equity research reports…decent 1h17; upgrade to add on fy18 · quality development-ready block in...

Equity research│September 6, 2017

Asia Pacific Daily - 6 September 2017

Equity Research Reports…

▌IDEA OF THE DAY | Malaysia Strategy Note-Alpha - Slower earnings growth momentum in 2Q17 but... | P2 The earnings revision ratio deteriorated from 0.34x in 1Q17 to 0.26x in 2Q17, the third-lowest ratio since 1Q08. On top of this, earnings growth momentum slowed in 2Q17 to 2%, vs. 12% in 1Q17. On a positive note, we see value emerging in selected stocks that have corrected. We project EPS growth of 7% for 2017F and 8% for 2018F. We maintain our end-2017 KLCI target at 1,790. Our revised top three picks are Axiata (replacing Sime Darby), Gamuda, and Tenaga Nasional. ——————————————————————————————————————————————————————————————————————————————————————— ▌Australia Senex Energy (ADD, tp:A$0.48▲) - Money for nothing | P3 Vimy Resources (ADD, tp:A$0.38▼) - Grade and tonnes up, costs down | P4 Wellard (HOLD▲, tp:A$0.11▼) - Tough times but getting near the worst of it? | P5 ——————————————————————————————————————————————————————————————————————————————————————— ▌China/Hong Kong Guangzhou R&F (ADD, tp:HK$21.00) - Takeaways from post-results NDR in HK | P6 ——————————————————————————————————————————————————————————————————————————————————————— ▌Indonesia Perusahaan Gas Negara (REDUCE, tp:Rp1,710.00▼) - Earnings risk still not out of the woods | P7 ——————————————————————————————————————————————————————————————————————————————————————— ▌Singapore Cache Logistics Trust (REDUCE, tp:S$0.76▼) - Would it be a case of déjà vu? | P8 ——————————————————————————————————————————————————————————————————————————————————————— ▌Thailand TV - FTA (NEUTRAL) - DTT licence fee waiver could solve oversupply | P9

Showcasing CIMB Research Ideas

MAL: Axiata Group 4/9 Decent 1H17; Upgrade to Add on FY18-19F recovery

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IND: Consumer Discretionary - Overall 28/8 A ray of sunshine

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HKG: AAC Technologies 25/8 Earnings driven by 3D glass and optics

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IND: Banks 24/8 Relatively manageable impact from change in restructuring terms

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PH: Puregold Price Club Inc 18/8 Bull's eye on retail

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Regional Equity Research Contact

Michael GREENALL, CFP Regional Head of Research T: (60) 3 2261 9088 E: [email protected]

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CIMB Conference / Events |

CIMB 10th Annual Malaysia Corporate Day 04 January 2018; Malaysia; Kuala Lumpur

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. IF THIS REPORT IS DISTRIBUTED IN THE UNITED STATES IT IS DISTRIBUTED BY CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH.

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Malaysia│September 5, 2017

Strategy Note │ Alpha series



Malaysia Strategy Slower earnings growth momentum in 2Q17 but… ■ The earnings revision ratio deteriorated from 0.34x in 1Q17 to 0.26x in 2Q17, the

third-lowest ratio since 1Q08. ■ On top of this, earnings growth momentum slowed in 2Q17 to 2%, vs. 12% in 1Q17. ■ On a positive note, we see value emerging in selected stocks that have corrected. ■ We project EPS growth of 7% for 2017F and 8% for 2018F. ■ We maintain our end-2017 KLCI target at 1,790. Our revised top three picks are

Axiata (replacing Sime Darby), Gamuda, and Tenaga Nasional.

Underachievers continue to trump overachievers in 2Q17 Among the 124 companies that we actively cover, 9% reported results that were above expectations in 2Q17 vs. 11% in 1Q17. The number of companies with results that were below our expectations increased from 32% in 1Q17 to 35% in 2Q17.

Earnings revision ratio was third lowest since 1Q08 Our revision ratio (number of forecasts upgraded vs. number of forecasts downgraded) fell further to 0.26x in 2Q17 vs. 0.34x in 1Q17. This revision ratio figure is the third-lowest attained since 1Q08. We were again disappointed by the high ratio of companies whose results came in below our expectations. These companies were mainly from the agribusiness, auto, media and healthcare sectors. Tech was the only outperformer.

2Q net profit growth slowed to 2% yoy and fell 0.8% qoq 2Q17 market earnings growth slowed to 2% yoy (1Q17: 12% yoy) due to slower earnings growth from agribusiness and banking sectors. However, Malaysian corporates remain on track to deliver their first year of positive earnings growth, after two consecutive years of negative growth. We project market earnings growing by 7% in 2017F and 8% in 2018F.

Maintaining KLCI target of 1,790 for end-2017 We maintain our end-2017 KLCI target of 1,790, which is still based on a 3-year average P/E of 16x. We continue to like the construction, utilities and small-cap sectors. During the results season, we upgraded our ratings for 11 stocks as value emerges following share price corrections. We continue to advise investors to take profit on cyclical stocks that have done well and switch to more defensive sectors.

Changes to our top picks We have revised our top picks. Stocks added to our top big-cap picks list are Axiata, RHB Bank and AirAsia (replacing IHH, Mah Sing and IJM). In the mid to small cap picks list, we added Bonia, Unisem and Inari (replacing CCK, Sasbadi and Oceancash Pacific). Our revised top three picks are Axiata (replacing Sime), Gamuda and Tenaga Nasional.

Figure 1: 2Q17 results by sector

SOURCES: CIMB, COMPANY REPORTS

Malaysia

Highlighted companies

Axiata Group ADD, TP RM6.00, RM4.93 close

We expect Axiata’s core EPS to rebound a strong 29%/50% in FY18F/19F due to a) much higher contributions from XL, 2) net profit breakeven for Airtel by end-2018, and 3) cessation in equity accounting for Idea's losses post-merger with Vodafone. Gamuda ADD, TP RM6.15, RM5.34 close

Gamuda is the frontrunner in the rail tunnelling tenders totalling RM41bn across all projects. In the short term, resolution to the sale of its 40%-owned Splash is the key event catalyst that may lead to special dividends. Tenaga Nasional ADD, TP RM15.70, RM14.28 close

Tenaga offers resilient organic earnings growth potential. In Malaysia; it is building four new power plants, which should raise its generation earnings in 2017-2020F, in our view. In addition, stronger earnings driven by the new assets it acquired in the past one year, is another potential re-rating catalyst for the stock.

FBMKLCI performance in 2016 and 2017

Insert

Analyst(s)

Ivy NG Lee Fang, CFA

T (60) 3 2261 9073 E [email protected]

1,550

1,600

1,650

1,700

1,750

1,800

1,850

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016 2017

Recommendation Results vs.

Q-o-Q Y-o-Y expectations

CIMB Stocks Universe -0.6% 2.0%

Agribusiness NEUTRAL -35.8% 26.5% BelowAutomotive UNDERWEIGHT nm nm BelowAviation NEUTRAL 40.6% 34.4% In-lineBanking & Finance NEUTRAL 1.7% 18.8% BelowChemicals NEUTRAL -32.5% 24.5% In-lineConglomerate OVERWEIGHT 166.0% 34.8% In-lineConstruction and Materials OVERWEIGHT 14.2% -19.7% In-lineConsumer NEUTRAL -5.2% -10.0% In-lineHealthcare NEUTRAL -52.2% -47.4% BelowIndustrial Goods and Services OVERWEIGHT -7.0% 20.5% In-lineInsurance OVERWEIGHT -16.4% -20.1% In-lineMedia NEUTRAL 62.5% -15.3% BelowOil Equipment and Services NEUTRAL -2.0% -19.1% In-lineProperty & REITs NEUTRAL -21.8% 16.5% In-lineServices OVERWEIGHT 14.0% 10.1% BelowShipping UNDERWEIGHT -9.1% -0.6% In-lineTechnology NEUTRAL -0.6% 26.8% AboveTelecommunications NEUTRAL -0.3% 2.3% In-lineTransport Infrastructure OVERWEIGHT 7.4% 9.9% In-lineTravel & Leisure NEUTRAL -1.7% -7.1% In-lineUtilities OVERWEIGHT 20.6% -19.8% In-line

2Q17 performance

2

Oil & Gas Exp & Prodn│Australia│Equity research│September 5, 2017

IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE THE SUBJECT OF THIS REPORT AND AN EXPLANATION OF RECOMMENDATIONS CAN BE FOUND AT THE END OF THIS DOCUMENT. MORGANS FINANCIAL LIMITED (ABN 49 010 669 726) AFSL 235410 - A PARTICIPANT OF ASX GROUP

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Senex Energy

Money for nothing

In a sector full of players on the acquisition hunt, SXY will pay zero consideration ■to pick up its next leg of growth – winning a government tender to pick up a high quality development-ready block in the Surat.

Awarded through Queensland government tender, the 58km2 block sits in a heavily ■productive/developed region of the Surat.

The block’s existing P50 recoverable gas estimate of 201PJ should comfortably ■see enough reserves delineated to support long-term production additions of 30 TJ/d.

Development-ready, SXY aims to have regulatory approvals in place by mid-2018, ■and with first gas production from the block aimed for 2019.

With net cash of A$135m, we see SXY as capable of progressing both WSGP and ■the new block with a combination of debt and operational cash flow.

Low-cost growth addition SXY has been awarded a 58km2 block in the Surat Basin (CSG acreage) by the Queensland government, for development into the east coast gas market. Unlike the West Surat Gas Project (WSGP) acreage, which still needs appraising and as a result is higher risk, these new acres being picked up sit in a highly productive and developed corner of the Surat Basin. SXY has identified 100 well locations on the new block, with a P50 estimate of 201PJ of gas, capable of supporting gas production of 30TJ/d.

More than capable of balancing growth In our model we have assumed rapid development of both WSGP and the new Surat block picked up this week, in addition to increased activity in the Cooper basin. Even under aggressive development assumptions (particularly for WSGP), we expect SXY will be capable of funding the growth through a combination of existing cash (net cash A$135m), operating cash flow, and new debt.

Upsized east coast exposure Importantly the Queensland government has not stipulated where on the east coast SXY sells its Surat Basin gas, leaving the opportunity for SXY to tap the best price outcome for the 30TJ/d of uncommitted gas (which might be Victoria). SXY plans to kick off marketing discussions with gas customers in early 2018, and commented that it had already received expressions of interest in excess of 130TJ/d as part of the tender process showing robust demand conditions continues for gas offtake.

Conservatively adds A$0.09ps to valuation Despite numerous infrastructure options, as this stage we have conservatively assumed SXY goes it alone and factored in A$200m of capex (wells and infrastructure) to deliver the 30TJ/d. On these metrics, and with a similar opex base to WSGP, we expect the new Surat acreage will have an attractive cash flow margin of ~A$4.50/GJ. Incorporating the additional growth into our model has resulted in our SXY valuation increasing to A$0.48ps (was A$0.39). We maintain our Add recommendation, with SXY also now less exposed to oil price risk through this gas acreage addition (but still a key risk).

SOURCE: MORGANS, COMPANY REPORTS

▎Australia

ADD (no change) Current price: A$0.26 Target price: A$0.48 Previous target: A$0.39 Up/downside: 86.5% Reuters: SXY.AX Bloomberg: SXY AU Market cap: US$293.5m A$369.1m Average daily turnover: US$0.32m A$0.42m Current shares o/s 1,153m Free float: 80.0%

Price performance 1M 3M 12M

Absolute (%) -10.5 -15 6.3 Relative (%) -10.2 -13.5 0.2 Adrian PRENDERGAST


Financial Summary Jun-16A Jun-17A Jun-18F Jun-19F Jun-20F

Revenue (A$m) 69.3 43.6 68.1 114.5 163.4Operating EBITDA (A$m) 18.30 -1.37 20.29 57.71 99.18Net Profit (A$m) -33.09 -22.74 6.16 40.01 78.97Normalised EPS (A$) (0.001) (0.017) 0.004 0.028 0.055Normalised EPS Growth (71%) 1059% 549% 97%FD Normalised P/E (x) NA NA 59.67 9.19 4.66DPS (A$) - - - - - Dividend Yield 0% 0% 0% 0% 0%EV/EBITDA (x) 10.44 NA 17.83 8.48 5.89P/FCFE (x) 5.79 NA NA NA NANet Gearing (27.7%) (30.7%) (1.3%) 25.1% 38.4%P/BV (x) 0.80 0.84 0.83 0.76 0.65ROE (0.4%) (5.6%) 1.4% 8.6% 15.0%% Change In Normalised EPS Estimates 0.0% (0.2%) 13.2%Normalised EPS/consensus EPS (x) -4.27 6.94 3.65

86.0

105.4

124.9

144.3

0.210

0.260

0.310

0.360

Price Close Relative to S&P/ASX 200 (RHS)

Source: Bloomberg

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40

60

Sep-16 Dec-16 Mar-17 Jun-17

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Mining│Australia│Equity research│September 5, 2017


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Vimy Resources

Grade and tonnes up, costs down

The Mulga Rock resource (to JORC Code 2012 standards) was lifted to 71.2Mt @ ■570ppm containing 90.1Mlbs of U3O8 in July 2017 – increasing both tonnage and more particularly grade (from 520ppm). Ore reserves (to JORC Code 2012 standards) are now lifted to 22.7Mt @ 845ppm (up from 15.2Mt @ 660ppm U3O8).

Vimy previously announced three uranium converter contracts to process its ■concentrate into uranium hexafluoride for nuclear fuel at plants in Canada, the US and France. With these agreements in place the Final Investment Decision is anticipated coupled with financing, offtake and/or JV agreements.

We maintain an Add rating, with a A$0.38ps sum-of-the-parts based valuation and ■target (previously A$0.42) with increased issued capital. We will revisit our valuation when the terms for funding the development are announced and will incorporate a revised (lower) cost structure with the higher head grade.

More tonnes, higher grade As part of the Definitive Feasibility Study to be released December 2017 the Mulga Rock Resource and Reserve statements (to JORC Code 2012 standards) are updated. The Resource increased to 71.2Mt @ 570ppm U3O8 at the 150ppm U3O8 cut-off. The Reserve increased to 22.7Mt @ 845ppm containing 42.3Mlbs of U3O8. The updated Reserve incorporates updated mining dilution and pit optimisations, metallurgical recoveries and processing costs generated by GR Engineering for the DFS.

DFS by December 2017 The November 2015 study outlined a financially robust project with a 17-year mine life. The capital cost was projected close to US$290m, and C1 Opex at US$34/lb before projected by-product credits, with a feed grade of 600ppm U3O8. The Resource was subsequently revised with a 14% increase in grade to 755ppm U3O8 which was projected to lower the C1 cash cost. This most recent reserve evaluation has lifted the grade by a further 30%. Our expectation is that given the project is robust at US$25/lb U3O8, the financing and off-take or JV arrangements will be concurrent with the DFS and Final Investment Decision. Recent medium-term (five-year) offtake agreements have been set in the US$40-45/lb range.

Risks – the FID and contract uranium price The major risk to our valuation remains the FID decision, the funding structure (debt funding terms, equity issue terms, marketing agreements), and the weak uranium spot price (currently US$20-25/lb), with our estimated cash cost now US$25/lb. Peninsula Energy (ASX: PEN, not rated), completed a supply agreement at a weighted average price of US$56/lb over a 10-year period (March 2016). Berkeley Energia (ASX:BKY, our rating Add)) reported offtake contracts over a five year period at US$43.78/lb, with the spot price at US$18/lb (November 2016). The industry consensus forecast is for global demand to increase to ~240Mlbs U308 by 2024, with current annual output ~150Mlbs. The incentive price to bring on this level of new supply is commonly estimated to be around US$65/lb. We have used US$60/lb in our modelling.


▎Australia

ADD (no change) Current price: A$0.12 Target price: A$0.38 Previous target: A$0.42 Up/downside: 231.5% Reuters: VMY.AX Bloomberg: VMY AU Market cap: US$32.91m A$41.39m Average daily turnover: US$0.02m A$0.03m Current shares o/s 227.7m Free float: 35.0%


Absolute (%) -23.3 -42.5 -62.9 Relative (%) -23 -41 -69 Chris BROWN



Revenue (A$m) - - - - - Operating EBITDA (A$m) -11.26 -22.23 -6.00 -6.00 -3.00Net Profit (A$m) -10.73 -11.96 -6.19 -6.19 -3.19Normalised EPS (A$) (0.047) (0.053) (0.020) (0.017) (0.009)Normalised EPS Growth 140% 11% (63%) (12%) (48%)FD Normalised P/E (x) NA NA NA NA NADPS (A$) - - - - - Dividend Yield 0% 0% 0% 0% 0%EV/EBITDA (x) NA NA NA NA NAP/FCFE (x) NA NA NA NA NANet Gearing (112%) (55%) 59% (161%) (739%)P/BV (x) 4.56 NA NA NA NAROE 114% (5349%) 182% 296% 179%% Change In Normalised EPS Estimates 0% 12% (136%)Normalised EPS/consensus EPS (x) 0.56 1.15

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113

0.090

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0.190

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0.290

0.340Price Close Relative to S&P/ASX 200 (RHS)

Source: Bloomberg

11223


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Food & Beverages│Australia│Equity research│September 4, 2017


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Wellard

Tough times but getting near the worst of it?

WLD reported a poor FY17 result, although it was in line with recent guidance. The ■state of its balance sheet remains concerning.

At this point, FY18 looks like it will be another challenging year, although ■improvement is expected. Earnings uncertainty remains high. We don’t expect WLD to return to profitability until FY19.

Given WLD is trading in line with our revised valuation, we move to a Hold rating ■from Reduce. However, we stress that given WLD’s high debt levels, it remains a high risk investment proposition.

Large operating loss and debt levels remain concerning WLD delivered an extremely weak FY17 result, with an underlying NPBT loss of A$58.8m. The statutory loss was A$77.3m and was impacted by a number of one-offs. Record Australian cattle prices throughout FY17 impacted customer orders in Indonesia and Vietnam, resulting in a material reduction in sales volumes (cattle shipped fell 29%). Consequently, sales declined 13% to A$498m. WLD was largely unable to pass on the significant increase in COGS to its customers (often forced to accept negative margins on trading livestock) and suffered severe gross profit margin compression (5.5% vs 15.5% the pcp). WLD's operating cash outflow was flat on the pcp at A$20.1m and largely reflected improved working capital management. WLD’s debt level remains far too high (net debt of A$159m vs A$168m) and the company was in breach of its bank covenants at 30 June 2017. It said it has received or expects to receive waivers for all breaches. Net debt was further reduced by A$15.6m post balance date following the sale of the Ocean Outback. The NTA (fully diluted) fell to 22c vs 45c the pcp.

Short term outlook remains tough WLD said that while conditions remain subdued, its financial performance so far in FY18 has improved. However it noted that until if sees price reductions sustained through the wet season and into 2018, it remains unclear what impact it will have on FY18. WLD has reduced its overheads by 21% which will help FY18. We have made large downgrades to our forecasts. While we forecast a material improvement in FY18 EBITDA (A$9.7m vs loss of A$25.9m in FY17), given significant D&A and interest expense, we forecast WLD to report a loss of A$18.1m. We forecast a return to profitability in FY19 (A$4.3m).

Investment view – move to Hold and A$0.11 price target While operating conditions remain challenging, the outlook uncertain and WLD’s balance sheet is severely stretched, the investment case remains high risk. Further assets sales and/or new equity raisings may be necessary. However, with Australian cattle prices starting to weaken as the national herd rebuilds, we believe WLD is likely through the worst of what has been an extremely challenging operating environment. Consequently, we move to Hold recommendation. However we stress that WLD remains high risk and note that its accounts are likely to include a going concern qualification. We have set our price target of A$0.11 (was A$0.15) in line with our revised DCF valuation. As Australia’s largest exporter of livestock (22% of Australian cattle exports), the company has significant leverage to lower cattle prices and a larger herd. The key downside risk to our view is financial solvency given WLD’s high level of debt, reduced cattle supply, trading losses and a rising cattle price, AUD and fuel price.


▎Australia

HOLD (previously REDUCE) Current price: A$0.11 Target price: A$0.11 Previous target: A$0.15 Up/downside: 4.8% Reuters: WLD.AX Bloomberg: WLD AU Market cap: US$44.48m A$55.78m Average daily turnover: US$0.09m A$0.12m Current shares o/s 531.3m Free float: 51.0%


Absolute (%) -16 -44.7 -55.3 Relative (%) -15.7 -43.2 -61.4 Belinda MOORE

T (61) 7 3334 4532 E [email protected] Kurt GELSOMINO



Revenue (A$m) 573.8 497.9 451.7 469.4 483.3Operating EBITDA (A$m) 38.70 -25.85 9.73 32.99 40.01Net Profit (A$m) -23.32 -77.26 -18.09 4.33 8.79Normalised EPS (A$) 0.04 -0.15 -0.03 0.01 0.01Normalised EPS Growth (38%) (497%) (77%) 72%FD Normalised P/E (x) 2.84 NA NA 12.88 7.48DPS (A$) - - - - - Dividend Yield 0% 0% 0% 0% 0%EV/EBITDA (x) 5.42 NA 21.22 6.65 5.88P/FCFE (x) NA NA NA NA NANet Gearing 89% 123% 136% 142% 136%P/BV (x) 0.22 0.43 0.50 0.48 0.53ROE 9.5% (38.7%) (15.0%) 3.8% 7.3%% Change In Normalised EPS Estimates (369%) (76%) (70%)Normalised EPS/consensus EPS (x) 3.40 0.39 0.41

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Source: Bloomberg

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Property Devt & Invt│Hong Kong│September 5, 2017

Company Note



Insert

Guangzhou R&F Takeaways from post-results NDR in HK ■ We hosted a post-results NDR for RF in HK last week, with about 15 investors. ■ Gross margin was a high 36.5% in 1H17, above our estimate (30%) and Bloomberg

consensus. Management aims to maintain high gross margins in coming years. ■ RF aims to achieve a strong sales growth of 45% p.a. over FY17-20F, to be

supported by sufficient saleable resources from proactive landbanking. ■ We forecast 27% EPS growth p.a. in FY17-19F. We reiterate our Add call with NAV-

based TP of HK$21.00. ■ In our view, RF is trading at attractive 40% discount to end-2017F NAV, 6x FY17F P/E

and 7% yield. It is our mid-cap top pick.

We hosted a post-results NDR for RF in HK last week We brought RF’s management to meet about 15 investors in Hong Kong (HK) last week. Overall, investors were surprised by the high gross margin achieved in 1H17 and question if it can achieve a similar level in long run. Investors’ questions also focused on what RF will do with Wanda’s hotels after the deal is completed, likely by end-Oct 2017.

RF targets contracted sales CAGR of ~45% over FY17-20F Propelled by ample saleable resources over the next few years, management stated that RF aims for sales growth of 30% in FY17F (Rmb80bn) and 60-73% (Rmb128bn-138bn) in FY18F. Management further disclosed that its sales could reach Rmb190bn in FY19F (about 50% growth yoy), translating into 45% CAGR over FY17-19F. These sales estimates are based on its current landbank and assumed sell-through rates of 50-55%.

Does RF have enough landbank to sustain high sales growth? Some investors were sceptical about RF having sufficient landbank to support its aggressive sales growth targets. Management said RF spent Rmb32bn for 11.4m sq m GFA in 1H17 and increased its total landbank to attributable GFA of 48.5m sq m as of end-Jun. Based on ASP of Rmb11k/sq m, total sales value could reach Rmb546bn, c.35% more than the Rmb400bn total sales targeted by management in FY17-19F.

RF has one of highest gross margins among Chinese developers RF’s 1H17 gross margin of 36.2% surprised us on the upside, well above our estimate (30%) and market expectations. Management said it could maintain gross margin at a minimum of 30% (vs. peer average of 27%) in the long term, given its low land cost of Rmb1.9k/sq m and all-in cost of Rmb7.5k/sq m vs. expected ASP of Rmb11k/sq m.

RF has room to improve profitability of Wanda hotels Management said its deal to buy 77 hotels from Wanda is at the due diligence stage and expects the deal to be completed by end-Oct. The consideration of Rmb20bn suggests a 30% discount to NAV (which we view as very attractive) and cash outlay would only be Rmb10bn for the first year. FY16 EBITDA of these hotels was Rmb874m (Rmb11m per hotel) and we think RF can improve this to c.Rmb1.5bn p.a. in future via stringent cost controls and increasing occupancy rates (current occupancy rate: 50-60%).

Funding cost and net gearing Thanks to its cheap financing in the past 12 months in China, RF lowered its average borrowing cost to a record low of 5.04% in 1H17 from 6.25% in FY16. However, management said that investors should not expect it to go any lower, given the rising interest rate environment in China. Meanwhile, management expects net gearing to return to 170-180% in FY17F from 207% in 1H17 due to the booking of a huge Rmb10bn gain from the Wanda transaction and its fast earnings growth this year.

IPO update Asked about timeframe for its A-share IPO in China, management declined to give any guidance due to uncertainty surrounding the IPO approval process. However, management pointed out that its current sales growth targets do not depend on the outcome of this IPO. Meanwhile, based on information from the China Securities Regulatory Commission (CSRC), RF ranked 57 in Shanghai’s IPO queue as of 1 Sep.

SOURCE: COMPANY DATA, CIMB FORECASTS

Hong Kong

ADD (no change) Consensus ratings*: Buy 11 Hold 8 Sell 5

Current price: HK$18.00 Target price: HK$21.00 Previous target: HK$21.00

Up/downside: 16.7% CIMB / Consensus: 22.9%

Reuters: 2777.HK Bloomberg: 2777 HK Market cap: US$7,413m HK$58,003m Average daily turnover: US$18.73m HK$146.4m Current shares o/s: 3,222m Free float: 33.4% *Source: Bloomberg Key changes in this note

No changes.

Source: Bloomberg

Price performance 1M 3M 12M Absolute (%) 27.1 43.3 33.3 Relative (%) 26.5 36.3 14.1

Major shareholders % held Li Sze Lim 32.9 Zhang Li 31.9 Insert

Analyst(s)

Raymond CHENG, CFA

T (852) 2539 1324 E [email protected] Siu Fung LUNG, CFA T (852) 2539 1327 E [email protected]

Financial Summary Dec-15A Dec-16A Dec-17F Dec-18F Dec-19F

Total Net Revenues (Rmbm) 44,291 53,730 57,803 77,489 96,652Operating EBITDA (Rmbm) 10,901 11,199 14,776 18,581 23,312Net Profit (Rmbm) 5,997 6,541 8,640 10,806 13,037Core EPS (Rmb) 1.86 1.96 2.68 3.35 4.05Core EPS Growth 49.2% 5.5% 36.6% 25.1% 20.6%FD Core P/E (x) 8.07 7.65 5.60 4.48 3.71DPS (Rmb) 1.20 1.00 1.09 1.18 1.28Dividend Yield 7.99% 6.66% 7.22% 7.84% 8.51%EV/EBITDA (x) 10.83 11.28 10.19 7.87 6.53P/FCFE (x) 4.44 1.47 NA 2.71 9.94Net Gearing 168% 174% 203% 170% 153%P/BV (x) 1.19 1.11 0.99 0.86 0.74ROE 15.6% 15.0% 18.6% 20.5% 21.4%CIMB/consensus EPS (x) 1.08 1.14 1.22

69.0

89.8

110.7

8.1

13.1

18.1

Price Close Relative to HSI (RHS)

20406080


Vol m

6

Gas Transmission & Dist│Indonesia│September 5, 2017 Shariah Compliant

Company Note



Insert Insert

Perusahaan Gas Negara Earnings risk still not out of the woods ■ Weak gas demand materialised as 2Q17 gas volume fell by 14.2% yoy/16.4% qoq on

a drop in PLN volume. Earnings surprises came from a jump in upstream asset costs. ■ Gas margin remains a key risk amid continued uncertainties in domestic gas price

policy. ■ Possible earnings risks could come from the currently dormant Lampung FSRU and

Kalija transmission pipeline. ■ We cut FY17-19 estimates and TP to Rp1,710; maintain a Reduce rating.

Weak 2Q17 earnings; 1H17 missed CIMB’s below-consensus expectation PGAS posted 1H17 core profit of US$69m (-65% yoy), implying that the company recorded core net loss of US$37m in 2Q17, resulting in 1H17 forming only 41%/19% of our/consensus forecasts. The weak 2Q17 profit was driven by a combination of lower distribution volume and rising costs, mainly due to the unexpected increase in depreciation and depletion expenses from the upstream subsidiaries (mainly from the Muriah PSC block which halted production).

Weak gas demand the main culprit as a key contract yet to renew Distribution business volume fell 14.2% yoy (-16.4% qoq) to 682mmscfd in 2Q17, resulting in 1H17 volume of 749mmscfd (-5.9% yoy), though this was still in-line with our FY17 expectation of 720mmscfd. As expected, this was mainly due to the lower offtake from PLN on the expiration of a key Muara Tawar contract. Gas spread contracted slightly to US$2.55/ mmBTU in 2Q17 (vs. US$2.58 in 1Q17), though this was mainly due to a shift in volume mix and was lower than our FY17 assumption of US$2.75/mmBTU.

Outlook still largely hinges on domestic gas price policy Management indicated that gas distribution volume rebounded to 750-760mmscfd in Jul 17 on better PLN volume offtake (including from Muara Tawar), but sales to Muara Tawar are currently still on an as-needed basis as its contract is yet to be renewed. The domestic gas price policy is still unsettled and continues to underpin our concerns over volume uncertainties and, in particular, risk for PGAS’s margin given the recent gas contract in Batam that prohibited the company from passing on gas cost increases.

More cuts in estimates and TP... Following our big cuts in Aug 17, we now cut our FY17-19 estimates by 3.3-9.1% to reflect the higher cost base which drove the 1H17 earnings miss. Consequently, our SOP-based TP is also lowered to Rp1,710/share.

...while earnings risk still looms While our expectation for a weaker earnings outlook for the distribution business seems to be largely priced in, we still see downside risk given low utilisation at Lampung FSRU (due to lacklustre demand for LNG) and the dormant Kalimantan-Jawa transmission pipeline (on halted production at Muriah PSC). Management estimates the value of these assets at US$180m (FSRU) and US$275m (Kalimantan-Jawa). It indicated possible contingency plans to keep both assets afloat but failed to convince us of the strong grounds of such plans.

Maintain Reduce despite recent price drop Post the recent share price correction, PGAS’s valuation of 19.4x forward P/E still reflects a 12% premium to its historical 5-year mean, though a 19% discount to the regional peer average (justified given the negative EPS growth outlook). Given the still-shaky fundamentals and earnings risks, we maintain a Reduce on the stock. Key upside risks are positive news from gas price policy and a faster recovery in domestic gas demand.

[Add FP Header] [Add FP BodyText]


Indonesia

REDUCE (no change) Consensus ratings*: Buy 8 Hold 11 Sell 5

Current price: Rp1,885 Target price: Rp1,710 Previous target: Rp1,800

Up/downside: -9.3% CIMB / Consensus: -25.9%

Reuters: PGAS.JK Bloomberg: PGAS IJ Market cap: US$3,426m Rp45,695,244m Average daily turnover: US$4.01m Rp55,298m Current shares o/s: 24,242m Free float: 43.0% *Source: Bloomberg Key changes in this note

FY17F EPS decreased by 9.1%. FY18F EPS decreased by 3.5%. FY19F EPS decreased by 3.3%.

Source: Bloomberg

Price performance 1M 3M 12M Absolute (%) -12.3 -22.4 -33.6 Relative (%) -13.2 -23.8 -42.4

Major shareholders % held Indonesian Government 57.0 Public 43.0 Insert

Analyst(s)

Erindra KRISNAWAN, CFA

T (62) 21 3006 1732 E [email protected] Felica TRENSENO T (62) 21 3006 1722 E [email protected]


Revenue (US$m) 3,069 2,935 2,151 2,312 2,627Operating EBITDA (US$m) 851.9 741.8 671.4 678.0 740.5Net Profit (US$m) 401.2 304.3 152.1 186.9 194.2Core EPS (US$) 0.019 0.012 0.006 0.008 0.008Core EPS Growth (34.9%) (35.4%) (48.8%) 22.9% 3.9%FD Core P/E (x) 7.44 11.52 22.52 18.33 17.64DPS (US$) 0.011 0.008 0.006 0.003 0.004Dividend Yield 7.84% 5.86% 4.44% 2.22% 2.73%EV/EBITDA (x) 5.81 6.70 7.28 7.73 7.48P/FCFE (x) 3.25 13.96 26.51 NA NANet Gearing 50.3% 48.5% 45.6% 54.5% 61.4%P/BV (x) 1.13 1.08 1.08 1.05 1.02ROE 15.6% 9.6% 4.8% 5.8% 5.8%% Change In Core EPS Estimates (9.05%) (3.53%) (3.33%)CIMB/consensus EPS (x) 0.48 0.51 0.50

52.0

73.4

94.9

1,700

2,200

2,700

Price Close Relative to JCI (RHS)

50100150200


Vol m

7

REIT│Singapore│September 5, 2017

Company Note



Insert Insert

Cache Logistics Trust Would it be a case of déjà vu? ■ CACHE has announced a rights issue to raise gross proceeds of S$102.7m.

Proceeds would be used to pare down debt. ■ We expect gearing to decrease to 35.3%. Factoring in S$3.5m interest cost savings

p.a. plus the rights issue, we cut our FY17F-19F DPU forecasts by 3.5-10.5%. ■ Judging from its previous equity fund raising in 2015, we would not be surprised if

CACHE acquires Australian assets in the next couple of months. ■ In the near-term, we expect unit price to come under pressure from this pre-emptive

rights issue. Maintain Reduce with a lower DDM-based target price.

Pre-emptive rights issue to raise gross proceeds of S$102.7m CACHE has announced an underwritten and renounceable rights issue of 162.6m new units to raise gross proceeds of S$102.7m (net proceeds of S$2.8m). The rights will be offered at the ratio of 18 rights for every 100 units at S$0.632/right (24.9% discount to theoretical ex-right price). Both ARA and CWT have provided irrevocable undertakings to subscribe for their respective allotment of rights, which represents 7.3% of the right units. Ex-date is on 08 Sep 2017.

Gearing to decrease to 35.3%; cut FY17F-19F DPU by 3.5-10.5% Proceeds from the rights issue would be used to pare down debt. We note that S$192m of S$-debt would be due in 2019. Post-completion of the rights, we estimate CACHE’s gearing to decrease to 35.3% (2QFY17: 43.4%). Factoring in S$3.5m interest cost savings p.a. plus the rights issue, we cut our FY17F-19F DPU forecasts by 3.5-10.5%. We calculate NAV to drop to S$0.743/unit at end-FY17 (2QFY17: S$0.77/unit).

We are rather surprised We previously thought the manager could divest its non-core Singapore assets to bring down gearing. In addition, while we understand that it could be difficult to control timing/circumstances, we are of the view that accompanying acquisitions with equity fund raising would be more palatable for the market.

Would it be a case of déjà vu? Nonetheless, CACHE is continuing its portfolio rebalancing and growth strategy with a focus in Australia. We note that in 2015, CACHE acquired two additional warehouses in Australia within a month or so after its S$100m private placement in Nov. In its latest acquisition of the Spotlight warehouse in Australia (Feb 17), it managed to time/fund the acquisition with proceeds from the divestment of Cache Changi Districentre 3 in Nov 16.

Maintain Reduce, TP decreased to S$0.76 Judging from its previous equity fund raising, we would not be surprised if CACHE acquires further Australian assets in the next few months to make up for the DPU-dilution from the rights issue. In the near-term, we expect unit price to come under pressure from this pre-emptive rights issue. We keep our Reduce call, with a lower DDM-based target price of S$0.76 (on the back of DPU downgrades). Upside risks to our call would be further accretive-acquisitions and faster recovery in the Singapore logistics market.


Singapore

REDUCE (no change) Consensus ratings*: Buy 1 Hold 7 Sell 2

Current price: S$0.88 Target price: S$0.76 Previous target: S$0.84

Up/downside: -13.4% CIMB / Consensus: -11.6%

Reuters: CALT.SI Bloomberg: CACHE SP Market cap: US$585.6m S$794.8m Average daily turnover: US$1.41m S$1.94m Current shares o/s: 900.5m Free float: 99.7% *Source: Bloomberg Key changes in this note

FY17F DPU decreased by 3.5%. FY18F DPU decreased by 7.0%. FY19F DPU decreased by 10.5%.

Source: Bloomberg

Price performance 1M 3M 12M Absolute (%) -0.6 0 -3.3 Relative (%) 2.3 0.3 -18.5

Major shareholders % held Prudential 5.3 Vanguard 2.4 HSBC 2.1 Insert

Analyst(s)

YEO Zhi Bin

T (65) 6210 8669 E [email protected] LOCK Mun Yee T (65) 6210 8606 E [email protected]


Gross Property Revenue (S$m) 89.7 111.3 109.4 111.7 113.0Net Property Income (S$m) 76.16 88.01 85.90 87.16 88.72Net Profit (S$m) (12.23) (23.97) 55.95 60.05 61.52Distributable Profit (S$m) 67.96 69.32 65.05 67.57 69.06Core EPS (S$) 0.063 0.063 0.059 0.058 0.057Core EPS Growth (14.2%) 1.0% (6.4%) (1.8%) (2.0%)FD Core P/E (x) 14.04 13.90 14.85 15.13 15.44DPS (S$) 0.085 0.077 0.069 0.065 0.064Dividend Yield 9.66% 8.78% 7.83% 7.44% 7.27%Asset Leverage 39.5% 42.8% 35.3% 35.5% 35.6%BVPS (S$) 0.88 0.78 0.80 0.74 0.73P/BV (x) 1.00 1.13 1.09 1.19 1.20Recurring ROE 6.76% 7.63% 7.48% 7.57% 7.77%% Change In DPS Estimates (3.5%) (7.0%) (10.5%)CIMB/consensus DPS (x) 0.97 0.92 0.91

75.0

85.0

95.0

105.0

0.700

0.800

0.900

1.000Price Close Relative to FSSTI (RHS)

5101520


Vol m

8

Media│Thailand│September 5, 2017

Sector Note



TV - FTA DTT licence fee waiver could solve oversupply ■ We think DTT licence fee waiver could solve the industry’s oversupply problem. ■ We expect 14 DTT players to exit and 10 operators to survive in the long run. ■ We expect BEC to return two licences, resulting in 18-23% earnings upside. ■ However, we doubt the NCPO would easily waive the THB14bn payable fees. ■ Without any clarity, we like the Thai TV industry the least and rate BEC a Reduce.

Fee waiver for failing digital terrestrial TV operators According to today’s Post Today newspaper, Mr. Takorn Tantasith, a secretary general of the National Broadcasting and Telecommunication Commission (NBTC), said that the NBTC is proposing the National Council for Peace and Order (NCPO) issues a special order to permit digital terrestrial TV (DTT) licensees to return their licences without any obligation. He added up to 15 DDT channels are reasonable for Thailand, vs. 24 channels currently.

Industry with structural problems The DTT industry has experienced oversupply since the NBTC awarded 24 licences in 2013, which fragmented the free-to-air TV (FTA-TV) market landscape (24 commercial FTA-TV channels vs. 4 previously). Also, the cost of exit for unsuccessful DTT channel operators appears to be high for possible market consolidation. Based on Nielsen’s TV viewership ratings in Jun 17 (Fig 3), the top 10 DTT channels had 9.41 rating points out of 10.88, implying that 14 DTT operators could exit the market.

Good idea but execution in doubt We believe the DTT fee waiver is the only way to bail out the DTT industry in a sustainable way. If the NCPO could resolve the DTT industry’s problems, we expect the DTT market to consolidate and the number of DTT channels to come down to 10, from 24 currently. However, we are not sure the NCPO is willing to waive the THB14bn DTT upfront fee payable from 14 DTT licences. As such, we are sceptical that this exercise would take place at this point.

Little revenue upside, more cost reduction We believe the market consolidation would benefit the remaining DTT channel operators on three fronts. First, the TV broadcasters who hold excessive DTT channels would return the licences to free up cash flow and opex burdens. Second, exiting DTT channel operators would likely become content providers and partner the remaining DTT channel operators. Lastly, the DTT channel supply contraction might result in additional revenue for the remaining DTT channel operators.

Scenario analysis on BEC If the DTT fee waiver could happen, we expect BEC to return two DTT channel licences (family and standard definition variety channel categories) and to operate only one DTT channel (high definition variety channel category). By doing so, BEC would lower the multiplexer (MUX) rental fee of THB114m per year and the licence amortisation cost of THB196m per year, both of which would boost BEC’s FY18-19F core net profit by 18-23% and DCF value by 13%.

We prefer the TV industry the least in the media sector In the absence of DTT fee waiver, we continue to prefer the TV industry the least in the Thai media space. BEC remains our top short. Our top picks are Major and PlanB.

Figure 1: BEC – Possible savings from return of DTT licences

SOURCES: CIMB RESEARCH, COMPANY

Thailand

Neutral (no change)

Highlighted companies

BEC World REDUCE, TP THB13.00, THB16.90 close

BEC is the second largest TV broadcaster in Thailand. It holds a 15-year licence to operate three digital terrestrial TV channels until 2027 and a concession to operate one analogue terrestrial TV channel until 2021. BEC is 47%-owned by the Maleenont family. Major Cineplex Group ADD, TP THB34.07, THB31.00 close

Major is the largest cinema operator in Thailand by number of screens and revenue. The company has 689 screens in 116 locations in Thailand (97.6% of its total screens) and 4 locations in neighbouring countries (2.4% of its total screens). Mr. Vicha Poolvaraluk is the founder and major shareholder of Major with a 31.84% stake. Plan B Media ADD, TP THB5.84, THB6.00 close

PlanB is the most diversified out-of-home (OOH) media provider in Thailand. It offers a wide range of innovative OOH media platforms, including transit, digital and static outdoor, in-store, airport and online media. PlanB is 51%-owned by Lojanagosin Group, 11.3%-owned by Luechaikajohnpan Group and 10.3%-owned by PT Elang Mahkota Teknologi Tbk.

Summary valuation metrics

Insert

Analyst(s)

Pisut NGAMVIJITVONG


P/E (x) Dec-17F Dec-18F Dec-19F

BEC World 43.15 29.29 23.58 Major Cineplex Group 23.49 20.30 17.43 Plan B Media 36.69 29.98 27.04

P/BV (x) Dec-17F Dec-18F Dec-19F

BEC World 4.11 3.92 3.76 Major Cineplex Group 4.11 3.98 3.84 Plan B Media 6.18 5.59 5.10

Dividend Yield Dec-17F Dec-18F Dec-19F

BEC World 2.32% 3.41% 4.24%Major Cineplex Group 3.85% 4.45% 5.18%Plan B Media 1.65% 2.01% 2.23%

THB m 2018F 2019F 2020F 2021F 2022F

Count 1 2 3 4 5WACC 8.80% 8.80% 8.80% 8.80% 8.80%Discount factor 0.92 0.84 0.78 0.71 0.66Licence upfront-Family 14 14 136 136 136-SD 38 38 493 493 493Mux rental cost 114 114 114 114 114Total 166 166 743 743 743PV of saving 153 140 577 530 487Terminal value 1,561 2,380NPV 3,448No of shares (m) 2,000Value per share (THB) 1.72

9

Asia Pacific Daily│Equity research│September 6, 2017

REGIONAL HEAD

Michael William GREENALL Regional Head of Research +60 (3) 2261 9088 [email protected]

COUNTRY HEADS OF RESEARCH

Ivy NG, CFA Siew Khee. LIM Erwan TEGUH Kasem PRUNRATANAMALA, CFA Ben BEI Malaysia Singapore Indonesia Thailand Hong Kong/China +60 (3) 2261-9073 +65 6210-8664 +62 (21) 3006-1720 +66 (2) 657-9221 +852 2532-1116 [email protected] [email protected] [email protected] [email protected] [email protected] Dohoon LEE Satish KUMAR South Korea India +82 (2) 6730-6121 +91 (22) 6602-5185 [email protected] [email protected] Yolan SEIMON Ralph Christian BODOLLO Sri Lanka Philippines +94 (11) 230-6273 +63 (2) 888-7118 [email protected] [email protected] Coverage via partnership arrangement with Coverage via partnership arrangement with John Keells Stock Brokers SB Equities

REGIONAL SECTOR HEADS

KJ KWANG Ivy NG, CFA Raymond YAP, CFA Offshore & Marine Plantations Transportation +82 (2) 6730-6123 +60 (3) 2261-9073 +60 (3) 2261-9072 [email protected] [email protected] [email protected]

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AAV, ADVANC, AMATA, ANAN, AOT, AP, BA, BANPU, BBL, BCH, BCP, BCPG, BDMS, BEAUTY, BEC, BEM, BJC, BH, BIG, BLA, BLAND, BPP, BTS, CBG, CENTEL, CHG, CK, CKP, COM7, CPALL, CPF, CPN, DELTA, DTAC, EA, EGCO, EPG, GFPT, GLOBAL, GLOW, GPSC, GUNKUL, HMPRO, INTUCH, IRPC, ITD, IVL, KBANK, KCE, KKP, KTB, KTC, LH, LHBANK, LPN, MAJOR, MALEE, MEGA, MINT, MONO, MTLS, PLANB, PSH, PTL, PTG, PTT, PTTEP, PTTGC, QH, RATCH, ROBINS, S, SAWAD, SCB, SCC, SCCC, SIRI, SPALI, SPRC, STEC, STPI, SUPER, TASCO, TCAP, THAI, THANI, THCOM, TISCO, TKN, TMB, TOP, TPIPL, TRUE, TTA, TU, TVO, UNIQ, VGI, WHA, WORK. 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 and Exchange 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 disclosed to 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 on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. CIMBS does not 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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Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (Thai IOD) in 2016, Anti-Corruption 2016 AAV – Very Good, n/a, ADVANC – Very Good, Certified, AEONTS – Good, n/a, AMATA – Excellent, Declared, ANAN – Very Good, Declared, AOT – Excellent, Declared, AP – Very Good, Declared, ASK – Very Good, Declared, ASP – Very Good, Certified, BANPU – Very Good, Certified, BAY – Excellent, Certified, BBL – Very Good, Certified, BCH – not available, Declared, BCP - Excellent, Certified, BEM – Very Good, n/a, BDMS – Very Good, n/a, BEAUTY – Good, Declared, BEC - Good, n/a, BH - Good, Declared, BIGC - Excellent, Declared, BJC – Good, n/a, BJCHI – Good, Declared, BLA – Very Good, Certified, BPP – not available, n/a, BR - Good, n/a, BTS - Excellent, Certified, CBG – Good, n/a, CCET – not available, n/a, CENTEL – Very Good, Certified, CHG – Very Good, n/a, CK – Excellent, n/a, COL – Very Good, Declared, CPALL – not available, Declared, CPF – Excellent, Declared, CPN - Excellent, Certified, DELTA - Excellent, Declared, DEMCO – Excellent, Certified, DIF – not available, n/a, DTAC – Excellent, Certified, EA – Very Good, Declared, ECL – Good, Certified, EGCO - Excellent, Certified, EPG – Good, n/a, GFPT - Excellent, Declared, GLOBAL – Very Good, Declared, GLOW – Very Good, Certified, GPSC – Excellent, Declared,

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GRAMMY - Excellent, n/a, GUNKUL – Very Good, Declared, HANA - Excellent, Certified, HMPRO - Excellent, Declared, ICHI – Very Good, Declared, INTUCH - Excellent, Certified, ITD – Good, n/a, IVL - Excellent, Certified, JAS – not available, Declared, JASIF – not available, n/a, JUBILE – Good, Declared, KAMART – not available, n/a, KBANK - Excellent, Certified, KCE - Excellent, Certified, KGI – Good, Certified, KKP – Excellent, Certified, KSL – Very Good, Declared, KTB - Excellent, Certified, KTC – Excellent, Certified, LH - Very Good, n/a, LPN – Excellent, Declared, M – Very Good, Declared, MAJOR - Good, n/a, MAKRO – Good, Declared, MALEE – Very Good, Declared, MBKET – Very Good, Certified, MC – Very Good, Declared, MCOT – Excellent, Declared, MEGA – Very Good, Declared, MINT - Excellent, Certified, MTLS – Very Good, Declared, NYT – Excellent, n/a, OISHI – Very Good, n/a, PLANB – Very Good, Declared, PLAT – Good, Declared, PSH – not available, n/a, PSL - Excellent, Certified, PTT - Excellent, Certified, PTTEP - Excellent, Certified, PTTGC - Excellent, Certified, QH – Excellent, Declared, RATCH – Excellent, Certified, ROBINS – Very Good, Declared, RS – Very Good, n/a, SAMART - Excellent, n/a, SAPPE - Good, n/a, SAT – Excellent, Certified, SAWAD – Good, n/a, SC – Excellent, Declared, SCB - Excellent, Certified, SCBLIF – not available, n/a, SCC – Excellent, Certified, SCN – Good, Declared, SCCC - Excellent, Declared, SIM - Excellent, n/a, SIRI - Good, n/a, SPA - Good, n/a, SPALI - Excellent, Declared, SPRC – Very Good, Declared, STA – Very Good, Declared, STEC – Excellent, n/a, SVI – Excellent, Certified, TASCO – Very Good, Declared, TCAP – Excellent, Certified, THAI – Very Good, Declared, THANI – Very Good, Certified, THCOM – Excellent, Certified, THRE – Very Good, Certified, THREL – Very Good, Certified, TICON – Very Good, Declared, TIPCO – Very Good, Certified, TISCO - Excellent, Certified, TK – Very Good, n/a, TKN – Good, n/a, TMB - Excellent, Certified, TNR – not available, n/a, TOP - Excellent, Certified, TPCH – Good, n/a, TPIPP – not available, n/a, TRUE – Very Good, Declared, TTW – Very Good, Declared, TU – Excellent, Declared, TVO – Very Good, Declared UNIQ – not available, Declared, VGI – Excellent, Declared, WHA – not available, Declared, WHART – not available, n/a, WORK – not available, n/a. Companies participating in Thailand’s Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) under Thai Institute of Directors (as of October 28, 2016) are categorized into: - Companies that have declared their intention to join CAC, and - Companies certified by CAC

CIMB Recommendation Framework Stock Ratings Definition: Add The stock’s total return is expected to exceed 10% over the next 12 months. Hold The stock’s total return is expected to be between 0% and positive 10% over the next 12 months. Reduce The stock’s total return is expected to fall below 0% or more over the next 12 months. The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months.

Sector Ratings Definition: Overweight An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation. Neutral A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation. Underweight An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.

Country Ratings Definition: Overweight An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark. Neutral A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark. Underweight An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.

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