March 21, 2016 OUTPERFORM (CPN TB ) Share Price: Bt48.25 Target Price: Bt58.0 (+20%)

Conquering Southeast Asia Company Update Company  Earnings expected to jump 23%/17% in FY16/17F, strongest growth among SE Asia peers despite fragile economy  Potential upside to earnings if CPN converts CPNRF into REIT, expected to be finalized by 2Q16  Reiterate OUTPERFORM and Bt58 TP based on DCF; attractive valuation at 22.4x FY16F PE vs 28.6x average over FY13-15

Most promising space developer in SE Asia CPN is primed for a rerating. It is expected to register the strongest earnings growth among SE Asia peers in FY16F (+23%) and FY17F (+17%) compared with 18% and 9% regional average, respectively. This would be driven by the opening of five shopping malls in FY15-16 Kittisorn PRUITIPAT, CFA, FRM that will expand total leasable area by 15%, 3-6% higher rents, and 662 - 659 7000 ext 5019 high occupancy rate of 95%. CPN has been registering positive [email protected] COMPANY RESEARCH | RESEARCH COMPANY earnings growth in the last seven consecutive years despite a shaky economy, suggesting limited downside to our forecasts. Synergies with Key Data , which owns leading retail and restaurant chains and 12-mth High/Low (Bt) 50.5 / 39.8 54% stake in CPN, would also ensure the success of future projects. Market capital (Btm/US$m) 218,790 / 6,277 3m avg Turnover (Btm/US$m) 251.7 / 7.2 Potential upside from converting CPNRF from a property fund into Free Float (%) 49.0 REIT Issue Shares (m shares) 4,488 The management is considering several options: (i) convert CPNRF Major shareholders: (27% stake) into a REIT, (ii) set up a new REIT, or (iii) raise capital at - CENTRAL HOLDING COMP 26.2 CPNRF to renovate existing properties to enhance yields. CPN is keen - STATE STREET CORP 5.2 - THAI NVDR CO LTD 4.8 on the first option as that would extend the life of CPNRF given that all the assets are leasehold. CPN would need to inject more assets and Share Price Performance the REIT would need to use debt to enhance yields to offset tax on dividends, which does not have under property fund. And, CPN would recognize gains from the sale of assets, possibly in 2H16. This would be an upside to our earnings forecast. This option may be finalized in 2Q16.

OUTPERFORM, DCF-based Bt58 TP implies 27x FY16F PE Our TP assumes 9.5% WACC and 5% LTG. We adjust FY17F earnings after reflecting latest details on new projects but there is limited impact on our TP. We like CPN for its (i) strongest earnings growth and ROE in the region, (ii) integrated business strategy with Central Group to

support future expansion, (iii) strong recurring income base, and (iv) YTD 1Mth 3Mth 12Mth clear expansion plan with a proven track record. Absolute (%) 2.7 7.8 10.9 15.6 Relative to index (%) (4.7) 1.0 3.3 25.3 Financial Summary (Btm)

Year to Dec 2014 2015 2016F 2017F 2018F Krungsri Securities vs Market

Sales (Btm) 22,308 24,283 28,434 31,398 33,673 Positive Neutral Negative Growth (%) 12 9 17 10 7 Market Recommend 22 0 0 EBITDA (Btm) 12,628 13,621 16,974 19,616 21,100 Krungsri Market % +/- Growth (%) 12 8 25 16 8 Target Price (Bt) 58.0 57.8 0.4 Recurring profit (Btm) 7,307 7,880 9,673 11,271 12,146 ’16 Net Profit (Btm) 9,673 9,350 3.5 Growth (%) 16 8 23 17 8 ’17 Net Profit (Btm) 11,271 10,774 4.6 FDEPS (Bt) 1.63 1.76 2.16 2.51 2.71 Growth (%) 16 8 23 17 8 Krungsri's earnings revision PE (x) 29.6 27.5 22.4 19.2 17.8 2016F 2017F DPS (Bt) 0.65 0.70 0.86 1.00 1.08 Earnings revision (%) - 0.8 Yield (%) 1.3 1.5 1.8 2.1 2.2 Source: Bloomberg, Krungsri Securities BVPS (Bt) 9.14 10.24 11.69 13.34 15.04 P/BV (x) 5.3 4.7 4.1 3.6 3.2

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 | CPN March 21 , 201 6

Why we like CPN

(i) FY16F earnings growth strongest among regional peers

We estimate earnings will surge 23% to Bt9.7bn in FY16 and grow by another 17% to Bt11.2bn in FY17. This would be driven by the opening of five shopping malls in FY15-16 that will expand total leasable area by 15%, 3-6% higher rents, and consistently high occupancy rate of 95%. This would be the strongest earnings among peers in the region, which could attract interest from regional funds and lead to a rerating of the share price. Note that we have ignored potential asset divestment gains, which would be upside risks to FY16F earnings.

CPN to register strongest FY16 earnings growth among regional peers Div Market PE P/BV EPS Growth Yield ROE Share Price Cap (x) (x) (%) (%) (%) Performance BB Ticker Name US$ 16F 17F 16F 17F 16F 17F 16F 16F 1M 3M 6M YTD CPN TB CENTRAL PATTANA PUB CO LTD 6,277 22.4 19.2 4.1 3.6 22.7 16.5 1.79 18.1 7.8 10.9 4.9 2.7 SF TB SIAM FUTURE DEVELOPMENT PCL 301 11.6 11.6 1.1 NA 11.8 0.0 0.5 10.9 (0.8) (2.5) 8.3 (5.6) SMPH PM SM PRIME HOLDINGS INC 13,362 24.6 22.0 2.7 2.5 20.5 11.7 1.3 11.3 0.2 (1.6) (4.0) (1.2) IGB MK IGB CORPORATION BHD 790 12.8 12.0 0.7 0.7 17.7 7.0 3.3 5.3 3.4 6.2 (5.1) 4.3 Source: Company data, Bloomberg, Krungsri Securities

(ii) Solid business model to support future expansion

Strong synergies with major shareholder Central Group which owns leading retail and restaurant chains, CPN has been consistently registering 94-98% occupancy rates at its malls over past nine years. This implies CPN has a successful business model, and we expect this to continue to support its new mall projects going forward. We assumed occupancy rate would remain high at 95% over FY16-18. This model is hard to replicate, in our view, and is one of the reasons why CPN has been able to retain its lead in the last several years.

Synergies with Central Group help to keep occupancy high

2,000,000 98 100 97 96 95 96 97 96 96 94 95 95 95 1,800,000 90 1,600,000 1,400,000 80 1,200,000 1,000,000 70 800,000 60 600,000 400,000 50 200,000 0 40 2011 2007 2008 2009 2010 2012 2013 2014 2015 2016F 2017F 2018F NLA (sqm) Occupancy rate (%) (RHS)

Source: Company data, Krungsri securities

(iii) Resilient earnings despite volatile economy

About 66% of CPN’s rental contracts by leasable area are at fixed rates, while the rest is based on a percentage of sales (i.e. revenue-sharing) with tenants having to meet minimum monthly sales requirement. This means the slow domestic consumption has limited impact on its revenue. This is a successful model as CPN has been registering positive earnings growth despite a volatile economy in the last five years; in fact, earnings growth had outpaced GDP and consumption growth.

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Company Update | CPN March 21 , 201 6

CPN’s earnings growth had outpaced GDP and consumption growth in the past five years %Growth (yoy) 2011 2012 2013 2014 2015 CPN - Core profit 8.3% 114.4% 42.6% 16.1% 7.8% Private consumption 1.8% 6.7% 1.0% 0.6% 2.1% Nominal GDP 4.6% 9.3% 4.5% 1.8% 2.8% Source: Company data, Krungsri securities

(iv) Converting CPNRF to REIT: a potential catalyst

The management is considering several options for CPNRF: (i) convert CPNRF (27% stake) into a REIT, (ii) set up a new REIT, or (iii) raise capital at CPNRF to renovate existing assets to enhance yields. CPN is keen on the first option as that would extend the life of CPNRF given that all the assets are leasehold, although CPN would need to inject more assets and the REIT would need to use debt to enhance yields to offset dividend tax. Dividend paid by property funds is tax- exempt. The conversion could rerate the stock as CPN would recognize extra gains from the sale of assets to the REIT, possibly in 2H16 in order to take advantage of the waiver on transfer fee which expire in 4Q16. We expect CPN to finalize this in 2Q16.

Expansion plan

Opening seven shopping malls over FY16-18, expanding NLA by 22%

CPN plans open one mall this year and three each in FY17 and FY18. These would expand total leasable area by 312,120 sq.m (+22%) to 1,702,247 sq.m. Three of the malls will be located in the provinces and one in ; locations for the rest will be announced soon but likely in . We estimate total CAPEX at Bt14.6bn-Bt16.8bn, to be funded by internal cash flow of Bt13bn p.a., debentures and/or bank loans. Given its its track record and low net D/E ratio of 0.4x, they should be able to finance the CAPEX.

Opening one project in FY16 New project in FY17 CentralPlaza Nakhonratchasima CentralPlaza Nakhonsrithammarat

Investment cost (Btm) 1,900 Investment cost (Btm) 5,000 Net leasable area Net leasable area (sq.m.) 26,000 (sq.m.) 56,000 Land size (rais) 51 (Freehold) Land size (rais) 65 (Freehold) Location Nakornsrithammarat Location Nakhonratchasima Opening (tentative) 3Q16 Opening (tentative) 3Q17

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

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Company Update | CPN March 21 , 201 6

New project in FY17 First overseas project (JV, 60% stake) to open in FY18 Central Phuket Phase 2 CentralPlaza i-City Selangor

Investment cost (Btm) 6,650 Investment cost (Btm) 8,300 Net leasable area (sq.m.) 63,000 Net leasable area (sq.m.) 89,700 Land size (rai) 57 (Leasehold) Land size (rai) 27.5 (Freehold) Location Phuket Location Selangor, Malaysia Opening (tentative) 4Q17 Opening (tentative) 4Q18

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

CAPEX estimated at Bt14.6-Bt16.8bn over FY16-18F Solid balance sheet to support future expansion 18.0 1.4 (Btm) (Btm) 16.0 40,000 40,000 1.2 14.0 1.0 30,000 30,000 12.0

20,000 20,000 10.0 0.8

8.0 0.6 10,000 10,000 6.0 0.4 0 0 4.0 0.2 2011 -10,000 2006 2007 2008 2009 2010 2012 2013 2014 2015 -10,000 2.0 2016F 2017F 2018F 0.0 0.0 -20,000 -20,000 2011 2006 2007 2008 2009 2010 2012 2013 2014 2015

-30,000 -30,000 2016F 2017F 2018F Capex Net profit Free cashflow (RHS) Interest coverage (x) (LHS) D/E (x)

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

Plan to develop more mixed-use projects

CPN plans to develop more mixed-use projects to maximize yields from currently vacant sites located next to its existing malls. They could be residential, and/or office developments depending on location. In January, CPN launched three condominium projects under the ESCENT brand in Chiangmai (400 units), Rayong (419 units) and Khonkaen (408 units) worth Bt3bn in total. Response has been positive. To date, 80% of the Chiangmai project has been sold, while the other two projects registered 50-60% take-up. Transfers will start in FY18.

ESCENT Condominium Projects

ESCENT , 400 units, 26-storeys ESCENT Rayong, 419 units, 25-storeys next ESCENT Khonkaen, 408 units, 24-storeys next to CentralFestival Chiangmai to CentralFestival Rayong next to CentralFestival Khonkaen

Source: Company data , Krungsri Securities

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Company Update | CPN March 21 , 201 6

Considering regional expansion ex-Malaysia

CPN’s overseas exposure is currently only in Malaysia (Selangor); the project is under construction. The management is keen to explore opportunities in and , although we believe this will not happen for at least another year as CPN conducts and considers the feasibility studies and acceptable risks. The overseas ventures will likely be joint ventures with local retail property developers, with CPN as property manager.

Regional ambitions

Source: Company data, Krungsri securities

Industry analysis

Occupancy rates remain resilient despite sluggish economy

At end FY15, the total retail space in Metropolitan Area (BMA) reached 7.1m sq.m., representing a 5.7% yoy increase. According to CB Richard Ellis, about 234,000 sq. m is expected to be completed by the end of this year, taking total retail space in BMA to 7.34m sq.m.

The overall occupancy rate of Bangkok retail properties had remained solid at 93.2% in 4Q15, up 2ppt from the previous quarter. This suggests shopping malls in Bangkok are still performing well despite the slower economy.

Occupancy rate remained solid in 4Q15 at 93.2% TOTAL MARKET DOWNTOWN MIDTOWN SUBURBS Total Supply (sqm) 7.1 million 1.5 million 2.0 million 3.6 million Total Take-Up (sqm) 6.6 million 1.3 million 1.9 million 3.4 million Total Vacancy (sqm) 0.5 million 0.2 million 0.1 million 0.2 million % Occupancy rate 93.2% 91.1% 92.8% 94.3% Source: CB Richard Ellis, Krungsri Securities

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Company Update | CPN March 21 , 201 6

Major competitors opening 10 shopping malls over FY16-20F

The Mall Group has budgeted Bt50bn CAPEX to add four new shopping malls.

TCC Land has announced it would develop three new projects at a budget of Bt7bn in FY17-18F.

Siam Future plans to develop Super Regional Mall with IKANO under a JV structure with an investment budget of Bt10bn.

Other players - Future Park and the Siam Piwat/CP/Magnolia JV - also plan to develop new shopping malls and mixed-use projects in Bangkok.

Major competitors will open least ten new shopping malls by FY20 Number of Investment New GFA (sqm) Year Strategy (Btm) Project City within the city malls in Bangkok The Mall 4 1,750,000 50,000 FY16-20 World iconic tourist destination for new malls in tourist destination SF 1 400,000 10,000 FY19-20 Expand 2-3 community malls per year JV with IKANO for super regional malls Expand mall adjoining FUTURE PARK 1 160,000 4,000 FY15 Use model of mall in CBD area for expand mall Mixed-use projects in tourist destination and fine TCC LAND 3 104 rais 7,000 FY17-18 dining concept Siam Piwat & CP & Plan to be Bangkok's iconic landmark 1 40 rais 35,000 FY17 Magnolia Mixed-use project (mall/ residential/ entertainment) Source: Company data, Krungsri securities

Company background

Thailand’s leading operator

CPN is the leading retail property developer in Thailand with about 21% market share in the BMA based on leasable mall space. It is the commercial property development arm of the Central Group. The Chirathivat family and the Central Group collectively hold 54% stake in CPN. Its core business is developing and managing shopping malls. CPN currently manages 29 shopping malls; 13 in BMA and 16 in the provinces (including Chiangmai, Chiangrai, – , Khonkaen, Phitsanulok, Phuket, and Udon Thani). The portfolio has a total leasable area of 1,390,127 sq.m.

CPN has 21% market share in BMA Central group has 26% stake in CPN as of 4Q15

CPN 21% Individuals 5% Local Funds 11% Chirathivat Family 28%

The Mall Group Other 8% 47%

Foreign Funds Seacon 30% Square 5% Siam Future Central Group 4% 26% Mega Fashion Future TCC Bangna Island Siam Park Land 3% 2% Paragon 4% 3% 3% Source: Company data, Krungsri Securities Source: Company data, Krungsri Securities

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Company Update | CPN March 21 , 201 6

Currently manages 29 shopping malls throughout Thailand Project Occupancy rate (%) 2010 2011 2012 2013 2014 2015 Retail Leasable area (sqm)

Ladprao 99 55,583 47,850 48,140 47,779 47,779 48,148 Ramindra 96 17,160 17,156 17,156 17,156 17,156 17,193 Pinklao 92 36,854 35,705 35,818 35,771 35,771 35,892 Pattaya Center 95 15,226 15,226 15,226 15,226 15,226 15,226 Chiangmai Airport 100 75,968 75,918 71,777 71,777 71,777 39,600 Rama III 93 18,192 18,394 18,192 17,353 17,353 18,476 Bangna 87 55,738 53,297 58,112 58,112 58,112 61,117 Rama II 100 5,937 5,937 5,937 5,937 5,937 5,937 CentralWorld 96 187,046 187,046 187,054 187,054 187,054 199,501 Rattanathibet 96 77,008 77,281 77,238 77,238 77,238 77,255 Chaengwattana 92 65,478 65,550 64,857 65,864 65,864 66,138 Pattaya Beach 98 57,993 57,150 57,161 56,914 56,914 57,557 Chonburi 98 39,762 40,294 40,386 40,392 40,392 40,383 Khonkaen 92 49,848 50,156 50,146 50,388 50,388 49,876 Udonthani 94 49,344 43,988 68,806 68,795 68,795 72,639 Chiangrai 99 23,515 21,459 21,459 21,459 22,540 Phitsanulok 95 27,418 24,974 25,161 25,161 26,382 Grand Rama IX 99 84,697 59,505 59,505 59,505 59,166 Suratthani 91 30,104 32,604 32,604 34,476 Lampang 96 21,612 21,604 21,604 22,270 Ubonratchathani 96 31,452 31,452 32,213 ChiangmaiFestival 94 65,556 65,556 66,338 Hatyai 88 66,956 66,956 69,830 Samui 93 26,921 31,688 Salaya 94 33,900 38,549 Rayong 94 30,553 WestGate (Bangyai) 92 82,690 East Ville (Ekkamai - Ramintra) 77 30,428 Phuket 1 96 38,066 Total 807,137 926,578 973,660 1,140,054 1,200,874 1,390,127 Source: Company data, Krungsri Securities

In addition to shopping malls, CPN also manages seven office buildings in Bangkok (169,447 sq.m.), two in Pattaya and Udon Thani (total of 561 rooms), and two residential projects (61 units). These are classified under non-core businesses. CPN also has investments in two property funds: Central Retail Growth Leasehold Property Fund (CPNRF, 26.7% stake) which invests in three of its retail malls and two of its office buildings, and CPN Commercial Growth Leasehold Property Fund (CPNCG, 25% stake) which invests in one grade A office building called The Office@CentralWorld .

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Company Update | CPN March 21 , 201 6

About 66% of rental contracts (by leasable area) is fixed

CPN splits its rental contracts into three categories: fixed rent (48% of NLA), consignment or percentage of sales (34%), and up-front payment/long-term leases which carry fixed rents (18%).

Fixed rent (49%) contracts – Rents are collected each month and each contract is for up to three years. The rental rate for this type of contract is usually increased by 5% p.a., but sometimes, unfavourable economic conditions for its tenants could make it challenging for CPN to raise rents. About 1/3 of its rental contracts (by NLA) expire each year.

Consignment or percentage of sales (34%) – Rents are collected monthly and each contract is for up to three years. Tenants who sign this type of contract are usually food court and cineplex operators, and fashion anchors such as Uniqlo or H&M. The rental percentage is between 10% and 30% of sales subject to minimum guaranteed rents.

Upfront payment or long-term leases (18%) – These contracts carry fixed rents. The total rental charge, some for up to 30 years, is paid upfront. CPN will realize this rental income on a straight-line basis throughout the contract period.

Going forward, CPN is trying to reduce the share of up-front payment or long-term leases in favor of short-term fixed rent or consignment contracts. This would help to lift rental rates, because upfront payment contracts carry relatively lower rents.

66% of rental structure is fixed Average rental rate grew by 4% p.a. over FY06-15

1,800 20%

1,600

1,400 15%

Long-term lease 1,200 18% 10% 1,000

Fixed rent 800 5% 48% 600

Consignment 400 0% 34% 200

0 -5% 2011 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016F 2017F 2018F Effective rents (Bt/sqm/mth) %growth

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

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Company Update | CPN March 21 , 201 6

Unique strength

Synergies with major shareholders to support future expansion

CPN’s major shareholders are the Central Group and Chirathivat family, who own 100% stake in Central Retail Corporation (CRC) and Central Marketing Group (CMG). They also hold 64% stake in Centara Hotel which owns Central Restaurant Group (CRG). The strong synergies with the Central Group help CPN to attract dynamic tenants (most of CPN’s malls almost fully occupied), increase shopper traffic, and command higher rents. CRG and CMG collectively account for 12% of CPN’s total leasable area as well as revenue.

Synergies within Central Group to support future expansion

Source: Company data, Krungsri securities Note: *Stake held by Central Group

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Company Update | CPN March 21 , 201 6

OUTPERFORM, TP Bt58 (based on DCF valuation)

Our TP assumes 9.5% WACC and 5% LTG and implies 27x FY16F PE. The LTG assumption is justified by CPN’s pricing power - its rental contracts expressly allow the company to raise rents by 15% every three years. We adjusted FY17F earnings after reflecting latest details on new projects but there is limited impact on our TP. We like CPN for its (i) strongest earnings growth and ROE in the region, (ii) integrated business strategy with Central Group to support future expansion, (iii) strong recurring income base, and (iv) clear expansion plan with a proven track record. Current valuation is attractive at 22.4x FY16F PE vs 28.6x in FY13-15 .

P/E Band P/BV Band

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

Peer table Div Market PE P/BV EPS Growth Yield ROE Share Price Cap (x) (x) (%) (%) (%) Performance BB Ticker Name US$ 16F 17F 16F 17F 16F 17F 16F 16F 1M 3M 6M YTD CPN TB CENTRAL PATTANA PUB CO LTD 6,277 22.4 19.2 4.1 3.6 22.7 16.5 1.79 18.1 7.8 10.9 4.9 2.7 SF TB SIAM FUTURE DEVELOPMENT PCL 301 11.6 11.6 1.1 NA 11.8 0.0 0.5 10.9 (0.8) (2.5) 8.3 (5.6) SMPH PM SM PRIME HOLDINGS INC 13,362 24.6 22.0 2.7 2.5 20.5 11.7 1.3 11.3 0.2 (1.6) (4.0) (1.2) IGB MK IGB CORPORATION BHD 790 12.8 12.0 0.7 0.7 17.7 7.0 3.3 5.3 3.4 6.2 (5.1) 4.3 Source: Company data, Bloomberg, Krungsri Securities

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Company Update | CPN March 21 , 201 6

Financial statement - Quarterly (Btm) 4Q14 1Q15 2Q15 3Q15 4Q15

Quarterly P&L (Bt m) Sales 5,755 5,761 5,848 6,071 6,602 COGS (inc dep'n) (2,994) (2,864) (3,022) (3,243) (3,505) Gross Profit 2,761 2,897 2,826 2,828 3,098 SG&A (1,230) (863) (858) (961) (1,349) Operating Profit 1,531 2,035 1,968 1,867 1,749 Net other income/expense 447 459 294 301 511 Net interest (75) (89) (97) (135) (164) Pretax profit 1,904 2,405 2,165 2,033 2,096 Income Tax (262) (413) (325) (369) (324) Associates 212 210 189 178 172 Minority interest (33) (55) (23) (26) (33) Profit after tax (pre-ex) 1,820 2,147 2,006 1,816 1,911 Extraordinaries, GW & FX 0 0 0 0 0 Reported net profit 1,820 2,147 2,006 1,816 1,911

Shares out (end Q, m) 4,488 4,488 4,488 4,488 4,488 Adjusted shares (m) 4,488 4,488 4,488 4,488 4,488

Pre-ex EPS 0.41 0.48 0.45 0.40 0.43 EPS 0.41 0.48 0.45 0.40 0.43

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Company Update | CPN March 21 , 201 6

INCOME STATEMENT (Btm) 201 4 2015 2016 F 2017 F 2018 F Turnover 22,308 24,283 28,434 31,398 33,673 Cost of sales (COGS) (7,597) (8,196) (8,315) (8,164) (8,597) Depreciation & amortization (4,019) (4,438) (5,134) (5,803) (6,501) Gross profit 10,691 11,649 14,984 17,431 18,575 S&A expense (3,667) (4,030) (4,724) (5,214) (5,589) Operating profit 7,025 7,618 10,259 12,217 12,986 Other operating income 1,584 1,565 1,580 1,596 1,612 EBIT 8,608 9,183 11,840 13,813 14,598 Interest expense (677) (509) (874) (874) (836) Interest income 61 24 151 124 90 Other income 0 0 0 0 0 Goodwill amortization 0 0 0 0 0 Pre-tax profit 7,993 8,699 11,117 13,063 13,852 Income tax on company & subsidiaries (1,378) (1,431) (2,223) (2,613) (2,770) Profit after tax 6,615 7,268 8,894 10,450 11,082 Minority interests (121) (137) (140) (143) (146) Share of associate net income 813 749 919 963 1,210 Preferred dividends 0 0 0 0 0 Recurring attributable net profit 7,307 7,880 9,673 11,271 12,146 Extraordinary items 0 0 0 0 0 Reported net profit 7,307 7,880 9,673 11,271 12,146 Shares in issue (Y/E, m) 4,488 4,488 4,488 4,488 4,488 Shares in issue (weighted avg. m) 4,488 4,488 4,488 4,488 4,488 EPS (before extraordinary items, Bt) 2 2 2 3 3 DPS (Bt) 1 1 1 1 1 DPS/EPS (%) 40 40 40 40 40

CASH FLOW (Btm) 201 4 2015 2016 F 2017 F 2018 F Operating profit 7,025 7,618 10,259 12,217 12,986 Other operating income 1,584 1,565 1,580 1,596 1,612 EBIT 8,608 9,183 11,840 13,813 14,598 Depreciation & amortization 4,019 4,438 5,134 5,803 6,501 EBITDA 12,628 13,621 16,974 19,616 21,100 Notional cash taxes on ungeared operations (1,524) (1,544) (2,376) (2,769) (2,924) Net change in working capital 428 1,151 1,061 896 747 CAPEX (11,497) (17,955) (14,230) (15,408) (15,572) Operating free cash flow (OpFCF) 33 (4,726) 1,430 2,335 3,351 Net interest income adjusted for tax impact (469) (371) (571) (594) (592) Net free cash flow (Net FCF) (436) (5,097) 859 1,741 2,759 Non-operating income (net of tax) 0 0 0 0 0 Equity income from associates 813 749 919 963 1,210 Investments (2,089) (74) (0) 0 0 Net change in other assets/liabilities 9,942 1,339 196 198 200 Other items 0 (47) 0 0 0 Residual cash flow (RCF) 8,231 (3,130) 1,975 2,902 4,168 Dividends (2,468) (2,917) (3,142) (3,869) (4,508) Equity capital raised 0 0 0 0 0 Other items (36) (0) 0 (0) (0) Cash flow from financing (2,504) (2,917) (3,142) (3,869) (4,508) Net change in cash 5,727 (6,047) (1,167) (967) (340) Net cash/(debt) at YS (17,977) (12,250) (18,298) (19,464) (20,431) Ending net cash/(debt) (12,250) (18,298) (19,464) (20,431) (20,771)

Increase/(decrease) in cash & equivalents 1,904 553 (790) (967) (1,340) (Increase)/decrease in debt 3,823 (6,600) (377) 0 1,000 NOPLAT (net op profit less adjusted tax) 7,084 7,639 9,464 11,044 11,674 Normalized OpFCF (est. maint. CAPEX) 7,265 8,309 9,967 11,310 11,715 FCFE (free cash flow to equity) 1 1 1 1 1

Krungsri Securities Research 12

Company Update | CPN March 21 , 201 6

BALANCE SHEET (Btm) 201 4 2015 2016 F 2017 F 2018 F Cash & equivalents 3,773 4,326 3,536 2,569 1,229 A/C receivable 1,404 1,250 1,250 1,250 1,250 Inventory 0 0 0 0 0 Others 1,841 1,762 2,187 2,415 2,590 Total Current Assets 7,018 7,337 6,973 6,234 5,069 Property and equipment 74,863 88,380 97,475 107,080 116,150 Investments & associates 5,444 5,517 5,517 5,517 5,517 Other assets 1,711 1,810 1,847 1,884 1,921 Goodwill 0 0 0 0 0 Total Assets 89,035 103,045 111,812 120,715 128,658 Short-term debt 4,683 5,169 6,000 6,000 5,000 A/C payable 828 904 911 895 942 Other current liabilities 8,615 9,457 10,936 12,076 12,951 Total Current Liabilities 14,126 15,530 17,847 18,971 18,893 Long-term debt 11,340 17,454 17,000 17,000 17,000 Other liabilities 21,821 23,259 23,492 23,727 23,964 Total Liabilities 47,287 56,244 58,339 59,698 59,857 Share capital 2,244 2,244 2,244 2,244 2,244 Share premium 8,559 8,559 8,559 8,559 8,559 Revaluation/Warrants/Treasury (40) (40) (40) (40) (40) Translation adjustment 0 0 0 0 0 Retained earnings 30,258 35,174 41,706 49,107 56,745 Total ordinary equity 41,021 45,937 52,468 59,870 67,507 Preferred equity 0 0 0 0 0 Minorities 727 865 1,005 1,147 1,293 Total equity & minorities 41,748 46,801 53,473 61,017 68,800 Accumulated depreciation (15,297) (18,443) (23,577) (29,380) (35,882) BV per ordinary share (Y/E, Bt) 9.14 10.24 11.69 13.34 15.04 Adjusted book value ps (Y/E, Bt) 9.14 10.24 11.69 13.34 15.04

RATIOS (%) 201 4 2015 2016 F 2017 F 2018 F Growth Turnover 12.0 8.9 17.1 10.4 7.2 EBITDA 11.7 7.9 24.6 15.6 7.6 EBIT 12.9 6.7 28.9 16.7 5.7 Net profit 16.1 7.8 22.7 16.5 7.8 EPS pre extraordinary items 16.1 7.8 22.7 16.5 7.8 EPS (diluted) 16.1 7.8 22.7 16.5 7.8 DPS 18.2 7.7 23.2 16.5 7.8 Accounting ratios Cash profit margin 65.9 66.2 70.8 74.0 74.5 Gross profit margin 47.9 48.0 52.7 55.5 55.2 Operating profit margin 31.5 31.4 36.1 38.9 38.6 Net profit margin 32.8 32.5 34.0 35.9 36.1 Turnover/avg. total assets (x) 0.3 0.3 0.3 0.3 0.3 ROA 8.8 8.2 9.0 9.7 9.7 ROE 17.5 16.8 18.1 18.5 17.7 S&A/turnover 16.4 16.6 16.6 16.6 16.6 Effective tax rate 17.2 16.4 20.0 20.0 20.0 Operating performance EBITDA margin 56.6 56.1 59.7 62.5 62.7 EBIT margin 38.6 37.8 41.6 44.0 43.4 NOPLAT margin (NOPLAT/Turnover) 31.8 31.5 33.3 35.2 34.7 Asset turnover (Turnover/avg Op assets) 0.4 0.4 0.4 0.4 0.4 ROCE (NOPLAT/avg Op assets) 14.2 14.1 14.9 15.3 14.5 ROCE incl. capitalized goodwill 14.2 14.1 14.9 15.3 14.5

Krungsri Securities Research 13

Company Update | CPN March 21 , 201 6

EQUITY VALUATIONS (Bt) 201 4 2015 2016 F 2017 F 2018 F EPS 1.6 1.8 2.2 2.5 2.7 FDEPS 1.6 1.8 2.2 2.5 2.7 FDEPS growth (%) 16.1 7.8 22.7 16.5 7.8 DPS 0.7 0.7 0.9 1.0 1.1 BVPS 9.1 10.2 11.7 13.3 15.0 Adjusted BVPS 9.1 10.2 11.7 13.3 15.0 Free cash flow to equity (FCFE) per share 1.0 0.8 0.5 0.6 0.7 Share price (Bt) – 48.25 PE (x) 29.6 27.5 22.4 19.2 17.8 PE (fully diluted, x) 29.6 27.5 22.4 19.2 17.8 PE/FDEPS growth (x) 1.8 3.5 1.0 1.2 2.3 Yield (%) 1.3 1.5 1.8 2.1 2.2 P/BV (x) 5.3 4.7 4.1 3.6 3.2 P/ABV (x) 5.3 4.7 4.1 3.6 3.2 P/FCFE (x) 49.1 62.4 92.1 74.6 68.4

ENTERPRISE VALUATIONS (Btm) 201 4 2015 2016 F 2017 F 2018 F Ordinary shares (m) 4,488 4,488 4,488 4,488 4,488 Share price (Bt) 46 47 47 47 47 Ordinary equity MV 204,204 210,936 210,936 210,936 210,936 MI & deferred taxes 727 865 1,005 1,147 1,293 Equity MV (adjusted ord) 204,931 211,801 211,941 212,083 212,229 Preferred equity 0 0 0 0 0 Debt 16,023 22,623 23,000 23,000 22,000 Enterprise value 220,954 234,424 234,941 235,083 234,229 Net noncore assets 9,217 9,843 8,769 7,773 6,409 Core enterprise value (EV) 211,738 224,581 226,172 227,311 227,820 Turnover 22,308 24,283 28,434 31,398 33,673 EBITDA 12,628 13,621 16,974 19,616 21,100 EBIT 8,608 9,183 11,840 13,813 14,598 NOPLAT 7,084 7,639 9,464 11,044 11,674 OpFCF 33 (4,726) 1,430 2,335 3,351 OpFCF (normalized) 7,265 8,309 9,967 11,310 11,715 Op (core) capital employed (CE) 48,554 59,581 67,704 76,245 84,391 Avg. core capital employed 50,000 54,068 63,642 71,974 80,318 Core EV multiples EV/Turnover (x) 9.5 9.2 8.0 7.2 6.8 EV/EBITDA (x) 16.8 16.5 13.3 11.6 10.8 EV/EBIT (x) 24.6 24.5 19.1 16.5 15.6 EV/NOPLAT (x) 29.9 29.4 23.9 20.6 19.5 EV/OpFCF (x) 6,356.1 (47.5) 158.2 97.3 68.0 EV/OpFCF normalized (x) 29.1 27.0 22.7 20.1 19.4 EV/capital employed (YE, x) 4.4 3.8 3.3 3.0 2.7 EV/avg capital employed (x) 4.2 4.2 3.6 3.2 2.8

RISK MEASURES 201 4 2015 2016 F 2017 F 2018 F Equity multiplier (avg. total assets/avg. equity) 2.2 2.2 2.2 2.1 2.0 Net debt/equity & MI 0.3 0.4 0.4 0.3 0.3 Interest cover (x) Interest cover (EBIT & int. incl/int. expense) 12.8 18.1 13.7 15.9 17.6 NOPLAT/interest paid 10.5 15.0 10.9 12.6 13.7 Debt service (OpFCF/net interest paid) 0.1 (9.8) 2.0 3.1 4.4 Short-term ratios (x) Current assets/current liabilities 0.5 0.5 0.4 0.3 0.3 Current assets less inventory/current liabilities 0.5 0.5 0.4 0.3 0.3 A/C receivable, days Turnover 23.0 18.8 16.0 14.5 13.5 Inventory, days COGS 0.0 0.0 0.0 0.0 0.0 A/C payable, days COGS 39.8 40.3 40.0 40.0 40.0

Krungsri Securities Research 14

Corporate Governance Report of Thai Listed Companies 2014

Thai Institute of Director (IOD)

BAFS BCP BTS CPN EGCO GRAMMY HANA INTUCH IRPC IVL KBANK KKP KTB MINT PSL PTT PTTEP PTTGC SAMART SAMTEL SAT SC SCB SE-ED SIM SPALI TISCO TMB TOP To recognize well performers, the list of companies attaining "Good", "Very Good" and "Excellent" levels of recognition without regulatory notation (from January 1, 2013 to October 22, 2014) is publicized.

AAV ACAP ADVANC ANAN AOT ASIMAR ASK ASP BANPU BAY BBL BECL BIGC BKI BLA BMCL BROOK CENTEL CFRESH CIMBT CK CNT CPF CSL DELTA DRT DTAC DTC EASTW EE ERW GBX GC GFPT GUNKUL HEMRAJ HMPRO ICC KCE KSL LANNA LH LHBANK LOXLEY LPN MACO MC MCOT NBC NCH NINE NKI NMG NSI OCC OFM PAP PE PG PHOL PJW PM PPS PR PRANDA PS PT QH RATCH ROBINS RS S&J SAMCO SCC SINGER SIS SITHAI SNC SNP SPI SSF SSI SSSC STA SVI TCAP TF THAI THANI THCOM TIP TIPCO TK TKT TNITY TNL TOG TRC TRUE TSTE TSTH TTA TTW TVO UAC VGI VNT WACOAL

2S AF AH AHC AIT AJ AKP AKR AMANAH AMARIN AMATA AP APCO APCS AQUA ARIP AS ASIA AYUD BEAUTY BEC BFIT BH BJC BJCHI BOL BTNC BWG CCET CGD CGS CHOW CI CKP CM CMR CSC CSP CSS DCC DEMCO DNA EA ESSO FE FORTH FPI GENCO GL GLOBAL GLOW GOLD HOTPOT HTC HTECH HYDRO IFS IHL INET IRC IRCP ITD KBS KGI KKC KTC L&E LRH LST MAJOR MAKRO MATCH MBK MBKET MEGA MFC MFEC MJD MODERN MONO MOONG MPG MTI NC NTV NUSA NWR NYT OGC OISHI PACE PATO PB PDI PICO PPM PPP PREB PRG PRIN PTG QLT QTC RCL SABINA SALEE SCBLIF SCCC SCG SEAFCO SEAOIL SFP SIAM SIRI SKR SMG SMK SMPC SMT SOLAR SPC SPCG SPPT SST STANLY STEC STPI SUC SWC SYMC SYNEX SYNTEC TASCO TBSP TEAM TFD TFI THANA THIP THREL TIC TICON TIW TKS TLUXE TMI TMT TNDT TPC TPCORP TRT TRU TSC TTCL TUF TVD TWFP UMI UP UPF UPOIC UT UV UWC VIH WAVE WHA WIN WINNER YUASA ZMICO Score Range Number of Logos Description - Excellent -  Very Good - Good - Satisfactory - Pass Below  No logo given N/A

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 of Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.

The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. Krungsri Securities Public Company Limited does not confirm nor certify the accuracy of such survey result.

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 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 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 Property, ICT ext. 5019 [email protected] Jesada Techahusdin, CFA Banking, Consumer Finance ext. 5004 [email protected] Sunthorn Thongthip Food, Transportation, Strategy ext. 5009 [email protected] Kaweewit Thawilwithayanon Renewable Energy, Contractor ext. 5010 kaweewit.thawilwithayanon @krungsrisecurities.com Worrapong Tuntiwutthipong Mid cap, Electronic, Automotive, ext. 5016 [email protected] Commerce Ittikorn Thepmani Mid cap, Media, Insurance ext. 5008 [email protected] Teerapol Udomvej, Assistant Analyst Healthcare, Tourism Songklod Wongchai Investment Strategy ext. 5003 [email protected] Artit Jansawang Small cap, MAI ext. 5005 [email protected] Apisak Limthumrongkul Technical ext. 5007 [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