cimb - banks - 3q12 upgrades galore

7/30/2019 CIMB - Banks - 3Q12 Upgrades Galore

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November 6, 2012

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.Designed by Eight, Powered by EFA

INDONESIA BANKS SHORT TERM (3 MTH) LONG TERM

Conviction| |

3Q12: Upgrades galoreWe upgrade the earnings of smaller banks by 10-19% after their 3Q12performances have surpassed expectations. The big banks' showingwas mostly in line with expectations, although BCA could be upgradedin 4Q12, while BRI is a potential candidate to be downgraded.

Figure 1: Except for BRI and BNI, 3Q12 earnings were mostly driven by operational,rather than provisioning factors as in previous quarters

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3Q12 PPOP yoy growth 3Q12 pretax profit yoy growth 3Q12 net profit yoy growth

SOURCES: CIMB, COMPANY REPORTS

We had toned down our expectationson BNI, whose growth turnaroundstory is rather protracted. MaintainOverweight, with catalysts expectedfrom the sectors buoyant earningsgrowth, thanks to robust loan growthand stable NIMs. Our top picksremain Mandiri and BCA; along withBukopin in the small banks space.

Stellar earnings growthBanks in our universe grew their9M12 net profit on average by 22%

yoy, in line with the combined loangrowth of 22% yoy. Unlike previousquarters, 3Q12 earnings growth ismainly driven by core operationalgrowth, rather than provisioningupside, except for BRI and BNI.Excluding these two, 3Q12pre-provisioning profit (PPOP) grewby 23% yoy, far higher than the 20%yoy spike for net profit. We upgradesmaller banks' CY12-13 EPS by10-19%, mainly on improving loangrowth assumptions. Overall, most

banks' NIMs were stable, except forMandiris that increased on betterasset mix and BRIs that slipped onweak micro lending growth.

Stable asset quality anddeclining costGross NPL ratios were mostly stable,except for Jabar and BTN that saw adeterioration due to riskier microlending expansion and seasonalityrespectively. The cost-income ratiosof some banks moderated, on theback of stellar topline showing andimproved efficiencies.

Positive outlook for BCA, but

negative on BRIIn general, 3Q12 results weresatisfactory and lay a solid loan basefor future quarters earnings growth,thereby, underpinning our sanguinesector call. More specifically, we seeupside potential in 4Q12 for BCA, butforesee downside risks for BRI. BCAsstrong PPOP growth in 3Q12 shouldeventually translate into net profitupside that trumps consensus, as itsexcessive provisioning coveragenormalises. Conversely, BRIs weak

core drivers could present earningsdownside, should its extremely low9M12 provisioning expenses prove tobe unsustainable in 4Q12.

Notes from the Field

Mulya Chandra CFAT 6221 30061721E [email protected]

Banking intermediaryremains sound, asreflected by credit growthin August 2012 thatreached 23.6% (yoy).

Bank Indonesia

Highlighted Companies

Bank Mandiri

Although loans growth moderated to 23% yoy, NIMexpanded due to better asset yield and stable costof funds. Asset quality remained benign, whilecosts moderated. We expect ROE to trend up oncontinuously improving NIM and loans expansion.

Bank Central Asia

BCA raised its provisioning coverage to 388% from312% in 3Q12, although this is irrelevant with itsdeclining NPL ratio. We believe this could providean earnings boost for the last quarter of 2012; asearnings will jump when the coverage normalises.

Bank Rakyat IndonesiaWith no signs of improving micro lending, BRIsconsecutive weak 3Q12 results vindicate ournegative contrarian call on the bank. We seefurther earnings downside from declining NIM andnormalising (i.e. rising) provisioning charges.


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BANKSNovember 6, 2012

2

KEY CHARTS

Robust loan growthLoan growth moderated to 22.0% from 24.5% yoy in

2Q12 on base effect, but this is still within ourexpectations of 22-24% for FY12. The loans of individualbanks grew in the range of 15-34%, with BNI and BRIlocated at the lower end and BCA at the upper end.

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Stable NIMs, except for Mandiri and BRI

Thanks to stable cost of funds (set against the backdropof ample sector liquidity) and flat lending rates, mostbanks maintained their NIMs.Yet, Mandiris NIM improved on rising contributionfrom higher-yielding assets like micro loans. On thecontrary, BRIs NIM fell on declining contribution frommicro loans, which expanded at a slower rate thancorporate loans.

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Mandiri BRI BCA BNI Danamon Panin BTN BTPN Jabar

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3Q11 4Q11 1Q12 2Q12 3Q12

Lesser provisioning upsideGenerally, provisioning expenses in 9M12 have matchedthose in 9M11 in absolute rupiah terms. The exception isBRI, whose 9M12 provisioning expenses were extremelylow at 39% for 9M11, and around 40% for both 9M10and 9M09. This is due to the full implementation of newaccounting standards in 2012, with downside expectedwhen the numbers are verified by auditors. 0

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Improving foreign currency liquidityIn 3Q12, banks foreign currency (Fx) LDRs were eitherdown or flat qoq. It was mostly due to the significantslowdown in Fx lending.

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Jun-08 Sep-08 Dec-08Mar-09 Jun-11 Sep-11Dec-11Mar-12 Jun-12 Sep-12

Mandiri Danamon BNI

BRI Panin BCA

Jabar BTN Sector

SOURCE: CIMB, COMPANY REPORTS


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BANKSovem er ,

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Figure 2: Sector Comparison

Price Target Price

(loca l cur r) (loca l cur r) CY2012 CY2013 CY2012 CY2013 CY2012 CY2013 CY2014 CY2012 CY2013 CY2012 CY2013DBS Group DBS SP Outperform 13.84 17.32 27,510 9.8 9.4 6.3% 1.07 1.01 11.2% 11.1% 10.9% 6.6 6.8 4.7% 4.4%OCBC OCBC SP Underperform 9.13 10.24 25,549 11.9 11.7 5.5% 1.24 1.17 11.0% 10.3% 10.7% 6.2 8.2 3.5% 3.7%United Overseas Bank UOB SP Neutral 18.31 22.47 23,508 10.5 10.1 11.9% 1.27 1.17 12.6% 12.1% 12.4% 7.9 7.4 3.8% 4.3%Singapore average 10.7 10.3 8.5% 1.18 1.11 11.5% 11.1% 11.3% 6.8 7.4 4.0% 4.2%

Agricultural Bank of China 1288 HK Outperform 3.41 4.14 134,057 5.7 4.8 22.5% 1.17 1.00 21.9% 22.6% 22.3% 3.6 3.1 6.1% 7.3%Bank of China 3988 HK Neutral 3.22 3.23 121,462 5.4 4.9 12.2% 0.89 0.79 17.4% 17.0% 17.4% 3.6 3.1 6.1% 6.7%Bank of Communications 3328 HK Neutral 5.63 5.49 52,772 5.1 5.8 2.3% 0.89 0.79 17.8% 14.4% 13.9% 3.4 3.3 3.5% 3.4%China CITIC Bank 998 HK Neutral 4.05 3.34 26,576 4.4 4.1 7.5% 0.76 0.66 18.6% 17.4% 16.2% 2.8 2.4 5.7% 6.2%China Construction Bank 939 HK Outperform 5.90 7.49 189,520 6.2 5.8 14.1% 1.26 1.09 21.8% 20.2% 20.7% 4.1 3.7 5.3% 5.7%

China Merchants Bank 3968 HK Neutral 14.62 13.85 36,851 5.7 5.2 16.4% 1.28 1.07 24.4% 22.4% 21.4% 3.9 3.5 4.0% 4.4%China Minsheng Bank 1988 HK Outperform 7.48 8.38 27,819 4.6 4.5 13.6% 1.08 0.91 25.1% 21.8% 20.4% 2.8 2.8 4.2% 4.4%ICBC 1398 HK Outperform 5.18 5.86 221,946 6.2 5.8 12.3% 1.30 1.12 22.5% 20.9% 20.4% 4.3 3.8 5.2% 5.6%Hong Kong average 5.8 5.3 14.4% 1.13 0.98 21.0% 19.8% 19.6% 3.8 3.4 5.3% 5.8%

Bank Bukopin BBKP IJ Outperform 630 1,300 521 5.9 4.9 17.0% 1.00 0.87 18.6% 18.9% 19.8% 4.1 3.3 3.8% 4.4%Bank Central Asia BBCA IJ Outperform 8,250 10,500 21,115 17.7 14.6 16.8% 4.01 3.32 25.2% 24.8% 23.9% 13.1 10.7 1.6% 1.8%Bank Danamon BDMN IJ Trading Buy 6,150 7,000 6,119 14.4 12.7 16.6% 2.07 1.87 15.1% 15.5% 16.7% 7.2 6.4 1.9% 2.2%Bank Jabar Banten BJBR IJ Neutral 1,100 1,280 1,107 8.3 7.0 23.2% 1.75 1.56 22.4% 23.6% 24.6% 5.5 4.5 4.6% 6.2%Bank Mandiri BMRI IJ Outperform 8,400 11,000 20,347 13.6 10.8 23.7% 2.66 2.22 21.2% 22.4% 22.1% 8.6 7.2 1.3% 1.6%Bank Negara Indonesia BBNI IJ Outperform 3,700 4,750 7,163 10.4 8.4 18.5% 1.62 1.40 16.5% 17.8% 18.4% 7.1 6.3 1.8% 1.6%Bank Panin PNBN IJ Outperform 710 1,200 1,775 7.7 6.5 28.9% 1.04 0.89 14.5% 14.8% 15.5% 3.9 3.4 0.0% 0.0%Bank Rakyat Indonesia BBRI IJ Underperform 7,100 7,400 18,182 10.0 8.9 16.2% 2.82 2.28 31.3% 28.3% 26.2% 6.6 6.1 2.2% 2.1%Bank Tabungan Negara BBTN IJ Outperform 1,570 2,200 1,441 10.2 8.6 24.8% 1.73 1.55 17.9% 19.0% 20.1% 5.8 5.3 3.1% 4.3%Bank Tabungan Pensiunan BTPN IJ Neutral 5,150 5,450 3,122 14.8 11.8 32.4% 3.87 2.91 29.9% 28.2% 27.9% 9.6 7.4 0.0% 0.0%Indonesia average 12.6 10.5 20.2% 2.58 2.17 22.4% 2 2.4% 2 2.1% 8.1 7.0 1.7% 1.8%

Affin Holdings AHB MK Underperform 3.36 2.82 1,639 8.6 8.7 6.6% 0.85 0.81 10.1% 9.5% 9.8% 6.3 5.8 5.8% 5.8%Alliance Financial Group AFG MK Underperform 4.07 4.00 2,057 12.1 10.6 13.1% 1.67 1.55 14.2% 15.2% 15.9% 8.4 7.4 3.5% 3.9%AMMB Holdings AMM MK Underperform 6.37 6.18 6,267 11.3 10.1 13.0% 1.52 1.36 14.4% 14.2% 14.3% 7.0 6.3 3.9% 4.5%BIMB Holdings BIMB MK Outperform 3.07 3.78 1,069 12.6 10.8 20.1% 1.66 1.52 13.4% 14.7% 15.6% 4.2 3.7 4.0% 4.6%Hong Leong Bank HLBK MK Underperform 14.68 11.50 9,008 14.9 13.2 15.8% 2.31 2.07 17.0% 16.5% 16.8% 11.2 9.4 1.9% 1.9%Malayan Banking Bhd MAY MK Outperform 9.01 11.60 24,822 12.7 11.9 8.5% 2.12 2.01 16.2% 17.3% 18.0% 8.5 8.1 5.9% 6.3%Public Bank Bhd PBK MK Outperform 15.54 17.30 17,916 13.7 12.2 13.6% 3.09 2.68 24.2% 23.6% 23.2% 9.5 8.4 3.7% 4.1%RHB Capital Bhd RHBC MK Neutral 7.50 7.40 5,474 9.2 8.2 13.3% 1.40 1.25 15.2% 16.0% 15.9% 5.5 4.9 3.2% 3.6%Malaysia average 12.5 11.4 12.8% 2.05 1.87 16.8% 1 7.2% 1 7.5% 8.3 7.5 4.2% 4.6%

Bangkok Bank BBL TB Underperform 178.0 188.0 11,028 10.4 9.2 12.7% 1.29 1.19 12.7% 13.4% 13.3% 6.9 6.3 3.8% 4.3%Bank of Ayudhya BAY TB Outperform 29.5 40.0 5,816 12.1 9.8 23.2% 1.61 1.46 13.7% 15.6% 16.6% 5.8 5.1 3.3% 4.1%Kasikornbank KBANK TB Neutral 177.5 207.0 13,788 11.9 10.0 22.4% 2.36 2.02 21.1% 21.9% 21.3% 7.3 6.4 2.5% 3.0%Krung Thai Bank KTB TB Outperform 18.4 27.0 8,347 7.9 7.6 20.0% 1.42 1.28 17.4% 17.6% 17.4% 4.9 4.9 4.4% 5.2%Siam Commercial Bank SCB TB Neutral 160.0 190.0 17,624 13.4 11.3 20.1% 2.59 2.27 20.2% 21.4% 21.2% 9.0 7.7 2.9% 3.5%Thanachart Capital TCAP TB Outperform 37.8 48.0 1,566 8.5 8.0 9.8% 1.15 0.90 14.0% 12.7% 12.0% 3.0 1.4 3.4% 3.7%Tisco Financial Group TISCO TB Neutral 46.5 55.0 1,099 9.2 7.9 10.9% 1.88 1.67 21.1% 22.4% 21.8% 5.0 4.3 5.4% 6.2%TMB Bank TMB TB Underperform 1.9 1.7 2,643 15.3 15.0 16.0% 1.46 1.37 9.7% 9.4% 10.2% 8.1 7.0 2.1% 2.1%Thailand average 11.3 9.8 20.0% 1.80 1.60 16.5% 17.3% 17.3% 6.8 5.7 3.2% 3.8%Average (all) 6.6 6.1 14.5% 1.25 1.09 20.0% 19.1% 19.0% 4.4 3.9 4.8% 5.2%

CompanyBloomberg

TickerRecom.

Market Cap

(US$ m)

P/PPOPS (x) Dividend Yield (%)Core P/E (x) 3-year EPS

CAGR (%)

P/BV (x ) Recurr ing ROE (%)


Calculations are performed using EFA Monthly Interpolated Annualisation and Aggregation algorithms to December year ends


4/12


4

3Q12: Upgrades galore

1. OUTLOOK1.1 More ahead-of-expectation results for smaller banks

The big banks met our and consensus expectations, although we expect someearnings upside for BCA and downside for BRI in 4Q12. Smaller banks beat ourand consensus expectations, mostly on the back of faster-than-expected loangrowth, as well as cost and tax surprises on the ancillary fronts. We raise theirearnings by 10-19%, thereby, nudging up their target prices in the process.Along with rolling forward to end-2013, our target prices increase by up to 33%,except for BNI, whose target price was downgraded by 9% as we tone down ourgrowth expectations.

Figure 3: 9M12 results recap. Big banks met expectations, while smaller banks

surpassed.

Reasons

(Rp bn) yoy qoq Consensus CIMB

Mandiri 11,119 21% 6% In line In line

BRI 13,168 26% 0% In line In line

BCA 8,276 8% -1% In line In line

BNI 5,039 24% 0% In line In line

Danamon 2,992 22% -10% Ahead Ahead Lower than expected cost and provisioning

Panin 1,621 29% -4% Ahead Ahead Higher than expected non interest income

BTN 1,021 44% 5% Ahead Ahead Strong loan growth and low provisioning

BTPN 1,442 50% 8% Ahead Ahead Strong loan growth

Jabar 946 19% 5% Ahead Ahead Tax surprise and strong loan growth

COMBINED 45,624 22% 1%

Net profit Core EPS: actual vs

prev forecast


Strong loan growth that came with robust NIMs was the dominant earningsgrowth driver, which is a departure from previous quarters where provisioningwas the key upside driver. Stable 3Q12 asset quality has contributed to thebanks flat yoy 9M12 provisioning expenses, with the exception of BRIs whichfell by 61% yoy, due to the full implementation of new accounting standards in2012. BRI stated that it only implemented the standards partially in 2011.

Figure 4: Banks in our universe grew by 15-34% yoy, averaging at 22% yoy. BCA andPanin led, while BRI and BNI lagged.

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qoq (LHS) yoy (RHS) SOURCES: CIMB, COMPANY REPORTS

Table of Contents1. OUTLOOK p.4

2. VALUATION AND RECOMMENDATIONS p.8

Notes from the Field

Banking intermediaryremains sound, reflectedby credit growth in August2012 that reached 23.6%(yoy).

Bank Indonesia


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Figure 5: Most banks 9M12 provisioning expenses were flat yoy, except for BRIsthat shrank by more than half on accounting change

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Asset quality generally improved, as indicated by the downward trajectory forgross NPL ratios. Jabar and BTN were the exceptions, as their NPL ratios roseon further deterioration arising from the expansion into the micro lendingsegment and seasonal factors, respectively. We are cautious on Jabar, but not somuch on BTN.

Figure 6: Banks gross NPL ratios mostly trended down, except for Jabar on riskierexpansion into micro lending and BTN on seasonality factor

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Anomalies in provisioning coverage were seen in BCA and Jabar amid flat levelsin other banks. BCA raised its coverage to 388% from 312%, despite itsdeclining gross NPL ratio to 0.4% from 0.5% in 2Q12. We see this as a bufferingmove during the favourable 3Q12 quarter, which could translate into potentialearnings upside in 4Q12. Conversely, Jabar cut its provisioning coverage to118% from 125% in 2Q12, which could alleviate the impact of asset qualitydeterioration on earnings.


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Figure 7: Provisioning coverage: mostly maintained the levels, except for BCA thatraised it (seemingly due to buffering) and Jabar that cut it to boost earnings

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Figure 8: LDRs trended up, but it is good for BCA and BNI, whose LDRs are belowBIs optimised level

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Most banks cost-to-income ratios moderated qoq, thanks to rising topline andbetter cost efficiencies. However, BRI and BNIs ratios inched up on the back ofnormalisation and seasonal factors, respectively.

Figure 9: Cost-to-income ratios trended down in general, except for BRI and BNI'sthat inched up

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Bank Jabar surprised us and consensus by reducing the 9M12 effective tax rateto 20% from 25% in 6M12. It claimed that it is eligible for the 5%-pt tax ratereduction, despite only having a 25% market float. It argued that another 24% ofits equity is owned by more than 300 parties, with each owning less than 5%.Thus, on a combined basis, Bank Jabar has met the criteria of having at least40% market float in principle. Yet, this has not been confirmed by the tax officeand auditors.

Figure 10: Quarterly effective tax rates were roughly unchanged, except for Jabarthat cut the rate to 20% for 9M12 profits from 25%, on claiming the tax incentive

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Figure 11: Individual banks Fx LDRs: flat or trending down. Fxliquidity improved across the board Figure 12: BNI and BRIs Fx deposits outstripped Fx loansgrowth

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Jun-08 Sep-08 Dec-08 Mar-09 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12

Mandiri Danamon BNI

BRI Panin BCA

Jabar BTN Sector

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Forex loans growth, qoq Forex deposits growth, qoq

SOURCES: CIMB, COMPANY REPORTS SOURCES: CIMB, COMPANY REPORTS


8/12


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Figure 13: Sector Fx LDR trended down as Fx deposits outpaced Fx loans growth

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SOURCES: CIMB, BANK INDONESIA

2. VALUATION AND RECOMMENDATION

2.1 Higher target prices, except for BNI

Aside from revising our earnings forecast for the banks, we also roll forward thetarget prices, thereby raising them; with the exception of BNI, whose targetprice was cut following the earnings forecast downgrade.

Figure 14: EPS and target price change

Previous Current Change Previous Current FY12F FY13F Comments

BMRI 9,600 11,000 15% Outperform Outperform - -

BBRI 6,600 7,400 12% Underperform Underperform - -

BBCA 9,200 10,500 14% Outperform Outperform - -

BBNI 5,200 4,750 -9% Outperform Outperform - -7% Lower loan growth and higher provisioning expectation

BDMN 7,000 7,000 0% Trading Buy Trading Buy 10% 13% Lower cost and provisioning expectation

PNBN 1,100 1,200 9% Outperform Outperform 17% 17% Higher non-interest income expectation

BBTN 2,000 2,200 10% Outperform Outperform 15% 13% Higher loan growth and lower provisioning expectation

BTPN 4,100 5,450 33% Neutral Neutral 13% 14% Higher loan growth expectation

BJBR 1,040 1,280 23% Neutral Neutral 15% 19% Lower tax and higher loan growth expectation

Target price Rating EPS changes

SOURCES: CIMB

We maintain Overweight on the sector, with catalysts expected from the sectorsbuoyant earnings growth that is driven by robust loan growth and stable NIMs.Our top picks remain Mandiri and BCA; along with Bukopin in the small banksspace.


9/12


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Figure 15: BMRI and BBCA are outperforming after 3Q12results, while BBRI underperforming considerably

Figure 16: BBTN recently outperformed on mini-hype before itsrights issue, while PNBN underperformed on the lack ofcatalysts

80

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160

JAKFIN BBCA BBRI BMRI

BBNI BDMN JCI

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110

120

130

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160

PNBN BBTN BTPN BJBR

BBKP JCI JAKFIN

SOURCES: CIMB, BLOOMBERG SOURCES: CIMB, BLOOMBERG


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(i) As of November 5, 2012, CIMB has a proprietary position in the securities (which may include but not limited to shares, warrants, call warrants and/or any other derivatives) in thefollowing company or companies covered or recommended in this report:

(a) Affin Holdings, Alliance Financial Group, AMMB Holdings, Bangkok Bank, Bank Central Asia, Bank Danamon, Bank Mandiri, Bank of Ayudhya, Bank of China, Bank RakyatIndonesia, BIMB Holdings, China Construction Bank, DBS Group, Hong Leong Bank, ICBC, Kasikornbank, Krung Thai Bank, Malayan Banking Bhd, OCBC, Public Bank Bhd, RHBCapital Bhd, Siam Commercial Bank, Thanachart Capital, TMB Bank, United Overseas Bank

(ii) As of November 6, 2012, the analyst(s) who prepared this report, has / havean interest in the securities (which may include but not limited to shares, warrants, call warrants and/orany other derivatives) in the following company or companies covered or recommended in this report:

(a) -

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not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments thereof.Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financialsituation and particular needs and consult their own professional and financial advisers as to the legal, business, financial, tax and other aspects before participating in any transactionin respect of the securities of company(ies) covered in this research report. The securities of such company(ies) may not be eligible for sale in all jurisdictions or to all categories ofinvestors.

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change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipienttherein are unaffected. CHK has no obligation to update its opinion or the information in this research report.

This publication is strictly confidential and is for private circulation only to clients of CHK. This publication is being supplied to you strictly on the basis that it will remain confidential. Nopart of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other personin whole or in part, for any purpose without the prior written consent of CHK. Unless permitted to do so by the securities laws of Hong Kong, no person may issue or have in itspossession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the securities covered in this report, which is directed at,or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong).

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This publication is strictly confidential and is for private circulation only to clients of CIMBI. This publication is being supplied to you strictly on the basis that it will remain confidential. Nopart of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other personin whole or in part, for any purpose without the prior written consent of CIMBI. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizenswherever they are domiciled or to Indonesia residents except in compliance with applicable Indonesian capital market laws and regulations.

Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (CIMB). The views and opinions in this research report a re our own as of the date hereof and are

subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to suchrecipient therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report.

This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. Nopart of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other personin whole or in part, for any purpose without the prior written consent of CIMB.

New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of theirbusiness, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act 1978.


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Singapore: This report is issued and distributed by CIMB Research Pte Ltd (CIMBR). Recipients of this report are to contact CIMBR in Singapore in respect of any matters arisingfrom, or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and MarketsAct of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBR has no obligation toupdate its opinion or the information in this research report.

This publication is strictly confidential and is for private circulation only. If the recipient of this research report is not an accredited investor, expert investor or institutional investor,CIMBR accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. This publication is being supplied to you

strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributedor passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBR.

As of November 5, 2012, CIMBR does not have a proprietary position in the recommended securities in this report.

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Taiwan: This research report is not an offer or marketing of foreign securities in Taiwan. The securities as referred to in this research report have not been and will not be registered withthe Financial Supervisory Commission of the Republic of China pursuant to relevant securities laws and regulations and may not be offered or sold within the Republic of China througha public offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Law of the Republic of China that requires a registration or approvalof the Financial Supervisory Commission of the Republic of China.

Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (CIMBS). The views and opinions in this research report are our own as of the datehereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligationsowed to such recipient therein are unaffected. CIMBS has no obligation to update its opinion or the information in this research report.

This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. Nopart of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other personin whole or in part, for any purpose without the prior written consent of CIMBS.

Corporate Governance Report:

The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of the Office of the Securities andExchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosedto the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based oninside information.

The survey result is as o f the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the s urvey result may be changed a fter that date. CIMBS doesnot confirm nor certify the accuracy of such survey result.

Score Range 90 100 80 89 70 79 Below 70 or No Survey Result

Description Excellent Very Good Good N/A

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United Kingdom: This report is being distributed by CIMB Securities (UK) Limited only to, and is directed at selected persons on the basis that those persons are (a) persons fallingwithin Article 19 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the Order) who have professional experience in investments of this type or (b) high

net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order, (all such persons together being referred to as relevantpersons). A high net worth entity includes a body corporate which has (or is a member of a group which has) a called-up share capital or net assets of not less than (a) if it has (or is asubsidiary of an undertaking which has) more than 20 members, 500,000, (b) otherwise, 5 million, the trustee of a high value trust or an unincorporated association or partnership withassets of no less than 5 million. Directors, officers and employees of such entities are also included provided their responsibilities regarding those entities involve engaging ininvestment activity. Persons who do not have professional experience relating to investments should not rely on this document.

United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMBResearch Pte Ltd solely to persons who qualify as "Major U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication isonly for Institutional Investors and investment professionals whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securitiesand who have professional experience in such investments. Any person who is not an Institutional Investor must not rely on th is communication. However, the delivery of this researchreport to any person in the United States of America shall not be deemed a recommendation to effect any transactions in the securities discussed herein or an endorsement of anyopinion expressed herein. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc.

Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticatedinvestors as defined in the laws and regulations of such jurisdictions.

Recommendation Framework #1 *

Stock Sector

OUTPERFORM: The stock's total return is expected to exceed a relevantbenchmark's total return by 5% or more over the next 12 months.

OVERWEIGHT: The industry, as defined by the analyst's coverage universe, isexpected to outperform the relevant primary market index over the next 12 months.

NEUTRAL: The stock's total return is expected to be within +/-5% of a relevantbenchmark's total return.

NEUTRAL: The industry, as defined by the analyst's coverage universe, is expectedto perform in line with the relevant primary market index over the next 12 months.

UNDERPERFORM: The stock's total return is expected to be below a relevantbenchmark's total return by 5% or more over the next 12 months.

UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, isexpected to underperform the relevant primary market index over the next 12 months.

TRADING BUY: The stock's total return is expected to exceed a relevantbenchmark's total return by 5% or more over the next 3 months.

TRADING BUY: The industry, as defined by the analyst's coverage universe, isexpected to outperform the relevant primary market index over the next 3 months.

TRADING SELL: The stock's total return is expected to be below a relevantbenchmark's total return by 5% or more over the next 3 months.

TRADING SELL: The industry, as defined by the analyst's coverage universe, isexpected to underperform the relevant primary market index over the next 3 months.

* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected

returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

CIMB Research Pte Ltd (Co. Reg. No. 198701620M)


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Recommendation Framework #2 **

Stock Sector

OUTPERFORM: Expected positive total returns of 10% or more over the next 12months.

OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has ahigh number of stocks that are expected to have total returns of +10% or better overthe next 12 months.

NEUTRAL: Expected total returns of between -10% and +10% over the next 12months.

NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i)an equal number of stocks that are expected to have total returns of +10% (or better)or -10% (or worse), or (ii) stocks that are predominantly expected to have total returnsthat will range from +10% to -10%; both over the next 12 months.

UNDERPERFORM: Expected negative total returns of 10% or more over the next 12months.

UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has ahigh number of stocks that are expected to have total returns of -10% or worse overthe next 12 months.

TRADING BUY: Expected positive total returns of 10% or more over the next 3months.

TRADING BUY: The industry, as defined by the analyst's coverage universe, has ahigh number of stocks that are expected to have total returns of +10% or better overthe next 3 months.

TRADING SELL: Expected negative total returns of 10% or more over the next 3months.

TRADING SELL: The industry, as defined by the analyst's coverage universe, has ahigh number of stocks that are expected to have total returns of -10% or worse overthe next 3 months.

** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily

outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2011.

ADVANC - Excellent, AMATA - Very Good, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCP - Excellent, BEC - Very Good, BECL -Very Good, BGH - not available, BH - Very Good, BIGC - Very Good, BTS - Very Good, CCET - Good, CK - Very Good, CPALL - Very Good, CPF - Very Good, CPN - Excellent,DELTA - Very Good, DTAC - Very Good, GLOBAL - not available, GLOW - Very Good, GRAMMY Excellent, HANA - Very Good, HEMRAJ - Excellent, HMPRO - Very Good,INTUCH Very Good, ITD - Good, IVL - Very Good, JAS Very Good, KBANK - Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR - Very Good, MCOT -Excellent, MINT - Very Good, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - not available, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent,SC Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI - Very Good, SPALI - Very Good, STA - Very Good, STEC - Very Good, TCAP - Very Good, THAI - VeryGood, THCOM Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Very Good, TUF - Very Good.

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