plantations to its refining unit) which would have lifted financial performance to meet our expectations. All in, 3Q17 Downstream Manufacturing EBITDA was positive, turning around y-o-y to the tune of RM2.6m (-7% q-o-q), though it was still mostly buoyed by biodiesel operations. The refinery operations had hit c.45% utilisation in the quarter. Plantations saw soft ASPs, not offset by normalising volume rebound. 3Q17 Plantation EBITDA was 8% lower y-o-y at RM141.6m (-1% q-o-q). The decline was primarily caused by the flat y-o-y CPO ASP of RM2,617/MT (-3% q-o-q) plus lower PK ASP of RM2,220/MT (-16% y-o-y, +11% q-o-q). Pricing softness was not sufficiently offset by internal FFB rising 11% y-o-y to 487.4k MT (+7% q-o-q), which was driven by its Indonesian hectarage as Malaysian output was revealed to be lower. Positive production outlook, ramped-up downstream operations to increase contribution. The group expects around 15% production growth next year with 8-10% of incremental volume coming from its recently completed acquisition of Knowledge One Investment. New planting on its existing land continues to be slow, and acceleration may not occur as soon as next year. On the other hand, its refinery is aiming for up to 60% utilisation with potential external CPO purchases. The group is still mulling the further expansion of biorefinery facilities near its refining unit (which would offtake their refined palm oil) but is awaiting progress from its intended partner in securing offtake for the final product. This would provide better stability to its overall downstream division, though the timeline may stretch beyond a year. Cutting forecasts. We slash our estimates to account for the reduced sales & inventory build-up and larger start-up costs for the refinery, as we anticipate only gradual easing of the situation. We also impute GENP s purchase of Knowledge One Investment, which involves the addition of c.12.9k ha planted area in Indonesia. Our FY17/18/19F FFB growth forecast is thus adjusted to +16%/+16%/+7% from +16%/+6%/+6% before. All in, our forecasts are lowered by 15%/7%/5% for FY17/18/19F, and our DCF-based TP drops to RM10.95. We expect any re-rating to hinge on more improvements in its downstream efficiencies, maintain HOLD. Page 2
Quarterly / Interim Income Statement (RMm) FY Dec 3Q2016 2Q2017 3Q2017 % chg yoy % chg qoq Revenue 397 446 429 8.2 (3.8) Cost of Goods Sold (232) (305) (262) 12.9 (14.3) Gross Profit 165 141 168 1.7 19.1 Other Oper. (Exp)/Inc (34.9) (27.8) (50.5) 44.7 81.4 Operating Profit 130 113 117 (9.9) 3.8 Other Non Opg (Exp)/Inc (3.1) 6.32 2.56 nm (59.5) Associates & JV Inc 5.78 7.57 9.32 61.3 23.2 Net Interest (Exp)/Inc (12.7) (16.7) (18.5) (45.1) (10.6) Exceptional Gain/(Loss) 3.08 (6.3) (2.6) nm (59.5) Pre-tax Profit 123 104 108 (12.2) 4.1 Tax (35.0) (27.8) (28.8) (17.5) 3.8 Minority Interest 5.98 (5.1) (2.8) nm (45.2) Net Profit 94.2 71.0 76.5 (18.7) 7.8 Net profit bef Except. 91.1 77.3 79.1 (13.2) 2.3 EBITDA 130 113 117 (9.9) 3.8 Margins (%) Gross Margins 41.6 31.5 39.1 Opg Profit Margins 32.8 25.3 27.3 Net Profit Margins 23.7 15.9 17.8 Source of all data: Company, AllianceDBS Page 3
CRITICAL DATA POINTS TO WATCH Critical Factors 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$645/MT (+0.8% y-o-y) in CY17, translating to RM2,760/MT (+4.1%); before declining to US$616/MT in CY18 (-4.5% y-o-y) or RM2,620/MT (-5.1%). Volume output. GENP had 131.1k ha of planted area in Malaysia and Indonesia at end-fy16, but we expect this to rise to 146.5k ha in FY18F thanks to its recent purchase of additional hectarage in Indonesia. From 2016-2019F, we expect GENP s internal FFB output to chart a CAGR of 13% as rising Indonesian volumes are slightly offset by reduced Malaysian hectarage, given its replanting programme. GENP has 11 palm oil mills which primarily processes its own FFB. The group s Malaysian hectarage is primarily in Sabah, while its Indonesian plantations are in West and Central Kalimantan. Growing downstream presence. GENP has a 72% stake in a palm oil refinery in Lahad Datu, Sabah, collaborating with the Musim Mas group. The plant has capacity of 600k MT p.a. which began operations in 2017. We expect utilisation to gradually ramp up to 30%/55%/60% in FY17/18/19F, initially processing its own CPO feedstock prior to sourcing external volumes. Contribution will rise with higher volumes and more favourable palm oil product spreads; though margins will be thinner than its upstream operations. The group also has a biodiesel plant in the same area of Sabah, though volumes and contribution remains immaterial for now. 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. 2787.6 2389.4 1991.1 1592.9 1194.7 796.5 398.2 0.0 119047.7 95238.2 71428.6 47619.1 23809.5 0.0 604475.99 483580.79 362685.59 241790.39 120895.20 0.00 122278.6 97822.9 73367.2 48911.4 24455.7 0.0 4.3 3.5 2.6 CPO price 2652 2760 2620 2600 2168 Mature palm oil hectarage 116713 109968 90212 92691 95163 CPO production volume 592624 547471 471955 441425 396953 Refined palm oil volume 121068 113153 96148 99859 85085 Average MYR/USD 4.28 4.25 4.28 4.08 4.1 1.7 0.9 0.0 Source: Company, AllianceDBS Page 4
Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Jan-00 Aug-00 Mar-01 Oct-01 May-02 Dec-02 Jul-03 Feb-04 Sep-04 Apr-05 Nov-05 Jun-06 Jan-07 Aug-07 Mar-08 Oct-08 May-09 Dec-09 Jul-10 Feb-11 Sep-11 Apr-12 Nov-12 Jun-13 Jan-14 Aug-14 Mar-15 Oct-15 May-16 Dec-16 Jul-17 Company Guide Appendix 1: GENP price correlation with critical factors Graph 1: Share price vs key benchmarks Indexed: Jun07 = 100 200 180 160 140 120 100 80 60 40 20 0 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Source: Company, Bloomberg L.P., AllianceDBS, DBS Bank GENP MK FBMKLCI KLPLN Index Spot CPO price (RM/mt) Substantial increases in y-o-y own FFB production Enters refinery business with partnership with Musim Mas group GENP share price vs CPO prices Indexed: Jan00 = 100 GENP MK Spot CPO price (RM/mt) 1000 900 800 700 600 500 400 300 200 100 0 400 350 300 250 200 150 100 50 0 Remarks GENP s share price is principally influenced by the movement of CPO prices, with a long-run correlation coefficient of 0.8. Source: Company, Bloomberg L.P., AllianceDBS GENP share price vs production and margins Indexed: Mar08 = 100 GENP MK FFB harvested Plantation EBIT margin (RHS) 250 80% 70% 200 60% 150 50% 40% 100 30% 20% 50 10% 0 0% Remarks GENP s share price is moved by the growth in its internal production, which can also be beneficial to its operating margins and thus profitability. Source: Company, MPOB, Bloomberg L.P., AllianceDBS Page 5
Balance Sheet: Manageable leverage levels. As at end-9m17, GENP had a net gearing ratio of c.0.2x, including USD debts amounting to US$302m, which represented debts incurred by its Indonesian subsidiaries to fund its ongoing capex programme there (interest expense and FX losses are partly capitalised). We expect minimal changes on its leverage, barring further large capex for downstream investments. Share Price Drivers: Value enhancement from downstream venture. Following its venture into the palm oil refinery business since early-2017, GENP has to deliver incrementally improved performances, which can be heightened if its additional biorefinery plans are successful. Leverage & Asset Turnover (x) 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Gross Debt to Equity (LHS) Asset Turnover (RHS) RMm 600.0 500.0 400.0 300.0 Capital Expenditure 0.3 0.3 0.2 0.2 0.1 SOP Valuation Valuat ion Value Value basis RM m RM/share Plant at ion DCF 9,424.0 10.49 Property (own) RNAV@50% disc. 522.7 0.58 Property (Premium Outlet JVs) DCF 213.7 0.24 Net Cash (933.5) -1.04 Outstanding warrant proceeds 620.1 0.69 SOP valuation 9,847.0 10.95 Enlarged share base (m) 898.0 Number of shares (m) 818.0 Warrant conversion (m) 80.0 200.0 100.0 0.0 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% Capital Expenditure (-) ROE (%) Key Risks: Volatility in CPO prices and USD exchange rate. Large changes in CPO prices would materially affect earnings, while volatility in USD affects both CPO prices and USD debt. 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. 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. 2.0% 1.0% 0.0% Forward PE Band (x) (x) 42.6 37.6 +2sd: 37.4x 32.6 +1sd: 33x 27.6 Avg: 28.5x -1sd: 24x 22.6-2sd: 19.6x 17.6 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 2.8 PB Band (x) (x) 2.6 2.4 +2sd: 2.37x 2.2 2.0 1.8 1.6 +1sd: 2.18x Avg: 1.99x -1sd: 1.8x -2sd: 1.61x 1.4 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Source: Company, AllianceDBS Page 6
Key Assumptions FY Dec CPO price 2,168 2,652 2,760 2,620 2,600 Mature palm oil hectarage 90,212 92,691 95,163 109,968 116,713 CPO production volume 441,425 396,953 471,955 547,471 592,624 Refined palm oil volume 96,148 85,085 99,859 113,153 121,068 Average MYR/USD 4.08 4.10 4.28 4.25 4.28 Segmental Breakdown FY Dec Revenues (RMm) Plantation 1,093 1,258 1,040 1,088 1,198 Property 189 126 132 136 140 Others 93.1 96.1 557 1,017 1,096 Total 1,375 1,480 1,728 2,240 2,434 EBIT (RMm) Plantation 137 511 539 529 563 Property 61.1 42.2 44.4 45.7 47.1 Others 78.7 2.10 (107) 16.2 20.5 Total 277 556 477 591 630 EBIT Margins (%) Plantation 12.6 40.6 51.8 48.6 47.0 Property 32.3 33.6 33.7 33.7 33.7 Others 84.5 2.2 (19.1) 1.6 1.9 Total 20.2 37.5 27.6 26.4 25.9 Income Statement (RMm) FY Dec Revenue 1,375 1,480 1,728 2,240 2,434 Cost of Goods Sold (924) (849) (1,053) (1,449) (1,599) Gross Profit 451 631 675 791 835 Other Opng (Exp)/Inc (224) (135) (261) (264) (272) Operating Profit 227 496 415 527 563 Other Non Opg (Exp)/Inc 5.76 (66.9) 0.0 0.0 0.0 Associates & JV Inc 22.0 25.0 27.6 30.4 33.7 Net Interest (Exp)/Inc (1.5) (20.2) (25.8) (31.3) (34.2) Exceptional Gain/(Loss) (5.8) 66.9 0.0 0.0 0.0 Pre-tax Profit 247 501 417 526 563 Tax (70.8) (131) (108) (137) (146) Minority Interest 13.2 (2.5) 26.9 (7.3) (8.8) Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Profit 190 367 335 382 408 Net Profit before Except. 196 301 335 382 408 EBITDA 316 577 498 614 655 Growth Revenue Gth (%) (16.3) 7.6 16.8 29.6 8.6 EBITDA Gth (%) (42.0) 82.5 (13.7) 23.2 6.8 Opg Profit Gth (%) (52.9) 118.6 (16.4) 26.9 7.0 Net Profit Gth (Pre-ex) (%) (48.2) 53.8 11.5 13.9 6.8 Margins & Ratio Gross Margins (%) 32.8 42.6 39.1 35.3 34.3 Opg Profit Margin (%) 16.5 33.5 24.0 23.5 23.1 Net Profit Margin (%) 13.8 24.8 19.4 17.0 16.7 ROAE (%) 4.7 8.3 7.0 7.6 7.6 ROA (%) 3.0 4.9 4.2 4.5 4.5 ROCE (%) 2.7 5.1 4.1 4.9 5.0 Div Payout Ratio (%) 22.8 45.4 22.0 22.0 22.0 Net Interest Cover (x) 150.5 24.6 16.1 16.8 16.5 Source: Company, AllianceDBS Page 7
Quarterly / Interim Income Statement (RMm) FY Dec 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 Revenue 397 513 400 446 429 Cost of Goods Sold (232) (200) (256) (305) (262) Gross Profit 165 313 144 141 168 Other Oper. (Exp)/Inc (34.9) 3.27 (27.8) (27.8) (50.5) Operating Profit 130 317 116 113 117 Other Non Opg (Exp)/Inc (3.1) (69.1) 3.74 6.32 2.56 Associates & JV Inc 5.78 7.67 6.04 7.57 9.32 Net Interest (Exp)/Inc (12.7) (13.5) (15.3) (16.7) (18.5) Exceptional Gain/(Loss) 3.08 69.1 (3.7) (6.3) (2.6) Pre-tax Profit 123 311 107 104 108 Tax (35.0) (76.6) (29.5) (27.8) (28.8) Minority Interest 5.98 (6.0) (5.0) (5.1) (2.8) Net Profit 94.2 228 72.5 71.0 76.5 Net profit bef Except. 91.1 159 76.3 77.3 79.1 EBITDA 130 317 116 113 117 Growth Revenue Gth (%) 28.3 29.4 (22.0) 11.5 (3.8) EBITDA Gth (%) 156.0 143.4 (63.3) (2.8) 3.8 Opg Profit Gth (%) 156.0 143.4 (63.3) (2.8) 3.8 Net Profit Gth (Pre-ex) (%) 202.3 74.7 (52.1) 1.3 2.3 Margins Gross Margins (%) 41.6 61.0 36.0 31.5 39.1 Opg Profit Margins (%) 32.8 61.7 29.0 25.3 27.3 Net Profit Margins (%) 23.7 44.5 18.1 15.9 17.8 Balance Sheet (RMm) FY Dec Net Fixed Assets 1,562 1,728 1,877 2,045 2,183 Invts in Associates & JVs 70.2 90.4 118 148 182 Other LT Assets 3,131 3,527 3,785 4,040 4,100 Cash & ST Invts 1,925 1,760 1,619 1,611 1,751 Inventory 98.1 174 202 223 245 Debtors 334 505 487 629 679 Other Current Assets 125 73.7 74.1 75.5 76.0 Total Assets 7,246 7,858 8,164 8,771 9,216 ST Debt 56.9 29.1 29.1 29.1 29.1 Creditor 361 412 482 667 739 Other Current Liab 6.33 15.7 13.6 18.8 20.7 LT Debt 2,233 2,316 2,416 2,516 2,516 Other LT Liabilities 84.0 120 120 120 120 Shareholder s Equity 4,219 4,676 4,840 5,150 5,512 Minority Interests 285 290 263 270 279 Total Cap. & Liab. 7,246 7,858 8,164 8,771 9,216 Non-Cash Wkg. Capital 190 325 268 241 240 Net Cash/(Debt) (365) (585) (826) (934) (794) Debtors Turn (avg days) 79.6 103.4 104.8 90.9 98.1 Creditors Turn (avg days) 149.8 183.8 168.4 154.0 170.4 Inventory Turn (avg days) 44.4 64.7 70.9 57.0 56.7 Asset Turnover (x) 0.2 0.2 0.2 0.3 0.3 Current Ratio (x) 5.8 5.5 4.5 3.6 3.5 Quick Ratio (x) 5.3 5.0 4.0 3.1 3.1 Net Debt/Equity (X) 0.1 0.1 0.2 0.2 0.1 Net Debt/Equity ex MI (X) 0.1 0.1 0.2 0.2 0.1 Capex to Debt (%) 24.2 17.7 20.0 19.8 11.3 Z-Score (X) 3.1 3.1 3.1 3.1 3.2 Source: Company, AllianceDBS Page 8
Cash Flow Statement (RMm) FY Dec Pre-Tax Profit 247 501 417 526 563 Dep. & Amort. 89.3 80.9 83.3 87.3 92.1 Tax Paid (70.8) (131) (108) (137) (146) Assoc. & JV Inc/(loss) (22.0) (25.0) (27.6) (30.4) (33.7) Chg in Wkg.Cap. (24.3) (196) 59.0 23.2 (0.3) Other Operating CF (72.0) 122 (5.7) (1.4) (0.6) Net Operating CF 148 352 417 468 474 Capital Exp.(net) (554) (416) (488) (504) (288) Other Invts.(net) (400) 0.0 0.0 0.0 0.0 Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 Other Investing CF 170 (90.0) 0.0 0.0 0.0 Net Investing CF (784) (506) (488) (504) (288) Div Paid (73.5) (39.6) (177) (77.3) (86.0) Chg in Gross Debt 1,233 83.2 100 100 0.0 Capital Issues 198 125 6.00 6.00 40.0 Other Financing CF (373) (179) 0.0 0.0 0.0 Net Financing CF 984 (10.6) (70.7) 28.7 (46.0) Currency Adjustments 0.0 0.0 0.0 0.0 0.0 Chg in Cash 348 (165) (141) (7.8) 140 Opg CFPS (sen) 22.0 69.0 44.5 54.3 52.8 Free CFPS (sen) (51.9) (8.1) (8.7) (4.5) 20.7 Source: Company, AllianceDBS Target Price & Ratings History 12.28 11.78 11.28 10.78 10.28 RM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1820 17 19 21 22 S.No. Date of Report Closing Price 12-mth T arget Price Rating 1: 24 Nov 16 10.54 12.40 BUY 2: 14 Dec 16 10.76 12.40 BUY 3: 10 Jan 17 10.96 12.40 BUY 4: 10 Feb 17 11.52 12.40 BUY 5: 17 Feb 17 11.26 12.35 HOLD 6: 27 Feb 17 11.44 12.20 HOLD 7: 10 Mar 17 11.44 12.20 HOLD 8: 05 Apr 17 11.50 12.20 HOLD 9: 10 Apr 17 11.38 12.20 HOLD 10: 17 Apr 17 11.12 12.20 HOLD 11: 24 Apr 17 11.28 12.20 HOLD 9.78 12: 11 May 17 11.62 12.20 HOLD Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 13: 30 May 17 11.46 12.20 HOLD 14: 14 Jun 17 11.06 12.20 HOLD Note : Share price and Target price are adjusted for corporate actions. 15: 10 Jul 17 10.94 12.20 HOLD 16: 20 Jul 17 10.80 11.05 HOLD 17: 10 Aug 17 10.70 11.05 HOLD 18: 14 Aug 17 10.52 11.05 HOLD 19: 21 Aug 17 10.62 11.05 HOLD 20: 24 Aug 17 10.56 11.05 HOLD 21: 13 Sep 17 10.64 11.05 HOLD 22: 10 Oct 17 10.50 11.05 HOLD 23: 10 Nov 17 10.74 11.05 HOLD 23 Source: AllianceDBS Analyst: Marvin KHOR Page 9
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 10
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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 11