CIMB Navigating Thailand 2015 Dec 2014.pdf

Navigating Thailand│2015 December 12, 2014

1

Navigating Thailand│2015 December 12, 2014

Table of Contents Tighten your seatbelts................................................................................................................................. 6 1.

2.

3.

4.

5.

REVIEW ........................................................................................................................................... 6 1.1

Political developments before the coup .............................................................................. 6

1.2

Then came the May 2014 coup ........................................................................................... 6

1.3

Long honeymoon period ..................................................................................................... 7

Themes for Thai market in 2015 ...................................................................................................... 9 2.1

No election in 2015 means less noise in 1H15, but… .......................................................... 9

2.2

Political labyrinth ................................................................................................................ 9

2.3

Government needs to deliver infrastructure projects ...................................................... 10

2.4

Tourism recovery............................................................................................................... 13

2015 ECONOMIC OUTLOOK ........................................................................................................ 16 3.1

2015 Macro outlook........................................................................................................... 16

3.2

The recovery so far… ......................................................................................................... 16

3.3

Exports not making the cut ............................................................................................... 18

3.4

Liquidity conditions stable ................................................................................................ 18

3.5

Inflation and interest rate outlook .................................................................................... 20

3.6

Risks and issues to watch .................................................................................................. 20

RISKS.............................................................................................................................................. 22 4.1

Strong economic headwinds ............................................................................................. 22

4.2

Weak farm prices and lack of major stimulus measures .................................................. 23

4.3

Further cuts in earnings forecasts likely ........................................................................... 25

4.4

Further delay in auction of 1800 MHz licences likely ...................................................... 25

4.5

Energy reform and impact on retail gas prices ................................................................. 26

4.6

Capital outflow?................................................................................................................. 30

VALUATION AND RECOMMENDATIONS .................................................................................. 35 5.1

Remain cautious with an unchanged 1,610 index target by end-2015 ............................. 35

5.2

Sector allocation strategy .................................................................................................. 37

5.3

Top picks............................................................................................................................ 38

Sector Briefs .............................................................................................................................................. 43 Company Briefs ......................................................................................................................................... 69 Appendices .............................................................................................................................................. 201

2

Navigating Thailand│2015 December 12, 2014

THAILAND

CIMB Analyst(s)

NAVIGATING THAILAND

Tighten your seatbelts We believe that the market has priced in a V-shaped recovery, while a U-shaped one is more likely. The economy is slowing down and more earnings cuts are likely. Valuations are not cheap given the 20% rise YTD. A stronger US$ and higher overseas rates could trigger outflows.

—————————————————————————————————————————

Kasem Prunratanamala, CFA T (66) 2 6579221 E [email protected] Julia GOH T (60) 3 2261 9097 E [email protected]

Figure 1: SET's forward P/E band 20.0

+2SD : 17.0

18.0

16.0

+1SD : 14.5

14.0

Mean : 12.1

12.0 Show Style "View Doc Map"

-1SD : 9.6

10.0

-2SD : 7.2

8.0 6.0

Highlighted Companies Bangkok Dusit Medical (BGH) A prime beneficiary of the ASEAN Economic Community (AEC), as patients from neighbouring countries are able to cross borders more easily to seek medical treatment in Thailand, thanks to its growing hospital network nationwide. Gunkul Engineering (GUNKUL) Gunkul has recurring income from two large 60mw wind farm projects in 2015-16 for both engineering, procurement and construction (EPC) and operations. This would account for an estimated 80% of its earnings by 2017. Its Myanmar exposure provides more earnings upside. Ratchaburi Electricity (RATCH) Its solid earnings growth of over 30% in 2014-2016, will stem from additional capacity of 750MW (13%) for its 40%-owned Hongsa coal-fired power plant in 2015-16. Thaicom (THCOM) New customer contracts and satellite projects will increase the upside potential to our earnings forecasts, which are already 11% higher than consensus in 2014 and 18% higher in 2015.

4.0 Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

12M Fwd Core P/E

SOURCES: CIMB, COMPANY REPORTS

We remain cautious on the market with an unchanged end-CY15 index target of 1,610, based on 12.1x CY16 P/E (5-year mean). Our regional strategist, Mr Jason Todd, remains Underweight on Thailand. We prefer defensive counters (healthcare, alternative energy and utilities) and sectors that are less exposed to domestic demand (hotels). Our top picks are AOT, BGH, GUNKUL, KCE, MINT, RATCH and THCOM.

Laying the foundation The government plans to introduce inheritance tax and raise value-added tax by 1% pt to 8% in Oct 15. The energy reform programme is likely to raise retail NGV prices by about 16% over the next couple of quarters. If the government were to bring the excise tax on diesel to be on par with that for other types of gasoline, diesel price should rise by 17%. Fewer farm subsidies are likely to cap the rebound in consumption in upcountry. Although these structural changes are good for the long term, we believe that the adjustment process will be painful

3

and the market has not factored this in yet. Therefore, near-term risks are high.

Themes: focus on defensive and tourism We believe that the weak economy will continue to weigh on domestic demand. Therefore, we focus on defensive sectors such as healthcare, which also benefits from medical tourism and utilities. They are less sensitive to a slow domestic recovery. Moreover, we believe that tourism will see strong rebound not only from higher tourist arrivals, but also from higher margins as occupancies approach optimum levels.

Infrastructure a long shot The progress on government infrastructure projects has been disappointing. However, it seems to be the only hope for 2015 if the government can really speed up its infrastructure plans. We believe that contractor stocks have already priced in more government projects.

Navigating Thailand│2015 December 12, 2014

KEY CHARTS 18% market EPS growth for 2015 way too high

130

1,800.00

125

To date, consensus EPS forecasts have been lowered by 14% for 2014 and 11% for 2015, although the Stock Exchange of Thailand (SET) Index has moved up 20% YTD.

1,600.00

120

1,400.00

115

1,200.00

110 105

1,000.00

100

800.00

95 90

600.00

85

400.00

SET EPS 2014

SET is at 13.6x CY15 P/E

SET EPS 2015

SET Index

19.0

The SET’s valuation is close to 1 s.d. above its 5-year mean which is not attractive, in our opinion.

+2SD : 17.0

17.0

+1SD : 14.5

15.0 13.0 11.0

Mean : 12.1 -1SD : 9.6

9.0 7.0

-2SD : 7.2

5.0 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

12M Fwd Core P/E

Local institutions supporting the market

Net Buy/Sell

Domestic institutional investors have been net buyers of THB47bn YTD, while retail investors were net sellers of THB55bn.

SET

40000

1800

30000

1600 1400

20000

1200

10000

1000 800

0

600

-10000

400 200

-30000

0

40179 40238 40299 40360 40422 40483 40544 40603 40664 40725 40787 40848 40909 40969 41030 41091 41153 41214 41275 41334 41395 41456 41518 41579 41640 41699 41760 41821 41883 41944

-20000

Local Institutes(LHS)

Weighting in SET

Sector allocation strategy We focus on sectors with less exposure to domestic demand, such as hotels and petrochem, as well as defensive counters, such as healthcare, utilities and alternative energy. Our top picks are AOT, BGH, GUNKUL, KCE, MINT, RATCH and THCOM.

SET Index (RHS)

Rec. Weighting

OW/UW (ppt)

OW/UW

Hotel

1.3%

2.5%

124

OW

Healthcare

3.0%

4.0%

98

OW

Utilities

1.7%

2.6%

92

OW

Petrochem

6.4%

7.2%

78

OW

Alternative Energy

0.9%

1.5%

60

OW

Technology

0.9%

1.4%

54

OW

Transportation

4.2%

4.5%

34

OW

Property

4.4%

4.8%

33

OW

Mining

0.5%

0.8%

27

OW

Construction

0.9%

1.0%

14

N

Food

0.6%

0.7%

6

Auto

0.2%

0.2%

(1)

UW

Construction Materials

N

0.1%

0.0%

(12)

UW

12.2%

12.0%

(22)

UW

0.3%

0.0%

(29)

UW

17.1%

16.3%

(78)

UW

1.4%

0.2%

(109)

UW

10.9%

9.5%

(142)

UW

Retail

4.8%

2.6%

(227)

UW

Total

71.7%

71.7%

Oil & Gas Agro Banking Media Telecom

-

SOURCE: CIMB, COMPANY REPORTS

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Navigating Thailand│2015 December 12, 2014

Figure 2: Top picks Company

Bloomberg Ticker

Airports of Thailand Bangkok Dusit Med Service Gunkul Engineering KCE Electronics Minor International Ratchaburi Electricity Thaicom Average

AOT TB BGH TB GUNKUL TB KCE TB MINT TB RATCH TB THCOM TB

Recom. Add Add Add Add Add Add Add

Price (local curr) 285.0 18.20 30.00 38.75 36.75 61.25 35.75

Target Price (local curr) 258.0 23.80 32.00 45.00 42.00 69.00 52.00

Market Cap (US$ m) 12,402 8,588 804 666 4,479 2,705 1,193

Core P/E (x) CY2014 CY2015 31.7 25.9 36.5 30.7 44.4 36.6 11.3 10.3 32.5 25.6 13.1 12.1 21.1 15.5 27.2 22.4

3-year EPS CAGR (%) 15.4% 17.2% 56.8% 27.1% 17.0% 20.3% 26.0% 25.7%

P/BV (x) Recurring ROE (%) CY2014 CY2015 CY2014 CY2015 4.08 3.69 13.5% 15.0% 6.23 5.57 18.0% 19.2% 7.33 6.24 18.6% 18.4% 3.67 2.93 35.7% 31.5% 5.23 4.60 17.0% 19.1% 1.53 1.43 12.0% 12.2% 2.32 2.12 11.5% 14.3% 4.34 3.79 18.0% 18.5%

EV/EBITDA (x) Dividend Yield (%) CY2014 CY2015 CY2014 CY2015 18.3 16.2 1.2% 1.5% 25.9 22.9 1.1% 1.4% 51.5 37.3 0.3% 0.5% 11.0 9.0 2.2% 2.6% 24.0 19.1 1.0% 1.3% 8.5 8.4 3.7% 3.9% 7.5 6.0 2.4% 4.8% 21.0 17.0 1.7% 2.3% SOURCES: CIMB, COMPANY REPORTS

Calculations are performed using EFA™ Monthly Interpolated Annualisation and Aggregation algorithms to December year ends

5

Navigating Thailand│2015 December 12, 2014

Tighten your seatbelts The conflict started when the Yingluck government had amended the Amnesty Bill in its second reading in Oct 2013 to allow former prime minister Thaksin and protest leaders, among other individuals, to gain amnesty. Protestors thought that the bill would allow him to get back his seized assets of THB46bn. The government was late in responding to the protests. Even though the government later dissolved the House, the rallies still continued. The government then set the date for the general election on 2 Feb 2014, but the Democrat Party boycotted the election. Voting was disrupted in many constituencies, and the election was later nullified by the Constitutional Court on the grounds that the Election Commission (EC) had failed to hold polls across the entire country on the same day, since the eligible voters in 28 constituencies failed to cast their ballots due to disruptions by anti-government protesters. The Election Commission and caretaker government were forced to set a new election date. The National Anti-Corruption Commission (NACC) resolved in early May 2014 to bring impeachment proceedings against Yingluck over the rice-pledging scheme. Thus, she was compelled to step down from being the caretaker premier, with Mr Niwatthamrong Boonsongpaisan becoming an acting caretaker prime minister.

Figure 3: Political events leading up to the May 2014 coup and SET index 1,600

1,550 Aug 8: House pass first reading of amnesty bill

Nov 11: Senate rejects bill

Mar 21: Feb 2 election was ruled unconstitutional

1,500 Nov 20: Court says Senate bill amendment breaches Constitution

May 7: Court ordered Yingluck to step down May 22: Military coup

1,450

Dec 2: Election; but with disruption; Yingluck continues as caretaker PM

1,400

Dec 21: Democrats to boycott election 1,350

Aug 4: Protest starts

May 20: Martial law is declared

1,300

Feb 28: End of Bangkok shutdown

Dec 9: PM dissolves House, call for snap poll

Feb 2: Election

1,250 Oct 31: House Passes 2nd /3rd reading

Jan 13: Bangkok Shutdown campaign begins

Jan 21: State of emergency

30/05/2014

16/05/2014

02/05/2014

18/04/2014

04/04/2014

21/03/2014

07/03/2014

21/02/2014

07/02/2014

24/01/2014

10/01/2014

27/12/2013

13/12/2013

29/11/2013

15/11/2013

01/11/2013

18/10/2013

04/10/2013

20/09/2013

06/09/2013

23/08/2013

09/08/2013

26/07/2013

12/07/2013

28/06/2013

1,200

14/06/2013

Yingluck Shinawatra, former Prime Minister

1.1 Political developments before the coup

31/05/2013

‘‘

If in 2016 there is a general election and I am still qualified to stand, I intend to run for parliament.

1. REVIEW

SOURCE: CIMB

1.2 Then came the May 2014 coup After almost seven months of political deadlock between the anti-government People’s Democratic Reform Committee (PDRC), led by former Democrat Party’s secretary general Mr Suthep Thaugsuban, and the Yingluck government; the military, led by the then-army chief General Prayuth Chan-o-cha, staged a

6

Navigating Thailand│2015 December 12, 2014

coup on 22 May 2014. This was Thailand’s 12th coup after the country turned into a constitution monarchy in 1932. The coup came as no surprise to us, as we believe that Mr Suthep had escalated the crisis, including setting up roadblocks, organising the Bangkok Shutdown in early Jan 2014, and blocking constituencies in many provinces in the South so that candidates could not register their applications, etc., in order to trigger a military intervention. But we were surprised that the Yingluck government did not see it coming, despite the fact that the military announced martial law on 20 May without informing the government in advance and that it refused to withdraw soldiers and their shelters even though the situation was calmer in early 2Q14. Both red shirt leaders and PDRC leaders walked into a trap, and they were locked up in a military barrack following two days of failed negotiations to settle their differences, after which the army chief declared a military coup. It was an easy coup on the part of the military, as leaders of both sides were locked up and their supporters could not do much without their leaders. Having learnt from the past coups, especially the one in 2006, the military this time round used stronger arm tactics. It has tried to disperse any political protests before ramping up the momentum. And even more than six months after the coup, the military still refused to lift martial law, despite the fact that there were few protests on the street. However, the curfew was lifted throughout the country on 13 Jun, about one month after the coup. Figure 4: Khon Kean University students were arrested when holding out three fingers as a sign of protest against the military coup in front of Prime Minister Prayuth while he was giving a speech in Khon Kean province. The students were later released

SOURCE: Twitter@WassanaNanuam

1.3 Long honeymoon period As the political crisis prior to the coup lasted longer than prior deadlocks, many Thais (generally from middle- and high-income segments) welcomed the coup as they thought that the coup would end the deadlock and allow the country to move forward. And thanks to the use of stronger arm tactics, the political situation after the coup has been calm. Therefore, the market has been positive on the political development and jumped 13% after the coup. Businesspeople were also positive as the political turmoil has created too much trouble for businesses over the past few years. Thus, they were happy that these politicians would have to lie low over the next couple of years. 7

Navigating Thailand│2015 December 12, 2014

With the surge in economic activities in early 3Q14, many people thought that the economy had undergone a V-shaped recovery following a more stable political environment. They have forgotten that many people withheld their spending during the 7-month political stalemate. Thus, when political situation remained calm after the coup, many Thais started to spend money and this caused a big jump in economic activities. However, we believe that once this pent-up demand is exhausted, economic activities will cool down again. And the 3Q14 GDP growth of only 0.6% yoy confirmed our belief. Figure 5: Long honeymoon period after the coup 1,700 Nov11 LTF tax breaks to end in 2016 1,650 1,600 1,550 May 22: Military coup 1,500

Oct 6 All 250 National Reform Council members appointed

May 7: Court ordered Yingluck to step down

1,450

Mar 21: Feb 2 election was ruled unconstitutional

1,400

Jan 13: Bangkok 1,350Shutdown campaign begins 1,300

May 20: Martial law is declared Feb 28: End of Bangkok shutdown

Feb 2: Election Jan 21: State of emergency

1,250

Nov-14

Nov-14

Oct-14

Oct-14

Sep-14

Sep-14

Aug-14

Aug-14

Jul-14

Jul-14

Jul-14

Jun-14

Jun-14

May-14

Apr-14

May-14

Apr-14

Mar-14

Mar-14

Feb-14

Jan-14

Feb-14

Jan-14

Jan-14

1,200

SOURCES: CIMB

Figure 6: The Thai market EPS has been revised down 14% this year and 11% next year, but the market has risen 20% YTD 130

1,800

125

1,600

120 1,400 115 110

1,200

105

1,000

100

800 95 600

90 85 Jan-14

400 Feb-14

Mar-14

Apr-14

May-14

SET EPS 2014

Jun-14

Jul-14

Aug-14

SET EPS 2015

Sep-14

Oct-14

Nov-14

SET Index

SOURCES: CIMB, COMPANY REPORTS

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Navigating Thailand│2015 December 12, 2014

2. Themes for Thai market in 2015 2.1 No election in 2015 means less noise in 1H15, but… It is unlikely that a general election can take place in 2015, as a new constitution is not drafted yet and it may need to go through a referendum, which could take some time. Moreover, it is likely that the reform process will take a longer time than originally thought. The fact that Thailand is highly unlikely to have an election in 2015 may be taken positively by the market, as politics have created many negative noises over the past decade. However, we believe that the market expectation has already run too high and it should already have given the government the benefit of the doubt in managing the economy. Therefore, we believe that the disappointment on the government’s economic management is more likely to outweigh the positives arising from the calm political climate. And with more disappointments on the economic front, we believe that the resistance against the military government will be stronger and those who had earlier supported the coup may start changing their minds. And since a general election is not likely to be held in 2015, rural economies will not be able to benefit from election campaigning activities. And if farm prices stay weak in 2015, it will be difficult to see a strong rebound in private consumption in the upcountry. Figure 7: Real GDP (% yoy) and general elections Northeastern

Northern

Greater Bangkok

1996

8.0%

9.6%

2.8%

Election

1997

0.9%

-1.1%

-6.5%

1998

-6.3%

-5.0%

-9.5%

1999

5.8%

5.8%

4.3%

2000

0.5%

-0.5%

6.1%

2001

1.1%

1.7%

5.4%

2002

5.7%

8.9%

3.8%

2003

8.9%

9.1%

5.7%

2004

2.7%

0.8%

6.9%

2005

1.9%

4.7%

4.5%

Y

2006

5.5%

1.3%

4.3%

Y

2007

5.4%

3.6%

4.9%

Y

2008

-0.9%

0.8%

0.7%

2009

6.3%

1.9%

-1.7%

2010

5.7%

3.5%

8.6%

2011

6.4%

4.6%

0.1%

2012

5.5%

6.2%

8.1%

Y

Y

Y

SOURCES: CIMB, COMPANY REPORTS

2.2 Political labyrinth Some may think that Gen Prayuth may want to contest in the next election to gain legitimacy. However, we think that the several policies that the government plans to implement over the next few months are not likely to win him popular support. For instance, higher NGV, LPG and diesel prices will hurt low-income people and businesses, while property and inheritance taxes will hurt middle- and high-income segments. Moreover, a higher VAT will affect everyone. Therefore, it is difficult to imagine that he would gain support from enough people to continue as an elected prime minister after the next election, even though the policies he plans to implement will be good for the country over the longer term. Thus, if it is not Gen Prayuth, who will then be the next prime minister or form the next government. Many still believe that the Pheu Thai Party will still win the next election. The Democrat is still too indecisive to become a credible competitor for Pheu Thai, even though the Democrat seems to be the preferred choice for the military to run the country, in our view.

9

Navigating Thailand│2015 December 12, 2014

This would lead us back to the question on whether the election in early 2016 is still likely. The concern that Pheu Thai Party will win the election and become a new government will make the military government think twice about handing power back to the public. That said, the government may want to stay in power longer. But since we believe that the current government's economic performance is likely to be weak, there will be growing resistance in 2015. Therefore, the military government may not be able to stay very long either, even though it may still want to maintain martial law. We expect the pressure to mount in 2H15. Therefore, it may have to reach a compromise with Pheu Thai so as not to encroach on each other's turf. With his younger brother being an assistant army chief, Gen Prayuth can still have strong support in the army after his retirement in Sep 2014. Therefore, we believe that this would be a better exit strategy for the current government, rather than incurring the risk of facing more resistance by staying longer. Although the Constitution Drafting Committee is likely to design a new constitution in such a way that there will be more appointed senators and probably some appointed members of Parliament as well, we believe that it will still be difficult to gain the necessary support from the general public.

2.3 Government needs to deliver infrastructure projects Government infrastructure spending is probably the only hope to boost Thai economy in 2015, in our opinion. But the progress so far has been quite disappointing. One of the reasons is that due to efforts to fight graft in the system, the military government has set up a committee, called the Budget Monitoring and Scrutinising Committee, to review all major government and state enterprises projects that are worth more than THB1bn (US$30m). And since all government infrastructure projects are worth a lot more than THB1bn, they have to undergo the scrutiny of this committee. The committee has already asked some government agencies to review some of these projects, which caused some delay in the rollout of these projects. The first major government project that is likely to be awarded first is the North Green Line project (Mo Chit-Sapanmai-Ku Kot) worth THB26.4bn (US$0.8bn). Based on our channel checks, the bidding results are likely to be known by Dec 2014, even though the Mass Rapid Transit Authority of Thailand (MRTA) announced earlier that the results will be known in Feb 2015. We believe that all major contractors will get their share of the project as it will be divided into four contracts. CH Karnchang (CK), which we believe is closest to the government, is likely to secure the biggest contract, i.e. contract 1, while Italian-Thai Development (ITD) is likely to get the second largest one, contract 2, followed by a joint venture between Sino-Thai Engineering (STEC) and AS Associates, i.e. STEC-AS for contract 3, and a JV of Uniq Engineering (UNIQ), Sino-Hydro Corp and China Harbour Engineering, i.e. UN-SH-CH for the forth one. But after the North Green Line, we believe that Orange Line (Taling Chan – Min Buri) worth THB115bn (US$3.5bn) is likely to be the next one. The bidding process may start in 2Q15. Although contractors are hopeful that the Pink Line (Khae Rai – Min Buri) worth THB59bn (US$1.8bn) can also roll out within this year, there is some risk that the project may be redesigned as the existing design is based on a light rail platform, which is not compatible with other mass transit lines that are heavy lines. The government may want the Pink Line and Yellow Line (Lad Prao – Samrong), worth THB57bn or US$1.78bn, to switch to heavy lines, thus making them compatible with the rest and more efficient for mass transit. If the authorities decide to change the design, then the Pink and Yellow Lines will have to go back to the drawing board, which would mean a few years of delay. In addition, the government is reported to have a plan to create a new government agency, the Rail Transport Authority of Thailand, to oversee both railway and electric trains. The Transport Minister, ACM Prajin Juntong, 10

Navigating Thailand│2015 December 12, 2014

expects the new agency to be up-and-running in Jun 2015. This new agency will be tasked with the bidding process of all rail mass transits and maintaining them, while the State Railway Authority of Thailand (SRT) and the Mass Rapid Transit Authority of Thailand (MRTA) will be providing services to the public. This could also mean further delays in the bidding process of future mass transit systems, in our opinion. Figure 8: North Green Line (Mo Chit-Sapanmai-Ku Kot) Contract Description 1 2 3 4

Distance Value (km) (THB bn)

Bidders

Civil work (Mor Chit-Sapanmai) 12.0 14.0 CK, STEC, ITD, UN-SH-CH* Civil work (Sapanmai-Ku Kot) 7.5 6.1 CK, STEC, ITD, UN-SH-CH Civil work (depot, park & ride) 3.7 STEC-AS, CK, ITD, UN-SH-CH** Rail system 2.6 STEC-AS, CK, ITD, UN-SH-CH Total 19.5 26.4 * UN-SH-CH is a JV between Unique Engineering, Sino-Hydro Corp and China Harbour Engineering ** STEC-AS is a JV between STEC and AS Associates SOURCES: CIMB, COMPANY REPORTS

Figure 9: Other mass transit systems by MRTA in the pipeline Line

Length (km)

Stations

Development plan

17.5

13

By 2019

9.0

6

By 2019

11.0

8

By 2019

Orange

37.5

Taling Chan – Cultural Center Cultural Center – Bang Kapi Bang Kapi – Min Buri Pink

36

Khae Rai – Pak Kret

6.0

5

By 2019

Pak Kret – Lak Si Circle

12.0

10

By 2019

Lak Si Circle – Outer Ring Road

10.5

9

By 2019

7.5

6

By 2019 By 2019

Outer Ring Road – Min Buri Yellow

30.4

Lat Phrao – Phatthanakan

12.6

10

Phatthanakan – Samrong

17.8

11

By 2029 SOURCES: MRTA, CIMB

11

Navigating Thailand│2015 December 12, 2014

Figure 10: 10 Mass transit network – 464km

SOURCE: CIMB RESEARCH, COMPANY

Although public investments may pick up next year, it is still uncertain whether these public investments will crowd out private investments as capacity utilisation is still hovering around 60% (Figure 11), which is quite low. Moreover, public investments alone will not be sufficient to revive the Thai economy if private investments do not pick up as well, since private investments are more than three times larger than public investments (Figure 10). The 19% yoy decline in value of projects submitted for BOI privileges in 10M14 also does not bode well for the investment outlook next year. However, given the political uncertainties in 1H14, we hope that there will be a pick-up in BOI applications soon. Figure 11: Public and private investments as a % of GDP 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Private

Public

SOURCES: CIMB, COMPANY REPORTS

12

Navigating Thailand│2015 December 12, 2014

Figure 12: Private investments and capacity utilisation 75.0

40%

70.0

30%

65.0

20%

60.0

10%

55.0

0%

50.0

-10%

45.0

-20%

40.0

-30%

Capacity utilisation

Private investment (%yoy)

SOURCES: CIMB, COMPANY REPORTS

Figure 13: BOI applications submitted down 19% yoy in 10M14 1,400

120% 100%

1,200

80% 1,000 60% 800

40%

600

20% 0%

400 -20% 200

-40%

-

-60% 2001

2002

2003

2004

2005

2006

2007

2008

2009

BOI applications submitted (THB bn)

2010

2011

2012

2013

9M14

%yoy

SOURCES: CIMB, COMPANY REPORTS

2.4 Tourism recovery No thanks to the political uncertainties in Thailand, tourist arrivals dropped significantly. Basically, tourist arrivals just turned positive by growing 6% yoy in Oct 14, following the government's measure to grant the exemption of visa fees to Chinese and Taiwanese tourists for three months, starting from 9 Aug 2014. As such, Chinese tourist jumped 67% yoy in Oct. From our channel checks with the Airports of Thailand (AOT), the number of passengers who went through its six airports had gone up 11% yoy during 1-23 Nov 2014. Therefore, it remains to be seen whether the surge in Chinese tourists can be sustained after the end of the visa fee exemption in early Nov 2014. Furthermore, the rebound in tourist arrivals because of the exemption of visa fee to Chinese and Taiwanese tourists may not be as healthy as it seems, as we believe that most of these tourists come from lower-income segments, which would not really benefit the listed hotels that we cover, i.e. MINT and CENTEL. However, European and American tourists were still down by 11% yoy and 7% yoy, respectively, in Oct 2014. Although curfews were lifted in late Jun 2014, many foreigners that we met while we were on the road thought that there are still curfews in Thailand. This is because the government has not lifted martial

13

Navigating Thailand│2015 December 12, 2014

law, which was put in place since 20 May 2014. In addition, the ongoing martial law is also the reason that many countries still have Thailand on travel alert. Specifically, 58 countries still have Thailand on travel alert, despite the calm political climate, vs. 66 countries in June after the coup. With travel warnings, many tourists are reluctant to travel to Thailand as their insurance may not cover accidents that are caused by political turmoil in Thailand. Thus, the tourist arrival recovery may take a longer time than expected and the rebound may be short-lived if the government still maintains martial law. But since Thai hoteliers have maintained a tight ship and have been through many crises over the past decade, we believe that they are prepared to cope with the prospects of a fragile recovery. On the contrary, hotels in upcountry are not affected much by political turmoil. Thus, if tourist arrivals pick up, they should be running at close to optimal occupancy, i.e. around 75-80%. This should allow them to raise their room rates more aggressively. In addition, at the optimal occupancy level, hotels normally do not hand out many freebies, such as free breakfast, free Wi-Fi, or a free night after two or three paid nights. As such, their margins should increase nicely in 2015.

Figure 14: Tourist arrivals and political crises 3,100,000

Emergency decree 2,600,000

May 14 coup 2,100,000

1,600,000

1,100,000

Airport shutdown

May 10 unrest

600,000 Jan

Feb

2008

Mar

Apr

2009

May 2010

Jun

Jul

Aug

2011

Sep

2012

Oct 2013

Nov

Dec

2014

SOURCES: CIMB, COMPANY REPORTS

Figure 15: Tourist arrival breakdown YTD Oceania Middle East 2% 4%

Other South Asia 5% Americas 1% USA

Africa 1%

ASEAN 27%

3%

Other Europeans 16%

Russia 6%

Other East Asia Japan 10% 6%

China 19%

ASEAN

China

Japan

Other East Asia

Russia

Other Europeans

USA

Other Americas

South Asia

Oceania

Middle East

Africa

SOURCES: CIMB, COMPANY REPORTS

14

Navigating Thailand│2015 December 12, 2014

Figure 16: Travel warnings #countries Exercise putting caution Reconsider need Thailand on (Level 1-3) to travel (Level 4-5) Special events travel alert Apr-14

50

46

May-14

62

47

15 Declare martial law on 20 May, coup on 22 May

4

Jun-14

66

48

Jul-14

60

54

18 Lifted nationwide curfew on 13 Jun Six countries, Maldives, Laos, Cambodia, 6 Vietnam, Nigeria and Kenya lifted travel

Aug-14

60

54

6

Sep-14

58

54

4 UAE and Iran lifted travel warnings

Oct-14

58

54

4

Nov-14

58

54

4 SOURCES: Bank of Thailand

15

Navigating Thailand│2015 December 12, 2014

3. 2015 ECONOMIC OUTLOOK 3.1 2015 Macro outlook We believe that Thailand’s medium-term growth prospects remain positive with potential GDP growth of 5% once its economic engines start running again. However, considerable patience is needed before a proper upswing takes place. We are unlikely to witness any material improvement until next year when the government’s stimulus programmes are underway and private consumption starts to normalise in 2Q15 at the earliest. Exports will continue to see soft demand amid the uneven global recovery and lingering structural weakness. The tourism sector is showing signs of recovery with the number of incoming tourist arrivals only starting to rise above last year’s levels in Oct, five months after the coup in May. As such, we think a U-shaped recovery is more realistic and project economic growth of 3.3% next year (vs. estimated 0.6% in 2014). Figure 17: Moderate pick-up in growth in 2015, annual GDP growth (real vs. nominal) % yoy 20 15 10 5 0 -5 -10 -15 1991

1993

1995

1997

1999

2001

2003

2005

Real GDP

2007

2009

2011

2013

2015F

Nominal GDP

SOURCES: CEIC, CIMB RESEARCH

3.2 The recovery so far… Real GDP growth has been quite flat through the year, posting a weak outturn of 0.2% yoy in 9M14 largely supported by net trade while domestic demand contracted. The economy turned around in 2Q-3Q but the recovery remains slow given the weakness in domestic demand and the fragile global recovery. Although the political situation has stabilised, a major change in government populist policies and the elimination of farming subsidies sent a shockwave through the rural economy. Figure 18: GDP growth (demand side components)

Figure 19: GDP growth (supply side components) % yoy

% yoy 40

40

30

30

20

% yoy

Title: Source:

20 15

10 in your rep Please fill in the values above to have them entered

20

10

10

5

0

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0 -10 -20 -30 -40

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-5

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-30 1Q07

2Q08

3Q09

4Q10

1Q12

2Q13

Private consumption

Govt. consumption

Gross fixed capital formation

Exports

3Q14

-15 1Q07

2Q08

3Q09

4Q10

1Q12

Agriculture

Services

Manufacturing (RHS)

Construction

2Q13

3Q14

Imports

SOURCES: CEIC, CIMB RESEARCH

16

SOURCES: CEIC, CIMB RESEARCH

Navigating Thailand│2015 December 12, 2014

Hopes are pinned on a revival in government stimulus to boost growth but little has been done so far and given the government’s poor track record of project execution, we think that the risk of delays remains high. Understandably, the military government has taken a more conservative approach on fiscal spending in order to clean up corruption in the public sector. As such, a new committee – the State Budget Monitoring and Scrutinising Committee – has been set up to review any government projects worth more than US$30m. However, we think that this is likely to create bottlenecks in launching government projects. Moreover, private investors are unlikely to make large commitments pending further clarity on government policies and effective execution of fiscal plans. The government is in the process of amending the Foreign Business Act (FBA), which has the unintended consequences of creating anxiety among foreign investors surrounding the investment environment.

Figure 20: Central government expenditure in FY2014 remains unchanged from previous years

Figure 21: Actual rate of capital expenditure spent continued to decline

THB bn

% spent

350 300

110

Title: Source:

100

Please fill in the values above to have them entered in your report

250 90 200 80 150 70 100 60

50 0

50 Oct

Nov

Dec

Jan

Feb

Mar

FY 2014

Apr

May

FY 2013

Jun

Jul

Aug

Sep

FY 2005

FY 2008

FY 2012

FY 2011

Current

SOURCES: BANK OF THAILAND (BOT), CIMB RESEARCH

Figure 22: Total investment applications received

Capital

FY 2014 Total

SOURCES: MINISTRY OF FINANCE (MOF), CIMB RESEARCH

Figure 23: Total investment applications approved THB bn

THB bn 500

Title: Source:

400

450

350

400

Please fill in the values above to have them entered in your rep

300 350 250

300 250

200

200

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50

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0 1Q08

1Q09

1Q10

Investment applications

1Q11

1Q12

1Q13

1Q08

1Q14

4Q08

3Q09

2Q10

Investment approved

Investment applications - foreign

SOURCES: BOARD OF INVESTMENTS (BOI), CEIC, CIMB RESEARCH

17

1Q11

4Q11

3Q12

2Q13

1Q14

Investment approved - foreign

SOURCES: BOI, CEIC, CIMB RESEARCH

Navigating Thailand│2015 December 12, 2014

3.3 Exports not making the cut Despite early signs of a turnaround in domestic demand, exports which are a key pillar of the Thai economy remain slack. Exports of goods never fully recovered from the 2011 flood crisis. Reports also suggest that orders were diverted elsewhere for fear of interruptions to production and logistics during the political crisis that started in Nov 2013. We believe that aside from cyclical, interim and exogenous factors that have prolonged the muted export performance, underlying these problems are structural issues. On the whole, Thailand appears to have diversified extensively its range of agriculture products to include rice, rubber, sugar, cassava, shrimps, canned pineapple and soy. It has also done well in terms of diversification of manufactured exports into sectors, ranging from textiles to electrical & electronics and automobiles. Thailand’s target export markets are also equally well diversified between the G3 countries, China, Australia, core ASEAN markets and CLMV (Cambodia, Laos, Myanmar, Vietnam). However, its stagnant export performance has revealed underlying weakness in its industrial base and other structural impediments. Weakening growth of labour-intensive manufactured exports indicates a loss of comparative advantage in the low-wage and labour-intensive sectors. Thai enterprises in various industries are also adjusting their investment plans in preparation for the loss of Generalised System of Preferences (GSP) privileges in the EU. These include relocation of factories to countries that still enjoy the tariff privileges or those that have free trade agreements (FTAs) with the EU. Mid- and high-tech products suffer from limited local inputs and high trade dependency as Thailand remains an assembler and does not specialise as a manufacturer in research, design and innovation. The entire export-oriented sector has been built on capital investment and a large pool of cheap labour, which is easily replicated in other low-cost countries. Instead, the country needs more durable technological capacities on the part of local producers and workers. As such, prospects for future development depend upon industrial restructuring through the creation of new growth industries, be it in agriculture or manufacturing.

Figure 24: Thailand's exports not picking up with global recovery, manufacturing production and OECD Composite Leading Index (CLI) 3MMA, % yoy

Figure 25: Thailand's major exports components

3MMA, % yoy

50

3MMA, % yoy

6

Title: Source:

120

40

100 4

30

80

20

2

Please fill in the values above to have them entered in your rep

60

10

40 0

0

20

-10

-2

0

-20

-20 -4

-30 -40 Jan-07

-40

Feb-08

Mar-09

Apr-10

Exports, US$ terms

May-11 MPI

Jun-12

Jul-13

-6 Aug-14

-60 Jan-07

Feb-08

Mar-09

Apr-10

Agriculture products Manufacturing products

OECD CLI (RHS)

SOURCES: OECD, CEIC, CIMB RESEARCH

May-11

Jun-12

Jul-13

Aug-14

Agro industrial products Mineral products

SOURCES: CEIC, CIMB RESEARCH

3.4 Liquidity conditions stable A current account surplus of US$7.3bn or 2.6% of GDP in 9M14 helped to offset outflows in the financial account, though the surplus came about due to a collapse in imports (-9.4% yoy) relative to exports (-0.7% yoy). Overall foreign 18

Navigating Thailand│2015 December 12, 2014

reserves has declined US$7bn or 4% to US$161bn as at end-Oct, which covers nine months of imports and 2.7 times short-term external debt. Generally liquidity conditions in the banking sector remain stable, with the high level of liquid assets held by banks relative to its deposits and borrowings at 27% as at Jun 14, which far exceeds the minimum legal requirement of 6%. This reflects that commercial banks have enough liquid assets to absorb deposit outflows. The loan to deposit (including B/E) ratio continues to trend higher but the slowdown in deposits and B/E is in part due to savers’ reallocation of savings towards investment in higher return assets such as stock, mutual fund and life insurance as a result of the low deposit interest rate environment. Competition between banks to mobilise deposits has also moderated. Going forward, deposit mobilisation is expected to pick up in tandem with rising demand for credit with improvement in private confidence and clarity on government policies. However, competition for deposits will not be as strong as in 2013 given the expectations of a moderate recovery. Moreover, commercial banks continue to maintain strict lending standards, particularly for selected consumer segments. Figure 27: Commercial banks’ ratio of liquid assets to deposits

Figure 26: Commercial banks' loan to deposit (incl. B/E) ratio %

% yoy 20

%

% yoy

100

50

95

40

Title: Source:

18 16

38 36

Please fill in the values above to have them entered in your report 34

14

30

90

32

12 10

20

30

10

28

85

8 80

6

26 0

4

24

75

-10

2 0 Jan-07

Dec-08 Loans

Nov-10 Deposits (incl. B/E)

Oct-12

70 Sep-14

22

-20 Jan-08

Nov-08

Sep-09

Jul-10

May-11

Mar-12

Jan-13

Nov-13

20 Sep-14

LD ratio (incl. B/E) (RHS)

Deposits

Liquid assets

SOURCES: BOT, CIMB RESEARCH

Figure 28: Balance of payments components

Liquid asset to deposit (RHS)

SOURCES: BOT, CIMB RESEARCH

Figure 29: Foreign reserves US$ bn

US$ bn 7

US$ bn

Title: Source:

195

10

190

5

8

Please fill in the values above to have them entered6 in your report

185

3

180

4

175

2

170

0

165

-2

160

-4

155

-6

150

-8

1 -1 -3 -5 -7 Jan-11

145 Jan-11 Dec-11 Current account

Nov-12

Oct-13

Oct-11

Jul-12

Apr-13

Jan-14

-10 Oct-14

Sep-14

Monthly change (RHS)

Capital and financial account

SOURCES: BOT, CIMB RESEARCH

19

Foreign Reserve

SOURCES: CEIC, CIMB RESEARCH

Navigating Thailand│2015 December 12, 2014

3.5 Inflation and interest rate outlook The GDP deflator eased further to 1.0% yoy in 3Q14 (2.0% in 2Q) and the consumer price index (CPI) rate also moderated to 2% (2.5% in 2Q), while the producer price index (PPI) rose 0.1% yoy (1.4% in 2Q). In 10M14, headline CPI rose 2.1% yoy (10M13: 2.3%). The Bank of Thailand (BOT) proposed an average headline inflation target range of 1.5-4.5% in 2015, in the minutes of the Sep Monetary Policy Committee (MPC) meeting. We project average annual headline inflation of 2% in 2015 (vs. estimated 2% in 2014). Given that the inflation risks have abated amid lower oil prices and ample excess capacity, there is room for the central bank to lower rates if needed. If the fiscal stimulus is delayed and the risk of stagnation rises, we think that the BOT will be compelled to ease rates. As at 26 Nov, the baht has declined 0.3% to THB32.8 against the US dollar vs. a 0.82% gain to 32.44 at end-Jun. We expect the THB/US$ to rise further to 36 by end-2015 as the dollar rebounds. Key support factors for the baht in the near term include calmer politics, an improved growth outlook and ample foreign reserves. Figure 31: Baht spot vs. trade weighted baht (Real Effective Exchanger Rate, REER)

Figure 30: Inflation and interest rate % yoy; %

THB/US$

5.0

Index

Title: Source:

34.0

4.5

115

33.0

110

4.0

Please fill in the values above to have them entered in your rep

32.0

3.5

105

3.0

31.0

2.5

100 30.0

2.0

95

1.5

29.0

1.0

90

28.0 0.5 0.0 Jan-10

Aug-10

Mar-11

Oct-11

Headline CPI

May-12

Dec-12

Core CPI

Jul-13

Feb-14

27.0 Jan-10

Sep-14

85 Sep-10

May-11

Jan-12

THB/USD

Policy rate

SOURCES: CEIC, CIMB RESEARCH

Sep-12

May-13

Jan-14

Sep-14

REER

SOURCES: BIS, CEIC, CIMB RESEARCH

3.6 Risks and issues to watch Farm prices have fallen sharply this year, thus depressing both export values and farm incomes. A new scheme to give cash handouts to the rice farmers based on the area under paddy cultivation instead of the harvest-linked subsidy by the former government is underway. However, the first tranche of payments has barely started to trickle down by mid-Nov with only 10% payments made well short of the 30% earmarked. Aside from this, the government has not announced any other concrete policy to restructure the agriculture sector which employs over 42% of the country’s labour force and remains the largest employing sector but accounts for only 4% of the total wage bill. We believe that this is the root cause of Thailand’s large income disparity, wide political and social divisions, and risks Thailand being caught in the middle-income trap. With energy reforms in the pipeline, the government will soon raise the excise tax on diesel. However, thanks to the decline in global oil prices, the increase in retail fuel prices should be manageable. But the government is looking into other avenues to boost revenue streams, including the introduction of a property tax, inheritance tax, and may also raise the VAT next year, which does not bode well for consumption. Although the share of household debt to GDP remains high at 82.3% as at end-2Q14 (vs. 61% in 2009), growth has moderated from double-digit pace over 20

Navigating Thailand│2015 December 12, 2014

the last four years to 8% as at mid-2014. Given the high percentage of indebted households and muted economic growth, the debt servicing ability of households remains an important risk factor that could dent potential consumption. As at end-2Q14, the debt servicing ability of households deteriorated slightly and the delinquency and NPL ratios of consumer loans edged up to 6% (vs. 5.8% in 1Q14) mainly due to auto leasing and other personal loans. The upside is household liquidity remains high as reflected by the ratio of household financial assets to household debt, which stabilised at 2x. Ultimately, the sustainability of the recovery rests on continued political stability and private sector participation. Greater clarity on government policies and effective execution of fiscal plans will help to restore investor confidence and drive private investment. After the last coup in 2006, the military government stayed for a year. But there is a growing possibility is that it may stay for longer this time.

Figure 33: Thailand’s primary commodity prices

Figure 32: Nominal farm income and farm production

Price

% yoy 80

Price

Title: Source:

100

700

90 600

60

Please fill in the values above to have them entered in your report

80

500

70 40 60

400

50

20

300

40 0

30

200

20 100

-20

10

-40 Jan-08

0 Jan-13 Jan-09

Jan-10

Jan-11

Jan-12

Nominal farm income

Jan-13

0 Apr-13

Jul-13

Oct-13

Jan-14

Apr-14

Jul-14

Oct-14

Jan-14 Rubber (THB/kg)

Farm production

Sugar (US$/lb)

SOURCES: BOT, CEIC, CIMB RESEARCH

Figure 34: Thailand household debt

Rice (US$/M T) (RHS)

SOURCES: BLOOMBERG, CIMB RESEARCH

Figure 35: Ratio of household financial assets to debt %

THB tr 12

Times

THB tr

Title: Source:

30

90 80

3.0

25

10

2.5

70 8

Please fill in the values above to have them entered in your rep

60

20

2.0

15

1.5

10

1.0

5

0.5

50 6 40 4

30 20

2 10 0 1Q03

0 2Q04

3Q05

4Q06

1Q08

2Q09

3Q10

4Q11

1Q13

0

2Q14

0.0 1Q11

4Q11

3Q12

Household debt Household debt

% of GDP (RHS)

2Q13

1Q14

Household financial assets

Financial assets to debt (RHS)

SOURCES: BOT, CIMB RESEARCH

21

SOURCES: BOT, CIMB RESEARCH

Navigating Thailand│2015 December 12, 2014

4. RISKS 4.1 Strong economic headwinds Exports is Thailand’s biggest economy driver, forming 73% of GDP in 9M14. At the beginning of this year, the authorities expected exports to expand by 4% yoy in 2014. A few months later, the government lowered its 2014 export growth forecast to 3% and subsequently to 2%. It now projects zero export growth in 2014, after exports contracted by 1% in 9M14. In our view, there are structural reasons for Thailand’s weak export performance, including: 1) Thailand is not part of the major supply chain for high-end electronic parts, which are used in mobile gadgets such as the iPhone and iPad. As such, Thailand’s exports of computers and parts have underperformed total exports over the past decade (Figure 35). Exports of computers and parts accounted for 12% of Thailand’s total exports in 2000 but only comprised 7% in 2013. Thailand’s failure to move into the higher value-added computers and parts supply chain could be due to the series of political crises. It would take significant time and effort for Thailand to attract foreign investment in new technology. It would also require a more stable political environment. Therefore, we do not expect Thailand’s exports of computers and parts to turn around in the near term. In addition, an economic slowdown in China will also hurt Thailand's export performance. Note that Thailand’s exports to China contracted 5% vs. flat growth for total exports in 10M14. A further slowdown in China will also weigh down Thailand's export growth in 2015. Figure 36: Exports of computers and parts vs. total exports 60% 50% 40% 30% 20% 10% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 9M14 -10% -20% Thai exports (%yoy)

Exports of computer and parts (%yoy)

SOURCES: CIMB, COMPANY REPORTS

2) Thailand’s auto exports, which were strong in the past decade, have started to face competition from its neighbouring countries in 2014. The weaker auto exports could also be attributable to the country’s political problems, which are forcing the carmakers to diversify their investments away from Thailand. Indonesia appears to be a natural choice, given its large domestic market. Auto exports only contributed 5% of Thailand’s total exports in 2000 but rose to 14% in 2013 and 9M14.

22

Navigating Thailand│2015 December 12, 2014

Figure 37: Thailand’s auto exports facing more competition from neighbouring countries 60% 50% 40% 30% 20% 10% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 9M14 -10% -20% -30% Thai exports (%yoy)

Auto exports (%yoy)

SOURCES: CIMB, COMPANY REPORTS

3) Thailand’s farming subsidies have reduced the competitiveness of certain agricultural exports such as rice. This, in turn, has weighed down export performance over the past few years. Figure 38: Weak farm exports weighed down export growth 50% 40% 30% 20% 10% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 9M14

-10% -20% -30% Thai exports (%yoy)

Agriculture exports (%yoy)

SOURCES: CIMB, COMPANY REPORTS

4.2 Weak farm prices and lack of major stimulus measures Although the political situation remained calm after the coup, the major change in government policies – the elimination of farming subsidies – sent a shockwave through the rural economy, in our opinion. The farmers have become dependent on farming subsidies as the previous governments provided support to upcountry farmers. The sudden change in government policy, without a proper plan to cushion the blow, makes it difficult for the upcountry population, especially given the weak farm prices. The price of paddy rice has fallen 13% YTD, while the price of smoked rubber third grade has plunged 25% YTD. Thailand produced 37.7m tonnes of paddy rice last year. Assuming that the paddy rice price falls 13% in 2014, the farmers would lose revenues of around THB28bn. In an attempt to compensate the farmers, the government will pay subsidies of THB1,000/rai (or THB2,500/acre) to farmers who own land measuring 1-15 rai (0.4-6 acres). The government expects total compensation to 23

Navigating Thailand│2015 December 12, 2014

amount to around THB40bn in 2014. However, the subsidy disbursement has been very slow in 2014, as the government aims to minimise corruption in the disbursement process. As for rubber, Thailand produced about 4.4m tonnes last year. Thus, a 25% decline in rubber price would translate into farmers’ lost revenues of around THB82bn in 2014. The government tries to compensate the rubber farmers by providing subsidies similar to those for rice farmers, as well as setting up a THB6bn fund to support rubber prices. However, the government’s measures have failed to prop up rubber prices in 2014. Therefore, the rural economy has suffered badly in 2014, as reflected in the weak retail same-store-sale growth (SSSG). Figure 39: Paddy rice price fell 13% YTD

Figure 40: Rubber price dropped more than 20% YTD

12,000

70%

10,000

Title: Source:

140.00

60%

100%

120.00

80%

50%

30% 6,000

Please fill in the values above to have them entered in your rep 60%

100.00

40%

8,000

80.00

40%

60.00

20%

40.00

0%

20.00

-20%

20% 10%

4,000

0%

-10%

2,000

-20% -

-30%

THB/ton

-

-40%

%yoy

THB/kg

SOURCES: Office of Agricultural Economics

%yoy

SOURCES: Office of Agricultural Economics

The rice subsidies gave farmers an incentive to grow more rice and the country’s rice output has increased from about 30m tonnes in 2005 to 37.7m tonnes in 2013. Given the 18m tonnes of rice inventory under the Yingluck government’s rice-pledging scheme, Thailand’s huge rice stockpile is likely to continue to put pressure on rice prices next year. The high rubber prices a few years ago encouraged farmers to plant more rubber trees, causing the mushrooming of rubber plantations beyond the Southern region (traditional rubber-growing area in Thailand). Hence, there was a big spike in rubber output over the past couple of years. In our view, the higher rubber output will continue to weigh on rubber prices in 2015 as well. Figure 41: Thailand's annual output of paddy rice and rubber 45.0

4.5

40.0

4.0

35.0

3.5

30.0

3.0

25.0

2.5

20.0

2.0 2005

2006

2007

2008

Paddy rice output (m tonnes)

2009

2010

2011

2012

2013

Rubber output (m tonnes) (RHS)

SOURCES: CIMB, COMPANY REPORTS

24

Navigating Thailand│2015 December 12, 2014

4.3 Further cuts in earnings forecasts likely The market consensus for EPS growth was 11% for this year and 14% for next year at the beginning of the year and had been quite stable even after the May 2014 coup. However, after the release of disappointing 2Q14 corporate results, market consensus for EPS growth this year was revised down to 7% but next year’s growth was revised up to 17%. Analysts may just cut 2014 forecasts but did not slash 2015 numbers in Aug 2014, as they hoped that the economy would see a V-shaped recovery after the coup as the economic activities seemed to have picked up nicely. However, they may have forgotten that during the 7-month political stalemate, people may not be in the mood to spend money, and the roadblocks and political protests may make it difficult for people to come out to shop. As such, when the political situation calmed down after the coup, any pent-up demand was released. Once this demand was exhausted, economic activities have slowed down again. As a result, the market consensus for EPS growth this year is now revised down to 2% and that for next year stands at 18%. We believe that the market is still optimistic about next year’s outlook and that the EPS growth number could be revised down to single digits.

Figure 42: Thai market EPS has been revised down 14% this year and 11% next year, but the market has risen 20% YTD 130

1,800

125

1,600

120 1,400 115 110

1,200

105

1,000

100

800 95 600

90 85 Jan-14

400 Feb-14

Mar-14

Apr-14

May-14

SET EPS 2014

Jun-14

Jul-14

Aug-14

SET EPS 2015

Sep-14

Oct-14

Nov-14

SET Index

SOURCES: CIMB, COMPANY REPORTS

4.4 Further delay in auction of 1800 MHz licences likely We have become less optimistic about the visibility of spectrum auctions taking place as per scheduled in Jul-Aug 15 as the government still has many milestones to hit before proceeding with the auctions. Based on the existing regulatory structure, the National Broadcasting and Telecommunications Commission (NBTC) will have to resume the spectrum auction process in Feb 15 or not later than Mar 15 in order to hold an auction in Jul 15. However, the ongoing transition from the ICT Ministry into the Digital Economy Ministry has led to more uncertainties regarding the NBTC’s authority to allocate spectrum.

25

Navigating Thailand│2015 December 12, 2014

Figure 43: Digital Economy Ministry framework

Figure 44: Digital Economy Ministry structure

SOURCES: CIMB, Bangkok Post, COMPANY REPORTS

SOURCES: CIMB, Bangkok Post, COMPANY REPORTS

In Jul 14, the NCPO ordered the NBTC to postpone the planned spectrum auction for 1800MHz for 12 months in order to give SOE telcos (TOT and CAT) a longer grace period to come up with their survival plans. On 21 Jul 14, Deputy Prime Minister General Prawit Wongsuwan set up the Digital Economy working group, with Deputy Prime Minister MR Pridiyathorn Devakula as the chairperson alongside eight other members. The group is tasked with drafting the ministry bill. The military government has proposed a digital economy policy framework that will involve 1) the transition of the ICT Ministry to the Digital Economy Ministry, 2) the amendment of the Frequency Allocation Act to restructure the NBTC and place it under the supervision of the Digital Economy Ministry, and 3) the amendment of the Telecoms Business Act. The market is likely to be confused with the misalignment of the junta government’s Digital Economy Policy and the NBTC’s mandate to auction 1800MHz spectrum in Jul-Aug 15 as planned. This implies higher uncertainties with regard to the spectrum auction. The visibility of the spectrum auction is certainly the key swing factor to determine mobile operators' share price performances in FY15. True will be a prime beneficiary of the lengthy delay in the 4G spectrum auction, as the award will weaken its now superior competitiveness in spectrum holding, regulatory cost and 3G/4G first-mover advantage. On the contrary, AIS will clearly benefit the most if the spectrum auctions can happen on time as AIS’s bandwidth limitation will be resolved, thus allowing it to regain its competitiveness.

4.5 Energy reform and impact on retail gas prices With the recent appointment of Energy Committees of the National Reform Council, we believe that the government is likely to continue to remove subsidies for NGV and raise the excise tax on diesel. The military government has raised NGV prices by THB1/kg to THB11.50/kg on 1 Oct 2014 and another THB1/kg on 3 Dec 2014 to THB12.50/kg. Meanwhile, the government also raised the LPG prices by THB1.03/kg to THB24.16/kg, thereby removing the remaining subsidy for LPG. With recent sharp plunge in oil prices as well as gas prices, we believe that NGV prices will not have to rise much following the subsidy removal. That said, the 26

Navigating Thailand│2015 December 12, 2014

cost of NGV should now be about THB8/kg vs. THB9/kg before the sharp plunge in oil prices. The cost to transport gas should remain stable at about THB5.56/kg. So, the new cost of NGV should be about THB14.5/kg, including 7% value-added tax, down from THB15.58/kg previously. With the current market price of THB12.50/kg, the retail NGV price would have to rise by another THB2.00/kg or about 16%. Which one has higher impact on the public? (LPG vs. NGV) Between LPG and NGV, we believe that the LPG price increase will impact the public more than the NGV price increase. This is due to 1) the number of vehicles using LPG accounts for 3.27% of Thailand’s total 35.4m vehicles. This compares with only 1% for NGV; and 2) LPG price increase will impact not only the transportation sector but other segments like cooking gas, industrial, and petrochemicals as well, while NGV is used only in the transportation sector.

Figure 45: Thailand's energy reforms by EPPO Energy reform 1 Acceleration and restructure of solar power sector Clarification of gas pipeline separation

Party impacted EA, GUNKUL, SOLAR, SPCG PTT

Impact Positive Positive

Date 18-Aug-14

2 Restructuing of petroleum price for diesel, gasoline, gasohol

Oil fund, Ministry of Finance

Negative

28-Aug-14

PTT, PTTGC

PTT (+) PTTGC (-)

4Q14F

RATCH, GLOW, EGCO BANPU, IRPC

Positive

Nov-14

3* Price lifting for LPG and/or NGV

4* New Power Development Plan 2015 (PDP 2015) announcment Including new potential bidding capacity for coal and gas-fired power plant Including potential increase in alternative energy capacity in PDP 2015 Note: 3* and 4* are the expected announcement assumed by CIMB

SOURCES: CIMB, COMPANY REPORTS

Figure 46: Brent vs. Gasohol 95

Figure 47: Brent vs. diesel prices THB

USD 140 130 120

44

USD 140

42

130 120

40

110

THB 31

Title: Source:

30

Please fill in the values above to have them entered in your rep 29

110 38

100

100

28

36 90

90

34

80 70

32

70

60

30

60

Brent (USD)

27

80

Gasohol 95 (THB)

26 25

Brent (USD)

SOURCES: CIMB, COMPANY REPORTS

Diesel (THB)

SOURCES: CIMB, COMPANY REPORTS

The retail prices of diesel are likely to move up as well. Prior governments tried to cap diesel prices below THB30/litre to limit the impact on transportation cost and the cost of living. To date, Brent oil prices have plunged more than 30%, but the retail prices of gasoline in Thailand have not come down as much, since the government levies various taxes on gasoline. As such, gasoline prices have fallen by about 13-15%, while diesel prices have declined by only 2% as the government starts collecting contributions to the Oil Fund from diesel, rather than providing subsidies from the Oil Fund for diesel. However, excise tax and municipal tax on diesel are still way below other gasoline prices. Therefore, we believe that the current government will start raising these taxes on diesel. We believe that ultimately retail diesel prices will be closer to Gasohol 95 E10 or 27

Navigating Thailand│2015 December 12, 2014

about THB33.20/litre, representing a 17% increase (+THB4.81/litre) from the current level. Again, we believe that the government will split the increases into several instalments. However, if oil prices move up significantly in the future, retail gasoline prices in Thailand will become more volatile.

Figure 48: Price structure of petroleum products (28 Nov 2014) UNIT:BAHT/LITRE

EX-REFIN.

TAX

M. TAX

OIL

CONSV.

WHOLESALE

VAT

WS&VAT

(AVG)

B./LITRE

B./LITRE

FUND

FUND

PRICE(WS)

ULG

19.1895

5.6000

0.5600

9.6500

0.2500

35.2495

2.4675

37.7170

GASOHOL95 E10

20.2928

5.0400

0.5040

4.1500

0.2500

30.2368

2.1166

32.3534

GASOHOL91

20.0649

5.0400

0.5040

2.4500

0.2500

28.3089

1.9816

GASOHOL95 E20

21.3051

4.4800

0.4480

0.7000

0.2500

27.1831

GASOHOL95 E85

26.9844

0.8400

0.0840

-8.2300

0.2500

H-DIESEL

20.3479

0.7500

0.0750

4.3000

0.2500

MARKETING

VAT

RETAIL

3.4047

0.2383

41.36

1.8192

0.1273

34.30

30.2906

1.8593

0.1302

32.28

1.9028

29.0859

1.7702

0.1239

30.98

19.9284

1.3950

21.3234

1.4548

0.1018

22.88

25.7229

1.8006

27.5235

1.7444

0.1221

29.39

MARGIN

SOURCES: CIMB, COMPANY REPORTS

Figure 49: Price structure of petroleum products (27 Dec 2013) UNIT:BAHT/LITRE

EX-REFIN.

TAX

M. TAX

OIL

CONSV.

WHOLESALE

VAT

WS&VAT

(AVG)

B./LITRE

B./LITRE

FUND

FUND

PRICE(WS)

ULG

25.9942

7.0000

0.7000

10.0000

0.2500

43.9442

3.0761

47.0203

GASOHOL95 E10

26.2972

6.3000

0.6300

3.3000

0.2500

36.7772

2.5744

GASOHOL91

26.0681

6.3000

0.6300

1.2000

0.2500

34.4481

GASOHOL95 E20

26.5090

5.6000

0.5600

-1.3000

0.2500

31.6190

GASOHOL95 E85

26.9851

1.0500

0.1050

-11.6000

0.2500

H-DIESEL

27.3249

0.0050

0.0005

-0.7000

0.2500

MARKETING

VAT

RETAIL

0.9623

0.0674

48.05

39.3516

1.1013

0.0771

40.53

2.4114

36.8595

1.1406

0.0798

38.08

2.2133

33.8324

1.6333

0.1143

35.58

16.7901

1.1753

17.9654

5.9015

0.4131

24.28

26.8804

1.8816

28.7620

1.1477

0.0803

29.99

MARGIN

SOURCES: CIMB, COMPANY REPORTS

Figure 50: Brent vs. LPG and NGV retail prices THB

140USD

25

130

23

120

21

110 19

100 90

17

80

15

70

13

60

11

50 9

40 30

7

20

5

Brent (USD)

LPG (THB)

NGV (THB)

SOURCES: CIMB, COMPANY REPORTS

28

Navigating Thailand│2015 December 12, 2014

PTT is prime beneficiary of higher NGV and LPG prices. Currently, the demand for NGV is 8,787 tonnes per day or 8.8m kg per day, equivalent to 3.2m tones p.a. Of this, only 19% of total consumption is for taxis and public buses, the two key segments that are likely to be subsidised given the impact on the general public. PTT currently subsidises an additional THB1/kg for these two segments, bringing the NGV price for these two segments down to THB9.5/kg. PTT incurred losses of THB19bn from NGV subsidies in 2013 due to its low, capped price of THB10.5/kg vs. its actual cost of THB16/kg, based on 9.5m kg demand per day. The loss of THB5.2/kg for NGV comes from PTT’s high cost structure – THB11/kg for the gas cost, THB3.7/kg for other operating costs including SG&A and depreciation, as well as transportation cost of THB1.5/kg for delivery from the 20 mother stations at the pipeline to the 356 daughter stations. Hence, we estimate that the NGV loss could swell to THB16.7bn in 2014 or 16% of its 2014 net profit if this NGV price cap continues. We estimate that every THB1/kg increase in NGV and LPG prices would result in an upside of 2.4% and 0.7%, respectively, to our 2015 net profit forecast of THB110bn for PTT. In terms of valuation upside, every THB1/kg price increase in NGV and LPG would result in an upside of 1.8% and 1.1%, respectively, to PTT’s SOP target price of THB400.

Figure 51: NGV’s impact on PTT Sold at capped price/cost Estimate impact to PTT Sold at netback Price increase % price increase No of month impacted Impact to after tax earnings CIMB BB consensus CIMB's net profit forecast BB consensus net profit forecast No of shr outstanding EPS impact Valuation impact at P/E 8x Target price CIMB BB consensus

Quantity (mtpa) 3.3 Quantity (mtpa) 3.3 3.3 2014F 1.0 219 105,720 101,193 0.2% 0.1% 2,856 0.077 0.61 0.2% 400 353

Price (US$/tonne) 313 THB/kg 10.0 1.0 10% 2015F 12 2,628 110,730 107,367 2.4% 0.8% 2,856 0.920

month THB m THB m THB m

mn shares THB/shr

7.36 THB/shr 1.8% 400 THB/shr 353 THB/shr SOURCES: CIMB, COMPANY REPORTS

29

Navigating Thailand│2015 December 12, 2014

Figure 52: LPG’s impact on PTT's GSPs Production Sold at netback Sold at capped price Estimate impact to PTT Current price Market price Price increase % price increase No of month impacted Impact to after tax earnings CIMB BB consensus CIMB's net profit forecast BB consensus net profit forecast No of shr outstanding EPS impact Valuation impact at P/E 8x Target price CIMB BB consensus

Quantity (mtpa) 2.7 0.7 2.0 Quantity (mtpa) 2.0 na 2.0 2014F 1.0 133 105,720 101,193 0.1% 0.1% 2,856 0.047

Price (US$/tonne 406 616 333 THB/kg 10.7 28.0 1.0 9% 2015F 12 1,600 110,730 107,367 0.7% 0.8% 2,856 0.560

0.37 0.1% 400 353

month THB m THB m THB m

mn shares THB/shr

4.48 THB/shr 1.1% 400 THB/shr 353 THB/shr SOURCES: CIMB, COMPANY REPORTS

4.6 Capital outflow? There are some concerns that there will be some outflows as US dollar is strengthening and overseas interest rates move up as the Bank of Thailand may not be ready to raise domestic interest rates amid a weak economy. Foreign investors held THB687bn (US$21bn) of Thai bonds as at end-Oct 14, or about 10% of the total value of the bond market of THB6.7tr. About 90% of foreign holdings are in Thai government bonds, while the remaining 10% are in Bank of Thailand bonds. Foreign holdings peaked at about THB863bn (US$26bn) or about 13% of total bonds outstanding in Apr 2013 before concerns over the tapering of the US Fed's QE stimulus programme surfaced. Since then, THB176bn (US$5.3bn) had been withdrawn from the bond market. Thus, if local rates do not move up when overseas rates rise, there could be some outflows from the Thai bond market, in our opinion. Figure 53: Foreign holdings of Thai bonds 1,000,000

14%

900,000

12%

800,000 10%

700,000 600,000

8%

500,000 6%

400,000 300,000

4%

200,000 2%

-

Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14

100,000

Foreign investors

0%

% of total

SOURCES: CIMB, COMPANY REPORTS

30

Navigating Thailand│2015 December 12, 2014

Figure 54: Foreign inflows into bond market Repo Rate 1 Day (%)

Net inflow Foreign (USD m )

4

6,000

3.5

5,000

3

4,000

2.5

3,000

2

2,000

1.5

1,000

1

-

(1,000)

0

(2,000)

Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14

0.5

Outright (TTM > 1 Y)

Outright (TTM 10% p.a.). Trading at 20x FY15 P/E (vs. retail sector’s 26x) and high ROE of 35%, JUBILE looks attractive. Its robust growth outlook and likely strong 4Q are potential re-rating catalysts.

Competitive advantage

JUBILE is the largest diamond jewellery retailer in the country with more than 114 branches nationwide. This is miles ahead of the second player, PRANDA’s Prima Diamond, which only has 39 branches. JUBILE's vast network allows the company to gain competitive advantages through: 1) strong bargaining power over suppliers, 2) opportunities to select better locations in department stores, and 3) effective brand-building and marketing strategies.

Price Close

173

40.0

157

35.0

141

30.0

125

25.0

109

20.0 800

93

600 Vol th

400 200 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range






Current

Target

Solid financials to boost growth

We project revenue CAGR of 32% and net profit CAGR of 36% over the next three years. This growth rate is expected to outpace the overall market (5-7%) given that JUBILE will increase its market share (thanks to its annual SSSG of 15%) and it aims to expand its network to 200 branches by 2016 (+23%). Moreover, with its successful brand-building strategy, we believe that JUBILE will be able to keep its existing customers while attracting new customers. Our view is confirmed by its ticket sales growth of 10%+ per year. Meanwhile, its strong financials with zero-debt are sufficient to fund its ambitious expansion plan.

Swift rebound

JUBILE’s net profit had grown yoy every quarter since the company was listed on MAI on 9 Nov 2009, except during times of crises in 4Q13 (flood crisis) and 1Q14 (political turmoil). It has also managed to rebound swiftly after each crisis. Moreover, despite 3Q14 being a weak quarter for most retailers, JUBILE still posted strong SSSG of 10% yoy during the quarter (vs. negative growth by its peers).

Financial Summary

Relative to SET (RHS)

45.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 1,226 218.9 166.2 0.96 26.3% 37.42 0.59 1.63% 27.85 97.17 (24.9%) 12.50 35.6%

Dec-13A 1,462 263.9 202.8 1.17 21.3% 30.85 0.45 1.24% 22.91 58.32 (33.8%) 10.02 36.0%

Dec-14F 1,798 296.1 223.2 1.28 9.8% 28.11 0.77 2.13% 20.92 80.29 (11.1%) 8.77 33.3% 0.99

Dec-15F 2,392 424.2 318.9 1.83 42.9% 19.67 1.10 3.05% 14.51 27.45 (13.9%) 7.44 40.9% 1.06

Dec-16F 3,263 571.9 436.6 2.51 36.9% 14.37 1.50 4.18% 10.85 29.48 (6.7%) 6.17 46.9% 1.00

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Jubilee Enterprise│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 1,462 631 264 (13) 251 (1) 0 3 254

Dec-14F 1,798 746 296 (21) 275 0 0 4 279

Dec-15F 2,392 1,016 424 (30) 395 0 0 4 399

Dec-16F 3,263 1,387 572 (30) 542 0 0 4 546

254 (51)

279 (56)

399 (80)

546 (109)

203

223

319

437

203 203 203

223 223 223

319 319 319

437 437 437

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-14F 83 94 720 8 904 120 0 3 25 147 0 0 279 46 324 0 3 8 12 0 336 715

Dec-15F 121 118 867 10 1,116 127 0 3 25 154 0 0 364 47 412 0 3 12 15 0 427 843

Dec-16F 71 161 1,182 14 1,429 125 0 3 25 152 0 0 497 48 545 0 3 15 19 0 564 1,017

715

843

1,017

Dec-13A 19.2% 20.5% 18.0% 1.21 3.59 479.6 20.0% 38.5% 20.08 229.4 96.67 52.7% 44.3%

Dec-14F 22.9% 12.2% 16.5% 0.46 4.10 N/A 20.0% 60.0% 18.04 223.1 95.06 52.0% 40.8%

Dec-15F 33.0% 43.2% 17.7% 0.67 4.84 N/A 20.0% 60.0% 16.14 210.6 85.29 49.0% 50.4%

Dec-16F 36.4% 34.8% 17.5% 0.39 5.84 N/A 20.0% 60.0% 15.64 199.8 83.99 58.8% 58.0%

Dec-13A N/A N/A 108 17.1% N/A N/A N/A N/A

Dec-14F N/A N/A 130 15.0% N/A N/A N/A N/A

Dec-15F N/A N/A 165 14.0% N/A N/A N/A N/A

Dec-16F N/A N/A 200 14.0% N/A N/A N/A N/A

626

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 263.9

Dec-14F 296.1

Dec-15F 424.2

Dec-16F 571.9

(1.6)

(154.9)

(84.2)

(224.9)

(8.7) (0.5) (50.7) 202.4 (35.0) (10.2) (66.9) 17.0 (95.1)

4.0 0.0 (55.8) 89.4 (76.8) (7.8) 75.0 (1.7) (11.3)

4.0 0.0 (79.7) 264.2 (28.0) (8.5) 0.0 0.9 (35.6)

4.0 0.0 (109.2) 241.8 (28.0) (0.6) 0.0 (0.4) (29.1)

0.5

0.0

0.0

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

0.0

(78.0)

(133.9)

(191.3)

(261.9)

(9.8) (87.3) 20.0 107.3 107.8

(1.3) (135.3) (57.1) 78.1 78.1

0.7 (190.7) 37.9 228.6 228.6

(0.3) (262.3) (49.5) 212.8 212.8

Key Drivers

12-month Forward Rolling FD P/E (x) 25.0

ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) No. of POS (main prod/serv) SSS grth (%, main prod/serv) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) No. of POS (2ndary prod/serv) SSS grth (%, 2ndary prrod/serv)

20.0

15.0 10.0 5.0 0.0 Jan-10

Dec-13A 215 84 565 6 871 56 0 3 25 83 0 0 269 47 317 0 3 8 12 0 328 626

Jan-11

Jan-12

Jan-13

Jan-14

Jubilee Enterprise

SOURCE: CIMB, COMPANY REPORTS

135

Banks│Thailand December 12, 2014

Kasikornbank KBANK TB / KBAN.BK

Market Cap

Avg Daily Turnover

Free Float

US$17,641m

US$31.19m

85.0%

THB579,169m

THB1,015m

2,393 m shares

Current

THB242.0

Target

THB274.0

Prev. Target

THB240.0

Up/Downside

13.2% Conviction|

Beautiful as she is

CIMB Analyst(s)

KBANK reported strong earnings even in a tough economic environment. We believe that it will be able to maintain its performance in FY15 with its built-to-suit core banking services. KBANK is one of our favorite Thai banks due to superior growth and ROE compared to its peers.

Weerapat WONK-URAI T (66) 2 657 9224 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

4.2

4.0

31.7

Absolute

3.0

2.5

45.8

Major shareholders

% held

Lamsam family

4.0

Show Style "View Doc Map"

Upon transfer of coverage, we upgrade our rating to Add from Hold, and raise our GGM-based target price, based on 2.27x FY15 P/BV, assuming 19% long-term ROE and 12.3% COE. We expect KBANK’s EPS growth to be driven by robust loan growth and non-interest income growth.

Resilient growth Key investment theme for FY15 is a play on cross-border trade and SME customers who are involved in government investment projects. Its sizable SME portfolio of 38% will propel its FY15 loan growth to 10%, according to our estimate. The bank will be less impacted by the stretched household debt (vs. SCB), as retail loans account for only 26% of KBANK’s portfolio. We expect non-interest income growth of 17% which will be boosted by its cross-selling efforts and hefty insurance business income, driven by the successful K-Transformation project which will enhance its sales force capabilities. We are not worried about its future operating expenses as the project is nearly complete.

Price Close

125.1

180

109.1

130 20

93.0

15 Vol m

10 5 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

Outlook KBANK is expected to sustain resilient growth in both lending and non-lending businesses. Amid weak domestic consumption, KBANK plans to target banking demand in Thailand’s border provinces such as Udon Thani, Nakhon Phanom and Tak. It has built up strong banking networks in these markets which will enable it to capture market share. Also, the bank’s financial targets for FY15 are not beyond achievable given the current macroeconomic conditions. KBANK manages its net-interest margin well by not sacrificing loan yields to create alpha lending growth. It plans to keep its credit cost at 100bp in FY15, and build up an NPL buffer. As such, its loan-loss-reserve ratio will inch up to 169.5%.

Deserves rich valuations Our Add call is based on KBANK’s outstanding growth along with a convincing risk-reward trade-off. In terms of P/BV-to-ROE, KBANK is now cheaper compared to SCB.

Financial Summary

Relative to SET (RHS)

230

Dec-13

|

Net Interest Income (THBm) Total Non-Interest Income (THBm) Operating Revenue (THBm) Total Provision Charges (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield BVPS (THB) P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 63,581 40,724 104,305 (8,390) 35,260 14.73 45.5% 16.43 3.00 1.24% 77.3 3.13 20.8%

Dec-13A 72,797 48,153 120,950 (11,743) 41,325 17.27 17.2% 14.02 3.50 1.45% 91.6 2.64 20.4%

Dec-14F 78,210 55,422 133,632 (13,424) 46,286 19.34 12.0% 12.51 3.87 1.60% 104.8 2.31 19.7% (3.37%) 1.00

Dec-15F 84,522 64,871 149,393 (16,503) 50,931 21.28 10.0% 11.37 4.26 1.76% 120.9 2.00 18.9% (7.08%) 0.98

Dec-16F 91,638 74,315 165,952 (18,154) 56,272 23.51 10.5% 10.29 4.70 1.94% 138.6 1.75 18.1% (8.95%) 0.94

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Kasikornbank│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Net Interest Income Total Non-Interest Income Operating Revenue Total Non-Interest Expenses Pre-provision Operating Profit Total Provision Charges Operating Profit After Provisions Pretax Income/(Loss) from Assoc. Operating EBIT (incl Associates) Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Consolidation Adjustments & Others Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX And Other Adj. Net Profit Recurring Net Profit

Dec-13A 72,797 48,153 120,950 (52,903) 68,047 (11,743) 56,303 0 56,303 0 56,303

Dec-14F 78,210 55,422 133,632 (57,729) 75,903 (13,424) 62,479 0 62,479 0 62,479

Dec-15F 84,522 64,871 149,393 (64,372) 85,020 (16,503) 68,517 0 68,517 0 68,517

Dec-16F 91,638 74,315 165,952 (72,362) 93,590 (18,154) 75,437 0 75,437 0 75,437

56,303 (11,457)

62,479 (12,496)

68,517 (13,703)

75,437 (15,087)

44,847 (3,522) 0 0 41,325 41,325

49,984 (3,698) 0 0 46,286 46,286

54,813 (3,883) 0 0 50,931 50,931

60,349 (4,077) 0 0 56,272 56,272

(THBm) Total Gross Loans Liquid Assets & Invst. (Current) Other Int. Earning Assets Total Gross Int. Earning Assets Total Provisions/Loan Loss Reserve Total Net Interest Earning Assets Intangible Assets Other Non-Interest Earning Assets Total Non-Interest Earning Assets Cash And Marketable Securities Long-term Investments Total Assets Customer Interest-Bearing Liabilities Bank Deposits Interest Bearing Liabilities: Others Total Interest-Bearing Liabilities Bank's Liabilities Under Acceptances Total Non-Interest Bearing Liabilities Total Liabilities Shareholders' Equity Minority Interests Total Equity

Balance Sheet Employment Dec-13A 94.3% 94.9% 32.2% 34.3% 61.0% 82.3% 18.3% 65.9% 0.85% 0.54% 0.475%

Dec-14F 95.5% 94.9% 32.0% 34.1% 61.8% 83.5% 19.3% 66.8% 0.89% 0.57% 0.290%

Dec-15F 96.4% 95.9% 31.4% 33.4% 62.4% 84.8% 20.2% 67.5% 1.00% 0.64% 0.361%

Dec-16F 97.3% 96.9% 30.3% 32.1% 64.0% 87.6% 21.0% 69.2% 1.00% 0.66% 0.368%

Total Income Growth Operating Profit Growth Pretax Profit Growth Net Interest To Total Income Cost Of Funds Return On Interest Earning Assets Net Interest Spread Net Interest Margin (Avg Deposits) Net Interest Margin (Avg RWA) Provisions to Pre Prov. Operating Profit Interest Return On Average Assets Effective Tax Rate Net Dividend Payout Ratio

Dec-15F 1,973,658 542,264

Dec-16F 2,160,812 553,109

2,141,756 (45,099) 2,096,656 0 152,779 152,779 40,610 0 2,290,045 1,529,835 167,403 93,315 1,790,553 3,196 259,288 2,053,038 219,232 17,775 237,007

2,312,376 (51,643) 2,260,733 0 161,307 161,307 36,536 0 2,458,577 1,644,573 174,099 96,108 1,914,779 3,516 269,983 2,188,278 250,923 19,375 270,298

2,515,922 (58,886) 2,457,037 0 173,328 173,328 43,701 0 2,674,066 1,792,584 175,840 103,451 2,071,876 3,867 287,948 2,363,691 289,256 21,119 310,375

2,713,922 (66,852) 2,647,069 0 186,303 186,303 34,806 0 2,868,179 1,953,917 140,672 105,339 2,199,928 4,254 309,381 2,513,563 331,596 23,019 354,616

Dec-13A 16.0% 18.6% 14.9% 60.2% 1.93% 5.18% 3.25% 4.98% 5.07% 17.3% 3.33% 20.3% 15.9%

Dec-14F 10.5% 11.5% 11.0% 58.5% 1.88% 5.07% 3.20% 4.93% 4.97% 17.7% 3.29% 20.0% 15.7%

Dec-15F 11.8% 12.0% 9.7% 56.6% 1.91% 5.08% 3.17% 4.92% 4.90% 19.4% 3.29% 20.0% 15.8%

Dec-16F 11.1% 10.1% 10.1% 55.2% 1.96% 5.11% 3.15% 4.89% 4.83% 19.4% 3.31% 20.0% 15.8%

Dec-13A 8.5% 3.5% 18.2% 43.7% 2.2% 140.8% 0.0% 12.0% 15.2% 10.0% 91.3% 2.2% 20.3%

Dec-14F 8.9% 3.5% 15.1% 43.2% 2.0% 163.5% 0.0% 12.8% 16.1% 7.5% 92.3% 2.0% 12.5%

Dec-15F 10.1% 3.5% 17.0% 43.1% 2.0% 169.5% 0.0% 13.5% 16.8% 9.0% 93.1% 2.0% 17.6%

Dec-16F 10.0% 3.5% 14.6% 43.6% 2.0% 174.9% 0.0% 14.1% 17.4% 9.0% 93.9% 2.0% 13.6%

Key Drivers

12-month Forward Rolling FD P/E (x) 14.00

Loan Growth (%) Net Interest Margin (%) Non Interest Income Growth (%) Cost-income Ratio (%) Net NPL Ratio (%) Loan Loss Reserve (%) GP Ratio (%) Tier 1 Ratio (%) Total CAR (%) Deposit Growth (%) Loan-deposit Ratio (%) Gross NPL Ratio (%) Fee Income Growth (%)

12.00

10.00 8.00 6.00 4.00 2.00

Jan-11

Dec-14F 1,793,463 518,913

Key Ratios

Gross Loans/Cust Deposits Avg Loans/Avg Deposits Avg Liquid Assets/Avg Assets Avg Liquid Assets/Avg IEAs Net Cust Loans/Assets Net Cust Loans/Broad Deposits Equity & Provns/Gross Cust Loans Asset Risk Weighting Provision Charge/Avg Cust Loans Provision Charge/Avg Assets Total Write Offs/Average Assets

0.00 Jan-10

Dec-13A 1,645,188 496,567

Jan-12

Jan-13

Jan-14

Bangkok Bank

Kasikornbank

Krung Thai Bank

Siam Commercial Bank

SOURCE: CIMB, COMPANY REPORTS

137

Technology Components│Thailand December 12, 2014

KCE Electronics KCE TB / KCE.BK

Market Cap

Avg Daily Turnover

Free Float

US$666.4m

US$1.80m

56.6%

THB21,878m

THB58.62m

549.0 m shares

Current

THB38.75

Target

THB49.00

Prev. Target

THB45.00

Up/Downside

26.5% Conviction|

Promising future

CIMB Analyst(s)

We expect KCE to post 23.5% EPS CAGR during FY14-16 given 1) solid demand growth in automotive PCB products, and 2) market share gains via competitive pricing and the sale of prepreg and copper clad laminate outside the KCE group.

Thanakorn CHONGSUKSIRICHOK T (66) 2 657 9227 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-4.3

-4.0

74.0

Absolute

-5.5

-5.5

Major shareholders

88.1 % held

Ongkosit Family HSBC (Singapore) Nominees PTE Ltd. Mr. Panja Senadisai

33.8 6.5 4.7

Show Style "View Doc Map"

Its new factory, featuring advanced production processes that can improve its gross profit margin in the long term, will begin operations in 1Q15. KCE remains our top pick in the Thailand technology component sector given its strong growth and cheap valuations compared to its local peers. We maintain our Add call and roll our target price to THB49, based on 11x FY16 P/E (1 s.d. above the industry mean).

Solid revenue outlook KCE’s production is currently running at 100% utilisation. In spite of this, we assume KCE’s new factory will deliver 16% revenue CAGR during FY14-16, driven by 1) strong demand for automotive PCB, 2) ramp-up of orders from existing customers, and 3) market share gains given competitive pricing and high quality standards.

New technology KCE’s new factory in Lad Krabang will commence operations in 1Q15 and we assume total capacity will

Price Close

209

43.0

189

38.0

169

33.0

149

28.0

129

23.0

109

18.0 15

89

Vol m

10 5 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

rise 22.4% in FY15, 18.3% in FY16 and 10.3% in FY17 from the current capacity of 2.34m sq ft per month. The plant is equipped with new machines that could reduce the cost of PCB production in the long term. We are positive about the potential for improvement, judging by the widening in profit and operating margins when management renovated the KCE Technology factory and significantly enhanced the production process post the floods.

Expect to gain more market share KCE currently has about 6% of the automotive PCB market. It plans to expand its slice of the pie via 1) competitive pricing, and 2) providing customers a choice other than China.

Top pick in the sector We maintain our Add rating given that it is the cheapest stock, based on P/E valuation, among peers but which offers solid earnings growth.

Financial Summary

Relative to SET (RHS)

48.0

Dec-13

|

Revenue (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) Price To Sales (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 6,478 643 1.38 378% 28.79 2.90 0.55 1.38% 36.22 23.82 166% 6.12 23.3%

Dec-13A 9,294 1,173 2.49 80% 15.98 2.04 0.75 1.89% 13.87 NA 108% 4.67 33.1%

Dec-14F 11,036 1,780 3.43 38% 11.59 1.87 0.85 2.14% 10.73 17.02 77% 3.77 35.7% 0% 1.10

Dec-15F 13,051 2,090 3.75 9% 10.61 1.70 1.00 2.52% 9.36 53.09 52% 3.00 31.5% 0% 1.03

Dec-16F 14,477 2,587 4.64 24% 8.57 1.53 1.10 2.77% 7.47 15.85 29% 2.36 30.8% 0% 1.08

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

KCE Electronics│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 9,294 2,956 1,681 (529) 1,152 (171) 13 203 1,210

Dec-14F 11,036 4,039 2,351 (563) 1,788 (176) 0 200 1,812

Dec-15F 13,051 4,651 2,785 (671) 2,114 (185) 0 196 2,125

Dec-16F 14,477 5,247 3,336 (759) 2,577 (165) 0 217 2,629

1,198 (16)

1,812 (24)

2,125 (28)

2,629 (34)

1,181 (8)

1,788 (8)

2,098 (8)

2,595 (8)

0 1,173 1,185 1,185

0 1,780 1,780 1,780

0 2,090 2,090 2,090

0 2,587 2,587 2,587

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 402 3,216 1,345 502 5,466 5,343 99 276 98 5,816 3,220 849 2,173 4 6,246 779 80 859 39 7,144 4,091 20 4,110

Dec-14F 1,181 3,449 1,428 64 6,122 6,696 0 0 98 6,795 3,016 793 1,170 4 4,982 1,939

Dec-15F 1,107 4,079 1,714 64 6,963 6,689 0 0 98 6,787 3,118 976 1,270 4 5,368 870

Dec-16F 1,928 4,524 1,887 64 8,403 7,200 0 0 98 7,299 3,067 1,042 1,535 4 5,648 515

84 2,023 0 7,005 5,886 28 5,914

92 962 0 6,330 7,387 36 7,423

101 617 0 6,265 9,395 44 9,439

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-12A 658 3 1,257 0 466 (805) 159 (90) 1,648 (950)

Dec-13A 1,681 (13) (1,156) 0 1,186 278 171 (16) 2,131 (1,622)

Dec-14F 2,351 0 (387) 0 925 (523) 176 (24) 2,518 (2,300)

Dec-15F 2,785 0 (814) 0 715 (640) 185 (28) 2,202 (1,000)

Dec-16F 3,336 0 (354) 0 806 (681) 165 (34) 3,238 (1,500)

(202) (1,152) 292 (8)

6 (1,616) (679) 87

99 (2,201) 896 0

0 (1,000) (785) 0

0 (1,500) (339) 0

(142)

(278)

(434)

(492)

(578)

(777) (634) (138) 788 337

361 (509) 5 (165) 344

0 (1,276) (74) 418 1,018

0 (918) 821 1,399 1,573

0 463 779 1,213 141

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Dec-13A 43.5% 155% 18.1% (9.25) 8.51 6.82 1.4% 23.4% 102.4 74.44 67.17 14.0% 13.2%

Dec-14F 18.7% 40% 21.3% (8.19) 10.55 10.17 1.3% 24.4% 110.2 72.34 62.88 20.5% 17.3%

Dec-15F 18.3% 18% 21.3% (6.91) 13.24 11.45 1.3% 23.5% 105.3 68.26 53.01 19.8% 17.6%

Dec-16F 10.9% 20% 23.0% (4.83) 16.84 15.59 1.3% 22.4% 108.7 71.39 55.63 22.4% 19.5%

Dec-13A 8.2% 33.9% N/A N/A N/A N/A N/A N/A

Dec-14F 4.7% 6.3% N/A N/A N/A N/A N/A N/A

Dec-15F 0.0% 18.6% N/A N/A N/A N/A N/A N/A

Dec-16F 0.0% 10.9% N/A N/A N/A N/A N/A N/A

Key Drivers

12-month Forward Rolling FD P/E (x) 30.0

ASP Change (%, Main Product) Unit sales growth (%, main prod) No. Of Lines (main Product) Rev per line (US$, main prod) ASP chg (%, 2ndary prod) Unit sales grth (%, 2ndary prod) No. Of Lines (secondary Product) Rev per line (US$, 2ndary prod)

25.0 20.0 15.0 10.0 5.0 0.0 Jan-10

Jan-11

Delta Electronics (Thailand)

Jan-12

Jan-13

KCE Electronics

Jan-14 SVI Public Company Limited

SOURCE: CIMB, COMPANY REPORTS

139

Banks│Thailand December 12, 2014

Krung Thai Bank KTB TB / KTB.BK

Market Cap

Avg Daily Turnover

Free Float

US$9,791m

US$24.11m

40.0%

THB321,449m

THB809.8m

13,982 m shares

Current

THB23.00

Target

THB28.00

Prev. Target

THB30.00

Up/Downside

21.7% Conviction|

Transformation in progress

CIMB Analyst(s)

Weerapat WONK-URAI T (66) 2 657 9224 E [email protected]

Share price info Share price perf. (%)

1M

3M

Relative

2.8

0.0

11.5

Absolute

0.0

-3.4

23.0

Major shareholders

12M

% held

FIDF Vayupak Fund I

55.0 3.7

Show Style "View Doc Map"

We expect KTB to deliver resilient earnings on the back of its transformation programme, which will enable it become a full-service financial institution vs. a traditional state-owned bank now. Its stronger balance sheet should gradually close the valuation gap with its larger peers. Upon transfer of coverage, we expect that its FY15-16 core earnings growth will be driven by stronger-than-peers credit growth and non-interest income growth. Our GGM-based target price is based on 1.57x FY15 P/BV, assuming 16% long-term ROE and 12.4% COE. We maintain our Add rating.

Change for a better future We believe that KTB’s management is capable of upscaling the bank’s operational improvement in SME and retail banking segments. However, it may take 2-3 years to see the full benefits of the transformation programme. KTB has the capability to push up its cross-selling efforts and non-interest income streams. We expect the bank’s non-interest income to resume growth in FY15 after the closure of Vayupak fund in FY13. Furthermore, KTB is keen to raise its lending business exposure to the private sector and high-yield retail customers rather than lending large amounts to state-owned enterprises with low yields. KTB is more active in the retail segment and encourages

Price Close

120.0

24.0

115.0

22.0

110.0

20.0

105.0

18.0

100.0

16.0

95.0

14.0 200

90.0

150 Vol m

100 50 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

new product subsidiaries.

launches

by

its

Outlook Over the last three years, KTB’s balance sheet has become stronger with a healthier loan-loss-reserve ratio of 124.8% in FY14. While the management has guided for THB700m/month provisioning, it always sets aside more-than-required given its strong performance. Its NPL is at a manageable level and should not be worrisome to investors due to the stringent credit approval criteria. We forecast FY15 loan growth of 9% on the back of accelerated government investments. In our view, its cost-to-income ratio will be retained at 43% in FY15 as the transformation programme does not demand huge investments.

Stay invested KTB is one of our favourite Thai banks due to its compelling valuation and a high dividend of 4.6%. We advise investors to stay invested in the stock.

Financial Summary

Relative to SET (RHS)

26.0

Dec-13

|

Net Interest Income (THBm) Total Non-Interest Income (THBm) Operating Revenue (THBm) Total Provision Charges (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield BVPS (THB) P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 58,122 23,774 81,896 (15,163) 23,366 2.02 33.1% 11.36 0.80 3.48% 15.36 1.50 14.9%

Dec-13A 63,870 30,466 94,336 (12,284) 33,928 2.62 29.5% 8.77 0.88 3.83% 14.75 1.56 17.4%

Dec-14F 69,180 29,032 98,212 (12,800) 34,167 2.44 (6.8%) 9.41 0.98 4.25% 16.22 1.42 15.8% (0.45%) 1.03

Dec-15F 73,804 32,068 105,873 (13,500) 37,512 2.68 9.8% 8.57 1.07 4.67% 17.84 1.29 15.8% (5.58%) 1.01

Dec-16F 79,748 35,429 115,178 (14,000) 42,108 3.01 12.3% 7.63 1.20 5.24% 19.66 1.17 16.1% (7.47%) 1.00

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Krung Thai Bank│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Net Interest Income Total Non-Interest Income Operating Revenue Total Non-Interest Expenses Pre-provision Operating Profit Total Provision Charges Operating Profit After Provisions Pretax Income/(Loss) from Assoc. Operating EBIT (incl Associates) Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Consolidation Adjustments & Others Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX And Other Adj. Net Profit Recurring Net Profit

Dec-13A 63,870 30,466 94,336 (40,302) 54,034 (12,284) 41,750 0 41,750 0 41,750 0 41,750 (7,822)

Dec-14F 69,180 29,032 98,212 (42,703) 55,509 (12,800) 42,709 0 42,709 0 42,709 0 42,709 (8,542)

Dec-15F 73,804 32,068 105,873 (45,483) 60,390 (13,500) 46,890 0 46,890 0 46,890 0 46,890 (9,378)

Dec-16F 79,748 35,429 115,178 (48,543) 66,635 (14,000) 52,635 0 52,635 0 52,635 0 52,635 (10,527)

33,928 0 0 0 33,928 33,928

34,167 0 0 0 34,167 34,167

37,512 0 0 0 37,512 37,512

42,108 0 0 0 42,108 42,108

(THBm) Total Gross Loans Liquid Assets & Invst. (Current) Other Int. Earning Assets Total Gross Int. Earning Assets Total Provisions/Loan Loss Reserve Total Net Interest Earning Assets Intangible Assets Other Non-Interest Earning Assets Total Non-Interest Earning Assets Cash And Marketable Securities Long-term Investments Total Assets Customer Interest-Bearing Liabilities Bank Deposits Interest Bearing Liabilities: Others Total Interest-Bearing Liabilities Bank's Liabilities Under Acceptances Total Non-Interest Bearing Liabilities Total Liabilities Shareholders' Equity Minority Interests Total Equity

Balance Sheet Employment Dec-13A 91.1% 92% 29.3% 30.7% 65.8% 79.3% 15.6% 74.4% 0.76% 0.51% 0.239%

Dec-14F 92.9% 92% 28.3% 29.6% 67.2% 80.7% 16.1% 76.2% 0.72% 0.50% 0.224%

Dec-15F 93.7% 93% 27.2% 28.2% 68.4% 81.9% 16.3% 77.6% 0.70% 0.50% 0.223%

Dec-16F 94.6% 94% 26.1% 27.1% 69.8% 83.3% 16.3% 79.1% 0.67% 0.48% 0.215%

Total Income Growth Operating Profit Growth Pretax Profit Growth Net Interest To Total Income Cost Of Funds Return On Interest Earning Assets Net Interest Spread Net Interest Margin (Avg Deposits) Net Interest Margin (Avg RWA) Provisions to Pre Prov. Operating Profit Interest Return On Average Assets Effective Tax Rate Net Dividend Payout Ratio

Dec-15F 2,455,716 250,472

Dec-16F 2,679,332 255,481

2,394,403 (61,783) 2,332,621 0 130,833 130,833 50,690 0 2,514,143 1,883,795 200,989 138,696 2,223,479 3,122 81,452 2,308,054 206,089 0 206,089

2,530,871 (68,828) 2,462,044 0 133,431 133,431 33,770 0 2,629,245 1,977,984 213,049 140,140 2,331,172 3,200 68,148 2,402,521 226,724 0 226,724

2,706,187 (76,258) 2,629,929 0 137,584 137,584 47,841 0 2,815,355 2,136,223 215,179 141,599 2,493,001 3,280 69,705 2,565,986 249,369 0 249,369

2,934,813 (83,964) 2,850,849 0 140,799 140,799 46,674 0 3,038,323 2,328,483 217,331 143,074 2,688,888 3,362 71,299 2,763,549 274,774 0 274,774

Dec-13A 15.2% 16.1% 33.0% 67.7% 2.22% 4.87% 2.65% 3.60% 3.66% 22.7% 2.68% 18.7% 29.5%

Dec-14F 4.1% 2.7% 2.3% 70.4% 2.23% 4.87% 2.64% 3.58% 3.57% 23.1% 2.69% 20.0% 32.0%

Dec-15F 7.8% 8.8% 9.8% 69.7% 2.23% 4.88% 2.64% 3.59% 3.53% 22.4% 2.71% 20.0% 32.0%

Dec-16F 8.8% 10.3% 12.3% 69.2% 2.22% 4.87% 2.65% 3.57% 3.48% 21.0% 2.72% 20.0% 32.0%

Dec-13A 11.7% 2.8% 28.1% 42.7% 3.2% 112.3% 0.0% 10.2% 14.8% 13.0% 87.8% 3.2% 14.9%

Dec-14F 7.1% 2.8% -4.7% 43.5% 3.0% 124.8% 0.0% 10.5% 14.8% 5.0% 89.4% 3.0% 8.8%

Dec-15F 9.0% 2.8% 10.5% 43.0% 2.9% 131.2% 0.0% 10.6% 14.6% 8.0% 90.2% 2.9% 12.7%

Dec-16F 10.0% 2.8% 10.5% 42.1% 2.8% 136.0% 0.0% 10.6% 14.3% 9.0% 91.0% 2.8% 13.7%

Key Drivers

12-month Forward Rolling FD P/E (x) 14.00

Loan Growth (%) Net Interest Margin (%) Non Interest Income Growth (%) Cost-income Ratio (%) Net NPL Ratio (%) Loan Loss Reserve (%) GP Ratio (%) Tier 1 Ratio (%) Total CAR (%) Deposit Growth (%) Loan-deposit Ratio (%) Gross NPL Ratio (%) Fee Income Growth (%)

12.00

10.00 8.00 6.00 4.00 2.00

Jan-11

Dec-14F 2,285,311 245,560

Key Ratios

Gross Loans/Cust Deposits Avg Loans/Avg Deposits Avg Liquid Assets/Avg Assets Avg Liquid Assets/Avg IEAs Net Cust Loans/Assets Net Cust Loans/Broad Deposits Equity & Provns/Gross Cust Loans Asset Risk Weighting Provision Charge/Avg Cust Loans Provision Charge/Avg Assets Total Write Offs/Average Assets

0.00 Jan-10

Dec-13A 2,163,830 230,573

Jan-12

Jan-13

Jan-14

Bangkok Bank

Kasikornbank

Krung Thai Bank

Siam Commercial Bank

SOURCE: CIMB, COMPANY REPORTS

141

Property Development│Thailand December 12, 2014

Land And Houses LH TB / LH.BK

Market Cap

Avg Daily Turnover

Free Float

US$3,179m

US$4.91m

54.0%

THB104,363m

THB159.9m

10,026 m shares

Current

THB9.50

Target

THB10.24

Prev. Target

THB11.32

Up/Downside

7.8% Conviction|

Little house room for re-rating

CIMB Analyst(s)

Wattaipun EKATAKSIN T (66) 2 657 9229 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-3.8

-9.7

-14.1

Absolute

-5.0

-11.2

0.0

Major shareholders

% held

Asavabhokhin family Thai NVDR GIC

23.8 19.1 13.7

Show Style "View Doc Map"

We continue to rate LH a Hold given its limited earnings upside as its 4Q14 results are unlikely to be exciting. FY14-15 earnings growth could be inferior to peers due to slower topline growth and limited upside for margins. We trim our target price as we roll it forward while cutting the target P/E from 18x to 15x (1 s.d. above 5-year mean) We keep our EPS estimates which do not factor in any one-off gains from asset sales or divestment of LHBANK. We believe that the LHBANK news has been well communicated to the market and is, hence, in the price.

No exceptional gains in FY14 but possible in FY15 Special gains from asset sales to a REIT are unlikely this year but will be pushed to 1Q15. The REIT, which will focus on assets from a retail shopping complex, is likely to be set up in 1Q15, at the earliest. Net gains from asset sales are estimated at THB1bn-1.2bn but this is well known by the market, in our view, as the news has been around for a few years.

Tame outlook for FY14-15 Compared with its peers’ average prospective EPS growth of 16% to 22% in FY14-15, LH’s growth is likely to be far less exciting, at 6-11%. Its FY16

Price Close

112.0

10.00

102.0

9.00

92.0

8.00 150

82.0

Vol m

100 50 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range



Current

Target

outlook is even duller, with earnings likely to grow 8-9% vs. the peer average of more than 18%. Even though SDH products have helped LH’s blended gross margin improve significantly to 36-37% in past year, we see limited upside. For LH’s earnings to expand more meaningfully, its condo gross margins of 28% need to grow faster to at least the peer average of 30-32%.

Rich valuations Although it is a proxy for the property sector given its large market capitalisation, LH’s valuations are quite demanding, at 14-15x CY15-16 P/E. We believe its growth prospects are not compelling enough to justify its hefty premium over peers, which are trading at 9-10x average P/E for FY15-16.

Financial Summary

Relative to SET (RHS)

11.00

Dec-13

|

Total Net Revenues (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 24,103 4,793 5,636 0.56 0.5% 16.90 0.44 4.62% 12.30 25.56 62.3% 3.09 18.7%

Dec-13A 25,075 5,650 6,478 0.65 15.0% 14.70 0.52 5.44% 11.68 23.37 72.8% 2.84 20.1%

Dec-14F 27,426 6,174 6,870 0.69 6.0% 15.25 0.52 5.42% 10.59 NA 64.5% 2.62 19.7% 0% 1.09

Dec-15F 30,145 6,984 7,568 0.75 10.2% 15.10 0.56 5.87% 9.52 60.85 54.8% 2.52 20.4% 0% 1.11

Dec-16F 33,160 7,682 8,217 0.82 8.6% 13.91 0.62 6.48% 8.62 31.37 51.2% 2.41 21.3% 0% 1.05

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Land And Houses│Thailand December 12, 2014

Profit & Loss

Balance Sheet

(THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 25,075 9,085 5,650 (509) 5,140 (61) 2,109 501 11,125 0 7,689 (1,102) 0 6,588 (109) 0

Dec-14F 27,426 9,871 6,174 (89) 6,084 (583) 2,214 580 11,992 0 8,295 (1,493) 0 6,802 68 0

6,478 6,478 6,478

6,870 6,870 6,870

Dec-15F 30,145 10,988 6,984 (98) 6,885 (573) 2,325 735 13,376 0 9,372 (1,874) 0 7,498 70 0

7,568 7,568 7,568

Dec-16F 33,160 12,087 7,682 (108) 7,574 (603) 2,441 771 14,588 0 10,183 (2,037) 0 8,147 70 0

(THBm) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

8,217 8,217 8,217

Cash Flow

Dec-14F 3,588

Dec-15F 3,520

Dec-16F 3,700

136 38,496 1,407 41,205 616 22,387 0 11,161 34,164 422

140 46,497 1,280 51,505 678 26,172 0 773 27,622 4,000

145 47,628 1,242 52,534 746 23,400 0 986 25,132 800

149 48,232 1,204 53,285 820 23,400 0 1,002 25,223 800

2,806 10,429 13,656 26,104

2,600 10,249 16,849 23,849

2,450 10,179 13,429 24,205

2,200 9,898 12,898 23,839

766 26,870 0 40,526 33,573 1,270 34,843

789 24,638 0 41,487 36,307 1,334 37,640

812 25,017 0 38,446 37,820 1,400 39,221

837 24,675 0 37,574 39,463 1,470 40,934

Dec-13A 4.0% 9.3% 36.2% (2.53) 3.35 15.05 14.3% 47.0% 1.87 810.7 56.52 19.4% 15.0%

Dec-14F 9.4% 8.6% 36.0% (2.42) 3.62 14.54 18.0% 44.0% 1.84 883.6 56.20 20.3% 15.4%

Dec-15F 9.9% 11.3% 36.4% (2.14) 3.77 16.23 20.0% 43.5% 1.72 896.7 48.11 23.9% 16.8%

Dec-16F 10.0% 10.0% 36.4% (2.09) 3.94 16.84 20.0% 44.0% 1.62 832.5 40.38 25.1% 18.5%

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital Straight Line Adjustment (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing

Dec-13A 5,650

Dec-14F 6,174

Dec-15F 6,984

Dec-16F 7,682

(5,315)

(8,211)

(1,285)

(859)

(331) 0 (1,102) (1,098) (161) 0

1,133 0 (1,597) (2,501) (151) 0

629 0 (1,729) 4,599 (166) 0

(791) 0 (1,910) 4,122 (183) 0

0 560 399 4,775 0 0 (5,183)

0 561 410 1,842 4,000 0 (5,166)

0 561 395 (3,115) 2,000 0 (5,588)

0 561 378 (857) 1,000 0 (6,169)

1,770 2,447

1,770 (4,933)

1,770 (4,255)

242 (165)

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%) |

Key Drivers

12-month Forward Rolling FD P/E (x) 40.0

Unbooked Presales (m) (THB) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (THB) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)

35.0 30.0 25.0 20.0 15.0

10.0 5.0 0.0 Jan-10

Dec-13A 1,166

Jan-11

Jan-12

Jan-13

Jan-14

Amata Corporation

Ananda Development

AP (Thailand) PCL

Central Pattana

Hemaraj

Land And Houses

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F 3,956.0 7,389.0 7,486.0 3,668.0 3,668.0 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 34.0% 35.8% 36.0% 36.5% 36.5% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 11.0% 10.2% 10.0% 9.8% 9.8%

SOURCE: CIMB, COMPANY REPORTS

143

Property Development│Thailand December 12, 2014

LPN Development LPN TB / LPN.BK

Market Cap

Avg Daily Turnover

Free Float

US$1,119m

US$3.81m

46.0%

THB36,745m

THB123.9m

1,476 m shares

Current

THB24.90

Target

THB29.78

Prev. Target

THB29.78

Up/Downside

19.6% Conviction|

Solid outlook

CIMB Analyst(s)

We maintain our Add call on LPN, given the promising share price and earnings upside. We retain our target price of THB29.8 based on 12.5x CY16 P/E (1 s.d. above 5-year mean). Potential near-term catalysts are recovery in 4Q14 presales and earnings

Wattaipun EKATAKSIN T (66) 2 657 9229 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

4.5

16.8

25.8

Absolute

3.3

15.3

39.9

Major shareholders

% held

Thai NVDR Chase Nominees HSBC (Singapore) Nominees

22.0 4.2 3.4

Show Style "View Doc Map"

We keep our EPS estimates unchanged. Given our FY15 revenue lock-in rate estimate of 96% thanks to its solid backlog, higher margin and intact gearing, LPN is still a high-quality long-term investment, with decent returns (including yields).

Earnings rebound in FY15 We project FY14’s EPS will decline 10%, before recovering in FY15 (expected 44% EPS growth), thanks to highly-secured revenue backed by a solid backlog (96% locked in), and higher gross margin. As our FY15-16 revenue assumptions are lower than LPN’s guidance, earnings upside potential cannot be ruled out. Net margin is expected to rise from 15% in FY14 to 18% in FY15-16.

Still upbeat targets LPN has retained its FY14 presales target of THB20bn despite the 71% lock-in rate in 9M14, which means that another THB5.8bn is needed to meet its FY14 target. LPN plans to launch four new condo projects (two in Cha-am) and relaunch LPN Township Rangsit-Klong 1, which have a combined value of THB8bn. Its finished inventory available for sale amounted to THB5.8bn at end-3Q14. Price Close

113.7

18.0

95.9

13.0 40

78.0

30 Vol m

20 10 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

LPN kept its FY14 condo sales target at THB13.6bn, of which 9M14 formed 57%. The balance should come from its 4Q14 backlog of THB3.5bn and the aforementioned finished inventory available for sale. Total backlog was THB21.3bn at end-3Q14 (THB3.5bn for 4Q14 revenue recognition, THB16bn for FY15 and THB1.9bn for FY16). Despite the slow transfers in 9M14, net gearing was well contained at 0.6x. LPN has guided for FY15 presales of THB22bn and revenue of THB18bn, as well as revenue of THB20bn in FY16 and THB22bn in FY17.

Quality investment returns Stay invested in LPN for its secure EPS growth of 44% in FY15 and 17% in FY16. Although LPN’s 12x CY15 P/E and 10x CY16 P/E valuations appear demanding and are at a premium to peer averages of 10x CY15 P/E and 9x CY16 P/E, we believe that LPN’s premium is justified, given its healthy balance sheet, efficiency-driven, high ROE of above 20%, and decent yields of 4-5%.

Financial Summary

Relative to SET (RHS)

23.0

Dec-13

|

Total Net Revenues (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 13,435 2,810 2,229 1.51 16.3% 16.48 0.76 3.03% 8.68 18.85 19.6% 4.33 28.6%

Dec-13A 14,436 2,955 2,329 1.58 4.5% 15.78 0.84 3.36% 8.54 32.32 42.4% 3.82 25.7%

Dec-14F 13,998 2,622 2,088 1.41 (10.3%) 17.60 0.71 2.84% 9.17 93.22 38.3% 3.51 20.8% 0% 0.95

Dec-15F 17,307 3,883 2,815 2.04 44.0% 12.22 1.05 4.21% 6.92 24.44 26.0% 2.93 26.1% 0% 0.88

Dec-16F 19,024 4,421 3,516 2.38 17.0% 10.45 1.19 4.78% 6.18 26.25 19.7% 2.53 26.0% 0% 1.00

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

LPN Development│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 14,436 4,779 2,955 (43) 2,912 (12) 0 54 4,779 0 2,954 (625)

Dec-14F 13,998 4,446 2,622 (42) 2,580 (17) 0 47 4,434 0 2,610 (522)

Dec-15F 17,307 5,777 3,883 (52) 3,832 (294) 0 50 5,481 0 3,587 (773)

(THBm) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 19,024 6,406 4,421 (33) 4,388 (45) 0 52 6,380 0 4,395 (879)

2,329 (0) 0

2,088 0 0

2,815 0 0

3,516 0 0

2,329 2,329 2,329

2,088 2,088 2,088

2,815 3,006 3,006

3,516 3,516 3,516

Cash Flow

Dec-14F 864

Dec-15F 1,203

Dec-16F 1,209

130 14,703 0 16,025 1,203 0 0 193 1,396 5,148

134 15,466 0 16,464 1,254 0 0 280 1,534 4,679

138 16,819 0 18,160 1,309 0 0 280 1,589 4,255

142 18,471 0 19,822 1,365 0 0 280 1,645 3,870

2,101 231 7,480 126

2,206 242 7,127 200

2,316 254 6,825 200

2,432 267 6,569 200

189 315 0 7,794 9,626 0 9,626

193 393 0 7,520 10,479 0 10,479

197 397 0 7,222 12,526 0 12,526

201 401 0 6,970 14,497 0 14,497

Dec-13A 7.7% 8.0% 33.3% (2.77) 6.52 408.4 21.2% 52.6% 4.48 483.9 79.27 36.8% 36.1%

Dec-14F (2.8%) (7.0%) 31.9% (2.72) 7.10 252.0 20.0% 54.3% 3.46 576.4 82.29 25.4% 29.1%

Dec-15F 23.8% 29.9% 33.5% (2.20) 8.49 323.6 21.5% 56.9% 2.88 511.0 71.58 31.2% 35.4%

Dec-16F 9.9% 10.9% 33.8% (1.94) 9.82 306.1 20.0% 50.1% 2.70 511.8 68.87 31.9% 35.9%

Dec-13A 11,000.0 N/A N/A N/A 32.7% N/A N/A N/A N/A N/A 12.4%

Dec-14F 6,667.0 N/A N/A N/A 31.5% N/A N/A N/A N/A N/A 13.0%

Dec-15F 14,122.0 N/A N/A N/A 33.2% N/A N/A N/A N/A N/A 11.0%

Dec-16F N/A N/A N/A 33.5% N/A N/A N/A N/A N/A 10.5%

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital Straight Line Adjustment (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing

Dec-13A 2,955

Dec-14F 2,622

Dec-15F 3,883

Dec-16F 4,421

(3,704)

(662)

(1,247)

(1,540)

451 (12) (688) (999) (338) 9

(505) (17) (625) 812 (52) 9

(144) (18) (522) 1,953 (54) 9

(280) (16) (773) 1,811 (57) 9

0 20 (309) 2,445 0 0 (1,234)

0 20 (23) (395) (0) 0 (1,044)

0 20 (25) (424) 0 0 (1,545)

0 20 (28) (384) 0 0 (1,758)

121 1,332

322 (1,116)

380 (1,590)

345 (1,797)

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 40.0

Unbooked Presales (m) (THB) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (THB) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)

35.0 30.0 25.0 20.0 15.0

10.0 5.0 0.0 Jan-10

Dec-13A 1,192

Jan-11

Jan-12

Jan-13

Jan-14

Amata Corporation

Ananda Development

AP (Thailand) PCL

Central Pattana

Hemaraj

Land And Houses

SOURCE: CIMB, COMPANY REPORTS

145

Media - Integrated│THAILAND December 12, 2014

Major Cineplex Group MAJOR TB / MAJO.BK

Market Cap

Avg Daily Turnover

Free Float

US$697.9m

US$1.67m

48.8%

THB22,911m

THB54.40m

881.9 m shares

Current

THB25.75

Target

THB24.38

Prev. Target

THB18.56

Up/Downside

-5.3% Conviction|

Good but too expensive

CIMB Analyst(s)

We are positive on Major’s dominant position in the cinema business in Thailand, which has benefited from the urbanisation in provincial areas. However, the stock price looks too demanding at this level as we do not expect the mild economic recovery and falling agricultural prices to boost cinema consumption in FY15. Maintain Hold.

Pisut NGAMVIJITVONG T (66) 2 657 9226 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

8.9

14.4

27.4

Absolute

7.7

12.9

41.5

Major shareholders

% held

Mr. Vicha Poolvaraluck State Street Bank and Trust Thai NVDR

36.7 10.3 4.8

Show Style "View Doc Map"

We maintain our FY14-16 core EPS forecasts but raise our target price by 31% to THB24.38, based on a blend of P/E and DCF, as we roll it forward. The stock trades at 22x FY15 P/E, which is 1.5 s.d. above its five-year historical average. We think that any good news should be largely in the price, but we do not rule out the IPO of SFX, the second-largest cinema operator, which could spur competitive intensity in the market.

Aggressive screen expansion in FY15

Major added 40 new screens in FY14, which was below the target of 60-70, due to the political uncertainty in 1H14. Management believes that retailers will resume their aggressive branch expansion in second- and third-tier provinces in FY15, and Major could tag along on the expansion cycle. However, news about the exit of Tesco from international markets could also affect the pace of branch expansion for retailers.

Price Close

122.7

19.0

104.9

14.0 15

87.0

Vol m

10 5 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

More attractive blockbusters in FY15

Management is confident that blockbusters in FY15, i.e. Avengers, Furious 7, Star Wars, look more attractive than those in FY14, which should also boost Major’s cinema revenue (admissions, concessions and advertisements). Major still has a good chance of improving the quality and quantity of local films, and should leverage the higher number of screens, particularly in provinces where consumers prefer local content to international films. Although we are comfortable with the decent movie consumption in major cities, we are increasingly concerned about the demand in provinces as the provincial economy will be softer than cities due to the falling agricultural prices, i.e. paddy rice, rubber, cassava, etc.

Too expensive

Although we are positive on Major as 1) it has the largest market share position, 2) it is a first-mover in second- and third-tier provinces and 3) there is room for improving the local film industry, we think that the stock is too pricey at 22x FY15 core P/E, which is 1.5 s.d. above its five-year historical average.

Financial Summary

Relative to SET (RHS)

24.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 6,965 1,740 811 0.77 (12.5%) 33.38 0.87 3.38% 13.32 84.94 37.1% 3.63 11.2%

Dec-13A 7,711 2,016 1,092 1.07 39.3% 24.12 1.13 4.37% 11.69 17.01 49.9% 3.80 15.3%

Dec-14F 7,186 1,768 1,066 1.21 13.2% 21.38 1.14 4.43% 13.31 37.41 51.9% 3.81 17.9% 0% 1.02

Dec-15F 7,287 1,870 1,268 1.44 19.0% 18.02 1.36 5.27% 12.27 72.28 42.8% 3.70 21.0% 0% 1.06

Dec-16F 7,572 1,995 1,532 1.74 20.8% 14.92 1.64 6.37% 11.16 23.13 32.7% 3.57 24.5% 0% 1.11

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Major Cineplex Group│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-12A 6,965 3,352 1,740 (1,083) 658 (133) 157 176 858 180 1,038 (282)

Dec-13A 7,711 3,765 2,016 (1,025) 991 (149) 189 121 1,152 189 1,341 (276)

Dec-14F 7,186 3,489 1,768 (1,051) 717 (141) 284 331 1,192 0 1,192 (181)

Dec-15F 7,287 3,521 1,870 (1,051) 820 (123) 292 454 1,443 0 1,443 (230)

Dec-16F 7,572 3,658 1,995 (1,049) 946 (96) 300 621 1,770 0 1,770 (294)

756 55 0

1,064 27 0

1,010 55 0

1,213 55 0

1,476 55 0

811 680 680

1,092 942 942

1,066 1,066 1,066

1,268 1,268 1,268

1,532 1,532 1,532

Dec-12A 1,740

Dec-13A 2,016

Dec-14F 1,768

Dec-15F 1,870

Dec-16F 1,995

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-12A 481 1,454 132 236 2,302 5,333 2,135 287 1,446 9,200 1,682

Dec-13A 603 1,312 145 425 2,486 5,350 2,186 338 1,537 9,411 1,708

Dec-14F 447 1,416 142 304 2,308 5,276 2,238 338 1,570 9,422 1,709

Dec-15F 128 1,393 148 301 1,969 4,886 2,291 338 1,582 9,097 1,327

Dec-16F 431 1,470 150 316 2,367 4,481 2,346 338 1,527 8,692 1,137

1,527 264 3,474 1,170

1,405 264 3,377 1,894

1,498 264 3,471 1,814

1,496 264 3,087 1,392

1,554 264 2,955 1,328

474 1,643 0 5,117 6,298 87 6,385

610 2,504 0 5,882 5,983 32 6,015

514 2,329 0 5,800 5,954 (23) 5,931

533 1,925 0 5,012 6,133 (79) 6,054

552 1,880 0 4,835 6,359 (134) 6,225

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

(35)

(183)

117

18

(33) (133) (282) 1,257 (1,087) 232 0 0 (855) (135) 86 0 (689)

353 (149) (276) 1,760 (1,402) 227 0 0 (1,176) 751 0 0 (972)

(152) (141) (181) 1,410 (954) 232 0 0 (721) (80) 0 0 (1,114)

(34) (123) (230) 1,501 (619) 238 0 0 (381) (804) 0 0 (1,090)

33 (96) (294) 1,601 (603) 245 0 0 (358) (254) 0 0 (1,306)

356 (382) 20 267 535

(241) (462) 122 1,335 734

349 (846) (156) 609 830

0 (1,894) (774) 316 1,243

0 (1,560) (318) 988 1,339

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

(37)

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F 3.5% 10.7% (6.8%) 1.4% 3.9% (4.8%) 15.8% (12.3%) 5.8% 6.7% 25.0% 26.1% 24.6% 25.7% 26.4% (2.67) (3.40) (3.49) (2.94) (2.31) 7.10 6.78 6.75 6.95 7.21 4.94 6.65 5.09 6.66 9.81 27.2% 20.6% 15.2% 16.0% 16.6% 122% 111% 95% 95% 95% 66.83 65.46 69.28 70.35 69.18 14.49 12.82 14.15 14.04 13.94 141.2 135.6 143.3 145.1 142.6 9.4% 14.0% 9.6% 11.3% 13.7% 7.2% 10.5% 7.5% 9.0% 10.8%

|

12-month Forward Rolling FD P/E (x)

Key Drivers

45.0 40.0

TV Adex Rate (% Change) Average Utilisation Rate (%) Prime Time Utilisation Rate (%) Non Prime Time Utilisation Rate (%) Programming Costs (% Change) Newsppr adex rev. grth (%) Newspaper ASP (% Change) Newsppr circulation grth (%) Newsprint Cost (% Change)

35.0 30.0

25.0 20.0 15.0

10.0 5.0 0.0 Jan-10 BEC World

Jan-11

Jan-12 Major Cineplex Group

Jan-13 MCOT

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F N/A N/A N/A N/A N/A 13.0% 12.8% 12.7% 12.9% 12.9% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 19.7% 2.1% 19.1% -7.7% 1.2% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Jan-14 VGI Global Media PCL

SOURCE: CIMB, COMPANY REPORTS

147

Retail│Thailand December 12, 2014

Mc Group MC TB / MC.BK

Market Cap

Avg Daily Turnover

Free Float

US$341.2m

US$1.16m

30.0%

THB11,200m

THB37.83m

800.0 m shares

Current

THB14.00

Target

THB17.10

Prev. Target

THB17.10

Up/Downside

22.1% Conviction|

Cut in expansion plans

CIMB Analyst(s)

Kitichan SIRISUKARCHA, CFP T (66) 2 657 9232 E [email protected]

Share price info Share price perf. (%)

|

1M

3M

12M

Relative

-12.9

-22.8

-10.4

Absolute

-14.1

-24.3

3.7

Major shareholders

% held

Ms.Sunee Seripanu HSBC Fund service Department Mindo Asia Investment

44.1 10.3 8.8

Show Style "View Doc Map"

2015 will be challenging for MC as sales depend largely on domestic consumption, especially upcountry (around 65% of total revenue), where purchasing power is eroding due to weak farm prices. With no sign of recovery in the near term, we project FY15 EPS growth of only 10% yoy. However, its 5% DPS yield is attractive and it has no debt. We reiterate Hold and our target price of THB17.10 (17x FY15 P/E, 1 s.d. below the sector’s mean). Next year, MC will likely suffer from slower sales at its sales counters in department stores and the modern trade (SSSG plunged 30% in 9M14) as purchasing power has been weak and this distribution channel is losing its popularity. As such, we project flat SSSG in 2015.

Cut in expansion plan MC initially planned to open 100 new branches every year but the slower-than-expected consumption, coupled with a steep decline in SSSG from modern trade, has forced the company to lower its target to 70 branches. However, we believe this move is positive given that MC should focus on boosting sales and generating economies of scales from its existing 680 stores. Nevertheless,

Price Close

144.0

20.0

134.0

18.0

124.0

16.0

114.0

14.0

104.0

12.0

94.0

10.0 20

84.0

Vol m

10 5 Dec-13

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range



Current

Target

Intensifying competition Competition in the retail industry is intensifying amid the weak consumption, forcing existing players to introduce more discount campaigns. MC is no exception and the company may have to sell products at a discount, which will put pressure on margins. Note that MC currently has 40% market share.

Maintain Hold for DPS and recovery MC’s price seems to be undemanding at 15.7x FY15 P/E (retail sector 26x). Despite its attractive DPS yield of 5%, we maintain Hold due to its unexciting EPS growth.

Financial Summary

Relative to SET (RHS)

22.0

15

this may also indicate that MC’s number of stores is approaching its optimum level.

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE CIMB/consensus EPS (x)

Dec-12A 2,556 772 599.3 2.00 101% 6.99 1.16 8.26% 5.95 NA 48.7% 5.21 88.2%

Dec-13A 2,973 873 733.4 1.34 (33%) 10.45 1.08 7.68% 6.99 NA (45.4%) 3.10 33.4%

Dec-14F 3,712 968 727.5 0.91 (32%) 15.32 0.73 5.20% 9.77 17.90 (47.6%) 2.98 19.8% 0.92

Dec-15F 4,238 1,074 803.6 1.01 10% 13.88 0.80 5.74% 8.99 23.08 (40.8%) 2.86 21.0% 0.89

Dec-16F 4,895 1,248 952.7 1.20 18% 11.71 0.95 6.81% 7.78 16.81 (37.7%) 2.72 23.8% 0.89

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Mc Group│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 2,973 1,775 873 (90) 783 (17) 0 44 814

Dec-14F 3,712 2,185 968 (153) 815 0 0 26 845

Dec-15F 4,238 2,423 1,074 (170) 904 0 0 33 941

Dec-16F 4,895 2,802 1,248 (173) 1,074 0 0 31 1,110

810 (77)

841 (99)

937 (118)

1,106 (137)

732 1

742 (15)

819 (16)

969 (16)

733 737 737

728 731 731

804 807 807

953 956 956

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 1,792 726 1,363 73 3,953 340 0 118 241 699 108 2 508 285 903 0

Dec-14F 1,831 851 1,240 91 4,013 516 0 115 241 872 0 0 556 293 850 0

Dec-15F 1,689 972 1,474 104 4,239 575 0 117 241 932 54 0 658 289 1,001 0

Dec-16F 1,609 1,123 1,699 120 4,551 586 0 116 241 942 27 0 755 291 1,074 0

155 155 39 1,044 3,759 88 3,847

132 132 39 1,172 3,920 88 4,008

190 190 39 1,304 4,110 88 4,198

Dec-13A 16.3% 13.1% 29.4% 2.10 4.52 45.09 9.5% 117% 83.73 326.4 128.4 50.8% 31.1%

Dec-14F 24.9% 10.9% 26.1% 2.29 4.70 N/A 11.7% 80% 77.57 311.1 122.6 31.7% 21.5%

Dec-15F 14.2% 10.9% 25.3% 2.04 4.90 N/A 12.6% 80% 78.53 272.8 118.2 33.0% 23.3%

Dec-16F 15.5% 16.2% 25.5% 1.98 5.14 N/A 12.4% 80% 78.32 277.5 120.2 34.0% 26.2%

Dec-13A N/A N/A 624 -2.0% N/A N/A N/A N/A

Dec-14F N/A N/A 728 -4.4% N/A N/A N/A N/A

Dec-15F N/A N/A 828 0.0% N/A N/A N/A N/A

Dec-16F N/A N/A 928 1.3% N/A N/A N/A N/A

9 9 39 951 3,614 88 3,701

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 873

Dec-14F 968

Dec-15F 1,074

Dec-16F 1,248

(538)

47

(254)

(278)

41 (17) (77) 282 (194) (211) (1,520) 249 (1,676)

11 0 (99) 927 (325) (1) 16 8 (302)

18 0 (118) 720 (225) (5) 0 (4) (235)

15 0 (137) 847 (180) (3) 0 2 (181)

3,074

15

16

16

(860)

(582)

(643)

(762)

(705) 1,509 114 (1,395) (1,377)

(3) (570) 55 626 626

0 (627) (142) 485 485

(0) (746) (80) 666 666

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 25.0

ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) No. of POS (main prod/serv) SSS grth (%, main prod/serv) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) No. of POS (2ndary prod/serv) SSS grth (%, 2ndary prrod/serv)

20.0

15.0 10.0 5.0 0.0 Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Mc Group

SOURCE: CIMB, COMPANY REPORTS

149

TV - FTA│THAILAND December 12, 2014

MCOT MCOT TB / MCOT.BK

Market Cap

Avg Daily Turnover

Free Float

US$368.4m

US$0.41m

34.2%

THB12,093m

THB13.39m

687.1 m shares

Current

THB17.60

Target

THB20.00

Prev. Target

THB24.79

Up/Downside

13.6% Conviction|

Sleeping giant or sinking boat?

CIMB Analyst(s)

We hope the new CEO is able to rejuvenate MCOT’s competitiveness as a TV incumbent and monetise its hidden assets in a more efficient way. The stock has plunged 54% in the past four quarters, and we do not see any near-term re-rating catalyst. Maintain Hold.

Pisut NGAMVIJITVONG T (66) 2 657 9226 E [email protected]

Share price info Share price perf. (%)

|

1M

3M

12M

Relative

-11.7

-27.5

-54.4

Absolute

-12.9

-29.0

-40.3

Major shareholders

% held

MINISTRY OF FINANCE, THAILAND GOVERNMENT SAVINGS BANK GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION

65.8 11.5 2.2

Show Style "View Doc Map"

We lower our FY14-16 core EPS forecasts by 7-37% to reflect the soft economy in FY14, mild economic recovery in FY15 and the viewership loss from intensifying competition in the digital terrestrial TV business. As a result, our blended P/E and DCF-based target price falls by 19% to THB20.

should be soft. We expect to see some recovery in 1Q15 or 2Q15 as the new CEO should strengthen its programme line-up to gain some traction with the audience and media buyers.

Unresolved structural problems

There is low visibility on the government’s initiative to reform the The board appointed Mr. Sivaporn SOEs, including MCOT. Under the Chomsuwan as the CEO of MCOT on current structure, it will be difficult 25 Nov. He replaced Mr. Anek for MCOT to be competitive against Permvongseni who resigned on 12 Jun. incumbents and new players in the Mr Sivaporn has more than 15 years new digital terrestrial TV landscape. of experience in the TV business and The new government’s reforms could was the president of National mean new board members and also a International Edutainment Plc. prior new CEO, which could disrupt the to joining MCOT. We believe the business rejuvenation process. board needs fill the CFO position soon. We expect the new CEO to redefine Cheap for good reasons MCOT’s strategic direction and boost Based on our new estimates, MCOT its competitiveness to match its trades at 15.3x FY15 core P/E which is a 25% discount to its peer BEC. This competitors. could imply limited downside risk Recovery takes time from the current price but we also do However, we do not expect MCOT to not see any near-term re-rating make a prompt recovery as the market catalyst for the stock. Upside risk to is now crowded with new players. our call hinges on the capability of the Leading indicators such as audience new CEO to turn around MCOT’s share and ad revenue market share operations. show that MCOT’s 4Q14 results

New CEO takes over

Price Close

104

26.0

81

21.0

59

16.0 4

37

3 2 Vol m

Financial Summary

Relative to SET (RHS)

31.0

1 Dec-13

Mar-14

Jun-14

Source: Bloomberg

52-week share price range




Current

Target

Sep-14

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 5,729 2,662 1,759 2.56 29.6% 6.88 2.30 13.1% 2.80 14.43 (57.2%) 1.52 22.6%

Dec-13A 5,715 2,207 1,527 2.22 (13.2%) 7.92 2.00 11.4% 3.51 3.79 (54.4%) 1.53 19.2%

Dec-14F 4,841 1,267 624 0.91 (59.2%) 19.39 0.77 4.4% 7.07 77.28 (40.3%) 1.58 8.0% (36.9%) 0.80

Dec-15F 5,138 1,599 816 1.19 30.9% 14.81 1.01 5.7% 6.13 NA (28.6%) 1.54 10.5% (16.3%) 1.06

Dec-16F 5,004 1,673 811 1.18 (0.6%) 14.90 1.06 6.0% 5.77 18.75 (30.0%) 1.52 10.3% (6.9%) 1.02

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

MCOT│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 5,715 3,529 2,207 (540) 1,668 256 0 0 1,924 0 1,924 (396) 0 1,528 (1) 0 0 0 1,527 1,527 1,527

Dec-14F 4,841 2,548 1,267 (651) 616 155 0 0 772 0 772 (147) 0 625 (1) 0 0 0 624 624 624

Dec-15F 5,138 2,967 1,599 (692) 907 136 0 0 1,043 0 1,043 (226) 0 817 (1) 0 0 0 816 816 816

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 5,004 3,012 1,673 (716) 956 112 0 0 1,068 0 1,068 (256) 0 812 (1) 0 0 0 811 811 811

Cash Flow

Dec-13A 4,337 1,516 51 328 6,232 3,988 90 0 859 4,936 0 6 1,358 406 1,770 4 0 1,435 1,439 0 3,208 7,899 61 7,960

Dec-14F 3,653 1,071 47 278 5,049 7,891 90 0 634 8,614 0 55 1,576 343 1,974 498 0 3,499 3,997 0 5,972 7,633 59 7,691

Dec-15F 2,760 1,542 27 295 4,623 7,867 90 0 736 8,692 0 55 1,472 365 1,892 442 0 3,075 3,517 0 5,409 7,848 59 7,906

Dec-16F 2,846 1,030 56 287 4,220 7,587 90 0 720 8,396 0 55 1,362 355 1,773 387 0 2,448 2,835 0 4,608 7,949 59 8,008

Dec-13A (0.2%) (17.1%) 38.6% 6.30 11.50 128.2 20.6% 103% 96.36 7.57 231.6 29.0% 24.2%

Dec-14F (15.3%) (42.6%) 26.2% 4.51 11.11 24.8 19.1% 161% 97.53 7.80 233.5 9.9% 9.8%

Dec-15F 6.1% 26.2% 31.1% 3.29 11.42 38.4 21.7% 74% 92.81 6.22 256.2 9.1% 12.8%

Dec-16F (2.6%) 4.6% 33.4% 3.50 11.57 45.2 23.9% 87% 94.07 7.58 260.3 8.9% 12.9%

Dec-13A -1.0% N/A N/A 66.1% -8.8%

Dec-14F -24.3% N/A N/A 60.8% -14.9%

Dec-15F 0.5% N/A N/A 59.0% 19.6%

Dec-16F -2.1% N/A N/A 61.2% 6.8%

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 2,207 0 (302) 19 0 0 22 (801) 1,145 (195) 37 2,087 120 2,049 (4) 26 0 (1,580) 0 188 (1,371) 1,824 3,190 3,195

Dec-14F 1,267 0 3,544 0 0 0 (25) (147) 4,639 (5,153) 0 128 0 (5,026) 543 0 0 (1,007) 0 167 (298) (684) 156 (362)

Dec-15F 1,599 0 (476) 0 0 0 (24) (226) 873 (1,269) 0 (33) 0 (1,301) (55) 0 0 (601) 0 192 (465) (893) (483) (404)

Dec-16F 1,673 0 360 0 0 0 (21) (256) 1,756 (1,036) 0 (20) 0 (1,056) (55) 0 0 (710) 0 151 (614) 87 645 721

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 45.0 40.0

Adex Revenue Growth (%) ARPU (% Change) No. Of Subscribers (% Change) Adex/total Revenue (%) Programming Costs Change (%)

35.0 30.0

25.0 20.0 15.0

10.0 5.0 0.0 Jan-10 BEC World

Jan-11

Jan-12 Major Cineplex Group

Jan-13 MCOT

Jan-14 VGI Global Media PCL

SOURCE: CIMB, COMPANY REPORTS

151

Hotels│Thailand December 12, 2014

Minor International MINT TB / MINT.BK

Market Cap

Avg Daily Turnover

Free Float

US$4,479m

US$8.28m

50.9%

THB147,057m

THB269.5m

4,001 m shares

Current

THB36.75

Target

THB42.00

Prev. Target

THB42.00

Up/Downside

14.3% Conviction|

A safe bet on tourism recovery

CIMB Analyst(s)

Kasem PRUNRATANAMALA, CFA T (66) 2 657 9221 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

15.2

6.5

36.5

Absolute

14.0

5.0

50.6

Major shareholders

% held

Heinecke family Mr Nithi Osathanugrah

34.0 8.6

Show Style "View Doc Map"

MINT will not only benefit from tourism recovery in Thailand, it will also profit from an emerging tourism trend in Africa. Its food business is likely to see a stronger year in 2015. We project improvements all round from MINT in 2015, driving up its earnings growth to almost 30% next year. MINT is one of our top picks for the Thai market next year. We reiterate our Add call and our THB42 target price, still based on 24x CY16 P/E (1 s.d. above 5-year historical mean). We believe that a pick-up in tourist arrivals and the food business will help catalyse its share price.

Turnaround in Thai hotels Its hotels in Thailand will benefit from a recovery in tourist arrivals next year on the back of a more stable political environment while its hotels elsewhere should continue to profit from the strong tourism trend worldwide. We expect its Thai hotels’ occupancy rate to rise from about 60% in 2014 to 70% in 2015. About 25% of its total hotel rooms are in Thailand (14% in Bangkok and 11% upcountry), 21% are in other Asian countries (e.g. Maldives, Indonesia, UAE, China), 40% are in Australia and New Zealand and the remaining 13% are in Africa.

Recovery in food business Although its Thailand hub has seen positive same-store-sale growth since

Vol m

Price Close

152.0

36.0

138.0

31.0

124.0

26.0

110.0

21.0

96.0

16.0 50 40 30 20 10

82.0

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range 36.75 38.00

18.70

42.00 Current

Target

2Q14, its Singapore and China hubs still experienced negative SSSG in 3Q14. We expect these two hubs to show better performance next year as MINT tries to introduce new food concepts in Singapore and increase its sales in China. The Thai hub should also see better growth next year on the back of a stronger economy.

Aggressive expansion plans MINT plans to add 20 hotels (2,574 rooms) using its own money during 2014-16 on top of the 93 hotels under its ownership, joint venture and Management Letting Right (MLR) (11,297 rooms) now. MINT also plans to add 28 hotels (4,210 rooms) under its managed hotel portfolio. That said, MINT plans to grow its number of rooms by 15% CAGR over the next three years. On the food side, MINT plans to add about 220 outlets per annum over the next few years. It expects to have 2,600 restaurants by 2018, from 1,648 at the end of 3Q14 (11% CAGR).

Financial Summary

Relative to SET (RHS)

41.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 31,310 5,406 3,243 0.93 66.8% 39.45 0.28 0.77% 26.37 73.8 95.0% 7.58 20.1%

Dec-13A 34,678 6,090 4,101 1.07 14.5% 34.44 0.34 0.92% 24.74 NA 60.3% 5.86 19.1%

Dec-14F 39,243 6,519 4,524 1.13 6.0% 32.50 0.37 1.02% 23.99 109.8 54.5% 5.23 17.0% 0% 1.01

Dec-15F 47,239 8,132 5,753 1.44 27.2% 25.56 0.47 1.29% 19.10 85.0 46.3% 4.60 19.1% 0% 1.04

Dec-16F 54,320 9,667 7,021 1.75 22.0% 20.95 0.58 1.58% 15.92 66.4 38.2% 4.01 20.5% 0% 1.10

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Minor International│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 34,678 20,129 6,090 (2,465) 3,625 (1,027) 530 1,729 4,857 0 4,857 (675)

Dec-14F 39,243 21,962 6,519 (2,630) 3,888 (1,012) 662 1,833 5,371 0 5,371 (752)

Dec-15F 47,239 26,600 8,132 (2,873) 5,259 (1,031) 695 1,979 6,902 0 6,902 (1,035)

Dec-16F 54,320 30,805 9,667 (3,140) 6,527 (926) 730 2,078 8,410 0 8,410 (1,262)

4,182 (80) 0

4,619 (95) 0

5,867 (114) 0

7,149 (128) 0

4,101 4,101 4,101

4,524 4,524 4,524

5,753 5,753 5,753

7,021 7,021 7,021

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 3,370 3,332 1,675 2,255 10,632 23,432 9,547 11,804 4,522 49,304 971

Dec-14F 3,282 3,731 1,792 2,278 11,083 24,603 9,648 12,276 4,748 51,275 777

Dec-15F 3,244 4,179 1,918 2,300 11,641 27,064 10,179 12,767 4,985 54,995 816

Dec-16F 3,211 4,681 2,052 2,323 12,267 29,770 10,743 13,278 5,234 59,025 938

8,694 1,293 10,958 18,602

7,598 1,319 9,694 18,842

8,147 1,346 10,309 18,136

8,752 1,373 11,063 17,052

3,501 22,103 0 33,062 25,090 1,784 26,875

3,851 22,693 0 32,386 28,122 1,850 29,972

4,236 22,372 0 32,681 31,976 1,980 33,956

4,448 21,500 0 32,562 36,680 2,050 38,730

Dec-13A 10.8% 12.7% 17.6% (4.05) 6.27 3.53 13.9% 25.5% 33.08 41.28 120.9 8.4% 8.3%

Dec-14F 13.2% 7.0% 16.6% (4.08) 7.03 3.84 14.0% 25.5% 32.85 36.62 110.8 8.4% 8.1%

Dec-15F 20.4% 24.7% 17.2% (3.93) 7.99 5.10 15.0% 25.2% 30.56 32.81 102.1 10.4% 10.3%

Dec-16F 15.0% 18.9% 17.8% (3.69) 9.17 7.05 15.0% 25.2% 29.85 30.89 98.8 11.9% 11.9%

Dec-13A 70.0% 5,573.0 12,800 1,457 100

Dec-14F 70.0% 5,740.2 14,968 1,557 100

Dec-15F 75.0% 6,199.4 16,724 1,657 100

Dec-16F 75.0% 6,571.4 18,062 1,757 100

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 6,090 1,798 94

Dec-14F 6,519 662 1,362

Dec-15F 8,132 695 1,509

Dec-16F 9,667 730 1,224

0 (1,027) (675) 6,280 (4,664) 0 (3,518) 0 (8,181) (1,315) 3,651 0 (1,353)

0 (1,012) (752) 6,779 (3,802) 0 (287) 0 (4,089) (1,352) (0) 0 (1,493)

0 (1,031) (1,035) 8,270 (5,333) 0 (539) 0 (5,872) (667) (0) 0 (1,899)

0 (926) (1,262) 9,434 (5,846) 0 (413) 0 (6,259) (962) (0) 0 (2,317)

587 1,569 (332) (3,216) (874)

66 (2,779) (88) 1,339 3,703

130 (2,436) (38) 1,731 3,429

70 (3,208) (33) 2,214 4,101

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 50.0

45.0

Average Occupancy Rate (%) Avg room rate (night) (THB) No. Of Rooms No. Of Food Outlets No. Of New Outlets

40.0 35.0

30.0 25.0 20.0 15.0 10.0 5.0 0.0 Jan-10

Jan-11 Central Plaza Hotel

Jan-12

Jan-13 Hotel Shilla

Jan-14 Minor International

SOURCE: CIMB, COMPANY REPORTS

153

Food & Beverages│Thailand December 12, 2014

MK Restaurant Group M TB / M.BK

Market Cap

Avg Daily Turnover

Free Float

US$1,623m

US$1.30m

24.6%

THB53,291m

THB42.33m

793.8 m shares

Current

THB58.75

Target

THB74.00

Prev. Target

THB74.00

Up/Downside

26.0% Conviction|

Recovery on the menu

CIMB Analyst(s)

We expect 2015 to be better for M as greater economic and political stability should boost consumer spending and thus keep its expansion plans on track. We also foresee better earnings prospects, supported by improving sales and continued branch expansion.

Kitichan SIRISUKARCHA, CFP T (66) 2 657 9232 E [email protected]

Share price info Share price perf. (%)

1M

3M

Relative

1.2

0.6

7.0

Absolute

0.0

-0.9

21.1

Major shareholders

12M

% held

Thirakomen Yupin Hanjitkasem Somchai Hanjitkasem Somnuk

21.9 18.1 18.1

Show Style "View Doc Map"

We keep our Add call and DCF-based (WACC 7.6%) target price of THB74. A key driver is M’s continued branch expansion. We expect it to achieve an 12.5% revenue CAGR and 16.5% net profit CAGR over the next three years (FY15-17). But ESOP-related provisions in FY14-16 will put pressure on net earnings. Its strengths lie in its solid financials (cash in hand of c.THB8bn or THB8.8 per share), and potential M&A in the coming years (not yet in our forecast), providing upside to its earnings.

SSSG almost positive Overall same-store sales growth (SSSG) showed signs of improvement, narrowing to -4.5% in 3Q14 (vs. -5% 2Q14 and -9% 1Q14). SSSG for MK Suki Restaurant fell 1% qoq from -5% in 2Q14 but its Bangkok branches posted positive SSSG for the first time this year (+1% in 3Q14 compared to -3% upcountry). However, Yayoi’s SSSG plunged 10% in 3Q14. M

Vol m

Price Close

132.0

66.0

125.0

61.0

118.0

56.0

111.0

51.0

104.0

46.0 10 8 6 4 2

97.0

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

believes that its SSSG will turn positive in FY15.

Expansion on track. M reiterates its plan to open around 60 new restaurants each year. It’s branch expansion plan is still on track, as 19 new branches were opened in 3Q14 (42 branches in 9M14), bringing M’s total branches to 548 at end-9M14. With the 16 new branches scheduled for opening in 4Q14, M would have added 58 new branches in 2014.

Maintain Add We maintain our positive view on M’s operation in the longer term and its solid net cash position. M’s estimated dividend yields are attractive, at 4.5% in FY15 and 5.2% in FY16 (based on 80% dividend payout). Considering its strong financials, M can afford to pay higher dividends.

Financial Summary

Relative to SET (RHS)

71.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 12,987 2,993 2,031 4.49 14.0% 13.07 4.50 7.66% 8.89 19.82 5.1% 23.30 156%

Dec-13A 13,969 2,875 2,039 3.17 (29.5%) 18.55 1.60 2.72% 12.86 NA (7.8%) 4.19 33%

Dec-14F 15,023 3,200 2,196 2.58 (18.4%) 22.73 1.74 2.96% 15.14 32.81 (12.8%) 4.58 19% 0% 1.12

Dec-15F 17,013 3,581 2,498 2.76 6.7% 21.31 2.59 4.41% 14.32 24.52 (16.8%) 4.58 22% 0% 1.03

Dec-16F 19,132 3,979 2,813 3.11 12.6% 18.92 3.01 5.12% 12.80 22.56 (19.6%) 4.58 24% 0% 1.02

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

MK Restaurant Group│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 13,969 9,940 2,875 (598) 2,276 (21) 0 271 2,526

Dec-14F 15,023 10,441 3,200 (704) 2,495 (21) 0 271 2,745

Dec-15F 17,013 11,773 3,581 (709) 2,872 (21) 0 271 3,122

Dec-16F 19,132 13,182 3,979 (712) 3,267 (21) 0 271 3,517

2,526 (487)

2,745 (549)

3,122 (624)

3,517 (703)

2,039 0

2,196 0

2,498 0

2,813 0

2,039 2,039 2,039

2,196 2,196 2,196

2,498 2,498 2,498

2,813 2,813 2,813

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

EFATableCorpIS|

Cash Flow

Dec-14F 1,490 118 244 3,686 5,537 4,311 0 56 5,658 10,025 0 0 1,506 452 1,958 0

Dec-15F 1,949 134 279 3,686 6,047 4,333 0 56 5,658 10,046 0 0 1,723 436 2,159 0

Dec-16F 2,282 150 317 3,686 6,434 4,351 0 56 5,658 10,064 0 0 1,956 444 2,400 0

1,586 1,586 0 3,864 11,142 0 11,142

1,992 1,992 0 3,951 11,612 0 11,612

2,323 2,323 0 4,482 11,612 0 11,612

2,487 2,487 0 4,887 11,612 0 11,612

Dec-13A 7.6% (4.0%) 20.6% 1.10 14.04 107.2 19.3% 62% 2.87 19.43 158.4 133% 34%

Dec-14F 7.5% 11.3% 21.3% 1.64 12.82 117.5 20.0% 72% 3.38 18.72 134.0 21% 22%

Dec-15F 13.2% 11.9% 21.0% 2.15 12.82 135.3 20.0% 94% 2.70 18.21 112.5 24% 25%

Dec-16F 12.5% 11.1% 20.8% 2.52 12.82 153.9 20.0% 97% 2.72 18.32 113.1 27% 28%

Dec-13A N/A 2.8% N/A N/A 16.6% N/A N/A N/A N/A N/A N/A N/A

Dec-14F N/A 7.8% N/A N/A 20.6% N/A N/A N/A N/A N/A N/A N/A

Dec-15F N/A 10.8% N/A N/A 23.2% N/A N/A N/A N/A N/A N/A N/A

Dec-16F N/A 10.3% N/A N/A 20.8% N/A N/A N/A N/A N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 2,875

Dec-14F 3,200

Dec-15F 3,581

Dec-16F 3,979

(327)

166

179

(700) (21) (487) 1,761 (1,891) (1) 2 (7,928) (9,818)

(50) (21) (549) 2,252 (730) 0 0 0 (730)

(200) (21) (624) 2,901 (730) 0 0 0 (730)

(344) (21) (703) 3,089 (730) 0 0 0 (730)

9,085

112

94

0

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

0

(1,270)

(1,575)

(2,345)

(2,725)

(1,437) 6,378 (1,680) (8,057) (8,036)

238 (1,225) 297 1,522 1,543

162 (2,183) (12) 2,171 2,192

84 (2,642) (282) 2,359 2,380

Key Drivers

12-month Forward Rolling FD P/E (x) 30.0

ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv) ASP (% chg, tertiary prod/serv) Unit sales grth (%,tertiary prod/serv) Util. rate (%, tertiary prod/serv) Unit raw mat ASP (%chg,main) Total Export Sales Growth (%) Export Sales/total Sales (%)

25.0 20.0 15.0 10.0 5.0 0.0 Jan-10

Dec-13A 871 160 226 3,686 4,943 4,286 0 56 5,722 10,063 0 0 1,858 420 2,278 0

Jan-11

Jan-12

Jan-13

Jan-14

MK Restaurant Group

SOURCE: CIMB, COMPANY REPORTS

155

Retail│Thailand December 12, 2014

Officemate OFM TB / OFM.BK

Market Cap

Avg Daily Turnover

Free Float

US$477.6m

US$0.20m

24.4%

THB15,680m

THB6.59m

320.0 m shares

Current

THB49.00

Target

THB54.00

Prev. Target

THB54.00

Up/Downside

10.2% Conviction|

The Amazon next door

CIMB Analyst(s)

OFM, the market leader in stationery and office supplies in Thailand, has strong growth potential, especially in e-commerce. Management aims to expand the company’s market share from the current 20% to 40-50% in the next three years.

Kitichan SIRISUKARCHA, CFP T (66) 2 657 9232 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

0.2

-0.5

42.7

Absolute

-1.0

-2.0

56.8

Major shareholders

% held

Mr.Narongrit Chirathivat Mr.Sudhitham Chirathivat Mr.Worawoot Ounjai

9.8 9.1 8.8

Show Style "View Doc Map"

We reiterate our Hold call and THB54 DCF-based target price (WACC 9%, LTG 3.0%). In our view, OFM’s current share price fully reflects its stronger outlook post-merger and its earnings growth will be pressured by the costs of its online retail business (due to start in 2H14). Investors looking to accumulate OFM as mid- to long-term investment should wait till it falls below THB45 (25x FY15 P/E or 1x PEG, the retail sector’s 5-yr mean).

Top distributor of office supplies The bulk of OFM’s revenue comes from OfficeMate (60%) and B2S (40%). In our view, OFM’s appeal lies with OfficeMate, the market leader in stationery and office supplies. OFM has strong growth potential (especially its e-commerce business), given its extensive distribution channels and free nationwide delivery service. Management targets to expand the company’s market share from 20% currently to 40-50% in the next three years by boosting the revenue contribution of its house brands, which generate higher margins around 10%. We forecast

Price Close

170

44.0

141

34.0

113

24.0 2

84

Vol m

1 1 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

3-year sales CAGR (2014-16) of 17% for OfficeMate and 8% for B2S.

Online retail store to boost mid- to long-term growth OFM will accelerate its marketing efforts and open a new distribution centre for its online retail business in 4Q14. Given OFM’s delivery service strength and Central’s (owned by the Chirathivat family and acquired a 63% stake in OFM) trusted brand, we forecast online retail sales CAGR of 120% over 2015-17. Although the online business is likely to incur losses in the first few years of operations, we expect earnings to gradually improve. In our view, the online retail business will be a new growth engine for OFM. It is a low-risk business due to the minimal capex required.

Recovery reflected in price We like OFM for its mid- to long-term growth story and solid financials. The company had cash of THB800m and no debt and generates operating cashflow of around THB500m p.a., sufficient to fund its annual capex of THB500m. However, we think that OFM’s current share price reflects its expected near-term earnings recovery.

Financial Summary

Relative to SET (RHS)

54.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE CIMB/consensus EPS (x)

Dec-12A 6,814 530 271.8 0.34 272% 145.2 1.21 2.47% 74.98 52.35 (17.0%) 3.70 10.0%

Dec-13A 8,690 723 408.8 1.37 305% 35.8 0.25 0.51% 20.57 72.27 (17.8%) 3.43 9.9%

Dec-14F 10,166 845 469.4 1.56 14% 31.5 0.51 1.04% 17.39 43.61 (20.2%) 3.22 10.5% 0.95

Dec-15F 12,091 1,038 585.9 1.92 23% 25.5 0.59 1.20% 13.82 28.84 (25.4%) 2.97 12.1% 0.98

Dec-16F 14,299 1,286 762.7 2.47 29% 19.8 0.73 1.49% 10.73 20.38 (32.3%) 2.70 14.3% 1.03

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Officemate│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-12A 7,177 2,019 530 (134) 396 (4) (13) 0 389

Dec-13A 9,120 2,560 723 (209) 514 (1) 0 0 550

Dec-14F 10,665 2,995 845 (259) 587 0 0 0 622

Dec-15F 12,685 3,527 1,038 (306) 732 0 0 0 767

Dec-16F 15,002 4,137 1,286 (333) 953 0 0 0 988

379 (108)

514 (105)

587 (117)

732 (146)

953 (191)

272

409

469

586

763

272 279 279

409 438 438

469 498 498

586 614 614

763 790 790

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow (THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-12A 722 405 1,266 0 2,393 564 0 3,343 106 4,012 0 2 2,051 0 2,053 0

Dec-13A 813 576 1,411 0 2,799 711 0 3,346 104 4,162 0 0 2,269 0 2,269 0

Dec-14F 982 574 1,565 0 3,121 939 0 3,352 104 4,396 0 0 2,525 0 2,525 0

Dec-15F 1,338 683 1,868 0 3,889 1,066 0 3,349 104 4,520 0 0 3,016 0 3,016 0

Dec-16F 1,873 807 2,217 0 4,897 1,145 0 3,351 104 4,600 0 0 3,578 0 3,578 0

58 58 56 2,167 4,239

49 49 76 2,394 4,567

52 52 66 2,643 4,873

50 50 71 3,137 5,271

51 51 68 3,697 5,800

4,239

4,567

4,873

5,271

5,800

Key Ratios Dec-12A Dec-13A Dec-14F 530 723 845 922

(974) (4) (108) 367 (405) (3,168) (68) 4,047 406 3,000

Dec-15F 1,038

Dec-16F 1,286 89

(98)

105

78

(42) (1) (105) 477 (159) (198) 40 57 (260)

0 0 (117) 833 (400) (92) 27 (8) (473)

0 0 (146) 969 (350) (80) 0 4 (426)

0

0

0

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

0 0 (191) 1,185 (350) (64) 0 (2) (416) 0

(387)

(80)

(164)

(188)

(234)

(3,109) (496) 277 773 777

(6) (86) 131 217 217

1 (163) 197 360 360

(0) (188) 356 544 544

0 (234) 535 769 769

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F 17.3% 27.5% 17.0% 18.9% 18.3% 46.6% 36.4% 16.9% 22.8% 23.9% 7.78% 8.32% 8.31% 8.59% 9.00% 2.25 2.54 3.07 4.18 5.85 13.25 14.27 15.23 16.47 18.12 102 1,034 N/A N/A N/A 28.3% 20.4% 20.0% 20.0% 20.0% 138% 18% 32% 30% 29% 39.09 20.60 20.64 18.96 19.06 75.82 74.46 70.80 68.41 68.80 121.7 120.2 114.1 110.4 111.1 39.7% 15.2% 16.0% 19.1% 24.4% 14.3% 12.3% 13.0% 14.9% 17.6%

Key Drivers ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) No. of POS (main prod/serv) SSS grth (%, main prod/serv) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) No. of POS (2ndary prod/serv) SSS grth (%, 2ndary prrod/serv)

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 38 49 57 65 73 N/A N/A 3.0% 2.0% 0.0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 78 85 96 106 116 N/A N/A -5.0% -3.0% 0.0%

SOURCE: CIMB, COMPANY REPORTS

157

Dry Bulk Shipping│Thailand December 12, 2014

Precious Shipping PSL TB / PSL.BK

Market Cap

Avg Daily Turnover

Free Float

US$487.6m

US$1.20m

39.5%

THB16,009m

THB39.04m

1,040 m shares

Current

THB15.40

Target

THB18.45

Prev. Target

THB18.45

Up/Downside

19.8% Conviction|

Tough markets

CIMB Analyst(s)

PSL’s unexpectedly large loss in 3Q14 clearly indicated that 2014 had been a tougher year than previously forecast. Secondhand vessel prices have also been dropping, suggesting that the market’s expectations of future freight rates are moderating.

Raymond YAP, CFA T (60) 3 2261 9072 E [email protected]

Kasem PRUNRATANAMALA, CFA T (66) 2 657 9221 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-17.8

-41.5

-40.8

Absolute

-19.0

-43.0

-26.7

Major shareholders

% held

Nishita Shah & family Khalid Hashim & family Thai NVDR

43.0 17.5 5.3

We maintain our Reduce call on PSL because we expect its 4Q14 results to be also weak and 2015 freight markets to be only modestly stronger than in 2014. These are the key de-rating catalysts. Our target price is based on PSL’s SOP which is anchored to its secondhand vessel values.

Freight markets more difficult than expected in 2014

Show Style "View Doc Map"

So far, 2014 has turned out to be a more difficult year than expected for the dry bulk markets (1) excessive capacity and competition among capesize operators depressed capesize rates despite record Chinese iron ore imports, (2) Chinese coal imports have declined as a result of more domestic mining output, (3) the impact of Indonesia’s early-January ban on bauxite and nickel ore exports continues to weigh on these trades, and (4) Argentina’s ban on grain exports earlier this year deprived the markets of much-needed cargoes.

Freight rate outlook The freight markets have improved sequentially this quarter due to the US grain season but the handysize and supramax markets have been less

Price Close

132

24.0

105

19.0

77

14.0 15

49

Vol m

10 5

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range 15.40 29.25

15.40

18.45 Current

Target

robust than a year ago. We expect 2015 to look stronger on the back of higher Indian coal imports and low iron ore import prices which should trigger strong Chinese import growth. But this may be partially offset by higher Chinese tariffs on imported coal and a bumper Chinese grain harvest that could result in lower Chinese grain imports. Overall, we expect a small improvement in dry bulk freight rates in 2015 but the weakening Chinese economy will act as a headwind preventing significant improvement in spot rates.

Fleet renewal PSL will take delivery of 17 new ships in FY15 and another seven in FY16. It plans to sell up to 21 older and/or fuel-inefficient ships by early 2016. Once this process is completed, the fleet average age should drop from 9.5 to 3.5 years and the average size should rise from 35,000 to 50,000 dwt. As a result, we expect PSL to reduce its operating costs/day due to lower maintenance costs and also lower voyage costs resulting from better fuel consumption. The benefits will be felt more deeply in FY16.

Financial Summary

Relative to SET (RHS)

29.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 3,499 1,223 141 (0.10) (122%) NA 0.36 2.34% 18.63 NA 49% 1.11 (0.72%)

Dec-13A 3,869 1,153 528 (0.40) 292% NA 0.36 2.34% 18.94 6.62 41% 1.03 (2.78%)

Dec-14F 4,895 1,875 106 0.11 NA 140.1 0.36 2.34% 14.35 25.52 74% 1.05 0.74% 0% 0.48

Dec-15F 5,559 2,439 1,872 0.10 (7%) 150.4 0.36 2.34% 14.04 4.23 112% 0.96 0.66% 0% 1.89

Dec-16F 6,392 3,113 142 0.14 33% 112.9 0.36 2.34% 12.39 11.48 140% 0.97 0.85% 0% 0.18

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Precious Shipping│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 3,869 1,478 1,153 (1,137) 16 (450) 32 0 (402) 947 545 (8)

Dec-14F 4,895 2,178 1,875 (1,319) 556 (434) 5 0 127 (8) 119 (10)

Dec-15F 5,559 2,757 2,439 (1,721) 719 (604) 5 0 119 1,766 1,885 (10)

Dec-16F 6,392 3,445 3,113 (2,193) 920 (770) 5 0 155 0 155 (10)

537 (9) 0

109 (3) 0

1,875 (3) 0

145 (3) 0

528 (419) (419)

106 114 114

1,872 106 106

142 142 142

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-14F 2,720 2,176 114 0 5,010 24,535 525 4 0 25,064 654

Dec-15F 5,488 2,361 117 0 7,966 33,143 530 4 0 33,677 654

Dec-16F 5,696 2,592 123 0 8,412 36,969 535 4 0 37,509 654

221 102 977 8,619

246 102 1,002 13,465

254 102 1,010 23,567

267 102 1,023 28,102

0 8,619 283 9,879 15,621 10 15,631

0 13,465 283 14,750 15,311 13 15,324

0 23,567 283 24,859 16,767 16 16,784

0 28,102 283 29,408 16,493 19 16,512

Dec-13A 10.6% (5.7%) 29.8% (6.09) 15.02 0.04 1.45% NA 60.89 19.01 36.27 0.06% 0.10%

Dec-14F 26.5% 62.6% 38.3% (10.96) 14.72 1.25 8.38% 301% 90.70 14.50 31.39 2.05% 2.07%

Dec-15F 13.6% 30.1% 43.9% (18.01) 16.12 1.16 0.53% 321% 95.27 15.05 32.58 2.17% 2.07%

Dec-16F 15.0% 27.6% 48.7% (22.17) 15.86 1.16 6.46% 247% 94.98 14.96 32.37 2.09% 2.17%

Dec-13A 1,099.0 7,508.0 -8.7% 14,235 29.9% 40.0 40

Dec-14F 1,154.0 8,198.9 9.2% 15,513 9.0% 45.0 45

Dec-15F 1,269.4 9,008.8 9.9% 16,243 4.7% 44.0 44

Dec-16F 1,396.3 9,810.8 8.9% 17,338 6.7% 51.0 51

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 1,153

Dec-14F 1,875

Dec-15F 2,439

Dec-16F 3,113

(845)

(271)

(180)

(224)

714 0 (9) 1,013 (3,540) 4,709 0 31 1,200 206 0 0 (415)

(75) 0 (10) 1,518 (6,058) 671 0 (350) (5,737) 4,846 0 0 (416)

0 0 (10) 2,249 (12,627) 4,414 0 (350) (8,563) 10,102 0 0 (416)

0 0 (10) 2,879 (5,670) 0 0 (350) (6,020) 4,536 0 0 (416)

(1,080) (1,289) 923 2,418 2,213

(434) 3,997 (222) 628 (4,219)

(604) 9,082 2,768 3,788 (6,314)

(770) 3,350 209 1,395 (3,141)

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 50 45 40 35 30 25 20 15 10 5 0 Jan-10

Dec-13A 2,942 1,892 102 0 4,936 20,050 520 4 0 20,574 654

Average Baltic Dry Index Average Bulk Rate (US$/day) Bulk Rates (yoy Change %) Capacity (no. Of Calendar Days) Bulk Capacity (yoy Change %) Fleet Size (no. Of Vessels) No. Of Dry Bulk Ships

Jan-11 MISC Bhd

Jan-12

Jan-13

Pacific Basin Shipping

Jan-14 Precious Shipping

SOURCE: CIMB, COMPANY REPORTS

159

Property Development│Thailand December 12, 2014

Pruksa Real Estate PS TB / PS.BK

Market Cap

Avg Daily Turnover

Free Float

US$2,035m

US$4.51m

22.5%

THB66,797m

THB146.7m

2,222 m shares

Current

THB30.00

Target

THB45.95

Prev. Target

THB45.95

Up/Downside

53.2% Conviction|

Trusted growth

CIMB Analyst(s)

We maintain our Add rating as we believe PS remains a solid long-term investment with an FY15 EPS growth of 20%, rising efficiency, and well-contained gearing of below 1x. Our target price based on 12x CY16 P/E (0.5 s.d. above 5-year mean) stays at THB46.

Wattaipun EKATAKSIN T (66) 2 657 9229 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-9.3

-6.2

30.8

Absolute

-10.5

-7.7

Major shareholders

44.9 % held

Mr. Thongma's family Mrs. Rattana Promsawadi Investment Funds

70.2 3.7 1.4

Show Style "View Doc Map"

We keep our EPS estimates unchanged. PS has kept its FY14 presales and revenue targets, and is confident of a minimum 15% revenue growth and ongoing bottom line improvements in FY15. Key catalysts include margin expansion and more exciting new launches in FY15.

Stronger FY15 We remain upbeat about the 20% EPS growth for FY15 given our revenue has been 34% locked in by higher-margin condo backlog. PS can easily meet our revenue estimate with flat growth for TH/SDH next year. Note that this condo backlog carries lower cost than the FY14 backlog given normalised construction cost after the 4Q11 flood crisis. The shorter SDH/TH business cycle of 90 days should support margin expansion for landed housing. As for FY14, despite the high 9M14 lock-in rate vs. our FY14 EPS, we keep our EPS estimates as we expect a softer 4Q14 due to lower gross margins from lower utilisation of factories (with its new factory No. 6) and further provision of THB70bn for its Vietnam operations. The upside potential for FY14 EPS cannot be ruled out if PS delivers its optimistic revenue target of THB42bn (vs. CIMB’s THB40bn) and its SG&A ratio

Vol m

Price Close

170

34.0

152

29.0

134

24.0

116

19.0

98

14.0 25 20 15 10 5

80

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

tapers off faster than expected, given only one new lower-end condo launch in 4Q14. Also, our FY14 revenue estimate has been 105% secured by 9M14’s sales and backlog.

Upbeat targets Target growth for FY15 presales is likely to be in the range of 8-10%, while FY15’s revenue from real estate sales should be between 15% and 20%. Gross margin should improve further due to a higher lower-cost condo mix and shorter business cycle for TH/SDH. Gearing is guided at below 1x. As for FY14, PS has retained its targets at THB43bn for presales and THB42bn for sales revenue. 9M14 presales and revenue formed 73% of PS’s FY15 targets (9M14 revenue was 75% of our FY14 estimate). New launches for FY14 were revised down to 62 projects worth THB58bn from 73 projects worth THB78bn. Ten more projects worth THB9.6bn will be launched in 4Q14 (TH 5, SDH 4, condo 1).

Deserves re-rating Stay invested for promising long-term returns. PS deserves to re-rate above its 5-year mean P/E, given its ongoing solid growth, high ROE and healthy gearing level.

Financial Summary

Relative to SET (RHS)

39.0

Dec-13

|

Total Net Revenues (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 27,023 5,532 3,898 1.75 37.0% 17.07 0.52 1.73% 8.87 60.9 71.4% 3.32 21.0%

Dec-13A 38,848 6,995 5,801 2.61 48.8% 11.49 0.72 2.39% 6.22 237.4 69.6% 2.67 25.8%

Dec-14F 40,000 8,340 6,164 2.77 6.3% 10.81 0.77 2.55% 5.94 26.2 64.7% 2.28 22.8% 0% 1.00

Dec-15F 46,000 10,006 7,431 3.34 20.6% 8.97 0.77 2.55% 5.07 25.6 53.2% 1.92 23.2% 0% 1.03

Dec-16F 52,900 11,458 8,507 3.83 14.5% 7.83 0.77 2.55% 4.46 25.0 44.6% 1.62 22.4% 0% 1.11

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Pruksa Real Estate│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 38,848 13,498 6,995 (374) 6,621 385 0 193 13,702 0 7,199 (1,399)

Dec-14F 40,000 14,400 8,340 (460) 7,880 (419) 0 195 13,716 0 7,657 (1,493)

Dec-15F 46,000 16,790 10,006 (484) 9,522 (489) 0 197 16,015 0 9,231 (1,800)

(THBm) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 52,900 19,044 11,458 (508) 10,950 (582) 0 199 18,154 0 10,568 (2,061)

5,801 0 0

6,164 0 0

7,431 0 0

8,507 0 0

5,801 5,801 5,801

6,164 6,164 6,164

7,431 7,431 7,431

8,507 8,507 8,507

Cash Flow

Dec-14F 4,362

Dec-15F 4,778

Dec-16F 4,949

0 48,687 0 52,291 2,702 0 0 1,201 3,903 6,955

0 53,956 0 58,318 3,837 0 0 1,261 5,098 6,265

0 59,554 0 64,332 4,029 0 0 1,324 5,353 6,273

0 65,856 0 70,805 4,231 0 0 1,390 5,621 6,281

2,090 7,952 16,997 14,000

2,153 8,509 16,927 17,000

2,218 9,111 17,601 17,000

2,284 9,484 18,049 17,000

265 14,265 0 31,262 24,933 0 24,933

278 17,278 0 34,205 29,211 0 29,211

292 17,292 0 34,893 34,792 0 34,792

307 17,307 0 35,356 41,070 0 41,070

Dec-13A 43.8% 47.8% 34.7% (7.81) 11.22 31.62 19.4% 15.3% 622.8 26.04 30.3% 34.2%

Dec-14F 3.0% 6.7% 36.0% (8.51) 13.15 33.29 19.5% 15.1% 731.7 30.25 26.2% 28.3%

Dec-15F 15.0% 16.6% 36.5% (8.32) 15.66 33.36 19.5% 15.7% 709.2 27.31 27.0% 29.8%

Dec-16F 15.0% 13.4% 36.0% (8.25) 18.49 31.85 19.5% 15.9% 677.9 24.33 27.7% 30.5%

Dec-13A 6,800.0 N/A N/A N/A 34.7% N/A N/A N/A N/A N/A 15.6%

Dec-14F 20,786.0 N/A N/A N/A 36.0% N/A N/A N/A N/A N/A 16.3%

Dec-15F 13,351.0 N/A N/A N/A 36.5% N/A N/A N/A N/A N/A 15.8%

Dec-16F 13,351.0 N/A N/A N/A 36.0% N/A N/A N/A N/A N/A 15.3%

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital Straight Line Adjustment (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing

Dec-13A 6,995

Dec-14F 8,340

Dec-15F 10,006

Dec-16F 11,458

(10,306) 374

(5,207) 460

(5,533) 484

(6,235) 508

1,149 736 (1,123) (2,549) (856) 0

508 (419) (1,399) 1,825 (1,596) 0

476 (338) (1,493) 3,118 (675) 0

233 (431) (1,800) 3,224 (709) 0

0 250 (606) 3,436 0 0 (1,885)

0 0 (1,596) 2,310 0 0 (1,849)

0 150 (525) 8 0 0 (2,229)

0 145 (564) 8 0 0 (2,552)

(27) 435

(53) (2,274)

(53) (2,597)

1,854 3,405

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 40.0

Unbooked Presales (m) (THB) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (THB) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)

35.0 30.0 25.0 20.0 15.0

10.0 5.0 0.0 Jan-10

Dec-13A 3,604

Jan-11

Jan-12

Jan-13

Jan-14

Amata Corporation

Ananda Development

AP (Thailand) PCL

Central Pattana

Hemaraj

Land And Houses

SOURCE: CIMB, COMPANY REPORTS

161

Oil & Gas - Integrated│Thailand December 12, 2014

PTT PTT TB / PTT.BK

Market Cap

Avg Daily Turnover

Free Float

US$30,016m

US$58.77m

49.0%

THB985,423m

THB1,914m

2,856 m shares

Current

THB345.0

Target

THB436.0

Prev. Target

THB436.0

Up/Downside

26.4% Conviction|

NGV upside trumps oil downside

CIMB Analyst(s)

Thanks to PTT’s diversified portfolio, its earnings growth momentum will be stronger in 2015 driven by the lower NGV loss that should offset the earnings downside from lower oil prices. We believe valuations will continue to rerate on the back of the subsidy reduction which should end by 2016.

Suwat SINSADOK, CFA, FRM T (66) 2 657 9228 E [email protected]

Share price info Share price perf. (%)

1M

3M

Relative

-10.6

0.6

-1.0

Absolute

-11.8

-0.9

13.1

Major shareholders

12M

% held

Ministry of Finance Vayupak Funds

52.5 15.6

Show Style "View Doc Map"

We maintain our Add rating and SOP-based target price. We believe PTT is one of the very few energy companies in Thailand with earnings downsides from lower oil prices more than offset by the regulatory upside from the NGV price increase. The earnings upside from its refinery and olefins should help offset weaker earnings from E&P. NGV price increases are key catalysts for the stock.

NGV upside The regulator Energy Policy and Planning Office has announced another increase in the NGV price which is expected to reach PTT’s cost at THB16/kg. This would effectively boost PTT’s earnings by THB12bn in 2015, in line with our expectations. We expect another upside of up to THB7bn from the LPG price lift which should start by 2H15 when the oil fund balance turns to a THB15bn surplus, the optimal level, in our view.

Oil price downside We believe the earnings downside for PTT from weakening oil prices should be limited given 1) PTT’s core gas earnings (1/3 of total earnings) that Price Close

115.1

350

105.8

300

96.4

250 20

87.0

15 Vol m

10 5 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range






Current

Target

are linked to oil prices make up less than 10% of its earnings via its Gas Separation Plant 2) its earnings upside from lower NGV loss subsidy of THB12bn; and 3) earnings upside from PTT’s refinery associates due to higher GRM.

Upsides from divestments PTT is likely to see more upside in 2015, with expected capital raised up to THB70bn, from five divestments, namely SPRC, GPSC, BCP, Palm asset, and gas retail stations. The biggest upside will be the listing of the retail station business with an initial value of THB100bn market cap.

Valuation rerating We believe the earnings upside from lower NGV and LPG subsidy losses will more than make up for the downside from lower oil prices, leading to a valuation rerating for PTT over the next 12 months. This is premised on the government’s aim to cut the subsidy and equalise tax across the energy products. Our SOP-based target price of THB436 already includes the upside from the NGV price increase.

Financial Summary

Relative to SET (RHS)

400

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 2,793,833 215,683 104,608 36.63 (1.0%) 10.05 13.01 3.54% 5.78 9.92 41.9% 1.74 18.0%

Dec-13A 2,842,688 218,358 94,652 33.12 (9.6%) 11.11 12.99 3.53% 5.74 17.00 37.2% 1.54 14.7%

Dec-14F 2,861,582 226,846 105,720 37.01 11.7% 9.94 14.81 4.02% 5.47 21.73 31.8% 1.40 14.7% 0% 1.07

Dec-15F 2,971,029 257,661 122,350 42.84 15.7% 8.59 17.13 4.66% 4.70 13.96 24.8% 1.26 15.5% 0% 1.16

Dec-16F 3,149,221 261,260 128,075 44.84 4.7% 8.21 17.94 4.87% 4.33 8.32 15.1% 1.15 14.7% 0% 1.17

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

PTT│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 2,842,688 268,231 218,358 (76,315) 142,043 (20,394) 27,079 14,090 162,817 0 162,817 (47,692)

Dec-14F 2,861,582 292,662 226,846 (79,322) 147,524 (20,893) 31,867 12,951 171,448 0 171,448 (42,862)

Dec-15F 2,971,029 314,111 257,661 (86,765) 170,896 (20,644) 31,867 12,951 195,069 0 195,069 (48,767)

Dec-16F 3,149,221 321,095 261,260 (93,367) 167,893 (20,396) 37,371 19,451 204,319 0 204,319 (51,080)

115,125 (20,473) 0

128,586 (22,867) 0

146,302 (23,952) 0

153,239 (25,164) 0

94,652 94,652 94,652

105,720 105,720 105,720

122,350 122,350 122,350

128,075 128,075 128,075

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 158,903 277,590 44,172 42,479 523,144 642,437 246,078 21,252 368,811 1,278,578 42,899

Dec-14F 170,142 279,435 44,466 42,479 536,522 669,002 262,165 21,678 387,574 1,340,419 42,899

Dec-15F 203,136 290,123 46,167 44,703 584,128 699,644 278,252 21,678 453,881 1,453,455 42,899

Dec-16F 280,535 307,523 48,936 44,321 681,314 686,941 299,844 21,678 472,406 1,480,868 42,899

303,807 47,414 394,120 422,563

305,827 59,702 408,427 417,563

317,524 59,702 420,124 412,563

336,568 59,702 439,168 407,563

129,586 552,149 32,274 978,543 682,647 140,532 823,178

105,252 522,815 32,275 963,518 751,234 162,189 913,424

155,183 567,746 32,275 1,020,146 831,297 186,141 1,017,438

161,439 569,002 32,275 1,040,446 910,432 211,305 1,121,737

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-12A 215,683 (27,015) 15,419

Dec-13A 218,358 (27,079) 12,888

Dec-14F 226,846 (31,867) (32,562)

Dec-15F 257,661 (31,867) (24,291)

Dec-16F 261,260 (37,371) (18,012)

64,927 18,876 (19,747) (46,516) 221,628 (114,763) 0 10,912 (74,231) (178,082) 62,408 0 0 (42,884)

(8,943) 8,547 (20,394) (47,692) 135,685 (110,494) 0 15,779 (647) (95,362) 21,547 0 0 (37,132)

21,949 22,867 (20,893) (42,862) 143,479 (105,888) 0 15,779 1 (90,107) (5,000) 0 0 (37,132)

20,865 23,952 (20,644) (48,767) 176,908 (117,407) 0 15,779 1 (101,626) 0 0 0 (42,288)

31,658 25,164 (20,396) (51,080) 191,223 (80,664) 0 15,779 0 (64,884) 0 0 0 (48,940)

(42,277) (22,753) 20,792 105,953 63,292

(3,979) (19,563) 20,759 61,870 60,717

0 (42,132) 11,240 48,372 74,265

0 (42,288) 32,994 75,282 95,926

0 (48,940) 77,399 126,339 146,734

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F 15.1% 1.7% 0.7% 3.8% 6.0% 7.3% 1.2% 3.9% 13.6% 1.4% 7.72% 7.68% 7.93% 8.67% 8.30% (107.0) (107.3) (101.6) (88.3) (59.5) 211.2 239.0 263.0 291.0 318.7 7.63 6.96 7.06 8.28 8.23 27.0% 29.3% 25.0% 25.0% 25.0% 35.5% 39.2% 40.0% 40.0% 40.0% 27.16 33.44 35.52 34.99 34.73 5.89 6.13 6.30 6.23 6.15 30.32 39.59 43.31 42.82 42.32 15.1% 12.2% 11.3% 12.7% 11.4% 13.3% 11.2% 10.8% 11.7% 10.8%

Key Drivers

12-month Forward Rolling FD P/E (x) 14.00

Oil Price (US$/bbl) Volume Growth (%) Ratio Of Up To Downstream (x) Operating Cash Cost (US$/bbl) Ratio Of High To Low Margin (x)

12.00

10.00 8.00 6.00

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F 105.0 105.0 85.0 85.0 85.0 11.0% 112.0% 4.0% 3.9% 4.0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

4.00 2.00 0.00 Jan-10

Jan-11 PTT

Jan-12

Jan-13

Jan-14

PTT Exploration & Production

SOURCE: CIMB, COMPANY REPORTS

163

Oil & Gas Exp & Prodn│Thailand December 12, 2014

PTT Exploration & Production PTTEP TB / PTTE.BK

Market Cap

Avg Daily Turnover

Free Float

US$14,753m

US$25.49m

33.7%

THB484,338m

THB831.1m

3,970 m shares

Current

THB122.0

Target

THB160.0

Prev. Target

THB160.0

Up/Downside

31.1% Conviction|

Downside priced in

CIMB Analyst(s)

We believe PTTEP’s current valuation has already priced in the US$70/bbl average oil price that should be the likely sustainable level in 2015-16 if OPEC maintains its production at 30mblpd.

Suwat SINSADOK, CFA, FRM T (66) 2 657 9228 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-15.8

-24.8

-40.2

Absolute

-17.0

-26.3

Major shareholders

-26.1 % held

PTT Plc State Street Bank and Trust Co.

65.4 1.8

Show Style "View Doc Map"

We upgrade PTTEP from Hold to Add but keep our DCF-based target price (WACC 11%) based on US$90/bbl oil price as we think the weak oil price scenario is short term, and prices will rebound by 2H15 when the supply glut softens. While the weak oil prices have a significant impact on PTTEP, its 20% share price correction in the past three months should limit its downside. It should perform better than its E&P peers under this environment given it is a gas-heavy E&P with 13% volume growth in 2015.

Penalty likely ends In the past three months PTTEP’s share price has plunged 20% following the oil price drop from US$110/bbl to the current US$64/bbl. We believe that at the current oil price level of US$64/bbl and PTTEP’s current share price there is a limited downside given it is less likely for oil prices to decline much further due to the marginal cost of oil at US$60-70/bbl.

Limited downside We estimate that every US$10/bbl drop in oil price will result in a 13% decline in PTTEP’s earnings from our base case of US$90/bbl in 2015-16.

Price Close

104.4

150.0

87.3

130.0

70.1

110.0 30

53.0

Vol m

20 10 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range




Current

Target

However, we note that unlike its regional E&P peers, PTTEP should see a smaller downside given 1) it is a gas-heavy E&P company with up to 70% of volume and 50% of earnings are from gas; and 2) its gas pricing in Thailand, which accounts for 80% of total volume, will be linked only 1/3 to fuel oil price while the remaining part will linked to CPI and exchange rate.

Volume growth a cushion In 2015, we expect PTTEP to see a 13% yoy volume growth, driven mainly by the full-year operations of its gas field Zawtika (300mmscfd production volume) that started up in 2Q14.

A recovery play We believe PTTEP will be an attractive E&P play with more gas earnings and volume growth to help cushion the earnings downside from lower oil prices. While in the shortterm, its earnings could face downside risk from further declines in oil prices, we think that in the medium- to longterm, its earnings growth should continue given that oil prices should recover, normalising at between US$70 and US$90/bbl.

Financial Summary

Relative to SET (RHS)

170.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 212,537 149,691 57,316 15.47 11.8% 7.24 5.22 4.28% 3.31 NA 3.63% 1.48 23.3%

Dec-13A 226,346 153,259 58,626 14.77 (4.5%) 8.26 5.32 4.36% 3.38 147.3 9.49% 1.33 16.9%

Dec-14F 233,524 163,538 59,288 14.93 1.1% 8.17 5.38 4.41% 3.17 19.7 8.88% 1.21 15.5% 0% 1.00

Dec-15F 237,031 172,008 60,197 15.16 1.5% 8.05 5.46 4.47% 2.95 12.9 5.42% 1.11 14.4% 0% 1.05

Dec-16F 228,646 170,634 58,023 14.62 (3.6%) 8.35 5.26 4.31% 2.98 20.1 5.47% 1.03 12.8% 0% 1.03

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

PTT Exploration & Production│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 226,346 209,189 153,259 (50,351) 102,908 (5,973) (46) 2,477 99,366 0 99,366 (40,740)

Dec-14F 233,524 221,242 163,538 (57,366) 106,171 (4,589) (46) 2,477 104,013 0 104,013 (44,726)

Dec-15F 237,031 230,579 172,008 (64,242) 107,766 (4,589) (46) 2,477 105,608 0 105,608 (45,411)

Dec-16F 228,646 227,133 170,634 (66,680) 103,954 (4,589) (46) 2,477 101,796 0 101,796 (43,772)

58,626 0 0

59,288 0 0

60,197 0 0

58,023 0 0

58,626 58,626 58,626

59,288 59,288 59,288

60,197 60,197 60,197

58,023 58,023 58,023

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 50,468 2,977 12,506 33,035 98,986 404,177 933 0 140,978 546,088 7,065

Dec-14F 51,582 3,072 12,903 33,035 100,591 440,831 871 0 140,978 582,679 9,120

Dec-15F 65,472 3,118 13,096 33,035 114,721 465,449 809 0 140,977 607,235 11,176

Dec-16F 65,472 3,008 12,633 33,035 114,148 468,129 746 0 184,634 653,509 13,233

9,601 63,231 79,896 77,933

9,905 63,231 82,256 77,933

10,054 63,231 84,460 77,933

9,698 73,285 96,216 77,933

108,545 186,478 14,993 281,367 363,704 0 363,704

108,545 186,478 14,993 283,727 399,542 0 399,542

108,544 186,477 14,993 285,931 436,023 0 436,023

108,545 186,478 14,993 297,687 469,968 0 469,968

Dec-13A 6.5% 2.4% 67.7% (8.70) 91.6 15.91 41.0% 36.0% 10.73 239 150 22.2% 23.3%

Dec-14F 3.2% 6.7% 70.0% (8.93) 100.6 20.89 43.0% 36.0% 4.73 378 290 20.4% 22.1%

Dec-15F 1.5% 5.2% 72.6% (5.95) 109.8 21.20 43.0% 36.0% 4.76 735 565 19.3% 20.8%

Dec-16F (3.5%) (0.8%) 74.6% (6.47) 118.4 20.45 43.0% 36.0% 4.90 3,112 2,389 17.8% 18.7%

Dec-13A 105.0 3.4% N/A N/A 0.6

Dec-14F 93.0 12.6% N/A N/A 0.6

Dec-15F 90.0 6.2% N/A N/A 0.5

Dec-16F 90.0 -1.5% N/A N/A 0.5

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 153,259 46 9,853

Dec-14F 163,538 46 (187)

Dec-15F 172,008 46 (91)

Dec-16F 170,634 46 218

0 2,431 (5,973) (40,740) 118,876 (118,470) 16 0 0 (118,454) 2,867 0 0 (23,026)

0 2,431 (4,589) (44,726) 116,513 (94,020) 16 0 0 (94,004) 2,055 0 0 (23,450)

0 2,431 (4,589) (45,411) 124,393 (88,860) 16 0 0 (88,844) 2,056 0 0 (23,715)

8,822 46 (4,589) (43,772) 131,404 (69,360) 16 0 0 (69,344) (37,982) 0 0 (24,079)

0 (20,159) (19,737) 3,289 6,888

0 (21,395) 1,114 24,565 27,592

0 (21,659) 13,890 37,605 40,632

0 (62,060) (0) 24,079 67,143

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 14.00

Oil Price (US$/bbl) Volume Growth (%) Ratio Of Up To Downstream (x) Operating Cash Cost (US$/bbl) Ratio Of High To Low Margin (x)

12.00

10.00 8.00 6.00 4.00 2.00 0.00 Jan-10

Jan-11 PTT

Jan-12

Jan-13

Jan-14

PTT Exploration & Production

SOURCE: CIMB, COMPANY REPORTS

165

Petrochemical│Thailand December 12, 2014

PTT Global Chemical PTTGC TB / PTTG.BK

Market Cap

Avg Daily Turnover

Free Float

US$7,657m

US$20.72m

30.0%

THB251,368m

THB675.5m

4,505 m shares

Current

THB55.75

Target

THB75.00

Prev. Target

THB70.00

Up/Downside

34.5% Conviction|

Mixed winds ahead

CIMB Analyst(s)

PTTGC is facing a mix of both head and tailwinds. Its earnings growth is driven by the tailwinds of its volume growth post GSP#5 shutdown and the rising olefin margin on industry upcycle in 2015-16. This will be partly offset by the headwinds from weakening oil prices given its gas feedstock cost will decline slower than the oil-driven product price.

Suwat SINSADOK, CFA, FRM T (66) 2 657 9228 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-8.9

-10.0

-43.3

Absolute

-10.1

-11.5

-29.2

Major shareholders

% held

PTT Plc

49.0

Show Style "View Doc Map"

PTTGC remains a good growth play in the Thai petrochemical sector thanks to its volume growth from higher gas feedstock and the margin expansion from olefin upcycle that should more than offset the negative impact from lower oil prices. We maintain Add and tweak up our target price, based on 6x CY16 EV/EBITDA as we roll forward our valuation to 2016 and lower our valuation multiple from 7x to reflect the downside risk from oil prices.

Refinery unit to improve in 2015

Olefin supports growth

Downside for LPG subsides

We expect PTTGC to see a healthy margin in 2015-16 thanks to its olefin margins that should continue to rise despite the negative impact from the oil price decline. As a gas-based olefin producer, PTTGC’s gas feedstock price will decline slower than oil-driven product prices. However its timely olefin volume growth of 20% yoy and higher margin for olefin on the tight industry outlook should be the key driver to help offset the weak earnings from aromatics and refinery units.

Vol m

Price Close

121.0

78.0

109.3

73.0

97.7

68.0

86.0

63.0

74.3

58.0

62.7

53.0 50 40 30 20 10

51.0

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range



Current

Target

We believe that after the loss in 2014 due to the large inventory loss due to the sharp oil price drop, PTTGC should see its refinery earnings grow in 2015, driven by higher GRM on the back of lower crude premium costs, lower fuel loss, and lower interest expenses on its working capital. These together could boost its GRM by US$2-4/bbl. Thanks to the sharp oil price decline that led to much lower LPG prices of below US$600/t, the risk for PTTGC from a potential LPG feedstock price increase is now much reduced. We estimate that even with the full impact of an LPG price increase to the market price of US$600/t, PTTGC will see a mere 2% earnings downside.

Pain, then gain While in the short-term, PTTGC’s earnings will be under pressure from inventory loss, its earnings growth will improve once oil prices stabilise in 2015.

Financial Summary

Relative to SET (RHS)

83.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 565,617 53,930 34,001 6.65 (9.2%) 8.38 3.40 6.10% 6.31 61.89 34.0% 1.13 14.2%

Dec-13A 552,881 54,914 33,277 7.29 9.5% 7.65 3.33 5.97% 5.95 15.52 33.4% 1.05 14.2%

Dec-14F 534,553 53,906 31,767 7.05 (3.2%) 7.91 3.18 5.70% 5.78 9.29 26.5% 1.01 13.0% 0% 1.14

Dec-15F 545,413 56,727 35,988 7.99 13.3% 6.98 3.60 6.45% 5.18 8.61 18.8% 0.95 14.0% 0% 1.14

Dec-16F 539,239 53,739 41,402 9.19 15.0% 6.07 4.14 7.43% 5.12 6.76 11.4% 0.90 15.2% 0% 1.21

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

PTT Global Chemical│Thailand December 12, 2014

Profit & Loss

Balance Sheet

(THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 552,881 68,945 54,914 (16,737) 38,177 (4,525) (78) 341 33,916 902 34,818 (1,976)

Dec-14F 534,553 63,951 53,906 (17,060) 36,845 (3,964) 535 2,359 35,775 0 35,775 (3,638)

Dec-15F 545,413 66,968 56,727 (17,903) 38,824 (3,826) 535 4,718 40,251 0 40,251 (3,892)

Dec-16F 539,239 63,775 53,739 (18,745) 34,993 (3,691) 535 14,153 45,990 0 45,990 (4,218)

32,841 436 0

32,138 (371) 0

36,359 (371) 0

41,773 (371) 0

33,277 32,823 32,823

31,767 31,767 31,767

35,988 35,988 35,988

41,402 41,402 41,402

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 21,244 58,388 50,238 30,644 160,513 231,249 13,322 0 27,278 271,848 22,064

Dec-14F 26,665 56,452 48,573 30,644 162,334 229,189 14,568 0 27,278 271,034 22,064

Dec-15F 34,920 57,599 49,559 30,644 172,723 226,286 15,814 0 27,278 269,378 22,064

Dec-16F 44,724 56,947 48,998 30,644 181,313 222,540 17,060 0 27,278 266,878 22,064

53,455 7,688 83,207 81,103

51,683 7,688 81,434 72,605

52,733 7,688 82,484 64,109

52,136 7,688 81,888 55,615

22,819 103,922 0 187,128 238,503 6,731 245,233

22,819 95,424 0 176,858 249,408 7,102 256,510

22,819 86,928 0 169,412 265,216 7,473 272,688

22,819 78,434 0 160,322 280,026 7,844 287,870

Dec-13A (2.3%) 1.82% 9.9% (18.18) 52.94 6.27 5.7% 46.3% 36.68 34.42 38.02 7.63% 11.4%

Dec-14F (3.3%) (1.84%) 10.1% (15.10) 55.36 6.67 10.2% 45.0% 39.21 38.32 40.77 7.66% 11.0%

Dec-15F 2.0% 5.23% 10.4% (11.38) 58.87 7.20 9.7% 45.0% 38.16 37.43 39.83 8.17% 11.4%

Dec-16F (1.1%) (5.27%) 10.0% (7.32) 62.16 6.66 9.2% 45.0% 38.87 37.93 40.36 7.40% 10.1%

Dec-13A 110.0 0.0% N/A N/A N/A

Dec-14F 107.0 0.0% N/A N/A N/A

Dec-15F 105.0 0.0% N/A N/A N/A

Dec-16F 100.0 0.0% N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 54,914 78 (7,340)

Dec-14F 53,906 (535) 1,829

Dec-15F 56,727 (535) (1,084)

Dec-16F 53,739 (535) 616

(729) 3,889 (4,525) (1,976) 44,312 (15,000) 289 (1,000) (3,916) (19,627) (8,499) 0 0 (21,188)

0 0 (3,964) (3,638) 47,598 (15,000) 289 (1,000) 3,645 (12,066) (8,498) 0 0 (20,861)

(0) 2,359 (3,826) (3,892) 49,749 (15,000) 289 (1,000) 3,645 (12,066) (8,496) 0 0 (20,180)

(1) 11,795 (3,691) (4,218) 57,706 (15,000) 289 (1,000) 3,645 (12,066) (8,494) 0 0 (26,591)

(4,598) (34,285) (9,600) 16,186 30,769

(751) (30,110) 5,421 27,034 41,059

(751) (29,427) 8,255 29,187 43,074

(751) (35,836) 9,803 37,145 50,896

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 50.00

45.00

Oil Price (US$/bbl) Volume Growth (%) Ratio Of Up To Downstream (x) Operating Cash Cost (US$/bbl) Ratio Of High To Low Margin (x)

40.00 35.00

30.00 25.00 20.00 15.00 10.00 5.00 0.00 Jan-10

Jan-11

Jan-12

Indorama Ventures

Jan-13

Jan-14

PTT Global Chemical

SOURCE: CIMB, COMPANY REPORTS

167

Property Development│Thailand December 12, 2014

Quality Houses QH TB / QH.BK

Market Cap

Avg Daily Turnover

Free Float

US$1,097m

US$3.59m

41.0%

THB36,000m

THB116.7m

9,184 m shares

Current

THB3.92

Target

THB5.53

Prev. Target

THB5.04

Up/Downside

41.2% Conviction|

Promising growth outlook

CIMB Analyst(s)

Wattaipun EKATAKSIN T (66) 2 657 9229 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-5.9

-4.3

21.1

Absolute

-7.1

-5.8

Major shareholders

35.2 % held

Land and Houses GIC Thai NVDR

24.8 10.8 7.1

Show Style "View Doc Map"

We maintain an Add rating on QH with a higher target price of THB5.53 as we roll over our valuation to 10x CY16 P/E (on par with its five-year mean). We continue to like QH for its strong earnings visibility, backed by its solid backlog and investment income and undemanding valuation. We raise FY14-16 EPS estimates by 2-3.8% to reflect its 9M14 performance, which came in broadly in line with our expectation. QH remains upbeat on its outlook in FY15 and targets growth of 20% for revenue, while presales are expected to expand at a slower pace of 10-15%. Still, upside potential for FY15 is possible given its higher guidance for both presales and revenues. Potential catalysts include continued buoyant presales and margin expansion. (keep abstract to 12 lines max. remove notice at top. add peers to P/E band on p.2. changes to TP & EPS should be done in a separate note)

Rising growth outlook We expect QH to report EPS growth of 10% in FY14 and accelerate to 17-20% in FY15-16. FY15’s growth visibility is firmly backed by a solid condo backlog, which suggests a 25% lock-in rate. We note that QH’s sales revenue mix comprises 20-30% condo and 70-30% SDH/TH. This 25% lock-in rate suggests that its condo revenue is entirely secured for FY15; hence its strong earnings visibility. We expect upward revisions in EPS by Price Close

149.0

4.10

137.0

3.60

125.0

3.10

113.0

2.60

101.0

2.10 150

89.0

Vol m

100 50 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

the market; our FY14 EPS is 10% above consensus.

Upbeat targets QH remains optimistic that its FY15 presales and revenues will grow by 20% from the FY14 presales target of THB21.4bn and sales revenue target of THB20bn. The company plans to grow its presence more in provincial markets, with an expected upcountry contribution of 20% in FY15 from 15% in FY14. The higher-end segment mix should remain at 20% and the majority is likely to come from the mid- to lower-end segment. The condo mix should form 20-25% and SDH and TH should make up the remainder.

Attractive valuation Stay invested for the company’s improving earnings outlook, expanding ROE and attractive valuations on both a P/E and RNAV of THB5.4 (more than a 30% discount to RNAV/share). Its dividend yield is also another return accretion for investing in QH.

Financial Summary

Relative to SET (RHS)

4.60

Dec-13

|

Total Net Revenues (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 13,077 1,632 2,450 0.27 187% 14.69 0.13 3.40% 13.28 39.28 131% 2.28 16.9%

Dec-13A 19,699 3,225 3,307 0.36 35% 10.89 0.18 4.59% 8.26 22.28 108% 2.08 20.0%

Dec-14F 21,275 3,853 3,638 0.40 10% 9.90 0.20 5.05% 7.82 36.94 116% 1.87 19.9% 1.72% 1.10

Dec-15F 24,400 4,620 4,349 0.47 20% 8.28 0.24 6.04% 6.38 12.42 88% 1.65 21.2% 3.35% 1.16

Dec-16F 27,988 5,350 5,083 0.55 17% 7.08 0.28 7.06% 5.41 27.26 71% 1.46 21.9% 3.85% 1.19

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Quality Houses│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 19,699 6,387 3,225 (232) 2,993 (228) 943 235 7,337 0 3,943 (636)

Dec-14F 21,275 7,233 3,853 (236) 3,617 (284) 1,000 215 8,164 0 4,547 (909)

Dec-15F 24,400 8,418 4,620 (228) 4,392 (281) 1,150 175 9,462 0 5,436 (1,087)

(THBm) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 27,988 9,656 5,350 (228) 5,122 (266) 1,323 175 10,887 0 6,353 (1,271)

3,307 0 0

3,638 0 0

4,349 0 0

5,083 0 0

3,307 3,307 3,307

3,638 3,638 3,638

4,349 4,349 4,349

5,083 5,083 5,083

Cash Flow

Dec-14F 1,268

Dec-15F 1,665

Dec-16F 1,555

91 29,138 943 31,803 854 8,146 848 0 9,848 4,308

96 36,729 20 38,112 896 8,114 0 0 9,010 6,500

101 36,065 20 37,851 941 8,128 0 0 9,069 5,500

106 37,391 21 39,072 988 8,142 0 0 9,130 5,000

882 2,290 7,481 16,012

927 2,405 9,831 17,200

973 2,525 8,998 15,300

1,022 2,651 8,674 14,000

882 16,894 0 24,374 17,277 0 17,277

830 18,030 0 27,861 19,262 0 19,262

830 16,130 0 25,128 21,792 0 21,792

830 14,830 0 23,504 24,700 0 24,700

Dec-13A 50.6% 55.0% 33.6% (2.04) 1.88 28.01 16.1% 22.2% 1.66 805 23.13 14.8% 16.9%

Dec-14F 8.0% 12.9% 35.1% (2.44) 2.10 25.43 20.0% 22.6% 1.60 856 23.51 17.6% 18.0%

Dec-15F 14.7% 15.8% 35.4% (2.08) 2.37 29.98 20.0% 23.4% 1.47 831 21.69 17.1% 19.7%

Dec-16F 14.7% 14.3% 35.3% (1.90) 2.69 36.30 20.0% 23.8% 1.35 733 19.91 20.1% 22.4%

Dec-13A 5,300.0 N/A N/A N/A 32.4% N/A N/A N/A N/A N/A 17.2%

Dec-14F 4,800.0 N/A N/A N/A 34.0% N/A N/A N/A N/A N/A 17.0%

Dec-15F 4,200.0 N/A N/A N/A 34.5% N/A N/A N/A N/A N/A 16.5%

Dec-16F N/A N/A N/A 34.5% N/A N/A N/A N/A N/A 16.2%

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital Straight Line Adjustment (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing

Dec-13A 3,225

Dec-14F 3,853

Dec-15F 4,620

Dec-16F 5,350

548 232

(7,551) 236

705 228

(1,282) 228

668 (228) (727) 3,486 (43) 0

1,807 (284) (636) (2,811) (45) 0

1,268 (281) (918) 5,394 (47) 0

3 (266) (1,087) 2,718 (49) 0

0 217 174 (2,044) 0

0 451 406 3,380 0

0 451 404 (2,900) 0

0 452 403 (1,800) 0

(1,654)

(1,819)

(2,174)

(2,541)

18 (3,679)

482 2,043

(327) (5,402)

1,112 (3,230)

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 40.0

Unbooked Presales (m) (THB) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (THB) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)

35.0 30.0 25.0 20.0 15.0

10.0 5.0 0.0 Jan-10

Dec-13A 1,630

Jan-11

Jan-12

Jan-13

Jan-14

Amata Corporation

Ananda Development

AP (Thailand) PCL

Central Pattana

Hemaraj

Land And Houses

SOURCE: CIMB, COMPANY REPORTS

169

IPP│Thailand December 12, 2014

Ratchaburi Electricity RATCH TB / RATC.BK

Market Cap

Avg Daily Turnover

Free Float

US$2,705m

US$1.70m

38.4%

THB88,813m

THB55.26m

1,450 m shares

Current

THB61.25

Target

THB69.00

Prev. Target

THB69.00

Up/Downside

12.7% Conviction|

|

Don’t overlook this growth play

CIMB Analyst(s)

RATCH’s earnings growth could start to accelerate in FY15 when the earnings from its 40%-stake coal-fired Hongsa power plant start to kick in. Additional growth could come from the coal-fired power plant bidding in Thailand and M&A overseas, which should be supported by its strong balance sheet.

Suwat SINSADOK, CFA, FRM T (66) 2 657 9228 E [email protected]

Share price info Share price perf. (%)

1M

3M

Relative

0.0

4.4

6.0

Absolute

-1.2

2.9

20.1

Major shareholders

12M

% held

EGAT Nortrust Nominees Ltd Littledown Nominees Ltd

45.0 9.1 6.5

Show Style "View Doc Map"

After a long period of a stagnant and defensive growth strategy, we believe that it is entering a more aggressive growth direction from not only its green field project, Hongsa, but also from the M&A upside that is targeted by the company. We think it is well-positioned to see a strong growth momentum in FY15-16. We maintain an Add rating and DCF-based target price of THB69 (WACC: 6.3%). Potential catalysts are three phases of the 1,800MW plant start full operating in 2016.

Potential growth outlook We believe that over the next 12 months, RATCH will be well positioned to gain positive earnings momentum from the better utilisation of its existing power plants and the additional earnings from Hongsa, which we project to contribute THB789m in FY15 and THB2.4bn in FY16 after all three phases of the 1,800MW plant start full operation.

Strong in both coal- and gas-fired power plants

largest in Thailand, we believe that it could stand as a key contender for the new coal-fired power plant, thanks to its experience given its 40% stake in the coal-fired power plant in Laos.

Solid shareholder structure Thanks to the 45% stake owned by the Electricity Generation Authority of Thailand (EGAT), RATCH is well positioned to win any new power plants, not only in Thailand but also in neighbouring countries where EGAT aims to expand its footprint. EGAT is Thailand’s only state-owned power generation company and the sole buyer of all power in Thailand.

Buy ahead of growth We believe that RATCH’s share price will continue to re-rate over the next 12 months, driven by the earnings growth momentum and the upside from the upcoming IPP bidding. RATCH could stand a chance to win both as a gas- or coal-fired IPP given its proven experience in large gas- and coal-fired power plants in Thailand, Laos and Australia.

While RATCH’s existing strength may lie in its large portfolio of gas-fired power plants of over 5,000MW, the

Vol m

Price Close

Financial Summary

Relative to SET (RHS)

64.0

109.0

59.0

104.5

54.0

100.0

49.0

95.5

44.0 5 4 3 2 1

91.0

Dec-13

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range







Current

Target

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 55,591 10,302 7,726 3.68 9.8% 16.69 2.27 3.69% 10.46 49.94 33.3% 1.68 10.6%

Dec-13A 50,850 9,484 6,187 3.50 (5.1%) 17.59 2.27 3.69% 10.87 NA 23.5% 1.63 9.4%

Dec-14F 56,382 11,320 6,780 4.68 33.7% 13.15 2.27 3.69% 8.51 9.02 10.5% 1.53 12.0% 0% 0.99

Dec-15F 55,681 10,655 7,369 5.08 8.7% 12.10 2.40 3.90% 8.41 8.91 (1.1%) 1.43 12.2% 0% 1.07

Dec-16F 55,387 11,285 9,436 6.51 28.0% 9.45 2.80 4.55% 7.21 7.45 (13.2%) 1.31 14.5% 0% 1.23

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Ratchaburi Electricity│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 50,850 11,246 9,484 (3,724) 5,761 (1,222) 958 1,978 7,475 0 7,475 (1,294)

Dec-14F 56,382 13,274 11,320 (4,387) 6,934 (1,164) 1,417 1,402 8,588 0 8,588 (1,665)

Dec-15F 55,681 12,585 10,655 (4,387) 6,269 (1,028) 2,331 1,542 9,114 0 9,114 (1,575)

Dec-16F 55,387 13,204 11,285 (4,387) 6,898 (889) 3,688 1,696 11,393 0 11,393 (1,788)

6,182 5 0

6,924 (143) 0

7,539 (170) 0

9,606 (170) 0

6,187 5,071 5,071

6,780 6,780 6,780

7,369 7,369 7,369

9,436 9,436 9,436

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 9,404 8,885 2,541 68 20,900 41,846 18,245 5,732 2,181 68,004 14,736

Dec-14F 16,237 8,885 2,766 76 27,964 39,149 18,245 5,732 2,181 65,307 14,736

Dec-15F 23,174 8,885 2,766 75 34,900 36,453 18,245 5,732 2,181 62,611 14,736

Dec-16F 31,574 8,885 2,707 75 43,241 33,766 18,245 5,732 2,181 59,924 14,736

7,757 458 22,951 7,729

8,444 508 23,687 7,729

8,442 501 23,679 7,729

8,263 499 23,497 7,729

2,684 10,413 0 33,364 54,701 838 55,539

2,684 10,413 0 34,101 58,190 981 59,171

2,684 10,413 0 34,092 62,268 1,151 63,418

2,684 10,413 0 33,910 67,934 1,320 69,254

Dec-13A (8.5%) (7.9%) 18.7% (9.01) 37.72 3.53 17.3% 53.2% 47.64 21.73 72.24 10.1% 7.55%

Dec-14F 10.9% 19.4% 20.1% (4.30) 40.13 5.13 19.4% 48.5% 57.52 22.47 68.59 13.1% 8.92%

Dec-15F (1.2%) (5.9%) 19.1% 0.49 42.94 4.64 17.3% 47.2% 58.24 23.43 71.50 12.6% 7.87%

Dec-16F (0.5%) 5.9% 20.4% 6.28 46.85 5.10 15.7% 43.0% 58.72 23.74 72.47 14.6% 8.29%

Dec-13A 22,693.7 5,600.9 N/A N/A N/A

Dec-14F 22,122.1 5,600.9 N/A N/A N/A

Dec-15F 22,595.2 5,660.9 N/A N/A N/A

Dec-16F 27,798.6 6,320.9 N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 9,484 958 (4,492)

Dec-14F 11,320 1,417 504

Dec-15F 10,655 2,331 (7)

Dec-16F 11,285 3,688 (123)

9,080 0 (1,222) (1,559) 12,250 (8,106) 0 (724) 4,763 (4,067) (9,338) 0 0 (3,260)

5,378 0 (1,164) (1,907) 15,548 (7,083) 0 0 1,417 (5,666) 0 0 0 (3,292)

4,604 0 (1,028) (1,797) 14,759 (7,083) 0 0 2,331 (4,752) 0 0 0 (3,292)

3,382 0 (889) (1,984) 15,359 (7,074) 0 0 3,688 (3,386) 0 0 0 (3,770)

(114) (12,711) (4,528) (1,154) 9,817

242 (3,049) 6,832 9,882 11,234

222 (3,070) 6,937 10,007 11,359

196 (3,574) 8,400 11,974 13,326

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

12-month Forward Rolling FD P/E (x)

Key Drivers

25.0

Power Despatched (GWh) Capacity (MW) Average Capacity Utilisation (%) Avg tariff/ASP per kwh (% chg) Fuel Cost Per Kwh (% Change)

20.0

15.0 10.0 5.0 0.0 Jan-10

Jan-11 Glow Energy

Jan-12

Jan-13

Jan-14

Ratchaburi Electricity

SOURCE: CIMB, COMPANY REPORTS

171

Retail│Thailand December 12, 2014

Robinson Department Store ROBINS TB / ROBI.BK

Market Cap

Avg Daily Turnover

Free Float

US$1,489m

US$2.69m

38.0%

THB48,869m

THB87.61m

1,111 m shares

Current

THB44.00

Target

THB66.00

Prev. Target

THB66.00

Up/Downside

50.0% Conviction|

|

Riding the urbanisation wave

CIMB Analyst(s)

With weak domestic demand resulting in lower sales, ROBINS generated flat sales growth in 2014 despite its aggressive expansion. We still believe in its long-term growth story as it is poised to benefit from the recovery in domestic demand and increasing urbanisation.

Kasem PRUNRATANAMALA, CFA T (66) 2 657 9221 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-9.9

-20.3

-31.1

Absolute

-11.1

-21.8

Major shareholders

-17.0 % held

Central Group & Chirathivat Family Credit Suisse AG, Singapore Branch Thai NDVDR

62.0 3.9 3.2

Show Style "View Doc Map"

We keep our EPS estimates, Add call and DCF-based target price of THB66 (WACC 10.5%, LTG 2%). We believe that the worst is now behind ROBINS and it is poised to generate long-term earnings growth, driven by two factors: 1) growth of its rental income base, and 2) potential upside from a pick-up in sales as domestic demand recovers.

in Thailand p.a. and 2 stores in Vietnam p.a. for the next 3 years.

Solid business model and balance sheet

ROBINS operates on a negative cash cycle as 80% of its sales are on consignment. Its balance sheet seems solid with minimal debt, as cashflow generated from operations (estimated at THB5.6bn for 2015) is sufficient to Lifestyle Center format finance its capex, estimated at improves earnings quality By end-2014, ROBINS will have 39 THB4.5bn-5bn for 2015. Thanks to department stores in Thailand (28 in the adoption of the Lifestyle Center upcountry) and two stores in Vietnam. format, new stores also generate Out of these, only 11 are Lifestyle positive cashflow from day one and Centers. Thanks to its continued positive EBIT in the first year of expansion using the Lifestyle Center operations. format, we expect its rental income to ROBINS still our top pick grow rapidly. This will allow it to build ROBINS remains our top pick. It has a larger recurring income base been a sector laggard in 2014 and this (estimated at THB90m-100m per can present opportunities to buy Lifestyle Center per year), which will ROBINS at a bargain. Its long-term help reduce earnings volatility during fundamentals remain unchanged and sales slowdowns and provide a boost we believe that ROBINS is poised to to ROBINS’s earnings once sales pick generate long-term sales growth, up. thanks to its leading position in the upcountry department store market – Expansion plan still on Robins plans to add five stores in 2015, where there is still low penetration of which four stores will be Lifestyle and ample room to grow as provinces Centers, and two more new stores in become increasingly urbanised. Vietnam. With its plan to add 5 stores

Price Close

Financial Summary

Relative to SET (RHS)

62.0

112.0

57.0

100.8

52.0

89.5

47.0

78.3

42.0 6

67.0

Vol m

4 2 Dec-13

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 23,460 3,426 1,658 1.49 14.1% 29.47 0.90 2.05% 13.29 28.82 (27.8%) 4.73 16.8%

Dec-13A 26,359 3,705 1,986 1.79 19.8% 24.61 0.90 2.05% 12.51 NA (15.7%) 4.31 18.3%

Dec-14F 28,591 4,345 1,972 1.78 (0.7%) 24.79 0.89 2.02% 11.08 NA 0.2% 3.96 16.7% 0% 0.98

Dec-15F 34,362 5,886 2,667 2.40 35.3% 18.32 1.20 2.73% 8.31 44.28 5.1% 3.58 20.5% 0% 1.08

Dec-16F 41,061 7,558 3,548 3.19 33.0% 13.77 1.60 3.63% 6.45 23.26 2.5% 3.17 24.4% 0% 1.18

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Robinson Department Store│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 26,359 7,972 3,705 -1,418 2,286 37 358 0 2,682 0 2,682 -456

Dec-14F 28,591 8,999 4,345 -1,927 2,418 6 358 0 2,783 0 2,783 -557

Dec-15F 34,362 11,038 5,886 -2,427 3,459 -29 358 0 3,789 0 3,789 -758

Dec-16F 41,061 13,267 7,558 -2,810 4,749 -48 358 0 5,059 0 5,059 -1,012

2,226 -241

2,226 -254

3,031 -364

4,048 -500

1,986 1,986 1,986

1,972 1,972 1,972

2,667 2,667 2,667

3,548 3,548 3,548

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 1,882 739 1,667 522 4,810 9,132 1,299 2,767 822 14,020 0 0 4,407 2,222 6,629 0

Dec-14F 470 789 1,665 304 3,228 13,017 1,657 2,555 822 18,051 500 0 5,116 2,222 7,838 0

Dec-15F 240 942 1,982 304 3,469 15,786 2,015 2,359 822 20,983 1,000 0 6,090 2,222 9,312 0

Dec-16F 568 1,127 2,362 304 4,361 18,158 2,374 2,178 822 23,531 1,000 0 7,258 2,222 10,480 0

188 188 0 6,818 11,343 670 12,013

188 188 0 8,026 12,329 924 13,253

188 188 0 9,501 13,662 1,288 14,950

188 188 0 10,668 15,436 1,788 17,224

Dec-13A 12.4% 8.1% 14.1% 1.69 10.21 N/A 17.0% 50.3% 9.30 29.71 86.90 24.6% 20.3%

Dec-14F 8.5% 17.3% 15.2% -0.03 11.10 193.4 20.0% 50.0% 9.76 31.04 88.71 21.4% 18.9%

Dec-15F 20.2% 35.5% 17.1% -0.68 12.30 102.5 20.0% 50.0% 9.20 28.54 87.69 23.4% 23.3%

Dec-16F 19.5% 28.4% 18.4% -0.39 13.90 95.0 20.0% 50.0% 9.22 28.60 87.89 27.4% 27.8%

Dec-13A N/A N/A 34 2.9% N/A N/A N/A N/A

Dec-14F N/A N/A 41 -4.0% N/A N/A N/A N/A

Dec-15F N/A N/A 48 4.0% N/A N/A N/A N/A

Dec-16F N/A N/A 55 6.0% N/A N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 3,705

Dec-14F 4,345

Dec-15F 5,886

Dec-16F 7,558

121

661

504

602

37 -456 3,407 -4,266 0 0 808 -3,457 0 0

6 -557 4,456 -5,600 0 0 219 -5,381 500 0

-29 -758 5,604 -5,000 0 0 0 -5,000 500 0

-48 -1,012 7,101 -5,000 0 0 0 -5,000 0 0

-1,000

-986

-1,333

-1,774

-91 -1,090 -1,141 -51 -51

0 -486 -1,412 -426 -913

0 -833 -230 1,104 637

0 -1,774 327 2,101 2,151

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 50.0

45.0

ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) No. of POS (main prod/serv) SSS grth (%, main prod/serv) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) No. of POS (2ndary prod/serv) SSS grth (%, 2ndary prrod/serv)

40.0 35.0

30.0 25.0 20.0 15.0 10.0 5.0 0.0 Jan-10

Jan-11 Big C Supercentre

Jan-12 CP All

Jan-13

Jan-14 Robinson Department Store

SOURCE: CIMB, COMPANY REPORTS

173

Telco - Mobile│Thailand December 12, 2014

Samart I-Mobile SIM TB / SIM.BK

Market Cap

Avg Daily Turnover

Free Float

US$461.1m

US$1.37m

55.5%

THB15,137m

THB44.34m

4,373 m shares

Current

THB3.44

Target

THB4.60

Prev. Target

THB4.60

Up/Downside

33.7% Conviction|

Regaining strength in 2015

CIMB Analyst(s)

2014’s earnings were driven by solid smartphone sales growth and the debut of its DTV Mobile. Although sales fell in 3Q14, they are likely to recover in 4Q14/2015, supported by the launch of new handset models that satisfy consumer needs and an expected large order by operators.

Kitichan SIRISUKARCHA, CFP T (66) 2 657 9232 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

0.0

-10.8

-8.6

Absolute

-1.2

-12.3

5.5

Major shareholders

% held

Samart Corp Pcl Bualuang Infra Rmf Bualuang Siripol

70.0 0.9 0.9

Show Style "View Doc Map"

We maintain our Add call and target price of THB4.60, based on 18.2x FY15 P/E (1 s.d. above the telecom sector’s 5-year mean). We believe SIM will be attractive over the next 1-2 years, driven by the growing smartphone market and potential of becoming a handset manufacturer for Thailand’s top mobile operators, plus additional benefits as an STB distributor.

Continuing growth SIM’s revenue and profit jumped more than 400% yoy in 2013 and around 25% in 2014, thanks to the transition from 2G to 3G in Thailand. Although this abnormally-high growth rate should normalise in 2014 (13% CAGR), we expect another push from the soon-to-be fully operational 4G as this transition should boost smartphone demand in the upcountry. And with the market gearing towards lower-cost devices, SIM’s attractively-priced and quality products, coupled with better services, should help it capture a larger market share.

Vol m

Price Close

110.5

3.50

98.0

3.00

85.5

2.50 500 400 300 200 100

73.0

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range




Current

Target

Driven by DTV mobile SIM’s growth in 4Q14-2015 will also be driven by the growing sales of its DTV Mobile, especially after the commencement of full operations of the new DTTV platform in Thailand in Sep 2014. This should help restore revenue growth to its former level by 4Q14 onwards. Moreover, SIM will book revenue from another big order of more than 500,000 handsets from DTAC in 4Q14. Also, as the company might be receiving more special orders of around 1m handsets next year, SIM targets to sell 5.5m units in 2015 (vs. 4.5m handsets in 2014).

Set-top box distributor SAMART expects to sell 1.5m-2m STBs per year in 2014-2015 (8-10% of total market share). With SIM as one of its STB distributors, accounting for around 20-30% of its STB sales (at 10% net margin), this target translates to THB300m in revenue and THB30m in net profit for SIM.

Still attractive We like SIM for its leading position in the Thai mobile market, its solid financials, and growth potential from overseas expansion, which should drive a 13% net profit CAGR in 15-17

Financial Summary

Relative to SET (RHS)

4.00

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Operating EBITDA Margin Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 6,940 464 6.7% 161 0.04 73% 81.32 0.01 0.29% 35.21 26.01 57.9% 7.4%

Dec-13A 10,239 1,082 10.6% 807 0.19 354% 17.90 0.07 2.17% 15.64 NA 61.4% 29.2%

Dec-14F 12,935 1,299 10.0% 1,007 0.24 23% 14.58 0.09 2.67% 13.07 23.09 49.0% 30.0% 0% 0.99

Dec-15F 14,195 1,410 9.9% 1,109 0.26 10% 13.30 0.11 3.33% 11.89 32.46 36.2% 28.0% 0% 0.89

Dec-16F 15,825 1,551 9.8% 1,270 0.30 14% 11.66 0.13 3.67% 10.83 11.89 31.6% 27.5% 0% 0.84

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Samart I-Mobile│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 10,239 2,744 1,082 (198) 884 (130) 0 62 843

Dec-14F 12,935 3,240 1,299 (200) 1,099 (143) 0 62 1,046

Dec-15F 14,195 3,496 1,410 (203) 1,207 (147) 0 62 1,149

Dec-16F 15,825 3,829 1,551 (205) 1,345 (123) 0 62 1,311

815 (5)

1,018 (6)

1,121 (6)

1,284 (7)

811 (4)

1,013 (5)

1,115 (6)

1,276 (7)

807 834 834

1,007 1,035 1,035

1,109 1,136 1,136

1,270 1,297 1,297

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 411 4,142 1,670 9 6,232 615 278 43 114 1,050 2,359 1 1,608 86 4,055 7 33 40 0 4,095 3,148 40 3,188

Dec-14F 509 4,873 1,521 9 6,913 627 278 43 102 1,050 2,359 7 1,681 84 4,131 5

Dec-15F 771 5,348 1,679 9 7,807 635 278 43 29 985 2,359 5 1,855 85 4,304 4

Dec-16F 743 6,054 1,882 9 8,689 641 278 43 38 1,000 2,359 4 2,080 85 4,527 3

29 33 0 4,164 3,755 44 3,798

75 79 0 4,383 4,360 49 4,409

30 32 0 4,560 5,075 54 5,129

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 1,082

Dec-14F 1,299

Dec-15F 1,410

Dec-16F 1,551

(459)

(425)

(637)

8

(631) (78) (5) (90) (184) (32) (94) 148 (162)

4 (90) (6) 782 (184) 57 0 (2) (129)

4 (94) (6) 676 (184) (27) 0 1 (210)

122

8

6

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

3 (71) (7) 1,483 (184) (27) 0 (1) (212)

Dec-13A 47.5% 133% 10.6% (0.45) 0.72 11.71 0.57% 39.2% 128.0 57.27 63.29 23.0% 18.3%

Dec-14F 26.3% 20% 10.0% (0.42) 0.85 12.49 0.57% 39.0% 118.4 60.08 61.92 22.9% 19.2%

Dec-15F 9.7% 8% 9.9% (0.36) 0.99 13.08 0.57% 44.3% 122.3 54.59 60.32 22.7% 19.1%

Dec-16F 11.5% 10% 9.8% (0.37) 1.15 19.39 0.57% 42.8% 122.7 54.32 60.03 23.5% 19.2%

Dec-13A 4.12 N/A N/A 49.3 N/A N/A N/A

Dec-14F 0.45 3.60 N/A N/A 80.7 N/A N/A N/A

Dec-15F 0.90 4.50 N/A N/A 80.0 N/A N/A N/A

Dec-16F 1.17 4.95 N/A N/A 81.9 N/A N/A N/A

8

(327)

(403)

(504)

(555)

555 350 98 (252) (174)

4 (391) 262 653 743

4 (493) (27) 466 560

2 (545) 726 1,271 1,342

Key Drivers

12-month Forward Rolling FD P/E (x) 50

45

Group Mobile Subscribers (m) Group Fixed Voice Subscribers (m) Grp fixed brdband subscribers (m) Group Pay TV Subs (m) Group Mobile ARPU (US$/mth) Grp fixed voice ARPU (US$/mth) Grp fixed brdband ARPU (US$/mth) Group Pay TV ARPU (US$/mth)

40 35

30 25 20 15 10 5 0 Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Samart I-Mobile

SOURCE: CIMB, COMPANY REPORTS

175

Property Development│Thailand December 12, 2014

Sansiri Public Co SIRI TB / SIRI.BK

Market Cap

Avg Daily Turnover

Free Float

US$772.1m

US$9.32m

58.1%

THB25,348m

THB303.0m

10,343 m shares

Current

THB1.86

Target

THB2.11

Prev. Target

THB2.12

Up/Downside

13.3% Conviction|

Concerned about dilution

CIMB Analyst(s)

Wattaipun EKATAKSIN T (66) 2 657 9229 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-6.7

3.1

-8.4

Absolute

-7.9

1.6

5.7

Major shareholders

% held

TS Star Company Limited Thai NVDR Chase Nominees Limited 42

18.1 16.8 7.4

Show Style "View Doc Map"

Despite its completed capital-raising exercise and concrete plans to drive earnings growth, we maintain our Hold call on SIRI, as it may take some time for the market to get over the massive dilution from the capital-raising exercise in FY14 and warrant issuance in FY16. As we roll over to 7x CY16 P/E (close to 5-year mean), our target price drops. Our FY14-16 EPS is unchanged. In spite of SIRI’s capital-raising exercise and the resulting dilution, we are cautiously optimistic on SIRI’s earnings growth outlook. Earnings growth would be supported by its business restructuring to ensure sustainable growth, solid backlog, stronger capital base and healthier balance sheet.

Capital-raising exercise In Nov 2014, SIRI raised capital through a rights issue, which allowed holders of its common shares on 6 Oct 2014 to buy new shares at a ratio of three existing shares for one new share at a price of THB1.30. Each new share came with one free 3-year warrant (SIRI-W2), exercisable at THB2.50 from the second year onwards (no exercise of warrant allowed in the first year). In addition, SIRI offered 300m warrants under ESOP #7 to its directors and management employees. The new shares and warrants were listed in Nov 2014. The funds raised will be mainly used for debt repayment and land acquisition. We deem the capital-raising exercise necessary,

Price Close

2.00

107.3

1.80

99.6

1.60

91.8

1.40 1000 800 600 400 200

84.0

Vol m

115.1

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range






Current

Target

given SIRI’s highly-geared balance sheet (above 2x at end-3Q14). Its backlog, the highest in the sector, is not sufficiently supported by its capital structure (vs. large-scale PS and LH). This limits its ability to fund backlog construction and future landbanking.

New growth path After the capital-raising exercise, SIRI announced a new business plan, Engineer For Growth (EFG), which lays the foundation for sustainable earnings growth through product/market diversification, cost efficiency and new capital. SIRI expects net margin to improve to 15% over the next five years and gearing to drop below 1x by FY16. It retains its targets of THB12bn presales and THB28bn-29bn revenue in FY14, as well as presales of THB30bn and revenue of THB36bn in FY15. We expect strong earnings recovery in FY15 and continued growth in FY16.

Hold for long term SIRI is worth revisiting, given its attractive risk-reward now.

Financial Summary

Relative to SET (RHS)

2.20

Dec-13

|

Total Net Revenues (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 30,087 4,626 2,938 0.32 16.4% 6.74 0.17 8.98% 6.61 NA 107% 0.96 18.7%

Dec-13A 28,987 3,290 1,930 0.21 (34.3%) 8.78 0.09 5.01% 13.48 NA 160% 1.13 12.0%

Dec-14F 32,856 4,414 2,521 0.21 (2.3%) 8.99 0.09 4.83% 11.30 257.8 120% 1.15 12.7% 0% 0.96

Dec-15F 36,377 5,766 3,714 0.26 27.8% 7.04 0.13 7.09% 8.61 27.8 93% 1.04 15.5% 0% 1.13

Dec-16F 40,611 7,116 4,791 0.30 13.9% 6.18 0.13 7.26% 6.78 NA 58% 1.03 16.8% 0% 1.22

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Sansiri Public Co│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 28,987 9,719 3,290 (281) 3,008 (1,103) 0 408 2,313 0 2,313 (384) 0 1,929 1 0 0 0 1,930 1,930 1,930

Dec-14F 32,856 11,623 4,414 (366) 4,048 (1,314) 0 1,488 4,222 (858) 3,364 (844) 0 2,520 1 0 0 0 2,521 2,521 2,521

Dec-15F 36,377 12,237 5,766 (421) 5,345 (1,121) 0 417 4,642 0 4,642 (928) 0 3,713 1 0 0 0 3,714 3,714 3,714

(THBm) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 40,611 13,853 7,116 (471) 6,645 (1,082) 0 426 5,989 0 5,989 (1,198) 0 4,791 1 0 0 0 4,791 4,791 4,791

Cash Flow

Dec-14F 9,688

Dec-15F 9,894

Dec-16F 8,616

45 45,621 0 52,957 2,700 0 0 4,383 7,083 11,854

53 54,496 0 64,237 2,808 0 0 1,166 3,973 14,000

63 53,636 0 63,593 2,920 0 0 1,148 4,068 11,000

75 56,000 0 64,691 3,037 0 0 1,131 4,168 10,000

2,251 5,284 19,388 22,816

2,296 5,595 21,891 22,900

2,342 5,966 19,308 22,400

2,388 6,372 18,760 17,255

768 23,584 0 42,972 17,067 0 17,068

784 23,684 0 45,574 22,638 (2) 22,636

799 23,199 0 42,507 25,156 (2) 25,154

815 18,070 0 36,831 32,030 (2) 32,028

Dec-13A (4.1%) (28.9%) 11.5% (2.65) 1.65 4.88 16.6% 50.0% 0.55 756.7 38.37 7.5% 6.7%

Dec-14F 9.8% 34.2% 14.1% (1.94) 1.62 5.92 25.1% 37.3% 0.57 860.5 39.07 7.2% 7.3%

Dec-15F 14.6% 30.6% 16.0% (1.67) 1.79 7.60 20.0% 50.0% 0.59 817.5 35.06 8.4% 9.1%

Dec-16F 11.7% 23.4% 17.7% (1.05) 1.80 10.13 20.0% 50.0% 0.63 749.8 32.35 10.7% 11.3%

Dec-13A 8,546.0 N/A N/A N/A 32.6% N/A N/A N/A N/A N/A 23.8%

Dec-14F 22,797.0 N/A N/A N/A 32.3% N/A N/A N/A N/A N/A 21.5%

Dec-15F 17,597.0 N/A N/A N/A 32.9% N/A N/A N/A N/A N/A 19.2%

Dec-16F 17,597.0 N/A N/A N/A 33.4% N/A N/A N/A N/A N/A 18.0%

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital Straight Line Adjustment (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing

Dec-13A 3,290

Dec-14F 4,414

Dec-15F 5,766

Dec-16F 7,116

(10,908)

(8,838)

896

(2,329)

(1,961) (323) (954) (10,856) (981) 0

230 (323) (384) (4,902) (474) 0

(556) (323) (844) 4,938 (533) 0

(1,697) (323) 0 2,767 (588) 0

0 (1,228) (2,208) 11,662 1,839 0 (965)

0 3,233 2,759 2,231 4,825 0 (1,260)

0 33 (500) (3,500) 64 0 (1,857)

0 33 (555) (6,145) 3,939 0 (2,395)

(761) 11,776

570 6,366

896 (4,396)

896 (3,705)

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 40.0

Unbooked Presales (m) (THB) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (THB) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)

35.0 30.0 25.0 20.0 15.0

10.0 5.0 0.0 Jan-10

Dec-13A 7,291

Jan-11

Jan-12

Jan-13

Jan-14

Amata Corporation

Ananda Development

AP (Thailand) PCL

Central Pattana

Hemaraj

Land And Houses

SOURCE: CIMB, COMPANY REPORTS

177

Property Development│Thailand December 12, 2014

SC Asset Corporation SC TB / SC.BK

Market Cap

Avg Daily Turnover

Free Float

US$407.4m

US$0.46m

34.5%

THB13,374m

THB15.08m

3,713 m shares

Current

THB3.60

Target

THB4.99

Prev. Target

THB4.59

Up/Downside

38.7% Conviction|

More visibility for growth

CIMB Analyst(s)

We maintain our Add rating and continue to like SC for its improving visibility in view of its increasingly solid backlog, sustainable gross margins and well-contained SG&A. Our target price rises as we roll over our valuation of 10x P/E (0.5 s.d. above its 5-year mean) to CY16.

Wattaipun EKATAKSIN T (66) 2 657 9229 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

0.6

-9.8

-6.3

Absolute

-0.6

-11.3

7.8

Major shareholders

% held

Shinawatra family Mr. Bhanapot Damapong Thai NVDR

61.2 4.8 2.3

Show Style "View Doc Map"

In view of its solid 9M14 performance, we keep our EPS estimates unchanged. We expect FY15 to show even stronger earnings growth, backed by a high lock-in rate of 30% for FY15 condo revenue and sustainable gross margin. Its P/E valuations of only 7-8.6x CY15-16 are undemanding, lower than its 5-year mean of 9x. Its FY15-16 EPS growth of 19-27% is also compelling, with 12% expected in FY14.

Cautiously optimistic targets Despite its solid 9M14 performance, SC retained its FY14 targets for both presales and revenue at THB12bn each (+16% yoy for the former and +7.5% yoy for the latter). SC expects both presales and sales to continue to grow at 10-15% in FY15, while anticipating the bottomline to grow even faster than the topline. Additionally, SC’s rental office business remains intact with an occupancy rate of 100% for ST1 and ST2, and 95% for ST3. The total rentable area for these three buildings is 53,965 sq m.

Vol m

Price Close

106.8

3.50

99.9

3.00

92.9

2.50 50 40 30 20 10

86.0

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range




Current

Target

Improving FY15 outlook We expect sales to grow faster given its increasingly solid backlog for condos. SC’s revenue mix consists of 20-30% condo and 70-80% SDH/TH, reinforcing its strong earnings visibility as our FY15-16 revenue estimates are 20-28% secured by condo backlog. Note that our FY14 sales forecast has been 70% locked in. We expect FY14 EPS to grow by 12%, while FY15 and FY16 EPS should expand by 27% and 19%, respectively, thanks to prudent expansion, rising revenue visibility, sustainable gross margins and a leaner back office with higher efficiency.

Attractive valuations Given SC's more compelling earnings growth, valuation discount to its 5-year mean P/E of 9x (vs. the peer average of 10x CY15 P/E and 9x CY16 P/E) and decent dividend yield of 5% (vs. the peer average of 4%), we remain positive about the company's prospects as a solid long-term investment.

Financial Summary

Relative to SET (RHS)

4.00

Dec-13

|

Total Net Revenues (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 8,358 1,385 1,219 0.33 12.9% 10.97 0.03 0.90% 7.70 NA 104% 1.40 12.9%

Dec-13A 10,031 1,311 1,082 0.29 (11.3%) 12.36 0.12 3.24% 7.18 NA 116% 1.27 10.8%

Dec-14F 11,804 1,616 1,216 0.33 12.5% 10.99 0.13 3.64% 6.18 17.41 100% 1.10 10.7% 0% 0.89

Dec-15F 13,270 2,055 1,550 0.42 27.5% 8.62 0.17 4.64% 5.46 20.07 85% 0.94 11.8% 0% 0.93

Dec-16F 15,171 2,449 1,853 0.50 19.5% 7.21 0.20 5.55% 4.69 26.15 69% 0.80 12.0% 0% 1.02

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

SC Asset Corporation│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 10,031 3,566 1,311 (85) 1,226 (8) 0 56 3,528 0 1,273 (192)

Dec-14F 11,804 4,135 1,616 (81) 1,535 (44) 0 29 4,038 0 1,520 (304)

Dec-15F 13,270 4,653 2,055 (84) 1,972 (62) 0 29 4,536 0 1,938 (388)

(THBm) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 15,171 5,294 2,449 (91) 2,357 (70) 0 29 5,162 0 2,316 (463)

1,082 0 0

1,216 0 0

1,550 0 0

1,853 0 0

1,082 1,082 1,082

1,216 1,216 1,216

1,550 1,550 1,550

1,853 1,853 1,853

Cash Flow

Dec-14F 981

Dec-15F 1,196

Dec-16F 1,390

63 19,299 550 20,747 6,076 0 60 109 6,246 7,069

68 19,553 592 21,195 6,258 0 60 113 6,431 6,158

73 21,207 699 23,175 6,428 0 60 116 6,604 5,743

79 22,498 752 24,719 7,012 0 60 120 7,192 5,368

627 1,763 9,459 5,993

238 1,057 7,453 7,000

238 1,057 7,038 7,500

239 1,057 6,664 7,500

1,014 7,007 0 16,466 10,527 0 10,527

1,044 8,044 0 15,498 12,128 0 12,128

1,076 8,576 0 15,613 14,165 0 14,165

1,108 8,608 0 15,272 16,638 0 16,638

Dec-13A 20.0% 18.1% 35.5% (3.29) 2.84 37.18 0% 12.3% 2.32 1,020 29.10 13.7% 15.9%

Dec-14F 17.7% 16.0% 35.0% (3.28) 3.27 32.42 0% 12.0% 2.03 964 21.44 13.6% 16.6%

Dec-15F 12.4% 12.5% 35.1% (3.25) 3.82 31.37 0% 13.7% 1.93 897 10.48 14.4% 17.3%

Dec-16F 14.3% 13.8% 34.9% (3.09) 4.48 32.35 0% 14.4% 1.81 839 9.14 15.3% 18.3%

Dec-13A 1,328.0 N/A N/A N/A 35.5% N/A N/A N/A N/A N/A 24.5%

Dec-14F 4,807.0 N/A N/A N/A 35.0% N/A N/A N/A N/A N/A 23.0%

Dec-15F 3,004.5 N/A N/A N/A 35.1% N/A N/A N/A N/A N/A 21.0%

Dec-16F 4,206.5 N/A N/A N/A 34.9% N/A N/A N/A N/A N/A 20.0%

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital Straight Line Adjustment (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing

Dec-13A 1,311

Dec-14F 1,616

Dec-15F 2,055

Dec-16F 2,449

(3,899) 85

(647) 81

(1,658) 84

(1,296) 91

299 (94) (180) (2,562) (161) 0

113 (125) (192) 765 (110) 0

762 (146) (304) 709 (143) 0

387 (161) (388) 991 (122) 0

0 47 (113) 2,425 423 0 (433)

0 16 (94) 96 1 0 (486)

0 16 (127) 84 0 0 (620)

0 17 (106) (374) 0 0 (741)

345 2,760

(135) (524)

169 (367)

424 (691)

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 40.0

Unbooked Presales (m) (THB) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (THB) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)

35.0 30.0 25.0 20.0 15.0

10.0 5.0 0.0 Jan-10

Dec-13A 835

Jan-11

Jan-12

Jan-13

Jan-14

Amata Corporation

Ananda Development

AP (Thailand) PCL

Central Pattana

Hemaraj

Land And Houses

SOURCE: CIMB, COMPANY REPORTS

179

Cement│THAILAND December 12, 2014

Siam Cement SCC TB / SCC.BK

Market Cap

Avg Daily Turnover

Free Float

US$16,887m

US$13.96m

67.9%

THB554,400m

THB454.7m

1,200 m shares

Current

THB462.0

Target

THB553.0

Prev. Target

THB553.0

Up/Downside

19.7% Conviction|

Best play on oil price downturn

CIMB Analyst(s)

SCC’s earnings momentum will accelerate in 2015-16 driven not only by its well-diversified portfolio that includes domestic-driven sectors of cement, building materials and auto, as well as its global-driven petrochemical olefins group, but also from the sharp decline in oil price, thanks to its high energy cost structure for cement and ceramics and its naphtha-based petrochemical producer.

Suwat SINSADOK, CFA, FRM T (66) 2 657 9228 E [email protected]

Share price info Share price perf. (%)

1M

3M

Relative

4.8

2.8

-1.4

Absolute

3.6

1.3

12.7

Major shareholders

12M

% held

Crown Property Bureau (CPB) NVDR Crown Property Bureau Equity (CPBE)

30.0 9.5 1.9

Show Style "View Doc Map"

We trim our EPS forecasts for 2014-16 to reflect our lower utilisation for SCC’s PTA associate. We believe SCC is the best play for Thailand as an ASEAN play, oil beneficiary play, and domestic cement and building material play in 2015-16. Catalysts include cement demand growth recovery and rising petrochemical olefin margins. We maintain Add and our SOP-based target price.

Domestic recovery play We expect SCC’s earnings from the cement and building materials group to bottom in 3Q14 and start to recover into 2015, driven by Thailand’s cement demand growth recovery from -3% in 3Q14 to +5% in 2015. This will be boosted by government spending that should inject much-needed capital into the economy.

Petrochemical still a hero As a naphtha-based olefin producer, SCC’s 2.9mtpa olefin production should be a key earnings growth driver in 2015, helped by the lower naphtha cost and healthy demand outlook that should lead to margin

Price Close

116.0

470

111.8

450

107.7

430

103.5

410

99.3

390

95.2

370 6

91.0

Vol m

4 2 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range






Current

Target

expansion. We believe petrochemical earnings will help sustain SCC’s earnings in 2015-16, before they start to decline when the new supply influx from US shale gas-based producers enter the market.

ASEAN reality growth SCC will start to see its earnings growth momentum accelerate in 2015 via its expansion into the ASEAN market. Initially setting the foot print via acquisitions and exports from Thailand, SCC will then complete the construction of a series of cement plants in ASEAN in 2015-18, from Indonesia and Myanmar to Cambodia and Laos. This alone will add 30% cement capacity growth to 30mtpa by 2018.

Attractive conglomerate Given the solid cement growth expectation, we believe its share price will start rerating ahead of its earnings growth momentum in 2015, after a 2-year consolidation due to Thailand’s weak cement demand growth.

Financial Summary

Relative to SET (RHS)

490

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 407,601 31,434 23,580 19.65 (13.6%) 23.51 12.00 2.60% 20.12 30.56 88.6% 3.87 16.6%

Dec-13A 434,251 46,840 36,719 30.60 55.7% 15.10 15.50 3.35% 13.80 55.64 86.8% 3.42 24.1%

Dec-14F 446,295 55,819 37,069 30.89 1.0% 14.96 12.00 2.60% 11.28 14.58 63.4% 2.97 21.3% 0.01%

Dec-15F 456,360 63,087 42,530 35.44 14.7% 13.04 14.00 3.03% 9.80 15.50 46.6% 2.60 21.2% (0.83%)

Dec-16F 459,534 67,298 45,025 37.52 5.9% 12.31 16.00 3.46% 8.92 34.82 31.7% 2.30 19.8% (2.37%)

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Siam Cement│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 434,251 86,873 46,840 (15,718) 31,123 (8,193) 6,744 13,141 42,814 0 42,814 (5,003)

Dec-14F 446,295 96,962 55,819 (17,163) 38,656 (8,053) 8,040 11,837 50,481 0 50,481 (6,366)

Dec-15F 456,360 105,158 63,087 (18,775) 44,312 (7,854) 9,413 12,429 58,300 0 58,300 (7,333)

Dec-16F 459,534 109,661 67,298 (20,387) 46,911 (7,854) 9,417 13,051 61,524 0 61,524 (7,816)

37,811 (1,091) 0

44,115 (7,046) 0

50,967 (8,437) 0

53,708 (8,683) 0

36,719 36,719 36,719

37,069 37,069 37,069

42,530 42,530 42,530

45,025 45,025 45,025

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-13A 24,418 49,453 55,557 5,702 135,130 183,589 95,679 0 26,235 305,504 33,739

Dec-14F 48,042 53,826 55,870 5,860 163,598 200,442 95,679 0 26,235 322,356 33,739

Dec-15F 68,214 53,735 56,168 5,992 184,110 215,683 95,679 0 26,235 337,597 33,739

Dec-16F 94,991 49,048 55,956 6,034 206,028 229,311 95,679 0 26,235 351,226 33,739

51,211 4,785 89,735 153,103

51,499 18,075 103,314 153,103

51,775 18,186 103,701 153,103

51,579 18,221 103,539 153,103

10,576 163,678 0 253,414 161,989 25,230 187,219

10,576 163,678 0 266,993 186,686 32,276 218,961

10,576 163,678 0 267,379 213,616 40,713 254,328

10,576 163,678 0 267,218 240,641 49,395 290,036

Key Ratios

Cash Flow (THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 46,840 6,744 (8,021)

Dec-14F 55,819 8,040 (4,424)

Dec-15F 63,087 9,413 47

Dec-16F 67,298 9,417 4,697

11,005 6,799 (8,193) (5,003) 50,170 (32,284) 1 (6,314) 9,762 (28,835) (11,372) 0 0 (17,999)

20,591 4,249 (8,053) (6,366) 69,857 (31,834) 0 0 0 (31,834) 0 0 0 (14,400)

5,837 4,211 (7,854) (7,333) 67,407 (31,635) 0 0 0 (31,635) 0 0 0 (15,600)

(22,397) 4,211 (7,854) (7,816) 47,555 (31,635) 0 0 0 (31,635) 0 0 0 (18,000)

0 (29,371) (8,036) 9,963 29,528

0 (14,400) 23,624 38,024 46,077

0 (15,600) 20,173 35,773 43,627

0 (18,000) (2,079) 15,921 23,775

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Dec-12A Dec-13A Dec-14F Dec-15F Dec-16F 10.6% 6.5% 2.8% 2.3% 0.7% (4.3%) 49.0% 19.2% 13.0% 6.7% 7.7% 10.8% 12.5% 13.8% 14.6% (118.9) (135.4) (115.7) (98.9) (76.5) 119.3 135.0 155.6 178.0 200.5 2.75 3.80 4.80 5.64 5.97 20.3% 11.7% 12.6% 12.6% 12.7% 61.1% 50.7% 38.8% 39.5% 42.6% 34.48 38.93 42.23 43.01 40.93 48.88 54.87 58.21 58.22 58.65 38.19 50.79 53.66 53.67 54.06 6.2% 10.8% 11.7% 13.0% 13.0% 5.3% 8.8% 9.9% 10.5% 10.2%

Key Drivers

12-month Forward Rolling FD P/E (x) 20.0

18.0

Domestic ASP (% Change) Domestic Vol. Sales Growth (%) Export ASP (% Change) Export Vol. Sales Growth (%) Utilisation Rate (%) Unit Raw Material ASP (% Change) Export Sales/total Sales (%)

16.0 14.0

12.0 10.0 8.0 6.0

Dec-13A 5.0% 10.0% 1.3% 12.0% 91.2% N/A N/A

Dec-14F 5.0% 10.0% 0.0% 6.0% 99.0% N/A N/A

Dec-15F 5.0% 8.0% 0.0% -17.7% 97.9% N/A N/A

Dec-16F 5.0% 8.0% 0.0% 14.3% 107.5% N/A N/A

4.0 2.0 0.0 Jan-10

Jan-11

Jan-12

PTT Global Chemical

Jan-13

Jan-14 Siam Cement

SOURCE: CIMB, COMPANY REPORTS

181

Banks│Thailand December 12, 2014

Siam Commercial Bank SCB TB / SCB.BK

Market Cap

Avg Daily Turnover

Free Float

US$19,644m

US$28.94m

50.0%

THB644,919m

THB942.9m

3,399 m shares

Current

THB190.0

Target

THB203.0

Prev. Target

THB185.0

Up/Downside

6.8% Conviction|

Normalised stage

CIMB Analyst(s)

We believe SCB will return to its normal growth phase in FY15, with key drivers from its non-lending business, supported by low operating costs. Its solid branch network should help it penetrate new markets. However, we think a valuation rerating is not justified.

Weerapat WONK-URAI T (66) 2 657 9224 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

3.9

1.8

9.3

Absolute

2.7

0.3

23.4

Major shareholders

% held

Crown Property Bureau Vayupak Fund I

23.7 23.1

Show Style "View Doc Map"

Upon transfer of coverage, we expect a core earnings growth of 5.8% for FY15, which is below its peers as a result of slower income growth and a high credit cost policy. Our GGM-based target price is based on 2.2x FY15 P/BV, assuming 19% long-term ROE and 12.2% COE. Our Hold call is unchanged. We believe its profit growth will be unremarkable amid the high household debt burden.

Superior growth period over Our FY15 loan growth forecast of 6% is based on SCB’s strategy of focusing on expanding its non-interest income rather than lending business. Retail banking, which makes up 44% of its portfolio, is not likely to provide the boost to FY15’s numbers as Thailand’s high household debt could be a drag on auto hire purchases and its credit card business. While SCB’s expected non-interest income growth of 12% in FY15 should be better than the previous year, it is still below KBANK’s 17%. We believe that further upside to this is limited given the high-base effects. On the other hand, the bank has set a high credit cost of 78bp for FY15 as a precautionary measure for asset deterioration. We

Vol m

Price Close

110.8

180

106.3

160

101.9

140

97.4

120 25 20 15 10 5

93.0

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

are nevertheless impressed by SCB’s opex ratio which is the lowest among the large banks.

Outlook SCB continues to leverage on its strong franchise value with an emphasis on small-sized SME and retail customers. A segmentation strategy will be put in place together with customers’ behaviour analysis. This is to enhance the bank’s cross-selling activities and to gain market share in new segments. On the wholesale banking front, we expect SCB’s capital market business to benefit from future M&A activities of large conglomerates. In our view, the key management change in FY15 will not result in a business disruption, while the bank’s asset quality should remain intact and its loan-loss reserve buffer will be on the rise.

No need to chase SCB’s P/BV-to-ROE for FY15 is considered premium compared with that of KBANK. We also do not foresee superior growth vs. its peers. As such we maintain our Hold rating on the stock.

Financial Summary

Relative to SET (RHS)

200

Dec-13

|

Net Interest Income (THBm) Total Non-Interest Income (THBm) Operating Revenue (THBm) Total Provision Charges (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield BVPS (THB) P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 62,104 40,880 102,985 (9,396) 39,235 11.68 9.5% 16.26 4.50 2.37% 65.6 2.90 19.4%

Dec-13A 73,009 50,523 123,532 (13,641) 50,233 14.96 28.0% 12.70 5.25 2.76% 72.4 2.62 21.7%

Dec-14F 78,858 49,194 128,052 (13,500) 54,134 15.92 6.4% 11.93 5.73 3.02% 82.0 2.32 20.6% 1.10% 1.00

Dec-15F 80,582 55,032 135,615 (14,000) 57,297 16.85 5.8% 11.27 6.07 3.19% 92.2 2.06 19.3% (2.46%) 0.96

Dec-16F 84,589 62,266 146,854 (15,000) 61,742 18.16 7.8% 10.46 6.54 3.44% 103.2 1.84 18.6% (5.92%) 0.92

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Siam Commercial Bank│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Net Interest Income Total Non-Interest Income Operating Revenue Total Non-Interest Expenses Pre-provision Operating Profit Total Provision Charges Operating Profit After Provisions Pretax Income/(Loss) from Assoc. Operating EBIT (incl Associates) Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Consolidation Adjustments & Others Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX And Other Adj. Net Profit Recurring Net Profit

Dec-13A 73,009 50,523 123,532 (47,317) 76,215 (13,641) 62,574 0 62,574 0 62,574 0 62,574 (11,821)

Dec-14F 78,858 49,194 128,052 (47,843) 80,209 (13,500) 66,709 0 66,709 0 66,709 0 66,709 (12,008)

Dec-15F 80,582 55,032 135,615 (51,035) 84,580 (14,000) 70,580 0 70,580 0 70,580 0 70,580 (12,704)

Dec-16F 84,589 62,266 146,854 (55,798) 91,056 (15,000) 76,056 0 76,056 0 76,056 0 76,056 (13,690)

50,752 (519) 0 0 50,233 50,233

54,701 (567) 0 0 54,134 54,134

57,875 (579) 0 0 57,297 57,297

62,366 (624) 0 0 61,742 61,742

(THBm) Total Gross Loans Liquid Assets & Invst. (Current) Other Int. Earning Assets Total Gross Int. Earning Assets Total Provisions/Loan Loss Reserve Total Net Interest Earning Assets Intangible Assets Other Non-Interest Earning Assets Total Non-Interest Earning Assets Cash And Marketable Securities Long-term Investments Total Assets Customer Interest-Bearing Liabilities Bank Deposits Interest Bearing Liabilities: Others Total Interest-Bearing Liabilities Bank's Liabilities Under Acceptances Total Non-Interest Bearing Liabilities Total Liabilities Shareholders' Equity Minority Interests Total Equity

Balance Sheet Employment Dec-13A 95.4% 96% 28.4% 29.7% 66.3% 86.5% 17.6% 67.8% 0.83% 0.57% 0.220%

Dec-14F 94.8% 95% 28.7% 30.0% 65.1% 86.0% 20.0% 66.9% 0.78% 0.53% 0.205%

Dec-15F 95.3% 95% 29.1% 30.4% 65.5% 87.0% 21.2% 67.5% 0.78% 0.53% 0.206%

Dec-16F 95.8% 96% 28.6% 29.8% 66.3% 87.6% 21.9% 68.4% 0.78% 0.54% 0.208%

Total Income Growth Operating Profit Growth Pretax Profit Growth Net Interest To Total Income Cost Of Funds Return On Interest Earning Assets Net Interest Spread Net Interest Margin (Avg Deposits) Net Interest Margin (Avg RWA) Provisions to Pre Prov. Operating Profit Interest Return On Average Assets Effective Tax Rate Net Dividend Payout Ratio

Dec-15F 2,020,429 571,749

Dec-16F 2,171,293 600,336

2,415,123 (60,317) 2,354,806 0 143,644 143,644 35,755 0 2,534,206 1,822,911 119,127 103,418 2,045,456 119 240,591 2,286,166 246,272 1,768 248,040

2,457,847 (68,591) 2,389,257 0 145,920 145,920 34,309 0 2,569,486 1,835,671 107,214 104,697 2,047,582 117 241,045 2,288,744 278,939 1,803 280,742

2,592,177 (77,172) 2,515,006 0 149,730 149,730 36,216 0 2,700,952 1,936,633 96,493 108,996 2,142,122 115 243,372 2,385,608 313,504 1,839 315,344

2,771,630 (86,365) 2,685,264 0 153,659 153,659 37,561 0 2,876,484 2,081,881 97,457 113,499 2,292,838 112 230,919 2,523,869 350,739 1,876 352,615

Dec-13A 20.0% 25.8% 22.2% 59.1% 2.44% 5.26% 2.82% 4.25% 4.51% 17.9% 3.04% 18.9% 28.8%

Dec-14F 3.7% 5.2% 6.6% 61.6% 2.06% 4.96% 2.91% 4.31% 4.59% 16.8% 3.09% 18.0% 29.5%

Dec-15F 5.9% 5.4% 5.8% 59.4% 2.12% 4.95% 2.83% 4.27% 4.55% 16.6% 3.06% 18.0% 29.5%

Dec-16F 8.3% 7.7% 7.8% 57.6% 2.09% 4.88% 2.79% 4.21% 4.46% 16.5% 3.03% 18.0% 29.5%

Dec-13A 12.2% 3.2% 23.6% 38.3% 2.2% 157.8% 0.0% 11.8% 15.3% 12.9% 92.1% 2.2% 19.7%

Dec-14F 0.0% 3.2% -2.6% 37.4% 2.1% 185.5% 0.0% 13.5% 17.1% 0.7% 91.1% 2.1% 9.5%

Dec-15F 6.1% 3.2% 11.9% 37.6% 2.1% 201.7% 0.0% 14.4% 18.0% 5.5% 91.3% 2.1% 13.7%

Dec-16F 8.1% 3.2% 13.1% 38.0% 2.1% 209.0% 0.0% 15.1% 18.5% 7.5% 91.7% 2.1% 14.4%

Key Drivers

12-month Forward Rolling FD P/E (x) 14.00

Loan Growth (%) Net Interest Margin (%) Non Interest Income Growth (%) Cost-income Ratio (%) Net NPL Ratio (%) Loan Loss Reserve (%) GP Ratio (%) Tier 1 Ratio (%) Total CAR (%) Deposit Growth (%) Loan-deposit Ratio (%) Gross NPL Ratio (%) Fee Income Growth (%)

12.00

10.00 8.00 6.00 4.00 2.00

Jan-11

Dec-14F 1,913,325 544,523

Key Ratios

Gross Loans/Cust Deposits Avg Loans/Avg Deposits Avg Liquid Assets/Avg Assets Avg Liquid Assets/Avg IEAs Net Cust Loans/Assets Net Cust Loans/Broad Deposits Equity & Provns/Gross Cust Loans Asset Risk Weighting Provision Charge/Avg Cust Loans Provision Charge/Avg Assets Total Write Offs/Average Assets

0.00 Jan-10

Dec-13A 1,910,935 504,188

Jan-12

Jan-13

Jan-14

Bangkok Bank

Kasikornbank

Krung Thai Bank

Siam Commercial Bank

SOURCE: CIMB, COMPANY REPORTS

183

Construction│Thailand December 12, 2014

Sino-Thai Eng & Construction STEC TB / STEC.BK

Market Cap

Avg Daily Turnover

Free Float

US$1,196m

US$6.13m

69.2%

THB39,271m

THB199.4m

1,525 m shares

Current

THB25.75

Target

THB23.00

Prev. Target

THB23.00

Up/Downside

-10.7% Conviction|

Desperate to fill up backlog

CIMB Analyst(s)

With an order backlog equivalent to only 1.6 years of revenue, STEC is looking for smaller projects to refill its backlog. This would mean lower margins and higher SG&A. It is not as close to the current government as it was with the Democrat administration.

Kasem PRUNRATANAMALA, CFA T (66) 2 657 9221 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

0.2

0.5

29.0

Absolute

-1.0

-1.0

43.1

Major shareholders

% held

Charnvirakul family Equity Plus Co Ltd

23.6 3.0

Show Style "View Doc Map"

Given its weak backlog and the slow progress on public infrastructure projects, we believe STEC’s topline growth will be slow down in 2015. We reiterate our Reduce call, with an unchanged target price of THB23.0, which is still based on 20x FY16 P/E (1 s.d. above 5-year historical mean). De-rating catalysts could come from the low backlog and slow progress on government infrastructure projects.

Weak backlog order STEC signed THB5bn worth of projects in 9M14, which is well below its THB20bn-30bn target for 2014. But it realised THB15.6bn worth of revenues in 9M14, reducing its order backlog to THB41bn or just 1.6 years of revenue. As such, STEC has to bid for smaller projects that earn lower margins and incur higher SG&A expenses, facing greater competition in the process.

THB20bn order wins in 2015 With a more stable political environment, we expect more government infrastructure projects to be awarded in 2015. We project that

Vol m

Price Close

150

25.0

130

20.0

110

15.0

90

10.0 100 80 60 40 20

70

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range 25.75 27.75

11.90

23.00 Current

Target

STEC will clinch THB20bn worth of contracts, boosting its order backlog to 2.5 years of revenues. Although STEC is strong in power and petrochemical civil works, we believe that the private sector is likely to adopt a wait-and-see attitude amid the slowing economy. We, therefore, believe that the public sector will be the main source of projects in 2015. Our forecast of THB20bn order wins is not too conservative given that STEC is not very close to the current government.

Clean balance sheet with strong earnings visibility Its clean balance sheet and stronger earnings visibility compared with its larger peers, i.e. ITD and CK, make STEC more popular among investors than other contractors. This explains STEC’s sizeable valuation premium over the other two. STEC is trading at 4.6x CY16 P/BV vs CK’s 2.4x and ITD’s 2.7x. In terms of CY15 P/E, STEC is trading at 27x vs CK’s 22x and ITD’s 53x.

Financial Summary

Relative to SET (RHS)

30.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 19,748 1,455 1,166 0.98 29.1% 26.20 0.55 2.14% 16.27 26.62 (109%) 4.97 19.8%

Dec-13A 22,242 1,923 1,733 1.11 12.6% 23.28 0.32 1.25% 13.75 50.11 (110%) 5.18 21.8%

Dec-14F 21,797 1,936 1,552 1.02 (8.0%) 25.30 0.50 1.94% 15.25 44.84 (112%) 4.69 19.4% 0% 0.99

Dec-15F 22,887 1,933 1,571 1.03 1.2% 25.00 0.52 2.00% 14.57 36.91 (117%) 4.29 17.9% 0% 0.94

Dec-16F 25,176 2,122 1,742 1.14 10.9% 22.55 0.46 1.77% 12.47 27.80 (122%) 3.85 18.0% 0% 0.94

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Sino-Thai Eng & Construction│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 22,242 2,094 1,923 (368) 1,555 (29) (22) 392 1,896 294 2,190 (449)

Dec-14F 21,797 2,071 1,936 (410) 1,526 0 10 405 1,940 0 1,940 (388)

Dec-15F 22,887 2,060 1,933 (422) 1,511 0 12 441 1,964 0 1,964 (393)

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 25,176 2,266 2,122 (435) 1,687 0 15 475 2,177 0 2,177 (435)

1,740 (7) 0

1,552 0 0

1,571 0 0

1,742 0 0

1,733 1,500 1,500

1,552 1,552 1,552

1,571 1,571 1,571

1,742 1,742 1,742

Cash Flow

Dec-14F 9,653 9,231 1,398 1,911 22,192 5,501 360 0 13 5,874 0

Dec-15F 11,008 10,216 1,747 2,102 25,072 6,051 363 0 15 6,428 0

Dec-16F 12,715 11,311 2,184 2,312 28,521 6,656 366 0 16 7,038 0

16,202 492 16,694 121

18,471 506 18,977 0

21,057 522 21,578 0

24,005 537 24,542 0

418 539 0 17,233 7,588 189 7,777

460 460 0 19,437 8,378 252 8,630

506 506 0 22,084 9,163 253 9,416

556 556 0 25,098 10,208 253 10,461

Dec-13A 12.6% 32.1% 8.64% 5.60 4.98 53.25 20.5% 1.8% 38.90 13.05 266.0 (204%) 21.4%

Dec-14F (2.0%) 0.7% 8.88% 6.33 5.49 N/A 20.0% 35.4% 51.29 23.27 320.8 (254%) 18.5%

Dec-15F 5.0% (0.2%) 8.45% 7.22 6.01 N/A 20.0% 36.0% 53.73 27.55 346.4 (131%) 16.7%

Dec-16F 10.0% 9.8% 8.43% 8.34 6.69 N/A 20.0% 28.8% 53.88 31.40 359.9 (93%) 17.0%

Dec-13A 51,022 22,242 33,505 N/A N/A N/A N/A N/A N/A

Dec-14F 54,224 21,797 7,000 N/A N/A N/A N/A N/A N/A

Dec-15F 61,338 22,887 20,000 N/A N/A N/A N/A N/A N/A

Dec-16F 76,162 25,176 30,000 N/A N/A N/A N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 1,923

Dec-14F 1,936

Dec-15F 1,933

Dec-16F 2,122

516

548

830

594

0 (29) (449) 2,038 (1,153) 0 (39) (9) (1,200) (141) 339 0 (38)

0 0 (388) 2,064 (904) 0 (152) (11) (1,067) (121) 0 0 (763)

0 0 (393) 2,088 (1,023) 0 (2) 0 (1,024) 0 0 0 (785)

0 0 (435) 2,517 (1,101) 0 (3) 0 (1,104) 0 0 0 (697)

0 (883) 113 876 997

0 (785) 279 1,064 1,064

0 (697) 716 1,413 1,413

0 160 998 697 867

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 50.0

(THBm) Outstanding Orderbook Order Book Depletion Orderbook Replenishment ASP (% chg, main prod./serv.) Unit sales grth (%, main prod./serv.) Util. rate (%, main prod./serv.) ASP (% chg, 2ndary prod./serv.) Unit sales grth (%,2ndary prod/serv) Util. rate (%, 2ndary prod/serv)

45.0 40.0 35.0

30.0 25.0 20.0 15.0 10.0 5.0 0.0 Jan-10

Dec-13A 8,663 8,345 1,118 1,737 19,863 5,001 134 0 12 5,147 0

Jan-11

CH. Karnchang

Jan-12

Jan-13

Italian-Thai Development

Jan-14 Sino-Thai Eng & Construction

SOURCE: CIMB, COMPANY REPORTS

185

Property Development│Thailand December 12, 2014

Supalai PCL SPALI TB / SPAL.BK

Market Cap

Avg Daily Turnover

Free Float

US$1,399m

US$5.56m

56.3%

THB45,918m

THB181.0m

1,717 m shares

Current

THB26.75

Target

THB32.62

Prev. Target

THB31.92

Up/Downside

22.0% Conviction|

Compelling earnings growth

CIMB Analyst(s)

Wattaipun EKATAKSIN T (66) 2 657 9229 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

3.1

11.1

55.2

Absolute

1.9

9.6

69.3

Major shareholders

% held

Tangmatitham Family Thai NVDR HSBC (Singapore) Nominees

28.2 12.7 4.3

Show Style "View Doc Map"

We retain our Add rating on SPALI, with its exciting line-up of new condo launches and stronger earnings in 4Q14 as potential near-term re-rating catalysts. As we roll over to an end-CY16 valuation, our target price rises to THB32.62, based on 9x CY16 P/E (1 s.d above its 5-year mean). Despite the possible risks to its FY14 presales target from the rising competition in 2H14, we believe that SPALI’s strong fundamentals are intact. Our FY14-16 EPS is unchanged. We continue to like SPALI for its defensive nature that offers compelling earnings growth, high margins and a healthy balance sheet with high ROEs of above 20%.

Solid FY15 earnings growth outlook Given SPALI’s rising revenue visibility from stronger backlog, higher proportion of condos in its FY15 sales mix (implying higher gross margins) and well-contained SG&A costs, we expect EPS growth of 14-54% in FY14-16. Although 9M14 net profit formed only 62% of our FY14 forecast, we expect a significant pick-up in 4Q14, mimicking the seasonality in FY13 (9M13 net profit formed 65% of FY13 net profit). SPALI has four new condos pending transfer in 2H14.

Retained business targets Although SPALI admits that there are possible risks to its FY14 presales target of THB22bn (9M14 lock-in rate was 66%), given the sizeable increase

Vol m

Price Close

160

22.0

137

17.0

115

12.0 25 20 15 10 5

93

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range







Current

Target

in new launches by competitors expected in 2H14. The recovery in demand YTD may not be strong enough to absorb the sudden influx of new supply. Nonetheless, SPALI anticipates favourable take-up rates for its new condo launches in 2H14 (70%), backed by its superior locations and competitive pricing. SPALI has kept its FY14 revenue target of THB20bn, given its solid backlog of THB40bn, of which THB12.2bn is pending booking in 2H14 (including 9M14, 97% of our FY14 revenue estimate has been locked in), THB15.4bn in FY15 (74% locked in), THB7.5bn in FY16 (33% locked in) and the remainder in FY17.

Our top pick Stay invested in view of SPALI’s compelling earnings growth, attractive valuations compared to its peers (trades at 8.5x CY15 P/E and 7.4x CY16 P/E vs. peer average of 10x and 9x, respectively) and decent dividend yields. SPALI remains one of our top picks in the Thai property sector.

Financial Summary

Relative to SET (RHS)

27.0

Dec-13

|

Total Net Revenues (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 11,649 3,646 2,744 1.60 10.4% 16.74 0.65 2.43% 9.46 24.13 24.7% 3.56 22.8%

Dec-13A 12,742 3,635 2,882 1.68 5.1% 15.93 0.70 2.62% 10.18 40.30 51.5% 3.22 20.9%

Dec-14F 19,551 5,705 4,442 2.59 54.1% 10.34 1.04 3.87% 6.66 29.99 44.4% 2.63 27.2% 0% 1.02

Dec-15F 22,482 7,012 5,479 3.19 23.4% 8.38 1.28 4.77% 5.36 19.07 28.8% 2.17 27.5% 0% 1.11

Dec-16F 25,405 7,936 6,222 3.62 13.6% 7.38 1.45 5.42% 4.61 24.27 18.5% 1.82 26.0% 0% 1.20

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Supalai PCL│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Pref. & Special Div FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 12,742 5,252 3,635 (86) 3,549 128 0 0 5,293 0 3,676 (726)

Dec-14F 19,551 8,092 5,705 (134) 5,571 79 0 0 8,037 0 5,650 (1,130)

Dec-15F 22,482 9,743 7,012 (154) 6,858 89 0 0 9,678 0 6,947 (1,389)

Dec-16F 25,405 11,010 7,936 (174) 7,762 113 0 0 10,949 0 7,875 (1,575)

2,950 (68) 0

4,520 (78) 0

5,557 (78) 0

6,300 (78) 0

2,882 2,882 2,882

4,442 4,442 4,442

5,479 5,479 5,479

6,222 6,222 6,222

(THBm) Total Cash And Equivalents Properties Under Development Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-14F 810

Dec-15F 1,684

Dec-16F 1,691

10 26,463 816 28,080 2,102 0 0 493 2,595 4,626

10 28,062 840 29,722 2,589 0 0 313 2,902 3,800

11 30,570 865 33,131 2,671 0 0 328 2,999 3,000

11 33,394 894 35,990 2,830 0 0 345 3,175 2,000

1,977 5,560 12,164 3,734

2,076 3,701 9,578 5,000

2,180 4,005 9,185 5,000

2,289 4,339 8,628 4,500

69 3,803 0 15,967 14,252 457 14,709

47 5,047 0 14,625 17,471 529 17,999

48 5,048 0 14,234 21,173 723 21,896

50 4,550 0 13,178 25,204 783 25,987

Dec-13A 9.6% 1.2% 41.6% (4.41) 8.30 60.59 19.7% 45.7% 0.35 1,108 73.10 25.6% 25.9%

Dec-14F 54.2% 54.1% 41.6% (4.65) 10.18 53.19 20.0% 37.3% 0.19 868 64.55 28.5% 32.8%

Dec-15F 15.1% 20.4% 43.5% (3.68) 12.33 59.93 20.0% 35.7% 0.17 840 60.97 29.5% 34.7%

Dec-16F 13.1% 13.0% 43.5% (2.80) 14.68 69.46 20.0% 34.4% 0.16 813 56.81 30.7% 35.5%

Dec-13A 6,641.0 N/A N/A N/A 40.6% N/A N/A N/A N/A N/A 11.8%

Dec-14F 15,584.0 N/A N/A N/A 41.1% N/A N/A N/A N/A N/A 11.8%

Dec-15F 14,411.0 N/A N/A N/A 43.1% N/A N/A N/A N/A N/A 11.8%

Dec-16F 6,576.0 N/A N/A N/A 43.1% N/A N/A N/A N/A N/A 11.8%

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital Straight Line Adjustment (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Disposals of Investment Properties Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing

Dec-13A 3,635

Dec-14F 5,705

Dec-15F 7,012

Dec-16F 7,936

(6,500) 86

(1,501) 134

(2,405) 154

(2,715) 174

2,657 96 (831) (943) (886) 10

(1,975) 65 (726) 1,568 (487) 10

(274) 76 (1,130) 3,280 (82) 10

(371) 80 (1,389) 3,541 (159) 10

0 (50) (926) 3,008 0 0 (1,202)

0 0 (477) 440 0 0 (1,777)

0 0 (72) (800) 0 0 (2,192)

0 0 (149) (1,500) (6) 0 (2,489)

(1,316) 491

204 (1,133)

604 (2,388)

604 (3,391)

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 40.0

Unbooked Presales (m) (THB) Unbooked Presales (area: m sm) Unbooked Presales (units) Unsold attrib. landbank (area: m sm) Gross Margins (%) Contracted Sales ASP (per Sm) (THB) Residential EBIT Margin (%) Investment rev / total rev (%) Residential rev / total rev (%) Invt. properties rental margin (%) SG&A / Sales Ratio (%)

35.0 30.0 25.0 20.0 15.0

10.0 5.0 0.0 Jan-10

Dec-13A 792

Jan-11

Jan-12

Jan-13

Jan-14

Amata Corporation

Ananda Development

AP (Thailand) PCL

Central Pattana

Hemaraj

Land And Houses

SOURCE: CIMB, COMPANY REPORTS

187

Technology Components│Thailand December 12, 2014

SVI Public Company Limited SVI TB / SVI.BK

Market Cap

Avg Daily Turnover

Free Float

US$291.2m

US$7.75m

43.9%

THB9,561m

THB253.7m

2,261 m shares

Current

THB4.22

Target

THB3.12

Prev. Target

THB3.12

Up/Downside

-26.1% Conviction|

Smoke after the fire

CIMB Analyst(s)

Thanakorn CHONGSUKSIRICHOK T (66) 2 657 9227 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-29.1

-12.4

-7.5

Absolute

-30.3

-13.9

6.6

Major shareholders

% held

Pongsak Lothongkam Eagle Mount Asia Equities Ltd. Thai NVDR Co., Ltd.

43.4 10.1 4.7

The company has resumed production at SVI CWT and expects to fully ramp up by the end of 2014. This is faster than we expected due to the rapid machine installation. However, we maintain our Reduce rating, as we expect soft earnings in 1H15 as production ramps up to be a de-rating catalyst. We maintain our target price of THB3.12, still pegged to 10x FY16 P/E (0.5 s.d. above the industry mean).

Updates after the fire SVI has already started small-scale production at SVI CWT in Chaengwattana. It plans to renovate the SVI II factory and start production there by 2Q15. SVI CWT is expected to generate up to US$75m per year by end-2014. Once the renovation is completed, SVI II will be capable of generating revenue of US$200m per year. However, we believe it will take up to 2-3 quarters to ramp-up production to full capacity. While at SVI HQ, The Department of Industrial Works ordered that the damaged building be closed for 60 days after the fire on 12 Nov 2014 for safety inspection and damage assessment.

Show Style "View Doc Map"

Loyal customers SVI’s FY12 revenue fell by 9% yoy, when it lost customers due to the flood in 2011. It was difficult for SVI to regain customers’ trust, as they could easily shift their orders to other suppliers. However, management has stated that all of its Price Close

129.3

5.60

117.7

5.10

106.0

4.60

94.3

4.10

82.7

3.60 1000 800 600 400 200

71.0

Vol m

141.0

6.10

Mar-14

Jun-14

Source: Bloomberg

52-week share price range



Current

Target

Sep-14

clients are staying despite the fire. We think that SVI’s main customers will remain loyal due to their long business relationships with the company.

Insurance coverage Company informs us that insurance will fully cover the damages (including business disruption) from the fire at its SVI HQ factory in Bangkadi Industrial Estate. SVI HQ contributed 100% of the group’s FY14 revenue.

Downside scenarios We think that there are two downside scenarios for SVI’s share price: 1) worst-case scenario target price of THB2.17, based on BV per share in 3Q14, 2) target price of THB3.72 following a near-term correction, based on the trough P/BV of 1.7x during the flood.

Reduce rating Reiterate Reduce due to our expectations of softer 1H15 earnings, as SVI has just resumed production, and expected low FY15 gross margin of 9.5% (similar to FY12, after the flood).

Financial Summary

Relative to SET (RHS)

6.60

Dec-13

|

Revenue (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) Price To Sales (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 7,704 524.8 0.26 75.9% 15.96 1.09 0.00 0.00% 14.18 NA (2.5%) 3.32 27.8%

Dec-13A 8,006 681.8 0.35 31.1% 12.18 1.04 0.00 0.00% 9.61 17.00 (31.9%) 1.94 20.1%

Dec-14F 8,514 715.8 0.34 (2.0%) 12.43 1.04 0.14 3.37% 7.95 13.01 (34.9%) 1.94 15.6% 0.0% 0.81

Dec-15F 7,711 496.7 0.22 (35.4%) 19.24 1.24 0.10 2.34% 10.29 14.76 (41.2%) 1.84 9.8% 11.8% 0.57

Dec-16F 8,354 707.5 0.31 42.4% 13.51 1.14 0.14 3.33% 7.89 17.95 (42.2%) 1.71 13.1% 0.0% 0.81

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

SVI Public Company Limited│Thailand December 12, 2014

Profit & Loss

Balance Sheet

(THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-13A 8,006 1,070 723 (296) 427 (19) 0 1,201 1,610

Dec-14F 8,514 1,243 902 (306) 596 (4) 0 461 1,053

Dec-15F 7,711 1,029 721 (296) 424 (3) 0 80 501

Dec-16F 8,354 1,205 913 (286) 627 (3) 0 90 714

1,610 14

1,053 (9)

501 (4)

714 (6)

1,623 0

1,045 0

497 0

708 0

0 497 497 497

0 708 708 708

(941) 682 682 682

(329) 716 716 716

Cash Flow

Dec-13A 1,359 1,960 1,191 632 5,141 1,292 0 23 35 1,351 0 1 1,867 318 2,186 0

Dec-14F 1,720 1,528 1,322 628 5,198 1,464 0 23 35 1,523 0 0 1,507 230 1,737 0

Dec-15F 2,144 1,384 1,217 627 5,372 1,724 0 23 35 1,783 0 0 1,647 249 1,896 0

Dec-16F 2,358 1,499 1,297 629 5,783 1,714 0 23 35 1,773 0 0 1,640 265 1,906 0

2 2 56 2,243 4,249

0 0 58 1,795 4,925

0 0 60 1,956 5,199

0 0 62 1,968 5,588

4,249

4,925

5,199

5,588

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 723

Dec-14F 902

Dec-15F 721

Dec-16F 913

(174)

(59)

389

(202)

1,701 (631) 19 (14) 1,624 (63)

1,317 (987) 4 9 1,185 (500)

832 (701) 3 4 1,248 (600)

1,110 (898) 3 6 932 (400)

(426) (490) (646) 0

0 (500) (2) 0

0 (600) 0 0

0 (400) 0 0

(0)

(322)

(224)

(318)

186 (459) 675 489 1,116

0 (324) 361 684 682

0 (224) 424 648 644

0 (318) 214 532 529

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Dec-13A 3.92% 23.3% 9.0% 0.70 2.18 22.8 0.00% 0.0% 79.12 63.33 91.68 16.8% 11.5%

Dec-14F 6.34% 24.8% 10.6% 0.76 2.17 169.3 0.84% 45.0% 74.77 63.05 84.67 20.0% 12.8%

Dec-15F (9.43%) (20.2%) 9.3% 0.95 2.30 132.5 0.84% 45.0% 68.92 69.33 86.13 12.9% 8.3%

Dec-16F 8.33% 26.7% 10.9% 1.04 2.47 208.8 0.84% 45.0% 63.16 64.35 84.15 19.9% 11.5%

Dec-13A N/A 5.1% N/A 160.0 N/A N/A N/A 85.0

Dec-14F N/A 1.7% N/A 167.7 N/A N/A N/A 82.5

Dec-15F N/A -9.4% N/A 150.9 N/A N/A N/A 76.1

Dec-16F N/A 8.3% N/A 162.6 N/A N/A N/A 84.7

Key Drivers

12-month Forward Rolling FD P/E (x) 30.0

ASP Change (%, Main Product) Unit sales growth (%, main prod) No. Of Lines (main Product) Rev per line (US$, main prod) ASP chg (%, 2ndary prod) Unit sales grth (%, 2ndary prod) No. Of Lines (secondary Product) Rev per line (US$, 2ndary prod)

25.0 20.0 15.0 10.0 5.0 0.0 Jan-10

Jan-11

Delta Electronics (Thailand)

Jan-12

Jan-13

KCE Electronics

Jan-14 SVI Public Company Limited

SOURCE: CIMB, COMPANY REPORTS

189

Oil & Gas Refinery│Thailand December 12, 2014

Thai Oil TOP TB / TOP.BK

Market Cap

Avg Daily Turnover

Free Float

US$2,734m

US$6.03m

40.0%

THB89,761m

THB196.6m

2,040 m shares

Current

THB44.00

Target

THB56.00

Prev. Target

THB48.00

Up/Downside

27.3% Conviction|

|

A better year ahead

CIMB Analyst(s)

We expect the large inventory loss on the sharp decline in oil prices to drag TOP into the red in 2014. However, we believe the company will see a marked improvement in earnings in 2015-16 driven by a muchimproved GRM on lower costs for fuel, crude premium, and interest.

Suwat SINSADOK, CFA, FRM T (66) 2 657 9228 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-1.6

-15.5

-44.0

Absolute

-2.8

-17.0

-29.9

Major shareholders

% held

PTT Plc Credit Agricole

49.5 3.1

Show Style "View Doc Map"

We see TOP as an attractive refinery stock after its share price declines in 2H14, and hence upgrade from Hold to Add. We also raise our target price which is based on 5x CY16 EV/EBITDA, 1s.d. below historical average to reflect the weak GRM outlook and downside from oil price weakness, as we roll over our valuations to 2016.

From oil victim to victor While TOP’s operational competitiveness is high thanks to its low cost structure and high production efficiency, it has suffered from a large inventory loss due to the sharp decline in oil prices in 2H14. We however believe that TOP’s 2015 earnings will improve markedly by US$2-4/bbl driven by 1) lower fuel loss to boost GRM by US$1/bbl; 2) lower crude premium to drive GRM by US$2/bbl; and 3) lower interest expenses on lower required working capital.

Price Close

107.0

60.0

95.0

55.0

83.0

50.0

71.0

45.0

59.0

40.0 20

47.0

Vol m

10 5 Dec-13

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range




Current

Target

Aromatics earnings are expected to remain in a downcycle on the back of poor PX margin caused by the continued oversupply that could not be offset by the strong benzenenaphtha spread.

Strong momentum Without the significant inventory loss on lower oil prices in 2015, we believe TOP would have seen solid earnings growth driven mainly by rising GRM on the back of lower oil prices. The indirect positive impact could come from an improved demand outlook thanks to the lower oil prices.

Limited downside At its current share price, we believe TOP’s downside is limited, supported by its replacement cost of THB42/shr. We believe its share price will rerate over the next 12 months driven by the rising GRM and absence of significant inventory loss.

Financial Summary

Relative to SET (RHS)

65.0

15

Aromatics a drag

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 447,432 19,150 12,320 5.07 (31%) 8.49 2.43 5.65% 5.62 NA 18.3% 1.01 12.4%

Dec-13A 414,599 20,508 10,394 6.62 31% 6.50 2.07 4.81% 4.92 11.11 21.3% 0.97 15.2%

Dec-14F 391,438 6,984 1,290 0.63 (90%) 67.98 0.28 0.66% 16.97 11.76 41.8% 1.00 1.4% 0% 0.34

Dec-15F 388,810 13,611 9,599 4.71 644% 9.14 2.12 4.92% 6.60 4.66 9.9% 0.91 10.4% 0% 1.13

Dec-16F 392,862 14,029 10,454 5.12 9% 8.39 2.31 5.36% 4.85 3.97 (10.7%) 0.86 10.5% 0% 1.10

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Thai Oil│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 414,599 23,090 20,508 (6,047) 14,461 129 533 (3,111) 12,012 0 12,012 (1,158)

Dec-14F 391,438 9,686 6,984 (8,228) (1,243) 2,871 560 0 2,188 0 2,188 (438)

Dec-15F 388,810 17,818 13,611 (8,742) 4,869 7,118 588 0 12,574 0 12,574 (2,515)

Dec-16F 392,862 18,350 14,029 (9,062) 4,967 8,029 647 0 13,642 0 13,642 (2,728)

10,854 (460) 0

1,750 (460) 0

10,060 (460) 0

10,914 (460) 0

10,394 13,505 13,505

1,290 1,290 1,290

9,599 9,599 9,599

10,454 10,454 10,454

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 43,815 28,746 48,509 6,079 127,149 65,468 11,156 0 4,746 81,370 2,636

Dec-14F 18,571 27,140 45,799 6,079 97,590 71,407 11,716 0 4,693 87,817 2,547

Dec-15F 36,761 23,329 45,492 6,079 111,661 68,038 12,304 0 4,583 84,926 2,457

Dec-16F 54,044 23,572 45,966 6,079 129,660 65,780 12,951 0 4,356 83,087 2,367

34,852 12,087 49,576 61,385

32,905 1,283 36,735 54,314

24,884 21,421 48,762 44,313

25,143 21,421 48,931 40,311

2,721 64,105 0 113,681 90,810 4,028 94,838

2,721 57,035 0 93,770 87,408 4,228 91,637

2,721 47,034 0 95,796 96,363 4,428 100,791

16,858 57,169 0 106,100 102,017 4,630 106,647

Dec-13A (7.34%) 7.1% 4.95% (9.91) 44.51 3.82 9.6% 40.6% 24.58 41.26 29.70 9.29% 12.5%

Dec-14F (5.59%) (65.9%) 1.78% (18.77) 42.85 (1.07) 20.0% 45.0% 26.06 45.08 32.39 (0.82%) 1.8%

Dec-15F (0.67%) 94.9% 3.50% (4.91) 47.24 4.56 20.0% 45.0% 23.69 44.91 28.43 2.82% 8.8%

Dec-16F 1.04% 3.1% 3.57% 5.57 50.01 5.09 20.0% 45.0% 21.85 44.69 24.45 3.43% 9.4%

Dec-13A 105.0 0.5% N/A N/A N/A

Dec-14F 93.0 -10.9% N/A N/A N/A

Dec-15F 90.0 11.1% N/A N/A N/A

Dec-16F 90.0 5.0% N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 20,508 533 (4,166)

Dec-14F 6,984 560 2,369

Dec-15F 13,611 588 (3,902)

Dec-16F 14,029 647 (458)

(3,363) 1,297 129 (1,158) 13,780 (21,299) 0 0 17,268 (4,030) (1,851) 0 0 (5,508)

560 1,297 2,871 (438) 14,204 (14,167) 0 0 9,000 (5,167) (1,576) 0 0 (4,692)

588 1,297 7,118 (2,515) 16,784 (5,373) 0 0 9,000 3,627 (1,576) 0 0 (645)

647 1,297 8,029 (2,728) 21,463 (6,804) 0 0 9,000 2,196 (1,576) 0 0 (4,800)

2,453 (4,907) 4,843 7,898 13,536

0 (6,268) 2,769 7,461 10,199

0 (2,222) 18,190 18,835 21,480

0 (6,376) 17,283 22,083 24,635

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 50

45

Oil Price (US$/bbl) Volume Growth (%) Ratio Of Up To Downstream (x) Operating Cash Cost (US$/bbl) Ratio Of High To Low Margin (x)

40 35

30 25 20 15 10 5 0 Jan-10

Jan-11

Jan-12

PTT Global Chemical

Jan-13

Jan-14 Thai Oil

SOURCE: CIMB, COMPANY REPORTS

191

Telco - Others│Thailand December 12, 2014

Thaicom THCOM TB / THCOM.BK

Market Cap

Avg Daily Turnover

Free Float

US$1,193m

US$4.79m

58.9%

THB39,180m

THB155.7m

1,096 m shares

Current

THB35.75

Target

THB52.00

Prev. Target

THB52.00

Up/Downside

45.5% Conviction|

Focus on the core

CIMB Analyst(s)

Pisut NGAMVIJITVONG T (66) 2 657 9226 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-4.1

-8.0

-21.9

Absolute

-5.3

-9.5

-7.8

Major shareholders

% held

Intouch Corporation Pcl. Wichai Mitr-Santisook Darong Pongsriniyom

41.1 2.3 1.4

Show Style "View Doc Map"

We are optimistic on Thaicom’s FY15 outlook given full-year contributions from Thaicom 6 (75% utilisation rate) and Thaicom 7 (55%). Positive surprises could come from 1) the sale of Thaicom 7’s entire remaining capacity, 2) progress in Thaicom 4’s sales, and 3) progress in Thaicom 8’s presales. Key issues that have recently held back its share price include 1) the uncertain satellite demand outlook, 2) the military government’s investigations into past concession irregularities, and 3) the government’s national satellite communication project. We keep our SOP-based target price and Add rating. Thaicom is our top Thai telco pick.

Political déjà vu We are not surprised to see the military government investigating Thaicom’s concession irregularities and embarking on the national satellite project, as both are exactly what the junta did in 2007-08. However, it has also been proven that this kind of political theatre only affects market sentiment and not Thaicom’s business fundamentals.

No more spectrum at 78.5 Thaicom’s most valuable asset is the 78.5 east orbital slot, the direction towards which 70% of Thai households point their satellite dishes. Thaicom has Thaicom 5 and 6 in that slot and will put Thaicom 8 there in 1H16. The company’s CEO has informed us that Thaicom will utilise the entire uplink/downlink spectrum Price Close

113.0

41.0

105.0

39.0

97.0

37.0

89.0

35.0

81.0

33.0 20

73.0

15 Vol m

10 5 Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range



Current

Target

available in that location. Deliberate or not, Thaicom will successfully monopolise this high-value position for the next 7-20 years.

Decent demand outlook The full utilisation of Thaicom 5, 6 (Indochina footprint) and 7 as well as the soon-to-be-launched 8, with the overwhelming demand for Indochina access, should be sufficient to provide Thaicom with a strong demand outlook. Rising satellite transponder demand should come from intensifying competition in the pay TV market, where operators are clamouring to offer more HD format channels and to introduce UHD channels in FY15. Note that one transponder can carry 20 SD channels, 8 HD channels and 2 UHD channels.

Thaicom 8 to spur FY16 growth Thaicom 8 will add another 30% to capacity in 2H16, half of which will be to serve the Thai broadcasting market and the rest to serve the Africa and India markets. We will add Thaicom 8 into our model once the capacity presale figures are revealed.

Financial Summary

Relative to SET (RHS)

43.0

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Operating EBITDA Margin Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 7,266 3,892 53.6% 174 0.40 NA 89.76 0.40 1.12% 11.22 NA 34.4% 3.1%

Dec-13A 7,896 3,750 47.5% 1,128 1.14 186% 31.43 0.45 1.26% 11.45 NA 31.5% 8.4%

Dec-14F 9,769 5,198 53.2% 1,723 1.70 49% 21.07 0.85 2.37% 7.51 NA 7.0% 11.5% 0% 0.99

Dec-15F 10,832 5,813 53.7% 2,524 2.30 36% 15.52 1.73 4.83% 6.01 9.84 (14.6%) 14.3% 0% 1.10

Dec-16F 11,287 5,916 52.4% 2,666 2.43 6% 14.70 1.82 5.10% 5.35 9.40 (30.1%) 14.1% 0% 1.02

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Thaicom│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 7,896 5,157 3,750 (2,088) 1,662 (265) 195 (74) 1,621 (51) 1,466 (339)

Dec-14F 9,769 6,970 5,198 (3,006) 2,192 (257) 195 196 2,325 (137) 2,188 (465)

Dec-15F 10,832 7,618 5,813 (2,937) 2,875 (111) 195 196 3,155 0 3,155 (631)

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 11,287 7,673 5,916 (2,876) 3,041 (99) 195 196 3,332 0 3,332 (666)

1,128 0 0

1,723 0 0

2,524 0 0

2,666 0 0

0 1,128 1,247 1,247

0 1,723 1,860 1,860

0 2,524 2,524 2,524

0 2,666 2,666 2,666

Cash Flow

Dec-13A 3,457 1,442 252 273 5,424 18,205 1,187 933 1,625 21,950 4,344

Dec-14F 3,047 1,706 358 273 5,384 15,499 1,382 933 1,625 19,438 443

Dec-15F 6,491 1,891 380 273 9,035 12,861 1,576 933 1,625 16,995 443

Dec-16F 9,157 1,971 400 273 11,801 10,286 1,771 933 1,625 14,614 443

1,678 1,038 7,060 4,028

1,900 1,038 3,381 3,789

1,957 1,038 3,437 3,346

2,012 1,038 3,492 2,903

704 4,733 0 11,793 15,543 38 15,581

704 4,493 0 7,874 16,910 38 16,948

704 4,050 0 7,488 18,504 38 18,542

704 3,608 0 7,100 19,277 38 19,315

Dec-13A 8.7% (3.6%) 47.5% (4.48) 14.18 6.66 23.1% 38.4% 63.73 38.61 101.5 7.1% 8.7%

Dec-14F 23.7% 38.6% 53.2% (1.08) 15.43 8.53 21.2% 50.0% 58.80 39.76 108.3 8.8% 10.6%

Dec-15F 10.9% 11.8% 53.7% 2.47 16.88 25.89 20.0% 75.0% 60.60 41.88 110.1 13.2% 14.1%

Dec-16F 4.2% 1.8% 52.4% 5.30 17.59 30.75 20.0% 75.0% 62.61 39.49 103.9 16.3% 14.4%

Dec-13A 4.37 N/A N/A N/A 2.6 N/A N/A N/A

Dec-14F 4.76 N/A N/A N/A 2.4 N/A N/A N/A

Dec-15F 5.18 N/A N/A N/A 2.4 N/A N/A N/A

Dec-16F 5.64 N/A N/A N/A 2.5 N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 3,750 (195) 21 (11) 0 0 (265) (339) 2,961 (3,033) 4 (1,192) 131 (4,089) 915 0 0 (438)

Dec-14F 5,198 (195) (148) 0 0 0 (257) (465) 4,134 (300) 0 0 0 (300) (4,141) 0 0 (493)

Dec-15F 5,813 (195) (151) 0 0 0 (111) (631) 4,726 (300) 0 0 0 (300) (443) 0 0 (930)

Dec-16F 5,916 (195) (45) 0 0 0 (99) (666) 4,911 (300) 0 0 0 (300) (443) 0 0 (1,893)

91 567 (560) (212) (862)

390 (4,243) (410) (307) 4,091

390 (982) 3,443 3,983 4,537

390 (1,945) 2,666 4,168 4,710

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 50

45

Group Mobile Subscribers (m) Group Fixed Voice Subscribers (m) Grp fixed brdband subscribers (m) Group Pay TV Subs (m) Group Mobile ARPU (US$/mth) Grp fixed voice ARPU (US$/mth) Grp fixed brdband ARPU (US$/mth) Group Pay TV ARPU (US$/mth)

40 35

30 25 20 15 10 5 0 Jan-10

Jan-11 Jasmine International

Jan-12

Jan-13 Samart I-Mobile

Jan-14 Thaicom

SOURCE: CIMB, COMPANY REPORTS

193

Telco - Mobile│THAILAND December 12, 2014

Total Access Communication DTAC TB / DTAC.BK

Market Cap

Avg Daily Turnover

Free Float

US$7,158m

US$11.53m

29.4%

THB235,005m

THB375.3m

2,368 m shares

Current

THB99.25

Target

THB117.0

Prev. Target

THB117.0

Up/Downside

17.9% Conviction|

|

Back on the right track

CIMB Analyst(s)

Pisut NGAMVIJITVONG T (66) 2 657 9226 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

-1.5

-1.7

-16.3

Absolute

-2.7

-3.2

-2.2

Major shareholders

% held

Telenor Asia Pte. Ltd. Thai Telco Holding TOT

42.6 22.4 5.6

Show Style "View Doc Map"

While DTAC will benefit if the spectrum auction is on schedule, it will not be badly hurt by any delay. We maintain our EPS estimates, DCF-based target price (9.5% WACC) and Add rating. DTAC is our top pick given room for EBITDA growth, its lofty dividend yield and undemanding EV/OpFCF valuation. We expect DTAC to better capitalise on its industry-leading spectrum bandwidth and concessionary period with new CEO Mr Sigve Brekke, effective Sep 14. DTAC must grab any available spectrum in the auction if it wants to maintain its costcompetitiveness. Yet, DTAC will still be comfortable if the spectrum auction is delayed given that its concession lasts until Sep 18.

The worst is behind it We are also positive on DTAC’s new strategy of accelerating its capex cycle, adopting localised marketing and turning more aggressive in defending its market share. This will restore its earnings growth momentum in FY15. We expect DTAC’s aggressive capex plans to lead to faster subscriber migration and 3G device adoption, resulting in rapid regulatory cost savings in FY15.

Competition to intensify In 3Q14, DTAC’s subscriber migration rate was 71% while the 3G device adoption rate was 41%, lagging behind AIS’s and True’s. We believe that DTAC’s more aggressive strategy should pave the way to catching up with AIS and True in terms of Price Close

120.4

118.0

109.3

108.0

98.2

98.0

87.1

88.0 20

76.0

Vol m

10 5 Dec-13

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range



Current

Target

Spectrum auction is a critical swing factor As no less than four spectrum bands will be available for auction (1800MHz and 900MHz) in FY15-16 and there are three potential bidders (AIS, DTAC and True), there is a high chance of DTAC bagging at least one licence. In our view, this should be enough for DTAC to stay competitive until its concession expires in Sep 18.

Brilliant long-term outlook We are still upbeat about DTAC’s long-term prospects. We expect the competitive equilibrium to normalise after the spectrum auction. As we see the capex cycle peaking in FY15, DTAC will have more than sufficient network for 3G and 4G services. Smartphone adoption will go beyond the natural adoption rate given Thailand’s smartphone affordability level, which will allow DTAC to monetise the explosion in data consumption, leading to an ARPU uplift, margin expansion, rising FCF and higher dividends.

Financial Summary

Relative to SET (RHS)

128.0

15

subscriber migration and 3G device adoption.

Revenue (THBm) Operating EBITDA (THBm) Operating EBITDA Margin Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing ROE CIMB/consensus EPS (x)

Dec-12A 89,232 26,258 29.4% 11,278 4.16 (2.8%) 23.86 5.06 5.10% 9.93 8.84 73.6% 28.2%

Dec-13A 94,459 29,643 31.4% 10,569 4.49 8.0% 22.10 3.72 3.75% 8.81 32.35 79.4% 31.5%

Dec-14F 90,157 32,168 35.7% 11,815 4.81 7.1% 20.63 6.05 6.10% 7.71 14.09 38.5% 34.2% 0.99

Dec-15F 93,098 36,505 39.2% 12,925 5.46 13.5% 18.18 6.36 6.40% 6.94 14.28 57.5% 39.3% 0.95

Dec-16F 97,386 40,882 42.0% 14,734 6.22 14.0% 15.95 7.31 7.37% 6.24 13.82 66.2% 47.5% 0.97

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Total Access Communication│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 94,459 41,297 29,643 (13,673) 15,970 (2,154) 0 113 13,929 (69) 13,860 (3,290)

Dec-14F 90,157 44,758 32,168 (16,473) 15,695 (1,346) 0 212 14,561 236 14,797 (2,982)

Dec-15F 93,098 49,550 36,505 (19,201) 17,304 (1,275) 0 188 16,218 0 16,218 (3,293)

Dec-16F 97,386 54,361 40,882 (21,304) 19,579 (1,275) 0 184 18,488 0 18,488 (3,754)

10,569 0 0

11,815 0 0

12,925 0 0

14,734 0 0

10,569 10,636 10,636

11,815 11,390 11,390

12,925 12,925 12,925

14,734 14,734 14,734

Dec-13A 29,643

Dec-14F 32,168

Dec-15F 36,505

Dec-16F 40,882

(6,475)

9,258

(4,983)

(3,355)

0 (2,154) (3,290) 17,723 (11,953) 134 169

0 (1,346) (2,982) 37,099 (15,080) 84 30

0 (1,275) (3,293) 26,954 (15,499) 0 0

0 (1,275) (3,754) 32,499 (15,499) 0 0

(11,649) 1,192 0 0 (12,687)

(14,966) (5,450) 0 0 (10,663)

(15,499) 5,000 0 0 (14,821)

(15,499) 0 0 0 (16,663)

6,339 (5,156) 918 7,265 8,228

1,488 (14,625) 7,508 16,683 23,478

(2,003) (11,824) (368) 16,456 12,730

(1,839) (18,502) (1,502) 17,000 18,275

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 5,472 10,351 1,683 3,598 21,105 79,963 326 0 3,661 83,949 8,296

Dec-14F 12,980 10,933 2,841 2,846 29,600 77,738 398 0 3,942 82,078 5,000

Dec-15F 12,612 9,411 2,947 3,296 28,266 76,585 398 0 3,942 80,925 5,000

Dec-16F 11,110 8,155 3,064 3,804 26,134 73,144 398 0 3,942 77,484 5,000

28,190 8,655 45,141 23,164

40,605 7,095 52,700 21,010

34,111 7,998 47,109 26,010

30,381 8,083 43,465 26,010

4,029 27,193 0 72,334 32,708 12 32,720

4,099 25,109 0 77,809 33,860 10 33,870

4,099 30,109 0 77,218 31,963 10 31,973

4,099 30,109 0 73,574 30,035 10 30,044

Dec-13A 5.9% 12.9% 31.4% (10.98) 13.81 7.41 23.7% 83% 36.20 8.88 177.8 19.0% 24.7%

Dec-14F (4.6%) 8.5% 35.7% (5.50) 14.30 11.66 20.2% 124% 43.08 18.19 276.5 20.1% 25.3%

Dec-15F 3.3% 13.5% 39.2% (7.77) 13.50 13.58 20.3% 116% 39.88 24.26 313.1 27.4% 28.2%

Dec-16F 4.6% 12.0% 42.0% (8.40) 12.68 15.36 20.3% 118% 33.01 25.57 274.3 29.0% 31.6%

Dec-13A 27.94 N/A N/A N/A 210.8 N/A N/A N/A

Dec-14F 28.43 N/A N/A N/A 204.3 N/A N/A N/A

Dec-15F 28.87 N/A N/A N/A 205.3 N/A N/A N/A

Dec-16F 29.03 N/A N/A N/A 206.0 N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 30.0

Group Mobile Subscribers (m) Group Fixed Voice Subscribers (m) Grp fixed brdband subscribers (m) Group Pay TV Subs (m) Group Mobile ARPU (US$/mth) Grp fixed voice ARPU (US$/mth) Grp fixed brdband ARPU (US$/mth) Group Pay TV ARPU (US$/mth)

25.0 20.0 15.0 10.0 5.0 0.0 Jan-10

Jan-11

Advanced Info Service

Jan-12

Jan-13

Intouch Holdings

Jan-14 Total Access Communication

SOURCE: CIMB, COMPANY REPORTS

195

Telco - Integrated│THAILAND December 12, 2014

True Corporation TRUE TB / TRUE.BK

Market Cap

Avg Daily Turnover

Free Float

US$9,519m

US$69.02m

34.0%

THB312,521m

THB2,244m

24,608 m shares

Current

THB12.70

Target

THB10.13

Prev. Target

THB10.13

Up/Downside

-20.2% Conviction|

|

Too expensive a turnaround

CIMB Analyst(s)

True’s share price has rallied 57% in six months. Further re-rating requires: 1) a lengthy delay in spectrum auctions, 2) consistent revenue market share gains, and 3) delivery of a cost-efficiency programme. We believe the chances of all three happening in FY15 are low.

Pisut NGAMVIJITVONG T (66) 2 657 9226 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

19.9

13.9

44.7

Absolute

18.7

12.4

58.8

Major shareholders

% held

CP group Thai Trust Fund Thai NVDR

64.8 5.7 2.3

Show Style "View Doc Map"

We keep our estimates, DCF-based target price (9.8% WACC) and Reduce rating. We think the market is too optimistic on True’s ability to increase its revenue market share and EBITDA margins (excl. gains from tower sale to TRUEIF). AIS and DTAC have begun to defend their market shares while Jasmine is aiming to speed up its capex cycle after listing its IFF. CTH is trying harder to turn the corner and gain traction in pay TV.

Turnaround is a known positive factor

This could lead to a jump in network opex and higher subscriber acquisition costs.

Spectrum auction a critical swing factor Unlike AIS, True will be the prime beneficiary if there is a lengthy delay in the 4G spectrum auction as the licences will weaken its current superior competitiveness in terms of spectrum holding, regulatory cost and 3G/4G first-mover advantage.

Brilliant long-term outlook

Notwithstanding our Reduce call, we are upbeat about True’s long-term prospects. We expect the industry’s competitive equilibrium to normalise after the spectrum auction. As we see the capex cycle peaking in FY15, True’s network will be more than sufficient to support its 3G and 4G services. Smartphone adoption will go beyond the natural adoption rate given Thailand’s smartphone Cost control remains a affordability level, which will allow True to monetise the explosion in data concern Its recently-announced FY15 capex of consumption, leading to ARPU uplift, THB33bn was above our forecast of margin expansion, rising FCF and THB24bn and consensus of THB20bn, higher dividends. reflecting the intensifying competition. A turnaround in earnings in FY15 is already in the bag, with most drivers being non-operating items, i.e. interest expense reduction (THB2.9bn), fully amortised concessionary assets (THB4.3bn) and gains from the sale of 3k towers to TRUEIF (THB3bn). Meanwhile, we project FY15 EBITDA to rise by 18% yoy (consensus: 30%).

Price Close

Financial Summary

Relative to SET (RHS)

13.1

143

11.1

123

9.1

103

7.1

83

5.1 2

63

Vol b

1 1 Dec-13

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

Revenue (THBm) Operating EBITDA (THBm) Operating EBITDA Margin Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Dec-12A 89,381 16,738 18.7% (7,429) (0.46) 23% NA 0% 16.66 NA 671% (39%)

Dec-13A 96,214 16,383 17.0% (9,062) (0.90) 97% NA 0% 15.74 13.08 1537% (150%)

Dec-14F 101,336 18,594 18.3% 8,341 (0.13) (86%) NA 0% 18.06 NA 28% (7%) 0% (3.90)

Dec-15F 108,599 21,910 20.2% 9,905 0.05 NA 241.9 0% 15.51 NA 30% 2% 0% 2.78

Dec-16F 115,251 24,656 21.4% 4,500 0.17 216% 76.6 0% 13.63 82.95 24% 4% 0% 0.68

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

True Corporation│Thailand December 12, 2014

Profit & Loss

Balance Sheet

(THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 96,214 36,306 16,383 (19,728) (3,345) (8,463) 61 0 (11,747)

Dec-14F 101,336 39,176 18,594 (17,841) 752 (6,466) 2,114 0 (3,600)

Dec-15F 108,599 43,452 21,910 (18,193) 3,718 (3,576) 2,208 0 2,349

Dec-16F 115,251 46,940 24,656 (18,206) 6,450 (3,586) 2,299 0 5,164

(11,747) (1,404) 4,011 (9,140) 78 0

(3,600) 389 11,451 8,239 102 0

2,349 (1,159) 8,614 9,804 101 0

5,164 (1,184) 418 4,398 102 0

(9,062) (13,073) (13,073)

8,341 (3,109) (3,109)

9,905 1,292 1,292

4,500 4,082 4,082

Dec-13A 16,383

Dec-14F 18,594

Dec-15F 21,910

Dec-16F 24,656

13,707

(19,921)

(10,204)

(10,003)

3,200 (10,612) 0 0 22,678 (44,979) 43,736 4,073 0 2,829 (11,415) 187 0 0

1,144 9,367 0 0 9,184 (23,993) 0 0 0 (23,993) (43,440) 65,001 0 0

1,144 6,188 0 0 19,038 (23,061) 0 0 0 (23,061) 0 0 0 0

1,144 (1,951) 0 0 13,846 (10,078) 0 0 0 (10,078) 0 0 0 0

(5,657) (16,884) 8,623 14,093 25,507

0 21,562 6,753 (58,249) (14,809)

0 0 (4,022) (4,022) (4,022)

0 0 3,768 3,768 3,768

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Dec-13A 17,174 38,685 6,070 9,149 71,078 72,162 16,559 40,284 5,769 134,774 13,637

Dec-14F 23,927 32,541 5,991 9,149 71,608 78,313 16,559 40,284 5,769 140,925 13,637

Dec-15F 19,904 26,397 6,194 9,149 61,645 83,182 16,559 40,284 5,769 145,794 13,637

Dec-16F 23,672 20,254 6,198 9,149 59,272 75,054 16,559 40,284 5,769 137,666 13,637

88,392 5,319 107,348 76,261

63,392 5,319 82,348 32,821

48,392 5,319 67,348 32,821

33,392 5,319 52,348 32,821

17,511 93,772 0 201,120 4,070 662 4,732

17,511 50,332 0 132,680 79,191 662 79,853

17,511 50,332 0 117,680 89,096 662 89,758

17,511 50,332 0 102,680 93,596 662 94,258

Dec-13A 7.6% (2.1%) 17.0% (5.01) 0.28 (0.39) 0.0% NA 114.0 26.91 405.5 (2.16%) (3.04%)

Dec-14F 5.3% 13.5% 18.3% (0.92) 3.22 0.11 0.0% NA 128.3 35.41 445.6 0.77% 0.81%

Dec-15F 7.2% 17.8% 20.2% (1.08) 3.62 1.00 49.3% NA 99.0 34.13 313.1 2.88% 2.94%

Dec-16F 6.1% 12.5% 21.4% (0.93) 3.80 1.73 22.9% NA 74.1 33.20 219.1 4.40% 4.76%

Dec-13A 22.88 1.73 1.69 0.76 4.0 8.3 23 29.1

Dec-14F 23.68 1.65 1.94 0.90 3.9 7.4 22 22.2

Dec-15F 24.65 1.57 2.21 1.13 3.9 7.4 22 19.3

Dec-16F 25.60 1.48 2.48 1.45 3.9 7.4 22 17.5

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 50

45

Group Mobile Subscribers (m) Group Fixed Voice Subscribers (m) Grp fixed brdband subscribers (m) Group Pay TV Subs (m) Group Mobile ARPU (US$/mth) Grp fixed voice ARPU (US$/mth) Grp fixed brdband ARPU (US$/mth) Group Pay TV ARPU (US$/mth)

40 35

30 25 20 15 10 5 0 Jan-10

Jan-11

Advanced Info Service

Jan-12

Jan-13

Total Access Communication

Jan-14 True Corporation

SOURCE: CIMB, COMPANY REPORTS

197

Media - Integrated│THAILAND December 12, 2014

VGI Global Media PCL VGI TB / VGI.BK

Market Cap

Avg Daily Turnover

Free Float

US$1,349m

US$7.12m

36.4%

THB44,273m

THB231.8m

3,432 m shares

Current

THB12.90

Target

THB11.00

Prev. Target

THB11.00

Up/Downside

-14.7% Conviction|

Hope for a better future

CIMB Analyst(s)

Praphan YUKHUNTHORNTHAM T (66) 2 657 9239 E [email protected]

Share price info Share price perf. (%)

1M

3M

12M

Relative

10.5

3.1

-5.7

Absolute

9.3

1.6

Major shareholders

8.4 % held

BTS Thai NVDR State Street Bank Europe Limited

62.2 2.9 2.3

Show Style "View Doc Map"

VGI’s 1HFY3/15 performance missed expectations due to sluggish total advertising spending, which remains under pressure (10M14: -9% yoy). Also, there is a strong possibility that Tesco Lotus will not renew its contract with VGI at the end of this year. We maintain our Reduce rating and DCF-based target price (WACC: 11.2%; LTG: 2%). While in-store advertising picked up in Oct 14, it does not point to a recovery as yet, in our view. Potential de-rating catalysts are 1) slower-than-expected recovery in total advertisement expenditure, and 2) limited advertising rate hike due to the weak economy and lower demand.

Ad (MACO TB) at 24.43%. However, its bid to acquire Tong Hua (TH TB) to get a stake in Aqua Ad (unlisted) failed. VGI is still searching for good deals. Also, VGI entered Laos recently and has plans to enter Cambodia, Myanmar, Lao and Vietnam, and is exploring outdoor media options.

Dominant in transit

Weak total adex in 10M14

VGI is a dominant player in transit advertising and has improved its position in office buildings advertising. However, we believe it will lose market share in in-store advertising if its contract with Tesco Lotus is not renewed. VGI has owned exclusive rights to manage advertising in all Tesco Lotus branches throughout Thailand since 2010. While VGI has just renewed its contract with BigC for the next five years and has signed a new advertising contract with FamilyMart, these would not be enough to offset the missing revenues from Tesco Lotus.

According to a Nielsen survey, total advertising in Oct 14 fell 9.6% yoy, while transit advertising rose 18% yoy and in-store advertising grew 13% yoy. Meanwhile, the total adex fell 8.5% yoy in 10M14; within this, in-store dropped 30% yoy but transit rose 5.7% yoy. 2014 has been a tough year for advertising spending due to the political and economic issues faced by the country. Our economist recently cut 2014 GDP growth forecast to 0.6% yoy from 1.5%.

Expanding outdoor media In order to achieve its target to become a major player in out-of-home media, VGI bought stakes in Midas Global Media (unlisted) and Master

Vol m

Price Close

105.0

11.7

95.0

9.7

85.0

7.7 250 200 150 100 50

75.0

Mar-14

Jun-14

Sep-14

Source: Bloomberg

52-week share price range





Current

Target

Maintain Reduce VGI’s share price rose 32% YTD and may limit upside in the near term. It trades at 34x CY16 P/E, which is higher than its peers.

Financial Summary

Relative to SET (RHS)

13.7

Dec-13

|

Revenue (THBm) Operating EBITDA (THBm) Net Profit (THBm) Core EPS (THB) Core EPS Growth FD Core P/E (x) DPS (THB) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Mar-13A 2,872 1,289 901 0.30 224% 42.93 0.26 2.02% 29.06 150.8 (68.9%) 21.25 85.3%

Mar-14A 3,196 1,511 1,147 0.36 19% 36.18 0.31 2.42% 26.80 157.8 (51.7%) 22.67 60.8%

Mar-15F 3,364 1,601 1,128 0.33 (8%) 39.25 0.31 2.38% 26.94 26.7 (57.4%) 22.02 56.9% 0% 0.96

Mar-16F 3,699 1,781 1,303 0.38 15% 33.98 0.35 2.75% 24.02 32.4 (65.8%) 19.59 61.0% 0% 0.94

Mar-17F 4,287 2,092 1,577 0.46 21% 28.07 0.43 3.33% 20.27 28.2 (71.3%) 16.89 64.6% 0% 0.96

SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

VGI Global Media PCL│Thailand December 12, 2014

Balance Sheet

Profit & Loss (THBm) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Mar-14A 3,196 1,854 1,511 -90 1,420 -1 0 0 1,419 0 1,419 -273

Mar-15F 3,364 1,962 1,601 -211 1,390 0 20 0 1,410 0 1,410 -282

Mar-16F 3,699 2,179 1,781 -175 1,606 0 22 0 1,628 0 1,628 -326

Mar-17F 4,287 2,553 2,092 -147 1,945 0 26 0 1,971 0 1,971 -394

1,147 0

1,128 0

1,303 0

1,577 0

1,147 1,147 1,147

1,128 1,128 1,128

1,303 1,303 1,303

1,577 1,577 1,577

(THBm) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Cash Flow

Mar-15F 1,154 630 19 10 1,812 762 0 24 164 950 0

Mar-16F 1,487 682 17 10 2,196 637 0 24 164 825 0

Mar-17F 1,868 780 14 10 2,672 540 0 24 164 728 0

151 611 762 0

115 611 726 0

125 611 736 0

143 611 753 0

26 26 0 788 1,953 0 1,953

26 26 0 752 2,010 0 2,010

26 26 0 762 2,260 0 2,260

26 26 0 779 2,621 0 2,621

Mar-14A 11.3% 17% 47.3% 0.29 0.57 2,101 19.2% 93.3% 73.12 7.88 44.69 241% 75%

Mar-15F 5.3% 6% 47.6% 0.34 0.59 N/A 20.0% 93.4% 67.09 3.02 34.62 143% 70%

Mar-16F 10.0% 11% 48.2% 0.43 0.66 N/A 20.0% 93.4% 64.92 4.32 28.91 182% 75%

Mar-17F 15.9% 17% 48.8% 0.54 0.76 N/A 20.0% 93.4% 62.27 3.25 28.15 244% 80%

Mar-14A N/A 80.0% N/A 20.0% N/A N/A N/A N/A N/A

Mar-15F N/A 82.0% N/A 20.0% N/A N/A N/A N/A N/A

Mar-16F N/A 84.0% N/A 25.0% N/A N/A N/A N/A N/A

Mar-17F N/A 84.0% N/A 25.0% N/A N/A N/A N/A N/A

Key Ratios

(THBm) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Mar-14A 1,511

Mar-15F 1,601

Mar-16F 1,781

Mar-17F 2,092

154

-73

-41

-78

10 -1 -302 1,372 -558 0 -2 -549 -1,109 0 43

0 0 -282 1,245 -50 0 0 463 413 0 0

0 0 -326 1,415 -50 0 0 0 -50 0 0

0 0 -394 1,620 -50 0 0 1 -49 0 0

-1,014

-1,070

-1,054

-1,217

0 -971 -708 263 264

0 -1,070 588 1,658 1,658

0 -1,054 311 1,365 1,365

0 -1,217 354 1,571 1,571

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (THB) BVPS (THB) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Key Drivers

12-month Forward Rolling FD P/E (x) 45.0 40.0

TV Adex Rate (% Change) Average Utilisation Rate (%) Prime Time Utilisation Rate (%) Non Prime Time Utilisation Rate (%) Programming Costs (% Change) Newsppr adex rev. grth (%) Newspaper ASP (% Change) Newsppr circulation grth (%) Newsprint Cost (% Change)

35.0 30.0

25.0 20.0 15.0

10.0 5.0 0.0 Jan-11

Mar-14A 1,009 607 4 10 1,630 923 0 24 164 1,111 0

Jan-12

Jan-13

Jan-14

BEC World

Major Cineplex Group

Media Chinese Int'l

VGI Global Media PCL

Jan-15 MCOT

SOURCE: CIMB, COMPANY REPORTS

199

Navigating Thailand│2015 December 12, 2014

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200

Navigating Thailand│2015 December 12, 2014

Appendices

201

Navigating Thailand│2015 December 12, 2014

Figure 1: Thailand Valuation Prices as at

11/12/2014

BBG code

Company name

Closing

Target

% up /

Recom. Free Float

Market Cap

Month

Price

price

(down)

(%)

(US$m)

end

19.60

22.80

16%

Agro GFPT TB

GFPT Public Company Limited

749 Add

44%

Banking

749

Dec 13

58,932

Price/ BVPS (X) 2014

2015

ROAE (recurring) %

2016

2014

2015

2016

P/E (Recurrent FD) (X) 2014

2015

2016

2-Yr forward EPS Cagr

Net Gearing FY2014 FY2015

Net Div Yield % 2014

2015

2.8x

2.3x

2.0x

23.8%

23.0%

21.0%

12.7x

11.0x

10.3x

21.7%

20.4%

17.3%

1.8%

2.3%

2.8x

2.3x

2.01x

23.8%

23.0%

21.0%

12.7x

11.0x

10.3x

21.7%

20.4%

17.3%

1.8%

2.3%

1.8x

1.6x

1.5x

16.9%

16.5%

16.4%

11.2x

10.4x

9.4x

6.5%

N.M.

N.M.

3.1%

3.4%

BBL TB

Bangkok Bank

199.5

203.0

2%

Hold

95%

11,600

Dec 13

1.2x

1.1x

1.0x

11.6%

11.5%

11.8%

10.7x

10.0x

9.1x

3.0%

N.M.

N.M.

3.7%

4.0%

KBANK TB

Kasikornbank

242.0

274.0

13%

Add

85%

17,641

Dec 13

2.3x

2.0x

1.7x

19.8%

18.9%

18.1%

12.5x

11.4x

10.3x

11.0%

N.M.

N.M.

1.6%

1.8%

KTB TB

Krung Thai Bank

23.60

28.00

19%

Add

40%

10,047

Dec 13

1.5x

1.3x

1.2x

15.9%

15.8%

16.1%

9.7x

8.8x

7.8x

5.1%

N.M.

N.M.

4.1%

4.5%

SCB TB

Siam Commercial Bank

190.0

203.0

7%

Hold

50%

19,644

Dec 13

2.3x

2.1x

1.8x

20.4%

19.8%

19.7%

11.9x

11.3x

10.5x

6.8%

N.M.

N.M.

3.0%

3.2%

3.3x

3.1x

2.9x

12.3%

11.4%

11.9%

27.8x

27.4x

28.1x

12.7% 111.2% 112.4%

1.2%

1.3%

Construction and Materials CK TB

CH. Karnchang

ITD TB

Italian-Thai Dev elopment

STEC TB

Sino-Thai Eng & Construction

3,792 26.00

30.00

15%

Add

60%

1,341

Dec 13

2.4x

2.2x

2.1x

12.6%

11.2%

11.2%

19.8x

20.6x

18.9x

48.5% 182.6% 180.5%

1.0%

1.2%

7.80

5.25

-33%

Reduce

64%

1,254

Dec 13

2.9x

2.8x

2.7x

4.8%

5.2%

6.5%

64.1x

55.9x

42.8x

-7.0% 263.0% 273.7%

0.6%

0.6%

25.75

23.00

-11%

Reduce

69%

1,196

Dec 13

4.7x

4.3x

3.8x

19.4%

17.9%

18.0%

25.3x

25.0x

22.5x

-3.5% -111.9% -116.9%

1.9%

2.0%

4.4x

4.2x

3.9x

24.5%

19.2%

22.7%

21.7x

22.5x

17.6x

-3.2%

1.8%

-6.5%

2.6%

2.8%

Food

2,459

ICHI TB

Ichitan Group

21.10

26.70

27%

Add

33%

836

Dec 13

4.3x

3.9x

3.5x

29.7%

17.3%

22.7%

20.6x

23.7x

16.4x

0.4%

16.5%

7.0%

2.1%

2.1%

M TB

MK Restaurant Group

58.75

74.00

26%

Add

25%

1,623

Dec 13

4.6x

4.4x

4.2x

19.2%

21.1%

22.8%

22.7x

21.3x

18.9x

-6.7%

-12.8%

-20.0%

3.0%

3.5%

6.4x

5.7x

5.1x

18.8%

20.1%

20.7%

37.4x

31.2x

27.3x

13.3%

9.3%

15.5%

1.3%

1.5%

63.4%

65.5%

1.4%

1.5%

Hospital BCH TB

Bangkok Chain Hospital

BGH TB BH TB

13,505 8.90

9.30

Bangkok Dusit Med Serv ice

18.20

23.80

Bumrungrad Hospital

142.5

125.0

CHG TB

Chularat Hospital

18.60

17.70

MEGA TB

Mega Lifesciences PCL

16.10

25.00

4%

Hold

38%

676

Dec 13

5.3x

4.9x

4.6x

12.3%

14.9%

16.0%

44.3x

34.4x

29.7x

-0.4%

31%

Add

46%

8,588

Dec 13

6.2x

5.6x

5.0x

18.0%

19.2%

20.1%

36.4x

30.7x

26.2x

21.0%

44.3%

42.6%

1.1%

1.4%

-12%

Reduce

39%

3,163

Dec 13

9.5x

8.3x

7.2x

27.3%

26.5%

26.8%

43.8x

39.5x

34.2x

11.3%

-14.2%

-8.8%

1.4%

1.5%

-9%

Reduce

35%

655

Dec 13

7.5x

6.9x

6.5x

18.5%

19.9%

19.8%

42.3x

36.3x

33.9x

13.3%

-33.1%

-8.8%

1.4%

1.7%

55%

Add

25%

424

Dec 13

3.3x

2.8x

2.4x

17.6%

20.1%

20.7%

20.0x

15.2x

12.7x

21.2%

-14.1%

-13.1%

1.3%

1.6%

4.8x

4.3x

3.8x

13.9%

17.3%

18.7%

36.9x

26.1x

21.5x

16.0%

72.2%

60.8%

1.2%

1.3%

4.4x

3.9x

3.6x

10.8%

15.5%

16.9%

41.3x

26.6x

22.0x

15.8%

89.9%

75.3%

1.4%

1.2%

Hotel

5,919

CENTEL TB

Central Plaza Hotel

35.00

38.50

10%

Add

45%

1,439

Dec 13

MINT TB

Minor International

36.75

42.00

14%

Add

51%

4,479

Dec 13

Media

5,750

5.2x

4.6x

4.0x

17.0%

19.1%

20.5%

32.5x

25.6x

20.9x

16.1%

54.5%

46.3%

1.0%

1.3%

10.0x

9.5x

8.8x

37.3%

40.5%

41.0%

23.1x

20.9x

19.3x

1.6%

-22.7%

-25.9%

4.7%

5.1%

BEC TB

BEC World

54.75

49.00

-11%

Hold

60%

3,335

Dec 13

12.5x

12.5x

12.5x

60.8%

68.9%

64.7%

20.5x

18.1x

19.3x

7.5%

-59.8%

-53.3%

5.1%

5.7%

MAJOR TB

Major Cineplex Group

25.75

18.56

-28%

Hold

49%

698

Dec 13

3.8x

3.7x

3.6x

17.9%

21.0%

24.5%

21.4x

18.0x

14.9x

15.7%

51.9%

42.8%

4.4%

5.3%

MCOT TB

MCOT

17.60

24.79

41%

Hold

34%

368

Dec 13

1.5x

1.5x

1.5x

12.5%

12.3%

10.9%

12.2x

12.4x

13.9x

-20.1%

-31.4%

-35.6%

7.0%

6.9%

VGI TB

VGI Global Media PCL

12.90

11.00

-15%

Reduce

36%

1,349

Mar 14

22.2x

20.1x

17.5x

57.8%

59.9%

63.9%

38.4x

35.2x

29.3x

3.4%

-51.7%

-57.4%

2.4%

2.7%

0.9x

0.9x

0.8x

4.7%

7.2%

12.4%

19.4x

12.2x

6.8x

53.8% 102.6%

94.1%

3.8%

4.8%

25.50

35.00

37%

Add

49%

Dec 13

0.9x

0.9x

0.8x

4.7%

7.2%

12.4%

19.4x

12.2x

6.8x

53.8%

94%

3.8%

4.8%

Mining BANPU TB

Banpu

2,005 2,005

103%

SOURCE: CIMB estimates

202

Navigating Thailand│2015 December 12, 2014

Figure 2: Thailand Valuation - cont'd Prices as at

11/12/2014

BBG code

Company name

Closing

Target

% up /

Recom. Free Float

Market Cap

Month

Price

price

(down)

(%)

(US$m)

end

Oil & Gas

47,503

Price/ BVPS (X) 2014

2015

ROAE (recurring) %

P/E (Recurrent FD) (X)

2016

2014

2015

2016

2014

2015

2016

2-Yr forward EPS Cagr

Net Gearing FY2014 FY2015

Net Div Yield % 2014

2015

1.2x

1.1x

1.0x

10.6%

13.4%

12.7%

29.0x

8.5x

8.2x

-0.2%

27.5%

13.4%

3.1%

4.8%

PTT TB

PTT

345.0

436.0

26%

Add

49%

30,016

Dec 13

1.3x

1.2x

1.1x

14.7%

15.5%

14.7%

9.3x

8.1x

7.7x

13.7%

31.8%

24.8%

4.3%

5.0%

PTTEP TB

PTT Ex ploration & Production

122.0

160.0

31%

Hold

34%

14,753

Dec 13

1.2x

1.1x

1.0x

15.5%

14.4%

12.8%

8.2x

8.0x

8.3x

1.3%

8.9%

5.4%

4.4%

4.5%

TOP TB

Thai Oil

44.00

48.00

9%

Hold

40%

2,734

Dec 13

1.0x

0.9x

0.9x

1.4%

10.4%

10.5%

69.6x

9.4x

8.6x

-15.7%

41.8%

9.9%

0.6%

4.8%

2.0x

1.8x

1.6x

13.7%

15.9%

16.6%

17.9x

11.9x

9.9x

6.4%

76.0%

58.1%

3.1%

3.7%

IVL TB

Petrochemical Indorama Ventures

21.70

33.00

52%

Add

35%

27,726 3,182

Dec 13

1.7x

1.5x

1.4x

5.5%

10.2%

12.6%

30.9x

15.8x

11.7x

N.M.

131.7%

112.1%

0.9%

1.7%

PTTGC TB

PTT Global Chemical

55.75

70.00

26%

Add

30%

7,657

Dec 13

1.0x

0.9x

0.9x

13.0%

14.0%

15.2%

7.9x

7.0x

6.1x

4.7%

26.5%

18.8%

5.7%

6.5%

SCC TB

Siam Cement

462.0

553.0

20%

Add

68%

16,887

Dec 13

3.3x

2.8x

2.5x

22.4%

23.6%

22.0%

15.0x

12.9x

12.0x

8.1%

69.7%

43.5%

2.6%

3.0%

11.9x

8.9x

6.8x

23.5%

29.1%

31.4%

49.9x

35.4x

25.1x

125.0%

49.4%

132.1%

0.2%

0.7%

Power

3,758

EA TB

Energy Absolute

26.00

25.00

-4%

Reduce

38%

GUNKUL TB

Gunkul Engineering

30.00

32.00

7%

Add

35%

Property AMATA TB

Amata Corporation

ANAN TB

2,954

Dec 13

16.5x

11.5x

8.3x

31.0%

39.7%

41.9%

61.2x

34.1x

22.9x

212.2%

110.0%

191.3%

0.2%

0.8%

804

Dec 13

7.3x

6.2x

5.3x

16.1%

18.4%

20.9%

38.6x

36.6x

27.3x

37.7%

-11.3%

72.9%

0.3%

0.5%

2.3x

2.0x

1.8x

18.0%

19.4%

19.8%

13.6x

11.2x

9.7x

13.7%

71.3%

58.7%

3.4%

4.2%

19,135 16.50

10.51

-36%

Reduce

62%

536

Dec 13

2.0x

1.8x

1.6x

13.3%

15.8%

17.4%

15.3x

11.8x

9.7x

-0.7%

58.7%

55.7%

2.6%

3.4%

Ananda Dev elopment

3.46

4.22

22%

Add

40%

351

Dec 13

1.7x

1.5x

1.2x

15.0%

16.8%

18.5%

12.3x

9.4x

7.2x

22.7%

70.6%

68.0%

1.5%

1.8%

AP TB

AP (Thailand) PCL

6.45

9.17

42%

Add

64%

618

Dec 13

1.1x

1.0x

0.9x

14.4%

15.0%

16.0%

8.4x

7.0x

6.0x

14.2%

80.9%

69.6%

4.8%

5.7%

CPN TB

Central Pattana

46.50

61.00

31%

Add

45%

6,357

Dec 13

5.1x

4.5x

4.0x

18.2%

19.1%

19.3%

29.4x

24.9x

22.0x

15.4%

42.1%

39.3%

1.4%

1.7%

HEMRAJ TB

Hemaraj

4.28

4.63

8%

Hold

78%

1,265

Dec 13

2.7x

2.4x

2.1x

21.1%

19.8%

20.3%

13.6x

12.8x

11.1x

5.3%

62.1%

55.6%

2.6%

3.2%

LH TB

Land and Houses

9.50

11.32

19%

Hold

54%

3,179

Dec 13

2.6x

2.5x

2.4x

19.7%

20.4%

21.3%

15.3x

15.1x

13.9x

-1.3%

64.5%

54.8%

5.4%

5.9%

LPN TB

LPN Dev elopment

24.90

29.78

20%

Add

46%

1,119

Dec 13

3.5x

2.9x

2.5x

20.8%

26.1%

26.0%

17.6x

12.2x

10.5x

13.6%

38.3%

26.0%

2.8%

4.2%

PS TB

Pruksa Real Estate

30.00

45.95

53%

Add

23%

2,035

Dec 13

2.3x

1.9x

1.6x

22.8%

23.2%

22.4%

10.8x

9.0x

7.8x

13.2%

64.7%

53.2%

2.6%

2.6%

QH TB

Quality Houses

3.92

5.04

29%

Add

41%

1,097

Dec 13

1.9x

1.7x

1.5x

19.6%

20.6%

21.3%

10.1x

8.6x

7.4x

12.8%

109.3%

75.6%

5.0%

5.8%

SC TB

SC Asset Corporation

3.60

4.59

28%

Add

35%

407

Dec 13

1.1x

0.9x

0.8x

10.7%

11.8%

12.0%

11.0x

8.6x

7.2x

19.8%

100.4%

85.0%

3.6%

4.6%

SIRI TB

Sansiri Public Co

1.86

2.12

14%

Hold

58%

772

Dec 13

1.2x

1.0x

1.0x

12.7%

15.5%

16.8%

9.0x

7.0x

6.2x

11.7%

120.2%

93.4%

4.8%

7.1%

SPALI TB

Supalai PCL

26.75

31.92

19%

Add

56%

1,399

Dec 13

2.6x

2.2x

1.8x

28.0%

28.4%

26.8%

10.3x

8.4x

7.4x

37.9%

44.4%

28.8%

3.9%

4.8%

5.8x

5.0x

4.3x

22.4%

25.6%

27.9%

27.2x

21.2x

17.1x

12.7%

65.4%

49.3%

2.2%

2.7%

Retail

20,417

BIGC TB

Big C Supercentre

253.0

212.0

-16%

Reduce

41%

6,358

Dec 13

5.0x

4.4x

3.9x

18.0%

18.2%

18.0%

29.3x

25.6x

22.8x

8.1%

38.7%

24.2%

1.0%

1.2%

CPALL TB

CP All

42.25

54.50

29%

Add

59%

11,561

Dec 13

11.1x

9.1x

7.4x

33.8%

41.0%

40.2%

35.7x

24.4x

20.3x

21.6%

434.3%

347.5%

1.4%

2.1%

JUBILE TB

Jubilee Enterprise

36.00

42.00

17%

Add

48%

191

Dec 13

8.7x

7.4x

6.1x

35.3%

40.6%

46.6%

26.4x

19.7x

14.4x

25.2%

-12.8%

-14.5%

2.3%

3.0%

MC TB

Mc Group

14.00

17.10

22%

Hold

30%

341

Dec 13

3.0x

2.9x

2.7x

19.8%

21.0%

23.8%

15.3x

13.9x

11.7x

-13.2%

-47.6%

-40.8%

5.2%

5.7%

OFM TB

Officemate

49.00

54.00

10%

Hold

24%

478

Dec 13

3.2x

3.0x

2.7x

10.5%

12.1%

14.3%

31.5x

25.5x

19.8x

18.4%

-20.2%

-25.4%

1.0%

1.2%

ROBINS TB

Robinson Department Store

44.00

66.00

50%

Add

38%

1,489

Dec 13

4.0x

3.6x

3.2x

16.7%

20.5%

24.4%

24.8x

18.3x

13.8x

15.9%

0.2%

5.1%

2.0%

2.7%

SOURCE: CIMB estimates

203

Navigating Thailand│2015 December 12, 2014

Figure 3: Thailand Valuation - cont'd Prices as at

11/12/2014

BBG code

Company name

Closing

Target

% up /

Recom. Free Float

Market Cap

Month

Price

price

(down)

(%)

(US$m)

end

Technology

3,883

Price/ BVPS (X)

ROAE (recurring) %

P/E (Recurrent FD) (X)

2014

2015

2016

2014

2015

2016

2014

2015

2016

3.0x

2.6x

2.3x

24.6%

21.0%

22.2%

13.3x

15.5x

11.8x

2-Yr forward EPS Cagr

Net Gearing FY2014 FY2015

Net Div Yield % 2014

2015

2.5%

-3.4%

-18.1%

3.0%

2.8%

DELTA TB

Delta Electronics (Thailand)

77.00

80.00

4%

Hold

37%

2,926

Dec 13

3.5x

3.2x

2.9x

22.3%

22.8%

22.6%

16.3x

14.5x

13.4x

9.7%

-56.9%

-58.3%

3.5%

3.8%

KCE TB

KCE Electronics

38.75

45.00

16%

Add

57%

666

Dec 13

3.7x

2.9x

2.3x

36.0%

31.5%

30.8%

11.3x

10.3x

8.4x

22.7%

77.2%

52.0%

2.2%

2.6%

SVI TB

SVI Public Company Limited

4.22

3.12

-26%

Reduce

44%

291

Dec 13

1.9x

1.8x

1.7x

15.6%

8.8%

13.2%

12.4x

21.5x

13.5x

-24.8%

-30.4%

-47.8%

3.4%

2.1%

7.8x

7.4x

7.2x

40.3%

46.5%

49.3%

4.0x

47.5x

22.7x

18.9%

23.6%

21.4%

3.8%

4.6%

Telecommunications

49,641

ADVANC TB

Adv anced Info Serv ice

245.0

243.0

-1%

Hold

36%

22,187

Dec 13

16.1x

14.7x

14.5x

73.6%

81.4%

86.0%

21.7x

18.9x

17.0x

3.8%

68.0%

82.8%

4.7%

5.4%

DTAC TB

Total Access Communication

99.25

117.0

18%

Add

29%

7,158

Dec 13

6.9x

7.4x

7.8x

34.2%

39.3%

47.5%

20.6x

18.2x

15.9x

10.2%

38.5%

57.5%

6.1%

6.4%

SIM TB

Samart I-Mobile

3.44

4.60

34%

Add

56%

461

Dec 13

4.0x

3.5x

3.0x

30.0%

28.0%

27.5%

14.6x

13.3x

11.7x

16.0%

49.0%

36.2%

2.7%

3.3%

INTUCH TB

Intouch Holdings

76.75

86.00

12%

Add

55%

7,496

Dec 13

17.2x

17.1x

16.9x

109.3%

128.8%

134.0%

15.8x

13.3x

12.7x

16.7%

-14.9%

-15.6%

6.3%

7.5%

JAS TB

Jasmine International

7.60

9.50

25%

Add

65%

1,625

Dec 13

4.1x

3.5x

3.0x

30.7%

32.5%

31.4%

14.4x

11.7x

10.3x

24.4%

-10.4%

-26.3%

4.2%

5.1%

THCOM TB

Thaicom

35.75

52.00

45%

Add

59%

1,193

Dec 13

2.3x

2.1x

2.0x

11.5%

14.3%

14.1%

21.1x

15.5x

14.7x

42.3%

7.0%

-14.6%

2.4%

4.8%

TRUE TB

True Corporation

12.70

10.13

-20%

Reduce

34%

9,519

Dec 13

3.9x

3.5x

3.3x

-7.2%

1.5%

4.5%

-79.9x

241.9x

76.6x

N.A.

28.2%

29.6%

0.0%

0.0%

2.3x

2.3x

2.3x

-2.6%

1.5%

4.2%

-3.2x

29.2x

19.6x

-12.0% 100.6% 114.5%

1.6%

1.7%

Transportation

19,414

AOT TB

Airports of Thailand

285.0

258.0

-9%

Add

30%

12,402

Sep 13

4.1x

3.7x

3.3x

13.4%

15.0%

15.9%

31.7x

25.9x

22.0x

16.6%

5.0%

21.4%

1.2%

1.5%

AAV TB

Asia Av iation PCL

4.66

2.20

-53%

Reduce

40%

688

Dec 13

1.2x

1.2x

1.1x

-0.8%

3.2%

3.9%

-150.9x

36.6x

29.4x

-32.6%

41.3%

54.3%

0.0%

0.0%

BMCL TB

Bangkok Metro

1.86

1.14

-39%

Reduce

28%

1,161

Dec 13

4.6x

5.2x

5.5x

-5.0%

-12.6%

-5.0%

-90.5x

-39.1x

-107.4x

-0.1% 104.9% 130.7%

0.0%

0.0%

BTS TB

BTS Group

10.10

11.00

9%

Add

58%

3,637

Mar 14

2.1x

2.2x

2.2x

4.0%

4.6%

5.1%

52.8x

47.2x

43.8x

19.2%

-38.2%

6.1%

6.5%

PSL TB

Precious Shipping

15.40

18.45

20%

Reduce

40%

488

Dec 13

1.0x

1.0x

1.0x

0.7%

0.7%

0.9%

140.1x

150.4x

112.9x

N.A.

74.4% 111.6%

2.3%

2.3%

THAI TB

Thai Airw ay s International

15.60

10.00

-36%

Reduce

32%

1,037

Dec 13

0.8x

0.8x

0.8x

-28.1%

-1.8%

4.6%

-2.4x

-45.8x

17.2x

-63.4% 417.9% 407.4%

0.0%

0.0%

2.4x

2.2x

2.0x

16.0%

16.8%

17.5%

16.0x

13.5x

11.9x

19.8%

39.4%

23.5%

3.1%

4.3%

29.0%

20.3%

9.5%

1.1%

1.4%

Utilities

7,053

DEMCO TB

Demco PCL

14.40

21.50

GLOW TB

Glow Energy

90.75

RATCH TB

Ratchaburi Electricity

61.25

Stock Exchange of Thailand

-39.9%

49%

Add

70%

304

Dec 13

2.8x

2.4x

2.2x

14.5%

17.3%

17.0%

20.5x

15.1x

13.5x

97.00

7%

Reduce

30%

4,044

Dec 13

2.9x

2.7x

2.7x

21.6%

20.8%

20.9%

14.3x

13.4x

12.7x

9.8%

87.4%

62.3%

4.6%

7.4%

69.00

13%

Add

38%

2,705

Dec 13

1.5x

1.4x

1.3x

12.0%

12.2%

14.5%

13.1x

12.1x

9.4x

20.6%

10.5%

-1.1%

3.7%

3.9%

1,560 SOURCE: CIMB estimates

204

Navigating Thailand│2015 December 12, 2014

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Navigating Thailand│2015 December 12, 2014

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Navigating Thailand│2015 December 12, 2014

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CIMBS has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBS. CIMB Securities (Thailand) Co., Ltd. may act or acts as Market Maker and issuer including offering of Derivative Warrants Underlying securities of the following securities. Investors should carefully read and study the details of the derivative warrants in the prospectus before making investment decisions. AAV, ADVANC, AMATA, ANAN, AOT, AP, ASP, BANPU, BAY, BBL, BCH, BCP, BEC, BECL, BGH, BH, BIGC, BJC, BJCHI, BLA, BLAND, BMCL, BTS, CENTEL, CK, CPALL, CPF, CPN, DCC, DELTA, DEMCO, DTAC, EARTH, EGCO, ERW, ESSO, GFPT, GLOBAL, GLOW, GUNKUL, HEMRAJ, HMPRO, INTUCH, IRPC, ITD, IVL, JAS, KBANK, KCE, KKP, KTB, KTC, LH, LOXLEY, LPN, M, MAJOR, MC, MCOT, MEGA, MINT, NOK, NYT, PS, PSL, PTT, PTTEP, PTTGC, QH, RATCH, ROBINS, RS, SAMART, SCB, SCC, SCCC, SIRI, SPALI, SPCG, SRICHA, STA, STEC, STPI, SVI, TASCO, TCAP, TFD, THAI, THCOM, THRE, THREL, TICON, TISCO, TMB, TOP, TPIPL, TTA, TTCL, TTW, TUF, UMI, UV, VGI, TRUE, WHA. Corporate Governance Report: The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. CIMBS does not confirm nor certify the accuracy of such survey result. Score Range: Description:

90 - 100 Excellent

80 - 89 Very Good

70 - 79 Good

Below 70 or N/A

No Survey Result

United Arab Emirates: The distributor of this report has not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the United Arab Emirates. This report is strictly private and confidential and has not been reviewed by, deposited or registered with UAE Central Bank or any other licensing authority or governmental agencies in the United Arab Emirates. This report is being issued outside the United Arab Emirates to a limited number of institutional investors and must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose. Further, the information contained in this report is not intended to lead to the sale of investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory 207

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of the United Arab Emirates. United Kingdom and Europe: In the United Kingdom and European Economic Area, this report is being disseminated by CIMB Securities (UK) Limited (“CIMB UK”). CIMB UK is authorised and regulated by the Financial Conduct Authority and its registered office is at 27 Knightsbridge, London, SW1X 7YB. This report is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are persons that are eligible counterparties and professional clients of CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”); (c) are persons falling within Article 49 (2) (a) to (d) (“high net worth companies, unincorporated associations etc”) of the Order; (d) are outside the United Kingdom; or (e) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with any investments to which this report relates may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This report is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will be engaged in only with relevant persons. Only where this report is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not constitute independent "investment research" under the applicable rules of the Financial Conduct Authority in the UK. Consequently, any such non-independent report will not have been prepared in accordance with legal requirements designed to promote the independence of investment research and will not subject to any prohibition on dealing ahead of the dissemination of investment research. United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB Research Pte Ltd, CIMB Investment Bank Berhad, PT CIMB Securities Indonesia, CIMB Securities (Thailand) Co. Ltd, CIMB Securities Limited, CIMB Securities (Australia) Limited, CIMB Securities (India) Private Limited, and is distributed solely to persons who qualify as "U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any transactions in the securities discussed herein, or an endorsement of any opinion expressed herein. CIMB Securities (USA) Inc, is a FINRA/SIPC member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc. Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. Distribution of stock ratings and investment banking clients for quarter ended on 30 September 2014 1552 companies under coverage for quarter ended on 30 September 2014 Rating Distribution (%)

Investment Banking clients (%)

Add

54.9%

5.0%

Hold

29.5%

2.3%

Reduce

15.6%

1.0%

CustomSpitzerKR_KRSpitzer Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (Thai IOD) in 2014. AAV – Very Good, ADVANC – Very Good, AEONTS – not available, AMATA - Good, ANAN – Very Good, AOT – Very Good, AP - Good, ASK – Very Good, ASP – Very Good, BANPU – Very Good , BAY – Very Good , BBL – Very Good, BCH – not available, BCP - Excellent, BEAUTY – Good, BEC - Good, BECL – Very Good, BGH - not available, BH - Good, BIGC - Very Good, BJC – Good, BLA – Very Good, BMCL - Very Good, BTS - Excellent, CCET – Good, CENTEL – Very Good, CHG – not available, CK – Very Good, CPALL – not available, CPF – Very Good, CPN - Excellent, DELTA - Very Good, DEMCO – Good, DTAC – Very Good, EA - Good, ECL – not available, EGCO - Excellent, GFPT - Very Good, GLOBAL - Good, GLOW - Good, GRAMMY - Excellent, HANA Excellent, HEMRAJ – Very Good, HMPRO - Very Good, ICHI - not available, INTUCH - Excellent, ITD – Good, IVL - Excellent, JAS – not available, JUBILE – not available, KAMART – not available, KBANK - Excellent, KCE - Very Good, KGI – Good, KKP – Excellent, KTB - Excellent, KTC – Good, LH - Very Good, LPN – Very Good, M - not available, MAJOR - Good, MAKRO – Good, MBKET – Good, MC – Very Good, MCOT – Very Good, MEGA – Good, MINT Excellent, OFM – Very Good, OISHI – Good, PS – Very Good, PSL - Excellent, PTT - Excellent, PTTEP - Excellent, PTTGC - Excellent, QH – Very Good, RATCH – Very Good, ROBINS – Very Good, RS – Very Good, SAMART - Excellent, SAPPE - not available, SAT – Excellent, SAWAD – not available, SC – Excellent, SCB - Excellent, SCBLIF – Good, SCC – Very Good, SCCC - Good, SIM - Excellent, SIRI - Good, SPALI - Excellent, STA – Very Good, STEC - Good, SVI – Very Good, TASCO – Good, TCAP – Very Good, THAI – Very Good, THANI – Very Good, THCOM – Very Good, THRE – not available, THREL – Good, TICON – Good, TISCO - Excellent, TK – Very Good, TMB - Excellent, TOP - Excellent, TRUE – Very Good, TTW – Very Good, TUF - Good, VGI – Very Good, WORK – not available.

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CIMB Recommendation Framework Stock Ratings Definition: Add The stock’s total return is expected to exceed 10% over the next 12 months. Hold The stock’s total return is expected to be between 0% and positive 10% over the next 12 months. Reduce The stock’s total return is expected to fall below 0% or more over the next 12 months. The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months. Sector Ratings Overweight Neutral Underweight

Definition: An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation. A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation. An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.

Country Ratings Overweight Neutral Underweight

Definition: An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark. A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark. An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.

*Prior to December 2013 CIMB recommendation framework for stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand, Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange were based on a stock’s total return relative to the relevant benchmarks total return. Outperform: expected to exceed by 5% or more over the next 12 months. Neutral: expected to be within +/-5% over the next 12 months. Underperform: expected to be below by 5% or more over the next 12 months. Trading Buy: expected to exceed by 3% or more over the next 3 months. Trading Sell: expected to be below by 3% or more over the next 3 months. For stocks listed on Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Outperform: Expected positive total returns of 10% or more over the next 12 months. Neutral: Expected total returns of between -10% and +10% over the next 12 months. Underperform: Expected negative total returns of 10% or more over the next 12 months. Trading Buy: Expected positive total returns of 10% or more over the next 3 months. Trading Sell: Expected negative total returns of 10% or more over the next 3 months.

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Analysts’ Coverage Kasem PRUNRATANAMALA (Head of Equity Research) +66 (2) 657-9221 – [email protected] Property (Contractor) Ch. Karnchang Italian-Thai Development Sino-Thai Engineering and Construction Hotel Central Plaza Hotel Minor International Healthcare Bangkok Chain Hospital Bangkok Dusit Medical Service Bumrungrad Hospital Consumer (Retail) Big C Supercentre CP All Robinson Department Store Suwat SINSADOK, CFA FRM +66 (2) 657-9228 – [email protected] Building Materials (Cement) Siam Cement Chemicals Indorama Ventures PTT Global Chemical Mining Banpu Oil & Gas PTT Plc PTT Exploration and Production Thai Oil Utilities Energy Absolute Gunkul Engineering Ratchaburi Electricity Generating Glow Energy

│

THAILAND

Weerapat WONK-URAI +66 (2) 657-9224 – [email protected] Banking & Finance Bangkok Bank Kasikornbank Krung Thai Bank Siam Commercial Bank Wattaipun EKATAKSIN +66 (2) 657-9229 – [email protected] Property Amata Corporation Hemaraj Land and Development Property (Residential) Ananda Development Asian Property Cnetral Pattana L.P.N. Development Land and Houses Preuksa Real Estate Quality Houses Sansiri SC Asset Corporation Supalai Raymond YAP +60 (3) 2084-9769 – [email protected] Transportation (Shipping) Precious Shipping Transportation (Aviation) Asia Aviation

Retail Research Kitichan SIRISUKACHA +66 (2) 657-9232 – [email protected] Retail Beauty Community Jubilee Enterprise MC Group Officemate Healthcare Chularat Hospital Agribusiness GFPT Food MK Restaurant Group Ichitan Group Telecommunications Samart I-Mobile Praphan YUKHUNTHORNTHAM +66 (2) 657-9239 – [email protected] Transportation BTS Group Bangkok Metro Media & Entertainment VGI Global Media Thanakorn CHONGSUKSIRICHOK +66 (2) 657-9227 – [email protected] Technology Components Delta Electronics (Thai) KCE Electronics SVI Public Company Limited

Pisut NGAMVIJITVONG +66 (2) 657-9226 – [email protected] Media & Entertainment BEC World Major Cineplex Group MCOT Telecommunications Advanced Info Service Jasmine International Shin Corporation Thaicom Total Access Communication True Corporation

Economics Research Arup RAHA (Regional Head of Economics) +(65) 6210-8412 – [email protected]

Julia GOH (Director) +60 (3) 2261-9097 – [email protected]

Jarratt Ma Ching (Senior Associate) +60 (3) 2261-9096 – [email protected]

GOW Jia Rong (Associate) +60 (3) 2261-9083 – [email protected] (as of 11/12/2014)

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Asia China Unit 802 AZIA Center 1233 Lujiazui Ring Road Pudong New District Shanghai 200120 T: +86 (21) 6194-0212 / +86 (21) 6194-0218

Hong Kong Units 7706-08, Level 77 International Commerce Centre 1 Austin Road West Kowloon T: +852 2868-0380 F: +852 2537-1928

India CIMB Securities (India) Pvt. Ltd. Equinox Business Park, Tower III LBS Marq, Off BKC, Kurla (W) Mumbai 400070 T: +91 (22) 4263-0203

Indonesia The Indonesia Stock Exchange Building Tower II, 20th Floor Jl. Jend. Sudirman, Kav. 52-53 Jakarta 12190 T: +62 (21) 515-1330 F: +62 (21) 515-1335

Malaysia Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur. T: +60 (3) 2261 8888 F: +60 (3) 2261 8899

Singapore 50 Raffles Place #19-00 Singapore Land Tower (S048623) T: +65 6225-1228 F: +65 6224-6906

South Korea CIMB Securities Limited, Korea Branch 15F, S-Tower, 116 Shinmun-ro 1-ga Jongro-gu, Seoul 110-700 T: +82 (2) 6730-6000 F: +82 (2) 6730-6183

Sri Lanka Level 33, West Tower World Trade Center Echelon Square Colombo 01

Taiwan CIMB Securities Limited, Taiwan Branch 76F, No. 7, Xin-Yi Road Sec. 5 Taipei City T: +886 (2) 8729-8388 F: +886 (2) 8729-8391

Thailand 132 Sindhorn Tower 3, 12th Floor Wireless Road, Lumpini, Pathumwan Bangkok 10330 T: +66 (2) 841-9000 F: +66 (2) 657-9240

Vietnam CIMB Securities International Ltd. 90 Pasteur Street District 1, HCMC Vietnam T: +84 839146925 F: +84 839 146924

Philippines SB Equities, Inc. (a strategic partner with CIMB Securities) 18F Security Bank Centre 6776 Ayala Ave. Makati 0719 T: +63 (2) 891-1243 / +63 (2) 891-1258 F: +63 (2) 813-3349

Sri Lanka John Keells Stock Brokers (Pvt) Ltd (a strategic partner with CIMB Securities) 130 Glennie Street Colombo 00200 T: +94 (0) 11 230 6271 F: +94 (0) 11 234 2068

Europe

Americas

United Kingdom (2719607) 27 Knightsbridge London, SW1X 7YB T: +44 (20) 7201-2199 F: +44 (20) 7201-2191

USA (52-1971703) 540 Madison Avenue 11th Floor, New York, N.Y. 10022 T: +1 (212) 616 8600 F: +1 (212) 616 8639

Australia Melbourne Level 32, 101 Collins St Melbourne, VIC 3000 +61 3 9631 1000

Sydney Level 29, Aurora Place 88 Phillip Street Sydney, NSW 2000 +61 2 9694 5000

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