AsiaPhos Limited

Re-initiating coverage 11 September 2015

Overweight

Current Price S$0.102

Fair Value S$.132 Up / (downside) 29.4%

Stock Statistics

Market cap S$91.9m

52-low S$0.098

52-high S$0.158

Avg daily vol 0.24m

No of share 901.3m

Free float 25%

Key Indicators

ROE 15F 3.2%

ROA 15F 2.3%

P/BK 1.1x

Net gearing 16.2%

Major Shareholders

Eastcomm* 60.9%

Mr Luo Yong 11.2% *major shareholders include Dr Ong Hian Eng, Melissa Ong, Simon Ong and Raymond Ong.

Historical Chart

Source: Bloomberg

Phosphorus is essential for life

We re-initiate coverage with Overweight recommendation. Given it is achieving economy of scale from both upstream and downstream businesses currently. We re-initiate our coverage with Overweight rating. We suspended our coverage in October 2014 given its fair valuation with uncertainly of acquisition plan of LYR Resources although we still liked its business outlook.

Our S$0.132 fair value is based on a valuation of 12x CY16 PER or about 1.5x FY15 PBR. We think this is justifiable, given its scalable business from upstream mining operation. Also, the group expects its P4 production to break even on 2H15. Our forecasts projection does not include phase 2 expansion and FengTai mine operation.

Acquisition of LYR could be a potential blockbuster revenue generator. The acquisition of LYR will enable it to apply for a Phosphate rock exploration licence in the newly acquired area covering 17.91 km2

could be key growth driver in the long term. This will improved their mining production capabilities as well as increasing revenue of its upstream business. FengTai’s ideal location which is within the group operations would lessen its operational costs as well as gain in economies of scale.

Integrated value chain. The vertically integrated business model allows the group to control the flow from mining to processing. According to the technical report done by Watts, Griffis and McOuat (WGM, an independent geological mining consultant), the group’s phosphate rocks are of relatively higher quality in comparison to those mined elsewhere in China, meaning the group can lower production costs at its production facilities due to lower impurities and thus, fewer processing issues.

Global Phosphate outlook is stable and growing. According to Food & Agriculture Organization of the United Nations (FAO) and International Fertilizer Industry Association (IFA), global fertilizer demand is anticipated to reach 200 million metric ton in 2018. East Asia, South Asia and Latin America are forecast to account for 27%, 26% and 24%, respectively, of the global increase in demand. Therefore we expect the demand for phosphate rocks to remain stable over the next one year and does not expect the phosphate rock price to fluctuate anytime soon.

Domestic market demands remains strong. China is currently the biggest producers and consumers of phosphate rocks. AsiaPhos is strategically poised to take advantage of China economic environment. According to Mosaic forecast, global shipment of phosphate rocks is expecting to increase by 1.1% yoy in 2015 to 65.3m tonnes.

Jacky Lee

(+65) 6236-6887 jacky.lee@nracapital.com www.nracapital.com

Key Financial Data

(S$ m, FYE Dec) 2013 2014 2015F 2016F 2017F

Sales 8.5 23.8 52.2 76.5 89.3

Gross Profit 2.6 4.7 11.9 23.9 28.6

Net Profit (3.7) 19.5 2.6 9.9 12.8

EPS (cents) (0.5) 2.4 0.3 1.1 1.4

EPS growth (%) (399.3) 631.7 (88.0) 278.2 28.4

PER (x) nm 4.1 34.3 9.1 7.1

NTA/share (cents) 6.4 9.0 9.1 10.2 11.6

DPS (cents) 0.0 0.0 0.0 0.0 0.0

Div Yield (%) 0.0 0.0 0.0 0.0 0.0

Source: Company, NRA Capital forecasts

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AsiaPhos Limited

page 2

Company Background

AsiaPhos is the first phosphate focused mining and processing company to be listed on the Singapore exchange. It listed on the exchange in October 2013. The group is headquartered in Singapore but operates two mines and two chemical production plants in China currently.

AsiaPhos’ core business comprises the Upstream business segment, which is mining for phosphate rocks; and the Downstream business segment which is the production of phosphate-based chemicals such as:

Yellow phosphorus (P4) – used to create Phosphoric Acid

Phosphoric Acid – used to create either SHMP or STPP

Sodium Hexamataphosphate (SHMP) – used mainly for both industrial and food applications including soft drinks, detergents, textile, etc.

Sodium Tripolyphosphate (STPP) – used mainly for both industrial and food applications. For foods, it is used as quality improver, pigment stabilisers and emulsifier agents for canned foods. For industrial applications it is used as a water softener and in water treatment.

Integrated strategy. The group is able to sell its products along the value chain in the industry after it complete its vertical integrated process line. It can sell its products as phosphate rocks, P4, STPP and SHMP. As shown by the diagram below, a big picture overview of its vertically integrated process line of phosphate usage. The group’s products from phosphate rock, to elemental phosphorus (P4) to phosphoric acid (TPA) and then finally to STPP and SHMP.

Vertically-integrated business strategy

Source: Company

AsiaPhos Limited

page 3

Upstream business segment

Location of mines and production plants. The group’s mining operations are

located in the vicinity of Mianzhu City, Sichuan Province.

AsiaPhos mines and production facilities in Sichuan, PRC

Source: Company

Exploration and mining licences

Mine 1

(Cheng Qiang Yan) Vicinity of

Mine 1 Mine 2

(Shi Sun Xi) Vicinity of

Mine 2 FengTai *

Mining Rights

Exploration Rights

Mining Rights Exploration

Rights Exploration

Rights

Current Licence period

Mar 2011 to Dec 2015

Apr 2014 to Apr 2016

Mar 2011 to Jan 2020

Jun 2014 to Jun 2016

Dec 2013 to Dec 2015

Permit Area (km²) 1.6491 1.54 2.0237 1.28 17.91

Approved production scale

50,000 tonnes per annum

Not applicable 200,000 tonnes

per annum Not

applicable Not applicable

Source: Company, Technical Report prepared by Watts, Griffis & McOuat (WGM) Note: - Mine 1 & 2: estimates that phosphorus rock output of 1 million tonnes per annum is possible with proper planning and CAPEX. * Fengtai: Refer to acquisition of LYR dated 22 April 2014. Upon completion of Fengtai transaction, the group will have 55% stake through 100% owned LYR Group in China.

Acquisition of LYR at approximately S$36.8m. LYR is a company owned by Mr Luo (a major shareholder with 11.24% after converting his 101,319,000 new shares in the capital of the company) which has a 55% equity interest in FengTai and its exploration rights. The acquisition could allow the group to 1) acquire the economic benefits under the Dashan Arrangement presently accruing to Dashan; and 2) benefit from ownership and control over FengTai (and correspondingly, the FengTai License). The group believes that it will be able to capitalise on the Fengtai License to expand the effective land area where the group has mining and exploration rights.

AsiaPhos Limited

page 4

Corporate structure of the group upon completion of the acquisition of LYR Group

Source: Company Notes: 1) Deyang Xin Zhong Lian He Technical Consulting Co., Ltd, a wholly-foreign owned enterprise incorporated in China (“WFOE1”) 2) incorporated in Singapore 3) Deyang City Xianrong Technical Consulting Co., Ltd, a wholly-foreign owned enterprise incorporated in China (“WFOE2”) 4) a China citizen who is unrelated to the Directors and substantial shareholders of the Company

What is FengTai Licence? An exploration licence for barite rocks with a land parcel of approximately 17.91 km2 situated in the vicinity of the group’s existing mines in Sichuan province. The FengTai Licence offers the potential to increase the group resource base. We believe that there could be potential economies of scale, operational synergies and cost savings from being close to its production facilities. As the group has been steadily increasing its mining output over the past few years, having an enlarged resource base will help sustain output growth over the longer term.

Resource estimate (excluding FengTai)

Category (Resources)

Mineral Type Gross Attributable to

Licence Net Attributable to Issuer Assumed at 100%

Tonnes (million)

Grade (P2O5%)

Tonnes (millions)

Grade (P2O5%)

Changes from previous update (%)

Measured Phosphorite 18.2 27.54 18.2 27.54 65

Indicated Phosphorite 12.1 29.43 12.1 29.43 0

Total Phosphorite 30.3 28.29 30.3 28.29 31

Inferred Phosphorite 17.9 29.77 17.9 29.77 -5

Source: Company, Technical Report prepared by Watts, Griffis & McOuat (WGM) at 30 September 2014.

AsiaPhos Limited

page 5

Downstream business segment

Gongxing Industrial Zone in Sichuan province is undergoing a rebuilding programme. Buildings are designed to withstand earthquakes of up to 7.0 on the Richter scale.

Phase 1 is completed with:

Two new P4 furnaces, each with designed annual capacity of 10,000 tonnes.

Commercial production of P4 commenced in May 2014

New site of approximately of 54,863m2 ; land use rights obtained

Factory layout for phase 1.

Phase 1 factory completion pictures

Source: Company

Receipt of land use rights for phase 2 announced on 12 Mar 2015.

Phase 2 ongoing plans:

Planning for the construction of a new phosphoric acid plant

Planning for the construction of a new food-grade SHMP plant

Considering other additions of the facilities to complement the downstream business

P4 Factory/ bulk storage P4 factory control centre STPP factory

AsiaPhos Limited

page 6

Industry Outlook Review

4.5% compound annual growth rate from 2013 to 2017. According to a United States of Geological Survey (USGS) report, World phosphate rock annual production capacity was projected to increase from 228m tonnes in 2013 to about 260m tonnes in 2017. The largest of increases in capacity were expected from projects in Brazil, China, Morocco, Peru, and Saudi Arabia. Phosphate is a non-renewable natural resource with many commercial and industrial applications and is the only economical source of phosphorus for manufacturing phosphatic fertilizers and chemicals. A major user is the agricultural sector with close to 90% of phosphate use coming from this single sector alone. The remaining 10% is used in products as diverse as detergents, fire retardants, food and beverages, LCD panels and semi-conductors. Phosphorus is an essential ingredient of fertilisers and its continuous supply constitutes the foundation of modern agriculture.

World phosphate rock mine production and reserves

Mine production (m tonnes) Reserves1 (m tonnes)

2013 2014e United States 31,200 27,100 1,100,000 Algeria 1,500 1,500 2,200,000 Australia 2,600 2,600 1,030,000 Brazil 6,000 6,750 270,000 Canada 400 - 76,000

China2 108,000 100,000 3,700,000 Egypt 6,500 6,000 715,000 India 1,270 2,100 35,000 Iraq 250 250 430,000 Israel 3,500 3,600 130,000 Jordan 5,400 6,000 1,300,000 Kazakhstan 1,600 1,600 260,000 Mexico 1,760 1,700 30,000 Morocco and Western Sahara 26,400 30,000 50,000,000 Peru 2,580 2,600 820,000 Russia 10,000 10,000 1,300,000 Saudi Arabia 3,000 3,000 211,000 Senegal 800 700 50,000 South Africa 2,300 2,200 1,500,000 Syria 500 1,000 1,800,000 Togo 1,110 1,200 30,000 Tunisia 3,500 5,000 100,000 Vietnam 2,370 2,400 30,000 Other countries 2,580 2,600 300,000 World total 225,120 219,900 67,417,000

Source: USGS, Mineral Commodity Summaries, January 2015

Notes: e Estimated 1 Reserves data are dynamic, USGS reports provide estimates of undiscovered mineral resources using a three-part assessment methodology (Singer and Menzie, 2010). 2 Production data for large mines only

China has the second largest phosphate rock reserves in the world. The distribution of production among countries is not the same as of reserves. In the figure above shows a picture representation of the difference in production and reserves of different countries. According to data compiled by the USGS and European union, the largest sedimentary deposits of phosphate are found in Northern Africa, China, the Middle East and the USA. China. The USA and Morocco account for 70% of world phosphate rock production while China, the USA and South Africa keep their mined phosphorus for their own use.

AsiaPhos Limited

page 7

Reserves and production of phosphate rock in the world

Source: European Union

Morocco is the leading Phosphate rock exporter (35-40% of world total export). The main phosphate rock mines are state-owned that involves the danger of an unexpected/extraordinary price-setting. On another hand, new exporting countries (Jordan, Peru and Egypt) are competing with Morocco since 2006. Some exporting/production regions of Phosphate rock are subject to political crisis or instability (Syria) that could shut down their mined production or limit investments.

World export of phosphate rock by countries

Source: European Union

Phosphate rock price is less volatile since financial crisis. Before the world financial crisis, the phosphate rock price shoot up to US$430 per metric ton due to famers sought to maximize corn production for ethanol and this sharp increase the demand for fertilizers. However, in 2009, the USA phosphate rock production and reported usage were at their lowest point since the mid-1960s, and consumption was at its lowest level since the early 1970s. The weak market conditions were driving the phosphate rock price down to below US$100 per metric ton in Jun 2009 and the rock price slowly recover in 2010. Over the last 5 years, the phosphate rock price trade in between US$100 and US$200 per metric. Despite the crude oil price is falling in the past 18 months, phosphate rock price was held stable for now.

AsiaPhos Limited

page 8

Historical pricing of phosphate rock (US$/metric ton)

Source: Index Mundi 10 year commodity price

Global consumption for fertilizers nutrients is growing moderately. According to Food & Agriculture Organization of the United Nations and International Fertilizer Industry Association (IFA), global fertilizer demand is anticipated to reach 200 million metric ton in 2018. The highest growth rates are forecast in Latin America (+3.7% pa), where cultivated land area is expanding steadily, followed by Africa (+3.4% pa), where volumes are still very low and several countries subsidize fertilizers to stimulate consumption, and West Asia (+3.1% pa), where the geopolitical situation can be expected to improve. Demand is seen as progressively rebounding in South Asia (+2.6% pa), assuming transition to a more effective fertilizer subsidy regime, while East Asian demand growth would continue to decelerate (+1.3% pa) as China’s fertilizer demand reaches a plateau. Demand expansion in the rest of the world would be modest. East Asia, South Asia and Latin America are forecast to account for 27%, 26% and 24%, respectively, of the global increase in demand. Therefore we expect the demand for phosphate rocks to remain stable over the next one year and does not expecting the phosphate rock price to fluctuate anytime soon.

Global nutrients (N+P2O5+K2O) consumption

Source: Food and Agriculture Organization of the United Nations

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AsiaPhos Limited

page 9

Management

Dr Ong Hian Eng - CEO and Executive Director. Dr Ong Hian Eng is Executive Director and the CEO of AsiaPhos since 3 January 2012. His responsibilities include overseeing the overall development of the group’s corporate direction and policies as well as the group’s operations, and playing an active role in the development, maintenance and strengthening of strategic business relationships. He is also a member of the Nominating Committee of the Company. He has been serving as a Director and Legal Representative of Mianzhu Norwest since 1996 and January 2010, respectively.

Mr Ong Eng Hock Simon - Executive Director. Mr Simon Ong is Executive Director since 1 October 2012. He was last re-elected on 30 April 2014. His responsibilities include overseeing the human resource and general administrative functions of the group. He has been serving as a Director of Mianzhu Norwest since January 2010. Mr Ong started his career as an audit assistant at KPMG Peat Marwick in 1991 and was subsequently promoted to audit senior, audit supervisor and audit manager in 1992, 1994 and 1996, respectively. Between 1996 and 1999, he served as director of corporate and financial planning in King George Development Corporation. Between 2000 and 2002, he worked at KPMG as an audit manager. He was later appointed as group finance manager of Hwa Hong Corporation Limited in 2002 and promoted to Chief Financial Officer in 2004, a position he held till July 2012.

Mr Jaime Chiew - Chief Risk Officer. Mr Jaime Chiew joined the group in 2014 as Chief Risk Officer and is primarily responsible for overseeing the group's risk management activities, forecasting/budgeting and monitoring of key management processes. Mr Chiew started his career at Ernst & Young London in 1998 as an audit associate in Insurance/Financial Services, where he qualified as a Chartered Accountant and was promoted to manager within Ernst & Young London’s audit/regulatory advisory practice, a position he held until 2006. Between 2006 and 2014, he held various roles in Citibank Asia Pacific, primarily in financial control, planning and analysis.

Ms Rachel Goh - Group Financial Controller. Ms Rachel Goh joined the group as Group Finance Manager in 2011, and was promoted to Group Financial Controller in January 2013. She is responsible for the overall financial functions of the group, including preparation of financial statements, cash management, corporate governance and internal controls.

AsiaPhos Limited

page 10

Key Risks

Area is prone to natural disasters such as earthquakes and inclement weather. The group operations has been affected by floods, landslides and mudslides during wet season as most of the roads have been damaged by the earthquakes in 2008. Nevertheless, the risk of disruptions caused by floods and landslides is minimise after the construction of key sections of the Mian Mao Highway has been completed by June 2015, the group has also increased accessibility between it mines and production facilities.

Foreign exchange fluctuation. As most of its business operations are based in China and the reporting currency is in SGD, unfavourable exchange rates between the RMB and SGD will affect reporting and dividend payments to shareholders. However, the China government have recently devalued its currency could boost export competitiveness.

Approval/Renewal of licenses. Its current mining licenses are up to 2015 and 2020 and are renewable. It also has other licenses such as the temporary occupation license of forestry land and Chemical safety production permit for its chemical operations, all of which are subject to approvals or renewals.

Policy risks from government. The China government may implement price restrictions or export taxes to preserve domestic supply of commodities. In addition, importing countries may also enact bans or tariffs that could hurt exports of phosphate or phosphate based chemicals. China see phosphorus as a strategically important resource and could restrict the exports of phosphate rocks through high tariffs and quotas.

High utility costs. Electricity is one of the key concerns for the production of P4. It takes a lot of electricity to start up the furnace and keep it running. Should the group be unable to negotiate with the government for a new and cheaper utility charge, the cost of operating the furnace will continue to take a large portion of profits from the sale of P4.

AsiaPhos Limited

page 11

Financial Highlights

FYE Dec (S$ m) 2Q15 2Q14 yoy % 1Q15 qoq %

chg chg

Revenue 12.0 3.9 205 6.3 91

Operating costs (10.8) (4.1) 160 (6.1) 76

EBITDA 1.3 (0.2) 724 0.2 621

EBITDA margin (%) 10.4 (5.1) 2.8

Depn & amort. (1.0) (0.3) 289 (0.3) 203

EBIT 0.2 (0.5) 147 (0.2) 230

Interest expense (0.3) (0.2) 10 (0.3) -18

Interest & invt inc 0.7 0.3 134 0.4 57

Associates' contrib 0.0 0.0 0 0.0 0

Exceptionals 0.0 0.0 0 0.0 0

Pretax profit 0.6 (0.4) 248 (0.1) 1,147

Tax (0.1) 0.0 #DIV/0! (0.1) 121

Tax rate (%) 22.2 0.0 (105.1)

Minority interests 0.0 0.0 0 0.0 0

Net profit 0.5 (0.4) 215 (0.1) 498

EPS (cts) 0.1 (0.0) 230 (0.0) 498

Source: Company, NRA Capital

2Q15 revenue increased 205% yoy to S$12m. The increase was due to both its upstream and downstream segments. Upstream segment improved by 238.5% yoy to S$6.55m due to increase in quantity of phosphate rocks from 43,000 tonnes in 2Q14 to 89,000 tonnes In 2Q15. The average selling price of phosphate rocks in 2Q15 increased 15.2% yoy to S$73.5 per tonnes. Downstream revenue in 2Q15 increased 360% yoy to S$5.5m due mainly to the sale of P4 and its by-products, which accounts for 93% of total downstream revenue. The group sold 1,900 tonnes of P4 in 2Q15, against 265 tonnes in 2Q14.

Gross profit margin for 2Q15 improved by 5.4% pts yoy to 16.7%. This was driven mainly by the increased gross profit margin of its upstream business segment which benefitted from higher average selling price of rocks and lower cost of sales per tonne. As a result of the reduction in mining levy from RMB30 per tonne to RMB8 per tonne, the group received a one-off refund of mining surcharge from the China government in respect of mining levy paid in prior years. Downstream segment in 2Q15 still in the loss territory, this is attributed to its high operating cost of manufacturing P4. However, given its production is ramping up and improving utilisation rate now, the cost of production should improve in the second half of 2015.

Balance sheet remains healthy. AsiaPhos generated negative free cash flow of S$3.6m in 2Q15 due mainly to the increase in working capital requirement. As a result, net gearing increased to 16.2% (net debt of S$11.8m) from 11.2%.

AsiaPhos Limited

page 12

Valuation and Recommendation

Two drivers of phosphate demand. First, ongoing population growth will lead to significant increase in global food demand. In 2050, global population is expected to reach 9.6b people, according to the UN’s medium scenario. Second, in addition to a growing world population, per capita income growth in developing countries is likely to lead to shifting dietary habits; from a mostly vegetarian diet to a diet with a higher share of meat and dairy products, which, in turn, results in further increased demand for crops.

Nutrient requirement for common agricultural crops

Source: Nutrient requirement data published by the Potash and Phosphate Institute and application rate data from Mississippi Chemical Corp.

Breaking down of economy of scale. Since FY12, the group has been increasing its mining output by at least 70% every year, revenue have increased from S$4.9m in FY12 to S$23.8m in FY14. As a result, EBITDA has improved significant from S$3.4m loss in FY13 to S$0.3m profit in FY14 and further improving to S$1.4m profit in 1H15. We are expecting AsiaPhos to increase its mining output by additional 50% for its FY15 results due to the group increasing the number of entry points to the mines as well as improving transportation network of phosphate rocks with the utilization of tramways. The group intends to acquire another weighbridge to ease congestions on the existing one, this will further improve its efficiency.

Output production (‘000 tonnes)

Source: NRA Capital estimates

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AsiaPhos Limited

page 13

Acquisition of LYR could be a potential blockbuster revenue generator if high-grade phosphate can be measured and extracted. The land parcel covering 17.91km2 is a long term boost for AsiaPhos business. The acquisition of LYR will enable it to apply for a Phosphate rock exploration licence in the newly acquired area will be key growth driver in the long term. This will improved their mining production capabilities as well as increasing revenue of its upstream business. FengTai’s ideal location which is within the group operations would lessen its operational costs as well as gain in economies of scale.

We expect a 55% CAGR growth in revenue for the next three years. After a strong growth in revenue of 182% yoy in FY14, we expect AsiaPhos revenue continue to grow conservatively by 18-119% over the next three years. We also expect its gross profit margins to improve significant from 19.7% in FY14 to between 22.9% and 32% in our FY15-17 forecasts. We expects its upstream business continue to achieve better economy of scale and downstream segment of manufacturing P4 to improve its utilisation rate after management guidance.

We re-initiate coverage with Overweight recommendation. Given its potential to achieve economy of scale from both upstream and downstream businesses currently. We re-initiate our coverage now with Overweight rating. We suspended our coverage in October 2014 given its fair valuation with uncertainly of acquisition plan of LYR Resources although we still liked its business outlook.

Our S$0.132 fair value is based on a valuation of 12x CY16 PER or about 1.5x FY15 PBR (AsiaPhos valued its mines assets at historical cost of approximately Rmb100 per tonne when its purchase in 2002, as of 2Q15, its rock selling at Rmb350 per tonne). We think this is justifiable given its scalable business from upstream mining operation. Also, the group expects its P4 production to break even on 2H15. Our forecasts projection does not including phase 2 expansion and FengTai mine operation.

Recent M&A/ fund raising news in China phosphate Industries

Date Company Type of Investments Amount raised

Dec 14 Yuntianhua JV with Israel Chemical as strategic investor US$500m for 50% share in JV

Jul 15 Jiangsu Chengxing

Private placement for business expansion and bank loans repayment

US$1.05bn

Jul 15 Anhui Sierte Acquisition of 20% stake of Guizhou Lufa US$65m

Source: Bloomberg research transactions/ CCM information Science & Technology Co. Ltd

AsiaPhos Limited

page 14

Profit & Loss (S$ m, FYE Dec) 2013 2014 2015F 2016F 2017F

Revenue 8.5 23.8 52.2 76.5 89.3

Operating expenses (11.8) (23.5) (43.4) (56.0) (64.3)

EBITDA (3.4) 0.3 8.8 20.5 24.9

Depreciation & amortisation (0.6) (1.6) (5.4) (6.1) (6.7)

EBIT (4.0) (1.3) 3.4 14.5 18.2

Net interest & invt income 1.8 0.6 0.2 (1.0) (1.0)

Associates' contribution 0.0 0.0 0.0 0.0 0.0

Exceptional items 0.0 20.2 0.0 0.0 0.0

Pretax profit (2.2) 19.5 3.6 13.4 17.2

Tax (1.4) 0.0 (0.9) (3.5) (4.5)

Minority interests 0.0 0.0 0.0 0.0 0.0

Net profit (3.7) 19.5 2.6 9.9 12.8

Shares at year-end (m) 800.0 800.0 901.3 901.3 901.3

Balance Sheet (S$ m, as at Dec) 2013 2014 2015F 2016F 2017F

Fixed assets 32.0 36.2 40.4 44.3 48.1

Intangible assets 0.2 0.1 0.1 0.1 0.1

Other long-term assets 6.7 44.8 44.8 44.8 44.8

Total non-current assets 38.9 81.1 85.3 89.3 93.1

Cash and equivalents 18.6 4.8 9.6 16.8 24.6

Stocks 5.4 8.8 12.1 15.8 18.2

Trade debtors 10.8 5.1 7.8 11.5 13.4

Other current assets 0.0 0.0 0.0 0.0 0.0

Total current assets 34.8 18.8 29.5 44.1 56.2

Trade creditors 11.4 10.7 12.1 13.2 12.1

Short-term borrowings 5.7 4.1 6.3 7.7 7.1

Other current liabilities 1.1 0.9 1.9 5.4 9.8

Total current liabilities 18.2 15.8 20.2 26.2 29.1

Long-term borrowings 0.0 8.2 8.9 11.5 11.6

Other long-term liabilities 4.4 4.0 4.0 4.0 4.0

Total long-term liabilities 4.4 12.2 12.8 15.5 15.6

Shareholders' funds 51.2 72.0 81.8 91.8 104.5

Minority interests 0.0 0.0 0.0 0.0 0.0

NTA/share (S$) 0.06 0.09 0.09 0.10 0.12

Total Assets 73.7 99.9 114.9 133.4 149.2

Total Liabilities + S’holders' funds 73.7 99.9 114.9 133.4 149.2

Cash Flow (S$ m, FYE Dec) 2013 2014 2015F 2016F 2017F

Pretax profit (2.2) 19.5 3.6 13.4 17.2

Depreciation & non-cash adjustments 2.4 (20.4) 6.0 6.1 9.8

Working capital changes 0.1 (1.6) (5.7) (7.6) (6.6)

Cash tax paid 0.0 0.0 (1.9) (2.8) (6.3)

Cash flow from operations 0.3 (2.6) 2.1 9.2 14.1

Capex (12.1) (6.2) (6.0) (6.0) (6.0)

Net investments & sale of FA 0.0 (15.0) 0.0 0.0 0.0

Others (2.1) 5.2 0.0 0.0 0.0

Cash flow from investing (14.2) (16.0) (6.0) (6.0) (6.0)

Debt raised/(repaid) 4.7 6.2 2.8 4.0 (0.4)

Equity raised/(repaid) 25.6 0.0 6.3 0.0 0.0

Dividends paid 0.0 0.0 0.0 0.0 0.0

Cash interest & others (3.5) (1.8) (0.4) 0.0 0.0

Cash flow from financing 26.8 4.4 8.7 4.0 (0.4)

Change in cash 12.8 (14.2) 4.8 7.2 7.8

Change in net cash/(debt) 8.1 (20.4) 2.0 3.2 8.1

Ending net cash/(debt) 12.9 (7.5) (5.5) (2.3) 5.8

KEY RATIOS (FYE Dec) 2013 2014 2015F 2016F 2017F

Revenue growth (%) 72.7 181.7 119.0 46.6 16.7

EBITDA growth (%) 111.6 (108.9) 2,847.0 133.9 21.5

Pretax margins (%) (26.6) 81.8 6.8 17.6 19.3

Net profit margins (%) (43.4) 81.8 5.0 13.0 14.3

Effective tax rates (%) (63.1) (0.1) 26.0 26.0 26.0

Net dividend payout (%) 0.0 0.0 0.0 0.0 0.0

ROE (%) (7.2) 27.1 3.2 10.8 12.2

Free cash flow yield (%) (13.2) (9.7) (4.3) 3.5 9.0

Source: Company, NRA Capital forecasts

AsiaPhos Limited

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NRA Capital Pte. Ltd (“NRA Capital”) has received compensation for this valuation report. This publication is confidential and general in nature. It was prepared from data which NRA Capital believes to be reliable, and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. No representation, express or implied, is made with respect to the accuracy, completeness or reliability of the information or opinions in this publication. Accordingly, neither we nor any of our affiliates nor persons related to us accept any liability whatsoever for any direct, indirect, special or consequential damages or economic loss that may arise from the use of information or opinions in this publication. Opinions expressed are subject to change without notice. NRA Capital and its related companies, their associates, directors, connected parties and/or employees may own or have positions in any securities mentioned herein or any securities related thereto and may from time to time add or dispose of or may be materially interested in any such securities. NRA Capital and its related companies may from time to time perform advisory, investment or other services for, or solicit such advisory, investment or other services from any entity mentioned in this report. The research professionals who were involved in the preparing of this material may participate in the solicitation of such business. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the duties of confidentiality, available on request. You acknowledge that the price of securities traded on the Singapore Exchange Securities Trading Limited ("SGX-ST") are subject to investment risks, can and does fluctuate, and any individual security may experience upwards or downwards movements, and may even become valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling securities traded on the SGX-ST. You are aware of the risk of exchange rate fluctuations which can cause a loss of the principal invested. You also acknowledge that these are risks that you are prepared to accept. You understand that you should make the decision to invest only after due and careful consideration. You agree that you will not make any orders in reliance on any representation/advice, view, opinion or other statement made by NRA Capital, and you will not hold NRA Capital either directly or indirectly liable for any loss suffered by you in the event you do so rely on them. You understand that you should seek independent professional advice if you are uncertain of or have not understood any aspect of this risk disclosure statement or the nature and risks involved in trading of securities on the SGX-ST.