October 30, 2017 OUTPERFORM Indorama Ventures (IVL TB) Share Price: Bt45.75 Target Price: Bt55.0 (+20.2%)

Company Update Company

Ready to take it all . 65% of newly acquired BOPET is HVA, underscoring healthy EBITDA margins in FY18F onward

. M&G’s bankruptcy is an opportunity for IVL to gain more market share in North America . OUTPERFORM, raised TP to Bt55/sh; share price weakness upon weak 3Q17 results is an opportunity to buy

IVL could become a major player of BOPET Early this month, IVL signed a share purchase agreement with DuPont Teijin Films (DTF) to acquire 100% stake in their PET film business. This marks an important step for IVL to diversify into PET film used in packaging, industrial, electrical, imaging, and magnetic media. 65% of Naphat CHANTARASEREKUL DTF’s products is ‘thick’ film, which commands the same EBITDA 662 - 659 7000 ext 5000 margin as IVL’s HVA portfolio of automotive and hygiene products. DTF [email protected]

COMPANY RESEARCH | RESEARCH COMPANY is a leading producer of biaxially oriented Polyethylene Terephthalate (BOPET) and Polyethylene Naphthalate (PEN). Their business Key Data comprises of eight production assets in the US, Europe, and China with 12-mth High/Low (Bt) 46.5 / 28.25 global innovation center in UK with annual capacity of 277k tons. PET Market capital (Btm/US$m) 239,957/ 7,205 film uses the same feedstock as PET but the market is small at 4.1m ton 3m avg Turnover (Btm/US$m) 747.8 / 22.5 consumption p.a. We are optimistic IVL could become a major player in Free Float (%) 29.5 this market. Issue Shares (m shares) 5,245 Major shareholders: M&G’s bankruptcy opens an opportunity for IVL to fill in PET -INDORAMA RESOURCES L 58.5 market in North America -STOCK EXCHANGE OF TH 6.7 One of IVL’s PTA customers, M&G, filed a Chapter 11 bankruptcy due -BANGKOK BANK PCL 4.4 to financial difficulties. This led IVL to book a net tax provision for receivables of US$39m (Bt1.3bn) in 3Q17. IVL supplied 220k tons of Share Price Performance PTA to M&G but now plans to use half of that volume for its PET plant in US and the other half to third parties or supply to their PET plant in Mexico (currently buy from Alpek). M&G has 1.4m tons of PET capacity in US, Mexico, and Brazil and this will allow IVL to penetrate the PET market immediately. This will also affect M&G’s PTA (1.2m tons) and PET (1.0m tons) plants currently under construction in Texas. This could be an opportunity for IVL to acquire and consolidate the PET market in the North America.

OUTPERFORM, raised DCF-based TP to Bt55/sh (from Bt50/sh) We incorporate BOPET and PEN of DTF into our model. Our key assumptions is 85% utilization and spreads of US$420/ton, US$470/ton and US$520/ton in FY18-20F respectively. This increases our earnings YTD 1Mth 3Mth 12Mth by 9%, 11%, 13% and raises our DCF-based TP to Bt55/sh, implying Absolute (%) 36.6 7.6 23.6 57.8 17.5x FY18F PE. We expect IVL to post core profit of Bt4.2bn in 3Q17, Relative to index (%) 25.3 4.9 15.3 42.8 +11% qoq, driven by higher production volume and PET spreads. Factoring in Bt1.3bn provision, net profit should be Bt2.9bn, flat qoq. Krungsri Securities vs Market Positive Neutral Negative Financial Summary (Btm) Market Year to Dec 2015 2016 2017F 2018F 2019F Recommend 16 1 1 Sales (Btm) 234,698 254,620 318,165 376,789 379,525 Krungsri Market % +/- Growth (%) (4) 8 25 18 1 Target Price (Bt) 55.0 48.2 14.2

EBITDA (Btm) 18,148 25,384 32,584 35,460 36,969 ’17 Net Profit (Btm) 12,124 12,954 (6.4) Growth (%) 21 40 28 9 4 ’18 Net Profit (Btm) 16,390 15,748 4.1 Recurring profit (Btm) 2,935 9,563 13,489 16,455 17,441 Growth (%) 685 226 41 22 6 Krungsri's earnings revision Net profit (Btm) 6,609 16,197 12,124 16,390 17,376 2018F 2019F FDEPS (Bt) 1.37 3.36 2.31 3.12 3.31 Earnings revision (%) 8.8 10.5 Growth (%) 295 145 (31) 35 6 Source: Bloomberg, Krungsri Securities PE (x) 75.0 23.0 17.8 14.6 13.8 DPS (Bt) 0.48 0.66 0.90 1.10 1.16 Yield (%) 1.0 1.4 2.0 2.4 2.5 BVPS (Bt) 16.58 18.50 21.47 23.59 25.77 P/BV (x) 2.8 2.5 2.1 1.9 1.8 Disclaimer: This publication constitutes information disclosed to the public and believed to be reliable but its accuracy and completeness are not guaranteed. All opinions, suggestions, or projections are for informational purposes only and shall not be construed as an inducement for the sale or purchase of securities. Amendments to this publication may be made without prior notice. Investors are urged to exercise caution in making a decision to invest in any securities. 1

Company Update | IVL October 30, 2017

Acquiring DuPont Teijin Films (DTF)

IVL signed a share purchase agreement with DuPont Teijin Films (DTF) on 10 October 2017 to acquire 100% stake in their PET film. DTF is a leading producer of biaxially oriented Polyethylene Terephthalate (BOPET) and Polyethylene Naphthalate (PEN, made from Naphthalene Dicarboxylate (NDC) and Mono Ethylene Glycol (MEG)). Their business comprises of eight production assets in the US, Europe, and China (51% stake) with global innovation center in the UK with film and polymer capacity of 277k tons per annum and a revenue of US$525-550m. IVL produces NDC from its BP Chemical plant in Decatur, Alabama.

IVL did not disclose the acquisition price but should be around 6-7x EBITDA multiples, the same multiples IVL paid for previous acquisitions. This implies US$300-350m, which IVL will use the proceeds from IVL warrant (IVL-W1) exercise (Bt15.5bn) to fund the transaction, which is expected to be completed by early 2018.

BOPET market is split into ‘thin’ and ‘thick’ films. Thin film is 50 microns or less, while thick film is over 50 microns. The industry capacity is identified by film thickness. The major end uses of BOPET can be categorised into five segments - packaging, industrial, electrical, imaging, and magnetic media. Thin film accounts for 75% of total global PET film consumption, and the balance is thick film. Of total production, DTF produces 65% thick film and 35% thin films. Thick films command higher margins ranging US$50/ton or higher, depending on application.

DTF’s target industries

Source: Company, Krungsri Securities

Krungsri Securities Research 2

Company Update | IVL October 30, 2017

Value chain of polyester business

0.35x 0.65x=1 Ethylene MEG Polyester fiber Clothing, fiber, automotive tires

0.67x=1 0.86x Paraxylene (PX) PTA Polyester PET resin Bottles, packaging Chip

0.7x=1 0.02x Food wrap, packaging, electrical appliances, Metaxylene IPA PET film LCD screen

DuPont Teijin Films (DTF)

Source: Company data, Krungsri Securities

Leverage on the same feedstocks as PET

BOPET is using PTA and MEG as feedstocks while PEN is using NDC and MEG as feedstocks. PEN offers more heat resistance, which is used in electronics such as smart phone and LCD screens. BOPET is used in food packaging.

There is a total of 6.0m tons of PET film capacity globally at end 2016, while demand is 4.1m tons (68% utilization). We estimate demand will grow by 200-300k tons per annum in 2017-19, outpacing new capacity.

But, starting from this year, there will not be new capacity addition. This would reduce the excess supply for at least two years. We expect PET film spreads to stay around US$400-500/ton, compared to US$1,000+ in 2008- 11. The improving balanced demand-supply dynamics should support spreads and utilization in the next two years.

PET film demand vs. supply (unit: m tons) 2015 2016 2017F 2018F 2019F Demand 3.8 4.1 4.3 4.5 4.8 Supply 5.8 6.0 6.1 6.1 6.1 Demand growth - 0.3 0.2 0.2 0.3 Net capacity addition - 0.2 0.1 - - Supply - demand situation - 1.9 1.8 1.6 1.5 Source: PCI, Company data

Krungsri Securities Research 3

Company Update | IVL October 30, 2017

Price, cost and spread of BOPET

Source: Krungsri Securities

Revise up earnings in FY18-20F by incorporating DTF into our model

We incorporate BOPET and PEN of DTF into our model. Our key assumptions is 80% utilization and spreads of US$420/ton, US$470/ton and US$520/ton in FY18-20F respectively. This increases our earnings by 9%, 11%, 13% and raises our DCF-based TP to Bt55/sh, implying 17.5x FY18F PE.

We expect IVL to post core profit of Bt4.2bn, +11% qoq, driven by higher production volume at 2.3m tons (vs. 2.2m tons in 2Q17) and PET spreads. The former comes from higher operating rate of PET because of production disruption at M&G and JBF, start-up of its new PTA Rotterdam (+320k tons) in August, and higher utilization rate of MEG (shutdown for five weeks in 2Q17).

Note that M&G and JBF have financial difficulties. JBF has PET plants in India, Belgium, Bahrain and UAE with total 1m ton capacity. M&G has total capacity of 1.4m ton PET in US (350kt), Mexico (590kt), and Brazil (460kt).

Krungsri Securities Research 4

Company Update | IVL October 30, 2017

PTA margins in Asia PTA margins in the west

Source: Company data, Krungsri Securities Source: Company data, Krungsri Securities

PET margins in Asia PET margins in the west

Source: Company data, Krungsri Securities Source: Company data, Krungsri Securities

IVL: Key assumptions 2016 2017F 2018F 2019F Total PET Capacity (KTA) 4,291 4,037 4,094 4,194 PET spread in US, Europe (US$/ton) 178 180 205 215 PET spread in Asia 114 125 140 140 Avg. utilization for PET (%) 81 84 84 84 Total PTA capacity (KTA) 3,698 4,018 4,018 4,018 PTA spread in Asia (US$/ton) 97 110 120 130 Avg. utilization for PTA (%) 90 90 90 90 EO/EG capacity (KTA) 550 550 550 550 MEG spread over ethylene (US$/ton) 109 310 330 330 Avg. utilization for MEG (%) 80% 90% 90% 90% Ethylene cracker (KTA) - - 440 440 Avg. utilization for Ethylene (%) - - 80% 100% Capex (US$m) 757 428 200 150 Source: Krungsri Securities

Krungsri Securities Research 5

Company Update | IVL October 30, 2017

P/E Band P/BV Band

Source: Bloomberg, Krungsri Securities Source: Bloomberg, Krungsri Securities

Peer Comparison Market PE P/BV EPS Div Yield ROE Share Price Cap (x) (x) G% (%) (%) Performance BB Ticker Name US$ 17F 18F 17F 18F 17F 18F 17F 17F 1M 3M 6M YTD IVL TB INDORAMA VENTURES PCL 7,205 17.8 14.6 2.1 1.9 (31.3) 35.2 2.0 13.4 7.6 23.6 22.8 36.6 BCP TB BANGCHAK CORP PCL 1,757 9.9 9.4 1.4 1.3 23.6 5.0 4.4 14.3 9.7 21.4 30.8 26.9 ESSO TB ESSO THAILAND PCL 1,590 10.5 10.3 2.1 1.8 (24.3) 1.8 2.9 22.7 30.8 56.1 30.8 19.5 IRPC TB IRPC PCL 3,988 13.4 10.9 1.5 1.4 1.0 23.1 3.5 12.0 4.0 18.2 14.0 35.4 PTTGC TB PTT GLOBAL CHEMICAL PCL 10,929 10.9 10.8 1.4 1.3 29.8 1.1 4.2 12.9 3.8 12.5 6.9 28.6 SCC TB SIAM CEMENT PCL/THE 17,729 10.8 11.0 2.2 1.9 (2.9) (1.7) 4.0 20.6 (1.6) (1.6) (9.6) (0.8) TOP TB THAI OIL PCL 6,279 10.5 11.2 1.8 1.6 (5.8) (6.6) 4.3 17.5 9.6 19.9 33.1 41.9 1301 TT FORMOSA PLASTICS CORP 19,347 13.4 14.0 1.8 1.7 10.6 (4.4) 5.4 12.9 (0.9) 0.4 0.8 3.0 6505 TT FORMOSA PETROCHEMICAL CORP 33,078 14.9 18.0 3.1 3.1 (11.4) (16.9) 5.0 19.6 (0.9) (0.9) (1.9) (6.3) 1402 TT FAR EASTERN NEW CENTURY CORP 4,594 17.7 15.0 0.7 0.8 NA 18.3 3.5 4.3 6.8 4.0 1.8 7.2 1326 TT FORMOSA CHEMICALS & FIBRE 17,833 12.1 12.6 1.6 1.6 NA (3.7) 5.9 11.9 0.0 0.2 0.0 (4.5) 363 HK SHANGHAI INDUSTRIAL HLDG LTD 3,427 8.6 8.0 0.7 0.6 NA 7.8 4.0 8.1 5.1 8.6 1.7 17.1 338 HK SINOPEC SHANGHAI PETROCHEM-H 9,062 8.3 8.3 1.9 1.7 (11.8) (0.2) 5.0 20.2 1.1 7.9 9.9 13.3 386 HK CHINA PETROLEUM & CHEMICAL-H 102,771 10.9 10.8 0.9 0.9 15.1 0.7 5.3 7.4 (3.7) (5.5) (10.9) 2.7 051910 KS LG CHEM LTD 25,371 14.1 13.8 1.9 1.7 65.5 1.9 1.4 14.1 7.3 22.5 44.3 55.4 009830 KS HANWHA CHEMICAL CORP 4,645 5.3 5.9 0.9 0.8 31.6 (10.4) 1.1 17.3 (4.9) (4.1) 22.8 28.7 011170 KS LOTTE CHEMICAL CORP 11,787 5.9 6.2 1.2 1.0 21.3 (5.0) 1.2 21.8 4.4 5.0 10.4 5.1 010950 KS S-OIL CORP 12,922 13.2 10.5 2.2 2.0 (5.4) 26.0 4.5 17.4 3.6 13.6 27.6 52.9 PCHEM MK PETRONAS CHEMICALS GROUP BHD 13,916 16.0 16.0 2.0 1.9 25.9 (0.2) 3.1 12.9 1.2 6.0 0.0 5.7 RIL IN RELIANCE INDUSTRIES LTD 92,918 17.6 14.4 2.0 1.7 4.2 22.3 0.8 9.8 16.4 16.6 31.9 71.8 Average (simple) 12.1 11.6 1.7 1.5 8.0 4.7 3.6 14.5 Source: Bloomberg, Krungsri Securities

Krungsri Securities Research 6

Company Update | IVL October 30, 2017

Quarterly P&L (Btm) 3Q16 4Q16 1Q17 2Q17 3Q17F QoQ YoY Sales 65,436 65,289 71,650 71,661 73,178 2% 12% COGS (incl. depreciation) (56,039) (56,057) (59,902) (61,538) (61,446) 0% 10% Gross Profit 9,397 9,233 11,748 10,123 11,732 16% 25% SG&A (5,526) (5,492) (5,746) (5,863) (5,708) (3%) 3% Operating Profit 3,871 3,740 6,003 4,260 6,024 41% 56% Net other income/expense 743 304 172 229 153 (33%) (79%) Net interest (1,063) (1,012) (985) (981) (996) 2% (6%) Pretax profit 3,551 3,033 5,189 3,508 5,181 48% 46% Income Tax (645) (41) (850) (329) (777) 136% 21% Associates (54) (49) 146 (120) (108) (10%) 100% Minority interest (37) (1) (71) (68) (76) 12% 105% Profit after tax (pre-ex) 2,815 2,943 4,415 2,990 4,219 41% 50% Extraordinaries, GW & FX 369 17 12 (53) (1,300) 2361% (453%) Reported net profit 3,184 2,959 4,426 2,937 2,919 (1%) (8%)

Shares out (end Q, m) 4,814 4,814 4,814 4,814 5,245 9% 9%

EPS 0.62 0.56 0.87 0.56 0.59 5% (5%)

Krungsri Securities Research 7

Company Update | IVL October 30, 2017

INCOME STATEMENT (Btm) 2015 2016 2017F 2018F 2019F Sales 234,698 254,620 318,165 376,789 379,525 Cost of sales (COGS) (198,852) (208,872) (262,296) (313,549) (314,643) Depreciation & amortization (9,326) (9,326) (10,796) (11,483) (11,858) Gross profit 26,521 36,422 45,072 51,757 53,024 S&A expenses (19,293) (21,823) (24,817) (29,390) (29,603) Operating profit 7,228 14,599 20,255 22,368 23,421 Other operating income 1,595 1,459 1,532 1,609 1,690 EBIT 8,823 16,059 21,788 23,977 25,110 Interest expense (3,652) (4,222) (4,528) (4,661) (4,848) Interest income 167 124 155 716 1,141 Other income 0 0 0 0 0 Goodwill amortization 0 0 0 0 0 Pre-tax profit 5,337 11,961 17,415 20,031 21,403 Income tax on company & subsidiaries (1,881) (2,062) (3,002) (3,454) (3,690) Profit after tax 3,456 9,898 14,412 16,578 17,713 Minority interests (279) (162) (381) (482) (482) Share of associate net income (242) (173) (542) 359 209 Preferred dividends 0 0 0 0 0 Recurring attributable net profit 2,935 9,563 13,489 16,455 17,441 FX & Extraordinary items 3,674 6,634 (1,365) (65) (65) Reported net profit 6,609 16,197 12,124 16,390 17,376 Shares in issue (Y/E, m) 4,814 4,814 5,245 5,245 5,245 Shares in issue (weighted avg, m) 4,814 4,814 5,245 5,245 5,245 EPS (before extraordinary items, Bt) 0.61 1.99 2.57 3.14 3.33 DPS (Bt) 0.48 0.66 0.90 1.10 1.16 DPS/EPS (%) 35 20 39 35 35

CASH FLOW (Btm) 2015 2016 2017F 2018F 2019F Operating profit 7,228 14,599 20,255 22,368 23,421 Other operating income 1,595 1,459 1,532 1,609 1,690 EBIT 8,823 16,059 21,788 23,977 25,110 Depreciation & amortization 9,326 9,326 10,796 11,483 11,858 EBITDA 18,148 25,384 32,584 35,460 36,969 Notional cash taxes on ungeared operations (2,951) (3,310) (4,338) (4,745) (4,973) Net change in working capital 4,719 (6,671) (7,104) (5,060) (1,922) CAPEX (31,295) (24,866) (14,627) (5,888) (4,405) Operating free cash flow (OpFCF) (11,379) (9,464) 6,515 19,767 25,668 Net interest income adjusted for tax impact (2,989) (3,804) (4,307) (3,766) (3,019) Net free cash flow (NetFCF) (14,368) (13,268) 2,208 16,001 22,649 Non-operating income (net of tax) 0 0 0 0 0 Equity income from associates (242) (173) (542) 359 209 Investments (37) (3,499) 0 0 0 Net change in other assets/liabilities 1,281 3,981 0 0 0 Other items (2,674) 158 (1,300) 0 0 Residual cash flow (RCF) (16,039) (12,801) 366 16,359 22,859 Dividends (915) (1,155) (4,093) (5,240) (5,932) Equity capital raised 1 0 15,505 0 0 Other items 4,529 (3,753) (65) (65) (65) Cash flow from financing 3,615 (4,909) 11,347 (5,305) (5,997) Net change in cash (12,424) (17,710) 11,713 11,054 16,862 Net cash/(debt) at YS (67,933) (80,357) (98,067) (86,354) (75,300) Ending net cash /(debt) (80,357) (98,067) (86,354) (75,300) (58,438) Increase/(decrease) in cash & equivalents (2,107) 793 14,578 11,054 4,862 (Increase)/decrease in debt (10,318) (18,503) (2,865) 0 12,000 NOPLAT (net op profit less adjusted tax) 5,871 12,748 17,450 19,232 20,137 Normalized OpFCF (est maint CAPEX) 13,194 7,633 12,505 16,468 20,586 FCFE (free cash flow to equity) (5,722) 5,702 3,231 16,359 10,859

Krungsri Securities Research 8

Company Update | IVL October 30, 2017

BALANCE SHEET (Btm) 2015 2016 2017F 2018F 2019F Cash & equivalents 3,232 4,026 18,603 29,658 34,520 A/C receivable 27,500 31,085 34,267 38,035 39,933 Inventory 31,786 40,459 43,117 51,542 51,722 Others 8,031 8,925 11,153 13,208 13,304 Total Current Assets 70,548 84,495 107,141 132,443 139,478 Property and equipment 120,366 136,860 141,961 137,477 130,619 Investments & associates 2,247 5,747 5,747 5,747 5,747 Other assets 5,110 4,021 4,021 4,021 4,021 Goodwill 23,370 27,257 27,257 27,257 27,257 Total Assets 221,641 258,380 286,126 306,945 307,122 Short -term debt 17,140 19,135 22,000 22,000 10,000 A/C payable 31,149 37,316 35,931 42,952 43,102 Other current liabilities 9,095 9,410 11,758 13,925 14,026 Total Current Liabilities 57,383 65,862 69,689 78,877 67,128 Long-term debt 66,450 82,958 82,958 82,958 82,958 Other liabilities 14,854 17,746 17,746 17,746 17,746 Total Liabilities 138,688 166,566 170,394 179,581 167,832 Share capital 4,814 4,814 5,245 5,245 5,245 Share premium 29,775 29,775 44,850 44,850 44,850 Revaluation/Warrants/Treasury 0 0 0 0 0 Translation adjustment 14,945 11,786 11,786 11,786 11,786 Retained earnings 30,291 42,679 50,710 61,860 73,305 Total ordinary equity 79,825 89,055 112,592 123,741 135,186 Preferred equity 0 0 0 0 0 Minorities 3,128 2,760 3,141 3,622 4,104 Total equity & minorities 82,953 91,815 115,733 127,364 139,290 Accumulated depreciation 43,756 52,014 62,810 74,293 86,151 BV per ordinary share (Y/E, Bt) 16.58 18.50 21.47 23.59 25.77 Adjusted book value ps (Y/E, Bt) 16.58 18.50 21.47 23.59 25.77

RATIOS (%) 2015 2016 2017F 2018F 2019F Growth Turnover (3.8) 8.5 25.0 18.4 0.7 EBITDA 20.8 39.9 28.4 8.8 4.3 EBIT 23.9 82.0 35.7 10.0 4.7 Net profit 294.5 145.1 (25.1) 35.2 6.0 EPS pre extraordinary items 684.5 225.8 29.5 22.0 6.0 EPS (diluted) 684.5 225.8 29.5 22.0 6.0 DPS 26.3 37.5 36.4 22.0 6.0 Accounting ratios Cash profit margin 15.3 18.0 17.6 16.8 17.1 Gross profit margin 11.3 14.3 14.2 13.7 14.0 Operating profit margin 3.1 5.7 6.4 5.9 6.2 Net profit margin 2.8 6.4 3.8 4.3 4.6 Turnover/avg total assets (x) 1.1 1.1 1.2 1.3 1.2 ROA 1.4 4.0 5.0 5.5 5.7 ROE 3.9 11.3 13.4 13.9 13.5 S&A/turnover 8.2 8.6 7.8 7.8 7.8 Effective tax rate 35.2 17.2 17.2 17.2 17.2 Operating performance EBITDA margin 7.7 10.0 10.2 9.4 9.7 EBIT margin 3.8 6.3 6.8 6.4 6.6 NOPLAT margin (NOPLAT/Turnover) 2.5 5.0 5.5 5.1 5.3 Asset turnover (Turnover/avg Op assets) 1.8 1.7 2.0 2.2 2.3 ROCE (NOPLAT/avg Op assets) 4.5 8.7 10.7 11.4 12.0 ROCE inc capitalized goodwill 3.9 7.4 9.2 9.8 10.4

Krungsri Securities Research 9

Company Update | IVL October 30, 2017

EQUITY VALUATIONS (Bt) 2015 2016 2017F 2018F 2019F EPS 0.61 1.99 2.57 3.14 3.33 FDEPS 0.61 1.99 2.57 3.14 3.33 FDEPS growth (%) 684.52 225.83 29.47 21.99 5.99 DPS 0.48 0.66 0.90 1.10 1.16 BVPS 16.58 18.50 21.47 23.59 25.77 Adjusted BVPS 16.58 18.50 21.47 23.59 25.77 Free cash flow to equity (FCFE) per share (1.19) 1.18 0.62 3.12 2.07

Share price (Bt) PE (x) 75.0 23.0 17.8 14.6 13.8 PE (fully diluted, x) 75.0 23.0 17.8 14.6 13.8 PE/FDEPS growth (x) 0.1 0.1 0.6 0.7 2.3 Yield (%) 1.0 1.4 2.0 2.4 2.5 P/BV (x) 2.8 2.5 2.1 1.9 1.8 P/ABV (x) 2.8 2.5 2.1 1.9 1.8

ENTERPRISE VALUATIONS (Btm) 2015 2016 2017F 2018F 2019F Ordinary shares (m) 4,814 4,814 5,245 5,245 5,245 Share price (Bt) 21 34 34 34 34 Ordinary equity MV 102,544 161,278 175,707 175,707 175,707 MI & deferred taxes 3,128 2,760 3,141 3,622 4,104 Equity MV (adjusted ord) 105,672 164,038 178,848 179,329 179,811 Preferred equity 0 0 0 0 0 Debt 83,590 102,093 104,958 104,958 92,958 Enterprise value 189,262 266,131 283,805 284,287 272,769 Net non-core assets 28,850 37,030 51,607 62,662 67,524 Core enterprise value (EV) 160,412 229,101 232,198 221,625 205,245 Turnover 234,698 254,620 318,165 376,789 379,525 EBITDA 18,148 25,384 32,584 35,460 36,969 EBIT 8,823 16,059 21,788 23,977 25,110 NOPLAT 5,871 12,748 17,450 19,232 20,137 OpFCF (11,379) (9,464) 6,515 19,767 25,668 OpFCF (normalized) 13,194 7,633 12,505 16,468 20,586 Op (core) capital employed (CE) 137,693 156,878 169,083 169,660 164,724 Avg core capital employed 129,422 147,286 162,981 169,371 167,192 Core EV multiples EV/Turnover (x) 0.7 0.9 0.7 0.6 0.5 EV/EBITDA (x) 8.8 9.0 7.1 6.3 5.6 EV/EBIT (x) 18.2 14.3 10.7 9.2 8.2 EV/NOPLAT (x) 27.3 18.0 13.3 11.5 10.2 EV/OpFCF (x) (14.1) (24.2) 35.6 11.2 8.0 EV/OpFCF normalized (x) 12.2 30.0 18.6 13.5 10.0 EV/capital employed (YE, x) 1.2 1.5 1.4 1.3 1.2 EV/avg capital employed (x) 1.2 1.6 1.4 1.3 1.2

RISK MEASURES 2015 2016 2017F 2018F 2019F Equity multiplier (avg total assets/avg equity) 2.7 2.8 2.7 2.5 2.4 Net debt/equity & MI 1.0 1.1 0.7 0.6 0.4 Interest cover (x) Interest cover (EBIT & int inc/int expense) 2.5 3.8 4.8 5.3 5.4 NOPLAT/interest paid 1.4 2.5 3.0 3.3 3.7 Debt service (OpFCF/net interest paid) (2.8) (1.9) 1.2 3.9 6.0 Short term ratios (x) Current assets/current liabilities 1.23 1.28 1.54 1.68 2.08 Current assets less inventory/current liabilities 0.7 0.7 0.9 1.0 1.3 A/C receivable, days Turnover 42.8 44.6 39.3 36.8 38.4 Inventory, days COGS 58.3 70.7 60.0 60.0 60.0 A/C payable, days COGS 57.2 65.2 50.0 50.0 50.0

Krungsri Securities Research 10

CG Rating 2016 Companies with CG Rating

AMATA AOT BAFS BAY BCP BIGC BTS BWG CK CPF CPN CSL DELTA DEMCO DRT DTAC DTC EASTW EGCO GFPT GPSC GRAMMY HANA HMPRO INTUCH IRPC IVL KBANK KCE KKP KTB KTC LHBANK LPN MBK MCOT MINT MONO NKI NYT OTO PHOL PPS PS PSL PTT PTTEP PTTGC QH QTC RATCH SAMART SAMTEL SAT SC SCB SCC SCCC SE-ED SIM SITHAI SNC SPALI SSSC STEC SVI TCAP THCOM TISCO TKT TMB TNDT TOP TSC TTCL TU UV VGI WACOAL WAVE

2S AAV ACAP ADVANC AGE AH AHC AKP ALUCON AMANAH ANAN AP APCO APCS ARIP ASIA ASIMAR ASK ASP AUCT AYUD BANPU BBL BDMS BEM BFIT BLA BOL BROOK CEN CENTEL CFRESH CGH CHG CHO CHOW CI CIMBT CKP CM CNS CNT COL CPI DCC EA ECF EE ERW FORTH FPI GCAP GLOBAL GBX GC GL GLOW GUNKUL HOTPOT HYDRO ICC ICHI IFEC INET IRC JSP K KSL KTIS L&E LANNA LH LHK LIT LOXLEY LRH LST M MACO MALEE MBKET MC MEGA MFC MOONG MSC MTI MTLS NCH NOBLE NSI NTV OCC OGC OISHI ORI PACE PAP PCSGH PDI PE PG PJW PLANB PM PPP PR PRANDA PREM PRG PRINC PT PTG PYLON Q-CON RICHY ROBINS RS RWI S SAMCO SABINA SALEE S&J SCG SEAFO SIAM SINGER SIS SMK SMPC SMT SNP SPI SPPT SPRC SR SSF SST STA SUSCO SUTHA SWC SYMC SYNEX SYTNEC TAE TAKUNI TASCO TBSC TCC TF TFI TGCI

AEC AEONTS AF AIRA AIT AJ AKR AMARIN AMATAV ARROW APURE AQUA AMC AS BA BEAUTY BEC BH BIG BJC BJCHI BKD BR BROCK BRR BTNC CBG CGD CHARAN CITY CMR COLOR COM7 CPL CSC CSP CSR CSS CTW DCON DIMET DNA EARTH EASON ECL EFORL EPCO EPG ESSO FE FER FOCUS FSMART FSS FVC GEL GIFT GLAND GOLD GSTEL GYT HPT HTC HTECH IFS IHL ILINK INSURE IRPC IT ITD J JMART JMT JUBILE JWD KASET KBS KCAR KGI KKC KOOL KWC KYE LALIN LPH MAJOR MAKRO MATCH MATI M-CHAI MDX MFEC MJD MK MODERN MPG NC NCL NDR NEP NOK NUSA PATO PCA PDG PF PICO PIMO PL PLAT PLE PMTA PPM PRIN PSTC QLT RCI RCL RICH RML RPC SANKO SAPPE SAWAD SCI SCN SCP SEAOIL SENA SIRI SKR SLP SMG SMIT SORKON SPA SPC SPCG SPVI SSC STANLY STPI SUC TACC TCCC TCMC TEAM TFD TFG TIC TIW TKN TLUXE TMD TNP TOPP TPA TPAC TPCH TPIPL TPOLY TRITN TRT TTI TVI TWP U UBIS UMI UPOIC UT UWC VIBHA VPO VTE WICE WIIK WIN XO

Disclaimer 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 assessment 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 or when there is any change to the relevant information. Nevertheless, Krungsri Securities Public Company Limited does not confirm, verify, or certify the accuracy and completeness of such survey result.

Anti-corruption Progress Indicator 2016

Companies that have declared their intention to join CAC

A AI AIE AIR AJ ALUCON AMATAV AOT APCO AQUA ARROW ASIA ASK AU BCH BJC BJCHI BLAND BR BROCK BRR CEN CGH CHEWA CHG CHOTI CHOW CIG COL COM7 CPALL CPF CPR CSC EKH EPCO FC FER FPI FSMART GEL GFPT GGC GIFT GJS GLOBAL GOLD GPSC GREEN GSTEL GUNKUL HARN IFS ILINK INET IRC J JMART JMT JUBILE JUTHA KASET KBS KCAR KTECH KWC KYE L&E LEE LIT LVT MAKRO MATCH MATI MBAX MC MFEC MIDA MILL ML MTLS NBC NCL NEP NINE NMG NNCL NTV NUSA NWR OGC PACE PAF PAP PATO PCSGH PIMO PK PL PLANB POST PRINC PRO PSTC PYLON QTC ROH ROJNA RWI SANKO SAUCE SC SCCC SCN SEAOIL SE-ED SENA SIRI SMART SPACK SPPT SPRC SR SRICHA SST STA SUPER SUSCO SWC SYMC TAKUNI TBSP TFI THE TICON TIP TKN TLUXE TMILL TMT TNP TPA TRUE TSE TTI TU TVD TVO TVT TWPC U UPA UREKA UWC VGI VIBHA VIH VNT WAVE WHA WICE WIIK

Companies certified by CAC

ADVANC AKP AMANAH AP ASP AYUD BAFS BANPU BAY BBL BCP BKI BLA BROOK BTS BWG CENTEL CFRESH CIMBT CM CNS CPI CPN CSL DCC DEMCO DIMET DRT DTAC DTC EASTW ECL EGCO FE FNS FSS GBX GCAP GLOW HANA HMPRO HTC ICC IFEC INTUCH IRPC IVL K KBANK KCE KGI KKP KSL KTB KTC LANNA LHBANK LHK LPN MBK MBKET MCOT MFC MINT MONO MOONG MSC MTI NKI NSI OCC OCEAN PB PDI PE PG PHOL PLAT PM PPP PPS PRANDA PREB PRG PSH PSL PT PTG PTT PTTEP PTTGC Q-CON QH QLT RATCH RML ROBINS S & J SABINA SAT SCB SCC SCG SGP SINGER SIS SITHAI SMIT SMPC SNC SNP SORKON SPC SPI SSF SSI SSSC SVI SYNTEC TAE TCAP TCMC TFG TGCI THANI THCOM THRE THREL TIPCO TISCO TKT TMB TMD TNITY TNL TOG TOP TPCORP TRU TSC TSTH TTCL TVI UOBKH WACOAL

N/A

2S AAV ABICO ACAP ACC ADAM AEC AEONTS AF AFC AGE AH AHC AIT AJA AKR ALLA ALT AMA AMARIN AMATA AMC ANAN APCS APEX APURE AQ ARIP AS ASAP ASEFA ASIAN ASIMAR ASN ATP30 AUCT BA BAT-3K BCPG BDMS BEAUTY BEC BEM BFIT BGRIM BGT BH BIG BIZ BKD BLISS BM BOL BPP BSBM BSM BTC BTNC BTW BUI CBG CCET CCP CGD CHARAN CHO CHUO CI CITY CK CKP CMO CMR CNT COLOR COMAN CPH CPL CRANE CRD CSP CSR CSS CTW CWT D DCON DCORP DELTA DIGI DNA DTCI EA EARTH EASON ECF EE EFORL EIC EMC EPG ERW ESSO ESTAR ETE EVER F&D FANCY FMT FN FOCUS FORTH FTE FVC GC GENCO GL GLAND GRAMMY GRAND GTB GYT HFT HOTPOT HPT HTECH HYDRO ICHI ICN IEC IHL III INGRS INOX INSURE IRCP IT ITD ITEL JAS JCT JSP JTS JWD KAMART KC KCM KDH KIAT KKC KOOL KTIS KWG LALIN LDC LH LOXLEY LPH LRH LST LTX M MACO MAJOR MALEE MANRIN MAX M-CHAI MCS MDX MEGA METCO MGT MJD MK MM MODERN MPG MPIC NC NCH NDR NETBAY NEW NEWS NFC NOBLE NOK NPK NPP NVD NYT OHTL OISHI ORI OTO PAE PDG PERM PF PICO PJW PLANET PRECHA PMTA POLAR POMPUI PPM PRAKIT PLE PRIN PRM PTL RAM RCI RCL RICH RICHY RJH ROCK RP RPC RPH RS S S11 SAFARI SALEE SAM SAMART SAMCO SAMTEL SAPPE SAWAD SAWANG SCI SCP SDC SE SEAFCO SELIC SF SFP SGF SHANG SIAM SIMAT SKN SKR SKY SLP SMK SMM SMT SOLAR SPA SPALI SPCG SPG SPORT SPVI SQ SSC SSP STANLY STAR STEC STHAI STPI SUC SUTHA SVH SVOA SYNEX T TACC TAPAC TASCO TC TCB TCC TCCC TCJ TCOAT TEAM TFD TFMAMA TGPRO TH THAI THANA THIP THL TIC TIW TK TKS TM TMC TMI TMW TNDT TNH TNPC TNR TOA TOPP TPAC TPBI TPCH TPIPL TPIPP TPOLY TPP TR TRC TRITN TRT TRUBB TSF TSI TSR TSTE TTA TTL TTTM TTW TUCC TWP TWZ TYCN UAC UBIS UEC UKEM UMI UMS UNIQ UP UPF UPOIC UT UTP UV UVAN VARO VI VNG VPO VTE WG WHAUP WIN WINNER WORK WORLD WP WPH WR XO YCI YNP YUASA ZIGA ZMICO Disclaimer The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission. Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company . The assessment result is therefore made from the perspectiv e of Thaipat Institute that is a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, Krungsri Securities Public Company Limited does not confirm, verify, or certify the accuracy and completeness of the assessment result." Reference Disclosure: Companies participating in Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) under Thai Institute of Directors (as of July 31, 2017) are categorised into: • Companies that have declared their intention to join CAC • Companies certified by CAC.

Krungsri Securities Public Company Limited

Headquarters 898 Ploenchit Tower, 3rd Floor, Ploenchit Road, Lumpini Pathumwan, Bangkok 10330 Tel: 0-2659-7000 Fax: 0-2658-5699 Internet Trading: 0-2659-7777 Branches Emporium Nakhon Pathom 662 Emporium Tower, Fl. 10, Sukhumvit 24 Road 67/1 Ratchadamnoen Road, Tambol Phra Pathom Jaedee, Klongton, Klongtoey, Bangkok 10110 Amphur Muang, Nakhon Pathom 73000 Tel: 0-2695-4500 Fax: 0-2695-4599 Tel: 0-3427-5500-7 Fax: 0-3421-8989

Central Bangna Suphanburi 589/151 Central City Tower 1 Office, Fl. 27 249/171-172 Moo 5 Tambol Ta Rahad, Bangna-Trad Road, Bangna, Bangkok 10260 Amphur Muang, Suphanburi, 72000 Tel: 0-2763-2000 Fax: 0-2399-1448 Tel: 0-3550-1234 Fax: 0-3552-2449

Rama II Nakhon Ratchasima 111/917-919 Rama II Road, Smaedum, 168 Chomphon Road, Tambol Nai Muang, Bangkhuntien, Bangkok 10150 Amphur Muang Nakhon Ratchasima, Tel: 0-2895-9575 Fax: 0-2895-9557 Nakhon Ratchasima 30000 Tel: 0-4425-1211-4 Fax: 0-4425-1215 Vibhavadi-rangsit Bank of Ayudhya Public Company Limited Khon Kaen 123 Suntowers (B) Building, Vibhavadirangsit Road, 114 Sri Chan Road, Tambol Nai Muang, Jompol, Jatujak, Bangkok 10900 Amphur Muang, Khon Kaen 40000 Tel: 0-2273-8388 Fax: 0-2273-8399 Tel: 0-4322-6120 Fax: 0-4322-6180

Chonburi Chiang Mai 64/17 Sukhumvit Road, Tambol Bang Plasoi, 70 Chang Phuak Road, Tambol Sri Phum Amphur Muang, Chonburi 20000 Amphur Muang, Chiang Mai 50200 Tel: 0-3879-0430 Fax: 0-3879-0425 Tel: 0-5321-9234-6 Fax: 0-5321-9247

Hat Yai Branch Chiang Rai 90-92-94 Nipat U Tit Nueng Road,Tambol Hat Yai, 231-232 Thamalai Road, Tambol Wiang, Amphur Hat Yai, Songkhla 90110 Amphur Muang, Chiang Rai 57000 Tel: 0-7422-1229 Fax: 0-7422-1411 Tel: 0-5371-6489 Fax: 0-5371-6490

Phitsanulok 275/1 Phichaisongkram Road, Tambol Nai Muang, Amphur Muang, Phitsanulok 65000 Tel: 0-5530-3360 Fax: 0-5530-2580

Central line: Analyst Team Sector Coverage 662-659-7000 E-mail Naphat Chantaraserekul, Head of Research Energy, Petrochemical, Strategy ext. 5000 [email protected] Kittisorn Pruitipat, CFA, FRM PropertyConstruction, ICT Materials, Contractor ext. 5019 [email protected] Jesada Techahusdin, CFA Banking, Consumer Finance, Insurance ext. 5004 [email protected] Sunthorn Thongthip Food,Insurance Transportation, Insurance Strategy ext. 5009 s [email protected] Worrapong Tuntiwutthipong Electronic, Automotive, Commerce ext. 5016 [email protected] Karun Intrachai RenewableMedia Energy, Food ext. 5010 [email protected] Teerapol Udomvej Healthcare, Tourism ext. 5012 [email protected] Kitti Pitakteerabandit Transportation, Media ext. 5008 [email protected] Artit Jansawang Mid - Small cap, MAI ext. 5005 [email protected] Nurudon Rusme Mid - Small cap, MAI ext. 5007 [email protected] Nalinee Praman, Assistant Analyst Mid - Small cap, MAI

Defi nition of Ratings Fax 662-658-5643

OUTPERFORM - Stocks with an expected capital gain above 10% in the next 12 months for small-caps, above 5% for big-caps NEUTRAL - Stocks with an expected capital gain between -10% and +10% in the next 12 months for small-caps, -5% to +5% for big-caps UNDERPERFORM - Stocks with an expected capital gain below 10% in the next 12 months for small-caps, below 5% for big-caps www.krungsrisecurities.com