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INITIATION
BUY
Share price: Target price: Rs131/sh Rs175/sh
25 September 2012
TGBL transformed into a global beverage company from a pure tea producer over the past decade. Its strategy of acquiring brands and entering new geographies through a series of acquisitions is beginning to pay off. For FY13, we expect TGBLs earnings to increase 26% to Rs4.2bn supported by 19% increase rd in earnings in its highly profitable India business which contributes 2/3 of net profit. We expect further 29% earnings growth for FY14. We believe TGBL will benefit from rising beverage consumption in India and improving free CF. We initiate with a BUY and a TP of Rs175/sh based on a sum-of-the-parts (India tea business:Rs92/sh; Coffee:Rs12/sh; Overseas business:Rs65/sh; Others:Rs6/sh). India beverage business is 1/3 of revenue but 2/3 of earnings. With a leading 21% share of the branded tea market, TGBLs India business is highly profitable. We forecast FY13 India revenue of Rs30bn, +18% (volume and price +9% each). In Q1, volume and selling price rose 9% each. Our FY13F EPS growth of 19% for the India business is modest because we assume a 50bp cut in gross margin to 30.8% due to increase in raw material cost (TGBL expects margin to rise). Overseas business is 2/3rd of revenue but 1/3rd of earnings. In the last decade, TGBL acquired 7 beverage companies to increase its presence to 40 countries. While gross margin of 43% of the overseas business is better than that of the India business, its net margin is low due to investment on brand building and introduction of new products. We are upbeat on the overseas business for FY13 due to rebound in earnings of Eight OClock Coffee (3x increase). Major investment phase behind; Free cash generation to begin. TGBL spent Rs48bn over the past decade to acquire tea and coffee brands to enter into new geographies. The payback time starts now because revenue and margin of TGBLs brands in the US, Australia, Russia, and Africa are improving. Our FY13F free CF is Rs1.6bn as against the negative free CF up to FY12. TGBL confirmed decline in CAPEX and moderation in SG&A expenses. Joint ventures to be a catalyst for future growth. To leverage its distribution network in India, TGBL established Nourishco, a JV with PepsiCo, to sell water and other health drinks. TGBL has established another JV with Starbucks to launch a coffee chain by Dec12, adding a new dimension to its growth. Core ROE of 28%; Market undervaluing branded sales. TGBLs consolidated ROE is overshadowed by low returns from its tea and coffee businesses that are in mature markets, and by start-up losses in new businesses. However, based on P/S of 1.1x FY13F, its portfolio of beverage brands with leading market share is undervalued. Our sum-of-the-parts valuation of TGBL works out to Rs175/sh and discounted CF is Rs161/sh.
TGBL Summary Earnings Table FY Mar 31 (Rs bn) Revenue EBITDA Recurring Net Profit Recurring Basic EPS (Rs) EPS growth (%) DPS (Rs) PER (x) EV/EBITDA (x) Div Yield (%) P/BV(x) 1-yr 44.7 41.1 YTD 51.6 37.2 FY10 57.8 6.8 3.7 6.1 nm 2.0 21.6 13.9 1.5 2.2 FY11 59.8 5.9 2.4 4.0 -34.8 2.0 33.1 16.3 1.5 2.0 1.1 6.4 6.1 FY12 66.3 6.2 3.3 5.4 36.3 2.2 24.3 15.3 1.6 1.8 8.1 7.8 6.6 FY13F 74.7 7.1 4.2 6.8 26.2 2.3 19.2 13.4 1.8 1.7 6.8 8.7 7.2 3.9 FY14F 81.2 8.6 5.3 8.6 25.9 2.5 15.3 11.1 1.9 1.6 2.6 10.3 8.7 4.6
rd rd
Stock Information
Description: Ticker: Shares Issued (m): Market Cap (US$ bn): 6-mth Avg Daily Volume (US$m): SENSEX: Free float (%): Major Shareholders: Tata Group TGBL IN 618 1.5 4.6 18,753 64.8 % 35.2
Key Indicators (FY13F) ROE annualised (%) Net debt (Rs bn): NTA (Rs/sh): Interest cover (x): 8.7 3.5 77.9 12.2
Historical Chart
50 25 0 -25 Sep-11 Jan-12 TGBL May -12 SENSEX Sep-12 (%)
Net Debt/Equity (%) -2.9 ROE (%) 9.3 ROA (%) 6.8 Consensus net profit (Rs bn) Source: Company data, Bloomberg, KESI estimates
Tea business will dominate overall revenue share for the next 3 years. While TGBL has entered water and coffee retailing business, tea business would continue to contribute 60% of total revenue by 2015 from 74% now. TGBL: Revenue contribution by business (%)
Yr To March Tea Coffee Others FY08 78.3 20.2 1.5 FY10 75.8 22.5 1.7 FY12 74.2 23.8 2.0 FY14F 68.7 26.8 4.5 FY16F 60.5 30.0 9.5
Balanced revenue contribution from different geographies. Multiple acquisitions in the past decade have led to significant revenue contribution from markets including the US, the UK and Russia. However, the major driver of revenue growth is the increasing consumption in India and geographic expansion in the Middle-East and African countries contributing 51% of total revenue. Low-volume but premium products are driving growth in the mature markets whereas high-volume and low-priced products are driving growth in the emerging markets. TGBL: Revenue by geography (%)
Yr To March India UK US & Canada Others Source: Company data, KESI estimates FY08 26.6 32.3 29.8 11.4 FY09 31.1 25.6 29.8 13.5 FY10 29.4 23.9 30.6 16.1 FY11 29.7 22.7 27.7 20.0 FY12 30.2 22.4 26.7 20.6
Page 2 of 21
The India tea market is Rs95bn p.a. with a large unorganized sector. Although Indians consume 850m kgs of tea every year, the countrys per capita consumption is low at about 0.7kg. Demand growth for tea has ranged 23% for the past 10 years. For large organized companies like TGBL, growth comes from increase in consumption and changing preference to branded tea from loose tea in the rural markets (unbranded loose tea sales comprise half of sales of the Indian tea market). [Refer annexure 2 for data on household monthly spending on various beverages] Per capita consumption of tea (kg)
2.1
1.3
UK
Russia
Sri Lanka
Pakistan
China
India
Expect stable market share. Over the past 3 years, TGBLs, market share of the tea business was 2022%. We believe that TGBL would be able to maintain its market share due to aggressive campaigns and expansion into rural areas. In FY12, TGBL expanded its distribution network in the rural areas in eight states through the Gaon Chalo campaign (Uttar Pradesh, Madhya Pradesh, Bihar, Jharkhand, Orissa, Rajasthan, Uttarakhand and Chhattisgarh). TGBL: Market share (%)
FY10
FY11
FY12
FY13F
FY14F
TGBL is focusing on premiumization. TGBL is gaining from a distinct pattern shift of tea buyers from packaged to loose tea. Consumer preference is also evident in the green and flavored tea which is sold at 23x price of the traditional tea. Last year, TGBL launched premium green tea with 3 flavored variants positioned as good-for-you drink. In addition, it launched luxury tea Tea Veda in 6 flavored variants, which is being retailed only thru premium food stores. The increased sale of premium products would support our FY13F average selling price increase of 9%.
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Tata Global Beverages (TGBL) In the past 5 years, TGBLs revenue increased by an average 15% pa. Of this, on an average, a 3% growth came from volume and 12% from increase in average selling price. TGBL: India Business Revenue Forecast
Yr To March Tea (Rs bn) Growth (%) Coffee (Rs bn) Growth (%) Total India Revenue (Rs bn) Growth (%) Source: Company data, KESI estimates FY10 17.2 24.4 3.4 5.2 20.5 20.8 FY11 18.1 5.6 4.0 19.4 22.1 7.8 FY12 20.4 12.4 5.1 26.9 25.4 15.0 FY13F 24.0 18.0 6.1 19.0 30.1 18.5 FY14F 27.1 13.0 7.1 18.0 34.2 13.6
For FY12, TGBLs India tea revenue grew 12%. This is mainly due to volume growth across its brands supported by new product launches and promotional campaigns. TGBLs 2 major brands, Tata Tea Gold and Tata Tea Agni grew 18% and 15%. All other tea brands in India registered an average 7% growth. [Refer annexure 3 for brand-wise revenue growth] FY13F India tea revenue growth of 18%. In Q1FY13, TGBL increased its selling price by 9% to pass on increase in raw material cost. Moreover, volume growth is 10% in Q1 and the company is confident that this trend will continue due to increasing rural penetration and shift to branded tea from loose tea in rural India. For FY13, we assume 9% increase each in volume and selling price. TGBL has an edge over peers due to scale, product innovation, and brand investment. In India, among several home grown tea brands, TGBLs main competitor is Hindustan Unilever (HUVR). However, we believe TGBL is well placed because of its ability to offer a variety of beverage blends leveraging its presence in various other markets. It also heavily invests in each of the brands and their distribution to gain one-upmanship (SG&A of 21% of revenue). TGBL: Peer comparison
Company Tata Global Beverages Hindustan Unilever Duncan Wagh Bakri Goodricke Market share (%) 21.3 20.1 8.6 3.5 2.0 FY12 Beverage segment revenue (Rs bn) 25.4 24.2 na na na (as % of total India revenue) 100.0 11.2 na na na
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Apart from selling traditional coffee beans, TGBL continues to focus on instant coffee and frozen dried coffee segments due to the shift in consumption pattern. To broaden the sales mix, it also started selling coffee brands to cafes and commercial establishments. As a result, for FY12, its instant coffee segment volume grew 28% and frozen dried coffee segment volume grew 14%. For FY13, we forecast a 5% increase in volume and a 14% increase in average selling price, leading to revenue growth of 19% to Rs6.1bn.
TGBLs Tetley, is the 2 largest tea brand in the UK with leadership in decaffeinated, redbush, and green tea segments. Tetley has 31% market share in in the redbush segment and 35% in the decaf segment. New products to support FY13F revenue growth. TGBL witnessed a shift in consumer demand internationally towards premium specialty and infusion tea brands, while the volume of black tea brands declined. In FY12, TGBL launched new tea brands blended with new herbal and fruit flavors in Canada and Australia. Moreover, TGBL also launched instant flavored tea Tetley Chai Latte in Australia. The initial consumer response was above its expectations, prompting TGBL to launch this brand in other countries in H213. Increasing revenue contribution from emerging markets. TGBLs geographic expansion in Africa and south-east Asia has reduced its dependence on the UK, the US, and Canada markets to 49% in FY12 from 55% in FY10. TGBL was able to maintain its 30% contribution from India on rising consumption and launch of new premium products.
nd
Page 5 of 21
New distribution channel to improve reach. In the US, FY12 revenue from its coffee business grew 6% due to increase in selling price. Last year, TGBL entered into an agreement with Green Mountain Coffee Roasters that will make TGBLs products available through the Keurig Single Cup Brewing systems. This will increase the reach of TGBLs products and support our FY13F revenue growth of 9% for the coffee business. (TGBL witnessed strong, double-digit growth in single serve coffee consumption vs. mere 2% growth in overall coffee consumption in the US and Europe). In Russia, TGBLs FY12 coffee volume grew 22%, supported by geographic expansion. Moreover, in FY12, TGBL started distributing the Grand brand in the Middle East.
Page 6 of 21
Long-term contracts ensure availability. TGBL procures tea leaves from India (70% of total requirements) and Kenya (30%). Over the past 6 months, dry weather in Africa (one of the major producers of tea) has led to reduced supply of tea leaves internationally. However, the tea plantations, where TGBL has long-term agreements for supply of tea leaves, have received adequate rainfall, which would reduce the risk of raw material availability. TGBL passes on increase in raw material cost to consumers. The adverse weather conditions in Africa has increased the average price of tea leaves in India to Rs135/kg in Aug 12 vs. Rs107/kg in Aug 11. However, TGBL has managed to pass on 9% of the price increase to consumers in Q1. It is confident of further price increase in Q2 and thereafter. Though there is a lag effect, historically, TGBL has been able to pass on complete impact of the rise in tea price to consumers.
130
110
90
70
50 Jan-08
Mar-09
May-10
Jun-11
Aug-12
Sharp fall in price of coffee bean to benefit TGBL. The company sources Arabica variety coffee bean from India for its Eight oclock brand coffee in US. The unusual heavy rain in Oct 11 had led to sharp increase Arabica coffee bean price in India to Rs286/kg vs. Rs194/kg in Oct 10. But favorable weather conditions in 4QFY12 have reduced Arabica coffee bean price to Rs212/kg in Jun 12. However, TGBL did not pass on the benefit of the reduced cost to its consumers.
Page 7 of 21
Feb-09
Mar-10
May-11
Jun-12
Do not expect increase in investment in brands. In the past 4 years, SG&A cost was at 3040% of revenue. Absolute SG&A cost increased an average 10% p.a. due to introduction of new brands and products and promotion of existing brands to improve sales volume. Advertising and promotion of Tetley brand of tea in the overseas markets accounts for 60% of SG&A costs. With increasing revenue contribution from the overseas markets, we do not expect any major increase in SG&A cost as a % revenue. For FY13, we forecast SG&A cost to remain at 30% of revenue.
Page 8 of 21
38.3
38.2
39.0
FY09
FY10
FY11
FY12
FY13F
FY14F
Leveraged acquisitions and investments in brands led to low earnings contribution from overseas business. We expect earnings contribution to improve gradually due to end of the investment phase. For FY13, we forecast the earnings from overseas business to improve marginally due to the impact of increase in raw material cost (tea leaves) and brand promotion expenses. Expect earnings recovery for Eight oclock coffee. TGBLs US-based subsidiary Eight oclock coffees FY12 net profit fell to Rs47m vs. Rs756m in FY11 as TGBL passed on only a part of the steep increase in coffee bean price. However, over the past 6 months, Arabica coffee bean prices declined by a, steep 26% to US$1.7/lb, which would lead to recovery in net profit. We forecast net profit of Rs200m for Eight o clock coffee for FY13. TGBL: Earnings contribution by segments (Rs bn)
Yr To March India Tea business Tata Coffee Overseas business Source: Company data, KESI estimates FY10 1.5 0.4 1.2 FY11 1.6 0.7 -0.1 FY12 2.2 0.8 0.6 FY13F 2.6 0.9 0.7 FY14F 3.3 1.2 0.8
Q1FY13 EPS was +15% YoY. This is due to an increase in the selling price in India to pass on the increase in raw material cost and favorable change in INR vs. USD. Nearly 40% the Q1 revenue growth (18% YoY) was due to INR depreciation vs. USD. Q1 forms 20% of our FY13F EPS of Rs6.8. With Q1 being seasonally lean (usually forms 2022% of full year), we believe that our FY13F EPS is achievable. Earnings contribution from new products to be insignificant. TGBL has launched its packaged water brand Tata Water Plus and energy drink brand Tata Gluco+ in 2 Indian states. It would launch these new products across India by 4Q13. It has invested Rs2.5bn in the non-tea and coffee beverages segment that incurred a net loss of Rs16m in FY12. We do not expect any significant earnings contribution from these products and brands in FY13/14F.
Page 9 of 21
Sensitivity Analysis. According to our sensitivity analysis, a 100bp change in gross margin impacts the EPS by 13%. TGBL: Sensitivity Analysis
Sensitivity matrix (FY13F) Gross Margin (base case of 38.2%) Impact of every 100bp change Exchange rate INR vs. USD (base case of Rs53) Impact of every Re1 change Exchange rate INR vs. GBP (base case of Rs85) Impact of every Re1 change Source: Company data, KESI estimates Change in EPS (%) 12.7
2.0
6.2
Page 10 of 21
Risks/ concerns
Increase in raw material cost. Significant increase in raw material cost will have a negative impact on TGBLs earnings. However, a strong brand presence would enable TGBL to increase selling prices and pass on the increase in cost partly or fully. Downtrading due to economic conditions. Consumers may shift to cheaper products due to weak economic conditions. However, TGBL has products in both economy and premium categories that would protect its volume market share. Further, differences in blend and taste among various tea brands would help TGBL to retain its consumers. Adverse change in currency. TGBL operates in 40 countries, which would lead to gain/ loss from FX fluctuations. However, it hedges net foreign currency receivables through currency forward and options contracts. TGBLs net unhedged position as on 31 March 2012 was only Rs307m.
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Sum-of-the-parts valuation
Under this method, we separately value the India tea business, overseas tea business, investment in Tata Coffee, and other investments using sum-of-theparts approach. Our computation values: India Tea business using PER method Overseas Tea business using P/S method Tata Coffee at 30% discount to CMP Other investments at book value
Discounted CF valuation
Discounted CF value is Rs161/sh. We assume WACC of 11.7% and terminal growth of 4%. TGBL: Discounted CF valuation
Yr to Mar (Rs bn) WACC (%) Terminal growth rate (%) Free cash flows PV of free cash flows PV of forecasted period PV of terminal value Enterprise value Net (debt)/ cash Equity value No of shares (bn) Value per share (Rs) FY13F 11.7 4.0 1.9 1.7 19.9 83.6 103.5 -3.7 99.8 0.6 161 FY14F FY15F FY16F FY17F Terminal Value
3.4 2.8
5.2 3.8
7.8 5.1
10.9 6.4
141.3 83.6
Relative valuation
TGBL is undervalued on both PER and P/S basis compared with other major consumer companies in India. TGBL: Relative valuation
Company Tata Global Beverages Hindustan Unilever Nestle India Godrej Consumer Dabur Average Ticker TGBL HUVR NEST GCPL DABUR Price (Rs) 131 530 4,350 658 125 Mcap (US$m) 1,500 21,218 7,766 4,147 4,034 PER (x) FY12 FY13F 24.3 19.2 41.1 36.6 43.6 37.0 29.5 29.8 33.8 28.4 34.5 30.2 P/S (x) FY12 FY13F 1.3 1.1 5.3 4.6 5.9 5.1 4.9 3.8 4.4 3.7 4.3 3.7
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Tata Global Beverages (TGBL) Prefer sum-of-the-parts valuation. TGBL is still in the investment phase of creating new brands and entering new geographies. This leads to low profitability from overseas markets and new businesses. We find sum-of-theparts valuation most appropriate to reflect the value of different brands of TGBL and set a TP of Rs175/sh.
Page 13 of 21
Recommendation BUY
Facts supporting our BUY recommendation: Market leader with 21% market share in the India tea market, growing at avg. 12% p.a FY13F EPS growth of 26% on contribution from increasing consumption in India and new brands and products Strong B/S with negligible debt to support growth.
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Annexure
Annexure 1: TGBLs Major brands
Tea
Coffee
Others
Source: Company data, KESI estimates
83
50
Tea
Coffee
Malted food
Mineral water
Soft drinks
Page 15 of 21
Quarterly % YoY 18 26 -3 54 3 67 222 3975 55 261 60 15 n.a. -52 15.4 -3.7 2.4 18.3
4Q12 17.3 -10.2 -5.3 1.9 -0.3 1.6 0.2 -0.1 1.7 -0.3 -0.4 0.9 -0.4 0.5 1.5 39.7 10.8 17.4
FY12 66.3 -37.9 -22.2 6.2 -1.0 5.3 0.7 -0.4 5.5 -1.4 -0.8 3.3 0.2 3.6 5.4 41.4 9.4 25.7
Cumulative FY11 60.0 -32.5 -21.5 6.1 -1.0 5.1 0.5 -0.7 4.8 -2.0 -0.4 2.4 0.1 2.5 4.0 44.2 10.1 41.7
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FY11 59.8 -31.3 -22.7 0.5 6.4 -1.0 5.4 -0.5 0.2 0.1 5.1 -2.0 -0.6 2.5 2.4 3.4 -14.4 -16.3 -34.9 -34.7 39.4
FY12 66.3 -40.0 -20.1 0.9 7.2 -1.0 6.2 -0.7 -0.2 0.2 5.6 -1.4 -0.6 3.6 3.3 10.9 12.6 15.6 40.3 36.5 25.4
FY13F 74.7 -45.0 -22.6 1.0 8.1 -1.1 7.0 -0.6 0.2 0.0 6.6 -1.7 -0.7 4.2 4.2 12.6 12.3 11.9 18.2 26.2 25.9
FY14F 81.2 -48.3 -24.3 1.0 9.5 -1.2 8.4 -0.4 0.2 0.0 8.2 -2.2 -0.7 5.3 5.3 8.7 18.5 20.6 25.9 25.9 26.6
FY11 38.0 6.0 10.0 5.7 10.7 7.2 77.6 0.1 15.9 10.3 0.6 11.1 39.6 77.6 0.6 10.4 0.4 7.7
FY12 43.6 6.2 6.7 6.5 11.6 8.2 82.8 0.0 15.4 10.4 0.7 10.7 45.7 82.8 0.9 10.4 3.7 11.0
FY13F 45.0 6.3 3.2 6.9 13.1 9.2 83.6 0.0 16.8 6.4 0.8 11.3 48.2 83.6 0.9 6.4 3.3 12.4
FY14F 46.3 6.4 3.1 7.1 14.1 10.3 87.2 0.0 18.0 4.4 1.0 12.1 51.7 87.2 0.9 4.4 1.4 13.4
FY11 6.4 -0.5 -1.5 -0.5 3.8 -0.5 -2.0 1.3 -1.9 -0.7 -1.3 -0.3 -1.4 1.7 -1.4 1.1 -0.3
FY12 7.2 -0.8 -0.9 -1.5 3.9 -0.7 -1.4 1.8 -6.5 -0.1 -4.9 0.0 -1.6 3.3 -3.1 -0.4 -3.6
FY13F 8.1 -0.4 -1.5 0.5 6.7 -0.6 -1.7 4.4 -2.5 -0.1 1.8 0.0 -1.7 0.1 0.2 -3.7 -3.5
FY14F 9.5 -0.2 -1.0 0.1 8.5 -0.4 -2.2 5.9 -2.5 -0.1 3.3 0.0 -1.8 -0.2 1.4 -3.3 -1.9
RATES & RATIOS FY March Gross Margin % EBITDA Margin % Op. Profit Margin % Net Profit Margin % ROE % ROA % Dividend Cover (x) Interest Cover (x) Asset Turnover (x) Asset/Debt (x) Debtors Turn (days) Creditors Turn (days) Inventory Turn (days) Net Debt/Equity (%) Debt/ EBITDA (x) Debt/ Market Cap (x)
FY11 46.0 10.6 9.0 4.1 6.4 6.1 0.5 10.1 0.8 7.5 35.0 185.4 124.7 0.8 1.6 0.1
FY12 38.3 10.8 9.4 5.0 7.8 6.6 0.4 8.8 0.8 7.9 35.9 140.4 106.0 7.8 1.5 0.1
FY13F 38.2 10.8 9.3 5.6 8.7 7.2 0.3 12.2 0.9 13.0 33.9 136.5 106.2 7.2 0.8 0.1
FY14F 39.0 11.8 10.3 6.5 10.3 8.7 0.3 22.8 0.9 19.6 31.9 136.1 106.4 3.7 0.5 0.1
KEY ASSUMPTIONS FY March India tea business revenue (Rs bn) Overseas tea business (Rs bn) Total Tea revenue (Rs bn) Growth (%) Coffee products revenue (Rs bn) Growth (%) Others revenue (Rs bn) Growth (%) RM cost as % of revenue S, G & A expense as % of revenue
FY11 18.1 26.7 44.8 2.2 14.2 9.5 0.8 -18.2 42.1 37.9
FY12 20.4 27.6 48.0 7.2 17.7 24.0 0.7 -22.2 50.1 30.3
FY13F 24.0 29.8 53.8 12.1 20.0 13.3 0.9 37.6 50.6 30.2
FY14F 27.1 31.0 58.1 8.0 22.0 10.0 1.1 22.2 50.5 29.9
Page 17 of 21
ECONOMICS
Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 suhaimi_ilias@maybank-ib.com Luz LORENZO Economist Philippines | Indonesia (63) 2 849 8836 luz_lorenzo@maybank-atrke.com
MALAYSIA
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Jigar SHAH Head of Research (91) 22 6623 2601 jigar@maybank-ke.co.in Oil & Gas Automobile Cement Anubhav GUPTA (91) 22 6623 2605 anubhav@maybank-ke.co.in Metal & Mining Capital goods Property Ganesh RAM (91) 226623 2607 ganeshram@maybank-ke.co.in Telecom Contractor
PHILIPPINES
Luz LORENZO Head of Research +63 2 849 8836 luz_lorenzo@maybank-atrke.com Strategy Laura DY-LIACCO (63) 2 849 8840 laura_dyliacco@maybank-atrke.com Utilities Conglomerates Telcos Lovell SARREAL (63) 2 849 8841 lovell_sarreal@maybank-atrke.com Consumer Media Cement Mining Kenneth NERECINA (63) 2 849 8839 kenneth_nerecina@maybank-atrke.com Conglomerates Property Ports/ Logistics Katherine TAN (63) 2 849 8843 kat_tan@maybank-atrke.com Banks Construction Ramon ADVIENTO (63) 2 849 8842 ramon_adviento@maybank-atrke.com Mining
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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 25 September 2012, 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 25 September 2012, 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.
OTHERS
Analyst Certification of Independence The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the research analysts 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 HOLD SELL Total return is expected to be above 15% in the next 12 months Total return is expected to be between -15% to +15% in the next 12 months Total return is expected to be below -15% in the next 12 months
Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.
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Malaysia
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Eddie LAU eddielau@kimeng.com.hk Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267
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