Deutsche Bank Markets Research Rating

Company

Buy

HPH Trust

Date

17 September 2015

Company Update

Asia

Hong Kong Conglomerates

Reuters HPHT.SI

Bloomberg HPHT SP

ADR Ticker HUPHY

ISIN US44842D1019

Price at 16 Sep 2015 (USD)

Exchange Ticker SES HPHT

0.58

Price target - 12mth (USD)

0.62

52-week range (USD)

0.74 - 0.52

Straits Times Index

Assessing Kwai Tsing land value Redevelopment option should not be overlooked Kwai Tsing, when operating as a port, may not look promising but as Hong Kong’s throughput continues to fall, the redevelopment option for Kwai Tsing’s land into residential usage would become more apparent and should not be understated. We estimate Kwai Tsing’s land for residential purpose will be worth HK$34bn under our bear case scenario. This option value, which has not been reflected in current share prices, should not only underpin the share price but also trigger a possible privatization of HPHT ahead. Kwai Tsing’s land eventually to be redeveloped… The rising competiveness of Chinese ports, particularly those in PRD, suggests HK ports would gradually lose out. Under our worse case scenario, we estimate HK’s throughput will plummet ~50% in the next 10 years. While the concession for HK ports would expire in 2047, this accelerating downtrend might trigger earlier-than-expected redevelopment of Kwai Tsing’s land into residential usage. Indeed, prior to its listing in 2011, HPHT signed a “Redevelopment Potential Agreement” with sponsor Hutchison Port Holdings, which highlights the possibility and value of this development option.

2,869

Sky Hong, CFA

Joe Liew, CFA

Research Analyst (+852) 2203 6131 [email protected]

Research Analyst (+65) 6423 8507 [email protected]

Price/price relative 0.9 0.8 0.7 0.6 0.5 9/13

3/14

9/14

3/15

HPH Trust Straits Times Index (Rebased)

Performance (%)

1m

3m

12m

Absolute

0.0

-10.2

-16.7

-7.9

-13.0

-12.3

Straits Times Index Source: Deutsche Bank

… and probably worth HK$34-45bn for residential usage HPHT currently holds 137.6 hectares (or 14.8m sq.ft) of land in Kwai Tsing. Assuming that half of the area would be developed into residential buildings, total NAV would reach HK$34bn, HK$38bn and HK$45bn under our bear, base and bull case scenarios, respectively. Applying a 20% discount, we estimate HPHT’s Kwai Tsing land will be worth US$0.40-0.53/share. Share price has not captured this development value; risks For the near term, we are positive on HPHT as its 2H15 DPU, which looks relatively certain, should offer a 4%-plus yield. While the long-term trend for HK ports looks unpromising, which might dent the DPU prospect, the redevelopment option for Kwai Tsing’s land should not be overlooked. This redevelopment value would not only underpin the share price. Another option could be privatization of HPHT ahead. Key macro risk: slower-than-expected global growth; company-specific risks; lower-than-expected DPUs. Forecasts And Ratios Year End Dec 31 Sales (HKDm) EBITDA (HKDm) Reported NPAT (HKDm) DB EPS FD (HKD) DB EPS growth (%) PER (x) DPS (net) (HKD) Yield (net) (%)

2013A

2014A

2015E

2016E

2017E

12,384.0 6,784.9 1,643.0 0.19 -28.2 31.7 0.41 6.9

12,622.2 6,965.5 1,604.4 0.18 -2.4 29.0 0.41 7.7

13,175.3 7,086.3 1,426.1 0.16 -11.1 27.2 0.34 7.6

13,848.6 7,369.6 1,429.4 0.16 0.2 27.2 0.34 7.7

14,557.2 7,660.9 1,356.2 0.16 -5.1 28.6 0.41 9.2

Source: Deutsche Bank estimates, company data 1

DB EPS is fully diluted and excludes non-recurring items

2

Multiples and yields calculations use average historical prices for past years and spot prices for current and future years, except P/B which uses the year end close

________________________________________________________________________________________________________________ Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 124/04/2015.

17 September 2015 Conglomerates HPH Trust Fiscal year end 31-Dec

Model updated:26 August 2015 Running the numbers

2012

2013

2014

2015E

2016E

2017E

0.26 0.26 0.51 7.7

0.19 0.19 0.41 7.5

0.18 0.18 0.41 5.1

0.16 0.16 0.34 4.9

0.16 0.16 0.34 4.7

0.16 0.16 0.41 4.5

8,709 50,542 89,177

8,709 52,113 96,489

8,709 46,470 87,126

8,709 38,810 79,261

8,709 38,810 77,909

8,709 38,810 76,734

P/E (DB) (x) P/E (Reported) (x) P/BV (x)

22.1 22.1 0.79

31.7 31.7 0.70

29.0 29.0 1.05

27.2 27.2 0.91

27.2 27.2 0.94

28.6 28.6 0.98

FCF Yield (%) Dividend Yield (%)

7.2 8.8

8.6 6.9

14.4 7.7

10.4 7.6

13.0 7.7

12.6 9.2

7.2 12.5 20.3

7.8 14.2 24.7

6.9 12.5 22.0

6.0 11.2 19.7

5.6 10.6 18.1

5.3 10.0 16.7

12,427 8,160 7,151 1,157 1,595 4,399 -598 161 0 0 3,962 376 1,296 0 2,289

12,384 7,890 6,785 1,289 1,595 3,900 -641 121 0 0 3,379 409 1,327 0 1,643

12,622 7,808 6,966 1,413 1,595 3,957 -586 139 0 0 3,509 731 1,174 0 1,604

13,175 8,140 7,086 1,463 1,595 4,028 -1,033 133 0 0 3,127 625 1,076 0 1,426

13,849 8,510 7,370 1,472 1,595 4,302 -1,289 121 0 0 3,135 627 1,078 0 1,429

14,557 8,896 7,661 1,481 1,595 4,585 -1,726 115 0 0 2,974 595 1,023 0 1,356

0 2,289

0 1,643

0 1,604

0 1,426

0 1,429

0 1,356

4,411 -747 3,664 0 -5,683 -28 324 -1,722 -1,694

5,155 -694 4,462 0 -5,832 4,502 137 3,269 -700

5,397 1,311 6,709 0 -4,835 -177 171 1,867 -439

5,250 -1,196 4,054 0 -4,219 0 629 464 81

5,240 -206 5,034 0 -4,589 0 301 746 83

5,087 -216 4,871 0 -4,798 0 330 403 77

6,169 27,563 94,445 2,688 3,984 134,850 29,141 20,202 49,343 67,156 18,351 85,507 22,973

5,819 29,971 94,603 2,667 4,107 137,166 33,799 19,136 52,934 65,169 19,063 84,232 27,980

7,799 27,372 72,372 4,305 4,263 116,110 33,681 19,035 52,716 44,316 19,078 63,394 25,883

8,019 31,142 70,658 4,305 4,367 118,490 33,800 22,940 56,740 42,775 18,975 61,750 25,781

8,764 29,876 69,062 4,305 4,474 116,481 33,800 23,104 56,904 41,208 18,368 59,577 25,036

9,168 28,611 67,467 4,305 4,583 114,135 33,800 23,294 57,094 39,443 17,597 57,040 24,632

nm na 57.5 35.4 195.0 3.4 6.0 0.3 26.9 7.4

-0.3 -28.2 54.8 31.5 217.3 2.5 5.7 0.2 33.2 6.1

1.9 -2.4 55.2 31.3 222.5 2.9 8.8 0.4 40.8 6.7

4.4 -11.1 53.8 30.6 208.1 3.3 9.1 0.4 41.8 3.9

5.1 0.2 53.2 31.1 209.6 3.4 1.5 0.1 42.0 3.3

5.1 -5.1 52.6 31.5 262.8 3.4 1.5 0.1 43.2 2.7

Financial Summary DB EPS (HKD) Reported EPS (HKD) DPS (HKD) BVPS (HKD)

Asia Hong Kong Conglomerates

HPH Trust Reuters: HPHT.SI

Bloomberg: HPHT SP

Weighted average shares (m) Average market cap (HKDm) Enterprise value (HKDm)

Valuation Metrics

Buy Price (16 Sep 15)

USD 0.58

Target Price

USD 0.62

52 Week range

USD 0.53 - 0.74

Market Cap (m)

EURm 4,435 USDm 5,008

EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

Income Statement (HKDm)

Company Profile HPH Trust is the first publicly traded container port business trust, having been listed in March 2011. It operates deep-water container terminals in HK (HIT and COSCO HIT) and east Shenzhen (Yantian). In addition, HPH Trust holds 50% economic benefits in three river ports and undertakes certain port ancillary services. As of April 2011, the trust has 30 berths with an annual capacity of 27m TEUs. HPH Trust is 28% owned by Hutchison Whampoa (0013.HK).

Price Performance 0.9

0.8

Sales revenue Gross profit EBITDA Depreciation Amortisation EBIT Net interest income(expense) Associates/affiliates Exceptionals/extraordinaries Other pre-tax income/(expense) Profit before tax Income tax expense Minorities Other post-tax income/(expense) Net profit DB adjustments (including dilution) DB Net profit

0.7 0.6

Cash Flow (HKDm)

0.5 Sep 13Dec 13Mar 14Jun 14Sep 14Dec 14Mar 15Jun 15 HPH Trust

Cash flow from operations Net Capex Free cash flow Equity raised/(bought back) Dividends paid Net inc/(dec) in borrowings Other investing/financing cash flows Net cash flow Change in working capital

Straits Times Index (Rebased)

Margin Trends 60 50

Balance Sheet (HKDm)

40 30 12

13

14

15E

EBITDA Margin

16E

17E

EBIT Margin

Growth & Profitability 6 5 4 3 2 1 0 -1

4

3 2 1 0 12

13

14

15E

16E

Sales growth (LHS)

17E ROE (RHS)

Solvency 50

8

40

6

30

4

20

2

10 0

0 12

13

14

Net debt/equity (LHS)

15E

16E

17E

Cash and other liquid assets Tangible fixed assets Goodwill/intangible assets Associates/investments Other assets Total assets Interest bearing debt Other liabilities Total liabilities Shareholders' equity Minorities Total shareholders' equity Net debt

Key Company Metrics Sales growth (%) DB EPS growth (%) EBITDA Margin (%) EBIT Margin (%) Payout ratio (%) ROE (%) Capex/sales (%) Capex/depreciation (x) Net debt/equity (%) Net interest cover (x) Source: Company data, Deutsche Bank estimates

Net interest cover (RHS)

Sky Hong, CFA +852 2203 6131

Page 2

[email protected]

Deutsche Bank AG/Hong Kong

17 September 2015 Conglomerates HPH Trust

Kwai Tsing’s land eventually to be redeveloped As a port, Kwai Tsing’s role is under structural threat… We highlighted this thesis in our previous report “Leaking business – HK ports losing out” issued on 26 June 2015. As 70% of HK’s current throughput ultimately relates to China, particularly the PRD regions, the shorter distance to cargo hinterland, cheaper container handling charters, rising connectivity, and possible relaxation of cabotage rule all suggest that major ports in PRD will likely continue to grab cargo from HK. HK’s throughput could decline 30% and in a worst case scenario, might fall 50% in the next 10 years. Figure 1: HK’s transshipments (70% of HK’s total laden throughput) breakdown by region - 2014

Other PRD 9% Zhuhai 4% Zhongshan 7%

Other Countries 27%

PRD 70%

Foshan 9%

Yantian 8% Huangpu 25%

China 38% Other China 5%

Other Asia regions 15% Asean 19%

Xiamen 5% Shantou 2%

Ningbo 2%

Shunde 7%

Qingdao 4% Shanghai 3%

Shekou/ Mawa/ Chiwan 8%

Nanhai 8% Jiangmen/ Xinhu 6%

Panyu 9%

Source: Deutsche Bank, Hong Kong Census and Statistics Department

Figure 2: DB estimates on HK’s throughput decline in the next 10 years Base case K TEU

Worst case

Transshipments

Direct shipments

Transshipments

Direct shipments

13,383

5,659

13,383

5,659

PRD-related

2,401

1,028

4,321

1,850

Other major locations in China (ex-PRD)

1,153

379

1,730

568

Other China

448

93

806

167

Total Impact

4,002

1,499

6,858

2,585

HK total throughput @ 2014 Impact on HK’s throughput

HK total throughput after 10 years

9,381

4,160

6,525

3,074

% chg

-29.9%

-26.5%

-51.2%

-45.7%

Total % chg on Hong Kong throughput

-28.9%

-49.6%

Source: Deutsche Bank estimate, Hong Kong Census and Statistics Department

Deutsche Bank AG/Hong Kong

Page 3

17 September 2015 Conglomerates HPH Trust

… this eventually might trigger the redevelopment of Kwai Tsing’s land In our view, the redevelopment of Kwai Tsing’s land into residential properties not only makes sense but is also technically feasible. HK simply lacks appropriate land reserves for building residential properties. Kwai Tsing’s 279 hectares (30m sq.ft) of land is very suitable for residential buildings, in our view. The land is not only adjacent to main roads and subways but also has a good sea view. In addition, out of 19m TEU throughput handled by HK, 70% is transshipments, which can easily be relocated. For the remaining 30% direct shipments, we estimate that 60% is ultimately related to China. This suggests that, out of HK’s total throughput, only 10% is relevant to HK. And this portion can be easily satisfied by trucking from the PRD regions, in our view. Figure 3: Direct shipments only account for 30%

Figure 4: Most HK’s imports are re-exported later Re-exports

Domestic exports

Imports

Ratio of re-export/import

100% 90% 80%

Direct Shipment 30%

70% 60%

Empty boxes 14%

50% 40%

Laden boxes 86%

30% 20% 10% Transshipment 70%

Source: Deutsche Bank, Hong Kong Census and Statistics Department

0%

Source: Deutsche Bank, Hong Kong Census and Statistics Department

Indeed, the parent company of HPHT has long noticed this land redevelopment potential. Prior to its listing in 2011, HPHT signed a “Redevelopment Potential Agreement” with its sponsor Hutchison Port Holdings, which is a subsidiary of Hutchsion Whampoa Limited (HWL). Under the agreement, as long as HWL and its subsidiaries hold 15% or more of total number of units or shares in issue in the company, HPH shall have the exclusive right of redevelopment of Kwai Tsing’s land. Hence, even if the holding is under 15%, HPH still holds the first development right. Currently, CK Hutchison holds a total 30% of HPHT. Figure 5: HPHT shareholder structure CK Hutchison

Temasek

100%

reorganisation and combination

Cheung Kong Holding 2.45%

Hutchison Whampoa Investment

27.62%

PSA International

11.02%

Public

58.91%

HPHT Source: Deutsche Bank, company data

Page 4

Deutsche Bank AG/Hong Kong

17 September 2015 Conglomerates HPH Trust

For residential usage, Kwai Tsing is worth HK$34-45bn How we derive the value for Kai Tsing? HPHT currently holds 137.6 hectares (or 14.8m sq.ft) of land in Kwai Tsing. Assuming that half of the area would be redeveloped into residential buildings, we estimate that NAV would reach HK$34bn, HK$38bn and HK$45bn under our bear, base and bull case scenarios, respectively. Applying a 20% discount, we estimate the Kwai Tsing land held by HPHT will be worth US$0.400.53/share. Figure 6: Kwai Tsing’s land redevelopment value – our scenario analysis # of berth HPHT stake HIT

Total area (Hectare)

Effective area Land value Note (m Sq. ft) (HK$m)

12

100%

111

11.9

18,000

Cosco-HIT

2

50%

30

1.6

1,500

ACT

2

40%

29

Total

Residential area

m sq, ft

Plot ratio Total floor area Residential price

1.2

1,200

14.8

20,700

As ports, Kwai Tsing’s land is valued at HK$20.7bn

Bear case

Base case

Bull case

7.4

7.4

7.4

* Assumption 2: 50% to developed into residential property * Assumption 3: plot ratio is 4-5

x

4.5

4.8

5.0

m sq, ft

33.3

35.2

37.0

HK$/sq.ft

10,000

12,000

15,000

25%

25%

25%

Development margin

*Assumption 1: land value of HK$1.5bn/berth based on previous transactions in HK and assumes that 60%-65% of total investment is for land

* Assumption 4: residential price nearby at HK$12,000/sq.ft * Assumption 5: 25% development margin

Gross development value

HK$/sq.ft

8,000

9,600

12,000

= residential price / (1+development margin)

Construction cost

HK$/sq.ft

(4,000)

(4,800)

(6,000)

* Assumption 6: 40% of residential price

SG&A expense

HK$/sq.ft

(1,000)

(1,200)

(1,500)

* Assumption 7: 10% residential price as SG&A expense

Land value (residential)

HK$m

99,975

126,635

166,625

* = (Gross development value – construction cost – SG&A)* residential area* plot ratio

Land premium to be paid

HK$m

79,275

105,935

145,925

* = land value (residential) – land value (ports)

Sales (PV of 10 yrs)

HK$m

218,749

277,082

364,581

* Assumption 8: 10 phases and sales of 1 phase each year

Costs (PV of 10 yrs)

HK$m

184,893

238,923

319,967

* Assumption 9: premium was paid 20% in the first year, and residual 80% paid within five years.

Total NAV

HK$m

33,856

338,159

44,614

= PV(sales)- PV(costs)

20% discount

HK$m

27,085

30,527

35,691

* Assumption 10: 20% discount to NAV

8,711

8,711

8,711

0.40

0.45

0.53

share outstanding NAV/share

US$

Source: Deutsche Bank estimate, company data

This redevelopment value has not been reflected in the share price We acknowledge that the land redevelopment still looks remote as the concession for Kwai Tsing ports would only expire in 2047. However, as the decline in HK’s throughput accelerates ahead, this land redevelopment value would become more apparent, which in turn should underpin the stock price, in our view. Moreover, given this redevelopment option, we note that one of several options for the company to realize this value would be privatization of HPHT’s parent going forward. Since its listing, HPHT has paid in total nine rounds of DPU. The present value of these DPUs amount to US$0.3/share, and the current share price of US$0.58 compares favourably to HPHT’s IPO price of US$1.01 in 2011. We would not rule out the possibility of HPHT’s parent company initiating privatization especially when the share price drops to a Deutsche Bank AG/Hong Kong

Page 5

17 September 2015 Conglomerates HPH Trust

desirable level, although the company has not commented on this possibility at this stage.

Figure 7: HPHT distributed DPU with 9 rounds 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 DPU (HKD cents)

14.3 23.4 24.1 27.2 18.7 22.3 18.7 22.3 15.7

FV of DPU (HKD cents)

19.5 30.8 30.6 33.4 22.2 25.6 20.7 23.9 16.2

FV Note * Distributed DPU by HPHT * Current value of distributed DPU, assuming 7% discount rate

Total DPU (HK$ cents)

223 * Total current value of DPU

Total DPU(US$)

0.3

FV of issue price(US$)

1.4 * Current value of IPO price of US$1.01

Current share price(US$)

0.58 * Current share price

Shortfall (US$)

0.52 = 1.4-0.3-0.58

Source: Deutsche Bank, company data

Valuations and risks For the near term, we are positive on HPHT. While China’s export slowdown would weigh on HPHT’s earnings/dividends, the strong throughput growth in Yantian along with low interest rates and higher port tariffs should provide strong tailwinds for earnings. On the dividend front, the 2H15E DPU would offer investors a 4%-plus yield. For the long run, the substantial value associated with land redevelopment of Kwai Tsing also bodes well for the share price, in our view. We continue to have a Buy rating on the stock with a target price US$0.62, which is based on a dividend discount model. Key risks include slower-thanexpected global growth, company-specific risks, and lower-than-expected DPUs ahead. Figure 8: Forward yield now 7.7%, which looks attractive

12.0%

Forward Dividend Yield (LHS)

Spread (RHS)

LT Average (RHS) 12.00

10.0%

10.00

8.0%

8.00

6.0%

6.00

4.0%

4.00

2.0%

2.00

0.0%

0.00

Source: Deutsche Bank, company data, Bloomberg Finance LP

Page 6

Deutsche Bank AG/Hong Kong

17 September 2015 Conglomerates HPH Trust

Appendix- Kwai Tsing layout Figure 9: Kwai Tsing landscape

HIT Terminal 8 West (ACT)

HIT total: 12mn sq.ft

ACT 3mn sq.ft

Terminal 6 & 7

Terminal 4

HIT

HIT

MTL MTL

Terminal 9

total:10mn sq.ft Terminal 1,2 & 5

MTL

Cosco-HIT 3mn sq.ft

Terminal 8 East (Cosco HIT) Source: Deutsche Bank, company data

Deutsche Bank AG/Hong Kong

Page 7

17 September 2015 Conglomerates HPH Trust

Appendix 1 Important Disclosures Additional information available upon request Disclosure checklist Company

Ticker

Recent price*

Disclosure

HPH Trust

HPHT.SI

0.58 (USD) 16 Sep 15

1,7

*Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr.

Important Disclosures Required by U.S. Regulators Disclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States. See Important Disclosures Required by Non-US Regulators and Explanatory Notes. 1.

Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees.

7.

Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year.

Important Disclosures Required by Non-U.S. Regulators Please also refer to disclosures in the Important Disclosures Required by US Regulators and the Explanatory Notes. 1.

Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees.

7.

Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year.

For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=HPHT.SI

Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Sky Hong

Page 8

Deutsche Bank AG/Hong Kong

17 September 2015 Conglomerates HPH Trust

Historical recommendations and target price: HPH Trust (HPHT.SI) (as of 9/16/2015) 0.90

Previous Recommendations 3

0.80

1

Security Price

0.70

5

Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating

4

2

6 7

0.60

0.50

Current Recommendations

0.40

Buy Hold Sell Not Rated Suspended Rating

0.30 0.20 0.10 0.00 Sep 13

*New Recommendation Structure as of September 9,2002 Dec 13

Mar 14

Jun 14

Sep 14

Date

Dec 14

Mar 15

Jun 15

1.

07/02/2014:

Buy, Target Price Change USD0.73

5.

27/01/2015:

Downgrade to Hold, Target Price Change USD0.70

2.

04/03/2014:

Buy, Target Price Change USD0.74

6.

25/06/2015:

Hold, Target Price Change USD0.62

3.

12/06/2014:

Downgrade to Hold, USD0.74

7.

26/08/2015:

Upgrade to Buy, USD0.62

4.

10/10/2014:

Upgrade to Buy, USD0.74

Equity rating key Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total shareholder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes: 1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were:

Equity rating dispersion and banking relationships 450 400 350 300 250 200 150 100 50 0

53 % 37 %

22 %

Buy

17 % Hold

Companies Covered

11 % 15 % Sell

Cos. w/ Banking Relationship

Asia-Pacific Universe

Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period

Deutsche Bank AG/Hong Kong

Page 9

17 September 2015 Conglomerates HPH Trust

Regulatory Disclosures 1.Important Additional Conflict Disclosures Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

2.Short-Term Trade Ideas Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the SOLAR link at http://gm.db.com.

Page 10

Deutsche Bank AG/Hong Kong

17 September 2015 Conglomerates HPH Trust

Additional Information The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively "Deutsche Bank"). Though the information herein is believed to be reliable and has been obtained from public sources believed to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness. Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own account or with customers, in a manner inconsistent with the views taken in this research report. Others within Deutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those taken in this research report. Deutsche Bank issues a variety of research products, including fundamental analysis, equity-linked analysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication may differ from recommendations contained in others, whether as a result of differing time horizons, methodologies or otherwise. Deutsche Bank and/or its affiliates may also be holding debt securities of the issuers it writes on. Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking revenues. Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof if any opinion, forecast or estimate contained herein changes or subsequently becomes inaccurate. This report is provided for informational purposes only. 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But counterparty exposure, issuer creditworthiness, client segmentation, regulation (including changes in assets holding limits for different types of investors), changes in tax policies, currency convertibility (which may constrain currency conversion, repatriation of profits and/or the liquidation of positions), and settlement issues related to local clearing houses are also important risk factors to be considered. The sensitivity of fixed income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depreciation, or to specified interest rates – these are common in emerging markets. It is important to note that the index fixings may -- by construction -- lag or mis-measure the actual move in the underlying variables they are intended to track. The choice of the proper fixing (or metric) is particularly important in swaps markets, where floating coupon rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. It is also important to acknowledge that funding in a currency that differs from the currency in which coupons are denominated carries FX risk. Naturally, options on swaps (swaptions) also bear the risks typical to options in addition to the risks related to rates movements. Derivative transactions involve numerous risks including, among others, market, counterparty default and illiquidity risk. The appropriateness or otherwise of these products for use by investors is dependent on the investors' own circumstances including their tax position, their regulatory environment and the nature of their other assets and liabilities, and as such, investors should take expert legal and financial advice before entering into any transaction similar Deutsche Bank AG/Hong Kong

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to or inspired by the contents of this publication. The risk of loss in futures trading and options, foreign or domestic, can be substantial. As a result of the high degree of leverage obtainable in futures and options trading, losses may be incurred that are greater than the amount of funds initially deposited. Trading in options involves risk and is not suitable for all investors. Prior to buying or selling an option investors must review the "Characteristics and Risks of Standardized Options”, at http://www.optionsclearing.com/about/publications/character-risks.jsp. If you are unable to access the website please contact your Deutsche Bank representative for a copy of this important document. Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as ADRs, whose values are affected by the currency of an underlying security, effectively assume currency risk. Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the investor's home jurisdiction. United States: Approved and/or distributed by Deutsche Bank Securities Incorporated, a member of FINRA, NFA and SIPC. Non-U.S. analysts may not be associated persons of Deutsche Bank Securities Incorporated and therefore may not be subject to FINRA regulations concerning communications with subject company, public appearances and securities held by the analysts. Germany: Approved and/or distributed by Deutsche Bank AG, a joint stock corporation with limited liability incorporated in the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized under German Banking Law (competent authority: European Central Bank) and is subject to supervision by the European Central Bank and by BaFin, Germany’s Federal Financial Supervisory Authority. United Kingdom: Approved and/or distributed by Deutsche Bank AG acting through its London Branch at Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the United Kingdom is authorised by the Prudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and Financial Conduct Authority. Details about the extent of our authorisation and regulation are available on request. Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch. Korea:

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and/or services, customers should carefully read the relevant disclosures, prospectuses and other documentation. "Moody's", "Standard & Poor's", and "Fitch" mentioned in this report are not registered credit rating agencies in Japan unless Japan or "Nippon" is specifically designated in the name of the entity. Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank Group's analysts with the coverage companies specified by DSI. Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. Malaysia: Deutsche Bank AG and/or its affiliate(s) may maintain positions in the securities referred to herein and may from time to time offer those securities for purchase or may have an interest to purchase such securities. Deutsche Bank may engage in transactions in a manner inconsistent with the views discussed herein. Qatar: Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial Centre Regulatory Authority. Deutsche Bank AG - QFC Branch may only undertake the financial services activities that fall within the scope of its existing QFCRA license. Principal place of business in the QFC: Qatar Financial Centre, Tower, West Bay, Level 5, PO Box 14928, Doha, Qatar. This information has been distributed by Deutsche Bank AG. Related financial products or services are only available to Business Customers, as defined by the Qatar Financial Centre Regulatory Authority. Russia: This information, interpretation and opinions submitted herein are not in the context of, and do not constitute, any appraisal or evaluation activity requiring a license in the Russian Federation. Kingdom of Saudi Arabia: Deutsche Securities Saudi Arabia LLC Company, (registered no. 07073-37) is regulated by the Capital Market Authority. Deutsche Securities Saudi Arabia may only undertake the financial services activities that fall within the scope of its existing CMA license. Principal place of business in Saudi Arabia: King Fahad Road, Al Olaya District, P.O. Box 301809, Faisaliah Tower 17th Floor, 11372 Riyadh, Saudi Arabia. United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial services activities that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai International Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been distributed by Deutsche Bank AG. Related financial products or services are only available to Professional Clients, as defined by the Dubai Financial Services Authority. Australia: Retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. Please refer to Australian specific research disclosures and related information at https://australia.db.com/australia/content/research-information.html Australia and New Zealand: This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act and New Zealand Financial Advisors Act respectively. Additional information relative to securities, other financial products or issuers discussed in this report is available upon request. This report may not be reproduced, distributed or published by any person for any purpose without Deutsche Bank's prior written consent. Please cite source when quoting. Copyright © 2015 Deutsche Bank AG

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David Folkerts-Landau Group Chief Economist Member of the Group Executive Committee Raj Hindocha Global Chief Operating Officer Research

Marcel Cassard Global Head FICC Research & Global Macro Economics

Steve Pollard Global Head Equity Research

Michael Spencer Regional Head Asia Pacific Research

Ralf Hoffmann Regional Head Deutsche Bank Research, Germany

Andreas Neubauer Regional Head Equity Research, Germany

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