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T h a i l a n d D a i l y Friday, 16 May 2014

PLEASE CLICK ON THE PAGE NUMBER TO MOVE TO THE RELEVANT PAGE. KEY INDICES
Symbol Close Chg %Chg
KEY HIGHLIGHTS SET 1,395.21 (0.82) (0.06)
Results SET50 946.88 0.10 0.01
Value (Btm) - SET 36,451,256
Aapico Hitech (AH TB/HOLD/Bt14.50/Target: Bt15.40) Page 2 Top 5 Sector
1Q14: In-line results, positive long-term outlook. Upgrade to HOLD. BANK 522.42 0.52 0.10
PETRO 947.93 4.14 0.44
Bangkok Dusit Medical Services (BGH TB/BUY/Bt15.50/Target: Bt17.00) Page 5
PROP 256.03 (2.45) (0.95)
1Q14: Better than expectation as cost control measures bear fruit. Earnings growth ENERG 19,292.78 (15.43) (0.08)
should continue into the next few years. ICT 219.17 (2.99) (1.35)
Source: Bloomberg
Central Plaza Hotel (CENTEL TB/BUY/Bt30.50/Target: Bt35.50) Page 8
1Q14: Results beat expectations by 10.3%. TOP VOLUME
Chg Volume
Hana Microelectronics (HANA TB/HOLD/Bt35.00/Target: Bt33.00) Page 11 Symbol Price (Bt) (%) (‘000)
SAWAD 14.30 (2.72) 273,026.6
1Q14: Significant gains from flood claims. TRUE 6.75 (4.26) 242,732.9
IEC 0.03 - 166,469.8
Thai Union Frozen Products (TUF TB/BUY/Bt69.50/Target: Bt80.00) Page 14 N-PARK 0.05 (16.67) 164,762.7
1Q14: Earnings in line with our expectation. ICHI 25.50 4.94 144,643.4

Thai Vegetable Oil (TVO TB/BUY/Bt22.40/Target: Bt28.00) Page 17 TOP GAINERS


1Q14: Earnings slightly lower than our expectation. Chg Volume
Symbol Price (Bt) (%) (‘000)
Vinythai (VNT TB/HOLD/Bt10.50/Target: Bt11.20) Page 20 SITHAI 2.10 793.62 38,464.0
ABC 4.96 27.18 0.1
1Q14: Weak results, as expected. THIP 121.50 20.30 98.4
TOG 4.84 18.05 18,374.1
LTX 61.25 16.67 61.7

AT A GLANCE TOP LOSERS


Chg Volume
Corporate Page 23 Symbol Price (Bt) (%) (‘000)
BEC: 1Q14: Results earnings lower than our expectation. NSI 60.50 (19.33) 143.9
METCO 214.00 (19.25) 78.9
SPALI: 1Q14: Results in line with expectation. N-PARK 0.05 (16.67) 164,762.7
WAT 0.05 (16.67) 68,646.6
TICON: 1Q14: Earnings down 84.2% qoq. PT 7.25 (14.20) 2,199.9

Sector Page 25 KEY STATISTICS


-------------%Chg--------------
Property: Sector set to suffer sales decline in 2014. Commodity Current
Price 1m 3M YTD
Brent crude* 109.4 0.1 1.3 0.3
Economics / Politics Page 25 Dubai crude* 105.8 0.3 0.3 (2.0)
Economy: Negative growth seen for 1Q14. Baltic Dry Index 1,021.0 5.3 (7.7) (55.2)
Gold Spot*** 1,295.5 (0.5) (1.8) 7.5
*(US$/bbl), *** (US$/toz)

FOREIGN PORTFOLIO INVESTMENT IN


EQUITIES (THAILAND)
Day MTD Net YTD Net YTD Net
(Mil US$) (Mil US$) (Mil US$) YoY%
18.6 (34.7) (171.8) (5,683.6)

Source: Bloomberg

Foreign Exchange Rate - THB/US$ (onshore) = 32.49


Interest Rate (%) - TH 1-day RP = 2.00
Thai Lending Rate (%)* - MLR = 6.75

* Based on Bangkok Bank’s rate

Refer to last page for important disclosures. 1


T h a i l a n d D a i l y Friday, 16 May 2014

COMPANY RESULTS HOLD


Aapico Hitech (AH TB) (Upgraded)
1Q14: In-line, Positive Long-term Outlook Share Price Bt14.50
AH’s 1Q14 earnings dropped by 45.2% yoy to Bt152.7m, due to high-base effect Target Price Bt15.40
from the first-car scheme and a drop in domestic consumption. Even though the Upside +6.2%
outlook for 2Q14 remains negative on seasonal effect, we have a positive long- (Previous TP Bt13.20)
term outlook on government support and the high average age of domestic
vehicles. Upgrade to HOLD with a new target price of Bt15.40. Entry price is COMPANY DESCRIPTION
Bt13.50. Auto parts manufacturer such as chassis,
forged parts, pressed parts, jigs, dies, door
1Q14 RESULTS check and fuel tanks. The company is also
Year to 31 Dec (Btm) 1Q13 4Q13 1Q14 yoy chg (%) qoq chg (%) engaged in automobile dealership for Ford,
Net turnover 4,542 3,370 3,574 -21.3 6.1 and Mitsubishi in Thailand, Honda in
Gross profit 385 160 220 -42.9 37.5 Malaysia and car navigation businesses.
EBIT 146 -46 46 -68.3 -199.5
EBITDA 327 183 224 -31.5 22.8 STOCK DATA
Net income 279 1 153 -45.2 12,626.3 GICS sector Consumer
EPS 0.86 0.00 0.47 -45.2 12,626.3 Discretionary
Ratio (%) bp yoy bp qoq Bloomberg ticker: AH TB
Gross margin 8.5 4.7 6.1 -2.3 1.4
EBIT margin 3.2 -1.4 1.3 -1.9 2.7 Shares issued (m): 322.6
EBITDA margin 7.2 5.4 6.3 -0.9 0.9 Market cap (Btm): 4,677.5
SGA % of sales 5.3 6.1 4.9 -0.4 -1.3
Market cap (US$m): 144.1
Net margin 6.1 0.0 4.3 -1.9 4.2
Source: AH 3-mth avg daily t'over (US$m): 0.1
RESULTS
Price Performance (%)
• Earnings dropped as expected. Aapico Hitech’s (AH) 1Q14 earnings dropped by 52-week high/low Bt28.00/Bt12.80
45.2% yoy to Bt152.7m, due to high-base effect from the first-car scheme and a drop in 1mth 3mth 6mth 1yr YTD
domestic consumption. Gross margin decreased by 2.3ppt yoy to 6.1% from lower 5.1 (4.0) (11.6) (46.8) (0.7)
utilisation rate. Revenue dropped by 21.3% yoy to Bt3.6b along with total car
Major Shareholders %
production, which also decreased by 28.3% yoy to 517,492 units relative to our
Yeap family 33.0
expectation. AH’s 1Q14 net profit accounts for 30% of our 2014 full-year forecast.
Sojitz corporation 16.0
• Weakest results to be in 2Q14. We expect 2Q14 to be the weakest quarter of the Jurangkool 7.0
year for AH primarily due to the fewer number of production days. As such, its earnings
FY14 NAV/Share (Bt) 11.14
might fall sharply qoq as lower utilisation could affect its gross margin.
FY14 Net Debt/Share (Bt) 15.19

PRICE CHART
(lcy) (%)
KEY FINANCIALS 30
AAPICO HITECH PCL AAPICO HITECH PCL/SET INDEX

110
Year to 31 Dec (Btm) 2012 2013 2014F 2015F 2016F 100
25
Net turnover 16,120 15,627 13,949 14,723 15,566 90

EBITDA 1,004 982 767 780 771 80


20
Operating profit 240 216 86 128 155 70

Net profit (rep./act.) 921 1,463 496 601 677 15


60

Net profit (adj.) 921 1,463 496 601 677 50

EPS (Bt) 2.9 4.5 1.5 1.9 2.1 10


3
40

PE (x) 5.1 3.2 9.4 7.8 6.9 2


Volume (m)

P/B (x) 1.4 1.5 1.3 1.1 1.0 1

EV/EBITDA (x) 9.7 9.9 12.7 12.5 12.6 0


May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14
Dividend yield (n.a.) n.a. n.a. n.a. n.a. n.a.
Net margin (%) 5.7 9.4 3.6 4.1 4.4 Source: Bloomberg
Net debt/(cash) to equity (%) 105.8 82.7 85.1 69.8 56.6
Interest cover (x) 3.5 3.6 3.1 3.2 3.3 ANALYST
ROE (%) 20.8 28.8 9.0 10.0 10.3 Arsit Pamaranont
Consensus net profit - - 535 631 707 +662 659 8317
UOBKH/Consensus (x) - - 0.93 0.95 0.96 arsit@uobkayhian.co.th
Source: Aapico Hitech, Bloomberg, UOB Kay Hian

Refer to last page for important disclosures. 2


T h a i l a n d D a i l y Friday, 16 May 2014

STOCK IMPACT PE BAND


PE(x)
• 2014 car production outlook. We still maintain our forecast that total car production 15.0 +3SD: 13.8x
could reach 2.15m units in 2014 - 0.96m units for domestic sales and 1.2m units for +2SD: 121x
exports. We think domestic car sales should perform in line with our forecast. We still 10.0
+1SD: 10.3x
Mean: 8.6x
have a positive longer-term outlook for this industry, due to a tax exemption programme
-1SD: 6.8x
from the Thai government for stimulating relocation from car makers. We expect total -2SD: 5.1x
5.0
car production could reach 3.0m units in 2019, or at a 6.9% 4-year CAGR.
• Average age of vehicles in Thailand. We expect domestic demand to increase in the -
next few years as the current vehicle age has reached an average of 8.9 years. We Jan-10 Sep-11 May-13

think that in the next 1-2 years, a surge in replacement demand could stimulate Source: Bloomberg, UOB Kay Hian
domestic car sales again as car owners tend to replace their vehicles after 11 years.
CCI & DOMESTIC CAR SALES
EARNINGS REVISION/RISK
90
160,000
• Key risks include: a) decrease in total car production, b) a larger-than-expected plunge 140,000 85
in domestic sales, and c) the political turmoil being extended. 120,000
100,000 80

VALUATION/RECOMMENDATION 80,000
75
60,000
• We think 2Q14 could be the period for accumulating its shares as we expect weak 40,000 70
20,000
2Q14 earnings due to fewer working days (lower utilisation), which could have a - 65
negative impact on the share price.

Ju 1

Ju 2

Ju 3
O 11

O 12

O 13
11

Ja 1
A 12

J a 12
A 13

J a 13
14
-1

-1

-1
-1
l-

l-

l-
n-

n-

-
n-

-
n-
pr

pr

pr
ct

ct

ct
Ja
• Upgrade to HOLD with a target price at Bt15.40 pegged at 10.0x 2014F PE, or +0.5

A
Car Sales Consumer Con.
SD to its 4-year average. We believe that negative factors have been priced in. In the
Source: UTCC, UOB Kay Hian
longer term, the automobile industry could see positive effects from manufacturers’
relocation to Thailand, which will become an ASEAN car manufacturing hub. Entry GROSS MARGIN
price is Bt13.50.
11.0%
SHARE PRICE CATALYST 10.0%

• Thailand International Motor Expo in Nov 14. 9.0%

8.0%

7.0%

6.0%

5.0%

4.0%
1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14

Source: AH, UOB Kay Hian

Refer to last page for important disclosures. 3


T h a i l a n d D a i l y Friday, 16 May 2014

PROFIT & LOSS BALANCE SHEET


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (Btm) 2013 2014F 2015F 2016F
Net turnover 15,627 13,949 14,723 15,566 Fixed assets 6,674 6,428 6,076 5,760
EBITDA 982 767 780 771 Other LT assets 1,843 3,106 3,387 3,696
Deprec. & amort. 766 681 652 616 Cash/ST investment 238 117 450 761
EBIT 216 86 128 155 Other current assets 3,825 3,869 4,061 4,273
Total other non-operating income 1,371 497 517 538 Total assets 12,579 13,519 13,974 14,490
Associate contributions 246 234 281 309 ST debt 2,563 2,825 2,575 2,325
Net interest income/(expense) (273) (251) (241) (232) Other current liabilities 2,360 2,465 2,599 2,729
Pre-tax profit 1,560 567 685 770 LT debt 2,061 2,191 2,251 2,311
Tax (74) (64) (77) (86) Other LT liabilities 124 116 116 116
Minorities (24) (6.6) (6.6) (6.6) Shareholders' equity 5,307 5,759 6,270 6,845
Net profit 1,463 496 601 677 Minority interest 163 163 163 163
Net profit (adj.) 1,463 496 601 677 Total liabilities & equity 12,579 13,519 13,974 14,490

CASH FLOW KEY METRICS


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (%) 2013 2014F 2015F 2016F
Operating 1,961 265 1,161 1,142 Profitability
Pre-tax profit 708 567 685 770 EBITDA margin 6.3 5.5 5.3 5.0
Tax (48) (64) (77) (86) Pre-tax margin 10.0 4.1 4.7 4.9
Deprec. & amort. 766 681 652 616 Net margin 9.4 3.6 4.1 4.4
Associates (246) (234) (281) (309) ROA 11.1 3.8 4.4 4.8
Working capital changes (395) 10 (59) (81) ROE 28.8 9.0 10.0 10.3
Non-cash items 0.0 0.0 0.0 0.0
Other operating cashflows 1,176 (694) 241 232 Growth
Investing (744) (412) (300) (300) Turnover (3.1) (10.7) 5.5 5.7
Capex (growth) (734) (400) (300) (300) EBITDA (2.2) (21.9) 1.7 (1.3)
Capex (maintenance) 0.0 0.0 0.0 0.0 Pre-tax profit 61.6 (63.7) 20.8 12.4
Investments (23) (14) 0.0 0.0 Net profit 58.8 (66.1) 21.1 12.7
Proceeds from sale of assets 12 0.0 0.0 0.0 Net profit (adj.) 58.8 (66.1) 21.1 12.7
Others 0.0 1.6 0.0 0.0 EPS 58.8 (66.1) 21.1 12.7
Financing (1,223) 33 (522) (524)
Dividend payments (180) (99) (90) (102) Leverage
Issue of shares 0.0 0.0 0.0 0.0 Debt to total capital 45.8 45.9 42.9 39.8
Proceeds from borrowings 922 280 210 210 Debt to equity 87.1 87.1 77.0 67.7
Loan repayment (1,732) 200 (400) (400) Net debt/(cash) to equity 82.7 85.1 69.8 56.6
Others/interest paid (232) (348) (241) (232) Interest cover (x) 3.6 3.1 3.2 3.3
Net cash inflow (outflow) (6.0) (114) 339 318
Beginning cash & cash equivalent 207 238 117 450
Changes due to forex impact 37 (6.6) (6.6) (6.6)
Ending cash & cash equivalent 238 117 450 761

Refer to last page for important disclosures. 4


T h a i l a n d D a i l y Friday, 16 May 2014

COMPANY RESULTS BUY


Bangkok Dusit Medical Services (BGH TB) (Maintained)
1Q14: Better-than-expected Results; Maintain BUY Share Price Bt15.50
BGH reported good 1Q14 results and beat our and consensus estimates. The group Target Price Bt17.00
showed that it has found the right balance of cost control and earnings growth. This Upside +9.7%
will be key for sustainable earnings growth going forward. It will also enable BGH to
start looking for new M&A deals to fulfil its ambition of having 50 hospitals. Maintain COMPANY DESCRIPTION
BUY with target price at Bt17.00. A group of leading private hospitals with a
nationwide network. Its proportion of local
1Q14 RESULTS and foreign revenue is currently at 72:28.
Year to 31 Dec 1Q14 1Q13 yoy 4Q13 qoq Remarks Growth drivers come from local and
(Btm) % chg % chg regional expansion via greenfield projects
Increasing number of and mergers & acquisitions.
patients & focus on
higher intensity STOCK DATA
Sales 13,861 12,267 13.0 13,030 6.4 cases GICS sector Health Care
Gross Profit 5,078 4,397 15.5 4,268 19.0
Bloomberg ticker: BGH TB
EBITDA 3,299 2,897 13.9 2,528 30.5 Effective cost control
Pre-tax Profit 2,379 2,115 12.5 1,626 46.3 Shares issued (m): 15,491.0
Tax (453) (410) 10.5 (367) 23.4 Market cap (Btm): 240,109.8
Net Profit 2,075 1,948 6.5 1,417 46.4
Net Profit (Ex EI) 2,075 1,938 7.1 1,395 48.7 Market cap (US$m): 7,395.0
EPS (Bt) 0.13 0.13 0.0 0.09 44.4 3-mth avg daily t'over (US$m): 11.9
Gross margin (%) 36.6 35.8 32.8
EBITDA margin (%) 23.8 23.6 19.4
Net margin (%) 15.0 15.9 10.9 Price Performance (%)
52-week high/low Bt17.45/Bt10.85
Source: BH, UOB Kay Hian
1mth 3mth 6mth 1yr YTD
RESULTS 17.0 27.0 20.6 (10.7) 31.9
• Satisfactory 1Q14 results. Bangkok Dusit Medical Services (BGH) reported better-than- Major Shareholders %
expected 1Q14 results as the group’s cost controls bore fruit. 1Q14 earnings are 5-6% Prasarttong-osoth family 31.2
better than our and consensus forecasts. 1Q14 sales grew impressively by 13% to Tongtang family 15.2
Bt14.9b on increasing number of patients and its focus on higher intensity cases. An
Viriya Insurance 6.2
expansion of two new hospitals in 2013 - Samitivej Thonburi Hospital and Bangkok
Hospital Pitsanulok - also contributed to its revenue growth in this quarter. With the FY14 NAV/Share (Bt) 2.93
centralisation of job allocation, equipment sharing, scaling down of opening of new FY14 Net Debt/Share (Bt) 1.10
hospitals and tight cost control, 1Q14 EBITDA margin was restored to 24%, the same as
in 1Q13. Including lower equity accounting in 1Q14 as there was no gain on sales of PRICE CHART
Ramkhamhaeng Hospital investment as in 1Q13, BGH reported 1Q14 net profit of Bt2.1b,
BANGKOK DUSIT MED SERVICE

an increase of 7% yoy. BGH’s 1Q14 performance was also better qoq as the hospital’s (lcy)
20
BANGKOK DUSIT MED SERVICE/SET INDEX
(%)
120
tight cost control started to bear fruit.
110
18

100
16
90
KEY FINANCIALS 14
Year to 31 Dec (Btm) 2012 2013 2014F 2015F 2016F 80

12
Net turnover 45,305 50,461 57,000 66,272 77,263 70

EBITDA 10,009 10,148 12,286 14,349 16,962 10 60


Operating profit 7,097 6,935 8,834 10,724 13,301 150
Volume (m)
100
Net profit (rep./act.) 7,849 6,261 7,687 9,521 11,841
50
Net profit (adj.) 6,037 6,076 7,687 9,521 11,841
0
EPS (Bt) 0.4 0.4 0.5 0.6 0.8 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14
PE (x) 39.7 39.4 31.2 25.2 20.3
P/B (x) 6.5 5.9 5.3 4.7 4.1 Source: Bloomberg
EV/EBITDA (x) 25.9 25.5 21.1 18.1 15.3
Dividend yield (%) 1.2 1.3 1.6 2.0 2.5 ANALYST
Net margin (%) 17.3 12.4 13.5 14.4 15.3
Net debt/(cash) to equity (%) 43.6 45.8 37.4 26.0 11.2 Kowit Pongwinyoo
Interest cover (x) 11.8 10.6 14.4 21.6 29.4 +662 659 8304
ROE (%) 22.8 16.2 17.9 19.7 21.7 kowit.p@uobkayhian.co.th
Consensus net profit - - 6,949 8,148 9,918
UOBKH/Consensus (x) - - 1.11 1.17 1.19
Source: Bangkok Dusit Medical Services, Bloomberg, UOB Kay Hian

STOCK IMPACT REVENUE BREAKDOWN

Refer to last page for important disclosures. 5


T h a i l a n d D a i l y Friday, 16 May 2014

• Earnings to continue to grow despite the low season in 2Q14. As BGH seemed to
find the right measures to control cost, we expect BGH’s earnings growth to continue in
the following quarters despite its plans to open up to six new hospitals this year. 26% 28% 28% 30%

However, the pace of growth may slow down slightly in 2Q14 as the hospital industry
enters the low season. Earnings growth should come back strongly in 3Q14 as the
74% 72% 72% 70%
industry enters the high season.
• Expect more acquisition of new hospitals soon. With cost control in place, we expect
2011 2012 2013 1Q14F
management may pay more attention on network expansion. In the pipeline is a
schedule to open six new hospitals in 2014, two new hospitals in 2015 and one new
Domestic Foreign
hospital in 2016. This will enable BGH to have 40 hospitals under its umbrella. We
expect more acquisitions soon to fulfil its target to have 50 hospitals under the group. Source: BGH

EARNINGS REVISION/RISK SALES AND CORE PROFIT GROWTH


(Btm) (%)

• Forecasts maintained. Despite better-than-expected earnings, we expect BGH’s 70,000

60,000
70

60
earnings growth momentum should slow down in 2Q14 as the industry braces for the low 50,000 50

season. We therefore maintain our forecasts for sales growth of 13% and 16% in 2014 40,000
27
40
24
and 2015, respectively. Its core profits are forecasted to grow by 27% and 24%, in 2014 30,000 30

20,000 20
and 2015, respectively. 10,000 13
16
10

- 0
VALUATION/RECOMMENDATION 2012 2013 2014F 2015F
Sales Core profit Sales growth yoy Core profit growth

• Maintain BUY. BGH is a good play on earnings recovery as evident in its good 1Q14
Source: BGH,UOB Kay Hian
results. We expect its earnings growth should continue and gather momentum in 3Q14.
We therefore maintain BUY on BGH. It also trades at 31x PE, on a par with the regional QUARTERLY NET PROFIT
(Btm)
peers’ yet offers catalysts on potential M&A deals in the foreseeable future. Current 3500

share price still offers 10% upside to our Bt17.00 target price, based on DCF model at a 3000

discount rate of 8%. 2500

2000

SHARE PRICE CATALYST 1500

1000

• Announcement of M&A deals. 500

PEER COMPARISON 1Q 2Q 3Q 4Q

P/BV EV/EBITDA Div yield ROE Earnings 2012 2013 2014


Company Ticker P/E (x) (x) (x) (%) (%) Growth (%) Source: BGH
2014F 2014F 2014F 2014F 2014F 2014F
Bangkok Dusit BGH TB 31.2 5.1 20.7 1.6 17.1 26.5* QUARTERLY MARGINS
Bumrungrad BH TB 30.1 7.5 18.8 1.8 26.5 12.2*
Bangkok Chain BCH TB 23.9 3.6 11.5 2.7 15.8 27.4* 40%
35%
Raffles Medical RFMD SP 27.4 3.8 20.7 1.5 14.4 5.8 30%

IHH Healthcare IHH MK 42.5 1.8 19.6 0.4 4.3 18.5 25%

KPJ Healthcare KPJ MK 30.3 2.8 16.5 1.6 9.2 6.8 20%

Ramsay RHC AU 28.3 5.6 14.8 1.8 20.1 19.6


15%

10%
Apollo APHS IN 38.3 4.4 19.5 0.6 11.8 7.7 5%

0%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q13 3Q13 4Q13
Local aver. 28.4 5.4 17.0 2.0 19.8 22.0
Total aver. 31.5 4.3 17.8 1.5 14.9 7.3 Gross margin EBITDA margin Net margin

*Core Earnings
Source: Bloomberg, UOB Kay Hian Source: BGH

P/B MEAN AND SD


BV (x)
BGH TB / Forward P/BV
7.0
+2SD: 6.0x
6.0

5.0 +1SD: 4.8x

4.0 Mean: 3.6x

3.0
-1SD: 2.3x
2.0
-2SD: 1.1x
1.0

0.0
Jan-06 Nov-06 Sep-07 Jul-08 May-09 Mar-10 Jan-11 Nov-11 Sep-12 Jul-13 May-1

Source: Bloomberg, UOB Kay Hian

Refer to last page for important disclosures. 6


T h a i l a n d D a i l y Friday, 16 May 2014

PROFIT & LOSS BALANCE SHEET


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (Btm) 2013 2014F 2015F 2016F
Net turnover 50,461 57,000 66,272 77,263 Fixed assets 38,875 41,978 44,069 44,502
EBITDA 10,148 12,286 14,349 16,962 Other LT assets 27,295 27,796 28,313 28,849
Deprec. & amort. 3,213 3,452 3,625 3,661 Cash/ST investment 4,181 1,696 1,782 6,399
EBIT 6,935 8,834 10,724 13,301 Other current assets 6,048 6,817 7,905 9,180
Total other non-operating income 761 777 788 815 Total assets 76,399 78,286 82,070 88,929
Associate contributions 988 1,036 1,203 1,408 ST debt 4,072 3,616 2,116 3,616
Net interest income/(expense) (957) (853) (664) (577) Other current liabilities 7,689 8,613 9,802 11,133
Pre-tax profit 7,727 9,794 12,052 14,946 LT debt 18,729 15,048 12,932 9,316
Tax (1,392) (1,752) (2,170) (2,708) Other LT liabilities 3,265 3,592 3,951 4,346
Minorities (259) (355) (361) (397) Shareholders' equity 40,681 45,356 51,106 58,246
Net profit 6,261 7,687 9,521 11,841 Minority interest 1,963 2,061 2,164 2,272
Net profit (adj.) 6,076 7,687 9,521 11,841 Total liabilities & equity 76,399 78,286 82,070 88,929

CASH FLOW KEY METRICS


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (%) 2013 2014F 2015F 2016F
Operating 8,913 10,210 11,236 12,288 Profitability
Pre-tax profit 6,924 8,758 10,848 13,538 EBITDA margin 20.1 21.6 21.7 22.0
Tax (1,392) (1,752) (2,170) (2,708) Pre-tax margin 15.3 17.2 18.2 19.3
Deprec. & amort. 3,213 3,452 3,625 3,661 Net margin 12.4 13.5 14.4 15.3
Associates 988 1,036 1,203 1,408 ROA 8.6 9.9 11.9 13.8
Working capital changes 353 (249) (1,068) (2,204) ROE 16.2 17.9 19.7 21.7
Non-cash items (914) (681) (842) (1,011)
Other operating cashflows (259) (355) (361) (397) Growth
Investing (9,857) (5,884) (4,152) (1,299) Turnover 11.4 13.0 16.3 16.6
Capex (growth) (9,857) (5,884) (4,152) (1,299) EBITDA 1.4 21.1 16.8 18.2
Financing 1,267 (6,812) (6,998) (6,373) Pre-tax profit (2.9) 26.8 23.0 24.0
Dividend payments (2,782) (3,099) (3,844) (4,760) Net profit (20.2) 22.8 23.8 24.4
Issue of shares 463 0.0 0.0 0.0 Net profit (adj.) 0.6 26.5 23.8 24.4
Proceeds from borrowings 3,586 0.0 0.0 0.0 EPS 0.6 26.3 23.8 24.4
Loan repayment 0.0 (3,712) (3,154) (1,613)
Others/interest paid 0.0 0.0 0.0 0.0 Leverage
Net cash inflow (outflow) 323 (2,485) 87 4,616 Debt to total capital 34.8 28.2 22.0 17.6
Beginning cash & cash equivalent 3,858 4,181 1,696 1,782 Debt to equity 56.0 41.1 29.4 22.2
Ending cash & cash equivalent 4,181 1,696 1,782 6,399 Net debt/(cash) to equity 45.8 37.4 26.0 11.2
Interest cover (x) 10.6 14.4 21.6 29.4

Refer to last page for important disclosures. 7


T h a i l a n d D a i l y Friday, 16 May 2014

COMPANY RESULTS BUY


Central Plaza Hotel (CENTEL TB) (Maintained)
1Q14: Results Beat Expectations By 10.3% Share Price Bt30.50
CENTEL reported a 1Q14 net profit of Bt501.9m, down 22.7% yoy owing to a) poor Target Price Bt35.50
performance of its hotels in Bangkok from political demonstrations and b) increased Upside +16.4%
SG&A expenses for food business. The results were better than our expectation by
10.3% due to better-than-expected hotel revenue and gross margin from hotel COMPANY DESCRIPTION
operations. Maintain BUY in view of CENTEL’s promising long-term earnings outlook CENTEL is Thailand’s leading operator of
and greater flexibility in restaurant portfolio management. Target price: Bt35.50. hotels both in Thailand and overseas, as
1Q14 Results well as Quick Service Restaurant (QSR) in
Thailand. CENTEL is part of Central Group
Year to 31 Dec (Btm) 1Q13 4Q13 1Q14 % qoq % yoy
of companies.
Revenue from hotel business 2,241.2 2,192.7 2,229.6 1.7 -0.5
Revenue from food business 2,150.4 2,327.1 2,286.4 -1.7 6.3
Other income 121.9 104.7 109.5 4.6 -10.2 STOCK DATA
Total revenue 4,513.5 4,624.5 4,625.5 0.0 2.5 GICS sector Consumer
Cost of sales - hotel business (746.5) (803.8) (719.1) -10.5 -3.7 Discretionary
Cost of sales - food business (1,043.8) (1,160.9) (1,141.1) -1.7 9.3 Bloomberg ticker: CENTEL TB
Total cost of sales (1,790.3) (1,964.7) (1,860.2) -5.3 3.9 Shares issued (m): 1,350.0
Gross operating profit from hotel business 1,494.7 1,388.9 1,510.5 8.8 1.1
Gross operating profit from food business 1,106.6 1,166.2 1,145.3 -1.8 3.5
Market cap (Btm): 41,175.0
Total gross operating profit 2,601.3 2,555.1 2,655.8 3.9 2.1 Market cap (US$m): 1,268.1
EBITDA 1,279.6 913.4 1,171.3 28.2 -8.5 3-mth avg daily t'over (US$m): 2.8
Net profit before extra items 649.0 290.3 501.9 72.9 -22.7
Net profit (loss) 649.0 290.3 501.9 72.9 -22.7
Gross operating profit margin from hotel 66.7% 63.3% 67.7% 4.4 1.1 Price Performance (%)
Gross operating profit margin from food 51.5% 50.1% 50.1% 0.0 -1.4 52-week high/low Bt42.75/Bt24.10
Overall gross operating profit margin 59.2% 56.5% 58.8% 2.3 -0.4 1mth 3mth 6mth 1yr YTD
EBITDA margin 28.4% 19.8% 25.3% 5.6 -3.0
1.7 (0.8) (21.8) (19.2) 10.9
Source: CENTEL, UOB Kay Hian
Major Shareholders %
RESULTS
Chirathivat Family 64.0
• 1Q14 net profit dropped 22.7% yoy due to political disturbances and Local Investors 26.0
consumption slowdown. Central Plaza Hotel (CENTEL) posted 1Q14 net profit of Foreign Investors 10.0
Bt501.9m, up 72.9% qoq but down 22.7% yoy. The yoy drop in net profit was owing to
a) poor performance of its hotels in Bangkok as a result of political demonstrations and FY14 NAV/Share (Bt) 8.43
b) increased SG&A expenses for food business. The results were better than our FY14 Net Debt/Share (Bt) 7.43
expectation by 10.3% due to better-than-expected hotel revenue and gross margin from
hotel operations. Its 1Q14 net profit accounted for 33% of our full-year forecast.
PRICE CHART
• Contribution from Maldives resorts partially offset poor performance of Bangkok CENTRAL PLAZA HOTEL PCL
(lcy) (%)
hotels. CENTEL’s revenue from hotel business dropped slightly by 0.5% yoy to 50
CENTRAL PLAZA HOTEL PCL/SET INDEX
140
Bt2,229.6m in 1Q14 since the impressive performance of its resorts in Maldives partially 45
130

offset the negative impact of political turmoil to its hotels in Bangkok and Pattaya. 120
40 110
100
35
KEY FINANCIALS 90
30 80
Year to 31 Dec (Btm) 2012 2013 2014F 2015F 2016F
70
25
Net turnover 14,918 17,557 18,930 21,536 23,528 60

EBITDA 3,200 3,905 4,395 4,896 5,383 20


15
50

Operating profit 1,839 2,327 2,550 2,924 3,294 10


Volume (m)
Net profit (rep./act.) 1,596 1,322 1,521 1,829 2,195 5
Net profit (adj.) 1,064 1,334 1,521 1,829 2,195 0
EPS (Bt) 0.8 1.0 1.1 1.4 1.6 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14

PE (x) 38.7 30.9 27.1 22.5 18.8


P/B (x) 4.6 4.0 3.6 3.3 2.9 Source: Bloomberg
EV/EBITDA (x) 16.3 13.3 11.8 10.6 9.7
Dividend yield (%) 1.0 1.2 1.3 1.6 1.9 ANALYST
Net margin (%) 10.7 7.5 8.0 8.5 9.3 Pornthipa Rayabsangduan
Net debt/(cash) to equity (%) 130.5 103.6 88.1 72.1 54.8 +662 659 8302
Interest cover (x) 6.6 7.7 8.5 9.5 11.8
pornthipa@uobkayhian.co.th
ROE (%) 21.6 13.7 14.0 15.2 17.2
Consensus net profit - - 1,496 1,927 2,294
UOBKH/Consensus (x) - - 1.02 0.95 0.96
Source: Central Plaza Hotel, Bloomberg, UOB Kay Hian

Refer to last page for important disclosures. 8


T h a i l a n d D a i l y Friday, 16 May 2014

Note that Centara Grand Island Resort and Centara Ras Fushi Resort in Maldives OCCUPANCY, ARR AND REVPAR IN 2008-15F
reported strong RevPar growth of 17.5% in 1Q14. In addition, Centara Ras Fushi Resort (Bt)
6,000 81.9% 90.0%
& Spa Maldives, opened on 24 Mar 13, will have a full-year 2014 contribution. RevPar of 79.8%
75.8%
80.0%
5,000 69.9%
its Bangkok hotels declined 44% yoy to Bt1,391 in 1Q14 as a result of a lower occupancy 64.2%
60.5%
58.1%
63.9%
4,166
70.0%

rate of 48% (vs 78% in 1Q13) and a 9% drop in average room rate (ARR). However, 4,000
3,486
3,639 60.0%

50.0%
CENTEL’s hotels in upcountry were less affected as its RevPar managed to be flat yoy at 3,000
2,340
2,617
40.0%
2,162
Bt4,490 in 1Q14. In sum, its RevPar of CENTEL’s hotel portfolio, including resorts in 2,000
1,983 1,979
30.0%

Maldives, increased 6.7% yoy to Bt4,323 in 1Q14, driven by strong ARR growth while 1,000
20.0%

10.0%
occupancy dropped to 75.3% (vs 84.3% in 1Q13). Its gross margin from hotel business - 0.0%
rose to 67.7% in 1Q14 from 66.7% in 1Q13 due to solid ARR growth of 19% to Bt6,103 in 2008 2009 2010 2011 2012 2013 2014F 2015F

RevPar ARR Occupancy rate


1Q14.
Source: CENTEL, UOB Kay Hian
• Gross margin from food business decreased to 50.1% in 1Q14. CENTEL’s revenue
from food business increased 6.3% yoy to Bt2,286.4m in 1Q14 driven by outlet REVPAR EXCLUDING MALDIVES RESORTS
expansion, new menu offerings, continued customer loyalty programme, as well as (Bt)
4,500 40.0%
increased advertising and sales promotions. The number of food outlets as at end-1Q14 4,000
33.2%
35.0%

increased 10.4% yoy to 752. Meanwhile, the average SSS growth in 1Q14 was still 3,500
30.0%
25.0%
18.2%
negative 1.8% due to a slowdown in domestic consumption. Note that SSS growth of 3,000

11.8%
14.5%
20.0%
2,500 15.0%
most food brands except KFC (+2.2%) and Ootoya (+5.7%) was negative. Its gross 2,000 5.7%
4.4%
10.0%

margin from food business declined to 50.1% in 1Q14 compared with 51.5% in 1Q13 but 1,500 -0.2% 5.0%
0.0%
1,000
was flat qoq as a result of higher cost of certain raw food ingredients and packaging 500
-8.3% -5.0%
-10.0%
materials, as well as the increased sales promotions and new menu offerings. -
2,162 1,983 1,979 2,340 2,617 3,486 3,639 4,166
-15.0%
2008 2009 2010 2011 2012 2013 2014F 2015F

EARNINGS REVISION/RISK RevPar RevPar growth

Source: CENTEL, UOB Kay Hian


• Keep our net profit forecasts for 2014-15 unchanged. Key risks include external risks,
deterioration of Thailand’s economic outlook, and the political turmoil. HOTEL REVENUE CONTRIBUTION BY LOCATION IN
1Q14
VALUATION/RECOMMENDATION
Bangkok

• Maintain BUY due to its promising long-term outlook and more flexibility in restaurant
17%

Maldives
portfolio management. CENTEL’s normalised profit is expected to grow strongly at a 23% Hua Hin
10%

CAGR of 19.8% for 2013-15. We maintain our target price for CENTEL at Bt35.50 based on
sum-of-the-parts valuation. We value CENTEL’s hotel business at Bt22.55, pegged at 14.3x Hat Yai
2%
Mae Sot
2014F EV/EBITDA, and its restaurant business at Bt12.95, based on 21.9x 2014F PE. 0.4%

Sam ui Krabi
SHARE PRICE CATALYST 8% 7%

• The addition of a new food brand. Pattaya


Phuket
19% 15%

• Acquisition of hotel properties abroad.


Source: CENTEL, UOB Kay Hian
• Sale of hotel properties in Thailand and overseas to a REIT in 2014.

SSSG, TSS GROWTH & NUMBER OF OUTLETS


(outlets)
30.0% 900
795
743
25.0% 677 750
603
20.0% 511 512 600
478
14.8%
15.0% 14.0% 450

10.0% 300
6.2%

5.0% 150
1.5% 0.9% 1.0%
9.1% 2.3% 15.4% 23.7% 27.1% 9.7% 11.5%
0.0% 0
2008 2009 2010 2011 2012 2013 2014F
-5.0% -150
-4.5%

-10.0% -300
SSS TSS No. of outlets

Source: CENTEL, UOB Kay Hian

Refer to last page for important disclosures. 9


T h a i l a n d D a i l y Friday, 16 May 2014

PROFIT & LOSS BALANCE SHEET


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (Btm) 2013 2014F 2015F 2016F
Net turnover 17,557 18,930 21,536 23,528 Fixed assets 22,945 21,446 22,334 22,911
EBITDA 3,905 4,395 4,896 5,383 Other LT assets 3,803 6,021 5,809 5,669
Deprec. & amort. 1,578 1,846 1,972 2,089 Cash/ST investment 742 220 749 408
EBIT 2,327 2,550 2,924 3,294 Other current assets 1,722 1,917 2,173 2,361
Total other non-operating income 0.0 0.0 0.0 0.0 Total assets 29,212 29,604 31,064 31,349
Associate contributions 22 12 12 12 ST debt 3,512 3,419 4,219 4,419
Net interest income/(expense) (507) (515) (515) (454) Other current liabilities 2,906 3,349 3,780 4,090
Pre-tax profit 1,842 2,047 2,420 2,851 LT debt 7,943 6,833 5,660 3,762
Tax (453) (464) (518) (568) Other LT liabilities 3,699 3,751 3,806 3,863
Minorities (55) (61) (74) (89) Shareholders' equity 10,344 11,383 12,657 14,184
Net profit 1,322 1,521 1,829 2,195 Minority interest 807 869 942 1,031
Net profit (adj.) 1,334 1,521 1,829 2,195 Total liabilities & equity 29,212 29,604 31,064 31,349

CASH FLOW KEY METRICS


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (%) 2013 2014F 2015F 2016F
Operating 3,140 3,664 4,039 4,483 Profitability
Pre-tax profit 1,842 2,047 2,420 2,851 EBITDA margin 22.2 23.2 22.7 22.9
Tax (453) (464) (518) (568) Pre-tax margin 10.5 10.8 11.2 12.1
Deprec. & amort. 1,578 1,846 1,972 2,089 Net margin 7.5 8.0 8.5 9.3
Associates (22) (12) (12) (12) ROA 4.6 5.2 6.0 7.2
Working capital changes 195 248 176 122 ROE 13.7 14.0 15.2 17.2
Other operating cashflows 0.0 0.0 0.0 0.0
Investing (2,002) (2,500) (2,582) (2,458) Growth
Capex (growth) (2,385) (2,517) (2,600) (2,400) Turnover 17.7 7.8 13.8 9.3
Investments 162 0.0 0.0 0.0 EBITDA 22.0 12.6 11.4 9.9
Others 221 17 18 (58) Pre-tax profit 29.9 11.1 18.3 17.8
Financing (753) (1,686) (928) (2,365) Net profit (17.2) 15.1 20.2 20.0
Dividend payments (405) (483) (555) (668) Net profit (adj.) 25.4 14.0 20.2 20.0
Issue of shares 0.0 0.0 0.0 0.0 EPS 25.4 14.0 20.2 20.0
Proceeds from borrowings (599) (1,203) (373) (1,698)
Others/interest paid 251 0.0 0.0 0.0 Leverage
Net cash inflow (outflow) 385 (521) 529 (341) Debt to total capital 50.7 45.6 42.1 35.0
Beginning cash & cash equivalent 356 742 220 749 Debt to equity 110.7 90.1 78.1 57.7
Ending cash & cash equivalent 742 220 749 408 Net debt/(cash) to equity 103.6 88.1 72.1 54.8
Interest cover (x) 7.7 8.5 9.5 11.8

Refer to last page for important disclosures. 10


T h a i l a n d D a i l y Friday, 16 May 2014

COMPANY RESULTS HOLD


HANA Microelectronics (HANA TB) (Maintained)
1Q14: Significant Gain From Flood Claims Share Price Bt35.00
HANA’s net profit excluding claims increased 60.1% qoq and 66.5% yoy to Bt240m, Target Price Bt33.00
while normalised net profit soared to Bt1,590m due to flood claims. Although the Upside -2.9%
new Lamphun plant 2 would increase IC production capacity by 25%, we think (Previous TP Bt23.00)
share price has reflected the growth catalysts. Maintain HOLD. Target price:
Bt33.00. Entry price: Bt30.00. COMPANY DESCRIPTION
Electronics manufacturing service
1Q14 RESULTS company. The major product groups are
Year to 31 Dec (Btm) 1Q13 4Q13 1Q14 qoq % chg yoy % chg PCBA, IC, LED and LCE assembly
Net turnover 3,622 4,818 4,670 3.2 28.9
Gross profit 174 595 581 2.5 233.1
STOCK DATA
EBIT -59 425 341 24.7 -680.5
GICS sector Information Technology
EBITDA 245 703 630 11.7 156.7
Net income 144 614 1,590 -61.4 1,002.0 Bloomberg ticker: HANA TB
Net income (excl. claims) 144 385 240 60.1 66.5 Shares issued (m): 804.9
EPS excl. claims (Bt) 0.18 0.48 0.30 60.1 66.5 Market cap (Btm): 27,365.9
Ratio (%) bp qoq bp yoy
Market cap (US$m): 844.0
Gross margin 4.8 12.4 12.4 0.1 7.6
EBIT margin -1.6 8.8 7.3 -1.5 8.9 3-mth avg daily t'over (US$m): 1.6
EBITDA margin 6.8 14.6 13.5 -1.1 6.7
SGA % of sales 6.3 4.4 5.0 0.7 -1.3 Price Performance (%)
Net margin 4.0 12.7 34.1 21.3 30.1 52-week high/low Bt34.00/Bt18.70
Net margin (excl. claims) 4.0 8.0 5.1 -2.8 1.2 1mth 3mth 6mth 1yr YTD
Source: Hana Microelectronics, UOB Kay Hian
13.3 36.0 45.9 40.5 34.7
RESULTS Major Shareholders %
• Gains from flood claims. HANA Microelectronics’ (HANA) net profit excluding claims OMAC (HK) Limited 21.0

increased 60.1% qoq and 66.5% yoy to Bt240m, while normalised net profit soared to OMAC (Thailand) Limited 5.0
Bt1,590m on flood claims (business interruption claims) of Bt1.3b from. Revenue Rainbow Joy Limited 5.0
increased 19% yoy in US$ terms from US$120m to US$143m, while the Thai baht FY14 NAV/Share (Bt) 22.26
depreciated 9% yoy to Bt32.66/US$, which led to sales rising 29% yoy. In addition, FY14 Net Cash/Share (Bt) 7.90
gross margin was maintained at 12.4% due to the weakening baht.
• Outstanding claims. HANA still has outstanding claims of around Bt81m, which will be PRICE CHART
recognised in 2014. (lcy)
HANA MICROELECTRONICS PCL

HANA MICROELECTRONICS PCL/SET INDEX


(%)
45
190
40
170

KEY FINANCIALS 35
150
Year to 31 Dec (Btm) 2012 2013 2014F 2015F 2016F 30
130

Net turnover 17,233 17,667 20,857 21,449 22,515 25 110


EBITDA 1,811 2,108 2,767 2,931 3,215 20 90
Operating profit 582 923 1,511 1,593 1,797 15 70
Net profit (rep./act.) 1,661 2,337 3,471 2,136 2,357 8
Volume (m)
6
Net profit (adj.) 1,261 1,396 2,040 2,136 2,357 4
2
EPS (Bt) 1.6 1.7 2.5 2.7 2.9 0
May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14
PE (x) 21.7 19.6 13.4 12.8 11.6
P/B (x) 1.8 1.6 1.5 1.5 1.4
Source: Bloomberg
EV/EBITDA (x) 11.6 10.0 7.6 7.2 6.5
Dividend yield (%) 4.4 4.4 6.3 4.7 5.2 ANALYSTS
Net margin (%) 9.6 13.2 16.6 10.0 10.5
Arsit Pamaranont
Net debt/(cash) to equity (%) (20.7) (25.1) (35.5) (39.9) (44.2) +662 659 8317
Interest cover (x) 242.1 243.9 251.2 258.9 180.8 arsit@uobkayhian.co.th
ROE (%) 11.3 14.8 20.1 11.6 12.2 Thailand Research Team
Consensus net profit - - 1,898 2,168 2,514 +662 659 8033
UOBKH/Consensus (x) - - 1.08 0.99 0.94 research@uobkayhian.co.th
Source: Hana Microelectronics, Bloomberg, UOB Kay Hian

Refer to last page for important disclosures. 11


T h a i l a n d D a i l y Friday, 16 May 2014

STOCK IMPACT PE BAND


PE(x)
• Catalysts from new plants. We expect the Lamphun plant 2 to commence operations 18
+3SD: 16.5x
in 2Q14, which would increase IC production capacity by 25%. We also expect the plant
15 +2SD: 14.1x
in Koh Kong province, Cambodia, which focuses on low-end and labour-intensive
12 +1SD: 11.6x
products to serve CLMV (Cambodia, Laos, Myanmar, and Vietnam) markets, could start
Mean: 9.1x
operations within 4Q14-1Q15. We think these two plants could increase overall capacity 9
by 30% in 2015. We have not included the new plant in Cambodia into our valuation. 6 -1SD: 6.7x

EARNINGS REVISION/RISK 3 -2SD: 4.3x

• We raise our assumptions for capacity from Lamphun Plant by 25%, utilisation rate, -
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
gross margin by 0.5ppt, and flood claims from Bt1,000m to Bt1,431m.
EARNINGS REVISION Source: Bloomberg, UOB Kay Hian
2014F 2014F chg 2015F 2015F chg
Year to 31 Dec (Btm) Old New (%) Old New (%) BOOK-TO-BILL RATIO
(x)
Net turnover 19,394 20,857 7.5 20,624 21,449 4.0 1.60
Net profit 2,742 3,470 26.6 1,954 2,136 9.3 +3SD: 1.4x
1.40
Net profit excl. claims 1,742 2,039 17.1 1,954 2,136 9.3 +2SD: 1.2x
1.20
+1SD: 1.1x
EPS (adj) (Bt) 3.4 4.3 26.6 2.4 2.7 9.3 Mean: 1.0x
1.00
EPS excl. claims (adj) (Bt) 2.2 2.5 17.1 2.4 2.7 9.3
0.80
Source: UOB Kay Hian -1SD: 0.8x
0.60 -2SD:0.7x
• Key risks include: a) low utilisation rate of new plants, b) the Cambodian plant may face
0.40
bureaucratic problems, and c) fluctuations in the Thai baht. Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan-
04 05 06 07 08 09 10 11 12 13 14
VALUATION/RECOMMENDATION
• We think share price has reflected the growth catalysts from capacity expansion and Source: SEMI, UOB Kay Hian
new customers. But HANA is a good dividend stock, and we forecast a dividend yield
6.0% in 2014-15.
• Maintain HOLD with a new target price at Bt33.00, pegged at 13.0x 2014F PE, or
+1.5SD to its 4-year mean of 9.1x, reflecting growth from the new plant and industry
upturn, as seen in the book-to-bill ratio at above 1.0x. Entry price is Bt30.00.
SHARE PRICE CATALYST
• Capacity expansion from new plants.

Refer to last page for important disclosures. 12


T h a i l a n d D a i l y Friday, 16 May 2014

PROFIT & LOSS BALANCE SHEET


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (Btm) 2013 2014F 2015F 2016F
Net turnover 17,667 20,857 21,449 22,515 Fixed assets 6,691 6,534 6,195 5,778
EBITDA 2,108 2,767 2,931 3,215 Other LT assets 188 34 33 33
Deprec. & amort. 1,184 1,256 1,339 1,417 Cash/ST investment 4,186 6,413 7,537 8,768
EBIT 923 1,511 1,593 1,797 Other current assets 9,092 9,026 9,207 9,520
Total other non-operating income 1,485 2,057 643 675 Total assets 20,157 22,007 22,973 24,099
Associate contributions 0.0 0.0 0.0 0.0 ST debt 16 55 57 59
Net interest income/(expense) (8.6) (11) (11) (18) Other current liabilities 3,161 3,634 3,728 3,892
Pre-tax profit 2,399 3,556 2,225 2,455 LT debt 0.0 0.0 0.0 0.0
Tax (62) (85) (89) (98) Other LT liabilities 386 401 417 434
Minorities 0.0 0.0 0.0 0.0 Shareholders' equity 16,594 17,917 18,772 19,714
Net profit 2,337 3,471 2,136 2,357 Minority interest 0.0 0.0 0.0 0.0
Net profit (adj.) 1,396 2,040 2,136 2,357 Total liabilities & equity 20,157 22,007 22,973 24,099

CASH FLOW KEY METRICS


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (%) 2013 2014F 2015F 2016F
Operating 3,236 4,936 3,344 3,579 Profitability
Pre-tax profit 2,399 3,556 2,225 2,455 EBITDA margin 11.9 13.3 13.7 14.3
Tax (108) (85) (89) (98) Pre-tax margin 13.6 17.1 10.4 10.9
Deprec. & amort. 1,184 1,256 1,339 1,417 Net margin 13.2 16.6 10.0 10.5
Associates 0.0 0.0 0.0 0.0 ROA 12.3 16.5 9.5 10.0
Working capital changes (165) 257 (103) (177) ROE 14.8 20.1 11.6 12.2
Non-cash items (11) (385) (101) (101)
Other operating cashflows (64) 337 73 82 Growth
Investing (1,606) (686) (997) (997) Turnover 2.5 18.1 2.8 5.0
Capex (growth) (1,427) (1,000) (1,000) (1,000) EBITDA 16.4 31.3 6.0 9.7
Capex (maintenance) 0.0 0.0 0.0 0.0 Pre-tax profit 38.7 48.2 (37.4) 10.3
Investments 105 6.2 1.9 2.0 Net profit 40.8 48.5 (38.5) 10.3
Proceeds from sale of assets 460 0.0 0.0 0.0 Net profit (adj.) 10.7 46.2 4.7 10.3
Others (744) 308 0.7 0.8 EPS 10.7 46.2 4.7 10.3
Financing (1,216) (1,696) (1,280) (1,411)
Dividend payments (1,207) (1,736) (1,281) (1,414) Leverage
Issue of shares 0.0 0.0 0.0 0.0 Debt to total capital 0.1 0.3 0.3 0.3
Proceeds from borrowings 0.0 0.0 0.0 0.0 Debt to equity 0.1 0.3 0.3 0.3
Loan repayment (8.5) 39 1.5 2.7 Net debt/(cash) to equity (25.1) (35.5) (39.9) (44.2)
Others/interest paid (0.7) 0.0 0.0 0.0 Interest cover (x) 243.9 251.2 258.9 180.8
Net cash inflow (outflow) 414 2,553 1,066 1,170
Beginning cash & cash equivalent 3,111 4,186 6,413 7,537
Changes due to forex impact 661 (326) 58 61
Ending cash & cash equivalent 4,186 6,413 7,537 8,768

Refer to last page for important disclosures. 13


T h a i l a n d D a i l y Friday, 16 May 2014

COMPANY RESULTS BUY


Thai Union Frozen Products (TUF TB) (Maintained)
1Q14: Earnings In Line With Our Expectation Share Price Bt69.50
TUF posted a net profit of Bt950m in 1Q14, which was in line with our expectation at Target Price Bt80.00
Bt1,013m. 1Q14 earnings were up 41% yoy but down 18% qoq owing to out-of-sales Upside +15.1%
seasonality. We maintain the view that 1Q14 earnings would be the bottom of this
year as the shrimp business tends to gradually improve in the next quarter. Maintain COMPANY DESCRIPTION
BUY with a target price at Bt80.00. Manufactures and exports frozen and
canned seafood. Its comprehensive
1Q14 Results business covers canned food, frozen food
Year to 31 Dec 1Q13 4Q13 1Q14 yoy qoq Remarks and various types of snacks, especially
(Btm) % chg % chg seafood. Also, its businesses include
Sales 24,441 30,788 27,948 14 -9 Sales declined qoq packaging and publishing, animal feed,
owing to out-of-sales fishing fleet.
seasonality
Gross profit 2,665 3,976 4,158 56 5 STOCK DATA
GICS sector Consumer Staples
SG&A expense 2,242 2,627 2,715 21 3
Other income 348 792 163 -53 -79
Bloomberg ticker: TUF TB
EBT 520 1,479 1,151 121 -22 Shares issued (m): 1,147.6
EBIT 883 2,000 1,625 84 -19 Market cap (Btm): 79,757.8
Net profit 674 1,151 950 41 -18 Market cap (US$m): 2,456.4
3-mth avg daily t'over (US$m): 4.1
Ratio-%
Gross margins 10.9 12.9 14.9 Price Performance (%)
EBITDA margins 5.7 8.7 7.9 52-week high/low Bt71.75/Bt44.00

Net margins 2.8 3.7 3.4 1mth 3mth 6mth 1yr YTD
Source: TUF, UOB Kay Hian 1.5 4.9 9.4 8.6 (3.1)
RESULTS Major Shareholders %
Mr. KRAISORN CHANSIRI 9.0
• 1Q14 earnings increased 41% yoy but decreased 18% qoq. Thai Union Frozen
Products (TUF) posted a net profit of Bt950m in 1Q14, which was in line with our Mr. THIRAPHONG CHANSIRI 5.2

expectation. Sales grew 14% yoy due to baht depreciation and higher sales of tuna, Mr. CHENG NIRUTTINANON 4.9
shrimp & related business, pet food and value-added & other products. However, sales in
FY14 NAV/Share (Bt) 37.47
1Q14 dropped 9% qoq owing to the low selling season. Gross margin improved from 13%
FY14 Net Debt/Share (Bt) 33.44
in 4Q13 to 15% in 1Q14 thanks to higher margin of branded tuna from declining raw
material cost. In addition, a foreign exchange gain of Bt254m supported earnings in 1Q14.
1Q14 revenue comprised tuna at 48%, shrimp and related business at 23%, sardine & PRICE CHART
mackerel at 6%, salmon at 4%, pet food at 8% and value added and other products at (lcy)
THAI UNION FROZEN PROD PUB

THAI UNION FROZEN PROD PUB/SET INDEX


(%)
100 160
11%. 150
90
140
130
80
120
KEY FINANCIALS 70 110
Year to 31 Dec (Btm) 2012 2013 2014F 2015F 2016F 100
60
90
Net turnover 106,698 112,813 127,313 147,516 171,212 80
50
EBITDA 8,772 6,311 9,609 11,407 13,060 70

Operating profit 6,869 3,988 7,340 9,176 10,829 40


15
60

Net profit (rep./act.) 4,694 3,189 5,098 6,776 8,309 10


Volume (m)
Net profit (adj.) 4,694 3,189 5,098 6,776 8,309 5
EPS (Bt) 4.1 2.8 4.4 5.9 7.2 0
PE (x) 17.0 25.0 15.6 11.8 9.6 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14

P/B (x) 2.1 2.0 1.9 1.7 1.7


EV/EBITDA (x) 13.9 19.4 12.7 10.7 9.4 Source: Bloomberg
Dividend yield (%) 3.0 2.1 3.2 4.2 5.2
Net margin (%) 4.4 2.8 4.0 4.6 4.9 ANALYST
Net debt/(cash) to equity (%) 89.0 104.8 89.2 87.8 88.6 Thunya Sutavepramochanon
Interest cover (x) 3.8 3.8 4.3 4.9 5.6 +662 659 8031
ROE (%) 15.2 8.3 12.4 15.2 18.2 thunya@uobkayhian.co.th
Consensus net profit - - 5,140 6,273 7,201
UOBKH/Consensus (x) - - 0.99 1.08 1.15
Source: Thai Union Frozen Products Plc., Bloomberg, UOB Kay Hian

Refer to last page for important disclosures. 14


T h a i l a n d D a i l y Friday, 16 May 2014

STOCK IMPACT SHRIMP PRICES


shrimp 2011
• Brighter outlook in the following quarters. TUF viewed that the tuna business would price 2012
Bt/kg.
do well as there should be higher consumption and sales volume from more retailers’ 2013

promotional activities thanks to relatively lower tuna raw material prices in 2014. In 2014
300
addition, gross margin in OEM tuna may gradually improve qoq given more timely price 250
adjustment when raw material price stabilises and orders pick up while gross margin of 200
150
branded business should benefit from lower cost of raw material. For shrimp business, 100
TUF still maintained the view of supply improvement in 2H14 and the whole year output 50
0
would vary from 250,000 tons to 300,000 tons. However, we noticed shrimp price has
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
dropped to Bt210 per kg from average price of Bt260 in Apr 14, which should be a
Source: CPF
positive sign of the EMS problem easing. In addition, TUF expected lower per unit
overhead cost and improving production efficiency from the integration of PPC’s and
TUF’s shrimp plant facilities in 1Q14, which should support cost control in the shrimp SALES BREAKDOWN BY COUNTRIES IN 1Q14
business going forward. Furthermore, TUF believed that US Pet Nutrition would
breakeven in 2H14 as the market has grown with demand becoming inelastic and with
margin improving.
• 1Q14 earnings should be the quarterly bottom of this year. Given the above-
mentioned outlook and the high selling season for both tuna and shrimp in 2Q and 3Q,
we believe that 1Q14 earnings would be the quarterly bottom of this year.
EARNINGS REVISION/RISK
• No significant changes for earnings projection in 2014-15. We project revenue growth for
2014 at 13% and gross margin at 14.5%, which both are in line with management
guidance.
VALUATION/RECOMMENDATION
• Maintain BUY with a target price of Bt80.00, pegged at 18.00x 2014F PE, +1.5SD to its
5-year mean at 13x.
Source: TUF
SHARE PRICE CATALYST
• The EMS problem being resolved.

Refer to last page for important disclosures. 15


T h a i l a n d D a i l y Friday, 16 May 2014

PROFIT & LOSS BALANCE SHEET


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (Btm) 2013 2014F 2015F 2016F
Net turnover 112,813 127,313 147,516 171,212 Fixed assets 21,473 18,250 18,842 19,259
EBITDA 6,311 9,609 11,407 13,060 Other LT assets 31,273 31,273 31,273 30,202
Deprec. & amort. 2,323 2,270 2,231 2,231 Cash/ST investment 1,621 1,913 1,659 1,286
EBIT 3,988 7,340 9,176 10,829 Other current assets 53,924 55,523 61,843 67,425
Total other non-operating income 1,465 681 700 734 Total assets 108,290 106,959 113,617 118,171
Associate contributions 176 (25) 0.0 0.0 ST debt 33,452 15,899 18,000 19,500
Net interest income/(expense) (1,655) (2,221) (2,329) (2,329) Other current liabilities 13,478 11,129 12,266 13,633
Pre-tax profit 4,309 6,180 7,547 9,234 LT debt 9,598 24,389 24,389 24,389
Tax (495) (765) (755) (923) Other LT liabilities 8,414 8,414 8,414 8,414
Minorities (626) (317) (16) (0.8) Shareholders' equity 39,536 43,000 46,412 48,098
Net profit 3,189 5,098 6,776 8,309 Minority interest 3,811 4,128 4,136 4,136
Net profit (adj.) 3,189 5,098 6,776 8,309 Total liabilities & equity 108,290 106,959 113,617 118,171

CASH FLOW KEY METRICS


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (%) 2013 2014F 2015F 2016F
Operating 3,871 11,008 6,854 6,363 Profitability
Pre-tax profit 4,309 6,180 7,547 9,234 EBITDA margin 5.6 7.5 7.7 7.6
Tax (495) (765) (755) (923) Pre-tax margin 3.8 4.9 5.1 5.4
Deprec. & amort. 2,323 2,270 2,231 2,231 Net margin 2.8 4.0 4.6 4.9
Associates 0.0 25 0.0 0.0 ROA 3.1 4.7 6.1 7.4
Working capital changes (4,294) 3,654 (2,330) (4,530) ROE 8.3 12.4 15.2 18.2
Non-cash items 0.0 0.0 0.0 0.0
Other operating cashflows 2,027 (356) 161 352 Growth
Investing (5,564) (3,500) (3,500) (3,500) Turnover 5.7 12.9 15.9 16.1
Capex (growth) (4,206) (3,500) (3,500) (3,500) EBITDA (28.1) 52.3 18.7 14.5
Investments (1,594) 0.0 0.0 0.0 Pre-tax profit (22.9) 43.4 22.1 22.3
Others 236 0.0 0.0 0.0 Net profit (32.1) 59.9 32.9 22.6
Financing 2,348 (7,216) (3,608) (3,236) Net profit (adj.) (32.1) 59.9 32.9 22.6
Dividend payments (1,836) (2,549) (3,388) (4,155) EPS (32.1) 59.9 32.9 22.6
Issue of shares 0.0 0.0 0.0 0.0
Proceeds from borrowings n.a. n.a. n.a. n.a. Leverage
Loan repayment 5,763 (2,763) 2,101 1,500 Debt to total capital 49.8 46.1 45.6 45.7
Others/interest paid (1,579) (1,904) (2,321) (582) Debt to equity 108.9 93.7 91.3 91.2
Net cash inflow (outflow) 655 292 (254) (373) Net debt/(cash) to equity 104.8 89.2 87.8 88.6
Beginning cash & cash 1,400 1,621 1,913 1,659 Interest cover (x) 3.8 4.3 4.9 5.6
equivalent
Changes due to forex impact (434) 0.0 0.0 0.0
Ending cash & cash equivalent 1,621 1,913 1,659 1,286

Refer to last page for important disclosures. 16


T h a i l a n d D a i l y Friday, 16 May 2014

COMPANY RESULTS BUY


Thai Vegetable Oil (TVO TB) (Maintained)
1Q14: Earnings Slightly Lower Than Our Expectation Share Price Bt22.40
TVO posted net profit of Bt519m in 1Q14, slightly lower than our expectation of Target Price Bt28.00
Bt570m. Earnings surged 692% yoy and 11% qoq, thanks to wider gross margins for Upside +25.0%
both soybean meal and soybean oil. Although 1Q14 earnings could likely be the (Previous TP Bt29.00)
quarterly peak for this year, 3Q14 earnings may possibly be healthy, benefitting from
rising soybean prices in the US as a result of the El Nino effect expected in Jun 14. COMPANY DESCRIPTION
Maintain BUY. Target price: Bt28.00. Manufactures and distributes soy meal and
soybean oil
1Q14 Results
Year to 31 Dec 1Q13 4Q13 1Q14 yoy qoq Remarks STOCK DATA
(Btm) % chg % chg
GICS sector Consumer Staples
Sales 6,730 7,160 6,699 0 -6 Sales dropped slighlty
qoq from lower selling Bloomberg ticker: TVO TB
volume of soybean Shares issued (m): 808.6
meal.
Gross profit 122 633 874 619 38 Market cap (Btm): 18,112.9
SG&A expense 144 186 227 58 22 Market cap (US$m): 557.9
Other income 138 -101 8 -94 -108 3-mth avg daily t'over (US$m): 0.9
EBT 112 342 652 483 91
EBIT 116 345 655 468 90
Net profit 66 466 519 692 11 Price Performance (%)
52-week high/low Bt23.90/Bt16.90
Ratio (%) 1mth 3mth 6mth 1yr YTD
Gross margin 1.81 8.84
13.05 (2.2) 9.8 22.4 6.7 21.1
EBITDA margin 2.99 5.94 11.11 Major Shareholders %
Net margin 0.97 6.50 7.75
Miss SUDARATH VITAYATANAGORN 7.2
Source: TVO, UOB Kay Hian
MR. VICHAI VITAYATHANAGORN 6.6
RESULTS
MRS. RATTANA CHANPITAKSA 5.2
• 1Q14 net profit surged 692% yoy and 11% qoq. Thai Vegetable Oil (TVO) posted a net FY14 NAV/Share (Bt) 9.94
profit of Bt519m in 1Q14, slightly lower than our expectation. The yoy earnings surge was
FY14 Net Debt/Share (Bt) 1.24
due to a low base in 1Q13 which was impacted by high inventory cost carried over from
4Q12. Sales dropped 6% qoq because of lower selling volume of soybean meal. Gross
PRICE CHART
margin improved from 9% in 4Q13 to 13% in 1Q14, thanks to better gross margins for
THAI VEGETABLE OIL PCL
both soybean meal and soybean oil as soybean meal prices increased in 1Q14 due to a (lcy)
THAI VEGETABLE OIL PCL/SET INDEX
(%)
30 150
drought in Brazil while the shortage of supply of domestic palm oil has resulted in a 140
narrower price gap between soybean oil and palm oil in 1Q14, reducing the price 130
competition between the two products. There was also a foreign exchange loss of Bt56m 25
120

in 1Q14. 110

100
20
KEY FINANCIALS 90

Year to 31 Dec (Btm) 2012 2013 2014F 2015F 2016F 80

15 70
Net turnover 27,350 25,762 27,258 27,371 27,948 6

EBITDA 2,550 1,584 2,074 1,963 1,608 4


Volume (m)

Operating profit 2,219 1,258 1,679 1,550 1,608 2

Net profit (rep./act.) 1,775 959 1,421 1,310 1,415 0


May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14
Net profit (adj.) 1,775 959 1,421 1,310 1,415
EPS (Bt) 2.4 1.3 1.9 1.7 1.9
PE (x) 9.5 17.6 11.8 12.8 11.9 Source: Bloomberg
P/B (x) 2.5 2.5 2.3 2.2 2.0
EV/EBITDA (x) 7.5 12.1 9.3 9.8 12.0 ANALYST
Dividend yield (%) 8.0 3.7 5.5 5.1 5.5 Thunya Sutavepramochanon
Net margin (%) 6.5 3.7 5.2 4.8 5.1 +662 659 8031
Net debt/(cash) to equity (%) 62.3 47.2 12.5 14.4 14.2 thunya@uobkayhian.co.th
Interest cover (x) 115.6 102.6 156.8 143.9 117.9
ROE (%) 28.6 14.2 20.0 17.2 18.0
Consensus net profit - - 1,471 1,432 1,478
UOBKH/Consensus (x) - - 0.97 0.92 0.96
Source: TVO., Bloomberg, UOB Kay Hian

Refer to last page for important disclosures. 17


T h a i l a n d D a i l y Friday, 16 May 2014

STOCK IMPACT SOYBEAN MEAL PRICES


• 2Q14 earnings may decline qoq on rising inventory cost while 3Q14 earnings
could be strong if El Nino occurs. We view the upward trend in domestic soybean
meal prices since Aug 13 on concerns over the drought in Brazil would turn down soon
as the harvest season in Brazil would nearly be over in May 14 while The US
Department of Agriculture’s (USDA) report in May has lowered its soybean price
forecast for this year from US$13.10/bushel to US$9.75-11.75/bushel due to better
yields and larger harvest area. Thus, we expect TVO’s 2Q14 earnings to drop qoq as
inventory cost rise while the average price of soybean meal may decline slightly qoq
and would result in a lower gross margin for soybean meal. In addition, gross margin of
Source: CPF
soybean oil in 2Q14 would also be pressured by rising palm oil output from seasonal
effect. We are more positive on 3Q14 earnings if El Nino occurs in Jun 14 as TVO views
soybean prices may surge to more than US$16/bushel and this should raise its earnings
in 3Q14.
EARNINGS REVISION/RISK
• We trim our net profit forecast for 2014 by 3% to reflect the slightly lower-than-expected
1Q14 earnings.
VALUATION/RECOMMENDATION
• Maintain BUY with a lower target price of Bt28.00, pegged at 16x 2014F PE, +0.75SD to
its 5-year mean of 11.8x.
SHARE PRICE CATALYST
• An economic recovery.

• Rising palm oil prices, which should reduce pressure on soybean oil prices.
• The successful development of a new product, Eproxidize soybean oil, in 2015 should
be a catalyst for TVO as the product may have the highest gross margin among TVO’s
products
• Japan’s lifting of a ban on raw chicken from Thailand since end-13 may stimulate
soybean meal demand from 2014 as this is animal feed.
• TVO is seeking for new businesses as it aims to be a more globalised company.

Refer to last page for important disclosures. 18


T h a i l a n d D a i l y Friday, 16 May 2014

PROFIT & LOSS BALANCE SHEET


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (Btm) 2013 2014F 2015F 2016F
Net turnover 25,762 27,258 27,371 27,948 Fixed assets 2,563 3,158 3,045 3,616
EBITDA 1,584 2,074 1,963 1,608 Other LT assets 232 232 632 632
Deprec. & amort. 326 395 412 0.0 Cash/ST investment 112 410 216 162
EBIT 1,258 1,679 1,550 1,608 Other current assets 8,004 7,314 7,383 7,531
Total other non-operating income 93 33 37 40 Total assets 10,911 11,114 11,277 11,941
Net interest income/(expense) (15) (13) (14) (14) ST debt 3,217 1,303 1,300 1,300
Pre-tax profit 1,335 1,699 1,573 1,635 Other current liabilities 677 2,036 1,855 1,989
Tax (127) (189) (181) (188) LT debt 66 40 40 40
Minorities (34) (33) (32) (32) Other LT liabilities 78 78 78 78
Net profit 959 1,421 1,310 1,415 Shareholders' equity 6,724 7,474 7,789 8,287
Net profit (adj.) 959 1,421 1,310 1,415 Minority interest 150 183 215 247
Total liabilities & equity 10,911 11,114 11,277 11,941

CASH FLOW KEY METRICS


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (%) 2013 2014F 2015F 2016F
Operating 2,261 3,676 1,672 1,731 Profitability
Pre-tax profit 1,335 1,699 1,573 1,635 EBITDA margin 6.2 7.6 7.2 5.8
Tax (127) (189) (181) (188) Pre-tax margin 5.2 6.2 5.7 5.8
Deprec. & amort. 326 395 412 0.0 Net margin 3.7 5.2 4.8 5.1
Working capital changes 1,143 1,859 (50) (113) ROA 8.4 12.9 11.7 12.3
Non-cash items (188) 0.0 0.0 0.0 ROE 14.2 20.0 17.2 18.0
Other operating cashflows (229) (89) (82) 397
Investing (120) (800) (900) (900) Growth
Capex (growth) (125) 0.0 0.0 0.0 Turnover (5.8) 5.8 0.4 2.1
Investments (5,160) (800) (900) (900) EBITDA (37.9) 30.9 (5.4) (18.1)
Others 5,166 0.0 0.0 0.0 Pre-tax profit (34.3) 27.3 (7.4) 3.9
Financing (2,143) (2,579) (966) (885) Net profit (46.0) 48.2 (7.8) 8.0
Dividend payments (1,050) (671) (995) (917) Net profit (adj.) (46.0) 48.2 (7.8) 8.0
Issue of shares 0.0 0.0 0.0 0.0 EPS (46.0) 48.2 (7.8) 8.0
Proceeds from borrowings n.a. n.a. n.a. n.a.
Loan repayment 95 (105) (3.0) 0.0 Leverage
Others/interest paid (1,188) (1,802) 32 32 Debt to total capital 32.3 14.9 14.3 13.6
Net cash inflow (outflow) (2.7) 297 (194) (54) Debt to equity 48.8 18.0 17.2 16.2
Beginning cash & cash equivalent 115 112 410 216 Net debt/(cash) to equity 47.2 12.5 14.4 14.2
Changes due to forex impact 0.0 0.0 0.0 0.0 Interest cover (x) 102.6 156.8 143.9 117.9
Ending cash & cash equivalent 112 410 216 162

Refer to last page for important disclosures. 19


T h a i l a n d D a i l y Friday, 16 May 2014

COMPANY RESULTS HOLD


Vinythai (VNT TB) (Maintained)
1Q14: Weak Results, As Expected Share Price Bt10.50
VNT reported 1Q14 net profit of Bt96m, down 30% yoy but a reversal from a loss of Target Price Bt11.20
Bt13m in 4Q13, in line with our expectation. Going forward, we expect VNT to still Upside +6.7%
deliver earnings of around Bt90m-100m in 2Q14. Maintain HOLD. Target price:
Bt11.20. Entry price: Bt10.00. COMPANY DESCRIPTION
Petrochemical ( PVC producer).
1Q14 Results
Year to 31 Dec 1Q14 1Q13 4Q13 yoy qoq STOCK DATA
(Btm) % chg % chg
Revenue 4,583 4,516 4,415 1.5 3.8
GICS sector Materials
Gross profit 373 498 260 (25.0) 43.7 Bloomberg ticker: VNT TB
Other income/(exp) 7 62 58 (88.6) (87.8) Shares issued (m): 1,185.2
SG&A (271) (407) (325) (33.4) (16.7)
Int. exp (39) (35) (48) 10.1 (19.0) Market cap (Btm): 12,444.5
Net profit 96 138 (13) (29.9) (869.2) Market cap (US$m): 383.8
EPS 0.08 0.12 (0.01)
Source: VNT, UOB Kay Hian
3-mth avg daily t'over (US$m): 0.0
Price Performance (%)
RESULTS
52-week high/low Bt16.20/Bt9.90
• Weak results, as expected. VNT reported 1Q14 net profit of Bt96m, down 30% yoy but
1mth 3mth 6mth 1yr YTD
a turnaround from a loss of Bt13m in 4Q13. The results were in line with our expectation
(1.9) (4.5) (5.4) (36.0) 0.0
but slighly above consensus forecast, representing 25% of our full-year forecast of
Bt395m. Major Shareholders %
- -
• Revenue growth continued, gross margin in line. Despite technical problems in the
production line, revenue slightly increased 1.5% yoy and 3.8% qoq to Bt4.5b, thanks to FY14 NAV/Share (Bt) 13.06
higher PVC demand in this region. Gross margin was 8.1%, up from 5.9% in 4Q13 but FY14 Net Debt/Share (Bt) 1.38
down from 11% in 1Q13, close to our full-year estimation.
PRICE CHART
• Gradual improvement in ECH business. The 1Q14 results showed some improvement VINYTHAI PUBLIC CO LIMITED
(lcy) (%)
in the epichlorohydrin (ECH) production business. After its commercial operation in 3Q12, 18
VINYTHAI PUBLIC CO LIMITED/SET INDEX
110
the segment had been performing poorly over the last two years, mainly due to weak 100
16
ECH spread and huge set-up expense from the expansion phase in China. However, the
90
segment posted a loss of only Bt94m in 1Q14, smaller than a loss of Bt213m in 1Q13, 14
80
thanks to a delay of ECH construction in China and rising ECH price. 12
70

10
60

KEY FINANCIALS 8
10
50

Year to 31 Dec (Btm) 2012 2013 2014F 2015F 2016F Volume (m)
5
Net turnover 16,933 17,332 20,676 22,462 25,570
EBITDA 1,657 116 389 472 573 0
May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14
Operating profit 1,657 116 389 472 573
Net profit (rep./act.) 1,562 198 395 488 565 Source: Bloomberg
Net profit (adj.) 1,562 198 395 488 565
EPS (Bt) 1.3 0.2 0.3 0.4 0.5 ANALYST
PE (x) 8.0 62.8 31.5 25.5 22.0 Arsit Pamaranont
P/B (x) 0.7 0.8 0.8 0.8 0.8 +662 659 8317
EV/EBITDA (x) 8.5 121.2 36.2 29.8 24.6 arsit@uobkayhian.co.th
Dividend yield (%) 8.2 1.9 2.9 3.3 3.3
Net margin (%) 9.2 1.1 1.9 2.2 2.2
Net debt/(cash) to equity (%) 6.0 11.9 10.6 7.2 6.3
Interest cover (x) 13.3 0.7 2.3 3.0 3.3
ROE (%) 9.4 1.2 2.5 3.1 3.6
Consensus net profit - - 357 450 645
UOBKH/Consensus (x) - - 1.11 1.08 0.88
Source: VNT, Bloomberg, UOB Kay Hian

Refer to last page for important disclosures. 20


T h a i l a n d D a i l y Friday, 16 May 2014

STOCK IMPACT GROSS MARGIN


1Q14 1Q13 4Q13
• Going forward, we expect VNT to still deliver earnings of around Bt90m-100m in 2Q14,
a turnaround from a loss of Bt70m in 2Q13 and flat qoq. We expect price and spread for Gross margin 8.1% 11.0% 5.9%
Source: VNT
both PVC and ECH to remain stable in 2Q14 due to stability of its feedstock cost-
Ethylene- at around US$1,400/tonne while PVC price will still be maintained at
US$1,024/tonne.
EARNINGS REVISION/RISK
• We keep our 2014-15 net profit forecasts unchanged. Note that 1Q14 net profit
represents 25% of our full-year forecast of Bt395m.
VALUATION/RECOMMENDATION
• Maintain HOLD with target price of Bt11.20. pegged at 0.8x 2014F P/B, a discount
from regional peers’ 1.7x, implying –1SD from 5-year historical average P/B. Although we
believe VNT’s earnings can continue to rebound in 2H14, upside from the current level
seems limited. Entry price: Bt10.00.

SHARE PRICE CATALYST


• 2H14: Improving China economy.

Refer to last page for important disclosures. 21


T h a i l a n d D a i l y Friday, 16 May 2014

PROFIT & LOSS BALANCE SHEET


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (Btm) 2013 2014F 2015F 2016F
Net turnover 17,332 20,676 22,462 25,570 Fixed assets 14,841 14,539 14,186 13,784
EBITDA 116 389 472 573 Other LT assets 1,595 387 390 393
Deprec. & amort. 0 0 0 0 Cash/ST investment 1,513 1,461 1,982 2,108
EBIT 116 389 472 573 Other current assets 3,835 4,308 4,482 5,101
Total other non-operating income 180 195 195 195 Total assets 21,783 20,694 21,041 21,386
Associate contributions (1) 25 30 35 ST debt 333 0 0 0
Net interest income/(expense) (163) (170) (155) (175) Other current liabilities 2,125 2,126 2,399 2,595
Pre-tax profit 133 439 542 628 LT debt 3,095 3,095 3,095 3,095
Tax 66 (44) (54) (63) Other LT liabilities 85 0 0 0
Net profit 198 395 488 565 Shareholders' equity 16,145 15,473 15,546 15,696
Net profit (adj.) 198 395 488 565 Total liabilities & equity 21,783 20,694 21,041 21,386

CASH FLOW KEY METRICS


Year to 31 Dec (Btm) 2013 2014F 2015F 2016F Year to 31 Dec (%) 2013 2014F 2015F 2016F
Operating 1,336 2,348 1,937 1,540 Profitability
Pre-tax profit 198 395 488 565 EBITDA margin 0.7 1.9 2.1 2.2
Tax n.a. n.a. n.a. n.a. Pre-tax margin 0.8 2.1 2.4 2.5
Deprec. & amort. 1,398 1,302 1,352 1,402 Net margin 1.1 1.9 2.2 2.2
Working capital changes (149) (472) 100 (424) ROA 0.9 1.9 2.3 2.7
Other operating cashflows (112) 1,123 (3) (3) ROE 1.2 2.5 3.1 3.6
Investing (1,316) (1,000) (1,000) (1,000)
Capex (growth) (815) (1,000) (1,000) (1,000) Growth
Others (501) 0 0 0 Turnover 2.4 19.3 8.6 13.8
Financing (499) (1,400) (415) (415) EBITDA (93.0) 234.8 21.3 21.3
Dividend payments (1,056) (356) (415) (415) Pre-tax profit (92.2) 231.2 23.5 15.8
Proceeds from borrowings 428 (333) 0 0 Net profit (87.3) 99.4 23.5 15.8
Others/interest paid 128 (711) 0 0 Net profit (adj.) (87.3) 99.4 23.5 15.8
Net cash inflow (outflow) (479) (52) 522 125 EPS (87.3) 99.4 23.5 15.8
Beginning cash & cash equivalent 1,991 1,513 1,461 1,982
Ending cash & cash equivalent 1,513 1,461 1,982 2,108 Leverage
Debt to total capital 17.5 16.7 16.6 16.5
Debt to equity 21.2 20.0 19.9 19.7
Net debt/(cash) to equity 11.9 10.6 7.2 6.3
Interest cover (x) 0.7 2.3 3.0 3.3

Refer to last page for important disclosures. 22


T h a i l a n d D a i l y Friday, 16 May 2014

CORPORATE
BEC WORLD PUBLIC COMPANY (BEC TB/BUY/Bt52.00/Target:Bt67.50)
1Q14: Results Earnings Lower Than Our Expectation
Year to 31 Dec 1Q13 4Q13 1Q14 yoy qoq Remarks
(Btm) (Btm) (Btm) %chg %chg
Sales 3,815 4,073 3,751 -2% -8% Sales dropped both yoy and qoq due
to the impact from political turmoil
Gross profit 2,192 2,266 1,926 -12% -15%
SG&A expense 421 547 474 13% -13%
Other income 57 57 60 4% 4%
EBT 1,780 1,726 1,459 -18% -15%
EBIT 1,780 1,728 1,462 -18% -15%
Net profit 1,381 1,341 1,149 -17% -14%
Ratio-%
Gross margins 57% 55% 51%
EBITDA 59% 56% 54%
margins
Net margins 36% 32% 30%
DE-x - - -
Source: BEC, UOB Kay Hian
Result: BEC posted 1Q14 earnings at Bt1,149 m, down 17% yoy and 14% qoq. The results were lower than our expectation due to larger-
than-expected impact from the political unrest.
Impact: Sales declined 2% yoy and 8% qoq due to lower advertising revenue as a result of the sluggish economic as well as the political
turmoil. Gross margin decreased from 55% in 4Q13 to 51% in 1Q14 following the economic downturn and more investment in both
instruments and human resources.
Recommendation: We still maintain our BUY recommendation with a target price at Bt 67.50 , pegged at 24x 2014F PE but plan to revise
down our earnings forecast to reflect the lower-than-expected 1Q14 earnings after attending the analysts’ meeting today.

Supalai (SPALI TB/BUY/Bt18.90/Target: Bt23.00)


1Q14: Results In Line With Expectation
Year to 31 Dec 1Q13 4Q13 1Q14 q-q y-y

(Btm) (Btm) (Btm) %chg %chg 2014F % of 14F


Sales & Services 2,105.8 6,713.8 3,215.8 -52.1% 52.7% 18,333.9 17.5%
Gross Profit 868.0 2,762.9 1,351.7 -51.1% 55.7% 7,362.3 18.4%
EBITDA 591.8 2,245.6 981.3 -56.3% 65.8% 5,294.3 18.5%
Interest Expense 21.8 12.0 48.2 301.2% 121.1% 179.0 26.9%
Corporate Tax 110.6 440.7 187.6 -57.4% 69.6% 1,034.4 18.1%
Forex Gain (Loss) - - - n.a. n.a. - n.a.
Other Extraordinary Items - - - n.a. n.a. - n.a.
Gn (Ls) from Affiliates - - - n.a. n.a. - n.a.
Net profit (Loss) 471.2 1,757.9 741.2 -57.8% 57.3% 4,007.1 18.5%
Normalized Profit (Loss) 471.2 1,757.9 741.2 -57.8% 57.3% 4,007.1 18.5%
Reported EPS (THB) 0.27 1.02 0.43 -57.8% 57.3% 2.33 18.5%
Gross Margin (%) 41.2% 41.2% 42.0% 40.2%
EBITDA Margin (%) 28.1% 33.4% 30.5% 28.9%
Net Margin (%) 22.4% 26.2% 23.0% 21.9%
Current Ratio (x) 2.8 2.3 2.7 2.9
Interest Coverage (x) 13.2 16.7 17.7 16.1
Debt to Equity (x) 0.3 0.6 0.6 0.6
BV (THB) 7.54 8.30 8.73 9.8
ROE (%) 14.8% 52.6% 20.3% 25.9%
Source: SPALI, UOB Kay Hian

Refer to last page for important disclosures. 23


T h a i l a n d D a i l y Friday, 16 May 2014

Results: SPALI reported 1Q14 net profit of Bt741.2m, down 57.8% qoq but up 57.3% yoy. The results were in line with our expectations.
Revenue from residential sales declined 52.9% qoq but increased 54.3% yoy to Bt3,126.8m in 1Q14, driven by the continued unit transfers
at Supalai Premier Ratchathewi project. Condo contributed 54% of total revenue from residential sales in 1Q14 while the rest came from
low-rise housing projects. Its gross margin from residential sales widened to 41.9% in 1Q14 compared with 40.6% in 1Q13 and 41.2% in
4Q13. Meanwhile, its SG&A expenses-to-revenue ratio in 1Q14 fell to 11.5% vs 14.0% in 1Q13 due to a larger revenue base.
Recommendation: We maintain our BUY rating on its strong growth prospects with high earnings visibility, solid balance sheet position,
and cheap valuations. Our TP of Bt23.00 is based on 9.8x PE, which is in line with -0.5SD to its historical average PE since 2012.

Ticon Industrial Connection (TICON TB/BUY/Bt14.90/Target: Bt19.00)


1Q14: Earnings Down 84.2% qoq
Year to 31 Dec 1Q13 4Q13 1Q14 qoq yoy Remarks
(Btm) (Btm) (Btm) % chg % chg
Due to sale of factories and warehouses to
Rental income 269.5 247.1 202.0 -18.3% -25.0% TGROWTH in 4Q13.
Revenue from
construction services 7.8 25.1 16.1 -35.8% 106.0%
Recorded the sale of properties to
Revenue from property TGROWTH amounting to Bt414.2m and
sales - 4,558.2 498.2 -89.1% n.a. TFUND worth Bt84m.
Utility income 7.7 4.7 5.1 9.3% -33.2%
Total revenue 285.0 4,835.1 721.4 -85.1% 153.2%
EBITDA 417.0 1,296.8 287.1 -77.9% -31.1%
EBIT 311.8 1,209.0 287.1 -76.3% -7.9%
Due to lower rental income, the absence of
insurance claims for flooded properties and
no gain on sales of investments in TFUND
and TLOGIS in 1Q14, increased SG&A
Net profit 254.9 907.2 143.7 -84.2% -43.6% expenses, and higher interest expenses.
Gross margin%
Rental 66.8% 77.2% 75.4% -1.8% 8.6%
Construction services 20.2% 24.7% 8.4% -16.2% -11.8%
Property sales n.a. 38.2% 62.4% 24.1% n.a.
Overall gross margin% 63.7% 40.1% 64.4% 24.3% 0.7%
EBITDA margin% 146.3% 26.8% 39.8% 13.0% -106.5%
Net margin% 89.4% 18.8% 19.9% 1.2% -69.5%
Source: TICON, UOB Kay Hian

Results: TICON reported a 1Q14 net profit of Bt143.7m, down 84.2% qoq and 43.6% yoy due to: a) lower rental income, b) the absence of
insurance claims for flooded properties and no gain on sales of investments in TFUND and TLOGIS in 1Q14, c) a drop in realised
additional gains on sales of properties to property funds, and d) higher SG&A expenses and interest expenses.

TICON’s rental income declined 18.3% qoq and 25.0% yoy to Bt202m in 1Q14 due to the sale of factories and warehouses worth
Bt5,514.5m to TICON Industrial Growth Leasehold Property Fund (TGROWTH) in Dec 13. Its gross margin from rental improved to 75.4%
in 1Q14 from 66.8% in 1Q13 since the company reclassified properties transferred to TGROWTH as a non-current assets held-for-sale of
Bt3,200.5m, and all these assets were not required to be depreciated. Meanwhile, the company recorded revenue from property sales of
Bt498.2m to TGROWTH amounting to Bt414.2m and TFUND worth Bt84m in 1Q14. Overall gross margin improved to 64.4% in 1Q14 vs.
63.7% in 1Q13.

Recommendation: We are revisiting our earnings forecasts for 2014-15F.

Refer to last page for important disclosures. 24


T h a i l a n d D a i l y Friday, 16 May 2014

SECTOR
Property: Sector set to suffer sales decline in 2014. Overall property sales are likely to fall by up to 10% this year, hit by weak
domestic consumption over the political strife, which has been ongoing for more than six months now. The SET-listed property developers
Pruksa Real Estate Plc (PS) and Quality Houses Plc (QH) both predict overall property sales will decline by 5-10% this year from a value of
Bt650b last year. "If the political crisis drags on until year-end, the sector could see a contraction of as much as 10%," Rutt Phanijphand,
president and chief executive of QH, said yesterday. He compared this with average annual growth of 10-20% in recent years. Thailand's
real estate market has been suffering from weak domestic demand, while several developers have delayed project launches in the first
quarter. On Wednesday, Pruksa chief operating officer Lersuk Chuladesa also projected the Thai property market would decline by 5-10%
this year while predicting the economy would grow by only 2%. "The market's recovery will hinge largely on how soon the political
stalemate can be settled," said Mr Rutt. (Source: Bangkok Post)

ECONOMICS / POLITICS
Economy: Negative growth seen for 1Q14. The Bank of Thailand (BOT) has said the country's economic growth from 4Q13 to
1Q14 is likely to be negative while the Kingdom's credit-default swap (CDS) remains stable. Dr Roong Mallikamas, spokeswoman of the
BOT, said the latest political developments continued to create high uncertainty for the economy and it was most likely that GDP growth
from 4Q13 to 1Q14 would be negative. The National Economic and Social Development Board (NESDB) will announce the 1Q14 GDP
figure on Monday. Roong said the economic slowdown would have only a small impact on the currency market, as the market was well
aware of the situation and had absorbed some of the effects from the slump already. In terms of the country's CDS level, she said that the
ratings of the surrounding countries such as Malaysia and Philippines had decreased but Thailand's rating had remained stable. While the
spread had widened, it was considerably small and not related to the political uncertainty. (Source: The Nation)

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T h a i l a n d D a i l y Friday, 16 May 2014

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