21 may 2020 results review 4qfy20 bajaj auto auto - 4qfy20... · 2020-05-21 · 21 may 2020 results...

21 May 2020 Results Review 4QFY20

Bajaj Auto

HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters

Resilient margins

Bajaj Auto’s 4Q PAT (flat/4% YoY/ QoQ) beat was driven by a richer product

mix as well as improved profitability. Going ahead, as the environment will

remain uncertain, the management expects margins to correct from ~18%

levels of 4Q. The OEM will pass on the benefits of a weakening INR to aid

demand, particularly in the African markets. We re-iterate our ADD rating on

the stock, while we expect volumes in the high growth export markets (which

are ~45% of vols) to decline in FY21E. A diversified product mix and healthy

balance sheet will cushion the impact of the volatile macro environment.

4QFY20 Financials: Volumes declined ~17% YoY and QoQ. However, the

average realization grew 10/8% YoY/QoQ owing to better product mix and

price hikes. Revenues declined 8/11% YoY/QoQ. EBITDA margin at 18.4%

expanded (+185/50bps YoY/QoQ) due to richer product mix and favorable

forex rate. Corporate tax rate was lower at 23.9% (-650bps YoY) due to

change in tax structure. Reported PAT grew flat/4% YoY/QoQ.

Call & other takeaways: (1) The Nigerian market is going through the dual

crisis of COVID-19 and fall in crude prices; similar to the earlier downturn,

the devaluation of the Nigerian Niara is causing concerns. (2) Most of Bajaj’s

export countries are under lockdown and retails in the international markets

are currently at 35% of normal levels. (3) The co has gained market share in

the African market, currently at ~40%. Bajaj is now the largest player, as the

Chinese competition is highly fragmented. The co is the market leader

across markets including Egypt. (4) In India, 50-60% of the dealerships are in

the green zone and are witnessing a 50% productivity in sales, whereas

servicing is at 65-70% of the normal levels. Overall retails are at 25% levels.

(5) COVID situation will impact the customer’s behavior as they will down

trade to lower variants (within the respective categories). Rural and semi-

urban areas could see positive impact post monsoons. (6) The share of

financing is higher in 3Ws (as compared to 2Ws). Bajaj has 85-90% market

share in small 3Ws which are not used for shared rides (more than 5

persons). Management expects this segment to be less impacted post COVID

as the price hikes in larger 3Ws is significantly higher post BSVI transition.

STANCE: We increase our FY21/22E EPS by ~7% to factor in the higher than

expected margins in 4Q. We continue to value the stock at 17x on FY22E EPS

(in line with the long term historic average trading multiple) with a TP of Rs

2,850. Key risks: Extended impact due to COVID on the downside, an

increase in oil prices on the upside.

Financial Summary YE Mar

(Rs mn)

4Q

FY20

4Q

FY19

YoY

(%)

3Q

FY20

QoQ

(%) FY18 FY19 FY20 FY21E FY22E

Net Sales 68,159 74,205 (8.1) 76,397 (10.8) 252,189 302,500 299,187 275,269 303,490

EBITDA 12,528 12,270 2.1 13,672 (8.4) 48,374 49,821 50,963 41,731 47,830

APAT 13,103 9,636 36.0 12,616 3.9 40,906 44,367 51,000 43,223 48,512

Adj. EPS (Rs) 45.3 33.3 36.0 43.6 3.9 141.4 153.3 176.2 149.4 167.6

APAT Growth (%)

6.9 8.5 15.0 (15.2) 12.2

P/E (x)

18.1 16.7 14.5 17.1 15.3

RoE (%)

22.6 21.7 22.9 18.2 18.8

Source: Company, HSIE Research

ADD

CMP (as on 20 May 2020) Rs 2,558

Target Price Rs 2,850

NIFTY 9,067

KEY

CHANGES OLD NEW

Rating ADD ADD

Price Target Rs 2,695 Rs 2,850

EPS % FY21E FY22E

8% 6%

KEY STOCK DATA

Bloomberg code BJAUT IN

No. of Shares (mn) 289

MCap (Rs bn) / ($ mn) 740/9,785

6m avg traded value (Rs mn) 1,681

52 Week high / low Rs 3,315/1,789

STOCK PERFORMANCE (%)

3M 6M 12M

Absolute (%) (16.6) (19.1) (14.9)

Relative (%) 8.6 5.1 6.8

SHAREHOLDING PATTERN (%)

Dec-19 Mar-20

Promoters 53.5 53.7

FIs & Local MFs 10.1 8.8

FPIs 13.9 13.9

Public & Others 22.5 23.6

Pledged Shares 0.0 0.0

Source : BSE

Aditya Makharia

[email protected]

+91-22-6171-7316

Mansi Lall

[email protected]

+91-22-6171-7357

Page | 2

Bajaj Auto: Results Review 4QFY20

Quarterly Financial Snapshot

Particulars (Rs mn) 4Q

FY20

4Q

FY19

YoY

(%)

3Q

FY20

QoQ

(%) FY20 FY19 YoY (%)

Volumes (in units) 991,961 1,193,589 (16.9) 1,202,486 (17.5) 4,615,212 5,018,712 (8.0)

Net ASP (Rs/veh) 68,711 62,170 10.5 63,532 8.2 64,826 60,489 7.2

Net sales (incl OOI) 68,159 74,205 (8.1) 76,397 (10.8) 299,187 303,576 (1.4)

Material Expenses 46,653 53,313 (12.5) 53,422 (12.7) 210,083 217,977 (3.6)

Employee Expenses 3,421 3,126 9.4 3,482 (1.8) 13,892 12,554 10.7

Other Operating Expenses 5,557 5,498 1.1 5,820 (4.5) 24,249 21,120 14.8

Total Expenditure 55,631 61,936 (10.2) 62,725 (11.3) 248,224 251,651 (1.4)

EBITDA 12,528 12,270 2.1 13,672 (8.4) 50,962 51,924 (1.9)

Depreciation 633 608 4.0 617 2.6 2,464 2,657 (7.2)

EBIT 11,895 11,661 2.0 13,055 (8.9) 48,498 49,268 (1.6)

Other Income (Including EO Items) 5,327 7,100 (25.0) 3,662 45.4 17,336 17,809 (2.7)

Interest Cost 9 3 213.8 5 93.6 32 45 (29.5)

PBT 17,212 18,759 (8.2) 16,713 3.0 65,802 67,031 (1.8)

Tax 4,109 5,703 (27.9) 4,097 0.3 14,802 20,280 (27.0)

RPAT 13,103 13,056 0.4 12,616 3.9 51,000 46,752 9.1

EO (Loss) / Profit (Net Of Tax) - (3,420) - - - - (3,420) -

APAT 13,103 9,636 36.0 12,616 3.9 51,000 43,332 17.7

Adj EPS 45.3 33.3 36.0 43.6 3.9 176.2 149.7 17.7


Quarterly Performance Analysis

As % of sales 4Q

FY20

4Q

FY19

YoY

(bps)

3Q

FY20

QoQ

(bps) FY20 FY19

YoY

(bps)

Material Expenses 68.4 71.8 (340) 69.9 (148) 70.2 71.8 (159)

Employee Expenses 5.0 4.2 81 4.6 46 4.6 4.1 51

Other Operating Expenses 8.2 7.4 75 7.6 54 8.1 7.0 115

Total Expenditure 81.6 83.5 (185) 82.1 (48) 83.0 82.9 7

EBITDA 18.4 16.5 185 17.9 48 17.0 17.1 (7)

APAT 19.2 13.0 624 16.5 271 17.0 14.3 277

Tax as % of PBT 23.9 30.4 (653) 24.5 (64) 22.5 30.3 (776)


Volumes for the quarter

declined due weak

macroeconomic

environment and lockdown

in end of Mar-20

Realisations grew as the

product mix titled more

towards exports

Gross margins expanded

340bps due to change in

product mix and stable

forex rates

The management will pass

on the benefits of the

weaker INR to revive

demand in the export

markets

The company declared one-

time special dividend of Rs

120 per share (payout of

68%)

Page | 3


Volumes affected due to weak industry environment Realizations benefitted due to better product mix



EBITDA margins expanded due to favorable currency 2W (%) – Premium share has risen in 4Q

Source: Company, HSIE Research Source: SIAM, Company, HSIE Research

Bajaj Auto’s 2W market share in India & Africa Dividend payout ratio (%)

Source: SIAM, Company, HSIE Research Source: Company, HSIE Research

32

.7 38

.7

25

.0

25

.7

14

.2

1.7

-12

.4

-4.5

-16

.9

-20

-10

0

10

20

30

40

800

1,000

1,200

1,400

4Q

FY

18

1Q

FY

19

2Q

FY

19

3Q

FY

19

4Q

FY

19

1Q

FY

20

2Q

FY

20

3Q

FY

20

4Q

FY

20

Volumes ('000 units) % change YoY -RHS

64.8

60.960.0

59.1

62.2 62.2

65.7

63.5

68.7

55

60

65

70

4Q

FY

18

1Q

FY

19

2Q

FY

19

3Q

FY

19

4Q

FY

19

1Q

FY

20

2Q

FY

20

3Q

FY

20

4Q

FY

20

Avg realisation (Rs '000)

15

16

17

18

19

20

60

65

70

75

1Q

FY

20

2Q

FY

20

3Q

FY

20

4Q

FY

20

Average USD/INR rate EBITDA Margin (%) - RHS

38

% 50

%

58

%

58

%

48

%

50

%

53

%

55

%

44

%

14%8%

5% 3%

3% 3% 2% 1%

0%

47

%

43

%

37

%

38

%

49

%

47

%

46

%

45

%

56

%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

4Q

FY

18

1Q

FY

19

2Q

FY

19

3Q

FY

19

4Q

FY

19

1Q

FY

20

2Q

FY

20

3Q

FY

20

4Q

FY

20

Economy Executive Premium

19%

40%

0%

15%

30%

45%

India Africa

41% 42% 42%39%

68%

20%

30%

40%

50%

60%

70%

FY16 FY17 FY18 FY19 FY20

Page | 4


1 year forward P/E band chart

Source: Bloomberg, Company, HSIE Research

4

8

12

16

20

24

Ma

y-0

9

Ma

y-1

0

Ma

y-1

1

Ma

y-1

2

Ma

y-1

3

Ma

y-1

4

Ma

y-1

5

Ma

y-1

6

Ma

y-1

7

Ma

y-1

8

Ma

y-1

9

Ma

y-2

0

PE Mean +1 SD -1 SD

Page | 5


Volume assumptions Volume assumption (in

units) FY17 FY18 FY19 FY20 FY21E FY22E

Motorcycles

-Domestic 2,001,391 1,974,574 2,541,320 2,078,348 1,766,596 1,943,255

-Exports 1,218,541 1,394,757 1,695,553 1,869,220 1,682,298 1,800,059

Total 3,219,932 3,369,331 4,236,873 3,947,568 3,448,894 3,743,314

% chng YoY (4.1) 4.6 25.7 (6.8) (12.6) 8.5

CVs

-Domestic 253,226 369,637 399,448 365,759 329,183 355,518

-Exports 192,792 267,820 382,391 301,885 271,697 285,281

Total 446,018 637,457 781,839 667,644 600,880 640,799

% chng YoY (16.7) 42.9 22.6 (14.6) (10.0) 6.6

Total sales

- Domestic 2,254,617 2,344,211 2,940,768 2,444,107 2,095,779 2,298,773

- Exports 1,411,333 1,662,577 2,077,944 2,171,105 1,953,995 2,085,340

3,665,950 4,006,788 5,018,712 4,615,212 4,049,773 4,384,113

% chng YoY (5.8) 9.3 25.3 (8.0) (12.3) 8.3

Average Realisation (Rs) 59,375 62,940 60,274 64,826 67,971 69,225

% chng YoY 2.4 6.0 (4.2) 7.6 4.9 1.8


Peer set comparison

Mcap CMP

Reco TP Adj EPS (Rs/sh) P/E (x) RoE (%)

(Rs bn) (Rs/sh) FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E

Ashok Leyland 127 43 REDUCE 46 1.2 1.0 3.5 35.9 43.4 12.3 4.2 3.4 11.4

Bajaj Auto 740 2,558 ADD 2,850 176.2 149.4 167.6 14.5 17.1 15.3 22.9 18.2 18.8

Eicher 373 13,677 REDUCE 13,800 645.0 542.3 677.2 21.2 25.2 20.2 18.2 13.5 15.0

Escorts Ltd. 107 869 BUY 950 55.4 49.9 63.1 15.7 17.4 13.8 15.1 12.0 12.2

Hero Motocorp 404 2,023 BUY 2,210 151.9 112.3 138.1 13.3 18.0 14.7 22.0 14.8 17.1

Mahindra & Mahindra 484 406 ADD 410 31.3 24.1 31.9 13.0 16.9 12.7 10.2 7.3 9.1

Maruti Suzuki 1,477 4,892 BUY 5,810 187.1 146.0 252.4 26.1 33.5 19.4 11.7 8.5 13.6

Source: HSIE Research

Change in Estimates

Rs mn New Old Change (%)

FY21E FY22E FY21E FY22E FY21E FY22E

Net Sales 275,269 303,490 270,153 299,788 2 1

EBITDA 41,731 47,830 38,794 45,268 8 6

EBITDA margin (%) 15.2 15.8 14.4 15.1 80 bps 66 bps

Adj PAT 43,223 48,512 39,933 45,837 8 6

Adj EPS (in Rs) 149.4 167.6 138.0 158.4 8 6

Source: HSIE Research

Page | 6


Financials Standalone Income Statement

(Rs mn) FY16 FY17 FY18 FY19 FY20P FY21E FY22E

Net Revenues 225,865 217,667 252,189 302,500 299,187 275,269 303,490

Growth (%) 4.5 (3.6) 15.9 19.9 (1.1) (8.0) 10.3

Material Expenses 150,569 146,242 174,101 218,243 210,083 196,817 216,085

Employee Expenses 9,171 9,971 10,691 12,554 13,892 13,323 13,961

Other Operating Expenses 18,306 17,231 19,023 21,882 24,249 23,398 25,615

Total Expenses 178,046 173,444 203,815 252,679 248,224 233,538 255,660

EBITDA 47,820 44,223 48,374 49,821 50,963 41,731 47,830

EBITDA Margin (%) 21.2 20.3 19.2 16.5 17.0 15.2 15.8

EBITDA Growth (%) 16.2 (7.5) 9.4 3.0 2.3 (18.1) 14.6

Depreciation 3,072 3,073 3,148 2,657 2,464 2,594 2,859

EBIT 44,748 41,150 45,226 47,164 48,498 39,137 44,971

Other Income (Including EO Items) 10,736 12,220 12,613 19,913 17,336 17,599 19,128

Interest 11 14 13 45 32 12 14

PBT 55,473 53,356 57,826 67,032 65,802 56,723 64,085

Tax (Incl Deferred) 16,177 15,081 17,145 20,280 14,802 13,500 15,573

RPAT 39,297 38,275 40,681 46,752 51,000 43,223 48,512

EO (Loss) / Profit (Net Of Tax) - - 225 (2,385) - - -

APAT 39,297 38,275 40,906 44,367 51,000 43,223 48,512

APAT Growth (%) 28.9 (2.6) 6.9 8.5 15.0 (15.2) 12.2

Adjusted EPS (Rs) 135.8 132.3 141.4 153.3 176.2 149.4 167.6

EPS Growth (%) 28.9 (2.6) 6.9 8.5 15.0 (15.2) 12.2


Standalone Balance Sheet

(Rs mn) FY16 FY17 FY18 FY19 FY20P FY21E FY22E

SOURCES OF FUNDS

Share Capital - Equity 2,894 2,894 2,894 2,894 2,894 2,894 2,894

Reserves 129,772 167,448 188,145 214,905 224,220 244,064 266,336

Total Shareholders Funds 132,666 170,341 191,039 217,799 227,114 246,957 269,230

Total Debt - - - - - - -

Net Deferred Taxes 2,028 3,136 3,234 5,427 4,756 3,508 2,932

Other Non-current Liabilities & Provns 1,886 1,764 1,687 1,696 1,696 1,696 1,696

TOTAL SOURCES OF FUNDS 136,579 175,242 195,960 224,922 233,566 252,162 273,857

APPLICATION OF FUNDS

Net Block 27,389 20,018 18,783 17,639 22,657 27,546 32,100

CWIP 522 422 565 480 498 515 602

Investments 12,227 12,227 12,227 12,227 12,227 12,227 12,227

Total Non-current Assets 40,139 32,667 31,575 30,347 35,383 40,289 44,930

Cash & Equivalents 98,554 137,886 171,436 188,595 206,708 221,979 240,069

Inventories 7,191 7,284 7,426 9,615 10,656 9,050 9,978

Debtors 7,179 9,533 14,919 25,597 17,213 15,837 17,461

Other Current Assets 11,803 20,780 12,839 19,651 15,246 14,027 15,466

Total Current Assets 124,727 175,482 206,620 243,457 249,824 260,893 282,974

Creditors 20,270 22,357 32,443 37,867 40,165 36,954 40,743

Other Current Liabilities & Provns 8,015 10,550 9,792 11,015 11,476 12,067 13,304

Total Current Liabilities 28,286 32,907 42,235 48,882 51,640 49,020 54,046

Net Current Assets 96,441 142,575 164,385 194,575 198,183 211,873 228,927

TOTAL APPLICATION OF FUNDS 136,580 175,242 195,960 224,922 233,566 252,162 273,857


Page | 7


Standalone Cash Flow (Rs mn) FY16 FY17 FY18 FY19 FY20P FY21E FY22E

Reported PBT 55,473 53,356 57,826 67,032 65,802 56,723 64,085

Non-operating & EO Items (10,736) (12,220) (12,613) (19,913) (17,336) (17,599) (19,128)

Interest Expenses 11 14 13 45 32 12 14

Depreciation 3,072 3,073 3,148 2,657 2,464 2,594 2,859

Working Capital Change (7,548) (6,802) 11,740 (13,031) 14,505 1,581 1,036

Tax Paid (15,564) (13,973) (17,047) (18,087) (15,473) (14,748) (16,149)

OPERATING CASH FLOW ( a ) 24,707 23,449 43,068 18,702 49,995 28,564 32,717

Capex (9,261) 4,399 (2,056) (1,429) (7,500) (7,500) (7,500)

Free Cash Flow (FCF) 15,446 27,847 41,011 17,273 42,495 21,064 25,217

Investments 787 (122) (77) 9 - - -

Non-operating Income 10,736 12,220 12,613 19,913 17,336 17,599 19,128

INVESTING CASH FLOW ( b ) 2,262 16,497 10,479 18,493 9,836 10,099 11,628

Debt Issuance/(Repaid) - - - - - - -

Interest Expenses (11) (14) (13) (45) (32) (12) (14)

FCFE 15,436 27,833 40,998 17,229 42,464 21,052 25,203

Share Capital Issuance 5,538 18,556 947 878 - 0 -

Dividend (19,130) (19,155) (20,931) (20,869) (41,686) (23,379) (26,240)

FINANCING CASH FLOW ( c ) (13,602) (614) (19,997) (20,037) (41,717) (23,391) (26,254)

NET CASH FLOW (a+b+c) 13,367 39,332 33,550 17,159 18,114 15,271 18,090

Closing Cash & Equivalents 98,554 137,886 171,436 188,595 206,708 221,979 240,069

Key Ratios

FY16 FY17 FY18 FY19 FY20P FY21E FY22E

PROFITABILITY (%)

GPM 33.3 32.8 31.0 27.9 29.8 28.5 28.8

EBITDA Margin 21.2 20.3 19.2 16.5 17.0 15.2 15.8

EBIT Margin 19.8 18.9 17.9 15.6 16.2 14.2 14.8

APAT Margin 17.4 17.6 16.2 14.7 17.0 15.7 16.0

RoE 32.8 25.3 22.6 21.7 22.9 18.2 18.8

RoIC (or Core RoCE) 101.8 78.3 102.8 108.1 119.0 104.6 106.4

RoCE 32.0 24.6 22.0 21.1 22.3 17.8 18.4

EFFICIENCY

Tax Rate (%) 29.2 28.3 29.6 30.3 22.5 23.8 24.3

Fixed Asset Turnover (x) 8.2 10.9 13.4 17.1 13.2 10.0 9.5

Inventory (days) 11.6 12.2 10.7 11.6 13.0 12.0 12.0

Debtors (days) 11.6 16.0 21.6 30.9 21.0 21.0 21.0

Other Current Assets (days) 19.1 34.8 18.6 23.7 18.6 18.6 18.6

Payables (days) 32.8 37.5 47.0 45.7 49.0 49.0 49.0

Other Current Liab & Provns (days) 13.0 17.7 14.2 13.3 14.0 16.0 16.0

Cash Conversion Cycle (days) (3.4) 7.9 (10.2) 7.2 (10.4) (13.4) (13.4)

Debt/EBITDA (x) (2.1) (3.1) (3.5) (3.8) (4.1) (5.3) (5.0)

Net D/E (x) (0.7) (0.8) (0.9) (0.9) (0.9) (0.9) (0.9)

Interest Coverage (x) 4,261.7 2,939.3 3,452.4 1,052.8 1,534.8 3,261.4 3,212.2

PER SHARE DATA (Rs)

EPS 135.8 132.3 141.4 153.3 176.2 149.4 167.6

CEPS 146.4 142.9 151.5 170.7 184.8 158.3 177.5

Dividend 50.0 55.0 55.0 60.0 60.0 119.8 67.2

Book Value 458 589 660 753 785 853 930

VALUATION

P/E (x) 18.8 19.3 18.1 16.7 14.5 17.1 15.3

P/BV (x) 5.6 4.3 3.9 3.4 3.3 3.0 2.7

EV/EBITDA (x) 13.4 13.6 11.8 11.1 10.5 12.4 10.5

EV/Revenues (x) 2.8 2.8 2.3 1.8 1.8 1.9 1.6

OCF/EV (%) 3.9 3.9 7.6 3.4 9.4 5.5 6.5

FCF/EV (%) 2.4 4.6 7.2 3.1 8.0 4.1 5.0

FCFE/Mkt Cap (%) 2.1 3.8 5.5 2.3 5.7 2.8 3.4

Dividend Yield (%) 2.0 2.2 2.2 2.3 2.3 4.7 2.6


Page | 8


Rating Criteria

BUY: >+15% return potential

ADD: +5% to +15% return potential

REDUCE: -10% to +5% return potential

SELL: >10% Downside return potential

Date CMP Reco Target

19-May-19 3,040 BUY 3,330

10-Jul-19 2,786 BUY 3,090

29-Jul-19 2,619 BUY 3,000

22-Sep-19 2,928 BUY 3,400

11-Oct-19 2,899 BUY 3,400

24-Oct-19 3,163 BUY 3,530

30-Dec-19 3,242 BUY 3,530

9-Jan-20 3,059 BUY 3,530

30-Jan-20 3,146 BUY 3,630

2-Mar-20 2,890 BUY 3,745

20-Apr-20 2,378 ADD 2,695

21-May-20 2,558 ADD 2,850

From 2nd March 2020, we have moved to new rating system

RECOMMENDATION HISTORY

1,800

2,300

2,800

3,300

3,800

Ma

y-1

9

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

Oct

-19

No

v-1

9

Dec

-19

Jan

-20

Feb

-20

Ma

r-2

0

Ap

r-2

0

Ma

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0

Bajaj Auto TP

Page | 9


HDFC securities

Institutional Equities

Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park,

Senapati Bapat Marg, Lower Parel, Mumbai - 400 013

Board: +91-22-6171-7330 www.hdfcsec.com

Disclosure:

We, Aditya Makharia, CA & Mansi Lall, MBA, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research

report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this

report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this

report.

Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative

or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding

the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material

conflict of interest.

Any holding in stock –No

HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475.

Disclaimer:

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investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor;

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document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in securities of the companies

referred to in this document (including merits and risks) and should consult their own advisors to determine merits and risks of such investment. The

information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be

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completeness or correctness. All such information and opinions are subject to change without notice. Descriptions of any company or companies or their

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HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with

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have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

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