Company Guide Padini Holdings

Version 17 | Bloomberg: PAD MK | Reuters: PDNI.KL Refer to important disclosures at the end of this report

DBS Group Research . Equity 28 May 2020

HOLD (Upgrade from FULLY VALUED) Still not fashionable Last Traded Price ( 27 May 2020): RM2.74 (KLCI : 1,451.73) Price Target 12-mth: RM2.50 (-9% downside) (Prev RM2.80) Reasonably priced. We upgrade our recommendation for Padini Analyst Holdings Bhd (PAD) to HOLD with a lower TP of RM2.50. King Yoong CHEAH +60 32604 3908 [email protected] Although FY20 is undoubtedly a challenging year for the group What’s New given the Covid-19 pandemic concerns, we expect its  3QFY20 earnings dropped 52% y-o-y, mainly due to operations to start picking up from FY21 onwards. The stock reduced revenue during MCO period and reduced has dropped >15% on a YTD basis, which we believe has priced visitations to high traffic areas in the negatives. Furthermore, PAD could benefit from downtrading, as the brand is associated with trendy, good-  Cut FY20-22F earnings by 2-54% for adverse impact of quality and value-for-money products. Its net cash (excluding Covid-19 pandemic and weak consumer sentiment lease liabilities) per share of 68 sen as at end March 2020  Net cash per share (excluding lease liabilities) of 68 sen should help the group to withstand the near-term challenges. as at end-March to help weather near-term headwinds  Upgrade to HOLD with lower TP of RM2.50 Where we differ. Our FY20/21/22 earnings estimates are below

consensus in view of the subdued consumer sentiments which could take longer to recover. We cut our FY20/21/22 earnings estimates for the group by 54%/16%/2%, upon revising our Price Relative same store sales growth (SSSG) assumptions to -29%/32%/5% (1%/0.5%/0.5% growth previously). Our TP is also more conservative relative to consensus. We believe that our 12x PE target is justified, as PAD no longer fits the profile of a growth stock in view of the increasingly competitive operating environment.

Forecasts and Valuation Potential catalyst. Weaker-than-expected topline growth due to FY Jun (RMm) 2019A 2020F 2021F 2022F (1) lower demand for its product offerings, and (2) weaker- Revenue 1,783 1,293 1,635 1,764 than-expected rebound in consumer spending. EBITDA 254 150 235 270 Pre-tax Profit 219 95.6 183 222 Valuation: Net Profit 160 70.7 136 164 Post earnings revisions and rolling forward our valuation base Net Pft (Pre Ex.) 160 70.7 136 164 Net Pft Gth (Pre-ex) (%) (10.1) (55.9) 91.8 21.2 to FY21, our TP that is pegged to 12x FY21 EPS, drops to EPS (sen) 24.4 10.8 20.6 25.0 RM2.50. EPS Pre Ex. (sen) 24.4 10.8 20.6 25.0 EPS Gth Pre Ex (%) (10) (56) 92 21 Key Risks to Our View: Diluted EPS (sen) 24.4 10.8 20.6 25.0 Net DPS (sen) 11.5 10.0 11.5 11.5 Stronger-than-expected rebound in consumer spending and BV Per Share (sen) 110 111 120 133 profit margin comes in higher than expected. PE (X) 11.2 25.5 13.3 11.0 PE Pre Ex. (X) 11.2 25.5 13.3 11.0 At A Glance P/Cash Flow (X) 10.5 14.7 12.9 10.2 Issued Capital (m shrs) 658 EV/EBITDA (X) 5.2 12.0 7.4 6.1 Mkt. Cap (RMm/US$m) 1,803 / 415 Net Div Yield (%) 4.2 3.6 4.2 4.2 P/Book Value (X) 2.5 2.5 2.3 2.1 Major Shareholders (%) Net Debt/Equity (X) CASH CASH CASH CASH Yong Pang Chaun Holdings Sdn Bhd 43.7 ROAE (%) 23.3 9.7 17.9 19.7 Skim Amanah Saham Bumiputera 5.0 Earnings Rev (%): (54) (16) (2) iCapital.biz 3.5 Consensus EPS (sen): 19.7 22.4 24.4 Free Float (%) 56 Other Broker Recs: B: 7 S: 3 H: 3 3m Avg. Daily Val (US$m) 1.0 Source of all data on this page: Company, AllianceDBS, Bloomberg GIC Industry : Consumer Discretionary / Retailing Finance L.P

ed: CK/ sa: WMT, PY, CS Company Guide

Padini Holdings

WHAT’S NEW Soft earnings dragged by Covid-19 pandemic

Weak quarter due to Covid-19 pandemic. PAD reported financial crisis. The drop below the threshold implies earnings of RM17m for 3QFY20 (-52% y-o-y, -70% q-o-q). increasingly cautious consumer spending, which does not The y-o-y decline in earnings was mainly due to (1) revenue augur well for consumer discretionary companies like PAD. falling by 27% during the quarter compared with the With the on-going uncertainties, we are not surprised if the corresponding period last year, dragged by the CSI drops further in 2QCY20 and takes a long time to implementation of the Movement Control Order (MCO) since recover. 18 March 2020 and reduced visitations to malls prior to that Cut FY20-22 earnings by 2-54%. We have cut our due to concerns over the Covid-19 pandemic, and (2) adverse FY20/21/22 earnings estimates for the group by impact of MFRS16: Leases’ Adoption, which lowered its 54%/16%/2%, upon revising our same store sales growth earnings by RM4m. (SSSG) assumptions to -29%/32%/5% ( 1%/0.5%/0.5% No dividend was declared during the quarter. There is no growth previously) to reflect (1) the loss of sales in 4QFY20 dividend declared during the quarter. YTD, the group has (end June) during the MCO period, and (2) the declared a dividend per share (DPS) of 5 sen. In view of its implementation of social distancing and weakened consumer strong net cash balance of 68 sen/share as at end-March sentiment to impact its FY20/21 earnings. 2020 (excluding lease liabilities created under MFRS 16: We have assumed the group to make about RM21m losses in Leases, which we view as a pure accounting adjustments), we 4QFY20 due to temporary closure during the MCO period forecast that management will still pay a DPS of 10 sen (vs. and subdued sales when recommencing its operations during previous assumption of 11.5 sen) for FY20, which is the the CMCO period. lowest absolute dividend paid since FY14. On a positive front, PAD could benefit from downtrading, as Operations affected by MCO. PAD has temporarily suspended the brand is associated with trendy, good-quality and value- its operations during the 39-day enforcement period of the for-money products. MCO effective from 18 March till 3 May in response to the Covid-19 outbreak. The group has gradually opened its Upgrade to HOLD with lower TP of RM2.50. Post earnings outlets upon the introduction of the Conditional Movement revisions and rolling forward our valuation base to FY21, our Control Order (CMCO), which is a relaxed iteration of the TP that is pegged to 12x FY21 EPS, drops to RM2.50. Our PE MCO, starting from 4 May. target of 12x is close to its historical 5-year mean prior to the PE expansion in July 2017. We believe that our 12x PE target Implementation of social distancing to impact sales per is justified, as PAD no longer fits the profile of a growth stock outlet. We believe that the implementation of social in view of the increasingly competitive operating distancing in the Covid-19 era, such as (1) ensuring a environment. minimum distance between customers, and (2) limiting the number of customers per outlet during peak periods to Notwithstanding our conservative stance on the group’s near- reduce crowding when the group restarts operations during term earnings prospects, we note that the stock has dropped the CMCO period. >15% on a YTD basis, which we believe has priced in the negatives. Its net cash (excluding lease liabilities) per share of Furthermore, fitting and alteration services are not provided 68 sen as at end-March 2020 also should help the group to during this period, which could adversely impact customer’s withstand the near-term challenges. As such, we upgrade our shopping experience. We believe that these measures could recommendation for the stock to HOLD. reduce its sales per outlet.

Expect discretionary spending to be subdued. Being a company that focuses on non-essential consumer items, we are cautious that PAD’s topline growth is likely to be impacted by the subdued consumer spending.

The Malaysian Institute of Economic Research’s recently released Consumer Sentiment Index (CSI) for 1Q20 recorded a sharp contraction of 31 points q-o-q to a 32-year low of 51.1 in 1Q2020. The 31-point contraction is also the sharpest

quarter-on-quarter drop since 2Q2008, during the global

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Company Guide

Padini Holdings

Quarterly Income Statement (RMm) FY Jun 3Q2019 2Q2020 3Q2020 % chg yoy % chg qoq

Revenue 474 495 347 (26.8) (29.9) Cost of Goods Sold (296) (297) (199) (32.8) (32.9) Gross Profit 178 198 148 (16.6) (25.3) Other Oper. (Exp)/Inc (133) (120) (121) (8.7) 1.1 Operating Profit 45.0 78.4 27.0 (40.0) (65.6) Other Non Opg (Exp)/Inc 0.0 0.0 0.0 nm nm Associates & JV Inc 0.0 0.0 0.0 nm nm Net Interest (Exp)/Inc 2.10 (3.2) (2.9) nm 9.4 Exceptional Gain/(Loss) 0.0 0.0 0.0 nm nm Pre-tax Profit 47.1 75.2 24.1 (48.8) (68.0) Tax (12.4) (19.4) (7.5) (39.5) (61.3) Minority Interest 0.0 0.0 0.0 nm nm Net Profit 34.7 55.8 16.6 (52.2) (70.3) Net profit bef Except. 34.7 55.8 16.6 (52.2) (70.3) EBITDA 55.4 78.4 27.0 (51.3) (65.6) Margins (%) Gross Margins 37.5 40.1 42.7 Opg Profit Margins 9.5 15.8 7.8 Net Profit Margins 7.3 11.3 4.8

Source of all data: Company, AllianceDBS

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Company Guide

Padini Holdings

CRITICAL DATA POINTS TO WATCH Total floor space (k sq ft)

SSSG and number of new outlets are key revenue drivers. Like other fashion retailers, same store sales growth (SSSG) and the number of outlets opened in the financial year are the key revenue drivers for the group. In view of the Covid-19 pandemic and MCO, we estimate SSSG for FY20 to tumble -29% before rebounding by 32% in FY21. We also expect the group to open two outlets in FY20.

Brand Outlet could benefit from downtrading. We observe that consumers are increasingly looking for value in the competitive Revenue growth (%) apparel market. This bodes well for the expansion of the group’s value brand, Brands Outlet (BO), over the next 2-3 years.

Expanding to suburban cities. The group will focus on the BO chain over the next three years, to improve business scale, distribution network, and operating leverage, to strengthen its presence in the local apparel market.

Management sees business opportunities in the huge underserved markets in Malaysia’s suburban cities, and tapping these markets should keep it busy over the next few years. Once BO hits SSS growth (%) saturation point, management will review its growth strategy, including expanding its product lines and overseas business.

Potential waning of its mix-and-match bundling strategy. We are concerned that the popularity of its mix-and-match bundling strategy implemented in Padini Concept Store (PCS) will eventually taper off, which could drag down SSSG, given the slower-than- expected recovery in domestic consumer spending.

Margin compression remains a key concern. At present, the group sources about 70% of its products from China through its sourcing Gross profit margin (%) agents. Although we expect the on-going US-China trade war to help to mitigate the cost of inventories from China, PAD may need to increase its marketing costs to remain competitive. Furthermore, the group also engages in deep discounting and heavy promotional activities during sales seasons to clear its unsold products. As such, its margin could be volatile on a q-o-q basis.

Dividend per share (sen)

Source: Company, AllianceDBS

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Company Guide

Padini Holdings

Appendix 1: Padini’s share price vs FBM KLCI

RM Weak consumer PAD (LHS) FBMKLCI (RHS) sentiments and challenging business 7.10 environment Market 2,000 Strong earnings growth downturn supported by (1) due to benefiting from COVID-19 downtrading, (2) concerns 1,900 6.10 popularity of mix and and match strategy, and (3) political store expansion uncertain ties 1,800 5.10 1,700 4.10 1,600 3.10 1,500 Disappointing 1QFY19 results 2.10 1,400

1.10 1,300

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Jul-19

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Oct-13

Oct-14

Oct-15

Oct-16

Oct-17

Oct-18

Oct-19

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18 Apr-19 Apr-20 Source: Company, Bloomberg Finance L.P., AllianceDBS Padini’s share price vs quarterly reported revenue Remarks PAD’s share price performance is closely correlated to its PAD (LHS) Revenue (RHS) RM RM'm quarterly revenue growth. This is due the group’s ability to continue beat market expectations in growing its 7.00 550.0 topline through (1) store expansion, (2) popularity of its 500.0 product offerings and mix-and-match bundling strategy, 6.00 and (3) benefiting from downtrading. 450.0 5.00 400.0

4.00 350.0

300.0 3.00 250.0 2.00 200.0

1.00 150.0

Source: Company, Bloomberg Finance L.P., AllianceDBS

Padini’s share price vs quarterly reported EBITDA Remarks

PAD (LHS) EBITDA (RHS) The group’s share price performance is also highly RM RM'm correlated with the quarterly reported EBITDA, as 7.00 100 potentially higher raw material costs and selling & 90 6.00 distribution expenses could dampen its earnings 80 prospects, despite its strong revenue growth. 5.00 70 4.00 60 50 3.00 40 2.00 30 1.00 20

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Company Guide

Padini Holdings

Leverage & Asset Turnover (x) Balance Sheet: Strong balance sheet – net cash position. Even with the inclusion of lease liabilities, the group is still in a net cash position, which allows the group to (1) sustain its dividend policy of at least 10 sen per share, and (2) undertake outlet expansion without stretching its balance sheet.

Share Price Drivers: Stable margins – key share price driver. Margins could come under pressure due to aggressive sales campaigns to drive sales and maintain market leadership. Capital Expenditure

Sustaining high dividend payout. Management is committed to pay out a minimum DPS of 10 sen over the next few years, even if its earnings prospects remain sluggish, thanks to its: (1) strong cash-generating capability, and (2) net cash position.

Key Risks: Competitive sector. PAD continues to face strong competition from a large pool of retail brands in Malaysia.

Prolonged slump in consumer sentiment. Although the group ROE (%) has so far benefited from downtrading, a prolonged slump in consumer sentiment could dampen discretionary spending.

Company Background PAD is a >40-year-old Malaysia-based fashion retailer that offers , accessories and under the brands of Padini, Vincci, Seed, Miki, Padini Authentic, P&Co, PDI, etc.

Forward PE Band (x)

PB Band (x)

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Company Guide

Padini Holdings

Key Assumptions FY Jun 2018A 2019A 2020F 2021F 2022F

Total retail floor space (k 1,487 1,537 1,557 1,577 1,597 sq ft) Revenue growth (%) 6.88 2.80 (25.1) 26.5 7.86 SSS growth (%) (2.0) 4.00 (29.0) 32.0 5.05 Gross profit margin (%) 41.0 39.1 41.0 41.0 41.0 Dividend per share (sen) 11.5 11.5 10.0 11.5 11.5

Income Statement (RMm) Dragged by Covid-19 FY Jun 2018A 2019A 2020F 2021F 2022F pandemic, MCO and weak consumer sentiment Revenue 1,679 1,783 1,293 1,635 1,764 Cost of Goods Sold (991) (1,085) (763) (965) (1,041) Gross Profit 688 698 530 671 723 Other Opng (Exp)/Inc (455) (487) (419) (473) (489) Operating Profit 233 211 111 198 235 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc 6.93 8.46 (15.4) (14.4) (12.5) Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 240 219 95.6 183 222 Tax (61.5) (59.0) (24.9) (47.7) (57.8) Minority Interest 0.0 0.0 0.0 0.0 0.0 Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Profit 178 160 70.7 136 164 Net Profit before Except. 178 160 70.7 136 164 EBITDA 271 254 150 235 270 Growth Revenue Gth (%) 6.9 6.2 (27.5) 26.5 7.9 EBITDA Gth (%) 8.6 (6.5) (40.9) 56.4 15.1 Opg Profit Gth (%) 10.1 (9.5) (47.3) 78.1 18.7 Net Profit Gth (Pre-ex) (%) 13.2 (10.1) (55.9) 91.8 21.2 Margins & Ratio Gross Margins (%) 41.0 39.1 41.0 41.0 41.0 Opg Profit Margin (%) 13.9 11.8 8.6 12.1 13.3 Net Profit Margin (%) 10.6 9.0 5.5 8.3 9.3 ROAE (%) 29.6 23.3 9.7 17.9 19.7 ROA (%) 19.7 16.5 5.7 8.9 10.0 ROCE (%) 25.8 20.9 7.9 11.0 12.4 Div Payout Ratio (%) 42.5 47.2 93.0 55.8 46.0 Net Interest Cover (x) NM NM 7.2 13.8 18.8 Source: Company, AllianceDBS

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Company Guide

Padini Holdings

Quarterly / Interim Income Statement (RMm) FY Jun 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020

Revenue 474 517 338 495 347 Cost of Goods Sold (296) (316) (201) (297) (199) Gross Profit 178 200 137 198 148 Other Oper. (Exp)/Inc (133) (129) (106) (120) (121) Operating Profit 45.0 71.1 30.4 78.4 27.0 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 0.0 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc 2.10 2.20 (3.5) (3.2) (2.9) Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 47.1 73.3 26.9 75.2 24.1 Tax (12.4) (18.9) (7.3) (19.4) (7.5) Minority Interest 0.0 0.0 0.0 0.0 0.0 Net Profit 34.7 54.4 19.6 55.8 16.6 Net profit bef Except. 34.7 54.4 19.6 55.8 16.6 Dragged by Covid-19 EBITDA 55.4 82.1 65.5 78.4 27.0 pandemic, MCO and weak

consumer sentiment Growth Revenue Gth (%) 2.5 8.9 (34.6) 46.5 (29.9) EBITDA Gth (%) (31.6) 48.2 (20.2) 19.7 (65.6) Opg Profit Gth (%) (36.1) 58.0 (57.2) 157.9 (65.6) Net Profit Gth (Pre-ex) (%) (34.8) 56.8 (64.0) 184.7 (70.3) Margins Gross Margins (%) 37.5 38.7 40.4 40.1 42.7 Opg Profit Margins (%) 9.5 13.8 9.0 15.8 7.8 Net Profit Margins (%) 7.3 10.5 5.8 11.3 4.8

Balance Sheet (RMm) FY Jun 2018A 2019A 2020F 2021F 2022F

Net Fixed Assets 144 145 137 131 126 Invts in Associates & JVs 0.0 0.0 0.0 0.0 0.0 Other LT Assets 14.9 14.6 528 528 528 Cash & ST Invts 451 530 570 618 704 Inventory 257 272 198 250 270 Debtors 55.7 57.3 42.9 54.3 58.6 Other Current Assets 1.27 3.27 4.27 5.27 6.27 Total Assets 924 1,022 1,479 1,586 1,693

ST Debt 33.5 45.0 125 125 125 Creditor 217 229 167 211 228 Other Current Liab 10.9 13.9 14.9 15.4 17.4 LT Debt 3.56 2.56 436 436 436 Other LT Liabilities 5.81 6.81 7.81 9.31 9.31 Shareholder’s Equity 653 724 729 789 878 Minority Interests 0.0 0.0 0.0 0.0 0.0 Total Cap. & Liab. 924 1,022 1,479 1,586 1,693

Non-Cash Wkg. Capital 86.1 88.9 63.1 83.1 89.4 Net Cash/(Debt) 414 483 9.54 57.0 144 Debtors Turn (avg days) 13.1 11.6 14.1 10.8 11.7 Higher debt due to creation of lease liabilities under Creditors Turn (avg days) 84.0 78.2 100.0 74.4 79.7 MFRS 16: Leases Inventory Turn (avg days) 86.3 92.6 118.3 88.1 94.4 Asset Turnover (x) 1.9 1.8 1.0 1.1 1.1 Current Ratio (x) 2.9 3.0 2.7 2.6 2.8 Quick Ratio (x) 1.9 2.0 2.0 1.9 2.1 Net Debt/Equity (X) CASH CASH CASH CASH CASH Net Debt/Equity ex MI (X) CASH CASH CASH CASH CASH Capex to Debt (%) 137.3 84.1 5.4 5.4 5.4 Z-Score (X) 7.5 7.1 6.8 6.7 6.6

Source: Company, AllianceDBS

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Company Guide

Padini Holdings

Cash Flow Statement (RMm) FY Jun 2018A 2019A 2020F 2021F 2022F

Pre-Tax Profit 240 199 95.6 183 222 Dep. & Amort. 38.7 40.2 39.0 36.9 35.3 Tax Paid (60.3) (51.8) (24.9) (47.7) (57.8) Assoc. & JV Inc/(loss) 0.0 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. (45.1) (3.8) 25.8 (19.5) (7.3) Other Operating CF (22.0) (11.7) (12.6) (13.7) (15.6) Net Operating CF 151 172 123 139 177 Capital Exp.(net) (50.8) (40.0) (30.0) (30.0) (30.0) Other Invts.(net) 0.0 0.0 0.0 0.0 0.0 Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0 Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 Other Investing CF 279 11.7 12.6 13.7 15.6 Net Investing CF 229 (28.3) (17.4) (16.3) (14.4) Div Paid (75.7) (75.7) (65.8) (75.7) (75.7) Chg in Gross Debt (45.4) 11.5 0.0 0.0 0.0 Capital Issues 0.0 0.0 0.0 0.0 0.0 Other Financing CF (2.0) 0.0 0.0 0.0 0.0 Net Financing CF (123) (64.1) (65.8) (75.7) (75.7) Currency Adjustments 0.0 0.0 0.0 0.0 0.0 Chg in Cash 257 79.6 39.8 47.4 86.7 Opg CFPS (sen) 29.8 26.7 14.8 24.2 28.0 Free CFPS (sen) 15.2 20.1 14.1 16.6 22.3 Source: Company, AllianceDBS

Target Price & Ratings History

Source: AllianceDBS Analyst: King Yoong CHEAH

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Company Guide

Padini Holdings

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

Completed Date: 27 May 2020 21:22:21 (MYT) Dissemination Date: 27 May 2020 23:58:42 (MYT)

Sources for all charts and tables are AllianceDBS unless otherwise specified.

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Company Guide

Padini Holdings

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Disclosure of previous investment recommendation produced: 4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.

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

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RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Australia This report is being distributed in by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946.

DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws.

Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report has been prepared by an entity(ies) which is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Bank (Hong Kong) Limited, a registered institution registered with the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). DBS Bank Ltd., Hong Kong Branch is a limited liability company incorporated in Singapore.

For any query regarding the materials herein, please contact Carol Wu (Reg No. AH8283) at [email protected]

Indonesia This report is being distributed in by PT DBS Vickers Sekuritas Indonesia.

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

Wong Ming Tek, Executive Director, ADBSR

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

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Thailand This report is being distributed in by DBS Vickers Securities (Thailand) Co Ltd.

United This report is produced by AllianceDBS Research Sdn Bhd which is regulated by the Securities Commission Malaysia. Kingdom This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom.

In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication.

Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608 - 610, 6th Floor, International Gate Precinct Building 5, PO Box 506538, DIFC, Dubai, . DBS Bank Ltd., (DIFC Branch) is regulated Financial by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the Centre DFSA rulebook) and no other person may act upon it.

United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as Emirates defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent.

United States This report was prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.

Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

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DBS Regional Research Offices

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

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

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