Asia Pacific Equity Research 08 May 2014

Underweight

Wilmar International Limited

WLIL.SI, WIL SP Price: S$3.34

Missing even our lower-than-consensus forecast by c.30%, still tough times ahead

▼ Price Target: S$2.90 Previous: S$3.00

 Wilmar’s 1Q14 net profit c.30%/c.35% below JPM/consensus: Wilmar reported 1Q14 core net profit of US$215 million (-32% Y/Y), which missed JPM/consensus forecasts by 30%/35%. The weakness came from losses at oilseeds (in line with our earlier view), and compression in palm oil refining margin, which has historically been resilient. We maintain UW, and further reduce our FY14/FY15 earnings estimates by 14%/10% as we lower our margin assumptions further to reflect the performance in 1Q14.  Losses at oilseeds: Oilseeds & grains sank into a loss of US$57 million with PBT margin of US$-11.6/MT in line with our expectations. We believe this is a negative surprise to the Street, which has been anticipating a Q/Q margin per MT decline from the US$20/MT achieved in 4Q13 but not a loss. Hence, we see meaningful consensus earnings downgrades triggered by this outcome. Volume growth of 6% was in line with our forecast.  Palm refining margin broke below US$30/MT: Palm & laurics margin declined for the fifth consecutive quarter to US$28.9/MT. Wilmar appears pressured by higher CPO feedstock costs as well as the imminent refinery overcapacity in Indonesia, which is expected to increase by c.50%. Volume growth was also lackluster at just +1% Y/Y.

Singapore ASEAN Agri-Commodities Ying-Jian Chan, CFA

AC

(65) 6882-2378 [email protected] Bloomberg JPMA YCHAN J.P. Morgan Securities Singapore Private Limited Price Performance

3.5 S$ 3.3 3.1 2.9 May-13

Aug-13

Nov-13

Feb-14

May-14

WLIL.SI share price (S$) FTSTI (rebased)

Abs Rel

YTD -2.3% -4.8%

1m -4.3% -5.7%

3m 3.4% -4.4%

12m -1.2% 3.6%

 Other segments unable to mitigate the weakness: Consumer products earnings rose 26% on better volume and margin. Upstream plantations also registered 53% increase in earnings on higher CPO price. However, these were insufficient to offset the poor performance from the two major earnings contributors. Losses at sugar were also wider than expected due to unrealized hedging losses and lower sugar refining margins in Indonesia.  Maintain UW, continued underperformance expected: We believe it is unlikely that oilseeds margin would have seen recovery in 2Q14, and a 2H recovery is uncertain given rising risk of El Nino that could disrupt soybean supply and drive soybean feedstock cost higher. Furthermore margin pressure for palm & laurics may persist as industry overcapacity adds further stress. We roll our SOTP PT to Jun-2015 with a new PT of S$2.90. Wilmar International Limited (Reuters: WLIL.SI, Bloomberg: WIL SP) $ in mn, year-end Dec FY12A FY13A FY14E FY15E Revenue ($ mn) 45,463 44,085 47,873 50,347 Net Profit ($ mn) 1,255 1,319 1,038 1,228 EPS ($) 0.20 0.21 0.16 0.19 DPS ($) 0.04 0.06 0.05 0.06 Revenue growth (%) 1.7% (3.0%) 8.6% 5.2% EPS growth (%) (21.6%) 5.1% (21.3%) 18.3% EPS Recurring Growth (23.1%) 11.7% (20.3%) 18.3% ROE 8.4% 8.9% 6.7% 7.4% P/E (x) 13.6 13.0 16.5 13.9 P/BV (x) 1.2 1.1 1.1 1.0 Dividend Yield 1.5% 2.4% 1.8% 2.2% Net Profit (Recurring) ($ mn) 1,167 1,303 1,038 1,228 EPS (Recurring) ($) 0.18 0.20 0.16 0.19

FY16E 53,702 1,309 0.20 0.06 6.7% 6.6% 6.6% 7.5% 13.1 1.0 2.3% 1,309 0.20

Company Data Shares O/S (mn) Market Cap (S$ mn) Market Cap ($ mn) Price (S$) Date Of Price Free Float(%) 3M - Avg daily vol (mn) 3M - Avg daily val (S$ mn) 3M - Avg daily val ($ mn) FTSTI Exchange Rate Price Target End Date Price Target (S$)

6,403 21,385 17,121 3.34 08 May 14 36.1% 8.31 28.39 22.7 3247.69 1.25 30-Jun-15 2.90

Source: Company data, Bloomberg, J.P. Morgan estimates.

See page 12 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, 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. www.jpmorganmarkets.com

Asia Pacific Equity Research 08 May 2014

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Key catalysts for the stock price: • Losses arising from negative oilseeds margin in China

Upside risks to our PT: • Correction in soybean price providing relief to crush margin

Downside risks to our PT: • Losses from palm oil and/or oilseeds arising from wrong directional trades

• Palm refining margin erosion from increased industry capacity in industry.

• Ability to increase cooking oil price to pass on cost increase to customers

• Margin compression from competition

Key financial metrics Revenues (US$ Mn) Revenue growth (%) EBITDA (US$ Mn) EBITDA margin (%) Tax rate (%) Net profit (US$ Mn) EPS (US$) EPS growth (%) DPS (US$) BVPS (US$) Operating cash flow (US$ mn) Free cash flow (US$ mn) Interest cover (X) Net margin (%) Sales/assets (X) Debt/equity (%) Net debt/equity (%) ROE (%) Key model assumptions Palm & laurics margin Oilseeds & grains margin Consumer products margin

FY14E 47,873 9% 2,356 4.9% 23.0% 1038 16.22 -20% 0.06 2.51 1,986 485.5 3.1 2.2% 1.01 162.8% 88.8% 6.7% FY14E 30.0 0.0 40.00

FY13A 44,085 -3% 2,268 5.1% 21.7% 1303 20.36 12% 0.08 2.34 1,614 237.3 4.2 3.0% 1.00 174.6% 96.4% 8.9% FY13A 34.9 11.2 40.46

FY15E 50,347 5% 2,693 5.3% 23.0% 1228 19.19 18% 0.07 2.65 1,558 58.1 3.5 2.4% 1.04 154.5% 86.1% 7.4% FY15E 28.0 10.0 40.00

FY16E 53,702 7% 2,898 5.4% 23.0% 1309 20.46 7% 0.08 2.79 1,547 47.2 3.8 2.4% 1.08 146.6% 83.6% 7.5% FY16E 28.0 10.0 40.00

Valuation and price target basis Our Dec-2014 PT of S$3.00 is based sum of the parts valuation below:

Chart to support valuation and price target

Palm & laurics Oilseeds & grains Consumer products Plantation and palm oil mills Sugar Associates Fair value of Wilmar International (US$) Fair value of Wilmar International (S$) Price target (S$)

Valuation 12.0x P/E 1x P/B 13.0x P/E 12.0x P/E 10.0x P/E 10.0x P/E

FY14E 14.3 0.9

Implied P/E Implied P/B

Per share (S$) 1.02 0.27 0.39 0.37 0.17 0.09 2.31 2.90 2.90 FY15E 12.1 0.9

Source: J.P. Morgan estimates.

Source: Bloomberg, Company and J.P. Morgan estimates.

Sensitivity analysis Sensitivity to US$10 chg in palm & laurics margin US$10 chg in oilseeds & grains margin US$10 chg in consumer product margin

PBT (%) FY14E FY15E 10.3% 9.8% 8.4% 7.8% 2.3% 2.2%

JPMe vs. consensus, change in estimates Net Income FY14E JPMe old 1,200 JPMe new 1,038 % chg -13.5% Consensus 1,443

EPS (%) FY14E FY15E 16.1% 15.4% 13.2% 12.2% 3.6% 3.5%

Source: Bloomberg, Company data and J.P. Morgan estimates.

FY15E 1,359 1,228 -9.6% 1,594

Source: Bloomberg, Company data and J.P. Morgan estimates.

Peer valuation comparison As at: 08 May-14 Archer-Daniels-Midland Bunge China Agri-Industries Conagra Foods Inc Noble Group Olam International Wilmar International Weighted average

Ticker

Ctry

ADM US BG US 606 HK CAG US NOBL SP OLAM SP WIL SP

USA USA HKG USA HKG SGP SGP

Source: J.P. Morgan estimates, Company data, Bloomberg.

2

Mkt cap (US$mn) 28,973 11,350 2,066 12,984 6,649 4,302 17,139 83,463

Price (LC) 44.27 77.10 3.05 30.83 1.25 2.23 3.34

Rating N OW OW N NR OW UW

Target (LC) 39.00 87.00 5.40 23.00 1.15 2.00 2.90

P/E CY14E CY15E 14.5 13.1 12.5 10.6 9.3 8.2 13.5 12.7 13.0 11.4 13.8 12.4 16.5 14.0 14.2 12.6

ROE CY14E CY15E 9.3 9.6 8.7 9.7 6.2 6.7 16.8 NA 9.6 10.1 11.3 7.9 6.7 7.4 11.7 9.0

Div Yld CY14E CY15E 2.0% 2.1% 1.5% 1.6% 2.7% 3.0% 3.3% 3.3% 1.9% 2.2% 1.9% 2.1% 1.8% 2.1% 2.1% 2.3%

P/B FY14E FY15E 1.4 1.3 1.0 0.9 0.6 0.5 2.2 2.0 1.2 1.1 1.6 1.4 1.1 1.0 1.4 1.3

Asia Pacific Equity Research 08 May 2014

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Table 1: 1Q13 results overview US$ in millions Revenue Merchandising & processing - Palm and laurics - Oilseeds and grains Consumer products Plantation and PO mills Sugar - Milling - Refining Others Eliminations PBT Merchandising & processing - Palm and laurics - Oilseeds and grains Consumer products Plantation and PO mills Sugar - Milling - Refining Others Associates' profits Unallocated inc / (exp) Volume ('000 MT) Merchandising & processing - Palm and laurics - Oilseeds and grains Consumer products Sugar - milling Sugar - refining PBT per MT (US$/MT) Merchandising & processing - Palm and laurics - Oilseeds and grains Consumer products Sugar - milling Sugar - refining Net income (reported) Net income (recurring)

1Q12 10,471 8,121 5,431 2,690 1,891 434 457 50 407 810 (1,242) 389 182 235 (53) 50 99 (48) (58) 10 92 22 (8)

2Q12 11,020 9,094 6,008 3,086 1,380 416 841 112 728 671 (1,382) 149 120 160 (40) 18 79 (60) (79) 19 (35) 31 (4)

3Q12 12,349 9,382 5,780 3,602 2,072 459 1,272 507 765 633 (1,468) 569 241 181 60 48 117 101 76 26 22 48 (10)

4Q12 11,623 9,087 5,529 3,559 1,753 419 1,072 408 664 613 (1,321) 548 241 195 46 41 116 107 68 39 31 22 (10)

1Q13 10,201 7,633 4,543 3,090 2,037 349 769 55 714 609 (1,196) 417 266 219 47 57 72 (14) (56) 42 (14) 53 (4)

2Q13 10,426 8,092 5,093 2,999 1,508 315 1,064 177 887 661 (1,214) 282 240 225 15 30 53 (30) (52) 22 (33) 25 (2)

3Q13 11,837 8,692 4,908 3,784 2,068 338 1,385 640 745 654 (1,300) 566 266 212 54 58 58 151 128 24 27 8 (1)

4Q13 11,622 9,141 5,382 3,759 1,942 431 814 196 618 743 (1,449) 510 316 201 116 75 87 19 (1) 20 (1) 18 (3)

1Q14 10,269 8,196 4,838 3,358 2,103 381 682 21 661 535 (1,628) 206 105 162 (57) 71 110 (54) (79) 25 (37) 16 (6)

9,577 5,169 4,408 1,206 85 495

10,211 5,623 4,588 897 257 1,039

11,094 5,850 5,244 1,316 1,204 1,175

11,785 6,474 5,311 1,190 1,213 1,020

10,197 5,531 4,666 1,325 97 1,210

10,692 6,194 4,498 1,094 436 1,691

11,726 6,104 5,622 1,504 1,879 1,546

12,511 6,677 5,834 1,499 668 1,265

45.5 (11.9) 41.7 (682.3) 20.4 256 206

28.5 (8.7) 20.0 (308.0) 18.2 117 172

31.0 11.5 36.8 62.8 21.9 406 388

30.1 8.7 34.1 55.9 38.1 477 401

39.5 10.1 42.7 (574.3) 34.8 315 314

36.2 3.4 27.3 (119.6) 12.9 219 245

34.7 9.5 38.7 67.9 15.4 416 391

30.0 19.8 49.8 (1.7) 16.2 369 353

Y/Y 1% 7% 6% 9% 3% 9% -11% -61% -7% -12% 36% -51% -61% -26% -222% 26% 53% 297% 42% -40% 170% -70% 54%

Q/Q -12% -10% -10% -11% 8% -11% -16% -89% 7% -28% 12% -60% -67% -19% -150% -5% 27% -380% 23% -8% 76%

10,557 5,607 4,950 1,546 50 1,360

4% 1% 6% 17% -48% 12%

-16% -16% -15% 3% -93% 8%

28.9 (11.6) 45.9 (1,583) 18.5 162 215

-27% -215% 8% 176% -47% -49% -32%

-4% -159% -8% 14% -56% -39%

Source: J.P. Morgan, Company data.

Figure 1: China back-to-back crush margin trend and Wilmar’s reported oilseeds & grains margin during various periods of pressure US$/MT

350

2Q13: US$3.4 Reasons: avian flu. 1Q14: US$-11.6

300 250 200 150 100

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Jul-10

Apr-10

Jan-10

Oct-09

Jul-09

Apr-09

Jan-09

0

Oct-10

3Q10: US$-7.5 ; 4Q10: US$-36.5 1Q12: US$-11.9; 2Q12: US$-8.7 Reasons: steep spike in soybean px; onset of industry overcapacity.

50

Source: J.P. Morgan estimates, Company data.

3

Asia Pacific Equity Research 08 May 2014

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Figure 2: Oilseeds & grains sales volume and PBT/MT margin trend 7,000

60

6,000

40

5,000

20

4,000

0

3,000

-20

2,000

Volume ('000 MT)

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

-60

3Q10

0

2Q10

-40

1Q10

1,000

PBT/MT (R)

Source: J.P. Morgan, Company data.

Figure 3: Palm & laurics sales volume & PBT/MT margin trend

Volume ('000 MT) (L)

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

50 45 40 35 30 25 20 15 10 5 0

1Q10

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 PBT / MT (US$) (R)

Source: J.P. Morgan, Company data.

Figure 4: Palm oil to Gas oil spread US$/MT

Source: J.P. Morgan, Company data.

4

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

Jan-11

Jul-10

Jan-10

Jul-09

Jan-09

Jul-08

Jan-08

Jul-07

Jan-07

Jul-06

Jan-06

500 400 300 200 100 0 (100) (200) (300) (400) (500)

Asia Pacific Equity Research 08 May 2014

Figure 5: Dalian soybean meal price Rmb/MT

5,000 4,500 4,000 3,500

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Jan-10

2,500

Apr-10

3,000

Source: J.P. Morgan, Bloomberg.

Figure 6: Dalian soybean oil price

Jul-11

Oct-11

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

Jan-14

Apr-14

Jul-11

Oct-11

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

Jan-14

Apr-14

Apr-11

Jan-11

Oct-10

Jul-10

Jan-10

11,000 10,500 10,000 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000

Apr-10

Rmb/MT

Source: J.P. Morgan, Bloomberg.

Figure 7: CBOT soybean price

Apr-11

Jan-11

Oct-10

Jul-10

1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900

Apr-10

US$/bushel

Jan-10

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Source: J.P. Morgan, Bloomberg.

5

9 8 7 6 5 4 3 2 1 0

6

Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14

35 30 25 20 15 10 5 0 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14

Ying-Jian Chan, CFA (65) 6882-2378 [email protected] Asia Pacific Equity Research 08 May 2014

Figure 8: 12-month forward P/E

(x)

+2SD=23.8x +1SD=19.6x Mean=15.4x

12M Fwd P/E

12M Fwd P/B

Source: J.P. Morgan estimates, Company data, Bloomberg.

-1SD=11.2x -2SD=7.0x

Mean

Mean

-1 Std Dev

-1 Std Dev

+1 Std Dev

Source: J.P. Morgan estimates, Company data, Bloomberg.

(x)

Figure 9: 12-month forward P/BV

+2SD=4.5x +1SD=3.3x Mean=2.1x -1SD=0.9x

+1 Std Dev

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Asia Pacific Equity Research 08 May 2014

Figure 10: Wilmar key assumptions US$ in millions, unless otherwise stated FY11

Volume growth assumptions Palm and laurics FY14E: From 8% to 3% FY15E-16E: From 8% to 5% Sugar merchandising & processing FY14E-16E: From 20% to 15%

Margin assumptions (US$/MT) Palm & laurics FY14E: From 34 to 30 FY15E: From 33 to 28 FY16E: From 32 to 28 Oilseeds and grains FY14E: From 5 to 0 Consumer products FY14E-16E: From 30 to 40 Sugar milling FY14E-16E: From 6 to 5 Sugar refining FY14E-16E: From 20 to 18

Vol by seg ('000 MT) Merchandising & proc'ing - Palm and laurics - Oilseeds and grains Consumer products Plantation and palm oil mills - FFB production - CPO production - Palm kernel production Sugar - Milling - Merchandising & proc'ing Vol growth by seg Merchandising & proc'ing - Palm and laurics - Oilseeds and grains Consumer products Plantation and palm oil mills - FFB production - CPO production - Palm kernel production Sugar - Milling - Merchandising & proc'ing PBT by segment Merchandising & proc'ing - Palm and laurics - Oilseeds and grains Consumer products Plantation and palm oil mills Sugar Others Share of associates' profits Unallocated expenses PBT growth by segment Merchandising & proc'ing - Palm and laurics - Oilseeds and grains Consumer products Plantation and palm oil mills Sugar Others Share of associates' profits Unallocated expenses % PBT Merchandising & proc'ing - Palm and laurics - Oilseeds and grains Consumer products Plantation and palm oil mills Sugar Others Share of associates' profits Unallocated expenses PBT/MT by seg (US$/MT) Merchandising & proc'ing - Palm and laurics - Oilseeds and grains Consumer products Sugar - milling Sugar - refining

FY12

FY13E

FY14E

FY15E

FY16E

40,245 20,306 19,939 4,397

42,666 23,115 19,551 4,608

45,125 24,506 20,619 5,423

46,891 25,241 21,650 5,965

49,236 26,503 22,732 6,562

51,697 27,828 23,869 7,218

4,073 1,779 414

4,210 1,909 450

4,041 1,848 423

4,397 1,993 461

4,436 2,011 465

4,598 2,084 482

2,669 2,458

2,759 3,729

3,080 5,712

3,172 6,569

3,268 7,554

3,366 8,687

2.9% -2.5% 9.1% 19.5%

6.0% 13.8% -1.9% 4.8%

5.8% 6.0% 5.5% 17.7%

3.9% 3.0% 5.0% 10.0%

5.0% 5.0% 5.0% 10.0%

5.0% 5.0% 5.0% 10.0%

21.6% 11.3% 11.3%

3.4% 7.3% 8.8%

-4.0% -3.2% -5.9%

8.8% 7.8% 8.8%

0.9% 0.9% 0.9%

3.6% 3.6% 3.6%

3.4% 51.7% 1,655 785 771 14 157 411 100 110 123 (32) -20% -22% 32% -97% 84% -44% -29% 165% -34% -73% 100% 47% 47% 1% 10% 25% 6% 7% 7% -2%

11.6% 53.2% 1,775 1,087 856 232 219 270 127 (21) 104 (10) 7% 38% 11% 1548% 40% -34% 27% -119% -16% -68% 100% 61% 48% 13% 12% 15% 7% -1% 6% -1%

3.0% 15.0% 1,422 757 757 0 239 270 134 0 72 (50) -20% -30% -12% -100% 9% 0% 6% -100% -31% 391% 100% 53% 53% 0% 17% 19% 9% 0% 5% -4%

3.0% 15.0% 1,682 969 742 227 262 272 152 0 76 (50) 18% 28% -2% NA 10% 1% 14%

3.0% 15.0% 1,793 1,018 779 239 289 282 173 0 81 (50) 7% 5% 5% 5% 10% 4% 14%

5% 0% 100% 58% 44% 14% 16% 16% 9% 0% 4% -3%

7% 0% 100% 57% 43% 13% 16% 16% 10% 0% 4% -3%

18.40 33.36 0.72 34.12 2.24 25.11

24.10 34.92 11.24 40.46 6.01 18.92

16.15 30.00 0.00 40.00 5.00 18.00

19.69 28.00 10.00 40.00 5.00 18.00

19.69 28.00 10.00 40.00 5.00 18.00

2,079 1,009 586 423 85 734 141 42 185 (117) 26% 43% 0% 260% -43% 15% -78% 386% 62% 100% 49% 28% 20% 4% 35% 7% 2% 9% -6% 25.07 28.85 21.21 19.40

Source: J.P. Morgan estimates Company data.

7

Asia Pacific Equity Research 08 May 2014

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Table 2: Plantations sector regional peer comparison As at: 08 May-14 Indonesia Astra Agro Lestari BW Plantation London Sumatra Indon Salim Ivomas Pratama Sampoerna Agro Weighted average Malaysia Felda Global Ventures Genting Plantations TSH Resources IJM Plantations IOI Corporation Kuala Lumpur Kepong Kulim Malaysia Sarawak Oil Palms Sime Darby Weighted average Singapore Bumitama Agri First Resources Golden Agri-Resources Indofood Agri Resources Mewah International Wilmar International Weighted average Sector weighted average

Ticker

Price (LC)

Rating

Mkt cap (US$mn)

P/E CY14E CY15E

EV/ha (US$) 2yr EPS CAGR FY14E 2014 - 2016E

P/B FY14E

ROE FY14E

Div Yld FY14E

Target (LC)

AALI IJ BWPT IJ LSIP IJ SIMP IJ SGRO IJ

29,025 1,395 2,420 1,005 2,275

UW UW OW N NC

3,953 539 1,428 1,375 372 7,295

18.4 19.3 13.0 14.0 12.9 16.6

20.4 17.5 13.6 14.0 11.0 17.6

22,730 17,079 16,779 10,467 NA 18,837

-9.5% 13.0% -0.8% 0.8% NA -4.2%

4.0 2.8 2.2 1.1 1.5 3.0

23.3 15.5 18.1 8.0 10.7 18.8

2.5% 1.6% 3.1% 2.0% 1.5% 2.4%

22,100 1,010 2,850 910 -

FGV MK GENP MK TSH MK IJMP MK IOI MK KLK MK KUL MK SOP MK SIME MK

4.55 11.10 3.27 3.60 5.00 24.34 3.53 6.60 9.48

N OW NC NC OW N NC NC N

5,126 2,606 906 896 9,805 8,005 1,394 894 17,754 43,297

21.6 21.5 18.8 18.8 21.1 21.9 18.8 16.5 16.7 19.5

23.0 18.9 16.5 14.6 20.4 21.4 15.3 12.7 15.5 18.8

16,056 30,413 NA NA 56,513 47,621 NA NA 35,622 39,941

-3.3% 19.2% 11.2% NA 2.4% 0.8% 8.2% NA 5.9% 3.8%

2.5 2.7 2.4 1.9 2.3 3.2 0.8 NA 2.0 2.4

11.6 13.1 13.7 7.4 10.6 15.1 5.9 12.8 11.6 12.1

3.5% 1.0% 1.3% 1.7% 3.0% 2.6% 1.0% 1.1% 3.4% 3.1%

4.90 12.20 5.20 21.80 9.20

BAL SP FR SP GGR SP IFAR SP MII SP WIL SP

1.14 2.50 0.60 1.08 0.48 3.34

NC OW N UW UW UW

1,607 3,176 6,125 1,222 574 17,139 28,236 78,828

15.0 12.2 13.6 13.0 28.8 16.5 15.5 17.8

12.4 10.9 11.8 12.2 25.6 14.0 13.3 16.7

NA 26,509 20,418 13,129 NA 77,637 56,248 43,738

19.9% 13.8% 7.0% 5.1% 2.9% 12.3% 10.8% 5.6%

2.8 2.7 0.7 1.0 1.0 1.1 1.2 2.0

19.5 22.9 5.1 7.6 3.5 6.7 8.1 11.3

1.0% 2.0% 2.2% 1.1% 1.4% 1.8% 1.9% 2.6%

2.80 0.65 0.85 0.43 2.90

Source: J.P. Morgan estimates, Company data, Bloomberg, Bloomberg consensus for stocks Not Covered (NC).

Table 3: Supply chain regional peer comparison As at: 08 May-14 Archer-Daniels-Midland Bunge China Agri-Industries Conagra Foods Inc Noble Group Olam International Wilmar International Weighted average

Ticker

Ctry

ADM US BG US 606 HK CAG US NOBL SP OLAM SP WIL SP

USA USA HKG USA HKG SGP SGP

Mkt cap (US$mn) 28,973 11,350 2,066 12,984 6,649 4,302 17,139 83,463

Price (LC) 44.27 77.10 3.05 30.83 1.25 2.23 3.34

Rating N OW OW N NR OW UW

Target (LC) 39.00 87.00 5.40 23.00 1.15 2.00 2.90

P/E CY14E CY15E 14.5 13.1 12.5 10.6 9.3 8.2 13.5 12.7 13.0 11.4 13.8 12.4 16.5 14.0 14.2 12.6

Source: J.P. Morgan estimates, Company data, Bloomberg, Bloomberg consensus for stocks Not Covered (NC).

8

ROE CY14E CY15E 9.3 9.6 8.7 9.7 6.2 6.7 16.8 NA 9.6 10.1 11.3 7.9 6.7 7.4 11.7 9.0

Div Yld CY14E CY15E 2.0% 2.1% 1.5% 1.6% 2.7% 3.0% 3.3% 3.3% 1.9% 2.2% 1.9% 2.1% 1.8% 2.1% 2.1% 2.3%

P/B FY14E FY15E 1.4 1.3 1.0 0.9 0.6 0.5 2.2 2.0 1.2 1.1 1.6 1.4 1.1 1.0 1.4 1.3

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Asia Pacific Equity Research 08 May 2014

Investment Thesis, Valuation and Risks Wilmar International Limited (Underweight; Price Target: S$2.90) Investment Thesis The key drivers of our Underweight recommendation on Wilmar are:  Oilseeds margins remain volatile in China: Oilseeds crushing margins in China are expected to remain volatile and could potentially be loss making in 1H2014.  Palm refining margin may see gradual deterioration: Refining capacity in Indonesia is expected to increase c.50% to 45 million MT resulting in overcapacity and potential margin erosion. Valuation Our valuation and Dec-14 price target of S$2.90 for Wilmar is based on sum-of-theparts valuation: Palm & laurics Oilseeds & grains Consumer products Plantation and palm oil mills Sugar Associates Fair value of Wilmar International (US$) Fair value of Wilmar International (S$) Price target (S$)

Valuation 12.0x P/E 1x P/B 13.0x P/E 12.0x P/E 10.0x P/E 10.0x P/E

Per share (S$) 1.02 0.27 0.39 0.37 0.17 0.09 2.31 2.90 2.90

Source: J.P. Morgan estimates

Risks to Rating and Price Target Key upside risks to our price target include: (1) correction in soybean price providing relief to crush margin, and (2) ability to increase cooking oil price and pass on cost increase to consumers.

9

Asia Pacific Equity Research 08 May 2014

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

JPM Q-Profile Wilmar International Limited (SINGAPORE / Consumer Staples) As Of: 01-May-2014

[email protected]

Local Share Price

Current:

3.40

12 Mth Forward EPS

8.00

0.45

7.00

0.40

6.00

0.35

5.00

0.30

4.00

0.25

Current:

0.23

0.20

3.00

0.15

2.00

0.10

1.00

0.05

Earnings Yield (& local bond Yield) 12%

12Mth fwd EY

9%

Implied Value Of Growth*

Current:

Oct/13

May/14

Mar/13

Jan/12

Aug/12

Jun/11

Apr/10

Nov/10

Sep/09

Jul/08

Feb/09

Dec/07

Oct/06

May/07

Mar/06

Jan/05

Aug/05

Jun/04

Apr/03

Nov/03

Sep/02

Jul/01

Feb/02

Dec/00

Oct/99

May/00

0.00 Mar/99

Oct/13

Current:

Singapore BY

May/14

Mar/13

Jan/12

Aug/12

Jun/11

Apr/10

Nov/10

Sep/09

Jul/08

Feb/09

Dec/07

Oct/06

May/07

Mar/06

Jan/05

Aug/05

Jun/04

Apr/03

Nov/03

Sep/02

Jul/01

Feb/02

Dec/00

Oct/99

May/00

Mar/99

0.00

-28.95%

0.80

Proxy

0.60

10%

0.40

8%

0.20

6%

0.00 4% -0.20 2%

-0.40

Current:

8.99

50.00

1.2x

Dividend Yield (Trailing)

Current:

May/14

Oct/13

Mar/13

Aug/12

Jan/12

Jun/11

Nov/10

Apr/10

Sep/09

Feb/09

Jul/08

Dec/07

May/07

PBV Forward

Oct/06

Mar/06

Aug/05

May/14

Oct/13

Mar/13

Jan/12

Aug/12

Jun/11

Apr/10

Nov/10

Sep/09

Jul/08

Feb/09

Dec/07

Oct/06

May/07

Mar/06

Aug/05

Jun/04

Nov/03

Apr/03

Sep/02

Feb/02

Jul/01

Dec/00

May/00

Jan/05 Jan/05

Mar/99

May/14

Oct/13

Mar/13

Aug/12

Jan/12

Jun/11

Nov/10

Apr/10

Sep/09

Feb/09

Jul/08

Dec/07

May/07

Oct/06

Mar/06

Aug/05

Jan/05

Jun/04

Nov/03

Apr/03

Sep/02

Feb/02

Jul/01

Dec/00

May/00

Oct/99

-2.0x

Mar/99

0.0x

0.0x

Jun/04

2.0x

5.0x

Nov/03

4.0x

10.0x

Apr/03

6.0x

15.0x

Sep/02

8.0x

20.0x

Feb/02

10.0x

25.0x

Jul/01

30.0x

Current: PBV hist

Dec/00

12.0x

ROE (Trailing)

Oct/99

Price/Book Value

35.0x

May/00

11.6x

Mar/99

May/14

Oct/13

Mar/13

Aug/12

Jan/12

Current:

-0.60

Oct/99

PE (1Yr Forward)

Jun/11

Nov/10

Apr/10

Sep/09

Feb/09

Jul/08

Dec/07

May/07

Oct/06

Mar/06

Aug/05

Jan/05

Jun/04

Nov/03

Apr/03

Sep/02

Feb/02

Jul/01

Dec/00

May/00

Oct/99

Mar/99

0%

2.29

3.0

40.00

2.5

30.00 20.00

2.0

10.00 1.5

0.00 -10.00

1.0

-20.00 -30.00

0.5

-40.00 Oct/13

May/14

Mar/13

Jan/12

Aug/12

Jun/11

Apr/10

Nov/10

Sep/09

Jul/08

Feb/09

Dec/07

May/07

Oct/06

Mar/06

Aug/05

Jan/05

Jun/04

Nov/03

Apr/03

Sep/02

Feb/02

Jul/01

Dec/00

May/00

Oct/99

May/14

Oct/13

Mar/13

Aug/12

Jan/12

Jun/11

Nov/10

Apr/10

Sep/09

Feb/09

Jul/08

Dec/07

May/07

Oct/06

Mar/06

Aug/05

Jan/05

Jun/04

Nov/03

Apr/03

Sep/02

Feb/02

Jul/01

Dec/00

May/00

Oct/99

Mar/99

Mar/99

0.0

-50.00

Summary Wilmar International Limited SINGAPORE Consumer Staples 12mth Forward PE P/BV (Trailing) Dividend Yield (Trailing) ROE (Trailing) Implied Value of Growth

17329.24 18.80541 SEDOL B17KC69 Food Products Latest Min 9.25 11.57x 0.53 1.16x 0.00 2.29 -37.48 8.99 -0.45 -29.0%

Max 28.80 9.66 2.78 42.42 0.58

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs

10

Median 14.82 1.36 0.55 11.62 0.11

Average 15.74 2.10 0.79 9.25 0.10

2 S.D.+ 24.79 5.56 2.42 47.71 0.62

2 S.D. 6.69 -1.36 -0.85 -29.22 -0.43

% to Min -20% -54% -100% -517% -54%

As Of: Local Price: EPS: % to Max % to Med 149% 28% 737% 18% 21% -76% 372% 29% 299% 139%

* Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

1-May-14 3.40 0.23 % to Avg 36% 82% -66% 3% 133%

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Asia Pacific Equity Research 08 May 2014

Wilmar International Limited: Summary of Financials Income Statement $ in millions, year end Dec Revenues % change Y/Y EBITDA % change Y/Y EBITDA Margin EBIT % change Y/Y EBIT Margin Net Interest Earnings before tax % change Y/Y Tax as % of EBT Minority Interest Net income (reported) % change Y/Y Net Profit (Recurring) Shares outstanding EPS (reported) Balance sheet $ in millions, year end Dec Cash Accounts receivable Inventories Others Current assets LT investments Net fixed assets Total Assets

FY12 FY13 FY14E 45,463 44,085 47,873 1.7% (3.0%) 8.6% 2,188 2,316 2,356 (17.9%) 5.9% 1.7% 4.8% 5.3% 4.9% 1,645 1,659 1,612 (24.7%) 0.9% (2.8%) 3.6% 3.8% 3.4% (178) (18) (263) 1,655 1,775 1,422 (20.4%) 7.3% (19.9%) (334) (385) (327) 20.2% 21.7% 23.0% (65) (72) (57) 1,255 1,319 1,038 (21.6%) 5.1% (21.3%) 1,167 1,303 1,038 6,403 6,399 6,399 0.20 0.21 0.16

FY12 FY13 8,562 11,735 3,953 4,085 7,137 7,221 4,167 4,800 23,819 27,842 422 417 8,924 9,337 41,920 46,632

FY14E 11,910 3,751 7,779 4,800 28,240 417 10,455 48,148

Short-term loans 17,740 19,392 Payables 1,580 1,403 Others 2,093 2,397 Total current liabilities 21,413 23,191 Long-term debt 4,505 6,804 Other liabilities 807 750 Total Liabilities 26,725 30,745 Shareholder's equity 14,346 15,005 Total Liabilities & equity 41,920 46,632 BVPS ($) 2.24 2.34 Source: Company reports and J.P. Morgan estimates.

19,392 1,831 2,397 23,619 6,804 750 31,173 16,093 48,148 2.51

Cash flow statement FY15E FY16E $ in millions, year end Dec 50,347 53,702 Profit before tax 5.2% 6.7% Depr. & amortization 2,693 2,898 Change in working capital 14.3% 7.6% Other non-cash items 5.3% 5.4% Cash flow from operations 1,862 1,980 15.5% 6.3% Capex 3.7% 3.7% Disposal/(purchase) (256) (268) Cash flow from investing 1,682 1,793 18.3% 6.6% Equity raised/(repaid) (387) (412) Debt raised/(repaid) 23.0% 23.0% Other (67) (71) Dividends paid 1,228 1,309 Cash flow from financing 18.3% 6.6% Net change in cash 1,228 1,309 Beginning cash 6,399 6,399 Ending cash 0.19 0.20 Free cash flow DPS Ratio Analysis FY15E FY16E $ in millions, year end Dec 11,599 11,254 EBITDA margin 3,945 4,207 Operating margin 8,181 8,726 Net profit margin 4,800 4,800 SG&A/Sales 28,525 28,988 417 417 Sales growth 11,124 11,706 EBIT growth 49,102 50,147 Net profit growth EPS growth 19,392 19,392 1,926 2,054 Interest coverage (x) 2,397 2,397 Net debt to equity 23,714 23,842 6,804 6,804 Sales/assets 750 750 Assets/equity 31,267 31,396 ROE 16,953 17,869 ROCE 49,102 50,147 2.65 2.79

FY12 1,655 543 (581) 113 1,068

FY13 1,775 657 (288) (53) 1,614

FY14E 1,422 744 203 206 1,986

FY15E 1,682 831 (501) 189 1,558

FY16E 1,793 918 (680) 197 1,547

(1,735) (1,376) 37 61 (1,858) (1,432)

(1,500) (1,500) (1,500) 0 0 0 (1,500) (1,500) (1,500)

3 6 8,079 2,189 (6,780) (1,387) (263) (281) 1,039 527 249 709 7,898 8,562 8,562 11,735 (668) 237 0.04 0.06

0 0 0 (311) (311) 174 11,735 11,910 486 0.05

0 0 0 (368) (368) (310) 11,910 11,599 58 0.06

0 0 0 (393) (393) (345) 11,599 11,254 47 0.06

FY14E 4.9% 3.4% 2.2% 5.1%

FY15E 5.3% 3.7% 2.4% 5.3%

FY16E 5.4% 3.7% 2.4% 5.5%

(3.0%) 8.6% 0.9% (2.8%) 5.1% (21.3%) 5.1% (21.3%)

5.2% 15.5% 18.3% 18.3%

6.7% 6.3% 6.6% 6.6%

126.0 91.0%

10.5 81.8%

10.8 79.7%

FY12 4.8% 3.6% 2.6% 5.2% 1.7% (24.7%) (21.6%) (21.6%) 12.3 90.0%

FY13 5.3% 3.8% 3.0% 5.2%

9.0 84.2%

1.1 1.0 1.0 1.0 1.1 294.3% 301.7% 304.8% 294.3% 285.0% 8.4% 8.9% 6.7% 7.4% 7.5% 3.7% 3.3% 3.0% 3.4% 3.5%

11

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Asia Pacific Equity Research 08 May 2014

Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention.

Important Disclosures



Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Wilmar International Limited within the past 12 months.



Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of Wilmar International Limited: Ying-Jian Chan.



Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Wilmar International Limited.



Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Wilmar International Limited.



Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Wilmar International Limited.



Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Wilmar International Limited.



Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Wilmar International Limited.



Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Wilmar International Limited.



Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Wilmar International Limited. Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan– covered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing [email protected] with your request. J.P. Morgan’s Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or e-mail [email protected].

12

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Asia Pacific Equity Research 08 May 2014

Rating Share Price Price Target (S$) (S$)

22-Jun-09

OW

4.88

5.80

14-Aug-09 OW

6.58

6.80

25-Sep-09 N

6.99

6.80

12-Nov-09 N

6.60

6.60

11-Jan-10

N

7.11

6.80

9

25-Jan-10

OW

6.69

9.00

8

13-Aug-10 OW

6.13

8.20

7

06-Oct-10

OW

5.91

7.80

6

10-Nov-10 OW

6.88

7.20

03-Jan-11

5.63

4.60

04-Mar-11 N

5.19

5.40

18-Jul-11

OW

5.65

6.50

16-Feb-12 OW

5.99

6.80

2

22-Feb-12 OW

5.86

6.00

1

10-May-12 OW

4.27

5.20

0

28-May-12 N

3.76

4.30

30-Jul-12

N

3.28

2.80

01-Nov-12 N

3.09

3.30

08-Jan-13

OW

3.49

4.20

06-Aug-13 OW

3.15

4.05

08-Oct-13

OW

3.20

4.10

28-Apr-14

UW

3.51

3.00

Wilmar International Limited (WLIL.SI, WIL SP) Price Chart 12 N S$6.8 OW S$9 OW S$7.2

11 10

Price(S$)

Date

OW S$6.8 N S$6.8 OW S$7.8 N S$5.4

OW S$5.2 N S$3.3

OW S$6 N S$2.8

OW S$4.1

OW S$5.8 N S$6.6 OW S$8.2 UW S$4.6 OW S$6.5 OW S$6.8 N S$4.3OW S$4.2 OW S$4.05UW S$3

5 4 3

Sep 06

Mar 08

Sep 09

Mar 11

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Jun 22, 2009.

Sep 12

Mar 14

UW

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.jpmorganmarkets.com. Coverage Universe: Chan, Ying-Jian: Astra Agro Lestari (AALI.JK), BW Plantation (BWPT.JK), British American Tobacco (M) Bhd (BATO.KL), China Agri-Industries (0606.HK), D&L Industries (DNL.PS), Emperador Inc. (EMP.PS), Felda Global Ventures (FGVH.KL), First Resources Limited (FRLD.SI), Genting Plantations (GENP.KL), Golden Agri-Resources Ltd (GAGR.SI), IOI Corp. (IOIB.KL), Indofood (INDF.JK), Indofood Agri Resources Ltd (IFAR.SI), Indofood CBP (ICBP.JK), Kuala Lumpur Kepong (KLKK.KL), London Sumatra Indonesia (LSIP.JK), Mewah International Inc (MEWI.SI), Noble Group Ltd (NOBG.SI), Olam International Limited (OLAM.SI), Salim Ivomas Pratama (SIMP.JK), Sime Darby Berhad (SIME.KL), Thai Beverage Public Company Ltd. (TBEV.SI), Universal Robina Corp (URC.PS), Wilmar International Limited (WLIL.SI)

13

Ying-Jian Chan, CFA (65) 6882-2378 [email protected]

Asia Pacific Equity Research 08 May 2014

J.P. Morgan Equity Research Ratings Distribution, as of March 31, 2014 J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients*

Overweight (buy) 44% 58% 45% 78%

Neutral (hold) 44% 49% 48% 67%

Underweight (sell) 11% 40% 7% 60%

*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst or your J.P. Morgan representative, or email [email protected]. Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

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Asia Pacific Equity Research 08 May 2014

Futures Act, Cap. 289. Recipients of this document are to contact JPMSS or JPMCB Singapore in respect of any matters arising from, or in connection with, the document. Japan: JPMorgan Securities Japan Co., Ltd. is regulated by the Financial Services Agency in Japan. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-X) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission in Malaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities and Exchange Commission of Pakistan. Saudi Arabia: J.P. 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Copyright 2014 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. #$J&098$#*P

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Asia Pacific Equity Research 08 May 2014