Company Update, 24 October 2014 TCL Multimedia Technology (1070 HK) Technology - Hardware & Equipment Market Cap: USD450m Sell (Maintained) Target Price: Price: HKD1.90 HKD2.62 Macro Risks A Disappointing Recovery Growth Value TCL Multimedia Technology (1070 HK) Price Close Relative to Hang Seng Index (RHS) 4.10 128 3.90 121 3.70 115 3.50 108 3.30 101 3.10 95 2.90 88 2.70 81 2.50 75 2.30 25 68 15 Aug-14 Jun-14 Apr-14 Feb-14 Dec-13 Oct-13 Vol m 5 Source: Bloomberg Avg Turnover (HKD/USD) Cons. Upside (%) Upside (%) 52-wk Price low/high (HKD) Free float (%) Share outstanding (m) Shareholders (%) 5.62m/0.72m 23.7 -27.5 2.50 - 3.93 38 1,334 TCL Corporation 61.9 Share Performance (%) YTD 1m 3m 6m 12m Absolute (27.2) (10.6) (8.7) (12.7) (23.0) Relative (27.6) (8.8) (6.3) (16.7) (24.8) Worse-than-expected 3Q14 results. TCL Multimedia’s (TCL) recurring earnings of HKD59m for 3Q14 missed our forecast by 52% mainly on: i) 21% revenue miss, ii) lower-than-expected other income (mostly government grants) and iii) higher-than-expected tax rates. Its GPM of 17.2% was in line with our 17.0% forecast while opex to sales was 0.2ppt higher than expected. While inventory turnover improved YoY in 3Q14 to 60 days from 72 days, its accounts payable turnover fell to 183 days from 206 days. TCL turned into a net debt with 15% net gearing vs net cash in 2Q14. Its recurring EPS in 3Q14 was HKD0.044. Headwinds in TV market share & smart TV platform. In contrast to Skyworth’s (751 HK, BUY, TP: HK4.70) 10% YoY growth in China TV shipments in Jul-Sep 2014, TCL’s 3Q14 China TV shipments have fallen 11% YoY. Note that both companies suffered large ASP declines YoY in 3Q14. TCL’s loss of market share is alarming because, even given the low base of 3Q13 (due to the expiry of the energy saving subsidy), it has not managed to grow. Also, despite efforts to grow its smart TV platform, its active user base dipped 1% MoM to 1.3m in Sep 2014. While it is too early to say if its TV platform has failed to uphold user interest, management should carefully monitor its smart TV platform strategy. TP lowered to HKD1.90 (from HKD2.40), maintain SELL. We cut our FY14F-16F recurring net profit by 27%/22%/26%, mainly on lower revenue forecasts. We lower our TP to HKD1.90, based on the same 7x FY15F P/E, which is at a discount to 8x target FY15F (Mar) P/E for Skyworth. We continue to prefer Skyworth due to its solid TV hardware business with better margins (see Figure 6). We are negative on TCL as its bread-and-butter TV hardware business is losing market share to its peers while its smart TV platform faces uncertain growth prospects. Forecasts and Valuations Dec-12 Dec-13 Total turnover (HKDm) 36,025 39,495 33,199 34,523 35,405 Reported net profit (HKDm) 911 (48) 342 359 445 Recurring net profit (HKDm) 734 (236) 209 359 445 189.8 (132.1) 71.7 24.0 Recurring EPS (HKD) 0.56 (0.18) 0.16 0.27 0.33 DPS (HKD) 0.25 0.29 0.08 0.08 0.10 16.8 9.8 7.9 0.80 0.77 0.73 0.68 5.9 Recurring net profit growth (%) Shariah compliant Christopher Tse +852 2103 9415 Recurring P/E (x) [email protected] P/B (x) 4.7 0.72 na Dec-14F Dec-15F Dec-16F na P/CF (x) 7.6 6.1 10.9 19.7 Kong Yong Ng 852 2103 5844 Dividend Yield (%) 9.6 11.1 2.9 3.1 3.8 [email protected] EV/EBITDA (x) 3.8 29.1 14.4 7.6 8.9 Return on average equity (%) Net debt to equity (%) Our vs consensus EPS (adjusted) (%) 22.0 na (1.1) na 7.6 net cash net cash net cash net cash net cash (34.7) (11.9) (8.8) Source: Company data, RHB See important disclosures at the end of this report 2 . 3 0 . 2 0 0 . 2 0 0 TCL’s 3Q14 recurring earnings missed our estimate by 52% even . 0 though it was an improvement over 2Q14. We are also concerned about 0 its 3Q shipments, which fell 11% despite last year’s low base, while its 0 smart TV platform saw a decrease in active users in Sep 2014 despite the company’s transition efforts. Overall, we slash our FY14F-16F numbers by 22-27% and cut our TP to HKD1.90 (from HKD2.40), implying a 27.7% downside based on 7x FY15F P/E. Maintain SELL. 20 10 Powered by EFATM Platform 1 TCL Multimedia Technology (1070 HK) 24 October 2014 Figure 1: Quarterly results FYE Dec 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Operating data 3Q14 QoQ YoY Actual 3Q14F Diff Forecast Total TV shipment PRC 2.54 2.02 2.49 2.89 1.80 1.76 2.22 26.7% -10.6% 2.91 -23.5% Overseas 1.72 2.22 2.44 1.94 2.04 2.07 2.16 4.5% -11.3% 2.38 -9.2% PRC 2,636 2,718 2,487 2,534 2,414 2,414 2,336 -3.2% -6.0% 2,430 -3.9% Overseas 1,489 1,347 1,271 1,672 1,460 1,460 1,462 0.1% 15.0% 1,480 -1.2% 19.8% 18.9% 15.8% 14.1% 16.7% 24.0% 21.8% -2.2 ppt +6.0 ppt 20.0% +1.8 ppt 8.5% 7.5% 9.5% 8.5% 10.3% 11.2% 10.3% -0.9 ppt +0.8 ppt 11.0% -0.7 ppt TV 9,244 8,463 9,289 10,553 7,329 7,261 8,357 15.1% -10.0% 10,592 -21.1% PRC 6,683 5,479 6,190 7,314 4,348 4,239 5,197 22.6% -16.0% 7,069 -26.5% Overseas 2,561 2,985 3,099 3,239 2,982 3,022 3,161 4.6% 2.0% 3,523 -10.3% 140 229 521 1,054 559 53 41 Total TV ASP GPM PRC Overseas P&L (HKDm) Revenue Others Total revenue 9,385 8,693 9,810 11,607 7,889 7,314 8,398 Cost of revenue (7,837) (7,400) (8,551) (10,293) (6,863) (5,958) (6,950) Gross profit GPM Total opex Opex / sales ratio Operating profit OPM Other income / expenses 53 14.8% -14.4% 10,645 1,547 1,293 1,260 1,314 1,026 1,356 1,448 6.8% 15.0% 1,811 -20.0% 16.5% 14.9% 12.8% 11.3% 13.0% 18.5% 17.2% -1.3 ppt +4.4 ppt 17.0% +0.2 ppt (1,365) (1,425) (1,541) (1,722) (1,076) (1,404) (1,427) -14.5% -16.4% -15.7% -14.8% -13.6% -19.2% -17.0% +2.2 ppt -1.3 ppt -16.8% (1,788) -0.2 ppt 182 (132) (281) (408) (51) (47) 21 n.a n.a 23 -8.2% 1.9% -1.5% -2.9% -3.5% -0.6% -0.6% 0.3% 0.2% 68 153 123 327 68 234 118 125 PBT 251 21 (158) (81) 18 186 139 148 Income tax (77) 0 8 (87) (6) (30) (68) (24) 30.8% -0.9% 5.0% -107.2% 33.0% 16.2% 49.0% 16.0% (2) (12) Effective tax rate MI Discontinued operations -21.1% (8,834) (13) (5) (4) 35 42 12 8 - 3 - - (2) - Net profit - reported 186 59 (142) (160) 15 154 59 NPM - reported 2.0% 0.7% -1.4% -1.4% 0.2% 2.1% 0.7% -61.9% n.a 122 -52.1% 1.1% Net profit - recurring 195 59 (142) (347) 15 21 59 NPM - recurring 2.1% 0.7% -1.4% -3.0% 0.2% 0.3% 0.7% 185.3% n.a 122 -52.1% EPS - reported 0.147 0.044 (0.107) (0.120) 0.011 0.116 0.044 -61.9% n.a 0.092 -51.7% EPS - recurring 0.147 0.044 (0.107) (0.261) 0.011 0.016 0.044 185.2% n.a 0.092 -51.7% 1.1% Source: Company data, RHB See important disclosures at the end of this report 2 TCL Multimedia Technology (1070 HK) 24 October 2014 Figure 2: Changes to our forecasts FYE 31 Dec FY14F FY15F FY16F Original New Chg. Original New Chg. Original New Chg. PRC 9.7 8.5 -12.6% 9.9 8.7 -12.6% 10.0 8.8 -12.6% Overseas 8.7 8.5 -1.9% 9.1 9.2 0.9% 9.5 9.7 2.8% 18.2 17.0 -6.8% 19.0 17.8 -6.2% 19.5 18.5 -5.1% PRC 2,431 2,364 -2.8% 2,431 2,340 -3.7% 2,407 2,317 -3.8% Overseas 1,476 1,460 -1.0% 1,461 1,475 1.0% 1,461 1,482 1.5% Average 1,998 1,912 -4.3% 1,967 1,895 -3.6% 1,947 1,878 -3.6% TV 36,440 32,505 -10.8% 37,420 33,829 -9.6% 37,952 34,711 -8.5% PRC 23,651 20,092 -15.0% 24,124 20,289 -15.9% 24,124 20,287 -15.9% Overseas 12,790 12,413 -2.9% 13,296 13,540 1.8% 13,828 14,424 4.3% 719 695 -3.4% 719 695 -3.4% 719 695 -3.4% Total revenue 37,160 33,199 -10.7% 38,139 34,523 -9.5% 38,671 35,405 -8.4% Cost of revenue -10.9% (31,922) (28,915) -9.4% (32,368) (29,730) -8.1% 6,217 5,608 -9.8% 6,303 5,676 -10.0% TV Shipments (million units) Total TV ASP (HKD) P&L (HKDm) Others (31,113) (27,731) Gross profit 6,046 5,469 Gross profit margin 16.3% 16.5% 16.3% 16.2% 16.3% 16.0% Selling expenses (4,355) (4,018) (4,386) (3,970) (4,370) (4,001) Admin expenses (1,088) (1,032) (1,030) (967) (1,005) (921) R&D (608) (428) (572) (518) (541) (496) Other (50) (51) (52) (53) (52) (54) -16.4% -16.7% -15.8% -16.0% -15.4% -15.5% OPEX as % of revenue Operating profit Operating profit margin (55) (61) -0.1% -0.2% -9.6% 11.3% 177 100 0.5% 0.3% -43.5% 334 204 0.9% 0.6% Other income 868 763 687 621 696 637 Finance costs (231) (197) (237) (205) (240) (210) JC entities (5) (17) (5) (17) (5) (17) Associates (70) 0 (70) 0 (70) Derivative gain (losses) - PBT Income tax Effective tax rate MI Net profit - reported NPM - reported Net profit - recurring NPM - recurring - - - 488.7 552.1 500.4 715.5 615.0 -85 -130 (88) (125) (114) (154) -17% -27% -16% -25% -16% -25% -4 -16 -4 -16 -4 342 1.1% 1.0% 286 209 0.8% 0.6% -18.4% -27.0% 460 359 1.2% 1.0% 460 359 1.2% 1.0% -9.4% 0 - 508.1 419 -3.8% - -22.0% -22.0% -38.9% -14.0% -16 597 445 1.5% 1.3% 597 445 1.5% 1.3% -25.5% -25.5% Source: RHB See important disclosures at the end of this report 3 TCL Multimedia Technology (1070 HK) 24 October 2014 Figure 3: Detailed P&L 31 Dec YE (HKD m) FY12 FY13 FY14F FY15F FY16F Revenue TV 35,086 37,550 32,505 33,829 34,711 PRC 23,146 25,666 20,092 20,289 20,287 Overseas 11,939 11,884 12,413 13,540 14,424 939 1,945 695 695 695 36,025 39,495 33,199 34,523 35,405 Others Total revenue YoY Cost of revenue Gross profit 9.4% 9.6% -15.9% 4.0% 2.6% (29,880) (34,081) (27,731) (28,915) (29,730) 5,676 6,145 5,414 5,469 5,608 YoY 16.2% -11.9% 1.0% 2.5% 1.2% Gross profit margin 17.1% 13.7% 16.5% 16.2% 16.0% Selling expenses (4,221) (4,539) (4,018) (3,970) (4,001) Admin expenses (951) (1,061) (1,032) (967) (921) R&D (336) (425) (428) (518) (496) Other (51) (28) (51) (53) (54) -15.4% -15.3% -16.7% -16.0% -15.5% opex / sales % Operating profit YoY Operating profit margin 586 (638) (61) 100 204 95.3% -208.9% -90.5% -265.0% 103.8% 1.6% -1.6% -0.2% 0.3% 0.6% Other income 586 890 763 621 637 Non-core 189 188 159 0 (275) (186) (197) (205) (210) Finance costs 0 JC entities 4 (2) (17) (17) (17) Associates (18) (31) 0 0 0 0 0 0 0 0 883 33 489 500 615 Derivative gain (losses) PBT Income tax Effective tax rate (57) (156) (130) (125) (154) 6.5% 472.2% 26.6% 25.0% 25.0% MI (11) (14) (16) (16) (16) Net profit - excluding Tonly 816 (137) 342 359 445 Discontinued operations Net profit - reported YoY 95 89 0 0 0 911 (48) 342 359 445 101.3% -105.3% -811.6% 4.9% 24.0% Net profit margin 2.5% -0.1% 1.0% 1.0% 1.3% Net profit - recurring 734 (236) 209 359 445 189.8% -132.1% -188.6% 71.7% 24.0% 2.0% -0.6% 0.6% 1.0% 1.3% YoY Net profit - recurring Source: Company data, RHB Figure 4: Annual LCD TV shipments Shipment (million units) FY12 FY13 FY14F FY15F FY16F PRC 8.9 9.9 8.5 8.7 8.8 Overseas 6.7 7.3 8.5 9.2 9.7 15.5 17.2 17.0 17.8 18.5 PRC 34.1% 11.9% -14.2% 2.0% 1.0% Overseas 56.8% 9.1% 16.8% 8.0% 6.0% Total 43.0% 10.7% -1.1% 5.0% 3.6% Total YoY growth Source: Company data, RHB See important disclosures at the end of this report 4 TCL Multimedia Technology (1070 HK) 24 October 2014 Figure 5: Peer comparison Company Ticker Price Mkt cap (USDm) 3-mth P/E FY13 P/E FY14 P/E FY15 avg t/o (x) (x) (x) (USDm) 0.8 (14.8) 16.8 9.8 Tcl Multimedia T 1070 HK 2.62 450 N/A 11.1 2.9 0.7 Skyworth Digital 751 HK* 4.15 1,518 4.1 8.7 7.0 6.1 23.8 14.9 6.3 1.1 3.6 4.7 1.0 Haier Electronic 1169 HK 20.30 7,026 8.4 20.0 17.6 14.5 13.4 21.3 16.6 0.9 0.5 0.6 4.2 14.4 12.3 10.3 18.6 18.1 11.5 1.0 2.1 2.7 2.6 1.3 Average (HK-listed) EPS FY14 yo-y N/A EPS 3-Yr EPS FY15 yCAGR o-y (%) 71.7 N/A PEG (x) Div yld Div yld P/BV FY13 (%) FY14 (%) FY14 (x) China-listed peers Hisense Elec-A 600060 CH 11.03 2,358 67.6 9.1 9.7 9.7 (6.4) 9.4 4.3 2.0 3.3 2.1 Sichuan Chang-A 600839 CH 4.33 3,266 52.7 39.4 216.5 216.5 (81.8) 465.0 17.8 n.a. 0.5 0.2 1.4 Konka Group-A 000016 CH 5.13 833 14.6 136.8 N/A N/A N/A N/A n.a. 0.2 N/A N/A 61.8 113.1 113.1 237.2 11.1 2.0 1.3 1.1 1.4 Average (China-listed) N/A (44.1) Source: Company data, RHB Figure 6: Margin comparisons Rev FY13 (USDm) Rev FY14 (USDm) Rev Gross Gross Gross Net Net Net FY15 NP FY13 NP FY14 NP FY15 margin margin margin margin margin margin (USDm) (USDm) (USDm) (USDm) FY13 (%) FY14 (%) FY15 (%) FY13 (%) FY14 (%) FY15 (%) Symbol HK-listed Company 1070 HK TCL MULTIMEDIA T 5090 4223 4394 -30 27 47 13.7 16.4 16.2 -0.6 0.6 1.1 751 HK SKYWORTH DIGITAL 5,088 5,823 6,378 172 213 245 19.3 19.8 19.8 3.4 3.7 3.8 1169 HK HAIER ELECTRONIC 10,174 11,563 13,209 333 400 482 14.7 14.6 14.6 3.3 3.5 3.7 15.9 16.9 16.9 2.0 2.6 2.9 5.0 Average China-listed 600060 CH HISENSE ELEC-A 4637 4733 5195 259 235 258 17.6 17.2 17.3 5.6 5.0 600839 CH SICHUAN CHANG-A 9541 9684 10367 84 -31 64 15.9 14.7 15.5 0.9 -0.3 0.6 000016 CH KONKA GROUP-A 3258 N/A N/A 7 N/A N/A 16.4 N/A N/A 0.2 N/A N/A 16.6 16.0 16.4 2.2 2.3 2.8 Average Source: Bloomberg, RHB See important disclosures at the end of this report 5 TCL Multimedia Technology (1070 HK) 24 October 2014 Financial Exhibits Profit & Loss (HKDm) Dec-12 Dec-13 Dec-14F Dec-15F Total turnover 36,025 39,495 33,199 34,523 35,405 Cost of sales (29,880) (34,081) (27,731) (28,915) (29,730) Gross profit 6,145 5,608 5,676 Gen & admin expenses Selling expenses Other operating costs Dec-16F 5,414 5,469 (951) (1,061) (1,032) (967) (921) (4,221) (4,539) (4,018) (3,970) (4,001) (387) (452) (479) (571) (550) Operating profit 586 (638) (61) 100 204 Operating EBITDA 586 (638) (61) 100 204 Operating EBIT 586 (638) (61) 100 204 Net income from investments (14) (33) (16) (16) (16) Other recurring income 397 702 604 621 637 (275) (186) (197) (205) (210) 189 188 159 - 95 89 - - - Pre-tax profit 979 122 489 500 615 Taxation (57) (156) (130) (125) (154) Minority interests (11) (14) (16) (16) (16) Profit after tax & minorities 911 (48) 342 359 445 Reported net profit 911 (48) 342 359 445 Recurring net profit 734 (236) 209 359 445 Interest income Exceptional income - net Other non-recurring income - Source: Company data, RHB Cash flow (HKDm) Operating profit Change in working capital Other operating cash flow Operating cash flow Interest received Tax paid Cash flow from operations Capex Other new investments Other investing cash flow Cash flow from investing activities Proceeds from issue of shares Increase in debt Other financing cash flow Cash flow from financing activities Cash at beginning of period Total cash generated Implied cash at end of period Dec-12 Dec-14F Dec-15F Dec-16F 586 (638) (61) 100 204 (432) 538 (166) (321) (23) 853 723 770 561 Dec-13 1,092 715 992 626 502 952 (275) (186) (197) (205) (210) 12 (235) (107) (118) (149) 452 571 323 179 592 76 (300) (300) (300) (1,142) 0 0 (32) (361) (1,174) (284) 249 (325) 13 (1,008) 354 (508) 278 (1,503) 4,708 (444) 4,264 4,264 (1,216) 3,048 - - - - (300) - (300) - (300) - 322 93 62 (413) (248) (309) (92) 3,048 (69) 2,979 (156) 2,979 (277) 2,702 (247) 2,702 45 2,747 Source: Company data, RHB See important disclosures at the end of this report 6 TCL Multimedia Technology (1070 HK) 24 October 2014 Financial Exhibits Balance Sheet (HKDm) Dec-12 Dec-13 Dec-14F Dec-15F Dec-16F Total cash and equivalents 4,264 3,048 2,979 2,702 2,747 Inventories 6,732 4,972 4,160 4,337 4,459 Accounts receivable 4,338 3,797 3,320 3,452 3,541 Other current assets 9,614 7,109 5,840 6,072 6,226 Total current assets 24,948 18,925 16,298 16,563 16,973 Total investments 177 528 528 528 528 2,630 2,564 2,864 3,164 3,464 Intangible assets 120 120 120 120 120 Total other assets 151 18 18 18 18 3,078 3,230 3,530 3,830 4,130 Tangible fixed assets Total non-current assets Total assets 28,026 22,156 19,828 20,393 21,103 Short-term debt 2,608 870 1,992 2,071 2,124 Accounts payable 9,263 5,473 4,437 4,337 4,459 Other current liabilities 10,716 10,168 8,332 8,669 8,900 Total current liabilities 22,587 16,511 14,760 15,077 15,484 402 1,132 332 345 354 45 31 31 31 31 448 1,163 362 376 385 Total long-term debt Other liabilities Total non-current liabilities Total liabilities 23,034 17,673 15,123 15,453 15,868 Share capital 1,321 1,334 1,334 1,334 1,334 Retained earnings reserve 3,444 3,025 3,264 3,515 3,827 Shareholders' equity 4,765 4,358 4,598 4,849 5,160 Minority interests 227 124 108 91 Other equity - 0 0 0 Total equity Total liabilities & equity 75 - 4,992 4,482 4,705 4,940 5,235 28,026 22,156 19,828 20,393 21,103 Dec-12 Dec-13 Dec-14F Dec-15F Dec-16F 9.4 9.6 (15.9) 4.0 2.6 95.3 (208.9) (90.5) 0.0 103.8 Source: Company data, RHB Key Ratios (HKD) Revenue growth (%) Operating profit growth (%) Net profit growth (%) 101.3 (105.3) 0.0 4.9 24.0 EPS growth (%) 66.6 (105.2) 0.0 4.9 24.0 Bv per share growth (%) 11.6 (10.1) 4.4 5.5 6.4 Operating margin (%) 1.6 (1.6) (0.2) 0.3 0.6 Net profit margin (%) 2.5 (0.1) 1.0 1.0 1.3 Return on average assets (%) 3.5 (0.2) 1.6 1.8 2.1 Return on average equity (%) 22.0 (1.1) 7.6 7.6 8.9 (25.1) (23.3) (13.9) (5.8) (5.1) DPS 0.25 0.29 0.08 0.08 0.10 Recurrent cash flow per share 0.35 0.43 0.24 0.13 0.44 Net debt to equity (%) Source: Company data, RHB See important disclosures at the end of this report 7 TCL Multimedia Technology (1070 HK) 24 October 2014 SWOT Analysis Market leader in small- to mid-sized TVs Market is becoming very competitive and price cuts are becoming common Established distribution channels in China and overseas. Demand in China’s TV replacement market Transition to entertainment and hardware could bring in new revenue A slower ramp-up in its product mix relative to peers P/E (x) vs EPS growth P/BV (x) vs ROAE 60 400% 40 100% 20 -200% 0 -500% P/E (x) (lhs) EPS growth (rhs) Source: Company data, RHB 1 10% 1 3% 1 -5% P/B (x) (lhs) Jan-16 700% 18% Jan-15 1000% 80 1 Jan-14 1300% 100 25% Jan-13 120 1 Jan-12 1600% Jan-16 1900% 140 Jan-15 160 Jan-14 2200% Jan-13 2500% 180 Jan-12 200 Return on average equity (rhs) Source: Company data, RHB Company Profile TCL Multimedia is China’s largest TV manufacturer by shipment. The company also supplies TV to overseas markets and currently ranks in the top 5 globally in terms of shipment, according to DisplaySearch. See important disclosures at the end of this report 8 TCL Multimedia Technology (1070 HK) 24 October 2014 Recommendation Chart Price Close 2.40 2.44 2.45 3.36 4.39 8.36 7.00 8.06 5.86 Recommendations & Target Price na 8.00 6.00 5.00 4.00 3.00 2.00 Buy 1.00 Oct-09 Neutral Feb-11 Sell Trading Buy May-12 Take Prof it Not Rated Aug-13 Source: RHB, Bloomberg Date Recommendation 2014-08-15 Sell Target Price Price 2.40 3.10 2014-04-25 Sell 2.44 2.88 2014-02-25 Sell 2.45 3.33 2014-02-13 Neutral 3.36 3.72 2013-12-06 Neutral 3.36 3.93 2013-11-04 Neutral 3.36 3.46 2013-08-19 Neutral 4.39 4.10 2013-05-20 Buy 8.36 5.48 2013-04-09 Buy 8.36 5.44 2013-03-08 Buy 8.36 5.57 Source : RHB, Bloomberg See important disclosures at the end of this report 9 RHB Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but RHB does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. No part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. This report is general in nature and has been prepared for information purposes only. It is intended for circulation to the clients of RHB and its related companies. Any recommendation contained in this report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. 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DMG & Partners Research Guide to Investment Ratings Kuala Lumpur Hong Kong Singapore Malaysia Tel : +(60) 3 9280 2185 Fax : +(60) 3 9284 8693 19 Des Voeux Road Central, Hong Kong Tel : +(852) 2525 1118 Fax : +(852) 2810 0908 Tel : +(65) 6533 1818 Fax : +(65) 6532 6211 Buy: Share price may exceed 10% over the next 12 months Trading Buy:Malaysia Share price may exceed 15% over theRHB nextOSK 3 months, however longer-term outlook remains uncertain Research Office Securities Hong Kong Ltd. (formerly known DMG & Partners Neutral: Share mayInstitute fall within months as 12 OSK Securities Securities Pte. Ltd. RHB price Research Sdn the Bhdrange of +/- 10% over the next Take Profit: Target price One, has been attained. Look to accumulate at lower Honglevels Kong Ltd.) Level 11, Tower RHB Centre 10 Collyer Quay Sell: Share price may more than 10% over the next 12 months Jalanfall TunbyRazak 12th Floor #09-08 Ocean Financial Centre Lumpur World-Wide House Singapore 049315 Not Rated: Stock isKuala not within regular research coverage DISCLAIMERS Phnom Penh This research is issuedJakarta by DMG & Partners Research Pte Ltd and it is forShanghai general distribution only. It does not have any regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate particular PT RHB OSK and Securities Indonesia (formerlyfinancial known asadviser RHB OSK (China) Advisory Ltd. into any RHBtransaction OSK Indochina Securities Limited (formerly investments consult an independent before makingInvestment any investments or Co. entering in relation to any securities or PT OSKmentioned Nusadana in this report. (formerly known as OSK (China) Investment known as OSK Indochina Securities Limited) investment instruments Securities Indonesia) Plaza CIMB Niaga Advisory Co. Ltd.) Suite 4005, CITIC Square No. 1-3, Street 271 Sangkat Toeuk Thla, Khan Sen Sok Tel : +(6221) 2598 6888 Tel : +(8621) 6288 9611 Fax: +(855) 23 969 171 The information contained herein has been obtained from sources 1168 we believed to be reliable but we do not make any representation or warranty nor 14th Floor Nanjing West Road Phnom Penh accept any responsibility or liability as to its accuracy, completeness orShanghai correctness. are subject to change Jl. Jend. Sudirman Kav.25 20041Opinions and views expressed in this report Cambodia without notice. Jakarta Selatan 12920, Indonesia China Tel: +(855) 23 969 161 Fax : +(6221) 2598or6777 Faxof: +(8621) 6288 9633or sell any securities. 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