regional plantations neutral (unchanged) pinning hope on ...apr 09, 2015 · april 9, 2015 l or |...

April 9, 2015

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SEE PAGE 13 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS PP16832/01/2013 (031128)

Regional Plantations

Pinning hope on dry weather There is a 50% chance that El Niño may return by mid-year,

and below average rainfall is anticipated.

Record soybean planting intentions by US farmers this spring

will likely offset near term tight supply in palm oil.

Stay NEUTRAL on the sector.

What’s New

According to the Australian Bureau of Meteorology (ABM), the

recent warming of the tropical Pacific Ocean has primed the

Pacific for an El Niño. ABM presently attaches a 50% probability of

El Niño happening but cautions that model outlooks have lower

predictive ability spanning the Feb – May period.

Malaysia Meteorology Department forecasts below-average rainfall

in the region for the Apr-Sept 2015 period. Affected areas are

Peninsular Malaysia, Sabah and parts of Sarawak over the next two

months, and thereafter Kalimantan and the southern tip of

Sumatra.

Elsewhere, the USDA prospective plantings report released on 31

Mar 2015 reveals that US farmers presently favours more soybean

planting this spring at the expense of corn. This may cap the near-

term price upside of soybean (and potentially soybean oil)

provided weather is favourable throughout this planting season.

The ample soybean supply outlook contrasts the muted palm oil

production outlook for 9M15.

What’s Our View

The sector lacks short term re-rating catalyst. The only

foreseeable upside to CPO price is the advent of weather

anomalies (like El Niño) which may result in supply shock. In the

meantime, the US planting progress requires close monitoring.

We remain NEUTRAL on the sector. Our MYR2,400/t CPO ASP

forecast for 2015 is unchanged. Our long term top BUYs in the

region are Bumitama Agri, First Resources, Genting Plantations,

Sarawak Oil Palms and Sime Darby. We advocate SELL on IOI

Corporation for its steep valuation.

Key swing factors in 2015 are weather, crude oil price direction,

further Ringgit and Rupiah weakness, changes in government

policies, and strict enforcement of biodiesel mandates in Indonesia

and Malaysia.

Analyst

Regional CPO price forecast

2014A 2015F

MYR/t MYR/t

Full year average (FOB) 2,416 2,400

MDEX:

3M CPO price (8 Apr) - 2,166

YTD (8 Apr) CPO ASP - 2,257

Source: Maybank KE, Bloomberg Regional Plantation coverage

Company Rec Shr px Target

px

Upside

M’sia listed LCY LCY %

Sime Darby Buy 9.27 10.20 10.0

IOI Corp Sell 4.54 3.93 (13.4)

KL Kepong Hold 22.98 21.40 (6.9)

FGVH Sell 2.10 2.44 16.2

Gent Plant Buy 10.10 11.36 12.5

SwkOil Palms Buy 5.00 6.55 31.0

TSH Res Buy 2.26 2.45 8.4

Ta Ann Buy 3.89 5.90 51.7

TH Plant Hold 1.55 1.45 (6.5)

BPlant Buy 1.38 1.68 21.7

S’pore listed

Wilmar Buy 3.24 4.04 24.7

First Res Buy 1.92 2.32 21.1

Bumitama Buy 1.00 1.30 30.0

Indo listed

Astra Agro Hold 24175 24000 (0.7)

Source: Maybank KE

(Unchanged)NEUTRAL

Ong Chee Ting, CA

(603) 2297 8678

[email protected]

April 9, 2015 2


Fig 1: Sector Summary Table

Company Rating Mkt Cap Shr px TP EPS Growth

(%)

PE

(x)

Div Yield (%) EV/EBITDA

(x)

P/B

(x)

ROE

(%)

8 Apr 8 Apr 15F 16F 15F 16F 15F 16F 15F 16F 15F 15F

(USD m) (LCY) (LCY) Sime Darby Buy 15,874 9.27 10.20 5.0 20.2 19.6 16.3 2.8 3.4 12.4 10.7 1.8 9.6

IOI Corp Sell 7,963 4.54 3.93 (13.2) 13.3 26.2 23.1 1.6 2.2 19.7 16.0 4.7 14.7

KL Kepong Hold 6,747 22.98 21.40 (5.1) 12.8 26.9 23.9 2.2 2.5 16.3 14.5 3.1 11.3

FGVH Sell 2,112 2.10 2.44 250.4 21.1 16.7 13.8 3.0 3.6 8.9 7.8 1.2 7.1

Gent Plant’ns Buy 2,147 10.10 11.36 (0.4) 24.5 20.6 16.5 1.0 1.2 15.2 12.4 1.9 9.3

SOP Buy 606 5.00 6.55 17.6 44.7 16.6 11.5 0.8 1.0 8.7 6.7 1.5 9.6

TSH Resources Buy 845 2.26 2.45 5.4 21.0 21.1 17.4 1.4 1.7 18.0 15.4 2.3 11.6

Ta Ann Buy 397 3.89 5.90 (9.2) 42.4 14.4 10.1 3.1 4.5 7.1 5.3 1.3 9.3

TH Plant Hold 378 1.55 1.45 57.0 56.1 25.4 16.2 2.0 3.1 13.0 10.1 1.1 4.4

Boustead Plant Buy 609 1.38 1.68 17.0 34.7 30.1 22.3 2.0 2.7 16.2 13.3 1.0 3.2

Malaysia Average 22.4 19.0

Wilmar Buy 15,290 3.24 4.04 13.2 12.1 11.1 9.9 1.7 1.9 12.0 11.1 1.0 8.9

Golden Agri * N.R 4,088 0.435 N.R. 35.3 26.1 14.0 11.1 2.8 3.4 10.1 8.9 0.5 3.4

First Resources Buy 2,238 1.92 2.32 5.5 16.5 12.3 10.5 2.4 2.8 8.7 7.4 1.9 15.3

Bumitama Agri Buy 1,297 1.00 1.30 10.6 19.6 12.2 10.2 1.7 2.0 9.3 7.9 2.2 19.5

Indofood Agri * N.R 756 0.73 N.R. 22.5 25.0 10.6 8.5 0.9 1.0 6.9 6.0 0.7 6.2

Singapore Average 11.8 10.1

Astra Agro Hold 2,939 24,175 24,000 (9.8) 11.6 16.9 15.1 2.0 2.3 10.5 10.0 2.9 18.7

Salim Ivomas

Pratama*

N.R 836 685 N.R. 12.2 19.6 11.3 9.4 2.7 2.8 5.4 4.7 0.7 7.1

London Sumatera N.R 896 1,700 N.R. 14.1 13.5 11.1 9.8 3.3 3.9 6.3 5.5 1.5 14.0

Sampoerna Agro * N.R 278 1,905 N.R. 25.8 18.8 8.4 7.1 2.7 3.1 5.6 4.8 1.1 13.7

BW Plant'n * N.R 811 333 N.R. 149.6 30.6 8.2 6.3 1.5 2.2 11.5 9.1 0.8 8.7

Indonesia Average 13.5 11.8

Source: Maybank-KE, *bloomberg estimates

April 9, 2015 3


Weather update: Strengthening El Niño

indicator

El Nino threshold by June 2015?

According to the Australian Bureau of Meteorology (ABM), the recent

warming of the tropical Pacific Ocean has primed the Pacific for an El

Niño. All the eight international climate models surveyed by ABM favour

warming of central Pacific Ocean SSTs (sea surface temperatures) over the

coming months, and will reach El Niño threshold levels by mid-year (see

overleaf). The latest POAMA (Predictive Ocean Atmosphere Model for

Australia) monthly mean NINO34 forecasts suggest that SSTs will remain

above threshold levels for a sustained period. However, ABM cautions that

the model outlooks spanning Feb – May (the traditional ENSO transition

period) have lower confidence than forecasts made at other times of year.

(Note also that history has shown El Niño does not always develop from the

ocean trends currently observed.)

Fig 2: The Sea Surface Temperatures anomaly map for Mar 2015 shows waters were warmer than average

Source: Australia Bureau of Meteorology

April 9, 2015 4


Fig 3: POAMA monthly mean NINO34 – forecast on 1 June 2014

POAMA stands for Predictive Ocean Atmosphere Model for Australia


SOI eases to -12.2 of late, below El Niño threshold

The Southern Oscillation Index (SOI) has decreased further in recent

weeks. The latest 30-day SOI eased to -12.2 as at 4 Apr 2015, below El Niño

threshold level. In general, sustained positive values of the SOI above +8

may indicate a La Niña event, while sustained negative values below −8

may indicate an El Niño event. Values of between about +8 and −8

generally indicate neutral conditions.

Fig 4: 30 day moving Southern Oscillation Index (SOI)


April 9, 2015 5


50% chance of an El Niño developing

The ABM's ENSO Tracker is at El Niño WATCH (upgraded from neutral on 3

Mar 2015), indicating at least a 50% chance of El Niño developing in 2015;

double the normal chance. Although still preliminary, the current reading

suggests that the ENSO Tracker may reach El Niño ALERT level by June

2015, and possible confirmation of an El Niño by Aug 2015.

Fig 5: Average of international model outlooks for NINO3.4


Outlook: Below average rainfall outlook for Apr-

Sep 2015

Regardless of whether an El Niño eventually materialize, the sustained

warming of the sea surface temperatures in the Pacific Ocean is expected

to bring less rainfall to this region as forecasted by the Malaysian

Meteorological Department (see Figures 6a-6d). While this represents a

long-range weather outlook with relatively low predictive ability, the areas

anticipated to be affected by below-average rainfall are Peninsular

Malaysia, Sabah, and parts of Sarawak in the immediate term (see Fig 6a)

and thereafter Kalimantan and the southern tip of Sumatra (see Fig 6b-d).

Fig 6a: Predicted seasonal mean precipitation anomaly (mm) by ECMWF model for Apr-May-June 2015

Source: Malaysia Meteorology Department

April 9, 2015 6


Fig 6b: Predicted seasonal mean precipitation anomaly (mm) by ECMWF model for May-June-July 2015


Fig 6c: Predicted seasonal mean precipitation anomaly (mm) by ECMWF model for June-July-Aug 2015


April 9, 2015 7


Fig 6d: Predicted seasonal mean precipitation anomaly (mm) by ECMWF model for July-Aug-Sept 2015


US farmers plan more soybean planting in 2015

The USA will start its spring planting in Apr-May 2015 and harvest them

sometime six months later. The fight for acreage between corn and

soybean is close this year unlike 2014 whereby financial rewards clearly

favour more soybean planting which led to record soybean planting (see

Fig 7a).

Fig 7a: US farmers plans record Soybean in 2015, based on recent survey

Source: USDA

50,000,000

55,000,000

60,000,000

65,000,000

70,000,000

75,000,000

80,000,000

85,000,000

90,000,000

95,000,000

100,000,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Corn Soybean

Areas Planted (Acres)

April 9, 2015 8


Fig 7b: US farmers plan record soybean acres

2015 planting

intentions (million of

acres)

2014 planned planting

(million of acres)

2014 actual

planting (million of

acres)

YoY chg (%)

Soybean 84.64 81.49 83.70 1.1

Corn 89.20 91.69 90.60 (1.5)

Source: USDA

Traditionally, soybean planting is favoured by US farmers when the

soybean-to-corn price ratio is above 2.5x, and vice versa. As at 1 Apr 2015,

the price ratio of soybean-to-corn is at ~2.5x (see Fig 8b), which

approximates the threshold. On 31 Mar 2015, the USDA released its annual

prospective plantings report based on survey response by US farmers. The

survey results show that US farmers intends to plant more soybean (+0.9m

acres; +1% YoY) in 2015 at the expense of corn (-1.4m acres; -2% YoY). If

this materialises, US farmers will again plant record soybean. A favourable

weather throughout this summer in the northern hemisphere will result in

still ample soybean supply globally, capping the near-term price upside of

soybean (and potentially soybean oil).

Fig 8a: Soybean vs Corn prices (USd per bushel) Fig 8b: Soybean-Corn Ratio (3M Futures)

Sources: Bloomberg, Maybank-KE Sources: Bloomberg, Maybank-KE

Expect muted palm oil production in 9M15

In our 1 Jan 2015 sector report, we highlighted that 2014 was a year of

strong CPO production recovery for the industry despite initial concern

over the potential impact on FFB output following a dry spell in Sumatra

and Peninsular Malaysia during Feb/Mar 2014. Production was especially

strong YoY in 2Q-3Q14. This was in tandem with the historical pattern

observed on the combined quarterly and half-yearly production trends of

five large and mature listed plantation groups with substantial Indonesian

palm oil acreage (with average tree age profiles of above 8 years), namely

Golden Agri (GGR SP), Sime Darby (SIME MK) - Indonesian operation only,

First Resources (FR SP), Astra Agro Lestari (AALI IJ) and Indofood Agri (IFAR

SP). Based on collected data (including plasma production for some), their

total production in Indonesia represented ~20% of Indonesia’s production

for 2013.

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

-

100

200

300

400

500

600

700

800

900USd/buUSd/bu Corn (LHS) Soybean (RHS)

1.50

1.70

1.90

2.10

2.30

2.50

2.70

2.90

3.10

3.30

3.50

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Soybean/Corn price ratio (x) Parity (x)

Favours corn planting

Favours soybean planting

April 9, 2015 9


We reiterate our view that we expect muted palm oil production supply

growth till 9M15. Based on the same observation (see Fig 9a & 9b), we

believe that the production outlook for 2015 will remain muted especially

in the first three quarters of 2015 given the high base of 2Q-3Q14. There is

a good chance that the expected YoY growth could slip into negative

territory in 1H15 and post a muted growth in 3Q15 if the dry spell pans out

in the coming months. The muted palm oil production outlook will limit

the downside of CPO price in the near term.

Fig 9a: Selected Indonesian Companies’ Quarterly Production

Combination of Indofood Agri, Astra Agro Lestari, First Resources, Golden Agri, and Sime - Indonesia

Sources: Company, Maybank-KE

Fig 9b: Selected Indonesian Companies’ Half-Yearly Production

Combination of Indofood Agri, Astra Agro Lestari, First Resources, Golden Agri, and Sime - Indonesia

Sources: Company, Maybank-KE

-14.0%

11.0%

18.8%21.8%

-2.3%

-12.5%

-1.6%

7.3%

28.0%

23.6%

7.0%

0.8%2.4%

6.8%

19.2%17.4%

7.6%

-11.1%-13.8%

-5.8%

4.0%

22.5%

13.5%

-6.3%

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

FFB tonnesYoY Combined tonne YoY growth

-1.6%

20.2%

-8.0%

2.9%

25.7%

3.7% 4.7%

18.3%

-2.0%

-9.8%

12.5%

3.9%

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

1H

08

2H

08

1H

09

2H

09

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

2H

13

1H

14

2H

14

Combined tonne YoY

April 9, 2015 10


Appendix – Normalised rainfall in 1Q15

According to rainfall data compiled by the Meteorology Service Singapore,

the rainfall data registered across the region in 1Q15 has been rather

normalised. The only exception is the relatively below-average rainfall

registered in parts of Sarawak and parts of Sabah– see Fig 10a – 10c.

Fig 10a: Rainfall barcharts for Borneo

Source: Meteorology Service Singapore

Fig 10b: Rainfall barcharts for Sumatra


April 9, 2015 11


Fig 10c: Rainfall barcharts for Peninsular Malaysia/ Singapore


April 9, 2015 12


Research Offices

REGIONAL

WONG Chew Hann, CA

Regional Head of Institutional Research

(603) 2297 8686 [email protected]

ONG Seng Yeow

Regional Head of Retail Research

(65) 6432 1453

[email protected]

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


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


• Strategy • Construction & Infrastructure

Desmond CH’NG, ACA

(603) 2297 8680

[email protected]

• Banking & Finance

LIAW Thong Jung


• Oil & Gas - Regional • Shipping

ONG Chee Ting, CA


• Plantations - Regional

Mohshin AZIZ


• Aviation - Regional • Petrochem

YIN Shao Yang, CPA


• Gaming – Regional • Media

TAN Chi Wei, CFA


• Power • Telcos

WONG Wei Sum, CFA


• Property & REITs

LEE Yen Ling


• Building Materials • Glove Producers

CHAI Li Shin


• Plantation • Construction & Infrastructure

Ivan YAP


• Automotive

LEE Cheng Hooi Regional Chartist

(603) 2297 8694

[email protected]

Tee Sze Chiah Head of Retail Research


HONG KONG / CHINA

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(852) 2268 0648

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• Oil & Gas - Regional

Alexander LATZER

(852) 2268 0647

[email protected]

• Metals & Mining - Regional

Jacqueline KO, CFA


• Consumer

Ka Leong LO, CFA


* Consumer Discretionary & Auto

Karen KWAN


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Osbert TANG, CFA

(86) 21 5096 8370

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SINGAPORE

NG Wee Siang Head of Research



Gregory YAP


• SMID Caps – Regional

• Technology & Manufacturing • Telcos

ONG Kian Lin


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YEAK Chee Keong, CFA

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• Offshore & Marine

Derrick HENG


• Transport (Land, Shipping & Aviation) WEI Bin


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John CHEONG


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TRUONG Thanh Hang


• Small & Mid Caps

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• Strategy

Rahmi MARINA

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Aurellia SETIABUDI

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• Property

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• Strategy

• Utilities • Conglomerates • Telcos

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Dir (66) 2257 0250 | (66) 2658 6300 ext 1399

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Institutional Research

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• Consumer • Manufacturing • Fishery

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(84) 8 44 555 888 x 8084

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• Port operation • Pharmaceutical

• Food & Beverage

April 9, 2015 13


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.

April 9, 2015 14


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 April 09, 2015, 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 April 09, 2015, 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.

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.

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.

April 9, 2015 15


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

Singapore Maybank Kim Eng Securities Pte Ltd

Maybank Kim Eng Research Pte Ltd

9 Temasek Boulevard

#39-00 Suntec Tower 2

Singapore 038989

Tel: (65) 6336 9090

Fax: (65) 6339 6003

London Maybank Kim Eng Securities

(London) Ltd

5th Floor, Aldermary House

10-15 Queen Street

London EC4N 1TX, UK

Tel: (44) 20 7332 0221

Fax: (44) 20 7332 0302

New York Maybank Kim Eng Securities USA

Inc

777 Third Avenue, 21st Floor

New York, NY 10017, U.S.A.

Tel: (212) 688 8886

Fax: (212) 688 3500

Stockbroking Business:

Level 8, Tower C, Dataran Maybank,

No.1, Jalan Maarof

59000 Kuala Lumpur

Tel: (603) 2297 8888

Fax: (603) 2282 5136

Hong Kong Kim Eng Securities (HK) Ltd

Level 30,

Three Pacific Place,

1 Queen’s Road East,

Hong Kong

Tel: (852) 2268 0800

Fax: (852) 2877 0104

Indonesia PT Maybank Kim Eng Securities

Plaza Bapindo

Citibank Tower 17th Floor

Jl Jend. Sudirman Kav. 54-55

Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188

Fax: (62) 21 2557 1189

India Kim Eng Securities India Pvt Ltd

2nd Floor, The International 16,

Maharishi Karve Road,

Churchgate Station,

Mumbai City - 400 020, India

Tel: (91) 22 6623 2600

Fax: (91) 22 6623 2604

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

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

Tel: (66) 2 658 6817 (sales)

Tel: (66) 2 658 6801 (research)

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

South Asia Sales Trading Kevin Foy

Regional Head Sales Trading

[email protected]

Tel: (65) 6336-5157

US Toll Free: 1-866-406-7447

North Asia Sales Trading Alex Tsun

[email protected]

Tel: (852) 2268 0228

US Toll Free: 1 877 837 7635

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

Thailand Tanasak Krishnasreni

[email protected]

Tel: (66)2 658 6820

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

London Simon Lovekin

[email protected]

Tel: (44)-207-626-2828

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

India Manish Modi

[email protected]

Tel: (91)-22-6623-2601

Vietnam Tien Nguyen [email protected]

Tel: (84) 44 555 888 x8079

Philippines Keith Roy

[email protected]

Tel: (63) 2 848-5288

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