Hatten Land Limited

Initiating coverage 28 February 2017

Overweight

Current Price S$0.280 Fair Value S$0.440 Up / (downside) 57.1%

Stock Statistics

Market cap S$385.0m 52-low n.a.

52-high n.a. Avg daily vol n.a.

No of share 1,375.1m Free float 17.2%

Key Indicators

ROE 17F 75.7% ROA 17F 6.0%

P/RNAV 0.23x Net Debt-to-Total Assets FY17F

45.0%

Major Shareholders

Hatten Holdings 82.8%

Tan June Teng Colin 82.8% Tan Ping Huang Edwin 82.8%

Strong Pipeline of Projects Justifies Upside

▪ RNAV of up to S$1.238. Hatten Land shall commence trading on 28 February. Our report enhances the existing information set by incorporating estimates for upcoming projects that are pending acquisition. Currently, Hatten Land’s existing projects have a gross floor area of 9.8m sq. ft. and land pending acquisition of maximum gross floor area of 27.5m sq. ft. based on a sales and purchase agreement and a memorandum of understanding announced in February. Including these assets into our model, we yielded a RNAV of S$1.238 and a fair value of S$0.440 per share, thus representing upside of 57.1% from the compliance placement price of S$0.280.

▪ Leveraging on Malacca’s future growth. The key selling point of Hatten Land is its portfolio of choice sites in Malacca. Most of its sites face the sea, overlooking Pulau Melaka and the Straits of Malacca. Pulau Melaka is slated to be transformed into a tourism and entertainment hub because of the RM42 billion Melaka Gateway project which will be developed in partnership with Chinese companies. On completion, Pulau Melaka will feature international hotels and an international cruise terminal. In this context, Hatten Land’s projects offer significant upside and hence marketability.

▪ Offers high growth with steady pipeline. Of the four existing projects, one has been completed and another two projects are expected to be completed within 2017. We expect Hatten Land’s revenue to cross the RM 1 billion mark in FY19 or in two and a half years. Profit after tax is in turn expected to grow from RM68.6m in FY16 to more than RM100m in FY18 and RM300m in FY19.

▪ What are the risks? The risk is if Hatten Land fails to accelerate sales, leaving it with hefty holding costs and slower than expected revenue recognition. The existing projects range from being 51% to 75% sold. Generally, the higher quantum retail mall units sell at a slower rate while the sales rate of residential components can be as high as 93% for some projects. Hatten Land’s growth plans may also be derailed if mega-projects such as the Melaka Gateway and the Singapore-KL high-speed rail are delayed. Thirdly, Hatten Land’s shares have a limited trading history and there is the risk that its share price may underperform after trading starts.

▪ Overweight (high return / high risk). On balance, we rate Hatten Land Overweight with a high return / high risk classification. We like the company for its visible pipeline of value-accretive projects. Potential catalysts include any future partnerships with high profile funds or institutions and the completion of on-going acquisitions. We understand that Hatten Land is considering the payment of dividends at the end of each financial year. Assuming a 10% payout ratio, dividend yield is expected to rise from 0.7% for FY17 to 1.5% for FY18.

Liu Jinshu

(+65) 6236-6887 jinshu.liu@nracapital.com www.nracapital.com

Key Financial Data

(RM m, FYE Jun) 2014 2015 2016 2017F 2018F

Sales 245.16 436.26 412.35 524.74 752.94

Gross Profit 65.14 93.948 154.72 220.52 371.23

Net Profit 19.50 25.78 68.59 82.47 183.69

EPS (cents)* 1.42 1.87 4.99 6.00 13.36

EPS growth (%) NA 32.2 166.1 20.2 122.8

PER (x) 63.00 47.64 17.91 14.89 6.69

NAV/share (Singapore cents)* -0.15 1.00 1.38 3.58 7.35

DPS (Singapore cents) NA NA NA 0.19 0.42

Div Yield (%) NA NA NA 0.67 1.50

Source: Company, NRA Capital *Based on post-placement number of shares outstanding

Hatten Land Limited

page 2

One of the Largest Landlords in Malacca

Background. Hatten Land Limited is the property development arm of the Hatten Group. The Hatten Group has core businesses in property development, property investment, hospitality, retail and education, while Hatten Land specializes in retail, hotel, residential and mixed developments. We like Hatten Land for its pipeline of projects and assets under Right of First Refusal and Call Option. In other words, Hatten Group has a pipeline of projects in Malacca and other parts of Malaysia that can be injected into Hatten Land to enhance its RNAV.

Hatten Land’s pipeline can be summarized into

a) 9.8m sq. ft. of gross floor area of existing projects,

b) 1.2m sq. ft. of land pending completion of acquisition for RM850.3m (“SPA Projects),

c) 3.7m sq. ft. of land under a memorandum of understanding for acquisition (“MOU Projects”) and

d) 3.9m sq. ft. of land bank or development rights in Malacca that is not owned by Hatten Land, but held by Hatten Group.

Figure 1: List of Projects and Assets under Right of First Refusal (ROFR) and Call Option in Malacca

Existing Projects Gross Floor Area

(sq. ft.) Net Saleable Area (sq. ft.)

% Sold^, ^^

% Completion^^

Hatten City Phase 1 3,282,020 1,443,452 62% 100%

Hatten City Phase 2 2,051,391 831,363 53% 84%

Vedro by the River 307,953 95,505 65% 99%

Harbour City 4,178,231 1,972,220 28% 10%

Total 9,819,595 4,342,540 45% 58%

^Based on Net Saleable Area, ^^as of 31 January 2017 Projects under Sale and Purchase Agreement (SPA) for acquisition

Maximum Gross Floor Area (sq. ft.)*

Land Area (sq. ft.)

Acquisition Cost (RM m)

Thea Wellness Project 517,928 89,298 76.37

Cyberjaya Project (in Selangor) 5,787,382 1,112,958 773.95

Total 6,305,310 1,202,256 850.32

Projects under MOU for acquisition Maximum Gross Floor

Area (sq. ft.)* Land Area

(sq. ft.)

MICC Project 1,627,402 406,850

Movie-Town Project 2,315,650 385,942

Plot K to E Project 17,249,760 2,874,960

Total 21,192,811 3,667,752

*Maximum gross floor area is based on land area multiplied by plot ratio as per 10 February announcement

Land Area (sq. ft.)

Landbank/Development Rights held by Hatten Group in Malacca 7,687,904

Less land being sold to Hatten Land under SPA or MOU -3,757,050

Available land/Development Rights in Malacca available to Hatten Land under Right of First Refusal and Call Option

3,930,854

Source: Company, NRA Capital

All sites listed here are in Malacca, except for the Cyberjaya project. The Hatten Group also owns properties in other parts of Malaysia, but we have streamlined this list to only projects in Malacca and announced projects such as Cyberjaya; as we believe Hatten Land will focus on Malacca as a start.

Hatten Land Limited

page 3

Figure 2: Hatten Group’s assets in Malacca are centred around two key areas

Source: Google Maps

Bandar Melaka Area

Source: Google Maps, Company, NRA Capital

A – Ayer Keroh area, to take advantage of possible high speed rail station. These sites are under Right of First Refusal (ROFR) and Call Option in favour of Hatten Land.

B – Bandar Melaka area, to take advantage of development of Melaka Gateway. Current projects are all in this area, including those land under MOU for acquisition.

Hatten Square Suites & Shoppes, Hatten Hotel, Terminal Pahlawan and Estadia Hotel and Dataran Pahlawan Melaka are existing investment assets held by Hatten Group. These are mature assets held for investment purposes and therefore were not injected into Hatten Land the property development arm of the

group.

Hatten Land Limited

page 4

Established Track Record of Revitalising Malacca

Building the largest mall in Malacca. Hatten Land can trace its roots to 2005 when the founders of the Hatten Group Dato’ Colin Tan the Managing Director and Dato’ Edwin Tan the Deputy Managing Director took over a 7.7 hectare (approximately 800,000 sq. ft.) abandoned mall project. The brothers were in turn advised by their father Datuk Wira Eric who currently serves as group adviser and mentor of the Hatten Group. Phase 1 of the abandoned mall project was completed in 2006 as Dataran Pahlawan Melaka Megamall. The second phase was completed in 2008. To date, Dataran Pahlawan Melaka Megamall is still the largest shopping mall in Malacca.

Building the largest hotel in Malacca. The group next embarked on the development of Hatten Square Suites & Shoppes which was completed in 2012. The hospitality component of Hatten Square Suites & Shoppes was branded Hatten Hotel and is the largest hotel in Malacca today with over 700 rooms. Most hotel owners will typically choose to work with hotel operating chains e.g. Accor to leverage on their guest reservation systems. However, Hatten operates the hotel itself and still manages to maintain occupancy at about 70%. According to the management, the group has over the years established its own network of leads and customers. For instance, Hatten Hotel frequently hosts corporate retreats with its conference facilities. Moreover, its large number of rooms means that it can host larger events without guests spilling over into other hotels.

Figure 3: Dataran Pahlawan Melaka and Hatten Hotel (excluded from ListCo portfolio)

Source: Company

Dataran Pahlawan Melaka Megamall

Hatten Square / Hatten Hotel

Hatten Land Limited

page 5

In 2015, Hatten Group completed Terminal Pahlawan which can be said to be an extension of Hatten Hotel. The area suffered from traffic congestion caused by the lack of tourist bus parking bays and Hatten Square faced a large unsightly drain. Hence, the Hatten Group applied to the government to build Terminal Pahlawan on top of the drain, featuring bus parking, four retail levels and the 196 deluxe suites Estadia Hotel.

Figure 4: Terminal Pahlawan (excluded from ListCo portfolio)

Source: Company

As Hatten Land is the property development arm of the group, the above three investment assets have been excluded from the listed company’s portfolio. Nonetheless, the projects show the group’s ability to execute developments in Malacca with each project generally taking two to three years to build. By consistently developing differentiated projects e.g. the largest mall and the largest hotel in Malacca, the Hatten Group increases the odds of its retail malls and hotels in attracting customers.

The focus on differentiated projects has led to the Hatten Group winning various awards such as “Best Luxury Suite Hotel” in 2014 and 2015 from the World Luxury Hotel Awards. Dataran Pahlawan Melaka Megamall was awarded "Highly Commended Retail Development Malaysia" and "Highly Commended Retail Architecture Malaysia" at the Asia Pacific Property Awards 2013/2014

Figure 5: Hatten Group Projects

Projects Owned by Hatten Group Units GFA NLA

Dataran Pahlawan Melaka Megamall 750 retail units 2m sq. ft. 0.8m sq. ft.

Hatten Square Suites & Shoppes, including Hatten Hotel

200 retail units, >700 hotel rooms - 0.18m sq. ft.

Terminal Pahlawan and Estadia Hotel 4-floors of retail, 196 deluxe suites - -

Source: Company

Terminal Pahlawan

Hatten Square / Hatten Hotel

Dataran Pahlawan Melaka Megamall

Hatten Land Limited

page 6

1 Grouping Kuala Lumpur and Putrajaya together as one state. 2 As of 2015, based on GDP at constant prices.

Why Malacca Offers Potential?

Malacca is a relatively small state in Malaysia, with a population of 0.9m people occupying land area of 1,652km2. It is the sixth wealthiest of 15 states and federal territories in Malaysia with a GDP per capita of RM39,853 in 20151, but contributes a mere 3% of Malaysia’s GDP2.

Geographical advantage. Currently, Malacca’s landscape can be said to be characterised by low-rise buildings with several high-rise structures. Economic activity is not as vibrant as that of Johor or Kuala Lumpur (KL). Both states have higher GDP than that of Malacca. What’s interesting about Malacca is that it is situated along the Straits of Malacca and is located almost halfway between Selangor and KL to the north and Johor to the south. As such, Malacca is well positioned to be a satellite trade and services centre in support of KL and Johor. Therefore, Malacca will enjoy positive spill over effects so long as its neighbouring states continue to grow. This geographical advantage sets the property market of Malacca apart from that of other states such as Negeri Sembilan (which is closer to KL than Johor), Kelantan, Perlis or Kedah.

Singapore-KL high-speed rail to boost people and capital flows between Malacca and other states. The development of the high-speed rail between KL and Singapore will further enhance this geographical advantage. Currently, it takes about three hours by road/car to travel from Singapore to Malacca and four hours from Singapore to KL. The high-speed rail will shorten travelling time to 90 minutes between Singapore and KL. With the high-speed rail, more people in Malacca can travel to other states to work and thus raise incomes. Given relatively higher property prices in KL, people in KL can in turn purchase properties and live in Malacca while continuing to work in KL.

Figure 6: Map of Kuala Lumpur, Malacca, Johor and Singapore

Source: Straits Times

Malacca (GDP of RM31 billion in 2015) is situated along the Straits of Malacca and is located almost between Johor (GDP of RM99 billion in 2015) and Kuala Lumpur (GDP of RM160 billion in 2015).

Hatten Land Limited

page 7

3 http://profile.id.com.au/australia/about?WebID=250

Figure 7: Population Density of Malacca relative to Other States

Source: mysidc.statistics.gov.my, NRA Capital

Figure 8: GDP per capita (2015), at Current Prices

Source: mysidc.statistics.gov.my, NRA Capital

Figures 7 and 8 show that Malacca (or Melaka in the figures) is a relatively well-to-do state in Malaysia of higher GDP per capita than Johor, with a decent population density of 545 people per sq. km. to justify a more vibrant property market. For instance, the Greater Sydney area has a population density of about 398 people per sq. km.3

Property prices remain relatively affordable in Malacca. That said, the high-speed rail is expected to be operational in ten years or only after 31 December 2026. This explains for the relatively lower property prices in Malacca compared to Kuala Lumpur. According to statistics from the National Property Information Centre (NAPIC), property prices in Malacca are about 24% that of KL. Hence, we can envisage that property prices in Malacca may eventually appreciate to narrow the gap with KL with the progressive development of the high-speed rail.

In fact, Malacca’s property prices have remained lower than that of KL even after adjusting for differences in GDP per capita. In other states such as Selangor, Sabah, Sarawak and Penang, property prices become comparable to that of KL once local income (GDP per capita) is taken into account (See Figure 9).

1,668 1,633

1,087

794

545 314 225 192 165 119 118 91 52 45 22

-

1,000

2,000

Persons per sq. km.

94,722

58,577

44,84744,012

42,61139,853

36,699

30,343

29,53926,529

25,418

21,394

19,734

18,249

12,075

0

50,000

100,000

RM

Hatten Land Limited

page 8

Figure 9: GDP per capita and All-House Price Index as a ratio to that of KL

Source: mysidc.statistics.gov.my, NAPIC, NRA Capital

Figure 10: Average All House Price, 3Q16

Source: NAPIC, NRA Capital

Figure 11: Quarterly Change in Average All House Price, (1Q15=100)

Source: NAPIC, NRA Capital

0.240.42

0.00

0.50

1.00Kuala Lumpur Vs Other States, All House Price Ratio, 3Q16

772

515460

408 394335

258223 220 212 190 190 181 170 153

0

500

1,000

Tho

usan

ds

RM

112.3%

100.0%

102.5%

105.0%

107.5%

110.0%

112.5%

115.0%

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

Kuala Lumpur Melaka Johor Malaysia

Hatten Land Limited

page 9

4 http://www.nst.com.my/news/2016/09/174420/malacca-targets-rm5b-fdis-chinese-investors-year 5 http://www.thestar.com.my/business/business-news/2016/09/01/kajd-and-powerchina-sign-rm30bil-agreement-for-melaka-gateway-project/ 6 http://asia.nikkei.com/Politics-Economy/International-Relations/Malaysia-and-China-ink-7.3bn-Melaka-Gateway-project

Inflow of mega-projects to support future growth in Malacca

Malacca obtained RM6.9 billion of foreign direct investment in 2015 and it has a target of attracting RM5 billion of FDI each year.4 As part of the government’s initiative to grow Malacca, the ambitious Melaka Gateway project has been rolled out at an estimated gross development cost of RM42 billion to be completed by 2025, translating to average FDI of RM4.2 billion each year.

Work on Melaka Gateway shall commence on Pulau Melaka. On completion, it will feature four islands with the first two islands being slated for education, tourism and commerce. Island 3 will be a liquid cargo port with approximately 1.5m cubic metres of storage capacity while Island 4 will comprise of a maritime industrial park with facilities such as a container terminal, shipbuilding and repair facilities.

The master developer of Melaka Gateway KAJ Development Sdn Bhd has signed a memorandum of understanding with PowerChina International Group Ltd for a RM30 billion joint investment to develop Islands 1 to 3 in September last year. 5 Island 4 will be jointly developed by KAJ Development, the Guangdong state government and a Malacca state-owned company.6 As part of the project, KAJ Development and PowerChina International has partnered with Shenzhen Yantian Port Group and Rizhao Port Group to build the deep sea port on Island 3, to be completed in 2019. The entire project is expected to be completed by 2025.

Figure 12: Melaka Gateway Concept (As extracted from website)

Source: melakagateway.com

Island 4: Maritime Industrial Park

Island 3: Melaka Gateway Port

Island 1: Theme park, hotels, marina, International cruise terminal

Island 2: Free Trade Economic Zone

Hatten Group and Hatten Land’s properties

Hatten Land Limited

page 10

Hatten Land’s Projects face Melaka Gateway

The upside for Hatten Land is that the bulk of its existing projects are near Melaka Gateway with upcoming MOU projects “Movie-Town Project” and “Plot K to E Project” facing Pulau Melaka or Island 1 of Melaka Gateway (Figure 2).

Completing the tallest building in Malacca. Of the four existing projects, Hatten City Phase 1 has been completed and is now in the fit-out phase for the mall and hotel component with the residential units being handed over to residents. Hatten City Phase 1 is a single building comprising of 13 storeys of shopping complex (Elements Mall), five floors of carpark, two 44-storey of serviced apartments (SilverScape Residences) and a 19-storey hotel block (Hatten Suites) and a 16-storey hotel block (DoubleTree by Hilton).

The block called DoubleTree by Hilton is the landowner’s entitlement to the project and is not retained by Hatten Land. It is a common practice in Malaysia where developers may enter into a development rights agreement with the landowner and apportion part of the completed project to the landowner instead of outright purchasing the land.

Figure 13: Hatten City Phase 1 (Completed, undergoing fit-out works)

Source: Company, NRA Capital, (Picture taken in early February)

Level 1 – 13 – Elements Mall

Level 14 – 45 – SilverScape Residences

19-storey hotel block – Hatten Suites

16-storey hotel block – DoubleTree by Hilton (original landowner’s entitlement, not owned by Hatten Land)

View from top floor of SilverScape

Pulau Meleka is being reclaimed for Melaka Gateway

Hatten City Phase 2 roof

Harbour City

Landbank owned by Hatten Group (being reclaimed)

Hatten Land Limited

page 11

Figure 14: Hatten City Phase 2 (Completion in 2H 2017)

Source: NRA Capital, Company, (Picture taken in early February)

Figure 15: “Movie-Town Project” or Hatten City Phase 3 (Land to be acquired)

Source: NRA Capital

Figure 16: A Mock Up of Hatten Group’s assets around Melaka Gateway

Source: NRA Capital

7 storey retail mall called Imperio Mall, followed by 7-storey carpark and two blocks of services residences Imperio Residence. The “cascading steps” design functions as an outdoor jogging route for residents that offers views of the coast and the surrounding city.

Hatten City Phase 2

Hatten City Phase 1

Land/Development Rights held by Hatten Group (being reclaimed)

Harbour City

Hatten Land Limited

page 12

Within Pulau Melaka itself, Hatten Land has the Harbour City project which is located right at the mouth of the Melaka Gateway project where the new international cruise terminal will be constructed. Harbour City shall comprise of Harbour City Mall, a water theme park and three hotel blocks. Completion is expected in 2H 2019 for the mall and one hotel block, and in 1H 2020 for the remaining two hotel blocks.

The fourth project is the Vedro by the River mall located inland, along the Malacca River (See Figure 2).

Figure 17: Harbour City (Completion expected in 2H 2019)

Source: Company, NRA Capital, (Picture taken in early February)

Figure 18: Vedro by the River (Completion in 1H 2017)

Source: NRA Capital (Picture taken in early February)

Based on our observation, construction of the first floor and foundation of Harbour City is currently ongoing.

Hatten Land Limited

page 13

Financial Projections and Estimates

ASP Assumptions and Gross Development Value Estimates. To formulate forecasts for Hatten Land, we assumed average selling prices (ASP) of RM 2,000 psf for retail properties, RM 850 psf for the residential component/serviced apartment components of Hatten City Phase 1 (SilverScape Residences), Hatten City Phase 2 (Imperio Residence) and Harbour City Suites.

As per the Industry Overview Report in the circular, SilverScape Residences and Imperio Residence were sold at RM 654 psf and RM 849 psf respectively. The difference in prices between SilverScape Residences and Imperio Residence could be due to price appreciation during the different launch periods of 2011 for SilverScape and and 2013 for Imperio Residence. Hence, we decided on an ASP of RM 850 psf for these two properties.

For hotel properties, we assumed RM 1,000 psf for Hatten Suites and Harbour City Luxury Hotel, and RM 900 psf for Harbour City Resort. As per the Industry Report, ASPs for Hatten Suites ranged from RM 803 psf in 2015 to RM 1,066 in 2016. Therefore, our assumptions are within the range of realized selling prices.

We noted that our ASP assumptions may be on the high side of existing prices. However, this approach will factor in price appreciation since the launch of the respective projects. As the developer is adopting a strategy of maintaining prices while progressively selling the units, we do not mark down the ASPs in our assumptions, but assume longer selling periods of five to six years for each project except for Vedro by the River. Vedro by the River is a relatively small project. As such, full occupancy/sales should be achievable relatively quickly.

Estimated GDV of RM 4.67 billion from four projects. In general, we assume lower remaining GDV for Hatten City Phases 1 and 2 and Vedro by the River, but higher GDV for Harbour City. Our total estimated GDV for these four projects sum up to RM 4.67 billion or 7% higher than that in the shareholders’ circular, probably due to different assumptions and computation methods.

Figure 19: Remaining Gross Development Value Estimates

Source: See Figure 20 for computations, NRA Capital

993.4709.5

97.1

2,866.4

1,030.5827.0

162.7

2,327.3

0.0

1,000.0

2,000.0

3,000.0

4,000.0

Hatten City Phase 1 Hatten City Phase 2 Vedro by the River Harbour City

RM m Our Estimates As per circular

Hatten Land Limited

page 14

Figure 20: Remaining Gross Development Value and Net Development Value Workings

As of 30 June 2016 As of 31 January 2017

Project Gross Floor Area (sq. ft.)

Net Saleable Area

(NSA, sq. ft.) % sold Unsold NSA

(sq. ft.) %

completion

Unbilled revenue in sq. ft. equivalent. % sold

Unsold NSA (sq.

ft.)

% completed

Formula

NSA x (1- % sold)

NSA x % sold x (1 - % completion

NSA x (1- % sold)

Hatten City Phase 1 Elements Mall 1,530,238 686,682 34% 453,210 100% 0 34% 453,210 100%

SilverScape Residences 820,188 591,638 85% 88,746 100% 0 85% 88,746 100%

Hatten Suites 240,616 165,132 93% 11,559 100% 0 93% 11,559 100%

DoubleTree by Hilton 283,521 N.A. Carpark 690,978 N.A. Total 3,565,541 1,443,452 62% 553,515 100% 0 62% 553,515 100%

Hatten City Phase 2 Imperio Mall 622,313 285,885 60% 114,354 58% 71,871 60% 114,354 84%

Imperio Residence 797,478 545,478 47% 289,103 58% 107,421 49% 278,194 84%

Carpark 631,600 N.A. Total 2,051,391 831,363 51% 403,457 58% 179,292 53% 392,548 84%

Vedro by the River Retail 213,547 95,505 65% 26,832 65% 21,727 65% 33,427 99%

Carpark 94,406 Total 307,953 95,505 65% 26,832 65% 21,727 65% 33,427 99%

Harbour City Harbour City Mall 1,766,847 1,033,914 15% 878,827 9% 141,129 16% 868,488 10%

Harbour City Suites 661,498 297,706 81% 56,564 9% 219,439 85% 44,656 10%

Harbour City Resort 586,771 407,545 24% 309,734 9% 89,008 31% 281,206 10%

Harbour City Luxury Hotel 322,959 233,055 NA 233,055 9% 0 NA 233,055 10%

Carpark 840,156 Total 4,178,231 1,972,220 75% 1,478,180 9% 449,576 28% 1,427,405 10%

Assumed ASP per

NSA (RM psf)

Est. Unbilled revenue (RM m)

GDV of unsold portion (RM m)

Development cost per GFA

(RM psf)

Development cost per NSA

(RM psf)

Development Cost (DC,

RM m)

Net Development

Value (RM m, NDV)

Implied Gross Margin

Formula

ASP x Unbilled revenue in sq.

ft. equivalent as of 30 June 2016

ASP x Unsold

NSA as of 30 June

2016 Assumed

Development cost (DC) per GFA x GFA /

Total NSA

DC per NSA x (unsold NSA +

unbilled revenue in sq.

ft.)

Unbilled revenue +

GDV of unsold portion - DC NDV / GDV

Hatten City Phase 1 Elements Mall 2,000 0 906.4 300 741 335.8 570.6 63%

SilverScape Residences 850 0 75.4 300 741 65.8 9.7 13%

Hatten Suites 1,000 0 11.6 300 741 8.6 3.0 26%

Total Est. GDV (unbilled revenue +

unsold portion) 993.4 300 741 410.2 583.2 59%

Hatten City Phase 2 Imperio Mall 2,000 143.7 228.7 350 863.6 161 211.6 57%

Imperio Residence 850 91.3 245.7 350 863.6 342 -5.4 -2%

Total Est. GDV 709.5 350 863.6 503 206.2 29%

Vedro by the River Retail 2,000 43.5 53.7 350 1,128.6 55 42.3 44%

Total Est. GDV 97.1 350 1,128.6 55 42.3 44%

Harbour City Harbour City Mall 2,000 282.3 1,757.7 350 720 734.6 1,305 64%

Harbour City Suites 850 186.5 48.1 350 720 198.8 36 15%

Harbour City Resort 900 80.1 278.8 350 720 287.2 72 20%

Harbour City Luxury Hotel 1,000 0.0 233.1 350 720 167.8 65 28%

Total Est. GDV 2,866.4 300 720.2 1,388 1,478.1 52%

Source: NRA Capital

Hatten Land Limited

page 15

Adjusting for land costs. Hatten City Phases 1 and 2 and Vedro by the River were developed under development rights agreements with the landowners and parts of the properties, about 9.6% of net saleable area of Hatten City Phase 1, 9.8% of the net saleable area of Hatten City Phase 2 and 6,595 sq. ft. of Vedro by the River, are owned by the respective landowners. Hence, the land cost of these properties is effectively Hatten Land’s cost of constructing the landowners’ entitlement of these properties. In our computations, we have assumed development cost of RM300 psf of gross floor area for the earlier project Hatten City Phase 1 and RM350 psf of gross floor area, including car parks, for the newer projects and adjusted it to development cost of per square feet of net saleable area, excluding car parks. We understand that the net saleable area provided generally excluded that of the landowners’ entitlement.

Overall, our NDV estimate for the four projects amount to RM 2.31 billion or approximately 24% lower than that of the shareholders’ circular of RM 3.03 billion for the residual value of the properties. Our estimated NDV of RM1.48 billion for Harbour City is close to that disclosed in the circular. However, our estimated NDV for Harbour City is 52% of estimated GDV, as opposed to 64% based on the GDV and NDV figures provided in the circular.

Figure 21: Remaining Net Development Value Estimates

Source: See Figure 20 for computations, NRA Capital

Valuing pipeline projects. Recently, Hatten Land has also announced entry into conditional sale and purchase agreements to acquire two projects known as Thea Wellness and Cyberjaya. The former has obtained development order approval while the latter is in the concept planning stage as of 10 February. Based on a ASP of RM 1,100 psf of NSA and 50% efficiency from the maximum gross floor area, we estimate that these projects have a GDV of RM 3.47 billion which is about 5% above Hatten Land’s estimate of RM 3.3 billion.

We had initially wanted to assume an ASP of RM 1,000 psf, but decided to add a 10% premium to factor in higher prices from the mall components. The ASP assumption is a subjective input, but is lower than the average selling prices of the existing projects, weighted by the respective mall, hotel and residential components. For instance, the ASP of Hatten City Phase 2 is about RM1,245 psf while that of Harbour City is about RM1,481. The ratio of NSA to GFA for the existing projects ranges from 31% to 47%. Hence, we assume an overall efficiency of 50% for the two projects. In the absence of more project information, e.g. NSA allocation between retail and hospitality, similar assumptions are used for the projects that are still under memorandum of understanding for acquisition in the future.

583.2

206.242.3

1,478.1

888.7

547.2

98.9

1,497.8

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

Hatten City Phase 1 Hatten City Phase 2 Vedro by the River Harbour City

RM m Our Estimated NDV Remaining Residual Value as per Circular

Hatten Land Limited

page 16

Figure 22: Gross Development Value and Net Development Value Assumptions and Workings for Thea Wellness, Cyberjaya, MICC, Movie-Town and Plot K to E Projects (Pending acquisition by Hatten Land)

Land Area (Acres) Plot Area

Max Gross Floor Area

(sq. ft.) Efficiency Est. NSA (sq. ft.)

Formula

Land area x plot ratio x 43,560 Assumed

Max GFA x Efficiency

SPA Projects Thea Wellness Project 2.05 5.8 517,928 50% 258,964

Cyberjaya Project 25.55 5.2 5,787,382 50% 2,893,691

MOU Projects MICC Project 9.34 4.0 1,627,402 50% 813,701

Movie-Town Project 8.86 6.0 2,315,650 50% 1,157,825

Plot K to E Project 66.00 6.0 17,249,760 50% 8,624,880

Assumed ASP per NSA (RM psf)

Gross Development Value (RM m)

Land cost per Max. GFA (RM

psf) ̂

Construction cost per Max. GFA (RM psf)

Land cost (RM m)

Construction and other costs

(RM m) NDV (RM m)

Formula

Land cost / max. GFA Assumed

As per announceme

nt

Construction cost per max GFA x Max GFA / NSA

GDV - land cost - construction cost

SPA Projects Thea Wellness Project 1100 285 13.8 250 7.1 155.4 122.3

Cyberjaya Project 1100 3,183 15.4 250 89.0 1,736.2 1,357.8

Total 3,468 Total 1,480.1

MOU Projects MICC Project 1100 895 20.00 250 32.5 488.2 374.3

Movie-Town Project 1100 1,274 13.33 250 30.9 694.7 548.0

Plot K to E Project 1100 9,487 13.33 250 230.0 5,174.9 4,082.4 Total 11,656 Total 5,004.8

Source: NRA Capital ^based on RM 80 psf of land area.

Figure 23: RNAV per share

Remaining Residual Value as per Circular

Our Estimated NDV

Existing Projects Existing + SPA

Projects Existing + SPA + MOU Projects

Hatten City Phase 1 888.7 583.2 Hatten City Phase 2 547.2 206.2 Vedro by the River 98.9 42.3 Harbour City 1,497.8 1,478.1 Remaining NDV 3,032.6 2,309.9 Admin & Overhead costs @ 15% -696.6 Corporate tax @ 24% -387.2 "Net NDV" 1,226.1 Book value of company 60.6 IPO Proceeds 71.5 RNAV (RM m) 1,358.2 Thea Wellness Project

122.3 Cyberjaya Project 1,357.8 Admin & Overhead costs @ 15% -517.7 Corporate tax -231.0 RNAV + SPA Projects (RM m) 2,089.7 MICC Project

374.3

Movie-Town Project 548.0

Plot K to E Project 4,082.4

Admin & Overhead costs @ 15% -609.4

Corporate tax -1,054.9

RNAV + SPA Projects + MOU Projects 5,430.1

Total RNAV (S$m) 506.37 425.8 655.1 1702.2

No of shares 1375.08 1375.08 1375.08 1375.08

RNAV per share (S$) 0.368 0.310 0.476 1.238

Source: NRA Capital

Hatten Land Limited

page 17

RNAV to rise from S$0.310 per share to S$1.238 per share as pipeline expands. Based on our calculations, the completion of the SPA to acquire Thea Wellness and Cyberjaya will raise Hatten Land’s RNAV per share by 54% to S$0.476. The larger upside will come from the remaining MOU projects with an estimated GDV of more than RM10 billion. Including the estimated NDV of RM 5.0 billion for the three MOU projects, Hatten Land will have a RNAV per share of S$1.238.

Figure 24: Forecasting Assumptions

FY17F FY18F FY19F FY20F FY21F FY22F Total

Hatten City Phase 1 (Completed) % of Remaining GDV Sold 10% 22% 22% 22% 23% 100%

Est. Revenue (RM m), should sum to GDV 99.34 220.76 220.76 220.76 231.80 993.41

Gross Profit, should sum to NDV 58.32 129.61 129.61 129.61 136.09 583.23

Hatten City Phase 2 (Completion in 2H 2017 or 1H FY18) Pre-sales % 5% 20% 25% 25% 25% 100%

Pre-sales (end FY16 est.unbilled rev of RM 235m) 23.72 94.89 118.61 118.61 118.61 474.45

Outstanding pre-sales 258.77 120.77 118.61 118.61 118.61 % Completion 90% 100% 100% 100% 100% Revenue 232.90 120.77 118.61 118.61 118.61 709.50

Gross Profit 67.69 35.10 34.47 34.47 34.47 206.22

Vedro by the River (Completion in 1H 2017 or 2H FY17) Pre-sales % 30% 70% 100%

Pre-sales 16.10 37.56 53.66

Outstanding pre-sales (end FY16 est. unbilled rev of RM43.5m 59.55 37.56 % Completion 100% 100% Revenue 59.55 37.56 97.12

Gross Profit 25.95 16.37 42.32

Harbour City (Completion in 2H 2019 or 1H FY20) Pre-sales % 5% 10% 20% 30% 25% 10% 100%

Pre-sales 115.88 231.75 463.51 695.26 579.39 231.75 2317.6

Outstanding pre-sales (end FY16 est. unbilled rev of RM548.9m) 664.77 763.57 883.47 960.31 627.40 231.75 % Completion 20% 45% 70% 95% 100% 100% Revenue 132.95 343.61 618.43 912.29 627.40 231.75 2866.4

Gross Profit 68.56 177.18 318.90 470.43 323.52 119.51 1478.1

SPA & MOU Projects FY17F FY18F FY19F FY20F FY21F FY22F FY23F FY24F FY25F FY26F FY27F

Pre-sales % 5% 5% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Pre-sales 756.2 756.2 1512.4 1512.4 1512.4 1512.4 1512.4 1512.4 1512.4 1512.4 1512.4

Outstanding pre-sales 756.2 1512.4 2994.5 4297.3 5165.1 5257.1 4666.7 3729.1 2817.6 2216.8 1844.9

% Completion 0% 2% 7% 15% 28% 40% 53% 65% 75% 85% 100%

Revenue 0.0 30.2 209.6 644.6 1420.4 2102.8 2450.0 2423.9 2113.2 1884.3 1844.9

Gross Profit 0.0 13.0 89.9 276.4 609.0 901.7 1050.5 1039.3 906.1 807.9 791.1

FY14 FY15 FY16 FY17F FY18F FY19F FY20F FY21F

Est. GFA Completed (based on change in % completion of each project above x GFA) 0

1,572,306

1,839,728

1,365,200

1,799,659

2,419,464

3,244,407

3,646,177

Total revenue (sum of above revenue per project) 245.2 436.3 412.3 524.7 752.9 1167.4 1896.3 2398.2

Revenue Growth 78.0% -5.5% 27.3% 43.5% 55.0% 62.4% 26.5%

Total Gross Profit (sum of above gross profit per project) 65.1 93.9 154.7 220.52 371.23 572.86 910.90 1103.13

Other income (assume RM 5m per year from e.g. interest) 4.42 6.25 12.16 5.00 5.00 5.00 5.00 5.00

Change in selling and distribution exp NA 44.1% -12.0% 50.0% 20.0% 20.0% 20.0% 20.0%

Change in general and admin exp NA 55.5% 27.6% 20.0% 20.0% 20.0% 20.0% 20.0%

Total debt to equity NA 317.9% 413.2% 572.4% 341.0% 224.8% 121.0% 42.4%

Dividend payout ratio NA NA NA 10% 10% 10% 10% 10%

Source: NRA Capital

Hatten Land Limited

page 18

Forecasting 27% revenue growth to RM524.7m in FY17; PATMI to grow at CAGR of 56% to reach RM639m by FY21. As of end June 2016, Hatten Land had unbilled revenue of about RM0.8 billion, which is close to our estimate of RM827.4m (as per Figure 20). To formulate our forecasts, we assume certain sales and completion progress as shown in Figure 24. Based on the assumptions, we expect Hatten Land to report revenue RM524.7m for FY17 versus revenue of RM412.3m in FY16. We reckon that these estimates are reasonable, considering the unbilled revenue.

Our forecasts include contribution from the SPA and MOU projects, lumped together for convenience. In general, we assume that the SPA and MOU projects will be progressively sold and completed over the next 10 years from FY18 to FY27.

Figure 25: Net Income Forecasts

FY14 FY15 FY16 FY17F FY18F FY19F FY20F FY21F

Revenue 245.16 436.26 412.35 524.74 752.94 1,167.42 1,896.26 2,398.22

Cost of sales (180.02) (342.32) (257.63) (304.22) (381.72) (594.56) (985.36) (1,295.08)

Gross profit 65.14 93.95 154.72 220.52 371.23 572.86 910.90 1,103.13

Other income 4.42 6.25 12.16 5.00 5.00 5.00 5.00 5.00

Selling & distribution costs (17.68) (25.48) (22.42) (33.63) (40.36) (48.43) (58.12) (69.74)

General & Administrative costs (23.77) (36.95) (47.16) (56.59) (67.91) (81.49) (97.78) (117.34)

IPO Expenses - - - (15.95) - - - -

Finance costs (0.32) (0.71) (0.86) (1.54) (5.54) (6.78) (8.32) (8.01)

Profit before tax 27.79 37.05 96.44 117.81 262.42 441.16 751.68 913.04

Income tax expense (8.30) (11.27) (27.85) (35.34) (78.73) (132.35) (225.51) (273.91)

Profit After Tax 19.50 25.78 68.59 82.47 183.69 308.82 526.18 639.13

Source: NRA Capital

Fair value pegged at S$0.440 or 64% discount from full RNAV comprising of existing, SPA and MOU projects. With our sales projections, we deducted an arbitrary 5% of net development profits (after overheads and tax) as capital charge and discounted the residual profits back to present value by a subjective discount of 15% per annum to yield a valuation of RM 1.93 billion or S$604.9m based on a SGDMYR exchange rate of 3.19. On a per share basis, our valuation works out to S$0.440 or 64% discount from the full RNAV of S$1.238 (See Figure 23).

As per the shareholders’ circular, the estimated weighted average cost of capital of Hatten Land is about 12.67% based on a cost of equity of 15.91%. To stress test our valuation, we applied discount rates of 10% to 20% per annum and yield a valuation of S$0.355 to S$0.559 per share, translating to upside of 26.8% to 99.6%.

Accounting for potential dilution. Given the size of Hatten Land’s pipeline, it is also reasonable to assume further fund raising or some form of dilution as new partners come on board. To factor in this possibility, we assumed potential additional share issuance at S$0.28 per share to raise S$50m, thus leading to total net proceeds of S$72.4m (RM231.0m). Under this scenario, a valuation of S$0.346 to S$0.527 is obtained based on a discount rate of 10% to 20%, with a 15% discount rate valuation yielding S$0.422 per share.

As a base case, we set our fair value at S$0.440.

Hatten Land Limited

page 19

Figure 26: Valuation

Based on existing projects

Based on existing + SPA + MOU

Projects

Assuming additional

share issuance to raise S$50m

BV of company as of 30 June 2016 60.6

Net Proceeds (S$22.4m – S$72.4m x 3.19) 71.5 231.0

PV of future development gains Hatten City Phase 1 202.3

Hatten City Phase 2 50.9

Vedro by the River 16.6

Harbour City 453.9

SPA and MOU Projects 1073.8 1073.8

Fair value (RM m) 855.7 1,929.5 2,089.0

Number of shares (m) 1375.08 1375.08 1553.7

Fair value per share (RM) 0.62 1.40 1.34

Fair value per share (S$) 0.195 0.440 0.422

RNAV per share (Figure 0.310 1.238 Discount to RNAV -37% -64% IPO Issue Price 0.28 0.28 0.28

Upside -30.3% 57.1% 50.5%

Scenario Analysis

Discount rate 10% 15% 20%

Valuation (no dilution) 0.559 0.44 0.355

Valuation (assumes additional share issuance) 0.527 0.422 0.346

Source: NRA Capital

Hatten Land Limited

page 20

Key Risks and Recommendation

Fund raising risk. Based on the project pipeline and our working capital projections, we estimate that Hatten Land’s borrowings will rise from RM250m at the end of FY16 to RM 900m by the end of FY17 with debt to total equity rising from about 413% at the end of FY16 to 572.4% by the end of FY17. Hence, there is the risk that Hatten may not be able to obtain these borrowings, thus forcing it to issue more new shares to fund its developments. As reflected in Figure 26, we still value Hatten Land at S$0.422 per share after accounting for the issuance of S$50m of shares at S$0.280 each. The risk is if future fund raising turns out to be larger than expected.

Execution risk. While we are confident of Hatten Land’s ability to develop landmark projects, our valuation is also dependent on the completion of the acquisition and the future development and sale of the SPA and MOU projects, which may or may not occur.

Geographical concentration risk. The bulk of Hatten Land’s projects are in Malacca. The upside of the Malacca market will depend on the execution of projects such as the high-speed rail and Melaka Gateway. Should these projects be delayed or fail to materialise, sales may turn out to be slower than expected. We noted that some of the existing projects such as Hatten City Phase 1 and Vedro by the River have not seen new sales between June 2016 and January 2017. Therefore, it is paramount that Hatten Land redoubles on sales efforts to meet forecasts.

Share price risk. Hatten Land’s shares do not have an established trading history and its share price may experience volatility post RTO/IPO. However, short term share price performance may not be reflective of the company’s fundamentals. This risk is worthy of mention given that Hatten Land’s issue price is substantially above its book value per share as existing accounting standards do not allow the capitalisation of the RTO consideration into Hatten Land’s book value of equity.

Other risks include foreign exchange, interest rate and regulatory risks. Should the MYR depreciate materially against the SGD, we may have to revise our valuation downwards and vice versa. Rising interest rates may also lead to higher mortgage rates and fewer loan approvals. In turn, these factors may affect demand for property. Finally, foreign buyers are among the target markets of Hatten Land. Should the Malaysian government implement curbs against foreign buyers, or if key foreign markets e.g. China implement capital controls, demand may also be affected.

Recommendation – Overweight (high return / high risk). In view of the upside factors that we have discussed and the risks presented by Hatten Land, we rate Hatten Land Overweight with a high return / high risk classification. Factors that will lead us to reduce the risk classification for Hatten Land include faster project sales and the completion of acquisition of the SPA and/or MOU projects.

Hatten Land Limited

page 21

Profit & Loss (RM m, FYE Jun) 2014 2015 2016 2017F 2018F 2019F 2020F 2021F

Revenue 245.16 436.26 412.35 524.74 752.94 1167.42 1896.26 2398.22

Operating expenses -219.40 -400.98 -322.67 -388.03 -481.21 -713.59 -1128.46 -1467.64

EBITDA 25.76 35.28 89.68 136.71 271.73 453.83 767.80 930.57

Depreciation & amortisation -2.06 -3.76 -4.54 -6.41 -8.77 -10.89 -12.80 -14.52

EBIT 23.70 31.52 85.14 130.30 262.96 442.94 755.00 916.05

Net interest & invt income 4.10 5.53 11.30 3.46 -0.54 -1.78 -3.32 -3.01

Associates' contribution 0 0 0 0 0 0 0 0

Exceptional items 0.00 0.00 0.00 -15.95 0.00 0.00 0.00 0.00

Pretax profit 27.79 37.05 96.44 117.81 262.42 441.16 751.68 913.04

Tax -8.30 -11.27 -27.85 -35.34 -78.73 -132.35 -225.51 -273.91

Minority interests 0 0 0 0 0 0 0 0

Net profit 19.50 25.78 68.59 82.47 183.69 308.82 526.18 639.13

Shares at year-end (m) NA NA NA 1375.08 1375.08 1375.08 1375.08 1375.08

Balance Sheet (RM m, as at Jun) 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F

PPE 31.89 39.08 64.10 87.69 108.92 128.03 145.23 160.70

Investment properties 0 0 0 0 0 0 0 0

Other long-term assets 23.99 39.08 51.29 51.29 51.29 51.29 51.29 51.29

Total non-current assets 55.88 78.16 115.40 138.98 160.22 179.32 196.52 212.00

Cash and equivalents 18.39 24.12 81.93 86.42 82.13 73.43 93.68 146.24

Stocks 382.93 479.81 476.35 1175.30 1473.54 1754.41 1746.10 1521.61

Trade debtors 185.74 352.22 212.55 359.41 515.71 799.60 1298.81 1642.62

Other current assets 31.47 43.09 47.08 47.08 47.08 47.08 47.08 47.08

Total current assets 618.52 899.24 817.91 1668.22 2118.47 2674.52 3185.66 3357.55

Trade creditors 232.39 464.30 288.99 416.74 522.90 570.13 674.90 887.04

Short-term borrowings 55.06 40.36 51.90 270.00 330.00 405.00 390.00 210.00

Other current liabilities 259.92 189.99 159.89 159.89 159.89 159.89 159.89 159.89

Total current liabilities 547.37 694.64 500.78 846.63 1012.78 1135.01 1224.79 1256.93

Long-term borrowings 79.60 98.45 198.57 630.00 770.00 945.00 910.00 490.00

Other long-term liabilities 54.20 140.64 173.34 173.34 173.34 173.34 173.34 173.34

Total long-term liabilities 133.80 239.09 371.91 803.34 943.34 1118.34 1083.34 663.34

Shareholders' funds -6.765 43.666 60.62 157.24 322.56 600.50 1074.06 1649.28

Minority interests 0 0 0 0 0 0 0 0

NAV/share (S$) (based on 1,375m shares) -0.002 0.010 0.014 0.036 0.074 0.137 0.245 0.376

Total Assets 674.40 977.40 933.31 1807.21 2278.68 2853.85 3382.18 3569.54

Total Liabilities + S’holders' funds 674.40 977.40 933.31 1807.21 2278.68 2853.85 3382.18 3569.54

Cash Flow (RM m, FYE Jun) 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F

Pretax profit 27.79 37.05 96.44 117.81 262.42 441.16 751.68 913.04

Depreciation & non-cash adjustments 1.96 2.57 -0.65 7.95 14.31 17.67 21.12 22.53

Working capital changes -79.18 -41.41 -51.64 -719.61 -353.92 -524.31 -394.43 84.81

Cash tax paid -2.88 -10.65 -17.48 -35.34 -78.73 -132.35 -225.51 -273.91

Cash flow from operations -52.32 -12.43 26.67 -629.19 -155.92 -197.83 152.87 746.47

Capex -19.31 -19.36 -36.26 -30.00 -30.00 -30.00 -30.00 -30.00

Net investments & sale of FA 4.43 8.68 7.23 0.00 0.00 0.00 0.00 0.00

Others 0 0 0 0 0 0 0 0

Cash flow from investing -14.88 -10.68 -29.03 -30.00 -30.00 -30.00 -30.00 -30.00

Debt raised/(repaid) 57.38 4.16 111.66 649.53 200.00 250.00 -50.00 -600.00

Equity raised/(repaid) 3.24 25.00 0.00 22.40 0.00 0.00 0.00 0.00

Dividends paid 0.00 -0.32 -51.49 -8.25 -18.37 -30.88 -52.62 -63.91

Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Cash flow from financing 60.61 28.84 60.17 663.68 181.63 219.12 -102.62 -663.91

Change in cash -6.59 5.73 57.81 4.49 -4.29 -8.71 20.25 52.56

Change in net cash/(debt) NA 1.57 -53.85 -645.04 -204.29 -258.71 70.25 652.56

Ending net cash/(debt) -116.27 -114.69 -168.54 -813.58 -1017.87 -1276.57 -1206.32 -553.76

KEY RATIOS (FYE Jun) 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F

Revenue growth (%) NA 78.0 -5.5 27.3 43.5 55.0 62.4 26.5

EBITDA growth (%) NA 37.0 154.2 52.4 98.8 67.0 69.2 21.2

Pretax margins (%) 11.3 8.5 23.4 22.5 34.9 37.8 39.6 38.1

Net profit margins (%) 8.0 5.9 16.6 15.7 24.4 26.5 27.7 26.7

Effective tax rates (%) 29.9 30.4 28.9 30.0 30.0 30.0 30.0 30.0

Net dividend payout (%) 0.0 1.2 75.1 10.0 10.0 10.0 10.0 10.0

ROE (%) NA 139.7 131.5 75.7 76.6 66.9 62.8 46.9

Free cash flow yield (%) – based on issue price of S$0.280

-17.5 -6.0 -0.6 -171.2 -48.3 -59.2 31.9 186.1

Source: Company, NRA Capital

Hatten Land Limited

page 22

NRA Capital Pte. Ltd (“NRA Capital”) has received compensation for this valuation report. This publication is confidential and general in nature. It was prepared from data which NRA Capital believes to be reliable, and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. No representation, express or implied, is made with respect to the accuracy, completeness or reliability of the information or opinions in this publication. Accordingly, neither we nor any of our affiliates nor persons related to us accept any liability whatsoever for any direct, indirect, special or consequential damages or economic loss that may arise from the use of information or opinions in this publication. Opinions expressed are subject to change without notice. NRA Capital and its related companies, their associates, directors, connected parties and/or employees may own or have positions in any securities mentioned herein or any securities related thereto and may from time to time add or dispose of or may be materially interested in any such securities. NRA Capital and its related companies may from time to time perform advisory, investment or other services for, or solicit such advisory, investment or other services from any entity mentioned in this report. The research professionals who were involved in the preparing of this material may participate in the solicitation of such business. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the duties of confidentiality, available on request. You acknowledge that the price of securities traded on the Singapore Exchange Securities Trading Limited ("SGX-ST") are subject to investment risks, can and does fluctuate, and any individual security may experience upwards or downwards movements, and may even become valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling securities traded on the SGX-ST. You are aware of the risk of exchange rate fluctuations which can cause a loss of the principal invested. You also acknowledge that these are risks that you are prepared to accept. You understand that you should make the decision to invest only after due and careful consideration. You agree that you will not make any orders in reliance on any representation/advice, view, opinion or other statement made by NRA Capital, and you will not hold NRA Capital either directly or indirectly liable for any loss suffered by you in the event you do so rely on them. You understand that you should seek independent professional advice if you are uncertain of or have not understood any aspect of this risk disclosure statement or the nature and risks involved in trading of securities on the SGX-ST.