COMPANY UPDATE

Thailand

HANA Microelectronics PCL (HANA.BK/HANA TB) ประมาณการ 3Q60: การออก smartphone รุ่นใหม่ จะช่ วยยืดวัฎจักรขาขึน้ ไปถึง 1H61

Neutral‧Maintained Price as of 18 Oct 2017

46.50

12M target price (Bt/shr)

47.00

Unchanged/Revised up(down)(%)

Unchanged

Upside/downside (%)

1.1

Key messages

เราคาดว่า HANA 0txitdkLz]dewi 3Q60 ที่ 676ล้า นบาท (+35.5% YoY, +18.5% QoQ) ยอดขายเติบโตแข็งแกร่ งจากการ ออกโมเดลใหม่ ข อง smartphone หลายๆแบรนด์ ในขณะที่ ระยะเวลาการส่ งสิ นค้าที่ส้ ันลงของ iPhone8 และpre-order ของ iPhoneX ที่ ก าลัง จะมา น่ า จะเป็ นปั จ จัย ช่ ว ยหนุ น ยอดขายใน 4Q60 ทีมวิจยั KGI Taiwan เชื่ อว่าวัฏจักรของiPhone จะเกิดขึ้น ในปี 2561ซึ่ งเป็ นไปตามมุ ม มองของเราว่ า วัฎ จัก รขาขึ้ น ของ อุตสาหกรรมอิเล็กทรอนิ กส์จะยืดไปถึง 1H61ถึงแม้ว่าราคาหุ ้น ในปั จจุบนั จะไม่เหลือupside แล้วแต่อตั ราผลตอบแทนจากเงิน ปันผลที่4.3% ก็ยงั ถือว่าสมเหตุสมผล Trading data Mkt cap (Btbn/US$mn) Outstanding share (mn) Foreign ownership (mn) 3M avg. daily trading (mn) 52-week trading range (Bt) Performance (%) Absolute Relative

3M 0.5 -7.3

6M 1.6 -6.6

37.4/936 805 522.3 6 Bt31-Bt55 12M 39.8 21.7

Quarterly EPS EPS 2014 2015 2016 2017

Q1 1.98 0.64 0.60 1.02

Q2 0.85 0.50 0.52 0.84

Q3 0.73 0.41 0.71 n.a.

Q4 0.67 1.02 0.79 n.a.

Share price chart 60

70

55

55

50

40

45

Event

ประมาณการ 3Q60 lmpact

ยอดขายเพิม่ ขึน้ จากการเปิ ดตัวsmartphone รุ่ นใหม่ เราคาดว่ายอดขายใน 3Q60 จะอยูท่ ี่ US$176 ล้าน (+15.8% YoY, +15.0% QoQ) จากปั จจัยด้านฤดูกาล และการเปิ ดตัว smartphone รุ่ นใหม่จากค่ายต่างๆ อย่างเช่ น iPhone, Samsung, Oppo, Huawei และ Vivo (ยอดขายกลุ่มสื่ อสารคิดเป็ นสัดส่ วน ~39% ของรายได้รวม) ทั้งนี้ ทีมวิจยั KGI Taiwan พบว่ายอดขาย iPhone 8 ในช่ วงสุ ดสัปดาห์แรกเป็ นไปตามคาด ไม่ได้อ่อนแอเหมื อนที่ตลาดคาดไว้ (KGI Taiwan ประเมินว่า 50% ของ presales จะเป็ น iPhone X และอีก 50% เป็ น iPhone8) กาไรจากธุรกิจหลักโตดีใน 3Q60 เราคาดว่ากาไรจากธุรกิจหลักของ HANA ใน 3Q60 จะอยูท่ ี่ 676 ล้านบาท (+35.5% YoY, +18.5% QoQ) และคาดว่าอัตรากาไรขั้นต้นจะเพิ่มขึ้นเป็ น 15.4% จาก 14.6% ใน 2Q60 เนื่ องจากการประหยัดต่อขนาด ซึ่ งจะทาให้กาไรจากธุรกิจหลักใน 9M60 อยูท่ ี่ 1.88 พันล้านบาท คิดเป็ น 76% ของประมาณการปี นี้ ท้ งั ปี ของเรา ระยะเวลาการขนส่ งที่ส้ ันลงของ iPhone8 และ pre-order ของ iPhoneXจะหนุนยอดขาย HANA ในอดีต การจัดส่ งสิ นค้ารุ่ นใหม่จะใช้เวลา 3-6 สัปดาห์หลัง pre-order แต่จากการประเมินล่ าสุ ดของ KGI Taiwan พบว่าใช้เวลาลดลงเหลื อแค่ 1-2 สัปดาห์เท่านั้นในกรณี ของ iPhone8 เนื่ องจากมีความเป็ น ห่ วงว่าจะเกิ ดการ cannibalize จากอุปสงค์ที่แข็งแกร่ งของ iPhoneX ซึ่ งจะเปิ ด pre-order ในวันที่ 27 ตุลาคม ซึ่งเรามองว่าจะเป็ นปั จจัยที่ช่วยหนุนการเติบโตของยอดขาย HANA ใน 4Q60 วัฏจักรของ iPhone อาจจะเกิดขึน้ ในปี 2561Fซึ่งจะยืดวัฏจักรของอุตสาหกรรมไปถึง 1H61 ทีมวิจยั KGI Taiwanมีมุมมองที่ เป็ นบวกต่อ iPhone supplier เนื่ องจากคาดว่าวัฏจักรของ iPhone จะ เกิดขึ้นในปี 2561โดยคาดว่าจะมีการจัดส่ ง iPhone 210-220 ล้านเครื่ องในปี นี้ และเพิ่มเป็ น 245-255 ล้าน เครื่ องในปี หน้า ซึ่ งเป็ นไปตามมุมมองของเราว่าวัฎจักรขาขึ้นของอุตสาหกรรมอิเล็กทรอนิ กส์จะยืดไปถึ ง 1H61 Valuation & Action

เรายังคงคาแนะนาถือ HANA โดยให้ราคาเป้ าหมาย 1H61 ที่ 47.00 บาท อิงจาก PER ที่ 14.5x เรามองว่า cycle ของ iPhone ในปี 2561 อาจจะเป็ นปั จจัยที่ ช่วยยืดวัฏจักรขาขึ้ นของอุตสาหกรรมออกไปได้อีก ถึงแม้วา่ ราคาหุ ้นในปั จจุบนั จะไม่เหลื อ upside แล้ว แต่อตั ราผลตอบแทนจากเงินปั นผลที่ 4.3% ก็ยงั ถื อ ว่าสมเหตุสมผล

25 40

10

35

(5)

30 25 Oct-16

(20) Dec-16

Mar-17

Share Price

May-17

Aug-17

Price performance relative to SET

Source: SET

Oct-17

Risks

ภัยธรรมชาติ, มีการปิ ดโรงงานโดยไม่ได้มีการวางแผนไว้ล่วงหน้า, ลูกค้าเปลี่ยนไปสั่งสิ นค้าจาก supplier รายอื่น และค่าเงินบาทแข็งขึ้นเมื่ อเทียบกับดอลลาร์ สหรั ฐ (เราใช้สมมติฐานค่าเงิ นบาทที่ 34.2 บาท/US$ ในปี 25602562), เกิดความล่าช้าในการจัดส่ งสิ นค้า Key financials and valuations

ChananthornPichayapanupat 66.2658.8888 Ext.8849 [email protected]

Revenue (Btmn) Gross Profit (Btmn) SG&A (Btmn) Net Profit (Btmn) Normalized Profit (Btmn) EPS(Bt) Normalized EPS(Bt) DPS(Bt) EPSGrowth (%) Normalized EPSGrowth P/E(X) P/B (X) EV/EBITDA (X) Net Debt to Equity (%) Dividend Yield (%) Return ob Average Equity (%)

Dec - 15A 20,521 3,030 1,115 2,066 2,328 2.57 2.89 2.00 (39.3) 19.5 13.9 1.5 7.6 (45.2) 5.6 10.6

Dec - 16A 20,523 2,876 1,167 2,105 2,027 2.62 2.52 2.00 1.9 (13.0) 15.1 1.6 7.1 (48.3) 5.1 10.5

Dec - 17F 22,065 3,385 1,214 2,828 2,477 3.51 3.08 2.00 34.3 22.2 13.4 1.8 5.2 (49.7) 4.3 13.4

Dec - 18F 24,298 3,662 1,288 2,736 2,736 3.40 3.40 2.00 (3.3) 10.4 13.8 1.7 5.0 (53.2) 4.3 12.3

Dec - 19F 25,174 3,767 1,284 2,856 2,856 3.55 3.55 2.00 4.4 4.4 13.2 1.6 4.6 (55.1) 4.3 12.1

Source: KGI Research

October 19, 2017

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

1

Thailand

HANA Microelectronics

Figure 1: 3Q17 earnings preview

Btmn Revenue Gross Profit SG&A Operating Profit Operating EBITDA Non-Op Inc./(Exp) Net profit Normalized profit EPS(Bt) Normalized EPS(Bt) Percent Gross margin EBIT margin SG&A/sales Sales in US$ term Total sales

3Q17F 5,824 894 326 642 950 110 786 676 0.98 0.84 3Q17F 15.4 11.0 5.6 3Q17F 176

3Q16 5,290 749 289 540 835 70 569 499 0.71 0.62 3Q16 14.2 10.2 5.5 3Q16 152

YoY (%) 10.1 19.4 12.8 18.8 13.8 57.6 38.2 35.5 38.2 35.5 YoY (ppts) 1.2 0.8 0.1 YoY (%) 15.8

2Q17 5,232 765 293 539 798 105 676 571 0.84 0.71 2Q17 14.6 10.3 5.6 2Q17 153

QoQ (%) 11.3 16.8 11.3 19.2 19.0 5.1 16.4 18.5 16.4 18.5 YoY (ppts) 0.7 0.7 0.0 QoQ (%) 15.0

9M17 16,294 2,503 921 1,769 2,619 405 2,279 1,874 2.83 2.33 9M17 15.4 10.9 5.6 9M17 478

9M16 YoY (%) 14,796 10.1 1,918 30.5 880 4.6 1,235 43.3 2,115 23.8 207 95.4 1,470 55.1 1,263 48.4 1.83 55.1 1.57 48.4 9M16YoY (ppts) 13.0 2.4 8.3 2.5 5.9 (0.3) 9M16 420 13.8

Source: Company data, KGI Research

Figure 2: HANA’s revenue breakdown by application Percent Other 1.0

1.0

Medical

Computer 13.0

Consumer 39.0

9.0

Industrial

Opto

Telecom

5.0 7.0 10.0 15.0

RFID

Auto Source: Company data, KGI Research

Figure 3: Mobile lanuches in 3Q17

M odel Nokia8 Samsung Galaxy Note8 LG V30 Sony XperiaXZ1 Vivo V7+ iPhone8/ 8Plus iPhone X Oppo R9 Spro Xiaomi Mi6 Huawei Nova 2i Xiaomi Mi Mix2 Google Pixel 2 /2XL

Launched 17-Aug 23-Aug 01-Sep 01-Sep 08-Sep 13-Sep 13-Sep 21-Sep 25-Sep 26-Sep 28-Sep 05-Oct

Selling period 3Q17 3Q17 N/A 3Q17 3Q17 4Q17 N/A 3Q17 3Q17 4Q17 4Q17 4Q17

Source: Various source (collect by KGI Research)

October 19, 2017

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

2

Thailand

HANA Microelectronics

Figure 4: Timelime of new model rollout Vendor

1Q13

2Q13

3Q13

M odel Price

iPhone 5S 24,500

Highlight

Finger scan

M odel Price Highlight

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

iPhone 6 24,900

iPhone 6S 26,500

iPhone 7 26,500 without earphone port

iPhone 5C 19,900

iPhone 6+ 28,900

iPhone 6S+ 30,500

Colorful

Larger screen

iPhone 7+ 31,500 without earphone port

1Q17

2Q17

3Q17

4Q17

* iPhone8

iPhone

M odel Price

Highlight

SS Galaxy S4 21,900

SS Gaxaly Note 3 23,500

SS Galaxy S5 23,800

SS Galaxy Note 4 25,900

Screen above 5"

Full HD screen

Heart Rate function

S-Pen and QHD Screen

SS Galaxy S6 23,900

SS Galaxy Note 5 25,900

SS Galaxy S7 23,900

SS Galaxy Note 7 N.A.

S-Pen improve

1.5M water resistance

Discon production

SS Galaxy S8 27,900 Without edge and home button, Eye scan

Samsung

Price

SS Galaxy S6 Edge 27,900

SS Galaxy S7 Edge 26,900

Highlight

Curve screen

1.5M water resistance

M odel

Huawei Ascend Mate 13,990

M odel Price

Huawei Ascend Mate 7 16,990 Full HD Scrren, Durable

Highlight Huaw ei

Price

Huawei Ascend P6 13,990

Highlight

Thinest

M odel

M odel Price Highlight OPPO

Huawei Ascend P7 14,990 Full HD Screen and

Oppo Find Mirror 11,990

Oppo Find wayS 12,990

Motion Function'

Larger screen

M odel Price

Oppo N1 17,990

Highlight

Camara

Huawei P9

15,990

12,990

28,999 3D touch

Oppo N3

Oppo R7

19,990

16,990

Oppo R7 Plus 16,990

Twist camera

Durable battery

Larger screen

Huawei Nexus 6P 39,990 Co with google Oppo R7S 14,990

Huawei Mate 8 23,990 new chip

Huawei Mate9

Huawei P10

Huawei P10 Plus

16,990

23,900

19,990

23,990

Leica Camera

Front-back Leica lens

Huawei P9+ 21,990 Leica Camera

Huawei Mate9 Pro 27,900

Larger screen

* Huawei Mate 10

Curve edge

Oppo F1 Plus (R9) 15,990

Oppo R9S 14,990 Better camaera, quick charge

Selfie expert

Oppo R9S Plus 16,990 Larger screen

Oppo R5 15,990

Vivo X3

Vivo X3S

N.A

Highlight

Good at sound system

12,990 Larger screen, Voice control

M odel

Vivo X shot

Price Highlight

16,990 Video 4K

October 19, 2017

Huawei Mate 6

15,990

Oppo R1 12,990

Price

Source: Various sources collected by KGI Research

Huawei G7 Plus

Huawei P8

Oppo Find 7 19,990 High screen resolution, Camera

M odel

Vivo

Huawei Honor 6 Plus

Huawei P8 Max 18,990

* SS Galaxy Note 8

SS Galaxy S8 Edge 30,900 Without edge and home button, Eye scan

Vivo X Play 3S 17,990

Vivo X5

Vivo X5 Pro

Vivo X6

12,990

13,990

N.A

Vivo X5 elite N.A

Vivo X6+

Vivo X Play5

N.A

N.A

2K screen

Vivo X5 max 15,990

Vivo X play 6

Thin

(*To be launched in 2H17)

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Vivo V3 max 12,990

Please see back page for disclaimer

3

VivoX7 and X7+ N.A.

VivoX9 and X9+ N.A.

Vivo V5+

Vivo X9s

13,990 High quality of Front camera

N.A

Vivo X9S Plus N.A

Thailand

Figure 5: Company profile HANA

Group

is

one

HANA Microelectronics

Figure 6: Earnings to continue to increase

of

Southeast

Asia’s

leading

independent

Normalized earnings, Btmn (LHS); gross margin, percent (RHS)

electronics manufacturing service (EMS) producers. The company’s

3,000

headquarters

manufacturing

2,500

facilities, which are located in Lamphun and Ayutthaya provinces in

2,000

Thailand, Jiaxingin, China, Ohio, US, ankh Kong, Cambodia.

1,500

is

in

Bangkok

and

there

are

six

15.5

15.0 14.5 14.0

1,000 13.5

500 0

13.0

2015

2016

2017F

2018F

2019F

Source: Company data

Source: Company data, KGI Research

Figure 7: HANA’s revenue breakdown by product

Figure 8: HANA’s revenue breakdown by application

Percent

percent Other 1.0

Microdisplay

4.6

Medical

13.0

Consumer

ICAssembly

39.2

39.0

9.0

Industrial

PCBA

1.0

Computer

56.2

Telecom

5.0

7.0

Opto 10.0 15.0

RFID

Auto

Source: Company data, KGI Research

Source: Company data, KGI Research

Figure 9: Earnings 3-year CAGR

Figure 10: Attractive dividend yield

Percent

Bt per share and percent

14.0 12.0

6.0 13.0

5.6

3.00

5.1

5.0

12.1 10.0

10.5

8.0 6.0

4.0

4.5

4.3

4.3

2.50

4.3

4.0

2.00

3.0

1.50

2.0

1.00

1.0

2.0

0.50

2.00

2.00

2015

2016

2.00

2.00

2.00

0.0 0.0 SVI

HANA

KCE

0.00

DELTA

2017F 2018F Dividend Dividend Yield

Source: Company data, KGI Research

Source: Company data, KGI Research

Figure 11: Company’s PER

Figure 12: Company’s PBV

PER, times

PBV, times

20.0

2019F

2.5

+2.0 sd = 16.6x

+2.0 sd = 1.9x

2.0

+1.0 sd = 13.8x

15.0

+1.0 sd = 1.7x 1.5

10.0

Average = 10.9x

Average = 1.4x -1.0 sd = 1.1x

1.0

-1.0 sd = 8.2x 5.0

0.0 2012

2013

Source: KGI Research

October 19, 2017

2014

2015

2016

-2.0 sd = 0.8x

0.5

-2.0 sd = 5.4x

2017F

2018F

0.0 2012

2013

2014

2015

2016

2017F

2018F

Source: KGI Research

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

4

Thailand

HANA Microelectronics

Quarterly Income Statement Mar-14A

Jun-14A

Sep-14A

Dec-14A

Mar-15A

Jun-15A

Sep-15A

Dec-15A

Mar-16A

4,670 (4,089) 581 (234) 57 404 (288) 692 1,466 42 1,424 (2) (2) 0 0 1,868 (278) 0

5,523 (4,724) 799 (234) 61 626 (284) 909 114 57 57 (2) (2) 0 0 738 (51) 0

5,732 (5,006) 725 (248) 69 547 (275) 822 66 56 11 (2) (2) 0 0 611 (24) 0

5,303 (4,562) 741 (294) 85 532 (275) 807 26 60 (34) (2) (2) 0 0 555 (13) 0

4,994 (4,396) 598 (256) 49 391 (283) 674 142 54 88 (2) (2) 0 0 531 (15) 0

5,119 (4,510) 609 (268) 60 401 (293) 694 16 58 (42) (2) (2) 0 0 415 (15) 0

5,285 (4,397) 888 (304) 82 667 (287) 954 (323) 55 (379) (2) (2) 0 0 341 (13) 0

5,125 (4,188) 936 (287) 53 703 (297) 1,000 126 55 71 (2) (2) 0 0 827 (5) 0

4,742 (4,160) 582 (325) 53 311 (294) 605 179 51 128 (2) (2) 0 0 488 (4) 0

4,764 (4,177) 587 (267) 64 384 (292) 676 60 50 9 (2) (2) 0 0 442 (25) 0

5,290 (4,542) 749 (289) 81 540 (294) 835 118 48 70 (2) (2) 0 0 657 (88) 0

5,726 (4,768) 958 (287) 63 734 (290) 1,024 (76) 53 (129) (2) (2) 0 0 656 (21) 0

5,238 (4,394) 844 (302) 47 588 (282) 871 242 51 191 (2) (2) 0 0 828 (11) 0

5,232 (4,467) 765 (293) 66 539 (259) 798 161 56 105 (2) (2) 0 0 698 (22) 0

1,590 167 1.98 0.21

686 629 0.85 0.78

587 576 0.73 0.72

542 576 0.67 0.72

517 429 0.64 0.53

399 441 0.50 0.55

329 707 0.41 0.88

822 751 1.02 0.93

484 356 0.60 0.44

417 408 0.52 0.51

569 499 0.71 0.62

635 764 0.79 0.95

818 627 1.02 0.78

676 571 0.84 0.71

12.4 8.6 14.8 34.1

14.5 11.3 16.5 12.4

12.7 9.5 14.3 10.2

14.0 10.0 15.2 10.2

12.0 7.8 13.5 10.3

11.9 7.8 13.6 7.8

16.8 12.6 18.1 6.2

18.3 13.7 19.5 16.0

12.3 6.6 12.7 10.2

12.3 8.1 14.2 8.8

14.2 10.2 15.8 10.8

16.7 12.8 17.9 11.1

16.1 11.2 16.6 15.6

14.6 10.3 15.3 12.9

(3.1) (5.1) (2.1) 175.3 (62.8)

18.3 55.0 31.5 (56.8) 277.5

3.8 (12.6) (9.6) (14.5) (8.4)

(7.5) (2.8) (1.8) (7.6) (0.0)

(5.8) (26.5) (16.4) (4.7) (25.6)

2.5 2.5 2.9 (22.7) 2.9

3.2 66.4 37.5 (17.7) 60.3

(3.0) 5.4 4.8 150.0 6.2

(7.5) (55.8) (39.5) (41.1) (52.6)

0.4 23.5 11.8 (13.8) 14.6

11.1 40.8 23.5 36.4 22.5

8.2 35.8 22.7 11.7 53.0

(8.5) (19.8) (15.0) 28.7 (18.0)

(0.1) (8.4) (8.3) (17.4) (8.9)

Income Stetement (Bt mn) Revenue Cost of Goods Sold Gross Profit Operating Expense Other incomes Operating Profit Depreciation of fixed asset Operating EBITDA Non-Operating Income Interest Income Other Non-op Income Non-Operating Expense Interest Expense Other Non-op Expense Equity Income/(Loss) Pre-tax profit Current Taxation Minorities Extraordinary items Net Profit Normalized Profit EPS(Bt) Normalized EPS(Bt) Margins Gross profit margin Operating EBIT margin Operating EBITDA margin Net profit margin Growth Revenue growth Operating EBIT growth Operating EBITDA growth Net profit growth Normalized profit growth

Jun-16A Sep-16A Dec-16A Mar-17A

Jun-17A

Source: KGI Research

Peer comparison – Key valuation stats Rating DELTA* HANA KCE* SVI* Sector

N N N U Neutral

Target Current price (Bt) price (Bt) 80.00 47.00 93.00 4.90

87.50 46.50 94.50 5.40

Upside (%)

16 core EPS (Bt)

17F core EPS (Bt)

18F core EPS (Bt)

17F PER (x)

18F PER (x)

17F PBV (x)

18F PBV (x)

(8.6) 1.1 (1.6) (9.3)

4.28 2.52 4.97 0.25

4.54 3.08 4.99 0.28

4.76 3.40 6.00 0.33

20.5 13.6 18.6 17.3 17.5

16.8 13.8 15.5 14.9 15.3

3.0 1.8 4.6 1.5 2.7

2.8 1.7 3.9 1.4 2.5

17F Div 18F Div 17F ROAE 18F ROAE yield (%) yield (%) (%) (%) 3.7 4.3 2.1 2.3 3.1

3.9 4.3 2.6 2.7 3.3

11.5 11.0 16.0 5.7 11.0

13.3 10.3 17.7 6.3 11.9

Source: KGI Research

October 19, 2017

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

5

Thailand

HANA Microelectronics

Balance Sheet As of 31 Dec (Bt mn) Total Assets Current Assets Cash & ST Investment Inventories Account Receivable Others Non-current Assets LT Investment Net fixed Assets Others Total Liabilities Current Liabilities Account Payable ST Borrowing Others Long-term Liabilities Long-term Debts Others Shareholders' Equity Common Stock Capital Surplus Retained Earnings Preferred Stock

Profit & Loss 2015 23,123 15,670 8,784 3,367 3,318 202 7,453 337 6,901 214 3,699 3,165 2,413 0 752 534 0 534 19,424 805 1,723 15,492 0

2016 23,781 17,038 9,641 3,676 3,561 160 6,743 386 6,145 212 3,819 3,364 2,813 0 551 455 0 455 19,962 805 1,723 16,089 0

2017F 25,183 17,915 10,533 3,583 3,627 172 7,269 386 6,679 204 4,003 3,514 3,071 0 443 489 0 489 21,181 805 1,723 17,307 0

2018F 26,725 19,433 11,858 3,392 3,994 189 7,292 386 6,707 199 4,419 3,880 3,392 0 488 539 0 539 22,306 805 1,723 18,433 0

2019F 28,135 20,825 12,972 3,519 4,138 196 7,310 386 6,730 195 4,583 4,025 3,519 0 506 558 0 558 23,553 805 1,723 19,679 0

Source: KGI Research

Source: KGI Research

October 19, 2017

2015 20,521 (17,491) 3,030 (1,115) 23 2,161 (1,161) 3,282 (39) 222 (262) (8) (8) 0 0 2,114 (47) 0 0 2,066 2,328 2.57 2.89

2016 20,523 (17,647) 2,876 (1,167) 58 1,969 (1,170) 3,420 281 203 79 (7) (7) 0 0 2,243 (137) 0 0 2,105 2,027 2.62 2.52

2017F 22,065 (18,680) 3,385 (1,214) 62 2,452 (1,466) 4,487 569 218 351 (8) (8) 0 0 3,013 (184) 0 0 2,828 2,477 3.51 3.08

2018F 24,298 (20,635) 3,662 (1,288) 68 2,683 (1,472) 4,395 240 240 0 (9) (9) 0 0 2,914 (178) 0 0 2,736 2,736 3.40 3.40

2019F 25,174 (21,407) 3,767 (1,284) 71 2,803 (1,477) 4,529 249 248 0 (9) (9) 0 0 3,042 (186) 0 0 2,856 2,856 3.55 3.55

2015 3,126 2,066 1,161 (102)

2016 2,904 2,105 1,170 (371)

2017F 4,492 2,828 1,466 198

2018F 4,427 2,736 1,472 219

2019F 4,218 2,856 1,477 (115)

(2,160) (1,657) (501) (3) 966 (1,006) 0 0 (1,006) (41)

(416) (414) 88 (90) 2,488 (1,567) 0 0 (1,567) 921

(2,238) (2,000) (248) 10 2,255 (1,610) 0 0 (1,610) 645

(1,851) (1,500) (358) 8 2,576 (1,610) 0 0 (1,610) 966

(1,635) (1,500) (141) 6 2,583 (1,610) 0 0 (1,610) 974

Source: KGI Research

Key Ratios Year to 31 Dec Growth (%YoY) Sales OP EBITDA NP Normalized Profit EPS Normalized EPS Profitability (%) Gross Margin Operating Margin EBITDA Margin Net Margin ROAA ROAE Stability Gross Debt/Equity (%) Net Debt/Equity (%) Interest Coverage (x) Interest & ST Debt Coverage (x) Cash Flow Interest Coverage (x) Cash Flow/Interest & ST Debt (x) Current Ratio (x) Quick Ratio (x) Net Debt (Bt mn) Per Share Data (Bt) EPS Normalized EPS CFPS BVPS SPS EBITDA/Share DPS Activity Asset Turnover (x) Days Receivables Days Inventory Days Payable Cash Cycle Assumption Sales (mn USD) Exchange Rate

Year to Dec 31 (Btmn) Revenue Cost of Goods Sold Gross Profit Operating Expenses Other Incomes Operating Profit Depreciation of fixed assets Operating EBITDA Non-Operating Income Interest Income Other Non-op Income Non-Operating Expense Interest Expense Other Non-op Expense Equity Income/(Loss) Pretax Profit Current Taxation Minorities Extraordinaries items Net Profit Normalized Profit EPS(Bt) Normalized EPS(Bt)

Cash Flow 2015

2016

2017F

2018F

2019F

(3.3) 2.5 (33.0) (39.3) 19.5 (39.3) 19.5

0.0 (8.9) 4.2 1.9 (13.0) 1.9 (13.0)

7.5 24.5 31.2 34.3 22.2 34.3 22.2

10.1 9.4 (2.1) (3.3) 10.4 (3.3) 10.4

3.6 4.5 3.0 4.4 4.4 4.4 4.4

14.8 10.5 16.0 10.1 8.9 10.6

14.0 9.6 16.7 10.3 8.9 10.5

15.3 11.1 20.3 12.8 11.2 13.4

15.1 11.0 18.1 11.3 10.2 12.3

15.0 11.1 18.0 11.3 10.2 12.1

0.2 (0.5) 265.3 265.3 390.8 390.8 5.0 3.9 (8,784)

0.2 (0.5) 304.7 304.7 393.3 393.3 5.1 4.0 (9,641)

0.2 (0.5) 380.5 380.5 565.9 565.9 5.1 4.1 (10,533)

0.2 (0.5) 334.3 334.3 506.4 506.4 5.0 4.1 (11,858)

0.2 (0.6) 336.9 336.9 465.7 465.7 5.2 4.3 (12,972)

2.6 2.9 3.9 24.1 25.5 4.1 2.0

2.6 2.5 3.6 24.8 25.5 4.2 2.0

3.5 3.1 5.6 26.3 27.4 5.6 2.0

3.4 3.4 5.5 27.7 30.2 5.5 2.0

3.5 3.5 5.2 29.3 31.3 5.6 2.0

0.9 59 70 50 79

0.9 63 76 58 81

0.9 60 70 60 70

0.9 60 60 60 60

0.9 60 60 60 60

599 34.3

581 35.3

645 34.2

710 34.2

736 34.2

Year to 31 Dec (Bt mn) Operating Cash Flow Net Profit Depreciation & Amortization Change in Working Capital Others Investment Cash Flow Net CAPEX Change in LT Investment Change in Other Assets Free Cash Flow Financing Cash Flow Change in Share Capital Net Change in Debt Change in Other LT Liab. Net Cash Flow Source: KGI Research

Rates of Return on Invested Capital Year 2015 2016 2017F 2018F 2019F Year 2015 2016 2017F 2018F 2019F Year 2015 2016 2017F 2018F 2019F

COGS Operating Exp. Operating Depreciation + + = Revenue Revenue Margin Revenue 85.2% 5.7% 6.6% 2.5% 86.0% 5.7% 7.0% 1.4% 84.7% 6.6% 6.8% 1.9% 84.9% 6.1% 6.6% 2.4% 85.0% 5.9% 6.4% 2.7% Working Capital Other Assets Capital Net PPE 1/ + + = Revenue Revenue Turnover Revenue (0.0) 0.3 0.8 0.9 (0.0) 0.3 0.9 0.9 0.0 0.3 0.8 0.9 0.0 0.3 0.8 0.9 (0.0) 0.3 0.9 0.9 Operating Cash After-tax Return Capital x x = Margin Tax Rate on Inv. Capital Turnover 2.5% 2.2% 0.0% 0.9 1.4% 6.1% 0.1% 0.9 1.9% 6.1% 0.1% 0.9 2.4% 6.1% 0.1% 0.9 2.7% 6.1% 0.1% 0.9

1-

Source: KGI Research

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

6

Thailand

HANA Microelectronics

HANA Microelectronics– Recommendation & target price history Date 1-Sep-17

60 55

Rating Neutral

Target 47.00

Price 43.00

50

45 40 35 30 25 Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Share price

Apr-17

May-17

Target price lowered

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Target price raised

Source: KGI Research

KGI Locations

ChinaShanghai

Room 1907-1909, Tower A, No. 100 Zunyi Road, Shanghai, PRC 200051

Shenzhen

Room 24D1, 24/F, A Unit, Zhen Ye Building,2014 Bao’annan Road, Shenzhen, PRC 518008

TaiwanTaipei

700 Mingshui Road, Taipei, Taiwan Telephone886.2.2181.8888 ‧

Hong Kong

Facsimile886.2.8501.1691

41/F CentralPlaza, 18 Harbour Road, Wanchai, Hong Kong Telephone 852.2878.6888

ThailandBangkok

Facsimile 852.2878.6800

8th - 11th floors, AsiaCentreBuilding 173 South Sathorn Road, Bangkok10120, Thailand Telephone 66.2658.8888

KGI's Ratings

Facsimile 66.2658.8014

Rating

Definition

Outperform (OP)

The stock's excess return* over the next twelve months is ranked in the top 40% of KGI's coverage universe in the related market (e.g. Taiwan).

Neutral (N)

The stock's excess return* over the next twelve months is ranked in the range between the top 40% and the bottom 40% of KGI's coverage universe in the related market (e.g. Taiwan).1.3

Under perform (U)

The stock's excess return* over the next twelve months is ranked in the bottom 40% of KGI's coverage universe in the related market (e.g. Taiwan).

Not Rated (NR)

The stock is not rated by KGI Securities.

Restricted (R)

KGI policy and/or applicable law regulations preclude certain typesofcommunications, including an investment recommendation, during the course of KGI's engagement in an investment banking transaction and in certain other circumstances.

Excess return = 12M target price/current priceNote

Disclaimer

October 19, 2017

KGI Securities no event shall profits, arising to buy or sell

When an analyst publishes a new report on a covered stock, we rank the stock's excess return with those of other stocks in KGI's coverage universe in the related market. We will assign a rating based on its ranking. If an analyst does not publish a new report on a covered stock, its rating will not be changed automatically. (Thailand) Plc. (“The Company”) disclaims all warranties with regards to all information contained herein. In the Company be liable for any direct, indirect or any damages whatsoever resulting from loss of income or by utilization and reliance on the information herein. All information hereunder does not constitute a solicitation any securities but constitutes our sole judgment as of this date and are subject to change without notice.

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

7

HANA Microelectronics PCL

Oct 19, 2017 - Pre-tax profit. 1,868. 738. 611. 555. 531. 415. 341. 827. 488. 442. 657. 656. 828. 698. Current Taxation. (278). (51). (24). (13). (15). (15). (13). (5). (4). (25). (88). (21). (11). (22). Minorities. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. Extraordinary items. Net Profit. 1,590. 686. 587. 542. 517. 399. 329. 822. 484. 417. 569.

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