COMPANY RESEARCH | Company Update

August 19, 2014

OCBC Bank

(OCBC SP)

Share Price: SGD10.20

MCap (USD): 28.6B

Singapore

Target Price: SGD10.10(-1%)

ADTV (USD): 26M

Banks

Now the hard part: Execution

HOLD Key Data 52w high/low (SGD)



On paper, Greater China strategic initiatives look good, with revenue synergies from day one.



Execution is critical. May prove harder than expected. Scrip dividends likely to stay, lifting CET1 higher.

Issued shares (m)

Maintain HOLD and TP of SGD10.10 (1.24x FY15E P/BV). Top sector pick is DBS.

Major shareholders:



(Unchanged)

10.53/9.09

3m avg turnover (USDm)

26.3

Free float (%)

72.1 3,498 SGD35.7B

Market capitalization -Lee Foundation

19.5%

-Aberdeen Asset Management

Share Price Performance

Upbeat management but execution is key Management painted sanguine prospects in yesterday’s briefing on the bank’s rights issue to finance its acquisition of Wing Hang Bank (WHB). There are revenue synergies by leveraging WHB’s presence in the Pearl River Delta and cross-selling each other’s specialised products. A larger platform in Greater China should help OCBC capture trade and investment flows in the region, capitalise on rising affluence in Greater China and build a stronger deposit base in USD and CNY. We estimate the rights (SGD3.3b at SGD7.65 apiece) will dilute our FY15E/16E EPS by up to 4%, translating into ROE dilution of 0.4ppt for both years. The rights issue would restore OCBC’s transitional common equity Tier 1 (CET1) to 13.2% vs DBS’s 13.5% and UOB’s 13.9%. Its scrip dividend scheme will remain a key feature for raising CET1 higher. We have yet to factor in WHB’s financials. On a pro-forma basis, our TP is unlikely to change much.

Not taking a leap of faith; maintain HOLD We maintain our HOLD rating on OCBC and TP of SGD10.10, based on 1.24x FY15E P/BV. This is 1SD below its average P/BV since 2005 to factor in M&A risks. As with most M&As, execution could prove trickier than initially expected. In our view, any concrete results are only likely to emerge in 2H15E, at the earliest. Management expects the acquisition to turn accretive three years from now.

FY12A 7,961.4 5,206.7 2,734.7 0.8 28.2 0.3 12.8 1.5 3.2 6.66 12.5 1.0

FY13A 6,621.4 3,779.4 2,677.4 0.8 (2.1) 0.3 13.1 1.5 3.3 6.89 11.5 0.8

11.5

116

11.0

112

10.5

108

10.0

104

9.5

100

9.0

96

8.5 Aug-12

Dec-12

Apr-13

OCBC - (LHS, SGD)

4% EPS and 0.4ppt ROE dilution

FYE Dec (SGD m) Operating income Pre-provision profit Core net profit Core EPS (SGD) Core EPS growth (%) Net DPS (SGD) Core P/E (x) P/BV (x) Net dividend yield (%) Book value (SGD) ROAE (%) ROAA (%)

FY14E 7,482.8 4,403.4 3,175.7 0.9 18.6 0.3 11.1 1.4 3.3 7.48 12.8 0.9

FY15E 8,223.4 4,874.3 3,474.9 1.0 9.4 0.3 10.1 1.3 3.3 8.15 12.9 0.9

7.2%

FY16E 9,277.1 5,630.5 4,017.7 1.2 15.6 0.3 8.7 1.1 3.3 8.97 13.6 1.0

SEE PAGE 9 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Aug-13

Dec-13

Apr-14

92

OCBC / Straits Times Index - (RHS, %)

1 Mth 3 Mth 12 Mth Absolute(%)

6.5

5.8

(3.3)

Relative to index (%)

6.3

4.1

(6.7)

Maybank vs Market Positive Market Recs

Neutral Negative

7

8

3

Maybank Consensus

% +/-

Target Price (SGD)

10.10

10.70

(5.6)

'14 PATMI (SGDm)

3,176

3,222

(1.4)

'15 PATMI (SGDm)

3,475

3,429

1.3

Source: FactSet; Maybank

Ng Wee Siang (65) 6432 1467 [email protected]

Co. Reg No: 198700034E

MICA (P) : 099/03/2012

OCBC Bank

Looks good on paper, but devil is in execution Upbeat management. Management attempted to provide clarity during yesterday’s briefing on its SGD3.3b rights issue and business plan for the merger. It sounded upbeat and highlighted areas of opportunity:  Leveraging WHB’s presence in the Pearl River Delta.  Cross-selling each other’s specialised products and harnessing each other’s strengths. Management’s confidence is premised on Asia’s faster growth vis-à-vis many other regions in the world, with China being a key growth driver. Hard part about to begin. On paper, potential revenue synergies look good. Like any M&A, the critical part is management’s ability to execute its plan. In our view, the market is likely to stay unconvinced until concrete results emerge. In our view, these are only likely in 2H15E, at the earliest. Management expects the acquisition to turn EPS- and ROEaccretive only three years from now. Maintain HOLD. In view of the above, we maintain our HOLD rating and SGD10.10 TP. This is based on 1.24x FY15E P/BV, 1SD below its average since 2005. Our TP implies 9.8x FY15E P/E, 2SD below its rolling average since 2005. We have yet to factor in WHB’s financials. On a pro-forma basis, our TP is unlikely to change much.

Our takeaways were:  Funding structure. The entire acquisition cost of USD5b (SGD6.22b) will be funded by:  SGD3.3b cash from the rights issue. Terms of the rights are tabulated in Figure 1.  SGD2.9b from debt and internally-generated cash. Recall that OCBC raised USD2b of Basel 3-compliant Tier-2 subordinated notes in 1H14. Figure 1: Terms of the rights issue Offer structure

Offer type: Renounceable, fully underwritten rights Size: SGD3.32b (net proceeds) Issue price: SGD7.65 per rights share Discount: 25% to last closing price of SGD10.20 as of 15 Aug Rights ratio: 1 rights share for 8 existing shares

Issue managers/underwriters

Has secured an irrevocable undertaking from Selat (Pte) Ltd to subscribe for and/or procure that various shareholders in the Lee Group companies (including Singapore Investments (Pte) Ltd, Lee Foundation and Lee Rubber Company (Pte) Ltd) subscribe for their full entitlements, amounting to 117.3m rights shares or 26.7% of the rights issue. The balance of up to 322.7m or 73.3% of the rights issue has been jointly underwritten by Merrill Lynch (Singapore) Pte Ltd, HSBC Ltd (Singapore branch) and J.P. Morgan (SEA) Ltd.

Financial impact

Based on our estimates, OCBC's transitional CET1 will fall from 14.7% at end-June to 13.2%. This is slightly below than DBS's 13.5% and UOB's 13.9%. Assuming zero synergies: We estimate FY15E/16E EPS will be diluted by 3.7/4.1%. We estimate FY15E/16E ROE will be diluted by 0.4/0.4ppt. Management expects the acquisition to be EPS- and ROE-accretive in three years, factoring in potential synergies which are largely revenue-related.

Use of proceeds

Strengthening of capital position. General corporate funding purposes.

Source: OCBC, Maybank KE

August 19, 2014

2

OCBC Bank  Short term EPS- and ROE-dilutive; accretive in three years’ time. Management expects the acquisition to be EPS- and ROE-accretive in three years’ time. This is likely to be from FY18E onwards, after factoring in revenue synergies. Assuming zero synergies, we estimate FY15E/16E EPS will be diluted by 3.7/4.1%, translating into potential ROE dilution of 0.4ppt for both FY15E/16E.  Balance-sheet impact. Without any rights issue, we estimate OCBC’s transitional common equity Tier 1 (CET1) will fall to 11.4%, significantly lower than that of its peers. Its SGD3.3b rights issue should restore its transitional CET1 to 13.2%, slightly below peers’ (Figure 2). When asked whether there is any large non-core asset that can be disposed of to spruce up its balance sheet, management replied there are few residing in WHB and it is in no hurry to sell. Assets are only considered non-core if they are not required for the group’s banking business. This means properties occupied by WHB as branches and headquarters would be deemed core and will not be disposed of. Figure 2: Transitional CET1 of the enlarged OCBC vs sector peers’ (%) 15.0

14.7

14.5 14.0 13.5

13.9 13.5 13.2

13.0 12.5 12.0 DBS

UOB

OCBC

OCBC+WHB

Source: DBS, UOB, OCBC, Maybank KE

 Leveraging wider network in Greater China. Management is confident that the acquisition will enhance cross-selling opportunities in wealth management, and retail & commercial banking via its larger infrastructure in Greater China. It also hopes to deepen relationships with large corporates and SOEs by galvanising WHB’s presence in the Pearl River Delta. OCBC’s Greater China network will increase to 120 branches and offices from 25. Management sees plenty of opportunities, given WHB’s decent branch network in five of the nine cities in the Pearl River Delta in Guangdong province. It sees bright prospects with the Hong Kong-Zhuhai-Macau bridge enhancing connectivity between Western Pearl River Delta, Hong Kong and Macau. This should eventually facilitate trade, capital and investment flows further.

August 19, 2014

3

OCBC Bank Figure 3: A rundown on OCBC and WHB General Market capitalisation (SGD b) Total branches Branches in China Branches in Hong Kong including Wing Hang Credit Branches in Macau No. of customers No. of staff Financial performance for FY13 Net loans (SGD b) Net loans in Greater China (SGD b) Deposits (SGD b) Assets (SGD b) PBT (SGD m) PBT from Greater China (SGD m) Net profit (SGD m) Ratios as at 31 Dec 2013 Tier 1/CAR NIM Non-interest income/ Total income LDR NPL ratio Cost-to-income ratio

WHB

OCBC

Pro forma

6.1 95 15 67 13 More than 500,000 More than 3,400

32.6 >450 16 1 0 N.A More than 25,000

More than 28,400

23.2 23.2 29.0 34.9 412.0 412.0 353.0

167.9 27.2 196.0 338.4 3,567.0 208.0 2,768.0

191.1 50.4 225.0 373.3 3,979.0 620.0 3,121.0

12.0%/15.9% 1.71% 22.4% 73.0% 0.44% 52.0%

14.5%/16.3% 1.64% 41.4% 85.7% 0.7% 42.0%

11.0%/12.5% 1.64% 39.6% 84.9% 0.7% 43.0%

>520 31 43 13

WHB’s contribution 48.4% 98.5% 100.0%

12.1% 46.0% 12.9% 9.3% 10.4% 66.5% 11.3%

Source: OCBC

 Areas of opportunities. Management highlighted the following: 

Capturing more trade and investment flows between Greater China and Southeast Asia.



New cross-border wealth-management opportunities on the back of rising wealth accumulation in the region.



Stronger deposit base in USD, HKD and CNY.

For details, please refer to Figure 4.

Figure 4: Greater China strategic initiatives Deepen relationships with large corporates

• Continue focus on growing large corporate relationships through OCBC Hong Kong, including Hong Kong blue chips and top-tier Chinese SOEs • Leverage WHB's presence in the Pearl River Delta to increase penetration of Chinese corporates and SOEs and promote onshore-offshore business

Grow SME segment

• Extend WHB's successful SME lending model and specialty products to OCBC China • Deepen presence across SME segments with more comprehensive range of products, including CNY products

Expand product & service suite

• Introduce wealth products and treasury advisory services to enlarged customer base • Extend offshore banking and network services to individuals and businesses - products and market access • Roll out treasury & investment banking services to WHB's business customers

Strengthen sales management & promote group customer concept

• Support sales efforts with training, product development, incentive programmes and sales promotions • Promote group customer concept by addressing customers' needs with the collective resources of the bank and its subsidiaries in private banking (Bank of Singapore), commercial banking (OCBC Malaysia, OCBC China, OCBC NISP), insurance (Great Eastern) and asset management (Lion Global Investors)

Increase cross-sell deepen penetration

• Increase product penetration in customer franchise through more robust cross-sell culture infrastructure eg Private Banking for SME business owners, Wealth and OCBC Premier Banking for mass affluent mortgage & tax loan customers, Offshore Banking for Greater China customers in Southeast Asia, Treasury products for SMEs

Leverage network synergies - flow business and deposits

• Provide network support to OCBC's customers expanding into Greater China with WHB's branch coverage in Pearl River Delta and vice versa • Capture increasing trade and investment flows among core markets of Singapore, Malaysia, Indonesia and Greater China • Access USD and CNY customer deposits for OCBC group

Source: OCBC

August 19, 2014

4

OCBC Bank Figure 5: Timeline of events 18 Aug 2014

Announcement of rights issue

25 Aug 2014

Shares trade ex-rights

27 Aug 2014

Book closure date

1 Sep 2014

Despatch of Offer Information Statement Commencement of trading of "nil-paid" rights

9 Sep 2014

Last date for trading of "nil-paid" rights

15 Sep 2014

Last date for acceptance of and payment of rights shares

26 Sep 2014

Expected date of issuance of rights shares

29 Sep 2014

Expected date of commencement of trading of rights shares

Source: OCBC

August 19, 2014

5

OCBC Bank FYE 31 Dec Key Metrics Core P/E (x) Core FD P/E (x) P/BV (x) P/NTA (x) Net dividend yield (%)

INCOME STATEMENT (SGD m) Interest income Interest expense Net interest income Net insurance income Net fees and commission Other income Total non-interest income Operating income Staff costs Other operating expenses Operating expenses Pre-provision profit Loan impairment allowances Other allowances Associates & JV income Pretax profit Income tax Minorities Discontinued operations Reported net profit Core net profit BALANCE SHEET (SGD m) Cash & deposits with banks Sec. under resale agreements Derivatives financial assets Dealing securities Available-for-sale securities Investment securities Loans & advances Central bank deposits Investment in associates/JVs Insurance assets Fixed assets Intangible assets Other assets Total assets Deposits from customers Deposits from banks & FIs Derivatives financial instruments Subordinated debt Other securities in issue Other borrowings Insurance liabilities Other liabilities Total liabilities Share capital Reserves Shareholders' funds Preference shares Minority interest Total equity Total liabilities & equity

August 19, 2014

FY12A

FY13A

FY14E

FY15E

FY16E

12.8 12.8 1.5 1.8 3.2

13.1 13.1 1.5 1.8 3.3

11.1 11.1 1.4 1.6 3.3

10.1 10.1 1.3 1.4 3.3

8.7 8.7 1.1 1.3 3.3

5,967.5 (2,219.8) 3,747.7 837.6 1,198.3 2,177.8 4,213.6 7,961.4 (1,649.6) (1,105.0) (2,754.6) 5,206.7 (271.4) 0.0 26.6 4,961.9 (698.9) (360.3) 0.0 3,902.7 2,734.7

6,174.1 (2,291.2) 3,882.8 756.1 1,355.5 627.1 2,738.6 6,621.4 (1,715.1) (1,126.9) (2,842.0) 3,779.4 (266.1) 0.0 53.9 3,567.3 (597.8) (292.1) 0.0 2,677.4 2,677.4

7,146.9 (2,666.6) 4,480.3 793.9 1,454.3 754.2 3,002.4 7,482.8 (1,859.1) (1,220.2) (3,079.3) 4,403.4 (285.1) 0.0 53.9 4,172.3 (688.4) (308.2) 0.0 3,175.7 3,175.7

8,454.4 (3,435.5) 5,019.0 833.6 1,596.2 774.7 3,204.5 8,223.4 (2,048.9) (1,300.2) (3,349.1) 4,874.3 (374.2) 0.0 56.6 4,556.8 (751.9) (330.0) 0.0 3,474.9 3,474.9

10,843.6 (5,056.4) 5,787.3 891.9 1,783.1 814.9 3,489.9 9,277.1 (2,260.2) (1,386.3) (3,646.6) 5,630.5 (445.8) 0.0 59.5 5,244.2 (865.3) (361.2) 0.0 4,017.7 4,017.7

29,810.9 2,056.2 5,154.8 3,500.2 24,210.0 9,519.8 142,376.5 16,396.8 354.9 52,271.4 2,580.8 3,817.9 3,893.3 295,943.5 165,300.8 25,655.6 5,000.6 5,127.0 9,193.3 0.0 52,387.0 7,474.0 270,138.3 1,720.5 21,188.0 22,908.6 0.0 2,896.6 25,805.2 295,943.5

39,572.5 2,109.7 5,194.2 5,168.0 26,577.6 8,467.6 167,854.0 19,340.8 379.8 53,404.9 2,629.4 3,741.0 4,009.0 338,448.4 196,141.4 21,548.9 5,508.7 4,412.0 23,685.7 0.0 53,182.6 7,285.5 311,764.8 1,720.6 21,999.1 23,719.7 0.0 2,963.9 26,683.6 338,448.4

44,321.2 2,236.3 5,298.0 5,354.1 28,073.7 8,877.4 181,282.3 21,165.2 433.7 55,007.0 2,689.3 3,741.0 3,955.8 362,435.1 211,836.1 21,979.8 5,784.1 4,412.0 23,685.7 0.0 58,500.9 7,525.3 333,724.0 1,720.6 24,004.8 25,725.4 0.0 2,985.7 28,711.2 362,435.1

50,969.4 2,370.5 5,404.0 5,510.1 29,758.1 9,278.7 197,597.7 21,916.5 490.3 56,657.2 2,750.7 3,741.0 4,495.8 390,940.0 230,903.2 22,639.2 6,131.2 4,412.0 23,685.7 0.0 64,351.0 7,777.7 359,900.0 1,720.6 26,309.7 28,030.3 0.0 3,009.7 31,040.0 390,940.0

57,595.4 2,512.7 5,512.1 5,688.8 31,919.3 9,701.0 219,333.5 24,327.3 549.8 58,356.9 2,813.4 3,741.0 4,847.0 426,898.4 256,300.5 23,318.4 6,437.7 4,412.0 23,685.7 0.0 70,786.1 8,043.1 392,983.5 1,720.6 29,157.5 30,878.1 0.0 3,036.8 33,914.9 426,898.4

6

OCBC Bank FYE 31 Dec Key Ratios Growth (%) Net interest income Non-interest income Operating expenses Pre-provision profit Core net profit Gross loans Customer deposits Total assets

FY12A

FY13A

FY14E

FY15E

FY16E

9.9 87.3 10.6 64.3 28.2 6.6 6.8 6.5

3.6 (35.0) 3.2 (27.4) (2.1) 17.8 18.7 14.4

15.4 9.6 8.3 16.5 18.6 8.0 8.0 7.1

12.0 6.7 8.8 10.7 9.4 9.0 9.0 7.9

15.3 8.9 8.9 15.5 15.6 11.0 11.0 9.2

Profitability (%) Non-int. income/Total income Average lending yields Average cost of funds Net interest margin Cost/income

52.9 2.82 1.13 1.77 34.6

41.4 2.60 1.03 1.64 42.9

40.1 2.65 1.05 1.66 41.2

39.0 2.86 1.27 1.70 40.7

37.6 3.35 1.72 1.79 39.3

Liquidity (%) Loans/customer deposits

86.1

85.6

85.6

85.6

85.6

0.8 0.8 0.2 141.8

0.8 0.8 0.2 134.2

0.9 0.9 0.2 111.0

0.9 0.9 0.2 119.2

0.8 0.8 0.2 123.0

Capital adequacy (%) CET1 Tier 1 capital Risk-weighted capital

16.6 16.6 18.5

14.5 14.5 16.3

14.0 14.0 16.2

14.3 14.3 16.4

14.3 14.3 16.2

Returns (%) ROAE ROAA Shareholders equity/assets

12.5 1.0 7.7

11.5 0.8 7.0

12.8 0.9 7.1

12.9 0.9 7.2

13.6 1.0 7.2

Asset quality (%) Net NPL Gross NPL (SP+GP)/average gross loans Loan loss coverage

August 19, 2014

7

OCBC Bank Research Offices REGIONAL

HONG KONG / CHINA

INDONESIA

WONG Chew Hann, CA Regional Head of Institutional Research (603) 2297 8686 [email protected]

Howard WONG Head of Research (852) 2268 0648 [email protected] • Oil & Gas - Regional

Wilianto IE Head of Research (62) 21 2557 1125 [email protected] • Strategy

ONG Seng Yeow Regional Head of Retail Research (65) 6432 1453 [email protected]

Alexander LATZER (852) 2268 0647 [email protected] • Metals & Mining - Regional

Rahmi MARINA (62) 21 2557 1128 [email protected] • Banking & Finance

Jacqueline KO, CFA (852) 2268 0633 [email protected] • Consumer

Aurellia SETIABUDI (62) 21 2953 0785 [email protected] • Property

Alexander GARTHOFF Institutional Product Manager (852) 2268 0638 [email protected]

ECONOMICS Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 [email protected] Luz LORENZO Philippines (63) 2 849 8836 [email protected] Tim LEELAHAPHAN Thailand (662) 658 1420 [email protected] JUNIMAN Chief Economist, BII Indonesia (62) 21 29228888 ext 29682 [email protected] Josua PARDEDE Economist / Industry Analyst, BII Indonesia (62) 21 29228888 ext 29695 [email protected]

MALAYSIA WONG Chew Hann, CA Head of Research (603) 2297 8686 [email protected] • Strategy • Construction & Infrastructure Desmond CH’NG, ACA (603) 2297 8680 [email protected] • Banking & Finance LIAW Thong Jung (603) 2297 8688 [email protected] • Oil & Gas - Regional • Shipping ONG Chee Ting, CA (603) 2297 8678 [email protected] • Plantations - Regional Mohshin AZIZ (603) 2297 8692 [email protected] • Aviation - Regional • Petrochem YIN Shao Yang, CPA (603) 2297 8916 [email protected] • Gaming – Regional • Media TAN Chi Wei, CFA (603) 2297 8690 [email protected] • Power • Telcos WONG Wei Sum, CFA (603) 2297 8679 [email protected] • Property & REITs LEE Yen Ling (603) 2297 8691 [email protected] • Building Materials • Glove Producers CHAI Li Shin (603) 2297 8684 [email protected] • Plantation • Construction & Infrastructure Ivan YAP (603) 2297 8612 [email protected] • Automotive LEE Cheng Hooi Regional Chartist (603) 2297 8694 [email protected]

Ka Leong LO, CFA (852) 2268 0630 [email protected] * Consumer Discretionary & Auto Karen KWAN (852) 2268 0640 [email protected] • Property & REITs Osbert TANG, CFA (86) 21 5096 8370 [email protected] • Transport & Industrials Ricky WK NG, CFA (852) 2268 0689 [email protected] • Utilities & Renewable Energy Steven ST CHAN (852) 2268 0645 [email protected] • Banking & Financials Warren LAU (852) 2268 0644 [email protected] • Technology – Regional William YANG (852) 2268 0675 [email protected] • Technology – Regional

INDIA Jigar SHAH Head of Research (91) 22 6632 2632 [email protected] • Oil & Gas • Automobile • Cement Anubhav GUPTA (91) 22 6623 2605 [email protected] • Metal & Mining • Capital Goods • Property Urmil SHAH (91) 22 6623 2606 [email protected] • Technology • Media

Isnaputra ISKANDAR (62) 21 2557 1129 [email protected] • Metals & Mining • Cement Pandu ANUGRAH (62) 21 2557 1137 [email protected] • Infrastructure • Construction • Transport Janni ASMAN (62) 21 2953 0784 [email protected] • Cigarette • Healthcare • Retail

PHILIPPINES Luz LORENZO Head of Research (63) 2 849 8836 [email protected] • Strategy • Utilities • Conglomerates • Telcos Lovell SARREAL (63) 2 849 8841 [email protected] • Consumer • Media • Cement Rommel RODRIGO (63) 2 849 8839 [email protected] • Conglomerates • Property • Gaming • Ports/ Logistics Katherine TAN (63) 2 849 8843 [email protected] • Banks • Construction Ramon ADVIENTO (63) 2 849 8845 [email protected] • Mining

THAILAND

Surachai PRAMUALCHAROENKIT (66) 2658 6300 ext 1470 [email protected] • Auto • Conmat • Contractor • Steel Suttatip PEERASUB (66) 2658 6300 ext 1430 [email protected] • Media • Commerce Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 [email protected] • Energy • Petrochem Termporn TANTIVIVAT (66) 2658 6300 ext 1520 [email protected] • Property Jaroonpan WATTANAWONG (66) 2658 6300 ext 1404 [email protected] • Transportation • Small cap Chatchai JINDARAT (66) 2658 6300 ext 1401 [email protected] • Electronics

VIETNAM LE Hong Lien, ACCA Head of Institutional Research (84) 844 55 58 88 x 8181 [email protected] • Strategy • Consumer • Diversified • Utilities THAI Quang Trung, CFA, Deputy Manager, Institutional Research (84) 844 55 58 88 x 8180 [email protected] • Real Estate • Construction • Materials Le Nguyen Nhat Chuyen (84) 844 55 58 88 x 8082 [email protected] • Oil & Gas NGUYEN Thi Ngan Tuyen, Head of Retail Research (84) 8 44 555 888 x 8081 [email protected] • Food & Beverage • Oil&Gas • Banking TRINH Thi Ngoc Diep (84) 4 44 555 888 x 8208 [email protected] • Technology • Utilities • Construction

Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 [email protected] • Consumer / Materials

TRUONG Quang Binh (84) 4 44 555 888 x 8087 [email protected] • Rubber plantation • Tyres and Tubes • Oil&Gas

Jesada TECHAHUSDIN, CFA (66) 2658 6300 ext 1394 [email protected] • Financial Services

PHAM Nhat Bich (84) 8 44 555 888 x 8083 [email protected] • Consumer • Manufacturing • Fishery

ONG Kian Lin (65) 6432 1470 [email protected] • S-REITs

Kittisorn PRUITIPAT, CFA, FRM (66) 2658 6300 ext 1395 [email protected] • Real Estate

NGUYEN Thi Sony Tra Mi (84) 8 44 555 888 x 8084 [email protected] • Port operation • Pharmaceutical • Food & Beverage

YEAK Chee Keong, CFA (65) 6432 1460 [email protected] • Offshore & Marine

Sittichai DUANGRATTANACHAYA (66) 2658 6300 ext 1393 [email protected] • Services Sector

SINGAPORE NG Wee Siang Head of Research (65) 6432 1467 [email protected] • Banking & Finance Gregory YAP (65) 6432 1450 [email protected] • SMID Caps – Regional • Technology & Manufacturing • Telcos

Derrick HENG (65) 6432 1446 [email protected] • Transport (Land, Shipping & Aviation) WEI Bin (65) 6432 1455 [email protected] • Commodity • Logistics • S-chips John CHEONG (65) 6432 1461 [email protected] • Small & Mid Caps • Healthcare TRUONG Thanh Hang (65) 6432 1451 [email protected] • Small & Mid Caps

Sukit UDOMSIRIKUL Head of Retail Research (66) 2658 6300 ext 5090 [email protected] Mayuree CHOWVIKRAN (66) 2658 6300 ext 1440 [email protected] • Strategy Padon VANNARAT (66) 2658 6300 ext 1450 [email protected] • Strategy

Tee Sze Chiah Head of Retail Research (603) 2297 6858 [email protected]

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OCBC Bank APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice. This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events. MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report. This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect. This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report. Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Singapore This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. Thailand The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect. US This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

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OCBC Bank DISCLOSURES Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.

Disclosure of Interest Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Singapore: As of 18 August 2014, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report. Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. As of 18 August 2014, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report. MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.

OTHERS Analyst Certification of Independence The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. Reminder Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Ong Seng Yeow | Executive Director, Maybank Kim Eng Research

Definition of Ratings Maybank Kim Eng Research uses the following rating system BUY Return is expected to be above 10% in the next 12 months (excluding dividends) HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends) SELL Return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

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OCBC Bank  Malaysia Maybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194 Stockbroking Business: Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888 Fax: (603) 2282 5136

 Philippines Maybank ATR Kim Eng Securities Inc. 17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200 Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

 Singapore

Maybank Kim Eng Securities (London) Ltd 5th Floor, Aldermary House 10-15 Queen Street London EC4N 1TX, UK

Tel: (65) 6336 9090 Fax: (65) 6339 6003

Tel: (44) 20 7332 0221 Fax: (44) 20 7332 0302

 Hong Kong

Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

Tel: (91) 22 6623 2600 Fax: (91) 22 6623 2604

 Thailand Maybank Kim Eng Securities (Thailand) Public Company Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand

Indonesia

London

New York

India

Vietnam

Philippines

[email protected]

Tel: (84) 44 555 888 x8079

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 Vietnam Maybank Kim Eng Securities Limited 4A-15+16 Floor Vincom Center Dong Khoi, 72 Le Thanh Ton St. District 1 Ho Chi Minh City, Vietnam Tel : (84) 844 555 888 Fax : (84) 8 38 271 030

 Saudi Arabia In association with

Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686 Fax: (966) 26068787

 North Asia Sales Trading

Thailand

Tien Nguyen

 India

Tel: (852) 2268 0800 Fax: (852) 2877 0104

Malaysia

Andrew Dacey [email protected] Tel: (212) 688 2956

Tel: (212) 688 8886 Fax: (212) 688 3500

Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India

Alex Tsun [email protected] Tel: (852) 2268 0228 US Toll Free: 1 877 837 7635

Harianto Liong [email protected] Tel: (62) 21 2557 1177

Maybank Kim Eng Securities USA Inc 777 Third Avenue, 21st Floor New York, NY 10017, U.S.A.

PT Maybank Kim Eng Securities Plaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia

Kevin Foy Regional Head Sales Trading [email protected] Tel: (65) 6336-5157 US Toll Free: 1-866-406-7447

Rommel Jacob [email protected] Tel: (603) 2717 5152

 Indonesia

 New York

Kim Eng Securities (HK) Ltd Level 30, Three Pacific Place, 1 Queen’s Road East, Hong Kong

Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

 South Asia Sales Trading

 London

Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Research Pte Ltd 9 Temasek Boulevard #39-00 Suntec Tower 2 Singapore 038989

Tanasak Krishnasreni [email protected] Tel: (66)2 658 6820

Simon Lovekin [email protected] Tel: (44)-207-626-2828

Manish Modi [email protected] Tel: (91)-22-6623-2601

Keith Roy [email protected] Tel: (63) 2 848-5288

www.maybank-ke.com | www.maybank-keresearch.com

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