hong kong tingyi - kim eng

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Hong KongCompany Update 18 April 2012

Tingyi New plans in the horizon Time to fight back. Tingyi’s reverse roadshow in Hangzhou revealed that the new battlefield against UPC has now extended to milk tea from pickled mustard beef/braised pork noodles and sweet iced pear juices, following UPC’s marked success. Our channel checks pointed to shrinking market shares of UPC after Tingyi’s counter attack. Its pear juice has overtaken UPC’s despite being six month late to the game.

Bottling loss to narrow. To our surprise, its new Pepsi bottling unit will operate as a separate entity. Its turnaround is expected to be achieved via better pricing and A&P sharing terms with Pepsi, raw materials procurement sharing and capitalization on its existing production plants which should lower its transportation cost burden. All these are expected to save up to US$100m. Tingyi targets breakeven in FY13.

Many new plans in mind. Tingyi believe consumers are getting more mature and complicated and the sustainability of its growth would hinge on its product variety. It is expanding the scope of its bakery unit to instant food by setting up a 45%-owned JV with Calbee. New products will be launched by late 2012. Meanwhile, it is moving into the processed meat area with a Japanese partner. Its new product is expected to be launched in 2013. Also it is open to M&A opportunities.

Long run outlook. Tingyi’s chairman, Mr Wei, is targeting net margins of 8-10%, 10-12%, and 6-8% for its instant noodles, instant food, and beverages divisions, respectively. Regarding industry sales growth prospect, Mr. Wei projects 15-20%/1.5X GDP growth/1.5-2.0X GDP growth CAGR until 2015. However, beverage demand is likely to remain weak in 2012, before returning to normal the following year.

Keep our forecast intact. Our site visit’s key findings largely supported our previous belief, while the loss at its Pepsi unit appeared to be much less than expected. Without taking into consideration the new developments mentioned above, we keep our forecasts intact. Upgrade to HOLD with TP unchanged at HK$20.01.

Tingyi – Summary Earnings Table FYE Dec (US$m) 2011A 2012F 2013F 2014FRevenue 7,867 9,250 10,701 12,429EBITDA 994 1,115 1,350 1,587Recurring Net Profit 380 473 571 724Recurring Basic EPS (cents) 6.80 8.41 10.12 12.76EPS growth (%) (6.8) 24.37 20.84 26.74 DPS (cents) 3.75 4.21 5.06 6.38

PER 40.54 32.76 27.24 21.60EV/EBITDA (x) 16.17 14.23 11.50 9.44Div Yield (%) 1.36 1.53 1.84 2.31P/BV(x) 7.34 6.67 5.83 4.98

Net Gearing (%) 31.42 19.37 4.19 N/AROE (%) 21.40 21.39 22.90 24.91ROA (%) 7.84 7.71 8.34 9.31Consensus Net Profit (HK$m) - 530 668 792Source: Company data, Kim Eng Securities

Hold (from Sell)

Share price: HK$21.50 Target price: HK$20.01

Jacqueline KO, CFA Jacqueline [email protected] (852) 2268 0633

Stock Information

Description: Tingyi manufactures and sells instant noodles, ready-to-drink (RTD) tea, juices and bakery products in China. Ticker: 322 HK Shares Issued (m): 5,590.3 Market Cap (US$m): 15,412.1 3-mth Avg Daily Turnover (US$m): 22.8 HSI: 20,562 Free Float (%): 66.31 Major Shareholders: % Wei Ing Chou 33.69 Key Indicators

ROE – annualised (%) 21.39 Net cash (HK$m): N/A NTA/shr (HK$): 3.22 Interest cover (x): 10.02 Historical Chart

Performance: 52-week High/Low HK$26.0/HK$17.84 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) (10.8) (9.9) (0.2) 7.0 8.9 Relative (%) (7.2) (14.6) (9.2) 21.3 (20.4)

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Apr 11 Jun 11 Aug 11 Oct 11 Dec 11 Feb 12 Apr 12

PRICE PRICE REL. TO HANG SENG INDEX

Source: Bloomberg

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Tingyi (Cayman Islands) Holding Corporation

Key meeting/ plant visit takeaways

Reverse roadshow background. Tingyi hosted a plant and sales channel visit in Hangzhou on 15-16 April 2012. We visited both the CenturyMart and Xiaoshan wholesale market. Chairman Wei Ing-Chou also gave a detailed talk regarding the industry outlook and the company’s future strategy. We met with several of its division heads as well as its new bottling unit head who has around 10 years of working experience at Pepsi.

Figure 1: In-store promotion activities at CenturyMart hypermarket

Source: Kim Eng Securities

Figure 2: Snapshot at Xiaoshan wholesale market


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About Hangzhou market. Hangzhou is ranked among top five in per capita GDP in 2011 with an average per capita disposable income at Rmb34,065 against the national average of Rmb19,118. Hence, both the per capita consumption of instant noodles and beverages were above industry’s while higher-priced items accounted for 60-70% of the overall market. Hangzhou’s market is more sensitive to economic changes which explained its underperformance last year. Tingyi owns around 70,000-80,000 point-of-sales(POS) for each of its noodles and beverages divisions through both its key accounts(KA) and around 140 first-tier distributors. Sales splits between KA and traditional distributors are roughly 10-15% and 85-90% respectively.

Instant noodles industry overview. The industry sales rose 9% yoy to Rmb50b in 2011 while per capita consumption reached 31 packs compared to US/Japan’s over 60. The sales structure is shifting more towards mid to high-end with container/bowl noodles’ contribution on the rise. Consumer preference is getting more complicated leading to the rising popularity for regional flavors though the braised beef noodles remain as the mainstream nationwide. UPC has identified and opened the market for pickled and mustard flavor and it is expected to stay hot in the near future. UPC has also launched braised pork noodles in 3Q11.

Figure 3: Market shares-instant noodles (%) By value Tingyi UPC Hualong White elephant2011 55.4 13.5 9.0 6.22010 53.1 9.5 11.1 7.0 By volume 2011 36.7 12.8 12.1 9.42010 39.6 9.0 13.5 10.3Source: Nielsen, Kim Eng Securities

Figure 4: Industry growth (%, yoy) - Instant noodles (2011) By value By value By volumeInstant noodles 15.2 (1.9) -bowl 24.8 -packet 10.8 -snack (7.6) Source: Nielsen, Kim Eng Securities

Beverages industry overview. The industry sales growth slowed in 2011 with notable changes in demand for different sub-categories. Bottled water, milk tea/coffee and functional drinks stood out with 12%/40%/38% yoy growth respectively in sales despite overall market weakness. The fancy over “One more bottle” campaign adopted in previous two years has faded, partly attributed to the weak growth in Ready-to-drink (RTD) drinks segment. Red, green, jasmine and honey tea would continue to be the major flavors. On a separate note, traditional Chinese type of drinks such as sour plum juice, sweet iced pear juice and herbal tea are taking some shares from typical juice products.

Figure 5: Market shares-RTD tea (%) By value Tingyi UPC Wahaha Coca-Cola Jinmailang2011 55.4 19.6 11.7 3.3 2.52010 54.7 19.8 12.3 5.1 2.0 By volume 2011 56.7 20.0 11.1 3.1 2.52010 55.4 20.1 12.0 4.9 2.0Source: Nielsen, Kim Eng Securities

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Figure 6: Market shares-Juice (%) By value Coca Cola Tingyi UPC Huiyuan Wahaha2011 28.6 15.2 11.5 7.6 4.72010 27.5 14.0 11.1 10.0 6.2 By volume 2011 28.8 17.5 14.3 8.2 5.02010 27.4 16.7 13.8 11.0 5.9Source: Nielsen, Kim Eng Securities

Figure 7: Market shares-milk tea (%) By value UPC Wahaha Kirin Suntory2011 60.2 31.2 6.9 1.42010 47.7 34.0 14.7 3.3 By volume 2011 60.0 31.4 7.1 1.32010 45.5 35.0 15.8 3.3Source: Nielsen, Kim Eng Securities

Figure 8: Market shares-coffee (%) By volume UPC wahaha Kirin Suntory2011 60.0 31.4 7.1 1.32010 45.5 35.0 15.8 3.3Source: Nielsen, Kim Eng Securities

Figure 9: Industry growth (%,yoy) - beverages (2011) Value Volume 2011 2010 2011 2010Beverages 10.9 10.8 4.7 8.6 - Carbonated drinks 6.6 2.6 (1.6) 2.0 - Bottled water 12.3 9.3 6.5 6.8 - Juice 11.2 12.4 7.0 12.2 - RTD tea (no milk) 0.2 16.7 0.0 17.1 - RTD tea 6.1 16.9 3.9 17.3 - Functional drinks 38.1 23.7 33.3 20.6Source: Nielsen, Kim Eng Securities

Review on strategies in 2011. Tingyi phased out its low-end Fumando series and adjusted up the retail price of its packet/bowl noodles’ ASP from a unit price of Rmb2/3.5 to Rmb2.5/3.8 during the year. On the beverages front, management admitted its inadequacy on evaluating the end market demand, which led to overstocking in its channel last year. However the issue was solved by promotional discounts in an inventory clear-off in 4Q11. Tingyi is striving to avoid similar problem in future by limiting the role of its distributors to logistics and prevent excessive inventory buildup at the wholesalers’ level. Meanwhile, management also shares our view that it had been slow in reacting to consumer taste changes on the new product development front and will strive to improve in the future.

Response under new environment. Tingyi followed suit by launching pickled and mustard beef noodles and another new braised beef noodles. Meanwhile, it has upgraded its flagship products braised beef noodles after CNY to maintain its market dominance. More in-store promotions such as free eating activities in hypermarkets/supermarkets were being adopted for boosting the new products’ recognition while the TV advertisement was more focused on the nationwide flavor. In response to the slowdown in beverage sales, Tingyi will slow down the pace of its capacity expansion. Management expects beverage demand to return to normal in 2013 onwards, industry sales is expected to grow at 11-12% in 2012. Also, it has refined its instant food unit by separating the sales functions from its existing operation for better flexibility.

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New products in the pipeline. Tingyi is about to launch its two brand new milk tea products nationwide in May 2012 with richer protein content against UPC’s. Blind tests based on several thousand customers suggested higher preference for its products against UPC’s given its smoother texture and stronger milk fragrance, according to management. Meanwhile, Tingyi announced forming a JV with Calbee and is expected to launch potato chips-related products by end FY12. Milk tea is expected to carry a gross margin of 40-42% while that for potato chips’ is around 50-55%. We believe Tingyi’s action is likely to create big competitive pressure to UPC as distributors are more willing to carry Tingyi’s considering its more complete product portfolio. Our chats with several local wholesalers confirmed our view. However, the PRC potato chips industry is highly concentrated with the top three firms accounting for 60-70% of the market; hence, Tingyi’s road ahead may still be challenging. Yet, Calbee target its JV to reach a sales of JPY 50b and EBIT margin at 10% by FY3/2018.

Figure 10: Tingyi’s new milk tea products


Plan with its bottling business. Tingyi will keep the bottling unit as a separate entity and has guaranteed no lay-offs to its over 20,000 ex-pepsi staff over the next two years. Therefore, we believe its wage burden will remain high. Nonetheless, management believes better cost savings on other aspects will mitigate the high wage pressure and it is eyeing for P&L breakeven in 2013. For example, by installing new production lines at Tingyi’s existing factories, it can shorten the delivery distance. While the sales teams will remain separate, Tingyi believe it can share refrigerators at retail end-points with Pepsi. To note, it has 400k refrigerators while Pepsi has 200k nationwide.

Figure 11: Tingyi’s internal projection for its beverages unit (%) No. of brands 2011 2015 2020Volume market share projections Bottled water 3 24 39 50Juice 4 14 17 23RTD Tea 2 50 70 78CSD 33 39 43 Volume growth % projections Bottled water 23 18Juice 16 15RTD Tea 20 16CSD 13 10Source: Company data, Kim Eng Securities

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Moving into processed meat area. Tingyi unexpectedly announced that it would move into this area in its Shanghai plant in cooperation with a Japanese partner. New products should be available to the market in 2013. No further details have been disclosed at the current stage and we have not factored into any earnings contribution. We view the move as positive with Tingyi’s clean food safety track record would likely make it a winner in this area. We believe its focus should be on the higher-margin LTMP segment.

Long-term outlook. Tingyi’s chairman, Mr Wei, is targeting net margins of 8-10%, 10-12%, and 6-8% for its instant noodles, instant food, and beverages divisions, respectively. Regarding industry sales growth prospect, Mr. Wei projects 15-20%/1.5X GDP growth/1.5-2.0X GDP growth sales CAGR until 2015. By 2020, Tingyi expects its instant food unit to reach 9% of its total sales with a targeted net margin of 10-12% and its carbonated drinks to account for 13% of its total sales with a normalised margin of 8% in the optimum case. Moreover, Tingyi aims to increase the market share of Pepsi by 1ppt each year and lift Pepsi’s market share to 46% against Coke’s 54% by 2020, based on projected sales CAGR of 12.5% and 10% over 2012-2016 and 2017-2021, respectively. Mr Wei expects per capita consumption of beverage and instant noodles to increase from the current 80 bottles/30 packs to 500/60 in the long run.

Figure 12: Sales breakdown (2011) Figure 13: Targeted sales mix (2020)

Source: Company data, Kim Eng Securities Source: Company data, Kim Eng Securities

UPC is at risk. Our findings confirmed our bearish view on UPC that its growth may not be sustainable if it only relied on several key S.K.U. Its sales and earnings are likely to be subjected to headwinds should consumer taste changes; although we admit that UPC is good at identifying niche and creative new products. Its market share increased by almost 4ppt to 14% last year, thanks to the positive reception of its new products. At the same time, as mentioned earlier, Tingyi is now following UPC’s launches and given Tingyi’s much favorable comparative cost advantages, we expect UPC’s market shares and margins to be at risk. For example, for its iced sweet pear juices, its retail price has now been lowered to slightly below Rmb2/bottle against Tingyi’s Rmb2.3, after Tingyi has taken over its no.1 position after just several months of launches.

Beverage50%

Instant noodles

45%

Bakery3%

Others2%

Beverage42%

Carbonated softdrinks

13%

Instant noodles

35%

Instant foods9%

Meat products1%

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Figure 14: Snapshots of Tingyi’s new products-another new braised beef/ pickled and mustard beef noodles


Figure 15: UPC and Tingyi’s sweet iced pear juice


Our view. Our site visit’s key findings largely supported our previous belief, while the loss at its Pepsi unit appeared to be much less than expected. While we acknowledge Tingyi’s endeavour to sustain its long-term business growth with numerous new initiatives, we still foresee the risk of cannibalisation: new products that undermine the sales performance of existing products and the potential competition among sales teams. Execution risks associated with its new structure is also worth ongoing scrutiny. Overall, we have not taken into consideration the new development mentioned above. We maintain our forecasts intact given limited earnings impact. Upgrade to HOLD with TP unchanged. We expect the upcoming 1Q12 results to be disappointing considering the high base for its beverages unit.

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Figure 16: Previous ownership structure of TAB (Tingyi-Asahi Beverages)

Source: Company data, Kim Eng Securities

Figure 17: New ownership structure of TAB (Tingyi-Asahi Beverages)


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INCOME STATEMENT BALANCE SHEET FYE Dec (US$m) 2011A 2012F 2013F 2014F

FYE Dec (US$m) 2011A 2012F 2013F 2014F Revenue 7,867 9,250 10,701 12,429 Fixed Assets 4,030 4,460 4,789 5,092 EBITDA 994 1,115 1,350 1,587 Other LT Assets 343 343 343 343 Depreciation & Amortisation 321 370 471 497 Cash/ST Investments 590 735 1073 1668 Operating Profit (EBIT) 672 831 974 1,194 Other Current Assets 846 915 1045 1200 Interest (Exp)/Inc (9) (83) (83) (87) Total Assets 5,809 6,453 7,250 8,303 Associates 0 0 0 0 One-offs 0 0 0 0 ST Debt 701 526 394 296 Pre-Tax Profit 663 748 891 1,107 Other Current Liabilities 1727 2103 2428 2809 Tax (163) (187) (223) (277) LT Debt 549 659 791 949 Minority Interest 80 88 97 107 Other LT Liabilities 145 178 213 255 Net Profit 420 473 571 724 Minority Interest 587 667 755 852 Recurring Net Profit 380 473 571 724 Shareholders' Equity 2,100 2,320 2,669 3,142 Total Liabilities-Capital 5,809 6,453 7,250 8,303 Revenue Growth % 17.74 17.59 15.68 16.15 EBITDA Growth (%) 20.58 12.20 21.08 17.57 Share Capital (m, mil of shares) 5,589 5,617 5,645 5,673 EBIT Growth (%) (9.55) 23.55 17.23 22.66 Gross Debt/(Cash) 1,250 1,185 1,185 1,245 Net Profit Growth (%) (12.01) 12.65 20.84 26.74 Net Debt/(Cash) 660 449 112 (423) Recurring Net Profit Growth (%) (6.80) 24.37 20.84 26.74 Working Capital (992) (978) (704) (236) Tax Rate % 24.63 25.00 25.00 25.00

CASH FLOW RATES & RATIOS

FYE Dec (US$m) 2011A 2012F 2013F 2014F FYE Dec 2011A 2012F 2013F 2014F Profit before taxation 663 748 891 1,107

EBITDA Margin % 12.63 12.05 12.61 12.77 Depreciation 318 370 471 497 Op. Profit Margin % 8.55 8.98 9.10 9.61 Net interest receipts/(payments) 9 83 40 40 Net Profit Margin % 5.33 5.11 5.34 5.82 Working capital change (157) 385 198 229 ROE % 21.40 21.39 22.90 24.91 Cash tax paid (114) (131) (156) (194) ROA % 7.84 7.71 8.34 9.31 Others (incl'd exceptional items) 79 1 141 183 Net Margin Ex. El % 5.33 5.11 5.34 5.82 Cash flow from operations 797 1,456 1,585 1,863 Dividend Cover (x) 3.21 3.52 3.41 3.30 Capex (1,000) (800) (800) (800) Interest Cover (x) 71.74 10.02 11.74 13.71 Disposal/(purchase) 0 0 0 0 Asset Turnover (x) 0.74 0.70 0.68 0.67 Others (41) 32 39 46 Asset/Debt (x) 4.65 5.45 6.12 6.67 Cash flow from investing (1,041) (768) (761) (754) Debtors Turn (days) 6.56 7.17 7.66 7.64 Debt raised/(repaid) 616 (65) 0 60 Creditors Turn (days) 65.00 60.42 63.64 63.64 Equity raised/(repaid) 0 0 0 0 Inventory Turn (days) 19.66 18.95 19.63 19.73 Dividends (paid) (293) (264) (291) (340) Net Gearing % 31.42 19.37 4.19 N/A Interest payments 0 0 0 0 Debt/ EBITDA (x) 1.26 1.06 0.88 0.78 Others 0 0 0 0 Debt/ Market Cap (x) 0.07 0.07 0.07 0.07 Cash flow from financing 323 (329) (290) (280)

Change in cash (44) 145 338 595 PER SHARE DATA

FYE Dec (US$) 2011A 2012A 2013F 2014F

EPS(US cents) 7.51 8.41 10.12 12.76 CFPS 0.14 0.26 0.28 0.33 BVPS 0.38 0.41 0.47 0.55 SPS 1.41 1.65 1.90 2.19 EBITDA/share 0.18 0.20 0.24 0.28 DPS(US cents) 3.75 4.21 5.06 6.38 Adjusted EPS(US cents) 6.80 8.41 10.12 12.76


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Definition of Ratings Kim Eng Research uses the following rating system:

BUY Total return is expected to be above 15% in the next 12 months

HOLD Total return is expected to be between -15% to +15% in the next 12 months

SELL Total return is expected to be below -15% in the next 12 months

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Maybank Kim Eng may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment. This research report is prepared for general circulation. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. The information contained herein is believed to be reliable, its completeness and accuracy is however not guaranteed. Opinions expressed in this report are subject to change without notice, and no part of this publication is to be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred therein or otherwise. We do not accept any liability whatsoever whether direct or indirect that may arise from the use of information contained in this report. Any transactions by US persons in any security discussed in this report must be carried out through Maybank Kim Eng Securities (USA) Inc which has distributed this report in the USA. In addition, this document has been distributed in the UK for information only and circulated only to existing customers of Maybank Kim Eng, who are not private customers as classified under FSA’s Rules.

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Malaysia Maybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194

Singapore Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Research Pte Ltd 9 Temasek Boulevard #39-00 Suntec Tower 2 Singapore 038989 Tel: (65) 6336 9090 Fax: (65) 6339 6003

London Maybank Kim Eng Securities (London) Ltd 6/F, 20 St. Dunstan’s Hill London EC3R 8HY, UK Tel: (44) 20 7621 9298 Dealers’ Tel: (44) 20 7626 2828 Fax: (44) 20 7283 6674

New York Maybank Kim Eng Securities USA Inc 777 Third Avenue, 21st Floor New York, NY 10017, U.S.A. Tel: (212) 688 8886 Fax: (212) 688 3500

Stockbroking Business: Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888 Fax: (603) 2282 5136

Hong Kong Kim Eng Securities (HK) Ltd Level 30, Three Pacific Place, 1 Queen’s Road East, Hong Kong Tel: (852) 2268 0800 Fax: (852) 2877 0104

Indonesia PT Kim Eng Securities Plaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

India Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India Tel: (91).22.6623.2600 Fax: (91).22.6623.2604

Philippines Maybank ATR Kim Eng Securities Inc. 17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200 Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

Thailand Maybank Kim Eng Securities (Thailand) Public Company Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

Vietnam In association with

Kim Eng Vietnam Securities Company 1st Floor, 255 Tran Hung Dao St. District 1 Ho Chi Minh City, Vietnam Tel : (84) 838 38 66 36 Fax : (84) 838 38 66 39

Saudi Arabia In association with

Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686 Fax: (966) 26068787

South Asia Sales Trading Connie TAN [email protected] Tel: (65) 6333 5775 US Toll Free: 1 866 406 7447

North Asia Sales Trading Eddie LAU [email protected] Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267

www.maybank-ke.com | www.kimengresearch.com | www.kimeng.com.hk

Regulatory Disclosures as required by the Hong Kong Securities and Futures Commission Policies of Kim Eng Securities (Hong Kong) Limited (“KESHK”): Research analysts who publish investment research are not directly supervised by, and do not report directly to, investment banking or sales and trading personnel. Research analysts’ compensation or remuneration should not be linked to any specific investment banking function or to recommendations in research. Research analysts or their associates are prohibited from dealing in the securities or any derivatives of any companies the research analysts review/analyse/cover. Research analysts or their associates are prohibited from holding any directorship or other position in any company the research analysts review/analyse/cover. Group companies of Kim Eng (inclusive of KESHK) which are carrying on a business in Hong Kong in investment banking, proprietary trading or market making or agency broking (the “Firms”) are not a market maker in the securities of the subject companies mentioned in this report. The Firms do not have any investment banking relationship with the companies mentioned in this report within the last 12 months. As of 18 April 2012, Kim Eng Securities (Hong Kong) Limited and the authoring analyst does not have interests in the said company/companies. Additional Disclaimers (for purpose of distribution in Singapore) This report has been produced as of the date hereof and the information herein maybe subject to change. Maybank Kim Eng Research Pte Ltd ("MBKERPL") in Singapore has no obligation to update such information for any recipient. Recipients of this report are to contact MBKERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), MBKERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. As of 18 April 2012, MBKERPL does not have an interest in the said company/companies. Analyst Certification The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. © 2012 Kim Eng Securities (Hong Kong) Limited. All rights reserved. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Kim Eng Securities (Hong Kong) Limited. Kim Eng Securities (Hong Kong) Limited accepts no liability whatsoever for the actions of third parties in this respect.

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