China Display Optoelectronics | 334.HK

Rating Trading BUY Foldable under the spotlight but stay focused Target Price HKD 1.11 Current price HKD 0.90 Upside: 23.5% %  TCL to launch foldable smart devices in 2020, CDOT would benefit in Company Update medium term

Foldable display smart devices were under the spotlight in MWC 2019, as 11 March 2019 and unveiled their first ever foldable display . Meanwhile, according to CNET, TCLC (which is one of CDOT’s client) is working Hayman Chiu on at least 5 devices employing flexible displays, including 2 tablets, 2 smartphones and a flexible phone that could curve into a smartwatch. The [email protected] flexible handsets would use its own DragonHinge technology which uses a (852) 2235 7677 special mechanical housing designed to fold and bend smartphones and tablets in a variety of ways, and in a manner that should provide “effortless and Trading data seamless movement” in foldable phones. DragonHinge technology will be used in combination with custom flexible AMOLED displays that will be provided by 52-Week Range (HK$) 0.97/0.44 CSOT. This may imply that CDOT would benefit in medium term from these new 3 Mth Avg Daily Vol (m) 3.34 product launch which drove the share price soared >80% since end-January. No of Shares (m) 2,086.8 Market Cap (HK$m) 1,878.1 According to Global Market Insights’ research released in Jan 2019, the foldable Major Shareholders SZ China Star (65.0%) display market size is set to expand from >US$65mn in 2018 to >US$18bn by Auditors EY 2025, while global shipments are set to grow at >85% CAGR in 2019-2025. Result Due FY18: March 2019 Meanwhile, IHS expects the penetration rate of foldable AMOLED displays are expected to account for 0.001% of flexible AMOLED shipments in 2018, and would increase to 6% of total shipment in 2021. Though companies are Company description foreseeing the technology as the next key differentiation in their products, the Established in 2000 and listed in HKEx in June 2015, foldable AMOLED displays seems to be a blue ocean in the next round of China Display Optoelectronics (CDOT), is one of the upgrade, we are skeptical whether end consumers would be willing largest manufacturers of small-to-meidum sized( ≦ to pay a high price (: €2,299 & Fold: €2,000) for 10.1“) LCD modules in China. CDOT ranked 7th in foldable smartphones at an initial stage, which could hinder the demand. revenue amongst Chinese manufacturers in 1H18, with market share at 2.4%. CDOT’s current From CDOT’s perspective, the CSOT t4 (6th generation flexible clients include Huawei (ODM), TCLC & LG. CDOT LTPS-AMOLED display panel production line with designed capacity at 45k current owns 24 LCD module production line in glass units/month) would commence operation in 1H2019 and would enter mass Huizhou with annual capacity at ~78mn million pieces production in 1H20. Therefore, we would not see meaningful contribution from flexible AMOLED in FY19E. Price chart

HK$  Expects 2H18E result to improve and further picks up in FY19E on new 1.6 clients’ order ramp up 1.4 1.2

1.0 In 9M18, CDOT’s sales grew 6.8% Yoy to RMB2,554mn while shipment dropped 0.8 3.9% Yoy to 32.6mn pcs, both figures showed CDOT’s operation improved in 3Q18 0.6 (with sales up 44% Yoy, while volume grew 19.0%). The reason behind the 0.4 improvement was mainly due to CDOT began to ship laminated products to new 0.2

0.0

18 16 17

16 17 17 18 18 16 19

16 17 18

- - -

- - - -

- - -

- -

Korean client’s mid-range smartphones (which we believe to be Samsung) in Sept -

Jun Jun Jun

Mar Mar Mar Mar

Sep Dec Sep Dec Sep and drove CDOT’s revenue/volume up 57%/19.0% Yoy in September/3Q18. In Dec

3Q18, laminated modules accounted for ~85%/69% of total revenue/volume Sources: Bloomberg, CIRL shipment Yoy, while ASP grew 16% Yoy to ~RMB105/pc. We expect CDOT’s allocation from Korean client would further increase in 4Q18 and FY19E. FLASH NOTE represent short-term Meanwhile, CDOT announced in a press release in end January that they have st trading ideas by Cinda International entered the LTPS full-screen display module supplier chain of 1 tier Chinese Research which are distinguished including Huawei, and Vivo through CSOT, we believe this would bring further from our normal coverage. The improvement to CDOT’s product mix, ASP and GM in FY19E. recommended stocks may not be continually followed. In FY17 CDOT’s full screen products only accounted for ~3% of sales volume, it rose to 47% in 9M18 (~ to industry level at ~45%). Smartphone clients’ demand shift in display scale from 16:9 to 18:9 full screen would continue in FY19E. According to WitsView, full screen smartphone penetration rate would increase from 8.7% in 2017 to 71.6% in 2019E, we expect CDOT would also show similar figure in FY19E.

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We expect CDOT’s FY18E shipment volume to arrive at 55mn pcs (~3% Yoy), driven by 16.6% Yoy growth in 2H18E (3Q18: +18.7% Yoy; 4Q18E: +15.2% Yoy), while ASP would grow ~11% to RMB72.2 (which implies 2H18E ASP +18% Yoy vs +2.0 in 1H18), thanks to increased sales and volume contribution from laminated modules.

 Trading at >30% discount to leading players, turnaround story remains intact

We expect CDOT’s EPS to grow 55.7% CAGR in FY18E-FY21E, driven by gradual GM expansion from both business segments and enjoy economy of scale. After having rocketed 80% in the past month mainly due to investors’ anticipation of foldable display TAM, and its FY19E 12.3x PE (39% discount to to BOE and Shenzhen Tianma’s average FY19E PE) looks undemanding to us as CDOT’s turnaround story remain solid. We arrive its TP at HK$1.11 based on 15.2x FY19E PE (25% discount to BOE and Shenzhen Tianma’s average FY19E PE). We identify the following upside catalysts for CDOT: i) FY19E shipment guidance (expected to unveil in FY18E result) ; ii) 1Q19E shipment (due in Apr), iii) New Chinese customers’ order ramp up, and iv) Ramp up of Wuhan CSOT t4

Exhibit 1: TCL unveiled plans in MWC 2019 to launch foldable smart devices in 2020 Exhibit 1: Pork products sold in supermark et counters

Source: cnet,GSMarena

Exhibit 2: AMOLED penetration expected to increase while foldable AMOLED expected to account for ~6% of total flexible AMOLED shipment in 2021

Ex

100% 100% 1% 3% 2% 90% 7% 6% 90% 80% 32% 80% 37% 52.0% 50% 30% 29% 70% 58.0% 70% 65.0% 65% 71.0% 76.2% 74.0% 60% 75% 60% 84.6% 50% 50% 40% 40% 68% 30% 61% 62% 62% 30% 50% 20% 48.0% 35% 20% 42.0% 35.0% 10% 25% 23.8% 26.0% 29.0% 10% 15.4% 0% 0% 2015 2016 2017 2018E 2019E 2020E 2021E 2015 2016 2017 2018E 2019E 2020E 2021E Flat Curved Foldable Bendable/ Rollable

AMOLED TFT-LCD

Source: Witsview, IHS,CIRL

hibit 1:

Pork products sold in supermark Page 2 of 8 et counters

Exhibit 3: Full screen smartphone’s penetration rate would increase to >70% in 2019E

Exhibit100.0% 1:

92.1% Pork90.0% 87.7% 80.0% products70.0% 71.6%

60.0% sold in 50.0% supermark 44.6% 40.0%

et 30.0%counters 26.9% 22.6% 25.1% 20.0% 15.7% 10.0% 8.7%

0.0% 2.4%

2017 2018E 2019E 2020E 2021E

Full screen Notch design Source: WitsView, CIRL

Exhibit 4: CDOT’s revenue breakdown and growth assumption ExhibitYear to Dec (RMB1: mn) FY16A FY17A FY18E FY19E FY20E Segment Revene

PorkNon-laminated modules 1,332 1,291 670 773 769

productsLaminated modules 2,347 2,173 3,303 4,600 5,689 Group 3,679 3,464 3,973 5,373 6,459 sold in Segment Revenue Growth supermark Non-laminated modules -0.3% -3.0% -48.1% 15.4% -0.5% et counters Laminated modules 159.1% -7.4% 52.0% 39.3% 23.7% Group 64.1% -5.8% 14.7% 35.2% 20.2%

Shipment volume (Mn Units) Non-laminated modules 45.4 31.8 22.0 23.1 22.1

Yoy(%) - -29.9% -30.8% 5.0% -4.4% Laminated modules 29.2 21.6 33.0 42.9 51.5 Yoy(%) - -26.0% 52.8% 30.0% 20.1% Group 74.6 53.4 55.0 66.0 73.6 Yoy(%) - -28.4% 3.0% 20.0% 11.5% Source: Company data, CIRL estimates

Exhibit 5: Ramp up of laminated modules since 3Q17 (% of total shipment) supported ASP

80.0%Exhibit 1: 140.0

70.0% 124.3 120.0 60.0%Pork 104.3 105.5 100.0 101.0 50.0% 96.7 99.7 91.9 92.9 90.9 products 86.2 82.9 84.0 40.0% 80.0 79.3 76.9 78.9 73.6 74.4 73.8 70.9 69.8 30.0%sold in 67.2 60.0 58.6 55.0 20.0% 49.9 49.9 52.0 44.5 46.1 46.6 43.6 supermarket 40.0 42.4 39.7 42.7 40.6 40.1 33.9 36.8 10.0% 30.6 28.5 30.1 28.0 26.0 23.7 0.0% 20.0 24.1 counters 21.0

0.0

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 4Q17 1Q18 2Q18 3Q18 1Q13 1Q15 2Q15 2Q17 3Q17 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Laminated modules (% of volume shipment) Non-laminated modules Laminated modules Blended ASP

Source: Company data, CIRL

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Exhibit 6: We expect CDOT’s profitability to improve driven by increasing in-cell LTPS contribution

Exhibit9.0 (%) 1:

Pork8.0

products7.0

6.0 sold in 5.0 supermark et4.0 counters

3.0

2.0

1.0

0.0 *FY15A FY16A FY17A FY18E FY19E FY20E

Gross margin (reported) EBITDA EBIT Source: Company data, CIRL estimates

Exhibit 7: CDOT’s current component suppliers and customers Exhibit 1: Pork products sold in supermark et counters

Source: Company data, CIRL

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Exhibit 8: CSOT holds 53.8% stake in CDOT after shareholding restructure Exhibit 1: Before shareholding restructure Pork products sold in supermark et counters

After shareholding restructure

Source: Company data

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Financial Statement

Exhibit 7: Financial summary

Income statement Cash flow YearExhibit to Dec (RMB 1: mn) FY16A FY17A FY18E FY19E FY20E Year to Dec (RMB mn) FY16A FY17A FY18E FY19E FY20E Revenue 3,679 3,464 3,973 5,373 6,459 Pre-tax profit 122 132 70 148 211 GrossPork profit (reported) 206 280 179 296 388 Taxes paid (31) (20) (11) (23) (33) EBITDA 187 211 142 245 327 Depreciation (44) (49) (63) (85) (102) Depreciationproducts 44 49 63 85 102 Associates 0 0 0 0 0 EBIT 143 163 79 161 226 CFO bef. WC change 47 63 (4) 40 76 Netsold interest in income (exp.) (20) (31) (9) (12) (15) Change in working cap (92) (174) 252 (215) (25) Associates 0 0 0 0 0 Cashflow from operation (45) (111) 248 (174) 51 Exceptionals/others 0 0 0 0 0 CAPEX (74) (319) (250) (150) (151) Profitsupermark before tax 122 132 70 148 211 Free cash flow (119) (430) (3) (325) (100) Tax expenses (31) (20) (11) (23) (33) Dividends 36 34 19 39 54 Minorityet counters interest 0 5 5 5 5 Balance sheet adj. 274 173 23 81 55 Net profit 91 116 64 130 183 Shares issued 0 0 0 0 0 Dividends 36 34 19 39 54 Others 0 0 0 0 0 Net cash flow 192 (223) 40 (205) 9 Balance sheet Net cash (debt) start 91 282 60 99 (106) Year to Dec (RMB mn) FY16A FY17A FY18E FY19E FY20E Net cash (debt) at year-end 282 60 99 (106) (96) Cash & equiv 465 508 413 208 217 Trade receivables 990 1,115 1,174 1,658 1,930 Ratios Other receivables 0 1 1 1 1 Year to Dec FY16A FY17A FY18E FY19E FY20E Inventories 367 225 401 537 642 Growth rate (%) Other current assets 44 91 91 91 91 Revenue - (5.8) 14.7 35.2 20.2 Fixed assets 193 463 650 716 765 EBITDA - 12.9 (33.0) 73.2 33.4 Intangible assets 0 6 6 6 5 EBIT - 14.1 (51.4) 103.1 40.3 Investment, associates etc 61 53 56 54 55 Net profit - 27.0 (44.9) 103.9 40.5 Total assets 2,121 2,460 2,791 3,269 3,705 Fully diluted EPS - 17.6% -44.9% 100.5% 40.5% Margins (%) Account payables 1,320 1,128 1,615 2,020 2,372 Gross margin (reported) 5.6 8.1 4.5 5.5 6.0 Other payables 192 207 199 203 201 EBITDA 5.1 6.1 3.6 4.6 5.1 Short-term debt 120 390 255 255 255 EBIT 3.9 4.7 2.0 3.0 3.5 Other current liabs 52 36 36 36 36 Net margin 2.5 3.3 1.6 2.4 2.8 Long-term debts 63 59 59 59 59 Other ratios Deferred tax and others 0 0 0 0 0 ROE (%) 24.7 18.9 10.2 18.8 23.5 Other long-term liabs 6 27 3 3 3 ROA (%) 4.3 4.7 2.3 4.0 4.9 Total liabilities 1,753 1,846 2,168 2,577 2,927 Net gearing (%) (76.7) (9.7) (15.9) 15.2 12.4 Interest coverage (x) 7.1 5.2 8.6 13.0 15.2 Share capital 165 170 170 170 170 Receivables days 98.3 117.4 107.8 112.6 109.0 Reserves 203 329 338 408 494 Payables days 138.7 129.2 155.3 145.2 142.6 Shareholders' equity 368 498 508 578 663 Inventory days 38.6 25.8 38.6 38.6 38.6 Minorities 0 115 115 115 115 Effective tax rate (%) 25.6 15.5 15.5 15.5 15.5 Total equity 368 613 623 693 778 Net cash (debt) 282 60 99 (106) (96)

Source: Company data, CIRL estimates (*FY15 figures are data ended 18 months, therefore cannot be a direct comparison with FY16 figures)

Exhibit 8: China Display Optoelectronics’ 12 month Forward P/E Ratio Exhibit 1:

Pork45 12 mths Forward P/E Ratio avg. -1std. products40

35 sold in 30 supermark a et counters25 20 - +1std.

15

10

5 -1std. 0 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18

Source: Bloomberg, CIRL

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Exhibit 9: Peers comparison Exhibit 1: bloomberg Year Mkt Cap Price Share Price Movement (%) PER (x) Yield (%) code End (HKD mn) (HKD) 3M YTD FY15 FY16 FY17 FY18E FY19E FY20E FY16 FY17 FY18E FY19E FY20E

HKPork Listed Peers

LENOVOproducts GROUP 992 HK 03/2018 83,022 6.91 27.0 30.8 11.5 -76.8 18.3 -209.4 17.6 14.2 3.8% 3.8% 3.8% 2.4% 3.0% AAC TECHNOLOGIES 2018 HK 12/2017 56,684 46.75 (9.9) 2.9 15.0 12.2 9.3 12.1 12.2 10.7 2.7% 3.2% 4.2% 3.5% 3.3% FIHsold MOBILE LTD in 2038 HK 12/2018 7,886 0.96 11.6 17.1 4.2 7.0 -1.9 -1.9 -2.8 -4.1 7.0% 4.3% 0.0% 0.0% 0.0% FIT HON TENG LTD 6088 HK 12/2017 26,232 3.89 13.1 14.7 15.6 16.6 16.9 14.8 13.0 11.1 0.0% 0.0% 1.2% 1.9% 2.2% SKY LIGHT HOLDIN 3882 HK 12/2017 360 0.42 (19.2) (13.4) 1.4 6.4 -0.7 6.0 5.3 - 31.7% 7.6% 0.0% 0.0% 0.0% SUNNYsupermark OPTICAL 2382 HK 12/2017 98,771 90.05 22.1 29.5 102.9 65.5 29.2 33.3 21.9 17.1 0.3% 0.4% 0.8% 0.8% 1.2% TRULY INTL HLDGS 732 HK 12/2017 4,769 1.45 21.8 52.6 5.0 7.2 68.1 7.4 5.0 8.5 6.9% 6.2% 0.7% 2.9% 3.6% COOLPADet counters 2369 HK 12/2017 3,624 0.72 0.0 0.0 1.3 -0.8 -1.4 - - - 0.0% 0.0% 0.0% 0.0% 0.0% BYD ELECTRONIC 285 HK 12/2017 22,893 10.16 (4.5) 3.3 20.6 15.8 7.7 8.5 7.6 6.8 0.0% 1.6% 2.6% 2.0% 2.4% TONGDA GROUP HLD 698 HK 12/2017 5,637 0.87 3.6 11.5 6.9 5.0 5.2 9.4 6.0 5.2 4.3% 6.0% 6.2% 4.5% 5.5% JU TENG INTL HDG 3336 HK 12/2017 2,414 2.07 (7.6) (1.9) 2.7 4.6 29.6 31.4 10.5 8.7 7.2% 4.8% 3.9% 2.2% 2.9% KARRIE INTL HLDG 1050 HK 03/2018 2,350 1.18 11.3 12.4 31.1 20.0 14.0 - - - 1.9% 3.0% 4.7% 0.0% 0.0% Q TECHNOLOGY GRO 1478 HK 12/2017 7,752 6.85 55.7 53.9 55.0 31.8 14.9 207.6 18.3 14.2 0.0% 0.6% 0.6% 0.1% 0.9% VITAL MOBILE HOL 6133 HK 12/2017 536 0.63 12.5 (4.5) 2.1 26.9 -4.2 - - - 8.3% 9.4% 0.0% 0.0% 0.0% COWELL 1415 HK 12/2017 1,189 1.43 40.2 53.8 2.5 5.4 5.6 6.2 5.1 4.4 0.0% 5.6% 4.8% 3.8% 4.7% WAI CHI HOLD 1305 HK 12/2017 278 1.28 33.3 7.6 -6.7 42.7 12.8 - - - 1.6% 0.0% 0.0% 0.0% 0.0% TK GROUP HOLDING 2283 HK 12/2017 3,525 4.23 (4.9) (0.7) 18.4 16.9 11.8 9.3 8.1 7.0 2.4% 3.3% 4.0% 5.0% 5.7% KA SHUI INTL HLD 822 HK 12/2017 353 0.40 11.3 12.9 -5.6 6.0 10.4 - - - 0.0% 0.0% 0.0% 0.0% 0.0% SAS DRAGON HLDG 1184 HK 12/2017 1,621 2.59 5.7 9.7 20.1 8.0 5.3 - - - 2.7% 3.9% 7.7% 0.0% 0.0% PANASIALUM HOLDI 2078 HK 12/2017 732 0.61 (11.6) (16.4) -2.2 -5.5 -4.7 - - - 0.0% 0.0% 0.0% 0.0% 0.0% SCUD GROUP LTD 1399 HK 12/2017 392 0.36 24.1 28.6 8.3 -2.8 16.1 - - - 0.0% 0.0% 0.0% 0.0% 0.0% SIM TECH GROUP 2000 HK 12/2017 900 0.36 22.0 14.3 14.2 11.9 8.3 - - - 0.0% 2.8% 4.4% 0.0% 0.0% WILLAS-ARRAY ELE 854 HK 03/2018 311 3.65 4.3 7.4 9.4 -4.2 8.1 - - - 7.9% 0.0% 7.7% 0.0% 0.0% Average 14,445 11.4 14.2 17.4 17.2 16.2 31.4 10.9 9.8 6.3% 4.1% 3.8% 2.6% 3.2%

CHINA DISPLAY OP 334 HK 12/2017 1,941 0.93 82.4 86.0 - 16.7 14.4 26.1 12.9 9.2 2.3% 2.1% 1.2% 2.3% 3.3%

LCD panel suppliers

SAMSUNG ELECTRON 005930 KS 12/2018 1,807,135 302.71 8.6 12.9 17.5 6.6 6.6 6.4 9.8 8.3 0.8% 0.8% 0.8% 3.3% 3.4% LG DISPLAY CO LT 034220 KS 12/2018 52,115 145.65 23.8 16.6 7.9 -35.3 -35.3 -27.6 -51.7 25.9 0.0% 0.0% 2.1% 2.4% 2.2% JAPAN DISPLAY 6740 JP 03/2018 4,124 4.87 32.7 (4.2) -3.4 -5.2 -5.2 -0.2 -5.8 -13.1 0.0% 0.0% 0.0% 0.0% 0.0% SHARP CORP 6753 JP 03/2018 45,844 86.10 (7.4) 10.6 -0.9 12.2 12.2 9.4 9.3 9.9 0.0% 0.0% 0.0% 0.0% 0.8% INNOLUX 3481 TT 12/2018 25,267 2.54 (2.0) 2.9 9.5 44.4 44.4 34.3 -18.7 -20.1 0.0% 0.0% 2.6% 2.5% 0.4% AU OPTRONICS 2409 TT 12/2018 28,100 2.92 (6.9) (6.5) 23.4 10.6 10.6 9.6 -34.0 -38.4 0.0% 0.0% 4.0% 7.0% 1.9% TRULY INTL HLDGS 732 HK 12/2017 4,769 1.45 21.8 52.6 5.0 278.8 278.8 7.4 5.0 8.5 0.0% 0.0% 6.7% 2.9% 3.6% BOE TECHNOLOGY-B 200725 CH 12/2017 166,275 3.15 31.8 38.8 55.5 49.9 12.6 23.2 19.9 13.7 0.0% 0.0% 0.0% 1.8% 0.7% TIANMA-A 000050 CH 12/2017 42,457 20.73 69.5 80.9 34.3 27.6 27.6 22.3 20.6 17.2 0.0% 0.0% 0.0% 0.6% 0.6% SHENZHEN O-FIL-A 002456 CH 12/2017 45,623 16.82 40.2 56.7 74.1 27.2 27.2 20.3 15.1 12.0 0.0% 0.0% 0.6% 0.6% 0.8% Average 46,064 22.6 27.6 28.4 57.2 52.5 16.6 13.3 13.6 N/A N/A 0.0 0.0 0.0

CHINA DISPLAY OP 334 HK 12/2017 1,690 0.81 (5.8) (27.0) - 16.7 14.4 26.1 12.9 9.2 2.3% 2.1% 1.2% 2.3% 3.3%

Source: Bloomberg, CIRL estimates

R isk Factors

Downside risks include: 1) Increasing competition from PRC peers; 2) Greater than expected ASP pressure ; 3) Slow down in clients’ smartphone shipment and 4) Slower than expected ramp up/ delay in Wuhan CSOT t6

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Rating Policy

Rating Definition Buy Outperform HSI by 15% Stock Rating Neutral Between -15% ~ 15% of the HSI Sell Underperform HSI by -15% Accumulate Outperform HSI by 10% Sector Rating Neutral Between -10% ~ 10% of the HSI

Reduce Underperform HSI by -10%

Analysts List

Hayman Chiu Research Director (852) 2235 7677 [email protected]

Lewis Pang Associate Director (852) 2235 7847 [email protected] Kenneth Li Senior Research Analyst (852) 2235 7619 [email protected] Farica Li Research Analyst (852) 2235 7617 [email protected] Leanna Xiao Research Analyst (852) 2235 7719 [email protected] Chloe Chan Research Analyst (852) 2235 7170 [email protected] Edith Li Research Analyst (852)2235 7515 [email protected]

Analyst Certification

I, Hayman Chiu, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was / were, is / are or will be directly or indirectly, related to the specific recommendations or views expressed in this report / note.

Disclaimer

This report has been prepared by the Cinda International Research Limited. Although the information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable, Cinda International cannot and does not warrant the accuracy or completeness of any such information and analysis. The report should not be regarded by recipients as a substitute for the exercise of their own judgment. Recipients should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. The report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Any opinions expressed in this report are subject to change without notice. The report is published solely for information purposes, it does not constitute any advertisement and should not be construed as an offer to buy or sell securities. Cinda International will not accept any liability whatsoever for any direct or consequential loss arising from any use of the materials contained in this report. This document is for the use of intended recipients only, the whole or a part of this report should not be reproduced to others.

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