Jinmao Hotel and Jinmao (China) Version 7 | Bloomberg: 6139 HK Equity | Reuters: 6139.HK Refer to Important Disclosures at the End of This Report

China / Hong Kong Company Guide Jinmao Hotel and Jinmao (China) Version 7 | Bloomberg: 6139 HK Equity | Reuters: 6139.HK Refer to important disclosures at the end of this report

DBS Group Research . Equity 19 Mar 2019

BUY Attractive valuation Last Traded Price ( 18 Mar 2019):HK$4.48 (HSI : 29,409) Price Target 12-mth: HK$4.96 (10.7% upside) (Prev HK$5.41) BUY on attractive valuation. We continue to expect the hotel sector’s demand/supply dynamics in tier 1 cities to keep improving, driving Analyst up occupancy and average daily rates (ADR). In addition, we are Ken HE CFA, +86 2138968221, [email protected] seeing rising transactions/liquidity for premium hotels in top tier Danielle WANG CFA, +852 36684176, [email protected] Jason LAM +852 36684179, [email protected] cities in China, which should drive up valuations. Foreign investors have also been chasing office assets in Shanghai lately, further What’s New compressing cap rates and driving up valuations. On the other hand, • FY18 results below, mainly due to lower than we expect DPU to resume growth in FY19F and the stock is now expected hotel EBITDA and higher funding costs attractively trading at a yield of 7.6% FY19F DPU. Decent dividend yield and asset appreciation potential continue to support our BUY • Decent EBITDA growth in city hotels, but overall call. performance dragged by resort hotels; office EBITDA higher on lower revenue Concerns over Shanghai office market easing. Office rents in

• Cut FY19F DPU by 10% on lower assumptions for Shanghai have started to increase and we expect occupancy to ramp resort hotels and Rmb depreciation up after the supply peak in 2017/2018. Further liberation for foreign financial institutions could also support potential demand in Lujiazui. • Maintain BUY on its attractive valuation, but TP Jinmao Tower managed to grow EBITDA by 1% despite a 4% revised down to HK$4.96 decrease in revenue as one big tenant had moved out. We expect

occupancy to ramp up in FY19F.

Price Relative City hotels on the uptrend while resort hotels suffer. City hotels in Beijing/Shenzhen continued to see increases in both occupancy and ADR. Grand Hyatt, Shanghai reported 89% occupancy, yet 3% decrease in ADR, as management’s strategy is to attract more travelers to improve F&B business in the hotel. Resort hotels in Sanya and Chongming continued to suffer from rising local competition. But EBITDA of Lijiang hotel is back into the black after the change of branding in early-2018. With our lower assumptions on resort hotels Forecasts and Valuation and Rmb depreciation, we cut our FY19F DPU by 10%. FY Dec (HK$ m) 2017A 2018A 2019F 2020F Gross Revenue 2,992 3,037 3,258 3,391 Valuation: Net Property Inc 1,713 1,746 1,992 2,109 Net Profit 254 297 346 375 We base our valuation on a two-stage DDM methodology, assuming Distribution Inc 701 669 684 690 9.8% cost of equity and 2% terminal growth, to derive HK$4.96 TP. DPU (HK$) 0.35 0.33 0.34 0.35 DPU Gth (%) (2) (5) 2 1 The stock is now trading at a yield of 7.6% based on FY19F DPU. Div Yield (%) 7.8 7.5 7.6 7.7 Gross Gearing (%) 40 41 42 43 Key Risks to Our View: Book Value (HK$) 3.73 3.45 3.28 3.13 Interest rate risk. Any interest rate hike might adversely affect its P/Book Value (x) 1.2 1.3 1.4 1.4 valuation. DPU Rev (%): (17) New Consensus DPU (HK$): 0.40 0.42 At A Glance Other Broker Recs: B:2 S:0 H:1 Issued Capital (m shrs) 2,000

Source of all data on this page: Company, DBS Bank (Hong Kong) Mkt Cap (HK$m/US$m) 8,960 / 1,141 Limited (“DBS HK”), Thomson Reuters Major Shareholders (%) China Jinmao Holdings Group Limited 66.8 Tong (Jinquan) 9.3 Lu (Shiqing) 7.9 Free Float (%) 16.0 3m Avg. Daily Val. (US$m) 0.04 ICB Industry: Financials / Real Estate Investment Trusts

ed-JS/ sa- CS /AH

Company Guide

Jinmao Hotel and Jinmao (China)

Distributable income

1H18 2H18 FY18 1H17 2H17 FY17 EBITDA (Rmb m) 554 464 1,018 497 459 957 - net finance cost -116 -188 -304 -79 -196 -275 - taxes paid -100 -47 -147 -90 -39 -129 - FF&E -6 -14 -20 -7 -3 -11 - others -4 23 19 26 40 66 Total distributable income (Rmb m) 336 229 565 346 262 608 Total distributable income (HK$ m) 411 258 669 392 309 701 Distribution per share (HKcents) 20.55 12.88 33.43 19.60 15.45 35.05

Source: Company

Segmental performance

Revenue (Rmb m) FY18 2H18 1H18 FY17 2H17 1H17 %, chg Hotels 1,864 914 950 1,903 948 955 -2% Rents 499 237 262 514 265 249 -3% Others 202 104 98 178 94 84 13%

EBITDA (Rmb m) FY18 2H18 1H18 FY17 2H17 1H17 %, chg Hotels 557 246 311 564 263 301 -1% Rents 459 209 250 450 221 229 2% Others 37 17 20 31 12 19 19%

Source: Company

Debt profile

End-FY18 End-FY17 End-FY16 Long-term interest rate 3.4% 2.8% 3.5% Short-term interest rate 3.9% 3.9% 4.0%

End-FY18 End-FY17 End-FY16 Short-term debt 77% 72% 47% Long-term debt 23% 28% 53%

Source: Company

Page 2

Company Guide

Jinmao Hotel and Jinmao (China)

Key operating performance for individual hotels

Occupancy FY18 FY17 ppts, chg FY18 comments Grand Hyatt, Shanghai 89% 86% ↑ 4 ppts Hyatt Regency, Chongming 54% 54% ↑ 0 ppts Westin, Beijing Chaoyang 82% 84% ↓ 1 ppts Renaissance, Beijing Wangfujin 89% 84% ↑ 4 ppts Ritz-Carlton, Sanya Yalong Bay 62% 75% Renovation of 277 guest rooms ↓ 12 ppts Hilton, Sanya Yalong Bay 90% 78% ↑ 12 ppts JW Marriott, Shenzhen 85% 85% ↑ 0 ppts Jinmao, Lijiang 48% 48% ↓ 0 ppts City hotels^ 86% 85% ↑ 2 ppts Resort hotels* 66% 66% ↓ 0 ppts

ADR (Rmb/room/night) FY18 FY17 %, chg FY18 comments Grand Hyatt, Shanghai 1,411 1,456 -3.1% Hyatt Regency, Chongming 724 826 -12.3% Price competition to continue Westin, Beijing Chaoyang 1,218 1,162 4.8% Strong momentum to continue Renaissance, Beijing Wangfujin 968 879 10.1% Strong momentum to continue Ritz-Carlton, Sanya Yalong Bay 2,146 2,129 0.8% Hilton, Sanya Yalong Bay 1,108 1,319 -16.0% JW Marriott, Shenzhen 1,096 1,039 5.5% Jinmao, Lijiang 723 775 -6.7% City hotels^ 1,207 1,175 2.7% Entering into a new round of corporate rate negotiation Resort hotels* 1,275 1,423 -10.4%

RevPAR (Rmb/room/night) FY18 FY17 %, chg FY18 comments Grand Hyatt, Shanghai 1,261 1,249 1.0% Hyatt Regency, Chongming 393 444 -11.5% Westin, Beijing Chaoyang 1,004 972 3.3% Renaissance, Beijing Wangfujin 857 742 15.5% Ritz-Carlton, Sanya Yalong Bay 1,340 1,594 -15.9% Hilton, Sanya Yalong Bay 993 1,026 -3.2% JW Marriott, Shenzhen 929 879 5.7% Jinmao, Lijiang 350 375 -6.7% City hotels^ 1,039 994 4.5% City hotels continued to deliver solid growth, while resort hotels Resort hotels* 840 939 -10.5% suffered a decline

Source: Company

^ city hotels refer to Grand Hyatt, Shanghai; Westin, Beijing Chaoyang; Renaissance, Beijing Wangfujin; JW Marriott, Shenzhen

* resort hotels refer to Hyatt Regency, Chongming; Ritz-Carlton, Sanya Yalong Bay; Hilton, Sanya Yalong Bay; Jinmao, Lijiang

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Company Guide

Jinmao Hotel and Jinmao (China)

Key financial performance for individual hotels

Revenue (Rmb m) FY18 FY17 %, chg FY18 comments Grand Hyatt, Shanghai 475 471 0.9% Slight decline in F&B Hyatt Regency, Chongming 67 73 -8.9% Price competition in the region

Westin, Beijing Chaoyang 308 304 1.5% Renaissance, Beijing Wangfujin 157 139 12.9% Ritz-Carlton, Sanya Yalong Bay 322 381 -15.6% Affected by renovation Hilton, Sanya Yalong Bay 242 243 -0.6% JW Marriott, Shenzhen 243 205 18.4% Jinmao, Lijiang 78 81 -4.2% Affected by change in branding in 1Q18 City hotels^ 1,184 1,119 5.8% Resort hotels* 708 779 -9.1%

EBITDA (Rmb m) FY18 FY17 %, chg FY18 comments Grand Hyatt, Shanghai 140 140 0.3% Hyatt Regency, Chongming 3 6 -52.5% Westin, Beijing Chaoyang 109 96 13.0% Significant growth in transient guest market Renaissance, Beijing Wangfujin 38 31 23.2% Ritz-Carlton, Sanya Yalong Bay 104 133 -21.8% Hilton, Sanya Yalong Bay 86 91 -5.7% JW Marriott, Shenzhen 75 73 3.4% Jinmao, Lijiang 2 -5 n/m Back to black after change in branding City hotels^ 363 340 6.6% Resort hotels* 195 226 -13.6%

EBITDA margin FY18 FY17 %, chg FY18 comments Grand Hyatt, Shanghai 30% 30% ↓ 0 ppts Hyatt Regency, Chongming 4% 8% ↓ 4 ppts Westin, Beijing Chaoyang 35% 32% ↑ 4 ppts Renaissance, Beijing Wangfujin 24% 22% ↑ 2 ppts Ritz-Carlton, Sanya Yalong Bay 32% 35% ↓ 3 ppts Hilton, Sanya Yalong Bay 36% 37% ↓ 2 ppts JW Marriott, Shenzhen 31% 35% ↓ 4 ppts Jinmao, Lijiang 3% -6% ↑ 8 ppts City hotels^ 31% 30% ↑ 0 ppts Resort hotels* 28% 29% ↓ 1 ppts

Source: Company

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Company Guide

Jinmao Hotel and Jinmao (China)

CRITICAL FACTORS TO WATCH Revenue HK$m Critical Factors 4,000 City hotels continued to deliver decent growth. City hotels or 3,500 business hotels in Shanghai/Beijing/Shenzhen continued to see 3,000 2,500 increases in occupancy. Currently, the four hotels in tier 1 cities 2,000 are enjoying over 80% occupancy. The high occupancy has 1,500 driven up ADR by >5% in Beijing and Shenzhen. Grand Hyatt, 1,000 Shanghai saw a 3% decrease in ADR in FY18, as management 500 0

wanted to bring in more travelers to improve F&B business in

FY14

FY15

FY16 FY17

the hotel. Overall, city hotels recorded a 2-ppt improvement in FY18

FY19E FY20E FY21E occupancy, 2.7% y-o-y increase in ADR and 4.5% increase in EBITDA RevPAR in FY18. Revenue and EBITDA from city hotels grew HK$m 5.8%/6.6% respectively. 1,600 1,400 Resort hotels continued to suffer from local competition. Ritz- 1,200 1,000 Carlton, Sanya Yalong Bay saw a decrease in occupancy due to 800 renovation. Hilton, Sanya Yalong Bay suffered a low occupancy 600 rate in 1Q18 due to vague positioning. Yet, occupancy saw a 400 200 strong pick-up during the rest of the year after the change of 0

on-site management. Hyatt Regency, Chongming has to

FY14

FY15

FY16 FY17

compete on price to maintain stable occupancy due to a new FY18

FY19E FY20E FY21E entrant in the area. This has led to an 8.9% decrease in revenue Distributable income in FY18. Occupancy of Jinmao, Lijiang was low in 1Q18 affected HK$m by the change in branding, but saw a gradual ramp-up during 1,000 the rest of the year. Despite a 4.2% y-o-y decrease in revenue 800 for this hotel, EBITDA turned around for the full year, due to 600 cost savings as the company uses its own management team instead of an outsourced team from Hyatt previously. 400 200 Rental growth in Shanghai likely to regain growth. Office 0

occupancy had dropped to 91.4% by end-2018, with average

FY14

FY15

FY16

FY17

FY18

FY19E FY20E rents edging down by 1% y-o-y to Rmb12.4/sm/day. A new FY21E mega asset – Shanghai Centre - had recorded 80% occupancy DDM valuation by end-4Q18. Looking ahead, we expect occupancy to keep FY Dec (HK$ m) 2019F 2020F 2021F EBITDA 1,273 1,346 1,407 ramping up after the supply peak in 2017/2018, due to limited - hotel pre-opening expenses supply ahead coupled with solid demand from domestic - actual interest paid (380) (391) (403) financial institutions, professional firms and co-working - actual income tax paid (208) (240) (268) operators. The further liberation for foreign financial institutions - FF&E spent (24) (24) (24) could also trigger potential demand in Lujiazui area. Despite soft - others 22 22 22 rentals in FY18, EBITDA edged up by 1% as EBITDA margin Subtotal 684 690 712 improved from 89% in FY17 to 94% in FY18. Shortfall supported by parent 0 0 0 Distributable income 684 690 712

Distributable income to regain growth momentum. After Cost of equity 9.8% factoring lower assumptions on resort hotels and Rmb Terminal growth 2.0% depreciation, we expect EBITDA to grow at a CAGR of 6% over PV of terminal value 8,183 the next three years. Meanwhile, assuming a higher funding Equity value 9,917 costs, we expect distributable income to grow at a CAGR of 2%. No. of shares 2,000 Value per share 4.96 The payout ratio will stay at 100%. Source: Company, DBS HK

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Company Guide

Jinmao Hotel and Jinmao (China)

Distributable income

Source: Company

Segmental performance

Revenue (Rmb m) FY18 2H18 1H18 FY17 2H17 1H17 %, chg Hotels 1,864 914 950 1,903 948 955 -2% Rents 499 237 262 514 265 249 -3% Others 202 104 98 178 94 84 13%

EBITDA (Rmb m) FY18 2H18 1H18 FY17 2H17 1H17 %, chg Hotels 557 246 311 564 263 301 -1% Rents 459 209 250 450 221 229 2% Others 37 17 20 31 12 19 19%

Source: Company

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Company Guide

Jinmao Hotel and Jinmao (China)

Gearing Balance Sheet:

A large portion of short-term debt for cheaper cost, yet management is confident of its liquidity, as the company still has Rmb10bn in unutilised credit facilities. Loan-to-market value (LTV) edged down to 28% as of end-FY18.

Share Price Drivers: Better-than-expected hotel performance will drive up its earnings and distributable income. In addition, management has indicated Net Capital Expenditure that the company will ride the potential C-REIT development to enjoy lower funding costs and unlock value.

Key Risks: Slower-than-expected hotel recovery will drag its earnings/distributable incomes as well as share price performance.

Interest rate risk. Any interest rate hike would adversely affect its valuation.

Company Background ROE Jinmao Investments (Jinmao) was established by China Jinmao Group Holdings (previously known as Franshion, Sinochem’s property arm) and has a long history of operating luxury hotels and top grade office space in China. Its initial portfolio includes eight luxury hotels in top tourist cities and a landmark building - Jin Mao Tower - in Shanghai Lujiazui. It offers investors exposure to the promising office market in Shanghai Pudong, and the recovering hotel market in China, driven by rising domestic tourism as a result of higher disposable incomes and changing lifestyles. The business trust structure generates high yields for Price to book NAV band unitholders, with room for future growth. x 1.60 1.50 +1SD: 1.4x 1.40 1.30 Avg: 1.3x 1.20 -1SD: 1.1x 1.10 1.00 0.90

0.80

Jul-17

Jun-16

Feb-18

Dec-16 Mar-19 Aug-18 Source: Company, DBS HK

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Company Guide

Jinmao Hotel and Jinmao (China)

Segmental Breakdown (HK$ m) FY Dec 2016A 2017A 2018A 2019F 2020F Revenues (HK$ m) Hotel operations 2,040 2,194 2,207 2,432 2,532 Gross rental income 559 593 591 669 702 Others 165 206 239 156 157 Total 2,764 2,992 3,037 3,258 3,391

Source: Company, DBS HK

Income Statement (HK$ m) FY Dec 2016A 2017A 2018A 2019F 2020F

Gross revenue 2,764 2,992 3,037 3,258 3,391 Property expenses (1,202) (1,279) (1,291) (1,265) (1,282) Net Property Income 1,562 1,713 1,746 1,992 2,109 Other expenses (957) (1,037) (992) (1,071) (1,115) Interest (Exp)/Inc (352) (314) (362) (369) (380) Exceptionals 360 45 75 0 0 Pre-Tax Profit 667 426 502 554 616 Tax (244) (172) (206) (208) (240) Non-Controlling Interests 0 0 0 0 0 Net Profit 423 254 297 346 375 Distribution income 714 701 669 684 690

Revenue Gth (%) (7) 8 1 7 4 NPI Gth (%) (6) 10 2 14 6 Dist. Inc Growth (%) (18) (2) (5) 2 1 DPU Growth (%) (18) (2) (5) 2 1

Source: Company, DBS HK

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Company Guide

Jinmao Hotel and Jinmao (China)

Balance Sheet (HK$ m) FY Dec 2016A 2017A 2018A 2019F 2020F

Fixed Assets 8,195 8,206 8,161 7,809 7,457 Other LT Assets N/A N/A N/A N/A N/A Cash & ST Invts 1,005 1,092 964 969 1,003 Other Current Assets 208 233 236 219 223 Total Assets 20,145 21,132 21,350 20,989 20,677 ST Debt 1,942 6,054 6,737 6,771 6,771 Creditors 1,292 1,229 1,130 1,072 1,074 Other Current Liab 1,634 2,009 2,420 2,420 2,420 LT Debt 5,463 2,350 2,026 2,026 2,026 Other LT Liabilities 1,712 2,021 2,135 2,135 2,135 Non-Controlling Interests 0 0 0 0 0 Unitholders’ funds 8,103 7,469 6,903 6,565 6,250 Total Capital 20,145 21,132 21,350 20,989 20,677 Share Capital (m) 2,000 2,000 2,000 2,000 2,000 Gross Debt N/A N/A N/A N/A N/A Working Capital (2,718) (3,006) (3,314) (3,273) (3,272) Book NAV (HK$) 4.05 3.73 3.45 3.28 3.13 Gross Gearing (%) 37 40 41 42 43

Source: Company, DBS HK

Cash Flow Statement (HK$ m) FY Dec 2016A 2017A 2018A 2019F 2020F

Pre-Tax Income 667 426 554 554 616 Tax Paid (148) (148) (174) (208) (240) Depr/Amort 354 360 370 352 352 Chg in Wkg.Cap. 508 290 308 (41) (1) Other Non-Cash (293) (234) (610) (11) (11) Operational CF 1,083 691 445 644 713 Net Capex (278) (326) (167) 0 0 Assoc, MI, Invsmt 5 0 (61) 11 11 Investment CF (275) (329) (240) 11 11 Net Chg in Debt (372) 747 (153) 34 0 New issues/Unit Buyback 0 0 0 0 0 Distribution Paid (254) (982) (243) (684) (690) Other Financing CF 28 (50) 30 0 0 Financing CF (598) (285) (366) (649) (690) Chg in Cash 210 77 (161) 6 34

Source: Company, DBS HK

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Company Guide

Jinmao Hotel and Jinmao (China)

Target Price & Ratings History

HK$ S.No. Date Closing 12-mth Rating 6.0 Price T arget Price 5.5 1: 9-Apr-18 HK$4.81 HK$5.41 Buy 5.0 2: 15-Aug-18 HK$4.59 HK$5.41 Buy

4.5 1 4.0 2

3.5

3.0

Jul-18

Jan-19

Jun-18

Oct-18

Feb-19

Apr-18

Sep-18

Dec-18

Nov-18

Mar-18

Mar-19

Aug-18 Aug-18 May-18 Source: DBS HK

Analyst: Ken HE CFA, Danielle WANG CFA, Jason LAM

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Company Guide

Jinmao Hotel and Jinmao (China)

DBS HK recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

* Share price appreciation + dividends

Completed Date: 19 Mar 2019 08:56:27 (HKT) Dissemination Date: 19 Mar 2019 09:50:39 (HKT)

Sources for all charts and tables are DBS HK unless otherwise specified.

GENERAL DISCLOSURE/DISCLAIMER

This report is prepared by DBS Bank (Hong Kong) Limited (“DBS HK”). This report is solely intended for the clients of DBS Bank Ltd., DBS HK, DBS Vickers (Hong Kong) Limited (“DBSV HK”), and DBS Vickers Securities (Singapore) Pte Ltd. (“DBSVS”), its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS HK.

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd., DBS HK, DBSV HK, DBSVS, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.

Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report.

This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned schedule or frequency for updating research publication relating to any issuer.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report.

DBS Vickers Securities (USA) Inc (“DBSVUSA”), a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making.

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Company Guide

Jinmao Hotel and Jinmao (China)

ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd, DBS HK, DBSVS or their subsidiaries and/or other affiliates have proprietary positions in Jinmao Hotel and Jinmao China Hotel Investments and Management Ltd (6139 HK) recommended in this report as of 14 Mar 2019.

2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.

3. DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates have a net long position exceeding 0.5% of the total issued share capital in Jinmao Hotel and Jinmao China Hotel Investments and Management Ltd (6139 HK) recommended in this report as of 14 Mar 2019.

4. DBS Bank Ltd, DBS HK, DBSVS, DBS Vickers Securities (USA) Inc (“DBSVUSA”), or their subsidiaries and/or other affiliates beneficially own a total of 1% of the issuer's market capitalization of Jinmao Hotel and Jinmao China Hotel Investments and Management Ltd (6139 HK) as of 14 Mar 2019.

5. Compensation for investment banking services: DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.

6. Disclosure of previous investment recommendation produced: DBS Bank Ltd, DBSVS, DBS HK, their subsidiaries and/or other affiliates of DBSVUSA may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA in the preceding 12 months.

1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

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Company Guide

Jinmao Hotel and Jinmao (China)

RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Australia This report is being distributed in Australia by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946. DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

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Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report. Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. United This report is produced by DBS HK which is regulated by the Hong Kong Monetary Authority

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In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication. Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608-610, 6th Floor, Gate International Precinct Building 5, PO Box 506538, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Financial Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for Centre professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

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Company Guide

Jinmao Hotel and Jinmao (China)

United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined Emirates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent. United States This report was prepared by DBS HK. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate. Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. DBS Bank (Hong Kong) Limited 13 th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong Tel: (852) 3668-4181, Fax: (852) 2521-1812

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Company Guide

Jinmao Hotel and Jinmao (China)

DBS Regional Research Offices

HONG KONG MALAYSIA SINGAPORE DBS Bank (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua 13th Floor One Island East, 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 18 Westlands Road, Capital Square, Marina Bay Financial Centre Tower 3 Quarry Bay, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 3668 4181 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2521 1812 Tel.: 603 2604 3333 Fax: 65 65353 418 e-mail: [email protected] Fax: 603 2604 3921 e-mail: [email protected] e-mail: [email protected] Company Regn. No. 196800306E

INDONESIA THAILAND PT DBS Vickers Sekuritas (Indonesia) DBS Vickers Securities (Thailand) Co Ltd Contact: Maynard Priajaya Arif Contact: Chanpen Sirithanarattanakul DBS Bank Tower 989 Siam Piwat Tower Building, Ciputra World 1, 32/F 9th, 14th-15th Floor Jl. Prof. Dr. Satrio Kav. 3-5 Rama 1 Road, Pathumwan, Jakarta 12940, Indonesia Bangkok Thailand 10330 Tel: 62 21 3003 4900 Tel. 66 2 857 7831 Fax: 6221 3003 4943 Fax: 66 2 658 1269 e-mail: [email protected] e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand

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