January 7, 2019 NEUTRAL Airways (BA TB) Share Price: Bt11.8 Target Price: Bt12.0 (+1.7%) Expect losses to halve yoy in 4Q18 Company Update

 Expect Bt222m core loss in 4Q18F vs Bt451m loss in 4Q17 and Bt96m profit in previous quarter; yoy drop due to higher fuel cost  Revised up FY19-20F core profit after imputing lower fuel cost

 Maintain NEUTRAL, trimmed TP to Bt12/sh (from Bt13); prefer AAV (sector top pick) on its better hedging position

Higher fuel cost and low season on Samui to drag 4Q18F earnings We expect BA to book Bt222m core loss in 4Q18 vs Bt451m loss in 4Q17 and Bt96m profit in the previous quarter. Ticket sales should drop 4% qoq to Bt5.0bn (flat yoy) driven by 6% drop in passenger yield due to low season on Samui, fewer European and Chinese tourist arrivals, and weak demand for Phuket and Chiang Mai routes. Cabin factor should drop 3ppt qoq and 1ppt yoy to 69% following decision to maintain yield Kitti PITAKTEERABANDIT (+1% yoy). Fuel cost should jump 25% yoy (+3% qoq) on higher jet fuel 662 - 659 7000 ext 50 08 price net of hedging (US$85/bbl in 4Q18 vs US$65 in 4Q17). CASK ex- [email protected] COMPANY RESEARCH | fuel should drop 8% yoy as BA managed seat capacity to match Key Data demand. Including Bt11m FX loss in the quarter, BA should report 12 -mth High/Low (Bt) 17.4 / 11.0 Bt233m net loss vs Bt930m net profit in 4Q17, led by extra gain from Market capital (Btm/US$m) 24,428.7 / 759.0 sales of BDMS shares. 3m avg Turnover (Btm/US$m) 16.5 / 0.5 Free Float (%) 37. 9 CLMV demand and higher margins to drive earnings from 2Q19F Issue Shares (m shares) 2,070 We are keeping FY18F profit but revised up FY19F/20F core profit by Major shareholders: 40%/41% after imputing lower jet fuel price of US$81 vs US$90 - PRASATTONG -OSOTH PUT 25.3 previously. BA has hedged 59%/56% of 1Q/2Q 2019 fuel requirement at - PRASARTTONG OSOTH AR 11.8 effective cost of US$88/87 per bbl (vs US$70/74 in 1Q/2Q 2018). - PRASATTONG -OSOTH PRA 10.8 Hence, 1Q19F operation would be pressured by hedging loss. Tropical Share Price Performance storm Pabuk should also affect Samui routes in the quarter. However, we foresee recovering demand for CLMV routes and rising share of international point-of-sales (73% in 3Q18) to boost BA’s profit starting 2Q19. On its network expansion plan, BA will focus on routes from/to Vietnam given double-digit growth in inbound tourists. Overall, cabin factor should grow 1ppt yoy to 70% and yield by 2% in FY19F.

Limited benefit from cheaper fuel and recovering Chinese arrivals We trimmed TP to Bt12/sh based on 0.9x FY19F P/BV, in line with regional peers’ average multiple. Negative factors have been priced in as BA’s share price has underperformed the SET by 21% in FY18.

Every US$1/bbl drop in jet fuel cost would lift earnings by Bt27m or 5% YTD 1Mth 3Mth 12Mth in FY19F. However, we prefer AAV because it hedged at lower fuel cost Absolute (%) 1.7 (6.3) (9.9) (31.8) and is more leveraged to recovering Chinese tourist arrivals. Relative to index (%) 2.0 0.4 0.5 (19.5)

Financial Summary (Btm) Krungsri Securities vs Market Year to Dec 2016 2017 2018F 2019F 2020F Positive Neutral Negative Sales (Btm) 24,692 24,932 25,425 26,606 27,616 Market Growth (%) 7 1 2 5 4 Recommend 9 5 0 EBITDA (Btm) 4,562 1,698 2,787 3,038 3,222 Krungsri Market % +/ - Growth (%) 32 -63 64 9 6 Target Price (Bt) 12.0 15.9 (24.6) ’1 8 Net Profit (Btm) 330 449 (26.5 ) Recurring profit (Btm) 2,095 -658 330 562 752 ’1 9 Net Profit (Btm) 562 683 (17.7) Growth (%) 42 na na 70 34 Net profit (Btm) 1,768 788 431 562 752 Krungsri's earnings revision FDEPS (Bt) 0.84 0.38 0.21 0.27 0.36 201 8F 201 9F Growth (%) 42 na na 70 34 Earnings revision (%) - 39 .5 PE (x) 11.8 na 75.1 44.1 32.9 Source: Bloomberg, Krungsri Securities DPS (Bt) 0.75 0.50 0.18 0.24 0.32 Yield (%) 6.4 4.2 1.6 2.0 2.7 BVPS (Bt) 15.20 13.48 13.19 13.27 13.39 P/BV (x) 0.8 0.9 0.9 0.9 0.9

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 | BA January 7 , 201 9

BA: 4Q18 earnings preview P&L (Btm) 4Q17 1Q1 8 2Q1 8 3Q1 8 4Q18F Chg Chg QoQ YoY

Sales 6,132 7,498 5,381 6,376 6,170 -3% 1% - Passenger revenue 4,947 6,222 4,206 5,147 4,950 -4% 0% - Other revenue 1,186 1,276 1,175 1,229 1,220 -1% 3% Expense (6,713) (6,566) (6,175) (6,624) (6,599) 0% -2% - Fuel and oil (1,082) (1,158) (1,063) (1,307) (1,351) 3% 25% - Non-fuel operating expenses (5,631) (5,407) (5,112) (5,317) (5,249) -1% -7% Operating Profit (580) 933 (794) (248) (429) 73% -26% Net other income 557 522 851 826 587 -29% 5% Interest income 30 27 32 32 35 13% 20% Interest expense (473) (471) (461) (475) (473) -1% 0% Pretax profit (467) 1,011 (372) 134 (280) na -40% Income Tax 30 (180) 6 (35) 73 na 141% Associates 0 0 0 0 0 na na Minority interest (14) (9) (1) (3) (15) 340% 7% Profit after tax (pre-ex) (451) 822 (366) 96 (222) na -51% Extraordinaries 1,381 (111) 284 (60) (11) -82% na - FX (10) (111) 284 (60) (11) -82% 15% - Impairment 0 0 0 0 0 na na - Others 1,391 0 0 0 0 na na Reported net profit 930 710 (83) 36 (233) na na

Shares out (end Q, m) 2,100 2,100 2,100 2,100 2,100 0% 0% Adjusted shares (m) 2,100 2,100 2,100 2,100 2,100 0% 0%

Pre-ex EPS (0.21) 0.39 (0.17) 0.05 (0.11) na -51% EPS 0.44 0.34 (0.04) 0.02 (0.11) na na

Depreciation (345) (335) (342) (351) (320) -9% -7% EBITDA (235) 1,268 (452) 102 (109) na -54%

Key Ratios

Operating profit margin (%) -9% 12% -15% -4% -7% EBITDA margin (%) -4% 17% -8% 2% -2% Net profit margin (%) 15% 9% -2% 1% -4%

Krungsri Securities Research 2

Company Update | BA January 7 , 201 9

BA: Key Assumptions (%growth) 2017 A 2018 F 2019 F 2020 F

ASK growth (%) 10 % -1% 1% 1% Passenger growth (%) 5% -1% 3% 3% Passenger yield growth (% , include excise tax charge ) -9% 1% 2% 2% Non -airline revenue growth (%) 13 % 6% 5% 5% Capex (Btbn) 2,976 2,137 2,147 2,257 Source: Krungsri Securities

BA: Changes to key assumptions FY18F FY19F FY20F

old new chg old new chg old new chg ASK (m) 6,946 6,690 -4 7,157 6,755 -6 7,514 6,824 -9 Number of Aircraft 39 39 0 40 40 0 38 38 0 Cabin Factor (%) 70.2 68.8 -1.4ppt 70.2 69.8 -0.4ppt 70.2 69.8 -0.4ppt Passenger growth (%) 5 -1 na 4 3 -1.0ppt 5 3 -2.0ppt Passenger yield (Bt/RPK) 4.41 4.50 2 4.53 4.59 1 4.58 4.70 3 Jet fuel price (US$/bbl) 86 83 -3 90 81 -9 90 81 -9 Gross profit margin (%) 14.4 13.5 -0.9ppt 14.1 14.1 0 13.4 14.0 +0.6ppt SG&A/sales (%) 15.6 15.7 0.1ppt 15.6 15.7 0.1ppt 15.6 15.7 0.1ppt Net profit margin (%) 1.3 1.3 0 1.5 2.1 0.6ppt 1.8 2.7 0.9ppt Core profit (Btm) 330 330 0 403 562 40 532 752 41 Source: Krungsri Securities

BA: Route network expansion in 2019 New route Increase frequency Untried & new destinations Bangkok -Cam Ranh (4 flights weekly ) Chiang Mai -Krabi (7 flights weekly ) Samui -Taipei /China (6 flights weekly) Bangkok-Danang (from 7 to 11 flights weekly) Source: Company data, Krungsri Securities

Krungsri Securities Research 3

Company Update | BA January 7 , 201 9

BA: Cabin factor BA: Passenger yield

80% (Bt/RPK) 76% 6.50 74% 75% 72% 71% 6.00 70% 70% 69% 70% 5.23 5.32 68% 68% 67% 5.50 5.08 66% 4.90 4.89 4.83 4.81 65% 5.00 4.64 65% 63% 4.63 4.62 4.73 63% 4.44 4.59 4.41 4.59 4.28 60% 4.50 4.15 4.25 4.15 60% 4.00 55% 3.50

50% 3.00 1Q 2Q 3Q 4Q 2015 2016 2017 2018 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

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

Thailand: International tourist arrivals : Inbound Chinese tourists

(m. tourist) (m. tourist) 3.5 3.6 3.5 1.30 1.20 3.2 3.2 3.2 1.20 3.3 3.1 3.0 1.10 0.97 1.00 0.99 0.93 2.8 2.7 1.00 0.90 2.8 2.7 0.87 0.87 0.90 0.80 0.65 0.68 2.3 0.70 0.65 0.60 1.8 0.50 0.40

1.3 0.30 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 2018 2015 2016 2017 2018

Source: Department of Tourism, Krungsri Securities Source: Department of Tourism, Krungsri Securities

Thailand: Inbound US tourists Thailand: Inbound German tourists (m. tourist) (m. tourist)

0.14 0.14 0.12 0.12 0.12 0.11 0.11 0.12 0.10 0.10 0.09 0.10 0.09 0.09 0.09 0.09 0.10 0.08 0.08 0.08 0.07 0.08 0.07 0.07 0.07 0.06 0.05 0.05 0.06 0.06 0.05 0.03 0.04 0.04

0.02 0.02 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2015 2016 2017 2018 2015 2016 2017 2018

Source: Department of Tourism, Krungsri Securities Source: Department of Tourism, Krungsri Securities

Krungsri Securities Research 4

Company Update | BA January 7 , 201 9

P/E Band P/BV Band

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

Peer table Market PE P/BV EPS Div ROE Share Price Cap (x) (x) G% Yield (%) (%) Performance BB Ticker Name US$ 18F 19F 18F 19F 18F 19F 18F 18F 1M 3M 6M YTD Full-Service Carriers BA TB PCL 762 73.9 43.3 0.9 0.9 na 70 1.6 1.5 (6.3) (9.9) (1.7) 1.7 THAI TB INTERNATIONAL 824 7.0 6.6 1.1 0.9 19.0 6.3 0.0 10.2 (14.2) (21.9) (7.6) 0.0 SIA SP SINGAPORE AIRLINES LTD 8,056 15.9 14.2 0.8 0.8 (22.8) 12.0 3.6 5.2 (3.0) (3.8) (10.2) (1.6) 293 HK CATHAY PACIFIC AIRWAYS 5,514 NA 12.7 0.7 0.7 (188.8) N/A 0.9 1.7 (1.8) (4.0) (9.0) (1.4) 670 HK CHINA EASTERN AIRLINES CO-H 9,338 11.9 8.5 1.0 0.9 (31.1) 40.3 0.9 7.3 (20.2) (13.3) (14.9) (6.0) 1055 HK CHINA SOUTHERN AIRLINES CO-H 10,730 11.7 8.1 0.9 0.8 (42.2) 43.2 1.4 7.0 (19.1) (1.5) (17.2) (4.7) 2610 TT CHINA AIRLINES LTD 1,898 27.7 N/A 1.0 N/A (2.5) N/A N/A 4.3 0.5 16.4 15.3 (1.8) 2618 TT EVA AIRWAYS CORP 2,222 12.0 N/A 1.1 N/A (0.7) N/A N/A N/ A (0.7) 7.5 11.7 (1.9) 003490 KS KOREAN AIR LINES CO LTD 2,733 N/A 7.7 0.9 0.8 106.2 885 0.7 (0.9) 3.5 18.9 17.9 (2.1) 020560 KS ASIANA AIRLINES 752 45.8 9.6 0.7 0.7 92.7 377.1 0.0 0.6 (9.4) (2.4) 2.5 (0.5) QAN AU QANTAS AIRWAYS LTD 6,557 9.1 8.3 2.3 2.0 11.3 10.0 3.5 25.3 (4.2) 0.0 (8.8) (1.7) Average (simple) 23.9 13.2 1.0 0.9 (5.9) 180.6 1.4 6.2 Low-Cost Carriers AAV TB ASIA AVIATION PCL 605 16.7 16.7 1.2 1.2 47.1 18.0 2.7 7.6 (7.0) (7.0) (18.4) (4.8) NOK TB NOK AIRLINES PCL 166 NA N/A N/A N/A N/A N/A N/A 29.0 (7.9) (16.4) (16.4) (3.3) AIRA MK AIRASIA BHD N/A N/A N/A N/A N/A N/A (9.2) N/A 18.9 N/A N/A N/A N/A CEB PM CEBU AIR INC 901 8.5 7.3 1.1 1.0 (28.8) 15.1 4.0 11.8 4.0 16.6 16.4 7.2 RYA ID RYANAIR HOLDINGS PLC 13,563 11.0 10.1 2.4 2.0 (21.5) 9.1 0.0 22.9 (8.0) (11.1) (32.5) (2.4) VAH AU VIRGIN AUSTRALIA HOLDINGS LT 1,130 23.8 21.1 1.6 1.4 (109.9) 12.5 0.0 6.0 2.7 (13.6) (11.6) 2.7 Average (simple) 15.0 13.8 1.6 1.4 (28.3) 9.1 1.7 16.0 Average FSC and LCC 16.7 10.9 1.2 1.1 (12.3) 118.3 1.5 10.5 Source: Bloomberg, Krungsri Securities

Krungsri Securities Research 5

Company Update | BA January 7 , 201 9

INCOME STATEMENT (Btm) 2016 2017 2018 F 2019 F 2020 F Turnover 24,692 24,932 25,425 26,606 27,616 Cost of sales (COGS) (18,015) (20,826) (20,633) (21,397) (22,169) Depreciation & amortization (1,068) (1,267) (1,349) (1,455) (1,568) Gross profit 5,609 2,839 3,443 3,753 3,879 S&A expense (3,836) (4,052) (3,983) (4,168) (4,326) Operating profit 1,773 (1,212) (540) (414) (447) Other operating income 1,721 1,644 1,979 1,998 2,101 EBIT 3,494 431 1,438 1,583 1,654 Interest expense (1,754) (1,840) (1,881) (1,926) (1,908) Interest income 171 117 127 132 152 Other income 0 0 0 0 0 Goodwill amortization 0 0 0 0 0 Pre -tax profit 2,597 (476) 492 707 946 Income tax on company & subsidiaries (433) (124) (135) (110) (148) Profit after tax 2,164 (600) 356 597 798 Minority interests (69) (58) (27) (35) (46) Share of associate net income 685 816 808 918 1,048 Preferred dividends 0 0 0 0 0 Recurring attributable net profit 2,095 (658) 330 562 752 Extraordinary items (327) 1,446 101 0 0 Reported net profit 1,768 788 431 562 752 Shares in issue (Y/E, m) 2,100 2,100 2,100 2,100 2,100 Shares in issue (weighted avg. m) 2,100 2,100 2,100 2,100 2,100 EPS (before extraordinary items, Bt) 1.00 (0.31) 0.16 0.27 0.36 DPS (Bt) 0.75 0.50 0.18 0.24 0.32 DPS/EPS (%) 89 133 89 89 89

CASH FLOW (Btm) 2016 2017 2018F 2019F 2020F Operating profit 1,773 (1,212) (540) (414) (447) Other operating income 1,721 1,644 1,979 1,998 2,101 EBIT 3,494 431 1,438 1,583 1,654 Depreciation & amortization 1,068 1,267 1,349 1,455 1,568 EBITDA 4,562 1,698 2,787 3,038 3,2 22 Notional cash taxes on ungeared operations (811) (530) (492) (476) (506) Net change in working capital (82) 8 149 341 326 CAPEX (4,303) (2,976) (2,137) (2,147) (2,257) Operating free cashflow (OpFCF) (633) (1,801) 307 756 785 Net interest income ad justed for tax impact (1,205) (1,317) (1,397) (1,429) (1,397) Net free cashflow (NetFCF) (1,838) (3,118) (1,090) (673) (613) Non -operating income (net of tax) 0 0 0 0 0 Equity income from associates 685 816 808 918 1,048 Investments (1,980) 4,120 0 0 0 Net change in other assets/liabilities 663 (563) 261 274 288 Other items (662) 1,437 0 0 0 Residual cashflow (RCF) (3,131) 2,692 (22) 520 723

Dividends (1,408) (987) (1,050) (384) (501) Equity capital raised 0 0 0 0 0 Other items 861 (3,390) 101 0 (0) Cashflow from financing (547) (4,378) (949) (384) (501)

Net change in cash (3,679) (1,685) (971) 135 223 Net cash/(debt) at YS (1,097) (4,775) (6,461) (7,431) (7,296) Ending net cash /(debt) (4,775) (6,461) (7,431) (7,296) (7,073)

Increase/(decrease) in cash & equivalents (2,574) (674) (42) 27 (1) (Increase)/decrease in debt (1,167) (1,074) (928) 108 224 NOPLAT (net op profit less adjusted tax) 2,683 (99) 946 1,107 1,148 Normalised OpFCF (est. maintenance CAPEX) 3,669 1,17 6 2,444 2,903 3,042 FCFE (free cashflow to equity) (1,964) 3,766 906 411 499

Krungsri Securities Research 6

Company Update | BA January 7 , 201 9

BALANCE SHEET (Btm) 2016 2017 2018F 2019F 2020F Cash & equivalents 10,670 9,996 9,954 9,981 9,980 A/C receivable 1,966 1,854 1,740 1,621 1,497 Inven tory 369 479 474 492 510 Others 1,188 2,052 2,093 2,190 2,273 Total Current Assets 14,192 14,381 14,261 14,284 14,260 Property and equipment 12,793 14,503 15,291 15,983 16,672 Investments & associates 31,688 27,568 27,568 27,568 27,568 Other assets 1,615 1,490 1,490 1,490 1,490 Goodwill 0 0 0 0 0 Total Assets 60,289 57,942 58,610 59,324 59,990

Short -term debt 465 583 401 475 258 A/C payable 2,687 2,816 2,790 2,893 2,997 Other current liabil ities 4,175 4,917 5,014 5,247 5,446 Total Current Liabilities 7,328 8,315 8,204 8,615 8,702 Long -term debt 15,060 16,016 17,127 16,944 16,937 Other liabilities 5,913 5,225 5,486 5,760 6,048 Total Liabilities 28,300 29,556 30,817 31,319 31,686

Share capital 2,100 2,100 2,100 2,100 2,100 Share premium 9,319 9,319 9,319 9,319 9,319 Revaluation surplus 210 210 210 210 210 Translation adjustment 19,830 16,445 16,445 16,445 16,445 Retained earnings 454 238 (381) (203) 48 Total ordinary equity 31,913 28,313 27,694 27,871 28,123 Preferred equity 0 0 0 0 0 Minorities 76 73 99 134 180 Total equity & minorities 31,989 28,386 27,793 28,005 28,303

Accumulated depreciation 7, 374 8,447 9,795 11,251 12,818 BV per ordinary share (Y/E, Bt) 15.20 13.48 13.19 13.27 13.39 Adjusted book value ps (Y/E, Bt) 15.20 13.48 13.19 13.27 13.39

RATIOS (%) 2016 2017 2018F 2019F 2020F Growth Turnover 6.8 1.0 2.0 4.6 3.8 EBITDA 32.0 (62.8) 64.2 9.0 6.0 EBIT 33.2 (87.7) 233.5 10.1 4.5 Net profit (1.6) (55.4) (45.3) 30.5 33.8 EPS pre extraordinary items 42.1 (131.4) (150.1) 70.4 33.8 EPS (diluted) 42.1 (131.4) (150.1) 70.4 33.8 DPS 7.1 (33.3) (63.4) 30.2 33.8 Accounting ratios Cash profit margin 27.0 16.5 18.8 19.6 19.7 Gross profit margin 22.7 11.4 13.5 14.1 14.0 Operating profit margin 7.2 (4.9) (2.1) (1.6) (1.6) Net profit margin 7.2 3.2 1.3 2.1 2.7 Turnover/avg total assets (x) 0.4 0.4 0.4 0.5 0.5 ROA 3.0 1.3 0.7 1.0 1.3 ROE 5.6 2.6 1.5 2.0 2.7 S&A/turnover 15.5 16.3 15.7 15.7 15.7 Effective tax rate 16.7 (26.2) 27.5 15.6 15.6 Operating performance EBITDA margin 18.5 6.8 11.0 11.4 11.7 EBIT margin 14.2 1.7 5.7 6.0 6.0 NOPLAT margin (NOPLAT/Turnover) 10.9 (0.4) 3.7 4.2 4.2 Asset turnover (Turnover/avg Op assets) 6.4 4.0 3.3 3.4 3.5 ROCE (NOPLAT/avg Op assets) 70.1 (1.6) 12.4 14.1 14.5 ROCE incl. capitalized goodwill 70.1 (1.6) 12.4 14.1 14.5

Krungsri Securities Research 7

Company Update | BA January 7 , 201 9

EQUITY VALUATIONS (Bt) 2016 2017 2018F 2019F 2020F EPS 1.00 (0.31) 0.16 0.27 0.36 FDEPS 1.00 (0.31) 0.16 0.27 0.36 FDEPS growth (%) 42 (131) (150) 70 34 DPS 0.75 0.50 0.18 0.24 0.32 BVPS 15.20 13.48 13.19 13.27 13.39 Adjusted BVPS 15.20 13.48 13.19 13.27 13.39 Free cashflow to equity (FCFE) per share (0.94) 1.79 0.43 0.20 0.24

PE (x) 11.8 (37.6) 75.1 44.1 32.9 PE (fully diluted, x) 11.8 (37.6) 75.1 44.1 32.9 PE/FDEPS growth (x) 0.3 0.3 (0.5) 0.6 1.0 Yield (%) 6.4 4.2 1.6 2.0 2.7 P/BV (x) 0.78 0.88 0.89 0.89 0.88 P/ABV (x) 0.78 0.88 0.89 0.89 0.88 P/FCFE (x) (12.6) 6.6 27.3 60.2 49.6

ENTERPRISE VALUATIONS (Btm) 2016 2017 2018F 2019F 2020F Ordinary shares (m) 2,100 2,100 2,100 2,100 2,100 Share price (Bt) 22.70 17.10 11.80 11.80 11.80 Ordinary equity MV 47,670 35,910 24,780 24,780 24,780 MI & deferred taxes 76 73 99 134 180 Equity MV (adjusted ord) 47,746 35,983 24,879 24,914 24,960 Preferred equity 0 0 0 0 0 Debt 15,525 16,599 17,527 17,419 17,195 Enterprise Value 63,271 52,582 42,406 42,332 42,155 Net noncore assets 42,358 37,564 37,521 37,549 37,547 Core Enterprise Value (EV) 20,913 15,018 4,885 4,784 4,608 Turnover 24,692 24,932 25,425 26,606 27,616 EBITDA 4,562 1,698 2,787 3,038 3,222 EBIT 3,494 431 1,438 1,583 1,654 NOPLAT 2,683 (99) 946 1,107 1,148 OpFCF (633) (1,801) 307 756 785 OpFCF (normalized) 3,669 1,176 2,444 2,903 3,042 Op (core) capital employed (CE) 5,156 7,421 7,799 7,876 7,951 Avg. core capital employed 3,829 6,288 7,610 7,837 7,913 Core EV Multiples EV/Turnover (x) 0.8 0.6 0.2 0.2 0.2 EV/EBITDA (x) 4.6 8.8 1.8 1.6 1.4 EV/EBIT (x) 6.0 34.8 3.4 3.0 2.8 EV/NOPLAT (x) 7.8 (152.3) 5.2 4.3 4.0 EV/OpFCF (x) (33.0) (8.3) 15.9 6.3 5.9 EV/OpFCFnormalised (x) 5.7 12.8 2.0 1.6 1.5 EV/capital employed (YE, x) 4.1 2.0 0.6 0.6 0.6 EV/avg capital employed (x) 5.5 2.4 0.6 0.6 0.6

RISK MEASURES 2016 2017 2018F 2019F 2020F Equity multiplier (avg. total assets/avg. equity) 1.9 2.0 2.1 2.1 2.1 Net debt/equity & MI 0.1 0.2 0.3 0.3 0.2 Interest cover (x) Interest cover (EBIT & Int. Income/Int. Expense) 2.1 0.3 0.8 0.9 0.9 NOPLAT/interest paid 1.5 (0.1) 0.5 0.6 0.6 Debt service (OpFCF/net interest paid) 0 (1) 0 0 0 Short -Term Ratios (x) Current assets/current liabilities 1.9 1.7 1.7 1.7 1.6 Current assets less inventory/current liabilities 1.9 1.7 1.7 1.6 1.6 A/C receivable, days turnover 29.1 27.1 25.0 22.2 19.8 Inventory, days COGS 7.5 8.4 8.4 8.4 8.4 A/C payable, days COGS 54.4 49.3 49.3 49.3 49.3

Krungsri Securities Research 8

CG Rating 2017 Companies with CG Rating

ADVANC AKP ANAN AOT AP BAFS BANPU BAY BCP BTS BWG CFRESH CHO CK CNT CPF CPN CSL DELTA DEMCO DRT DTAC DTC EASTW EGCO GC GCAP GFPT GOLD GPSC GRAMMY GUNKUL HANA HMPRO ICC ICHI INTUCH IRPC IVL JSP KBANK KCE KKP KTB KTC LHFG LPN MBK MCOT MINT MONO NCH NKI NYT OTO PDJ PHOL PLANB PPS PRG PSH PSL PTG PTT PTTEP PTTGC PYLON Q-CON QH QTC RATCH ROBINS SAMART SAMTEL SAT SC SCB SCC SCCC SDC SE-ED SIS SITHAI SNC SPALI SPRC SSSC STEC SVI SYNTEC TCAP THANA THCOM THREL TISCO TKT TMB TNDT TOP TRC TRUE TSC TTCL TU TVD UV VGI WACOAL WAVE

2S AAV ACAP AGE AH AHC AIRA AIT ALT AMANAH AMATA AMATAV APCO ARIP ASIA ASIMAR ASK ASP AUCT AYUD BBL BCPG BDMS BEC BEM BFIT BJC BJCHI BLA BOL BROOK BRR BTW CEN CENTEL CGH CHARAN CHEWA CHG CHOW CI CIG CIMBT CKP CM CNS COL COM7 CPI CSC CSP CSS DCC EA EASON ECF ECL EE EPG ERW FN FNS FORTH FPI FSMART FVC GBX GEL GLOBAL GLOW

HARN HYDRO ILINK INET IRC IT ITD JCKH JWD K KGI KKC KOOL KSL

KTIS L&E LALIN LANNA LH LHK LIT LOXLEY LRH LST M MACO MAJOR MAKRO

MALEE MBKET MC MEGA MFC MFEC MOONG MSC MTC MTI NOBLE NOK NSI NTV NWR OCC OGC OISHI ORI PAP PATO PB PCSGH PDI PE PG PJW PLANET PLAT PM PPP PREB PRINC PT RICHY RML RS RWI S S & J SABINA SALEE SAMCO SAWAD SCG SCI SCN SEAFCO SEAOIL SENA SFP SIAM SINGER SIRI SMK SMPC SMT SNP SORKON SPC SPI SPPT SR SSF SST STA STPI SUC SUSCO SUTHA SWC SYMC SYNEX TAE TAKUNI TASCO TBSP TCC TEAM TFG TGCI THAI THANI THIP THRE TICON TIPCO TIW TK TKN TKS TMC TMI TMILL TMT TNITY TNL TOG TPAC TPCORP TRT TRU TSE TSR TSTE TSTH TTA TTW TVI TVO TWP TWPC U UAC UMI UP UPF UPOIC UWC VIH VNT WICE WINNER XO YUASA ZMICO

7UP AEC AEONTS AF AJ AKR ALLA ALUCON AMA AMARIN AMC APURE AQUA ARROW AS ASEFA ASIAN ASN ATP30 AU B BA BCH BEAUTY BH BIG BIZ BLAND BPP BR BROCK BTNC CBG CCET CCP CGD CITY CMR COLOR COMAN CPL CSR

CTW CWT DCON DIGI DNA EFORL EKH EPCO ESSO ETE FE FOCUS FSS GENCO

GIFT GJS GLAND GSTEL GTB GYT HPT HTC HTECH IFS IHL INSURE IRCP J JCK JMART JMT JUBILE KASET KBS KCAR KIAT KWC KYE LDC LEE LPH MATCH MATI M-CHAI MDX META METCO MGT MILL MJD MK MODERN MPG NC NCL NDR NEP NETBAY NPK NPP NUSA OCEAN PDG PF PICO PIMO PK PL PLE PMTA PRECHA PRIN PSTC QLT RCI RCL RJH ROJNA RPC S11 SANKO SAPPE SCP SE SGP SKR SKY SLP SMIT SOLAR SPA SPCG SPG SPVI SQ SRICHA SSC STANLY SUPER SVOA T TACC TCCC TCMC TIC TLUXE TM TMD TNP TNR TOPP TPA

TPBI TPCH TPIPL TPOLY TPP TRITN TTI TVT TYCN UOBKH UPA UREKA UT VIBHA

VPO WIIK WIN

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 2018

Companies that have declared their intention to join CAC

A ABICO AIE AJ AMATA AMATAV ANAN AOT APCO APCS ARROW ASIAN B BGRIM BJC BJCHI BLAND BLISS BM BPP BR BSBM BUI CEN CGH CHEWA CHG CHO CI COL COM7 CPR DDD EFORL EKH ESTAR FLOYD FN FPI FTE GJS GPI GSTEL GYT HARN ICHI ILINK ITEL JAS JTS KWC KWG LDC LEE LIT LRH MATCH MATI MBAX MFEC MILL MTC NCL NEP NNCL NWR PAP PK PL PLANB POST PRM PRO PYLON QTC ROJNA RWI SAPPE SCI SELIC SHANG SST STA STANLY SUPER SWC SYMC SYNEX THE THIP TKN TMC TNP TNR TOPP TRITN TTI TVO TWPC UEC UKEM UPA UWC VIH XO YUASA Companies certified by CAC

ADVANC AKP AMANAH AP ASK ASP AYUD BAFS BANPU BAY BBL BCH BCP BCPG BKI BLA BROOK BRR BTS BWG CENTEL CFRESH CIG CIMBT CM CNS CPALL CPF CPI CPN CSC CSL DCC DEMCO DIMET DRT DTAC DTC EASTW ECL EGCO EPCO FE FNS FSS GBX GC GCAP GEL GFPT GGC GLOW GOLD GPSC GUNKUL HANA HMPRO HTC ICC IFEC IFS INET INTUCH IRPC IVL K KASET KBANK KBS KCE KGI KKP KSL KTB KTC L&E LANNA LHFG LHK LPN M MAKRO MALEE MBK MBKET MC MCOT MFC MINT MONO MOONG MSC MTI NBC NINE NKI NMG NSI OCC OCEAN OGC PATO PB PCSGH PDG PDI PDJ PE PG PHOL PLANET PLAT PM PPP PPS PREB PRG PRINC PSH PSL PSTC PT PTG PTT PTTEP PTTGC Q-CON QH QLT RATCH RML ROBINS S & J SABINA SAT SC SCB SCC SCCC SCG SCN SE-ED SENA SGP SINGER SIRI SIS SITHAI SMIT SMK SMPC SNC SNP SORKON SPACK SPC SPI SPRC SRICHA SSF SSI SSSC SUSCO SVI SYNTEC TAE TASCO TCAP TCMC TFG TFI TFMAMA TGCI THANI THCOM THRE THREL TICON TIP TIPCO TISCO TKT TLUXE TMB TMD TMILL TMT TNITY TNL TOG TOP TPA TPCORP TRU TRUE TSC TSTH TTCL TU TVD TVI U UBIS UOBKH VGI VNT WACOAL WHA WICE N/A 2S 7UP AAV ABM ACAP ACC ADAM ADB AEC AEONTS AF AFC AGE AH AHC AI AIRA AIT AJA AKR ALLA ALT ALUCON AMA AMARIN AMC APEX APURE AQ AQUA ARIP AS ASAP ASEFA ASIA ASIMAR ASN ATP30 AU AUCT BA BAT-3K BDMS BEAUTY BEC BEM BFIT BGT BH BIG BIZ BKD BOL BROCK BSM BTNC BTW CBG CCET CCP CGD CHARAN CHAYO CHOTI CHOW CHUO CITY CK CKP CMAN CMO CMR CNT COLOR COMAN CPH CPL CPT CRANE CRD CSP CSR CSS CTW CWT D DCON DCORP DELTA DIGI DNA DOD DTCI EA EARTH EASON ECF EE EIC EMC EPG ERW ESSO ETE EVER F&D FANCY FC FMT FOCUS FORTH FSMART FVC GENCO GIFT GL GLAND GLOBAL GRAMMY GRAND GREEN GTB GULF HFT HPT HTECH HUMAN HYDRO ICN IEC IHL III INGRS INOX INSURE IRC IRCP IT ITD J

JCK JCKH JCT JKN JMART JMT JSP JUBILE JUTHA JWD KAMART KC KCAR KCM

KDH KIAT KKC KOOL KTECH KTIS KYE LALIN LH LOXLEY LPH LST LTX LVT

MACO MAJOR MANRIN MAX M-CHAI MCS MDX MEGA META METCO MGT MIDA MJD MK

ML MM MODERN MPG MPIC NC NCH NDR NETBAY NEW NEWS NFC NOBLE NOK NPK NPP NTV NUSA NVD NYT OHTL OISHI ORI OTO PACE PAE PAF PERM PF PICO PIMO PJW PLE PMTA POLAR POMPUI PORT PPM PRAKIT PRECHA PRIN PTL RAM RCI RCL RICH RICHY RJH ROCK ROH RP RPC RPH RS RSP S S11 SAFARI SALEE SAM SAMART SAMCO SAMTEL SANKO SAUCE SAWAD SAWANG SCP SDC SE SEAFCO SEAOIL SF SFP SGF SIAM SIMAT SKE SKN SKR SKY SLP SMART SMM SMT SOLAR SPA SPALI SPCG SPG SPORT SPPT SPVI SQ SR SSC SSP STAR STEC STHAI STPI SUC SUN SUTHA SVH SVOA T TACC TAKUNI TAPAC TBSP TC TCB TCC TCCC TCJ TCOAT TEAM TGPRO TH THAI THANA THG THL THMUI TIC TITLE TIW TK TKS TM TMI TMW TNDT TNH TNPC TOA TPAC TPBI TPCH TPIPL TPIPP TPOLY TPP TR TRC TRT TRUBB TSE TSF TSI TSR TSTE TTA TTL TTTM TTW TUCC TVT TWP TWZ TYCN UAC UMI UMS UNIQ UP UPF UPOIC UREKA UT UTP UV UVAN VARO VCOM VI VIBHA VNG VPO WAVE WG WHAUP WIIK WIN WINNER WORK WORLD WP WPH WR YCI YNP 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, 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, Fl. 27 249/171-172 Moo 5 Tambol Ta Rahad, Debaratana Road, Bangna Nua,Bangna, Bangkok Amphur Muang, Suphanburi, 72000 10260 Tel: 0-3596-7981 Fax: 0-3552-2449 Tel: 0-2763-2000 Fax: 0-2399-1448 Nakhon Ratchasima Rama II 168 Chomphon Road, Tambol Nai Muang, 111/917-919 Fl. 4 Rama II Road, Smaedum, Amphur Muang Nakhon Ratchasima, Bangkhuntien, Bangkok 10150 Nakhon Ratchasima 30000 Tel: 0-2013-7145 Fax: 0-2895-9557 Tel: 0-4425-1211-4 Fax: 0-4425-1215

Vibhavadi-rangsit Khon Kaen Bank of Ayudhya Public Company Limited 114 Sri Chan Road, Tambol Nai Muang, 123 Suntowers (B) Building, Vibhavadirangsit Road, Amphur Muang Khon Kaen, Khon Kaen 40000 Jompol, Jatujak, Bangkok 10900 Tel: 0-4322-6120 Fax: 0-4322-6180 Tel: 0-2273-8388 Fax: 0-2273-8399 Chiang Mai Chonburi 70 Chang Phuak Road, Tambol Sri Phum 64/17 Sukhumvit Road, Tambol Bang Plasoi, Amphur Muang Chiang Mai, Chiang Mai 50200 Amphur Muang, Chonburi 20000 Tel: 0-5321-9234-6 Fax: 0-5321-9247 Tel: 0-3312-6580 Fax: 0-3312-6588 Chiang Rai Hat Yai Branch 231-232 Thamalai Road, Tambol Wiang, 90-92-94 Nipat U Tit Nueng Road,Tambol Hat Yai, Amphur Muang Chiang Rai, Chiang Rai 57000 Amphur Hat Yai, Songkhla 90110 Tel: 0-5371-6489 Fax: 0-5371-6490 Tel: 0-7422-1229 Fax: 0-7422-1411 Phitsanulok 275/1 Phichaisongkram Road, Tambol Nai Muang, Amphur Muang Phisanolok, Phitsanulok 65000 Tel: 0-5530-3360 Fax: 0-5530-2580 Central line: Analyst Team Sector Coverage 662-659-7000 E-mail Isara Ordeedolchest, Head of Research Strategy ext. 5001 [email protected] Naphat Chantaraserekul Energy, Petrochemical ext. 5000 [email protected] Kittisorn Pruitipat, CFA, FRM Property, ICT, Contractor ext. 5019 [email protected] Jesada Techahusdin, CFA Banking, Consumer Finance, Insurance ext. 5004 [email protected] Sunthorn Thongthip InsuranceFood, Transp Insuranceortation ext. 5009 [email protected] Worrapong Tuntiwutthipong Electronic, Automotive, Commerce ext. 5016 [email protected] Karun Intrachai MediaUtilities Energy, Food ext. 5010 [email protected] Kitti Pitakteerabandit Transportation, Media ext. 5008 [email protected] Artit Jansawang Mid - Small cap, MAI ext. 5005 [email protected] Kaushal Ladha, CFA, Assistant Analyst Strategy Nalinee Praman, Assistant Analyst Mid - Small cap, MAI Chaiyot Jiwagkul Technical ext. 5006 [email protected] Fax 662-658-5643

Definition of Ratings 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