Tai Hing Group | 6811.HK

Rating Not Rated Multi-brand strategy to drive growth Target Price - Current price HKD 2.04

Operate multi-brand through self-development, acquisition and Company Visit licensing agreement

Tai Hing Group (THG) currently runs 9 brands (self-developed 6 brands, 2 30 July 2019 through acquisitions and 1 through licensing agreement) with >190 restaurants network in , , and . In FY16-FY18, THG’s Hayman Chiu revenue and adjusted net profit (excl. one-off gain on investment property disposal and listing expenses) grew at 11.5%/18.7% CAGR to [email protected] HK$3,126mn/HK$153mn. The stable growth was driven by store counts grew at (852) 2235 7677 10.3% CAGR together with a low-single digit SSSG in Hong Kong. During the track record period, THG had a stable seat turnover rate of 5.0-5.4x (7.6x-7.8x in Trading data Hong Kong, 2.4x-2.5x in China), in which Men Wah Bing Teng and Pho Le’s seat turnover rate achieved >10x on average. 52-Week Range (HK$) 3.01/1.92 3 Mth Avg Daily Vol (m) 20.1 Future growth driven by store expansion, launch of new lines in fast No. of Shares (m) 1,000.0 growing brands; Recent Hong Kong political unrest would hit near term Market Cap (HK$m) 2,040.0 SSSG Major Shareholders Chan Wing On & Assoc (52.4%) During FY16-FY18, Tai Hing’s total number of store counts grew at ~10.3% Auditors EY CAGR to 185 stores (FY17: +16 ; FY18 :+17), with Tai Hing took up ~60% of total store counts in FY18 while TeaWood, Trusty Congee King, Men Wah Bing Teng Result Due 1H19: Aug 2019 and Pho Le each accounted for 17.3%/9.2%%/5.5%/5.4% of total store counts in FY18. Since 45% of the net IPO proceeds would be allocated to opening new Company description restaurants, we expect Men Wah Bing Teng and Pho Le would be the main Established in 1989 and listed on the Main Board of contributor of net store openings in Hong Kong, while Tai Hing and TeaWood the Hong Kong Stock Exchange in June 2019, Tai store expansion would be gradual. According to the prospectus, THG plans to Hing Group (THG) gradually expanded from a siu mei open 105 stores (Hong Kong: 63, China: 36) and reach 290 by FY21E, which style restaurant to the largest multi-brand casual represents 16.1% CAGR from FY18. dining restaurant operators in Hong Kong, and established a chain of over 190 restaurants network in Meanwhile, THG recently introduced TeaWood Deluxe, which is the premium Hong Kong, Mainland China, Macau and Taiwan. Tai version of TeaWood (avg. ticket price HK$100-200 vs. HK$51-100 for Hing currently operates 9 brands through in-house TeaWood). It co-operates with the local Tourbillon brand and focuses on delicate development, acquisitions, acquisition and licensing Taiwanese and western fusion cuisine with the quality ingredients. Through our including “TeaWood”, "Trusty Congee King”, “Men Wah Bing Teng”, “Phở Lê”, “Tokyo Tsukiji”, “Fish & channel check, TeaWood Deluxe received good customer feedback in Openrice Farmer”, “ Rice Rule” and “Hot Pot Couple. app. THG is also considering to adopt similar strategy in other brands, e.g. Men Wah Bing Teng. Despite THG continue to grow through store expansions, we also view the launch of premium lines in fast growing brands such as TeaWood (thru Price chart

TeaWood Deluxe) and Men Wah Bing Teng would be another new growth drivers. HK$ 3.5 Enhance operating efficiency through stable menu, automation in 3.0 restaurants and food factories 2.5 2.0

THG strive to maintain both operating efficiency and consistency in food quality 1.5 through i) stable menu while introducing some seasonal specials each quarter ii) 1 .0 standardised operation processes for different brands, iii) implementation of 0.5

automated production processes in restaurants and food factories and iv) obtain 0.0

19 19 -

larger floor space in shopping malls to accommodate different brands so that - Jul logistics can be centralized. THG managed to achieve operating breakeven Jun within 2-4 months. Sources: Bloomberg, CIRL

THG is among the first to introduce automated food processing machinery including automated woks, programmed barbecued pork sauce mixers, programmed chicken poaching machines and poultry roasting ovens. The introduction of automated cooking machines not only help reduce the reliance on skilled chef, but also lowering the risk of obtaining occupational illness/ injury while maintaining the overall product quality .

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Two food factories in operation to suuport current operation and future expansion

THG currently has two factories (1 in Hong Kong and 1 in Dongguan, China). The Hong Kong factory has an area ~158k sq. ft, supporting all of THG restaurants in Hong Kong (~120 in FY18). With current capacity, together with i) increasing additional equipment (such as industrial pressure boilers, kettles and oven) and ii) increasing the numbers and employtee working hours, it would be able to further support 50-60 restaurants in Hong Kong, which is in-line with THG ‘s store expansion plan until FY21E.

The China food factory, which has an area ~253k sq. ft (floor area 60% larger than that of Hong Kong factory) and commenced operation in October 2018 and still undergoing ramp up. It would be able to further support 200 restaurants in China (vs. THG had 62 stores in FY18) and the production of certain food products for THG’s restaurants in Hong Kong.

Trading at FY19E 9.8x PE, ongoing political unrest suppress near term valuation

Having dropped >30% since IPO in end-June, Tai Hing is currently trading at FY18 13.3x PE (excl. one-off sales proceeds from investment properties and listing expenses) and FY19E 9.8x PE (based on our back of the envelope calculation and excl. listing expenses) , which is trading at 14%/45% discount vs. catering peers listed in Hong Kong. The ongoing political unrest in Hong Kong in the past 60 days already raise investors’ concern (local catering peers’ stock price dropped ~4.0% in the last 5 trading days vs. HSI dropped 1.4%) that this may deter consumer spending in 2H19, and we believe this near term overhang would continue to suppress THG’s valuation.

Exhibit 1: Tai Hing currently run 9 brands Exhibit 1:

Pork

products

sold in

supermark et counters

Source: Company prospectus

Exhibit 2: Use of proceeds Exhibit

1: Pork 10.0%

products 11.0% Open new restaurants

sold in 44.0% Enhancement & expansion of

food factory superma rket Current restaurant rennovation/ upgrade counters Working capital 35.0%

Source: Company prospectus, CIRL Page 2 of 11

Exhibit 3: Tai Hing’s key milestones Exhibit 1: Year Key milestones Pork 1989 - Mr. Chan and Mr. Yuen opened first restaurant under 'Tai Hing' brand in Sai Wan Ho products sold in 2004 - Opened first restaurant in China under 'Tai Hing' brand supermark2008 - Hong Kong Food Factory opened in Fo Tan ; Acquired 'Trusty Congee King' from independent 3rd party

et counters - Opened first 'Tokyo Tsukiji' restaurant in Mong Kok ; 'Trusty Congee King' in Wan Chai featured in the Michelin Guide Hong 2011 Kong & Macau for the first time

2012 - Opened first TeaWood restaurant in Mong Kok

2013 - The siu mei production unit of Hong Kong Food Factory obtained ISO 22000 certification

2014 - Opened first TeaWood restaurant in China - Opened first Fisher Farmer restaurant in Tsim Sha Tsui; Entered into the first of the Hong Kong Airport Tai Hing Franchise 2015 Agreements with our Tai Hing Franchise Partner and opened a 'Tai Hing' restaurant in HKIA - Opened first 'Trusty Congee King' restaurant in China; Acquired a standalone 'bing sutt' ( 冰室 ), Man Wah Bing Teng ( 文華冰 2016 廳 ) which was subsequently rebranded as Men Wah Bing Teng( 敏華冰廳 )

2017 - Opened first Vietnamese restaunrat 'Pho Le' in Kwun Tong

- Opened Mainland Food Factory in Dongguan ;Trusty Congee King' in Wan Chai has been conferred the Michelin Guide Bib 2018 Gourmand award for 2 consecutive years in Michelin Guide Hong Kong Macau 2018 Selection and Michelin Guide Hong Kong Macau 2019 Selection 2019 - Opened first Taiwanese hotpot restaurant under 'Hot Pot Couple' in Mong Kok; Opened first 'Tai Hing' restaurant in Taiwan

Source: Company prospectus, CIRL

Exhibit 4: Tai Hing’s store location in China, Hong Kong and Macau

Exhibit 1:

Pork

products

sold in

supermark et counters

Source: Company prospectus

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Exhibit 5: Tai Hing’s targets to open ~105 stores in FY19E-21E Exhibit 1: 350 Pork 350 300 290 products 300 253 sold250 in 218 250 98 supermark200 185 168 200 85 et counters152 73 150 150 62 59

100 100 185 163 142 122 50 50 108

0 0 FY16 FY17 FY18 FY19E FY20E FY21E FY17 FY18 FY19E FY20E FY21E Hong Kong China Macau Taiwan

Source: Company prospectus, CIRL

Exhibit 6: Famous menu for Tai Hing Restaurants Exhibit 1:

Pork

products sold

in

supermarket counters

Source: Company prospectus, CIRL

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Exhibit 9: Famous menu for TeaWood (Top) & Trusty Congee King (Bottom) Exhibit 1:

Pork

products

sold in

supermark et counters

Source: Company prospectus, CIRL

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Exhibit 9: Tai Hing launched a premier brand, TeaWood Deluxe, in K11 at TST Exhibit 1:

Pork

products

sold in

supermark et counters

Source: Openrice.com, CIRL

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Exhibit 10: Famous menu for Men Wah Bing Teng (Top) & Pho Le (Bottom) Exhibit 1:

Pork

products

sold in

supermark et counters

Source: Company prospectus, CIRL

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Exhibit 10: Peers’ profitability comparison

Exhibit 1: bloomberg Year ROE (%) ROA (%) Net Gearing (%) FY18 code End FY18 FY18 FY18 GM (%) OM (%) PM (%) Pork products HK listed catering peers sold in XIABUXIABU 520 HK 12/2018 21.6 15.5 (74.8) - 12% 10% HAIDILAOsupermark INTERNA 6862 HK 12/2018 107.6 31.4 (1.8) - 13% 10% AJISEN CHINA HOL 538 HK 12/2018 8.2 6.2 (41.2) 75% 28% 23% CAFE DE CORAL 341 HK 03/2019 14.0 11.1 (23.3) 12% 7% 5% FAIRWOODet counters HLDGS 52 HK 03/2019 30.6 18.1 (69.8) 14% 9% 8% HOP HING GROUP 47 HK 12/2018 28.9 15.2 (104.0) 63% 7% 5% TAO HEUNG 573 HK 12/2018 5.0 3.4 (19.0) 11% 3% 3% FUTURE BRIGHT 703 HK 12/2018 (1.6) (1.0) 24.9 70% -5% -5% TSUI WAH HOLDING 1314 HK 03/2019 8.1 6.3 (36.6) 72% 3% 4% TANSH 3666 HK 12/2018 11.2 5.6 12.0 71% -3% -5% TANG PALACE HLDG 1181 HK 12/2018 26.0 15.8 (68.0) - 11% 8% LONGHUI INTERNAT 1007 HK 12/2018 - 13.2 (37.0) - -74% -72% FULUM GROUP HOLD 1443 HK 03/2019 8.5 6.5 (61.2) 70% 2% 1% LI BAO GE GROUP 1869 HK 12/2018 18.2 12.4 (39.1) 67% 2% 1% LH GROUP LTD 1978 HK 12/2018 16.3 8.8 (34.7) N/A 5% 4% K2 F&B HOLDINGS 2108 HK 12/2018 17.2 6.5 125.9 N/A 12% 9% U BANQUET GROUP 1483 HK 12/2018 (61.8) (11.3) (3.1) 74% -5% -7% Average 23.0 11.7 54.3 55% 9% 7%

TAI HING GROUP H 6811 HK 12/2018 35.5 6.0 431.8 72% 12% 10%

China and international peers

CHINA QUANJUDE-A 002186 CH 12/2018 8.3 6.1 (64.1) 60% 4% 4% OHSHO FOOD SERV 9936 JP 03/2019 9.2 6.4 (3.3) 70% 7% 5% ICHIBANYA CO LTD 7630 JP 02/2019 - - - 46% 10% 6% SAIZERIYA CO 7581 JP 08/2018 10.1 7.9 (46.4) 63% 6% 3% KURA SUSHI INC 2695 JP 10/2018 15.9 10.4 (23.9) 54% 5% 4% YUM! BRANDS INC YUM US 12/2018 N/A 27.9 - 47% 40% 27% YUM CHINA HO YUMC US 12/2018 - 14.0 (43.4) 23% 11% 8% MCDONALDS CORP MCD US 12/2018 - 16.8 - 51% 42% 28% WENDY'S CO/THE WEN US 12/2018 19.4 2.7 450.6 65% 16% 29% JACK IN THE BOX JACK US 09/2018 - 10.3 - 61% 27% 14% RESTAURANT BRAND QSR CN 12/2018 19.6 1.9 242.3 58% 36% 11% BJ'S RESTAURANTS BJRI US 12/2018 18.6 7.1 53.8 39% 5% 5% DINE BRANDS GLOB DIN US 12/2018 - 6.8 - 45% 22% 10% BLOOMIN' BRANDS BLMN US 12/2018 114.4 5.6 1,218.6 40% 4% 3% BRINKER INTL EAT US 06/2018 - 11.1 - 17% 7% 4% DENNY'S CORP DENN US 12/2018 - 13.1 - 27% 12% 7% MK RESTAURANTS M TB 12/2018 17.5 14.9 (70.5) 68% 18% 15% Average 34.2 11.0 491.3 46% 19% 13%

TAI HING GROUP H 6811 HK 12/2018 35.5 6.0 431.8 72% 12% 10%

Source: Bloomberg, CIRL

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Exhibit 10: Peers’ valuation comparison

Exhibit 1: bloomberg Mkt Cap Price Share Price Movement (%) PER (x) Yield (%) code (HKD mn) (HKD) 1M 3M YTD FY16 FY17 FY18 FY19E FY20E FY16 FY17 FY18 FY19E FY20E Pork products HK listed catering peers sold in XIABUXIABU 520 HK 11,361 10.52 (7.4) (18.4) (14.1) 25.9 23.2 20.4 17.8 14.6 1.5% 1.7% 1.9% 2.4% 3.1% HAIDILAOsupermark INTERNA 6862 HK 169,600 32.00 (2.0) 8.1 86.5 - - 81.8 56.3 39.7 0.0% 0.0% 0.2% 0.4% 0.5% AJISEN CHINA HOL 538 HK 3,689 3.38 6.3 4.0 54.3 4.7 -6.5 5.7 14.5 13.7 4.2% 2.0% 4.2% 3.6% 3.9% CAFEet DE counters CORAL 341 HK 15,108 25.80 11.0 33.0 35.9 28.7 29.7 32.7 29.3 24.4 3.1% 3.1% 3.1% 3.2% 3.5% FAIRWOOD HLDGS 52 HK 3,348 25.85 (3.9) (6.0) (1.5) 16.3 16.0 15.3 14.1 13.6 3.3% 3.6% 5.5% 5.5% 4.8% HOP HING GROUP 47 HK 1,249 0.12 (10.8) (17.9) (20.0) 9.8 7.3 9.9 - - 5.0% 6.7% 4.9% 0.0% 0.0% TAO HEUNG 573 HK 1,484 1.46 (1.4) (3.9) 11.5 8.4 16.7 12.8 - - 8.2% 7.9% 7.9% 0.0% 0.0% FUTURE BRIGHT 703 HK 274 0.40 (8.1) (28.0) (47.0) -179.5 24.8 -4.6 - - 0.0% 0.0% 0.0% 0.0% 0.0% TSUI WAH HOLDING 1314 HK 861 0.61 (7.6) (29.1) (16.4) 12.0 9.5 10.7 61.0 12.2 5.7% 5.7% 5.7% 9.8% 9.8% TANSH 3666 HK 367 0.17 (5.1) (34.5) (20.9) 7.1 3.1 -4.1 - - 0.0% 7.0% 16.4% 0.0% 0.0% TANG PALACE HLDG 1181 HK 1,342 1.25 (0.8) (8.1) 8.7 11.2 8.8 9.8 7.9 7.4 7.1% 9.7% 7.5% 0.0% 0.0% LONGHUI INTERNAT 1007 HK 519 0.10 13.6 5.3 (6.5) -6.6 5.2 -0.8 - - 0.0% 0.0% 0.0% 0.0% 0.0% FULUM GROUP HOLD 1443 HK 585 0.45 (1.1) (5.3) (9.1) 5.8 7.1 13.8 - - 6.9% 5.7% 2.9% 0.0% 0.0% LI BAO GE GROUP 1869 HK 232 0.29 (3.3) (4.9) 5.5 17.9 10.0 103.6 - - 2.9% 5.2% 1.7% 0.0% 0.0% LH GROUP LTD 1978 HK 528 0.66 (5.7) (24.1) 13.8 - - 13.5 - - 0.0% 0.0% 8.2% 0.0% 0.0% K2 F&B HOLDINGS 2108 HK 248 0.31 44.2 (6.1) N/A - - 8.0 - - 0.0% 0.0% 0.0% 0.0% 0.0% U BANQUET GROUP 1483 HK 1,117 1.90 (0.5) (4.0) 2.7 -15.8 -17.3 -38.0 - - 0.0% 0.0% 0.0% 0.0% 0.0% Average 12,465 18.8 12.6 27.4 13.4 13.4 26.0 28.7 17.9 4.8% 5.3% 5.4% 4.1% 4.3%

TAI HING GROUP H 6811 HK 2,040 2.04 (25.3) - - 18.8 17.6 13.3 9.8 8.3 0.0% 0.0% 0.0% 2.8% 3.4%

China and international peers

CHINA QUANJUDE-A 002186 CH 4,009 13.00 (1.5) (7.6) 0.7 24.6 25.5 46.3 24.2 39.6 2.2% 2.3% 1.6% 0.0% 0.0% OHSHO FOOD SERV 9936 JP 11,128 477.86 5.2 (8.2) (8.4) 35.0 32.6 34.8 26.3 26.1 1.7% 1.8% 1.8% 1.8% 1.8% ICHIBANYA CO LTD 7630 JP 11,764 368.47 6.9 12.4 23.8 52.2 - 52.6 51.5 49.6 1.2% 0.0% 1.4% 1.5% 1.6% SAIZERIYA CO 7581 JP 9,679 185.17 10.0 3.0 37.2 24.8 17.4 25.4 27.0 21.4 0.7% 0.7% 0.7% 0.7% 0.7% KURA SUSHI INC 2695 JP 6,614 319.53 (3.4) (7.6) (18.7) 20.2 18.6 17.3 18.0 16.8 0.4% 0.7% 0.7% 0.7% 0.7% YUM! BRANDS INC YUM US 272,742 891.38 3.0 9.8 24.0 27.5 29.6 23.7 29.9 27.0 1.5% 0.8% 1.3% 1.5% 1.6% YUM CHINA HO YUMC US 133,986 354.22 (1.9) 1.3 35.1 33.8 44.1 24.6 26.3 23.6 0.0% 0.2% 0.9% 1.1% 1.2% MCDONALDS CORP MCD US 1,286,868 1,685.35 3.8 9.4 21.4 39.5 33.6 28.3 26.8 24.7 1.7% 1.8% 1.9% 2.2% 2.3% WENDY'S CO/THE WEN US 34,181 148.15 (3.2) 1.3 21.4 38.9 24.1 9.8 30.2 24.7 1.3% 1.5% 1.8% 2.1% 2.3% JACK IN THE BOX JACK US 15,289 592.27 (6.9) (2.6) (2.4) 20.7 17.2 17.8 17.8 15.9 1.6% 2.1% 2.1% 2.1% 2.3% RESTAURANT BRAND QSR CN 272,576 588.33 8.9 12.5 39.0 51.2 28.6 30.5 28.0 25.3 0.8% 1.0% 2.4% 2.6% 2.9% BJ'S RESTAURANTS BJRI US 6,443 310.76 (9.5) (21.6) (21.4) 21.0 19.0 16.4 20.0 18.1 0.0% 0.3% 1.1% 1.2% 1.4% DINE BRANDS GLOB DIN US 12,445 709.70 (4.9) (1.0) 34.8 16.6 -4.8 20.4 12.7 11.3 4.1% 4.3% 2.8% 3.0% 3.1% BLOOMIN' BRANDS BLMN US 12,769 139.23 (5.8) (13.3) (0.4) 48.5 17.0 15.3 11.3 10.4 1.6% 1.8% 2.0% 2.2% 2.3% BRINKER INTL EAT US 11,703 312.08 1.4 (8.9) (9.2) 11.6 13.5 14.5 10.2 9.9 3.2% 3.4% 3.8% 3.3% 3.7% DENNY'S CORP DENN US 10,347 171.60 6.9 16.6 35.4 85.0 38.0 31.7 32.5 28.0 0.0% 0.0% 0.0% 0.0% 0.0% MK RESTAURANTS M TB 18,550 20.14 7.8 8.9 6.4 39.8 33.1 29.8 25.2 23.0 2.3% 2.5% 2.9% 3.5% 3.8% Average 161,116 5.3 8.5 27.2 34.8 26.1 25.8 24.6 23.3 1.7% 1.7% 1.8% 2.0% 2.1%

TAI HING GROUP H 6811 HK 2,040 2.04 (25.3) - - 18.8 17.6 13.3 9.8 8.3 0.0% 0.0% 0.0% 2.8% 3.4%

Source: Bloomberg, CIRL

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Financial Statement

Exhibit 11: Financial summary IncomeExhibit statement 1: Cash flow Year to Dec (HKD mn) FY17 FY18 Year to Dec (HKD mn) FY17 FY18 RevenuePork 2,771 3,126 Pre-tax profit 271 358 Gross profit (reported) 1,984 2,239 Taxes paid (61) (50) EBITDAproducts 424 527 Depreciation 133 148

Depreciationsold in & Amortization (133) (148) Associates 0 0 EBIT 290 379 CFO bef. WC change 343 456 Netsupermark interest income (exp.) (20) (21) Change in working cap (10) (10) Associates 0 0 Cashflow from operation 333 446 Exceptionals/otherset counters 0 0 CAPEX (233) (233) Profit before tax 271 358 Free cash flow 100 213 Tax expenses (61) (50) Dividends 0 0 Minority interest 94 0 Balance sheet adj. (217) 347 Net profit attributable to shareholders 116 305 Shares issued 0 0 Adjusted net profit 116 153 Others 0 0 Dividends 0 0 Net cash flow (117) 559 Net cash (debt) start (737) (854) Balance sheet Net cash (debt) at year-end (854) (295) Year to Dec (HKD mn) FY17 FY18 Cash & equiv 165 242 Ratios Trade receivables 100 114 Year to Mar FY17 FY18 Other receivables 79 1 Growth rate (%) Inventories 39 57 Revenue 10.3 12.8 Other current assets 419 3 EBITDA 7.7 24.4 Fixed assets 757 815 EBIT 9.8 30.6 Intangible assets 19 11 Net profit 6.5 163.6 Investment, associates etc 157 156 Fully diluted EPS 6.5% 163.6% Total assets 1,734 1,399 Margins (%) Gross margin (reported) 71.6 71.6 Account payables 305 327 EBITDA 15.3 16.8 Other payables 43 0 EBIT 10.5 12.1 Short-term debt 1,019 112 Net margin 4.2 9.8 Other current liabs 93 93 Other ratios Long-term debts 0 425 ROE (%) 58.5 83.3 Deferred tax and others 11 8 ROA (%) 6.7 21.8 Other long-term liabs 66 68 Net gearing (%) 432.3 80.6 Total liabilities 1,537 1,033 Interest coverage (x) 14.8 17.9 Receivables days 13.1 13.3 Share capital 0 0 Payables days 141.5 134.7 Reserves 198 366 Inventory days 18.2 23.3 Shareholders' equity 198 366 Effective tax rate (%) 22.5 14.0 Minorities 0 0 Total equity 198 366 Net cash (debt) (854) (295)

Source: Company data, CIRL

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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 Associate Director (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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