BUY (Unchanged) TP: Bt 25.00 (From: Bt 22.00 ) 21 SEPTEMBER 2017

Change in Numbers Upside : 47.1%

Banpu Public Co Ltd (BANPU TB)

New Dawn

We maintain our BUY call on BANPU and raise our TP to Bt25 from Bt22. We are now more bullish on coal prices, as we expect China to keep coal prices elevated amid its push for a greener energy mix. CHAK REUNGSINPINYA BANPU remains attractive at 7-8x 2018-19F P/E with 6%+ dividend 662 – 617 4965 [email protected] yield. We see strong 2H17F results as a key share price catalyst.

Coal price supported by China’s policies COMPANY VALUATION It has been a year since China began to curb domestic coal Y/E Dec (Bt m) 2016A 2017F 2018F 2019F production and we are more positive than ever that authorities there will continue to support high coal prices in order to Sales 79,737 88,347 94,324 95,132

discourage coal consumption and accelerate the shift towards Net profit 1,677 8,961 11,937 11,130 cleaner energy sources. We believe this policy favors major Consensus NP  9,054 8,682 8,988 seaborne coal suppliers, of which BANPU is among the foremost Diff frm cons (%)  (1.0) 37.5 23.8 players. We raise our coal price forecasts (based on the Norm profit 2,100 10,961 11,937 11,130 Newcastle Export Index) by $5/ton to $85/80/80 for 2017/18/19F Prev. Norm profit  10,530 10,682 9,633 and $75/ton in the longer term. Note that our new assumption is Chg frm prev (%)  4.1 11.7 15.5 still conservative vs. China’s target range of RMB535/ton +/-6% Norm EPS (Bt) 0.4 2.1 2.3 2.2 which would equate to roughly $75-85/ton. Given our higher coal Norm EPS grw (%) na 422.0 8.9 (6.8)

Securities price assumption, we raise our norm profit forecasts by 4-20% in Norm PE (x) 41.8 8.0 7.4 7.9 2017-20F and raise our SOTP-based DCF-based 12-month TP EV/EBITDA (x) 14.2 7.0 6.3 6.3 (2018F base year) to Bt25 from Bt22 previously. P/BV (x) 1.1 1.0 0.9 0.9

Volume recovery Div yield (%) 2.2 5.1 6.8 6.3

In 2H17F and 2018F, we expect BANPU to benefit from a ROE (%) 3.0 13.0 12.8 11.2

recovery in sales volume especially in Indonesia which was Net D/E (%) 99.7 75.3 67.0 54.6 Securities particularly hit hard by weather conditions in 1H17. We believe production volume in the second half of this year will be 20% PRICE PERFORMANCE higher than the first half. Still, we think our assumption of 23.5m ton 2017F sales volume for Indonesia is conservative vs. the (Bt/shr) BANPU (%) Thanachart company’s 25m ton guidance. Heading into 2018-19F, we expect 22 Rel to SET Index 40 volume to normalize to 24.5m and 25.5m tons, respectively. 20 30 18 20 16 Stock de-rated despite ROE improvement 10 14 BANPU has de-rated significantly over the past 5 years and is 12 0 now trading below 1x P/BV (2018F) compared to over 2x P/BV at 10 (10) Sep-16 Dec-16 Mar-17 Jun-17 Sep-17

Thanachart the end of 2012 when coal price was in a similar price range ($80-95/ton). We think this is unjustified given: a) ROE is improving to 12% in 2017-18F (similar to where it was in 2012), COMPANY INFORMATION and b) a stronger outlook for coal prices with clear policy support Price as of 21-Sep-17 (Bt) 17.00 from China’s government. On a P/E basis, BANPU also looks cheap at 7-8x while offering over 6% yield (2018F). Market Cap (US$ m) 2,648.5 Listed Shares (m shares) 5,161.9 Laggard play with likely street upgrades Free Float (%) 92.1 We expect strong earnings in 2H17F, driven by higher volume, Avg Daily Turnover (US$ m) 33.3 higher prices and stable cost. We see strong sequential earnings 12M Price H/L (Bt) 21.10/14.90 growth with normalized profit reaching Bt3bn in 3Q17F and Sector ENERG Bt3.3bn in 4Q17F, vs. Bt2.2bn and Bt2.6bn in 1Q-2Q17A (based on our calculations). Given these numbers, we think consensus Major Shareholder Vongkusolkit family 12.69% are still behind the curve and expect further street upgrades. Our Sources: Bloomberg, Company data, Thanachart estimates

norm earnings forecasts are 10-33% higher than consensus for 2017-19F while our TP is 14% higher. Additionally, we view BANPU as a laggard play, with the stock having underperformed the market and other energy names in the recent run up.

Please see the important notice on the back page

COMPANY NOTE BANPU CHAK REUNGSINPINYA

We raise our coal price We raise our coal price assumption (based on Newcastle Export Index) by $5/ton across assumption by $5/ton the forecast period to $85/ton in 2017F, $80/ton in 2018-19F and $75/ton over the longer across the forecast periods term. We think our assumption is well supported by recent policy movement and actions implemented by China’s government in order to keep coal prices to within a certain band.

Ex 1: We Raise Our Coal Price Assumption By $5/ton Across The Forecast Period (US$/tonne) 2017F 2018F 2019F 2020F LT Coal price New 85 80 80 75 75 Old 80 75 75 70 70 Change (%) 6.3 6.7 6.7 7.1 7.1

Sources: Company data, Thanachart estimates

China targets RMB535/ton According to comments from the National Development and Reform Commission (NDRC), +/-6% coal price, implying China’s government aims for thermal coal price (based on Qinhuangdao 5,500 kcal/kg about $75-85/ton for the benchmark) to be in the range of RMB 535/ton +/- 6%. If coal prices move outside of this seaborne market band, we believe the government would likely step in to take action. In our view, the NDRC needs coal price to remain high enough to discourage consumption, while at the same time minimizing potential impact on power and energy costs for industries and households. Given this target band, we think the seaborne market will also find support in the $75-85/ton range. As such, we believe that our new coal price forecasts better capture China’s policy for the coming years.

Ex 2: China’s domestic coal price (QHD5500) vs. seaborne benchmark (NEWC6000) (RMB/tonne) (US$/tonne) QHD 5500 NEWC 6000 (RHS) 800 120

750 110 700 100 650

600 90

550 80 500 70 450

400 60 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Sources: Bloomberg, Thanachart estimates Note: QHD 5500: Qinhuangdao 5,500 kcal/kg NEWC 6000: Newcastle 6,000 kcal/kg

We raise our norm EPS With a higher coal price assumption, we raise our earnings forecasts by 4% in 2017F and forecasts by 4-20% in 2017- 12-20% in 2018-20F and raise our target price to Bt25 from Bt22. Our earnings forecasts 20F and raise our TP to are 10-33% higher than Bloomberg consensus in 2017-19F and our TP is now 14% higher. Bt25 from Bt22

THANACHART SECURITIES | DAIWA CAPITAL MARKETS 2

COMPANY NOTE BANPU CHAK REUNGSINPINYA

Ex 3: Earnings And Target Price Revisions (Bt/shr) ————————— Norm EPS ————————— TP 2017F 2018F 2019F 2020F

New 2.12 2.31 2.16 1.87 25.00 Old 2.04 2.07 1.87 1.56 22.00 Change (%) 4.1 11.7 15.5 19.8 13.6

Consensus 1.93 1.74 1.73 21.84 Thanachart vs consensus (%) 10.0 32.9 24.6 14.5

Sources: Company data, Thanachart estimates

BANPU has de-rated below On the back of our more bullish forecasts, we expect BANPU’s ROE to increase to 12% in 1x P/BV despite strong ROE 2017-18F, where it last was in 2012. Yet, BANPU’s valuation has continually de-rated over recovery in 2017-18F the past 5 years. The stock has traded at over 2x P/BV but now languishes below 1x P/BV (2018F). With improved ROE and a strong coal price outlook, we believe the stock deserves to trade at a much higher multiple. Nevertheless, our new 12-month TP of Bt25 implies less than 11x 2018F P/E and 1.3x 2018F P/BV.

Ex 4: ROE Reverting To Double Digits Ex 5: …yet Stock Continues To De-rate (%) (x)

14 2.8 12 +2 STD = 2.3x 10 2.3 8 +1 STD = 1.9x 6 1.8 4 Average = 1.4x 2 1.3 0 -1 STD = 1x (2) 0.8 -2 STD = 0.6x (4) (6) 0.3 2012 2013 2014 2015 2016 2017F 2018F 2019F Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sources: Company data, Thanachart estimates Sources: Bloomberg, Thanachart estimates

Strong 2H17F earnings is We believe that strong 2H17F earnings would be a potential catalyst for the stock. We the key catalyst, in our view expect sequentially higher ASP and volume growth for 3Q-4Q17F to be the main drivers of earnings, partially offset by lower profit from the power business due to normal seasonal factors.

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COMPANY NOTE BANPU CHAK REUNGSINPINYA

Ex 6: Volume Recovery In 3Q-4Q17F Ex 7: With Higher ASP Following The Rise In Coal Price

(m tonnes) (US$/tonne) Coal price TTM Indonesia ASP Australia Indonesia China 14 100

12 90

10 80

8 70

6 60

4 50

2 40 0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17F 4Q17F 3Q17F 4Q17F Sources: Company data, Thanachart estimates Sources: Company data, Thanachart estimates Note: Australia and China volumes are on equity basis; Indonesia is on 100% Note: Coal price TTM = Trailing 12-month average of Newcastle coal price basis

Ex 8: 12-month DCF-derived TP Calculation Using A Base Year Of 2018F

(Bt m) 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F Terminal Value Coal EBITDA and equity income 28,224 26,731 24,101 21,713 22,064 22,437 22,790 23,139 23,483 23,823 23,627 - Free cash flow 10,667 13,461 12,369 12,679 12,601 12,828 13,042 13,246 13,441 13,628 13,275 186,762 PV of free cash flow 9,831 11,432 9,677 9,140 8,371 7,852 7,354 6,882 6,435 6,012 5,407 76,074

Risk-free rate (%) 4.5 Market risk premium (%) 7.5 Beta 1.3 WACC (%) 8.5 Terminal growth (%) 2.0

BANPU's sum-of-the-parts valuation (Bt m) PV of cash flow 164,468 Less: net debt 85,367 Less: minority interest 18,984 Equity value – coal 60,117 Power and other investments 69,513 Total equity value 129,630 # of Shares 5,162

Total value per share (Bt/shr) 25.00 Sources: Company data, Thanachart estimates

THANACHART SECURITIES | DAIWA CAPITAL MARKETS 4

COMPANY NOTE BANPU CHAK REUNGSINPINYA

Valuation Comparison

Ex 9: Valuation Comparison With Regional Peers EPS Growth —— PE —— —— P/BV —— – EV/EBITDA – — Div. yield — Company Code Country 17F 18F 17F 18F 17F 18F 17F 18F 17F 18F (%) (%) (x) (x) (x) (x) (x) (x) (%) (%)

New Hope Corp NHC AU Australia 5.3 18.5 10.6 8.9 0.8 0.8 4.3 3.9 4.2 4.9 China Shenhua Energy 601088 CH China 44.4 (2.2) 11.3 11.6 1.3 1.2 5.3 5.5 4.3 4.4 Datong Coal Industry 601001 CH China na 30.3 13.5 10.3 1.9 1.7 9.1 10.1 0.3 0.1 Guizhou Panjiang Ref. Coal 600395 CH China (88.1) na na 20.9 1.9 1.8 10.9 10.2 3.4 3.0 Kailuan Energy 600997 CH China na na na na 1.3 1.3 8.0 7.9 na na Pingdingshan Tianan Coal 601666 CH China 67.7 18.5 12.7 10.7 1.4 1.3 9.2 9.5 1.0 0.4 Shanxi Guoyang New En. 600348 CH China na 27.3 13.9 10.9 1.3 1.2 5.9 6.0 na na Yanzhou Coal Mining 600188 CH China na (1.9) 12.0 12.2 1.4 1.3 6.7 5.9 2.5 2.2 China Coal Energy 1898 HK Hong Kong 150.0 (12.3) 12.1 13.8 0.6 0.6 9.0 9.3 2.4 2.0 Bumi Resources BUMI IJ Indonesia na na na na na na 45.3 28.6 62.8 106.8 Indo Tambangraya Megah ITMG IJ Indonesia 62.5 (6.7) 7.6 8.1 1.6 1.6 3.5 3.8 8.6 10.2 PT Tambang Batubara PTBA IJ Indonesia 52.1 (0.8) 7.2 7.3 1.9 1.6 4.7 4.9 4.1 5.6 Semirara Mining Corp. SCC PM Philippines 32.4 7.7 12.4 11.5 4.5 3.6 9.3 8.7 3.6 3.1 Banpu Pcl * BANPU TB Thailand 422.0 8.9 8.0 7.4 1.0 0.9 7.0 6.3 5.1 6.8

Average 83.2 7.9 11.0 11.1 1.6 1.4 9.9 8.6 8.5 12.5

Sources: Bloomberg, * Thanachart estimates Based on 21 September 2017 closing prices

THANACHART SECURITIES | DAIWA CAPITAL MARKETS 5

APPENDIX BANPU CHAK REUNGSINPINYA

COMPANY DESCRIPTION COMPANY RATING

Rating Scale Banpu Pcl (BANPU) is a leading regional coal player with production Industry in Indonesia, Australia and China. It also has investments in the Outlook 5 Excellent 5 power businesses in Thailand, Laos, China and Japan. The company Analyst 4 Business REC. 3 Outlook Good 4 recently started investing in US shale oil and gas. 2 1 0 Fair 3 CG Manage rating* ment Weak 2

Very Weak 1 Financials Operating None 0

Source: Thanachart Source: Thanachart; *CG Rating

THANACHART’S SWOT ANALYSIS

S — Strength W — Weakness

. Reduced operating risk due to greater geographical . Earnings are quite volatile as they depend on the price of diversification. coal.

. Operations more reliable than peers’, which don’t own port . Relatively high financial leverage

facilities and/or power plants.

. Stronger bargaining power than small players.

O — Opportunity T — Threat

. Opportunity to diversify into power and other energy-related . Main threat to coal operation is potential substitution impact

operations. from gas and renewable energy

. Regulatory risk and environmental concerns.

CONSENSUS COMPARISON RISKS TO OUR INVESTMENT CASE

Consensus Thanachart Diff . A weaker-than-expected coal price environment would Target price (Bt) 21.84 25.00 14% present downside risks to our earnings and TP. 9,054 8,961 -1% Net profit 17F (Bt m) . Lower-than-expected growth in the power business would Net profit 18F (Bt m) 8,682 11,937 37% present downside potential to our TP. Consensus REC BUY: 14 HOLD: 4 SELL: 0

HOW ARE WE DIFFERENT FROM THE STREET?

. Our reported earnings forecast for 2017F is lower than consensus as we factor in unrealized FX losses from a stronger THB. However, our norm profit forecasts are 10-33% higher than consensus in 2017-18F, potentially due to our higher coal price assumption.

. As a result, our TP is 14% higher.

Sources: Bloomberg consensus, Thanachart estimates Source: Thanachart

THANACHART SECURITIES | DAIWA CAPITAL MARKETS 6

FINANCIAL SUMMARY BANPU CHAK REUNGSINPINYA

INCOME STATEMENT FY ending Dec (Bt m) 2015A 2016A 2017F 2018F 2019F Sales 84,650 79,737 88,347 94,324 95,132 Cost of sales 57,188 53,324 51,349 53,781 55,717 Gross profit 27,462 26,413 36,998 40,543 39,414 % gross margin 32.4% 33.1% 41.9% 43.0% 41.4% Selling & administration expenses 21,701 19,743 19,223 20,379 20,882 Operating profit 5,761 6,670 17,774 20,164 18,532 % operating margin 6.8% 8.4% 20.1% 21.4% 19.5% Depreciation & amortization 6,445 6,428 6,907 7,118 7,238 EBITDA 12,206 13,098 24,681 27,282 25,771 % EBITDA margin 14.4% 16.4% 27.9% 28.9% 27.1% Non-operating income (1,185) 37 1,270 1,051 1,074 Non-operating expenses (260) (96) (320) (320) (300) Interest expense (4,198) (4,495) (4,273) (4,027) (3,803) Pre-tax profit 117 2,117 14,451 16,867 15,503 Income tax 3,382 2,441 5,058 5,904 5,426 After-tax profit (3,265) (325) 9,393 10,964 10,077 % net margin -3.9% -0.4% 10.6% 11.6% 10.6% Shares in affiliates' Earnings 1,761 4,180 5,717 5,602 5,347 Minority interests (869) (1,756) (4,149) (4,629) (4,294) We forecast strong Extraordinary items 839 (423) (2,000) 0 0 growth in 2018F driven by NET PROFIT (1,534) 1,677 8,961 11,937 11,130 higher average selling Normalized profit (2,373) 2,100 10,961 11,937 11,130 EPS ( Bt) (0.3) 0.3 1.7 2.3 2.2 price and volume Normalized EPS (Bt) (0.5) 0.4 2.1 2.3 2.2

BALANCE SHEET FY ending Dec (Bt m) 2015A 2016A 2017F 2018F 2019F ASSETS: Current assets: 37,044 36,668 27,376 30,838 31,168 Cash & cash equivalent 14,296 16,301 4,000 6,000 6,000 Account receivables 6,706 7,674 8,472 9,045 9,122 Inventories 4,936 3,001 4,220 4,420 4,580 Others 11,106 9,692 10,684 11,373 11,466 Investments & loans 23,983 34,485 37,492 41,254 41,909 Net fixed assets 42,588 46,001 46,094 43,976 41,738 Other assets 132,870 132,696 132,696 141,674 142,886 Total assets 236,485 249,850 243,658 257,743 257,701

LIABILITIES: Current liabilities: 37,878 41,354 36,069 37,229 35,817 Account payables 1,323 1,994 914 958 992 Bank overdraft & ST loans 8,317 10,139 8,937 8,963 7,940 Current LT debt 8,778 11,817 6,434 6,453 5,717 Others current liabilities 19,460 17,404 19,784 20,855 21,168 Balance sheet has Total LT debt 103,485 92,155 73,996 74,212 65,741 improved post capital Others LT liabilities 20,593 18,238 20,207 21,574 21,759 increase through warrant Total liabilities 161,956 151,747 130,272 133,016 123,316 conversion Minority interest 11,322 19,227 23,377 28,006 32,300 Preferreds shares 0 0 0 0 0 Paid-up capital 2,582 4,937 5,162 5,162 5,162 Share premium 5,058 14,479 19,636 19,636 19,636 Warrants 0 0 0 0 0 Surplus (7,181) (2,511) (2,511) (2,511) (2,511) Retained earnings 62,748 61,969 67,722 74,434 79,797 Shareholders' equity 63,207 78,875 90,009 96,721 102,084 Liabilities & equity 236,485 249,850 243,658 257,743 257,701 Sources: Company data, Thanachart estimates

THANACHART SECURITIES | DAIWA CAPITAL MARKETS 7

FINANCIAL SUMMARY BANPU CHAK REUNGSINPINYA

CASH FLOW STATEMENT FY ending Dec (Bt m) 2015A 2016A 2017F 2018F 2019F Earnings before tax 117 2,117 14,451 16,867 15,503 Tax paid (3,399) (2,014) (5,215) (5,722) (5,486) Depreciation & amortization 6,445 6,428 6,907 7,118 7,238 Chg In w orking capital 4,313 1,638 (3,096) (730) (202) Chg In other CA & CL / minorities (969) 8,125 7,134 5,803 5,627 Cash flow from operations 6,507 16,294 20,309 23,336 22,680 We expect strong cash flow generation with Capex (5,140) (9,841) (7,000) (5,000) (5,000) limited capex ST loans & investments (846) 1,406 0 0 0 LT loans & investments (4,854) (10,502) (3,007) (3,763) (655) Adj for asset revaluation 0 0 0 0 0 Chg In other assets & liabilities (6,288) (2,451) 2,097 (7,611) (1,028) Cash flow from investments (17,128) (21,388) (7,909) (16,374) (6,682) Debt financing 14,750 (6,891) (26,745) 262 (10,232) Capital increase 0 11,776 5,381 0 0 Dividends paid (3,097) (2,508) (3,209) (5,225) (5,767) Warrants & other surplus 377 4,722 0 0 0 Cash flow from financing 12,030 7,100 (24,572) (4,963) (15,998)

Free cash flow 1,367 6,453 13,309 18,336 17,680

VALUATION FY ending Dec 2015A 2016A 2017F 2018F 2019F Normalized PE (x) na 41.8 8.0 7.4 7.9 Valuation looks attractive Normalized PE - at target price (x) na 61.5 11.8 10.8 11.6 on less than 8x norm P/E PE ( x ) na 52.3 9.8 7.4 7.9 in 2018F PE - at target price (x) na 76.9 14.4 10.8 11.6 EV /EBITDA ( x ) 15.9 14.2 7.0 6.3 6.3 EV/EBITDA - at target price (x) 19.3 17.3 8.7 7.8 7.9 P/BV ( x ) 1.4 1.1 1.0 0.9 0.9 P/BV - at target price (x) 2.0 1.6 1.4 1.3 1.3 P/CFO ( x ) 13.5 5.4 4.3 3.8 3.9 Price/sales (x) 1.0 1.1 1.0 0.9 0.9 Dividend yield (%) 2.9 2.2 5.1 6.8 6.3 FCF Yield (%) 1.6 7.4 15.2 20.9 20.1

(Bt) Normalized EPS (0.5) 0.4 2.1 2.3 2.2 EPS (0.3) 0.3 1.7 2.3 2.2 DPS 0.5 0.4 0.9 1.2 1.1 BV/share 12.2 15.3 17.4 18.7 19.8 CFO/share 1.3 3.2 3.9 4.5 4.4 FCF/share 0.3 1.3 2.6 3.6 3.4

Sources: Company data, Thanachart estimates

THANACHART SECURITIES | DAIWA CAPITAL MARKETS 8

FINANCIAL SUMMARY BANPU CHAK REUNGSINPINYA

FINANCIAL RATIOS FY ending Dec 2015A 2016A 2017F 2018F 2019F Growth Rate Sales (%) (17.1) (5.8) 10.8 6.8 0.9 Net profit (%) na na 434.3 33.2 (6.8) EPS ( % ) na na 434.3 33.2 (6.8) Normalized profit (%) na na 422.0 8.9 (6.8) Normalized EPS (%) na na 422.0 8.9 (6.8) Dividend payout ratio (%) (168.3) 115.5 50.0 50.0 50.0

Operating performance Gross margin (%) 32.4 33.1 41.9 43.0 41.4 Operating margin (%) 6.8 8.4 20.1 21.4 19.5 EBITDA margin (%) 14.4 16.4 27.9 28.9 27.1 Net margin (%) (3.9) (0.4) 10.6 11.6 10.6 ROE is improving D/E (incl. minor) (x) 1.6 1.2 0.8 0.7 0.6 significantly in 2017-18F Net D/E (incl. minor) (x) 1.4 1.0 0.8 0.7 0.5 yet stock still trades Interest coverage - EBIT (x) 1.4 1.5 4.2 5.0 4.9 below book Interest coverage - EBITDA (x) 2.9 2.9 5.8 6.8 6.8 ROA - using norm profit (%) na 0.9 4.4 4.8 4.3 ROE - using norm profit (%) na 3.0 13.0 12.8 11.2

DuPont ROE - using after tax profit (%) na na 11.1 11.7 10.1 - asset turnover (x) 0.4 0.3 0.4 0.4 0.4 - operating margin (%) 5.1 8.3 21.2 22.2 20.3 - leverage (x) 3.6 3.4 2.9 2.7 2.6 - interest burden (%) 2.7 32.0 77.2 80.7 80.3 - tax burden (%) na na 65.0 65.0 65.0 WA CC (%) 8.5 8.5 8.5 8.5 8.5 ROIC (%) (99.8) (0.6) 6.5 7.5 6.7 NOPA T ( Bt m) (160,882) (1,024) 11,553 13,107 12,046

Sources: Company data, Thanachart estimates

THANACHART SECURITIES | DAIWA CAPITAL MARKETS 9

DISCLAIMER BANPU CHAK REUNGSINPINYA

Important Disclosures and Disclaimers:

This publication is prepared by Thanachart Securities Public Company Limited (“Thanachart Securities”) and distributed outside Thailand by Daiwa Securities Group Inc. and/or its non-U.S. affiliates except to the extent expressly provided herein. This publication and the contents hereof are intended for information purposes only, and may be subject to change without further notice. Any use, disclosure, distribution, dissemination, copying, printing or reliance on this publication for any other purpose without our prior consent or approval is strictly prohibited. Neither Thanachart Securities , Daiwa Securities Group Inc. nor any of their respective parent, holding, subsidiaries or affiliates, nor any of their respective directors, officers, servants and employees, represent nor warrant the accuracy or completeness of the information contained herein or as to the existence of other facts which might be significant, and will not accept any responsibility or liability whatsoever for any use of or reliance upon this publication or any of the contents hereof. Neither this publication, nor any content hereof, constitute, or are to be construed as, an offer or solicitation of an offer to buy or sell any of the securities or investments mentioned herein in any country or jurisdiction nor, unless expressly provided, any recommendation or investment opinion or advice. Any view, recommendation, opinion or advice expressed in this publication constitutes the views of the analyst(s) named herein and does not necessarily reflect those of Thanachart Securities, Daiwa Securities Group Inc. and/or their respective affiliates nor any of their respective directors, officers, servants and employees except where the publication states otherwise. This research report is not to be relied upon by any person in making any investment decision or otherwise advising with respect to, or dealing in, the securities mentioned, as it does not take into account the specific investment objectives, financial situation and particular needs of any person.

Thanachart Securities, Daiwa Securities Group Inc., their respective subsidiaries or affiliates, or their respective directors, officers and employees from time to time have trades as principals, or have positions in, or have other interests in the securities of the company under research including market making activities, derivatives in respect of such securities or may have also performed investment banking and other services for the issuer of such securities. Thanachart Securities, Daiwa Securities Group Inc., their respective subsidiaries or affiliates do and seek to do business with the company(s) covered in this research report. Therefore, investors should be aware that a conflict of interest may exist. The following are additional disclosures. Ownership of Securities of Thanachart Securities, Daiwa Securities Group Inc, their subsidiaries and affiliates For “Ownership of Securities” information, please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Investment Banking Relationship of Thanachart Securities, Daiwa Securities Group Inc, their subsidiaries and affiliates For “Investment Banking Relationship”, please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Japan Disclosure of Interest of Daiwa Securities Group Inc. Investment Banking Relationship Within the preceding 12 months, the subsidiaries and/or affiliates of Daiwa Securities Group Inc. * has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: Neo Solar Power Corp (3576 TT), Acushnet Holdings Corp (GOLF US), No Va Land Investment Group Corporation (NVL VN), PT Integra Indocabinet Tbk (WOOD IJ), PT Buyung Putera Sembada (HOKI IJ) and PT Totalindo Eka Persada Tbk (TOPS IJ).

*Subsidiaries of Daiwa Securities Group Inc. for the purposes of this section shall mean any one or more of: Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司 ), Daiwa Capital Markets Singapore Limited, Daiwa Capital Markets Australia Limited, Daiwa Capital Markets India Private Limited, Daiwa-Cathay Capital Markets Co., Ltd., Daiwa Securities Capital Markets Korea Co., Ltd.

This research may only be distributed in Japan to “qualified institutional investors”, as defined in the Financial Instruments and Exchange Act (Article 2 (3) (i)), as amended from time to time.

Disclosure of Interest of Thanachart Securities Investment Banking Relationship Within the preceding 12 months, Thanachart Securities has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: Bangkok Airways Co Ltd (BA TB), Star Petroleum Refining Pcl (SPRC TB), Rajthanee Hospital Pcl (RJH TB), Banpu Power Pcl (BPP TB), Ratchaphruek Hospital (RPH TB).

Hong Kong This research is distributed in Hong Kong by Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) (“DHK”) which is regulated by the Hong Kong Securities and Futures Commission. Recipients of this research in Hong Kong may contact DHK in respect of any matter arising from or in connection with this research. Relevant Relationship (DHK) DHK may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage.

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DISCLAIMER BANPU CHAK REUNGSINPINYA

Singapore This research is distributed in Singapore by Daiwa Capital Markets Singapore Limited and it may only be distributed in Singapore to accredited investors, expert investors and institutional investors as defined in the Securities and Futures Act, Chapter 289 of Singapore, as amended from time to time and is not for, nor intended for, distribution to any other persons in Singapore. By virtue of distribution to these category of investors, Daiwa Capital Markets Singapore Limited and its representatives are not required to comply with Section 36 of the Financial Advisers Act (Chapter 110) (Section 36 relates to disclosure of Daiwa Capital Markets Singapore Limited’s interest and/or its representative’s interest in securities). Recipients of this research in Singapore should contact Daiwa Capital Markets Singapore Limited in respect of any matter arising from or in connection with the research.

Australia This research is distributed in Australia by Daiwa Capital Markets Australia Limited and it may only be distributed in Australia to wholesale investors within the meaning of the Corporations Act. Recipients of this research in Australia may contact Daiwa Capital Markets Stockbroking Limited in respect of any matter arising from or in connection with the research.

India This research is distributed in India to Institutional Clients only by Daiwa Capital Markets India Private Limited (Daiwa India) which is an intermediary registered with Securities & Exchange Board of India as a Stock Broker, Merchant Bank and Research Analyst. Daiwa India, its Research Analyst and their family members and its associates do not have any financial interest save as disclosed or other undisclosed material conflict of interest in the securities or derivatives of any companies under coverage. Daiwa India and its associates, may have received compensation for any products other than Investment Banking (as disclosed)or brokerage services from the subject company in this report or from any third party during the past 12 months. Daiwa India and its associates may have debt holdings in the subject company. For information on ownership of equity, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. There is no material disciplinary action against Daiwa India by any regulatory authority impacting equity research analysis activities as of the date of this report.

Associates of Daiwa India, registered with Indian regulators, include Daiwa Capital Markets Singapore Limited and Daiwa Portfolio Advisory (India) Private Limited.

Taiwan This research is solely for reference and not intended to provide tailored investment recommendations. This research is distributed in Taiwan by Daiwa-Cathay Capital Markets Co., Ltd. and it may only be distributed in Taiwan to specific customers who have signed recommendation contracts with Daiwa-Cathay Capital Markets Co., Ltd. and non-customers including (i) professional institutional investors, (ii) TWSE or TPEx listed companies, upstream and downstream vendors, and specialists that offer or seek advice, and (iii) potential customers with an actual need for business development in accordance with the Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers. Recipients of this research including non-customer recipients of this research shall not provide it to others or engage in any activities in connection with this research which may involve conflicts of interests. Neither Daiwa-Cathay Capital Markets Co., Ltd. nor its personnel who writes or reviews the research report has any conflict of interest in this research. Since Daiwa-Cathay Capital Markets Co., Ltd. does not operate brokerage trading business in foreign markets, this research is prepared on a “without recommendation” to any foreign securities basis and Daiwa-Cathay Capital Markets Co., Ltd. does not accept orders from customers to trade in such foreign securities. Recipients of this research in Taiwan may contact Daiwa-Cathay Capital Markets Co., Ltd. in respect of any matter arising from or in connection with the research.

Philippines This research is distributed in the Philippines by DBP-Daiwa Capital Markets Philippines, Inc. which is regulated by the Philippines Securities and Exchange Commission and the Philippines Stock Exchange, Inc. Recipients of this research in the Philippines may contact DBP-Daiwa Capital Markets Philippines, Inc. in respect of any matter arising from or in connection with the research. DBP-Daiwa Capital Markets Philippines, Inc. recommends that investors independently assess, with a professional advisor, the specific financial risks as well as the legal, regulatory, tax, accounting, and other consequences of a proposed transaction. DBP-Daiwa Capital Markets Philippines, Inc. may have positions or may be materially interested in the securities in any of the markets mentioned in the publication or may have performed other services for the issuers of such securities. For relevant securities and trading rules please visit SEC and PSE link at http://www.sec.gov.ph and http://www.pse.com.ph/ respectively.

United Kingdom This research report is produced by Daiwa Securities Co. Ltd. and/or its affiliates and is distributed in the European Union, Iceland, Liechtenstein, Norway and Switzerland. Daiwa Capital Markets Europe Limited is authorised and regulated by The Financial Conduct Authority (“FCA”) and is a member of the London Stock Exchange and Eurex. This publication is intended for investors who are not Retail Clients in the United Kingdom within the meaning of the Rules of the FCA and should not therefore be distributed to such Retail Clients in the United Kingdom. Should you enter into investment business with Daiwa Capital Markets Europe’s affiliates outside the United Kingdom, we are obliged to advise that the protection afforded by the United Kingdom regulatory system may not apply; in particular, the benefits of the Financial Services Compensation Scheme may not be available.

Daiwa Capital Markets Europe Limited has in place organisational arrangements for the prevention and avoidance of conflicts of interest. Our conflict management policy is available at http://www.uk.daiwacm.com/about-us/corporate-governance-regulatory.

Germany This document is distributed in Germany by Daiwa Capital Markets Europe Limited, Niederlassung Frankfurt which is regulated by BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) for the conduct of business in Germany.

Bahrain This research material is distributed in Bahrain by Daiwa Capital Markets Europe Limited, Bahrain Branch, regulated by The Central Bank of Bahrain and holds Investment Business Firm – Category 2 license and having its official place of business at the Bahrain World Trade Centre, South Tower, 7th floor, P.O. Box 30069, Manama, Kingdom of Bahrain. Tel No. +973 17534452 Fax No. +973 535113.

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DISCLAIMER BANPU CHAK REUNGSINPINYA

United States This report is distributed in the U.S. by Daiwa Capital Markets America Inc. (DCMA). It may not be accurate or complete and should not be relied upon as such. It reflects the preparer’s views at the time of its preparation, but may not reflect events occurring after its preparation; nor does it reflect Thanachart Securities’ or DCMA’s views at any time. Neither Thanachart Securities, DCMA nor the preparer has any obligation to update this report or to continue to prepare research on this subject. This report is not an offer to sell or the solicitation of any offer to buy securities. Unless this report says otherwise, any recommendation it makes is risky and appropriate only for sophisticated speculative investors able to incur significant losses. Readers should consult their financial advisors to determine whether any such recommendation is consistent with their own investment objectives, financial situation and needs. This report does not recommend to U.S. recipients the use of any of Thanachart Securities’ or DCMA’s non-U.S. affiliates to effect trades in any security and is not supplied with any understanding that U.S. recipients of this report will direct commission business to such non-U.S. entities. Unless applicable law permits otherwise, non-U.S. customers wishing to effect a transaction in any securities referenced in this material should contact a Daiwa entity in their local jurisdiction. Most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as a process for doing so. As a result, the securities discussed in this report may not be eligible for sales in some jurisdictions. Customers wishing to obtain further information about this report should contact DCMA: Daiwa Capital Markets America Inc., Financial Square, 32 Old Slip, New York, New York 10005 (Tel no.212-612-7000).

Ownership of Securities For “Ownership of Securities” information please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Investment Banking Relationships For “Investment Banking Relationships” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

DCMA Market Making For “DCMA Market Making” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Research Analyst Conflicts For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions.

Research Analyst Certification For updates on “Research Analyst Certification” and “Rating System” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The views about any and all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the firm producing the report if no individual analyst is named on the report); and no part of the compensation of such analyst (or no part of the compensation of the firm if no individual analyst is named on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report.

For stocks in Thailand covered by Thanachart Securities, the following rating system is in effect: Ratings are based on absolute upside or downside, which is the difference between the target price and the current market price. If the upside is 10% or more, the rating is BUY. If the downside is 10% or more, the rating is SELL. For stocks where the upside or downside is less than 10%, the rating is HOLD. Unless otherwise specified, these ratings are set with a 12-month horizon. Thus, it is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on the market price and the formal rating.

For the sector, Thanachart looks at two areas, ie, the sector outlook and the sector weighting. For the sector outlook, an arrow pointing up, or the word “Positive”, is used when Thanachart sees the industry trend improving. An arrow pointing down, or the word “Negative”, is used when Thanachart sees the industry trend deteriorating. A double-tipped horizontal arrow, or the word “Unchanged”, is used when the industry trend does not look as if it will alter. The industry trend view is Thanachart’s top-down perspective on the industry rather than a bottom-up interpretation from the stocks that Thanachart covers. An “Overweight” sector weighting is used when Thanachart has BUYs on majority of the stocks under its coverage by market cap. “Underweight” is used when Thanachart has SELLs on majority of the stocks it covers by market cap. “Neutral” is used when there are relatively equal weightings of BUYs and SELLs].

Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Investment Banking Relationships For “Investment Banking Relationship”, please visit BlueMatrix disclosure Link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Relevant Relationships (TNS) TNS may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage.

TNS market making TNS may from time to time make a market in securities covered by this research.

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DISCLAIMER BANPU CHAK REUNGSINPINYA

Additional information may be available upon request.

Japan - additional notification items pursuant to Article 37 of the Financial Instruments and Exchange Law (This Notification is only applicable where report is distributed by Daiwa Securities Co. Ltd.)

. If you decide to enter into a business arrangement with us based on the information described in materials presented along with this document, we ask you to pay close attention to the following items. . In addition to the purchase price of a financial instrument, we will collect a trading commission* for each transaction as agreed beforehand with you. Since commissions may be included in the purchase price or may not be charged for certain transactions, we recommend that you confirm the commission for each transaction. . In some cases, we may also charge a maximum of ¥2 million (including tax) per year as a standing proxy fee for our deposit of your securities, if you are a non-resident of Japan. . For derivative and margin transactions etc., we may require collateral or margin requirements in accordance with an agreement made beforehand with you. Ordinarily in such cases, the amount of the transaction will be in excess of the required collateral or margin requirements. . There is a risk that you will incur losses on your transactions due to changes in the market price of financial instruments based on fluctuations in interest rates, exchange rates, stock prices, real estate prices, commodity prices, and others. In addition, depending on the content of the transaction, the loss could exceed the amount of the collateral or margin requirements. . There may be a difference between bid price etc. and ask price etc. of OTC derivatives handled by us. . Before engaging in any trading, please thoroughly confirm accounting and tax treatments regarding your trading in financial instruments with such experts as certified public accountants.

* The amount of the trading commission cannot be stated here in advance because it will be determined between our company and you based on current market conditions and the content of each transaction etc.

When making an actual transaction, please be sure to carefully read the materials presented to you prior to the execution of agreement, and to take responsibility for your own decisions regarding the signing of the agreement with us.

Corporate Name: Daiwa Securities Co. Ltd. Financial instruments firm: chief of Kanto Local Finance Bureau (Kin-sho) No.108 Memberships: Japan Securities Dealers Association, The Financial Futures Association of Japan Japan Investment Advisers Association Type II Financial Instruments Firms Association

Thanachart Securities Pcl. Research Team 19 Floor, MBK Tower 444 Phayathai Road, Pathumwan Road, Bangkok 10330 Tel: 662 - 617 4900 Email: [email protected]

Pimpaka Nichgaroon, CFA Adisak Phupiphathirungul, CFA Chak Reungsinpinya Head of Research Retail Market Strategy Energy, Petrochemical [email protected] [email protected] [email protected]

Kalvalee Thongsomaung Pattarawan Wangmingmat Phannarai Tiyapittayarut Food, Hotel, Media Senior Technical Analyst Property, Retail [email protected] [email protected] [email protected]

Rata Limsuthiwanpoom Saksid Phadthananarak Sarachada Sornsong Industrial Estate, Property Fund, REITs Construction, Transportation Bank, Financial, Telecom [email protected] [email protected] [email protected]

Siriporn Arunothai Supanna Suwankird Wichaya Wongpanuwich, CFA, FRM Small Cap Research, Healthcare Energy, Utilities Analyst, Retail Market [email protected] [email protected] [email protected]

Witchanan Tambamroong Nuttapop Prasitsuksant Pattadol Bunnak Technical Analyst Assistant Analyst Assistant Analyst [email protected] [email protected] [email protected]

Sittichet Rungrassameephat Thaloengsak Kucharoenpaisan Assistant Analyst, Quantitative Assistant Analyst [email protected] [email protected]

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