HEXA CIMB

8/12/2019 HEXA CIMB

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Industrial Goods and Services INDONESIA October 24, 2011

IMPORTANT DISCLOSURES. INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.

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Strong excavator HEXA has upgraded its sales unit targets yet again post-Japanearthquake with new orders from the plantation and forestry sectors.We revise up our earnings forecasts but assign higher risk premiumson softer global growth prospects, trimming our target price.

We raise our earnings forecasts forFY12-13 after incorporating the neworders. Our OUTPERFORM rating ismaintained but our lower pricetarget is based on a target P/E of11.6x (previously 12.7x) followingUNTR’s recent valuationsdowngrade.

Extra orders; a positivesurpriseRevising its numbers yet again,HEXA upgraded its sales target by13% due to the recent order for 400small excavators from the plantationand forestry sectors. Orders wereclinched due to Hitachi’s niche in thesmall- to medium-sized excavatorsmarket, we believe. We revise ourearnings higher in line with thecompany’s upward revision in itsFYE March 2012 sales volume target but incorporate slower sales volumegrowth in the successive year, albeitstill higher than UNTR, to take intoaccount increased risks on the bleaker global growth outlook.

September record salesSeptember sales volume of 301 units(+37% mom/+62% yoy) was a newrecord high. April-September sales

were at 1,267 units, forming 36% ofour revised sales volume forecast forFY12. This translates to an expectedaverage sales unit of 372 per monthfor the second half of the financial year. Given the import of 400 unitsfrom Japan and the shortening of itsorder backlog, we deem the targetattainable. Further, we take comfortfrom the fact that the company hashistorically set conservative salestargets.

Incorporating higheruncertaintyIn-line with UNTR’s downgrade in valuations, we assign a higher riskpremium as reflected in a lowertarget P/E of 11.6x (previously 12.7x)on the back of softer global growthprospects that translates to addedearnings risk. We continue to valueHEXA at par with UNTR on the backof higher growth and its pure heavyequipment play that deserves ahigher P/E, we believe. Stockcatalysts are positive surprises inearnings that will be released next week and stronger-than-expectedsales volume.

Notes from the Field

Erindra Krisnawan

T (62) 21 30061732E [email protected]

Erisca Wiraatmadja

T [email protected] E (62) 21 30061723

Company Visit Expert Opinion

Channel Check Customer Views

“ The brilliant performance has positioned the companyas a strong player… and

prepared its competitive power to be a marketleader in [the] giant andsmall HE industry...”

─ Kardinal A.K., Presdir

Hexindo AdiperkasaHEXA IJ / HEXA JK

Current Rp7,300 SHORT TERM (3 MTH) LONG TERM

Market Cap Avg Daily Turnover Free Float Target Rp9,300

US$688.4m US$0.30m 21.08% Previous Target Rp9,700

Rp6,132,000m Rp2,782m 840.0 m shares Up/downside 27.40%

5,100

5,600

6,100

6,600

7,100

7,600

8,100

8,600

9,100

83

91

98

106

113

121

128

136

143Price Close Relative to JCI (RHS)

Source: Bloomberg

2

46

8

10

Oct-10 Jan-11 Apr-11 Jul-11

V o l m

Financial Summary

Mar-10A Mar-11A Mar-12F Mar-13F

Revenue (US$m) 341.2 498.6 680.3 904.3

Net Profit (US$m) 34.06 43.28 58.59 81.80

Core EPS (US$) 0.04 0.05 0.07 0.10

Core EPS Growth 0.0% 27.1% 35.4% 39.6%

FD Core P/E (x) 20.21 15.91 11.75 8.42

DPS (US$) 0.01 0.02 0.02 0.03

Dividend Yield 1.64% 1.98% 2.51% 3.40%

EV/EBITDA (x) 12.78 11.31 8.33 5.57

P/FCFE (x) 26.51 NA 34.08 18.11

Net Gearing (26.9%) (19.6%) (22.5%) (28.1%)P/BV (x) 6.94 5.22 3.88 2.92

Recurring ROE 37.5% 37.9% 39.6%

% Change In Core EPS Estimates 0.00% 0.00% 2.75% 0.59%

CIMB/consensus EPS (x) 1.05 1.03 1.11

Consensus EPS (US$) 0.05 0.07 0.09

7,300

9,300

5,500 8,550

Target

52-week share price range

Current

SOURCE: CIMB, COMPANY REPORTS

8/12/2019 HEXA CIMB


Hexindo AdiperkasaOctober 24, 2011

2

PEER COMPARISON

Research Coverage

Bloomberg Code Market Recommendation Mkt Cap US$m Price Target Price Upside

Hexindo Adiperkasa HEXA IJ ID OUTPERFORM 688 7,300 9,300 27.4%

Hong Leong Asia HLA SP SG UNDERPERFORM 530 1.81 1.78 -1.4%

Tat Hong Holdings TAT SP SG UNDERPERFORM 261 0.67 0.70 4.5%

United Tractors UNTR IJ ID NEUTRAL 9,547 22,800 24,000 5.3%

Rolling P/BV (x)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Hexindo Adiperkasa Hong Leong Asia

Tat Hong Holdings United Tractors

Rolling FD Core P/E (x)

0

5

10

15

20

25

30

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Hexindo Adiperkasa Hong Leong Asia

Tat Hong Holdings United Tractors

Peer Average: P/BV vs Recurring ROE

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

0%

3%

5%

8%

10%

13%

15%

18%

Rolling P/BV (x) (lhs) Recurring ROE (rhs)

Peer Average: FD Core P/E vs FD Core EPS Growth

0

5

10

15

20

25

30


-100%

-50%

0%

50%

100%

150%

200%

Rolling FD Core P/E (x) (lhs) FD Core EPS Grow th (rhs)

ValuationFD Core P/E (x) P/BV (x) EV/EBITDA (x)

Dec-10A Dec-11F Dec-12F Dec-10A Dec-11F Dec-12F Dec-10A Dec-11F Dec-12F

Hexindo Adiperkasa 16.79 12.59 9.03 5.56 4.14 3.11 11.64 8.94 6.07

Hong Leong Asia 6.50 8.03 7.85 0.88 0.80 0.76 2.08 3.74 3.80

Tat Hong Holdings 10.89 11.16 9.39 0.66 0.63 0.60 4.52 4.66 4.01

United Tractors 21.93 15.37 11.48 4.89 3.36 2.75 10.28 7.30 6.02

Growth and Returns

FD Core EPS Growth Recurring ROE Dividend Yield

Dec-10A Dec-11F Dec-12F Dec-10A Dec-11F Dec-12F Dec-10A Dec-11F Dec-12F

Hexindo Adiperkasa na 33.4% 39.3% 37.8% 39.3% 1.90% 2.38% 3.19%

Hong Leong Asia 20.1% -19.2% 2.4% 14.1% 10.4% 9.9% 5.53% 5.52% 5.52%

Tat Hong Holdings -28.2% -2.4% 18.9% 6.3% 5.8% 6.6% 2.60% 2.79% 2.99%United Tractors 0.4% 42.6% 33.9% 24.0% 25.7% 26.4% 1.94% 1.86% 2.18%


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

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3

We forecast an FYE March

2012 gross profit margin of

18.6%, flat yoy

Healthy cashflow on higherprojected profits and minimal

capex

Share price infoShare px perf. (%) 1M 3M 12M

Relative -6.7 5.8 20.8

Absolute -8.8 -5.2 21.7

Major shareholders % held

Hitachi Construction Machinery Co.Ltd

48.6

Itochu Corporation 25.1

Hitachi Construction Machinery Asiaand Pacific

5.1

P/BV vs Recurring ROE

0.0

1.0

2.0

3.0

4.0

5.0

6.0


36.5%

37.0%

37.5%

38.0%

38.5%

39.0%

39.5%

Rolling P/BV (x ) (lhs ) Rec urring ROE (rhs)

FD Core P/E vs FD Core EPS Growth

0.0

5.0

10.0

15.0


0%5%10%15%20%25%30%35%40%45%

Rolling FD Core P/E (x) (lhs) FD Core EPS Growth (rhs)

Profit & Loss

(US$m) Mar-10A Mar-11A Mar-12F Mar-13F

Revenue 341.2 498.6 680.3 904.3

Cost Of Sales (262.1) (404.7) (554.0) (727.3)

Gross Profit 79.1 93.9 126.3 177.0

Total Operating Costs (30.15) (38.45) (51.70) (68.73)

Operating Profit 49.0 55.5 74.6 108.3

Operating EBITDA 51.8 58.6 77.9 111.8

Depreciation And Amortisation (2.79) (3.10) (3.25) (3.52)

Operating EBIT 49.0 55.5 74.6 108.3

Net Interest Income (0.91) (0.20) 0.40 0.40

Exchange Gains (0.31) (0.28) 2.76 0.00

Other Income 0.29 3.22 0.30 0.30

Associates ' Profit 0 0 0 0

Profit Before Tax (pre-EI) 48.0 58.2 78.1 109.0

Exceptional Items 0 0 0 0

Pre-tax Profit 48.0 58.2 78.1 109.0Taxation (13.99) (14.96) (19.47) (27.18)

Profit After Tax 34.06 43.28 58.59 81.80

Minority Interests 0 0 0 0

Net Profit 34.06 43.28 58.59 81.80

Recurring Net Profit 34.06 43.28 58.59 81.80

Cash Flow


Pre-tax Profit 48.0 58.2 78.1 109.0

Depreciation And Non-cash Adj. 3.39 3.02 5.61 3.12Change In Working Capital 51.12 (30.98) (28.05) (35.18)

Tax Paid (13.99) (14.96) (19.47) (27.18)

Other Operating Cashflow (6.17) (19.12) (8.87) (6.65)

Cashflow From Operations 82.39 (3.81) 27.29 43.10

Capex (4.99) (2.44) (4.26) (4.61)

Disposals Of FAs/subsidiaries 0 0 0 0

Acq. Of Subsidiaries/investments (2.96) (1.62) 0.00 0.00

Other Investing Cashflow 0.51 0.26 (0.71) (0.87)

Cash Flow From Investing (7.44) (3.80) (4.97) (5.49)

Debt Raised/(repaid) (48.08) (4.04) (2.52) 0.00

Equity Raised/(Repaid) 0 0 0 0

Dividends Paid (11.29) (13.62) (17.31) (23.44)

Net Cash Interest (0.91) (0.20) 0.40 0.40

Other Financing Cashflow 0.80 4.45 3.65 3.67

Cash Flow From Financing (59.48) (13.41) (15.77) (19.36)

Total Cash Generated 15.47 (21.01) 6.54 18.25

Change In Net Cash 63.55 (16.98) 9.06 18.25

Free Cashflow To Equity 25.96 (11.84) 20.20 38.01

BY THE NUMBERS


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Debt-free balance sheet

Balance Sheet


Fixed Assets 28.81 30.53 31.54 32.63

Intangible Assets 2.21 1.95 2.66 3.53

Other Long Term Assets 8.43 10.05 10.05 10.05

Total Non-current Assets 39.45 42.53 44.25 46.21

Total Cash And Equivalents 29.06 25.89 39.93 66.17

Inventories 96.4 104.7 142.9 190.0

Accounts Receivable 42.5 65.4 89.3 118.7

Other Current Assets 10.17 15.42 21.04 27.97

Total Current Assets 178.1 211.5 293.2 402.8

Trade Creditors 84.4 82.2 110.6 145.3

Short-term Debt 0 0 0 0

Other Current Liabilities 28.74 34.83 43.48 57.08

Total Current Liabilities 113.1 117.1 154.1 202.3Total Long-term Debt 2.41 0.00 0.00 0.00

Other Liabilities 2.83 4.17 3.84 7.92

Deferred Tax 0.00 1.00 2.00 3.00

Total Non-current Liabilities 5.23 5.17 5.84 10.92

Shareholders' Equity 99.2 131.8 177.4 235.8

Minority Interests 0 0 0 0

Preferred Shareholders Funds 0 0 0 0

Total Equity 99.2 131.8 177.4 235.8

Key Drivers


ASP (% chg, main prod./serv.) 0.0% 0.0% 0.0% 0.0%

Unit sales grth (%, main prod./serv.) 22.9% 45.6% 49.4% 10.0%

Util. rate (%, main prod./serv.) N/A N/A N/A N/A

ASP (% chg, 2ndary prod./serv.) N/A N/A N/A N/A

Unit sales grth (%,2ndary prod/serv) N/A N/A N/A N/A

Util. rate (%, 2ndary prod/serv) N/A N/A N/A N/A

Unit raw mat ASP (%chg,main) N/A N/A N/A N/A

Unit raw mat ASP (%chg,2ndary) N/A N/A N/A N/A

BY THE NUMBERS

Key Ratios


Revenue Growth N/A 46.1% 36.4% 32.9%

Operating EBITDA Growth N/A 13.2% 32.9% 43.6%

Operating EBITDA Margin 15.2% 11.8% 11.4% 12.4%

Net Cash Per Share (US$) 0.03 0.03 0.05 0.08

BVPS (US$) 0.12 0.16 0.21 0.28

Gross Interest Cover 34 139 746 1,083

Tax Rate 29.1% 25.7% 24.9% 24.9%

Net Dividend Payout Ratio 33.2% 31.5% 29.5% 28.7%

Accounts Receivables Days N/A 39.49 41.63 41.97

Inventory Days N/A 90.72 81.80 83.52

Accounts Payables Days N/A 75.14 63.71 64.21

ROIC (%) N/A 40.6% 39.9% 45.2%

ROCE (%) N/A 47.7% 48.6% 52.6%


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Higher sales target1. BACKGROUND

1.1 Substantial new orders receivedBased on our recent chat with the company, HEXA has yet again revised up itssales target units by 13% following the order of 400 excavators by customersfrom the plantation and forestry sectors. Our channel checks with its closestpeer UNTR reveal that they did not observe a similar sudden boost in ordersfrom these sectors recently. Orders received by HEXA could be attributable to

its edge in the small- to medium-sized excavator market, we believe. With localmanufacturing running at full capacity, the company managed to secure itssupply for this order from Japan HCM. Partial delivery is expected by Novemberand full delivery by the end of the current financial year. HEXA affirmed that it will receive margins that are similar to locally- manufactured small excavatorsales for these units.

1.2 Upward revision in company’s earnings guidance Following a higher sales volume target, HEXA revised its budget as follows:

Revenue: US$ 695m (previously US$ 644m)

Gross profit: US$127m (previously US$119m)

Net profit: US$ 62m (previously US$54m)

This implies an expected booking of 18.3% gross margin and 8.9% net profitmargin. A higher proportion of small excavator sales to total sales may provide aslight upside in margins given the typically higher margins fetched from the saleof smaller excavators relative to bigger ones.

Figure 1: Quarterly GPM per segment

10%

15%

20%

25%

30%

35%

40%

45%

50%

F Y 0 9 Q 4

F Y 1 0 Q 1

F Y 1 0 Q 2

F Y 1 0 Q 3

F Y 1 0 Q 4

F Y 1 1 Q 1

F Y 1 1 Q 2

F Y 1 1 Q 3

F Y 1 1 Q 4

F Y 1 2 Q 1

Sales, Rental of HE & Commission Income Sales of Spare Parts

Repair & Maintenance Service Total gross prof it margin

SOURCES: CIMB, COMPANY REPORTS

2. OUTLOOK

2.1 Sales volume forecast revised up by 8-13% Accordingly, we revise upwards our FYE March 12-13 sales volume forecast by8-13% but we also factor in lower sales volume growth for the subsequent year

Notes from the Field

“The brilliant performancehas positioned thecompany as a strong

player… and prepared itscompetitive power to be amarket leader in [the]giant and small HEindustry...”

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6

on the expectation that commodity players may slowdown their expansion inresponse to softening prices, albeit with lagging effects. Demand from theconstruction sector, which largely comprises of small excavators orders, shouldremain robust.

2.2 September; a turning pointSeptember sales volume was at a record high of 301 units (+37% mom/+62% yoy). 3QFYE March 2012 sales units volume of 1,267 units, only forms 36% ofour revised sales volume forecast (implying a 15% yoy growth). We expect acatch up in the 2H with an average monthly sales of 720 units for our forecast to be achievable. Considering the import of 400 units from Japan and theshortening of its recent order backlog from 6-7 months to 3-4 months, we deemthe number attainable. Further, we take comfort from the fact that the companyhistorically sets a conservative sales target.

Figure 2: Yearly sales volume and growth comparison Figure 3: HEXA monthly unit sales volume with 3 months MA

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1 F

2 0 1 2 F

-40%

-20%

0%

20%

40%

60%

80%

100%

UNTR yearly sales volume HEXA yearly sales volume

UNTR yoy volume growth HEXA yoy volume growth

0

50

100

150

200

250

300

350

J a n - 0 5

J u l - 0 5

J a n - 0 6

J u l - 0 6

J a n - 0 7

J u l - 0 7

J a n - 0 8

J u l - 0 8

J a n - 0 9

J u l - 0 9

J a n - 1 0

J u l - 1 0

J a n - 1 1

J u l - 1 1

Monthly unit sales volume 3 mo MA SOURCES: CIMB, COMPANY REPORTS SOURCES: CIMB, COMPANY REPORTS

3. VALUATION AND RECOMMENDATION

3.1 Incorporating higher risks We revise up our FYE March 12-13 earnings by 2-3% on sales volume changes.Parallel to UNTR’s dow ngrade in valuations, we lower our target P/E for HEXAfrom 12.7x previously to a new 11.6x to factor in a higher risk premium givenglobal economic uncertainty, which translates to added risks for the company’searnings. We maintain an OUTPERFORM rating but lower our target price fromRp 9,700 to Rp 9,300 following the reduction in the P/E target. We continue to value HEXA at par to UNTR on the back of higher growth and its pure heavyequipment play that deserves a higher P/E. Further, its larger exposure to theconstruction sector compared to UNTR provides lower earnings sensitivity to asoftening commodity outlook. Stock catalysts are positive surprises in earningsthat will be released next week and stronger-than-expected sales volume.

Figure 4: Forecast revision

2012 2013 2014 2012 2013 2014 2012 2013 2014

Total units sold 3,100 3,550 3,905 3,500 3,850 4,235 13% 8% 8%

Sales 644 875 1,022 680 904 1,056 6% 3% 3%

Gross profit 121.6 172.8 203.5 126.3 177.0 208.4 4% 2% 2%

Net profit 57.0 80.4 95.0 58.6 81.8 96.7 3% 2% 2% SOURCES: CIMB, COMPANY REPORTS

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Figure 5: Narrowing forward P/E to UNTR

0x

3x

6x

9x

12x

15x

18x

J a n - 0 7

J u l - 0 7

J a n - 0 8

J u l - 0 8

J a n - 0 9

J u l - 0 9

J a n - 1 0

J u l - 1 0

J a n - 1 1

J u l - 1 1

-80%

-60%

-40%

-20%

0%

20%

40%

(Discount)/premium UNTR HEXA

SOURCES: CIMB, COMPANY REPORTS

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Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (“CIMB”). The views and opinions in this research report are our own as of the date hereof and aresubject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to suchrecipient therein are unaffected. CIMB 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 CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No partof 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 CIMB.New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of theirbusiness, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act 1978.

Singapore: This report is issued and distributed by CIMB Research Pte Ltd (“CIMBR”). Recipients of this report are to contact CIMBR in S ingapore in respect of any matters arising from,or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act ofthe United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBR has no obligation to update

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9

its opinion or the information in this research report.

This publication is strictly confidential and is for private circulation only. If the recipient of this research report is not an accredited investor, expert investor or institutional investor, CIMBRaccepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. This publication is being supplied to you strictly onthe 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 passedon, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBR.

As of October 21, 2011, CIMB Research Pte Ltd does not have a proprietary position in the recommended securities in this report.

Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sellto any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden.

Taiwan: This research report is not an offer or marketing of foreign securities in Taiwan. The securities as referred to in this research report have not been and will not be registered withthe Financial Supervisory Commission of the Republic of China pursuant to relevant securities laws and regulations and may not be offered or sold within the Republic of China through apublic offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Law of the Republic of China that requires a registration or approval of theFinancial Supervisory Commission of the Republic of China.

Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (CIMBS). The views and opinions in this research report are our own as of the date hereofand are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to suchrecipient therein are unaffected. 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. Nopart 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 personin whole or in part, for any purpose without the prior written consent of CIMBS.

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 andExchange 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 oninside information.

The survey result is as o f the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed a fter that date. CIMBS doesnot confirm nor certify the accuracy of such survey result.

Score Range 90 – 100 80 – 89 70 – 79 Below 70 or No Survey Result

Description Excellent Very Good Good N/A

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 inthe 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 orgovernmental 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 toany 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 saleof investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates.

United Kingdom: This report is being distributed by CIMB Securities (UK) Limited only to, and is directed at selected persons on the basis that those persons are (a) persons falling within Article 19 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the “Order”) who have professional experience in investments of this type or (b) high networth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order, (all such persons together being referred to as “relevantpersons”). A high net worth entity includes a body corporate which has (or is a member of a group which has) a called-up share capital or net assets of not less than (a) if it has (or is a

subsidiary of an undertaking which has) more than 20 members, £500,000, (b) otherwise, £5 million, the trustee of a high value trust or an unincorporated association or partnership withassets of no less than £5 million. Directors, officers and employees of such entities are also included provided their responsibilities regarding those entities involve engaging in investmentactivity. Persons who do not have professional experience relating to investments should not rely on this document.

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 ResearchPte Ltd solely to persons who qualify as "Major U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only forInstitutional Investors and investment professionals whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and whohave professional experience in such investments. Any person who is not an Institutional Investor must not rely on this communication. However, the delivery of this research report to anyperson in the United States of America shall not be deemed a recommendation to effect any transactions in the securities discussed herein or an endorsement of any opinion expressedherein. 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 distribtion to professional, institutional or sophisticated investorsas defined in the laws and regulations of such jurisdictions.

Recommendation Framework #1 *

Stock SectorOUTPERFORM: The stock's total return is expected to exceed a relevantbenchmark's total return by 5% or more over the next 12 months.

OVERWEIGHT: The industry, as defined by the analyst's coverage universe, isexpected to outperform the relevant primary market index over the next 12 months.

NEUTRAL: The stock's total return is expected to be within +/-5% of a relevantbenchmark's total return.

NEUTRAL: The industry, as defined by the analyst's coverage universe, is expectedto perform in line with the relevant primary market index over the next 12 months.

UNDERPERFORM: The stock's total return is expected to be below a relevantbenchmark's total return by 5% or more over the next 12 months.

UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, isexpected to underperform the relevant primary market index over the next 12 months.

TRADING BUY: The stock's total return is expected to exceed a relevantbenchmark's total return by 5% or more over the next 3 months.

TRADING BUY: The industry, as defined by the analyst's coverage universe, isexpected to outperform the relevant primary market index over the next 3 months.

TRADING SELL: The stock's total return is expected to be below a relevantbenchmark's total return by 5% or more over the next 3 months.

TRADING SELL: The industry, as defined by the analyst's coverage universe, isexpected to underperform the relevant primary market index over the next 3 months.

* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected

returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

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Recommendation Framework #2 **

Stock Sector

OUTPERFORM: Expected positive total returns of 15% or more over the next 12months.

OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has ahigh number of stocks that are expected to have total returns of +15% or better over

the next 12 months.NEUTRAL: Expected total returns of between -15% and +15% over the next 12months.

NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i)an equal number of stocks that are expected to have total returns of +15% (or better)or -15% (or worse), or (ii) stocks that are predominantly expected to have total returnsthat will range from +15% to -15%; both over the next 12 months.

UNDERPERFORM: Expected negative total returns of 15% or more over the next 12months.

UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has ahigh number of stocks that are expected to have total returns of -15% or worse overthe next 12 months.

TRADING BUY: Expected positive total returns of 15% or more over the next 3months.

TRADING BUY: The industry, as defined by the analyst's coverage universe, has ahigh number of stocks that are expected to have total returns of +15% or better overthe next 3 months.

TRADING SELL: Expected negative total returns of 15% or more over the next 3months.

TRADING SELL: The industry, as defined by the analyst's coverage universe, has ahigh number of stocks that are expected to have total returns of -15% or worse overthe next 3 months.

** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily

outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2010.

ADVANC Excellent FUTUREPF not available QH Very Good

AMATA Excellent GLOBAL not available RATCH Excellent

AOT Excellent GLOW Very Good ROBINS Excellent

AP Very Good HANA Very Good ROJNA Very Good

BANPU Excellent HEMRAJ Excellent SAMART Excellent

BAY Excellent HMPRO Very Good SAMTEL Excellent

BBL Very Good ITD Very Good SCB Excellent

BCP Excellent IVL not available SCC Excellent

BEC Very Good KBANK Excellent SCCC Very Good

BECL Excellent KTB Excellent SIRI Very Good

BH Very Good LH Very Good SPALI Very Good

BIGC Very Good LPN Excellent STA Good

BTS Good MAJOR Very Good STEC Very Good

CCET Very Good MCOT Excellent TASCO Very Good

CK Very Good MINT Very Good THAI Very Good

CPALL Very Good PS Very Good TMB Excellent

CPF Excellent PSL Excellent TOP Excellent

CPN Excellent PTT Excellent TRUE Very Good

DELTA Very Good PTTAR Excellent TTA Excellent

DTAC Very Good PTTCH Excellent TTW Very Good

PTTEP Excellent TUF Very Good

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