DBS Bank | Singapore - Monthly Strategy...DBS Group Research . Equity 6 Sep 2016 Thailand Market Focus Monthly Strategy Refer to important disclosures at the end of this report Turn

ed: CK / sa: CT, PY

SET : 1,492.52

Analyst Chanpen SIRITHANARATTANAKUL +662 657 7824 [email protected] Thailand Research Team +662 658 1222 [email protected]

Key Indices

Current % Chng SET Index 1548.44 0.15% SET 100 Index 2211.03 0.08% SET 50 Index 983.26 0.02% Bt/US$ Exchange Rate 34.60 -0.05% Daily Volume (m shrs) 10,232 Daily Turnover (US$m) 1,474

Source: SET, DBS Vickers Market Key Data

(%) EPS Gth Div Yield 2015A (16.5) 3.0 2016F 32.6 3.1 2017F 9.0 3.3

(x) PER EV/EBITDA 2015A 21.2 8.8 2016F 16.3 8.3 2017F 14.7 7.7

Source: SET, DBS Vickers STOCKS

Source: DBS Vickers, Bloomberg Finance L.P.

DBS Group Research . Equity 6 Sep 2016

Thailand Market Focus

Monthly Strategy Refer to important disclosures at the end of this report

Turn to defensive plays

Our portfolio outperformed the market’s 1.6% gain in August, led by CPF and ERW

We see limited upside to the SET Index in September, with current stretched valuation making it vulnerable to any potential negative news

Switch to defensive plays with high yields and reasonable valuations

Our top picks for September are AAV, AP, CPALL, CPNRF, and DIF

The Thai market has risen 20.2% YTD, the best performing market in the region. It outperformed regional peers, which went up 8.9% YTD, thanks to the strong foreign fund inflow. The market is now trading at 2016 PE of 16.3x, which is not cheap compared with regional peers at 14.8x. This stretched valuation makes it quite vulnerable to any potential negative news. Switch to defensive plays. Our 12-month SET Index target remains at 1570, based on 15x 2017 PE. We recommend investors to lock in profit and switch to defensive plays with high yields and reasonable valuations. Our top picks. Our top picks for this month are AP (Thailand) (AP), Asia Aviation (AAV), CP All (CPALL), CPN Retail Growth Leasehold Property Fund (CPNRF), and Digital Infrastructure Fund (DIF). AP should see strong earnings growth next year, on the back of the strong jump in contribution from its JV with Mitsubishi Estate Group. AAV should continue to benefit from the strong tourism outlook and its rising market share. We still like CPALL for its leading position in the convenience store market, strong growth outlook, resilient operations and decent ROE. CPNRF should see near-term catalyst from the conversion from a property fund into a REIT. DIF has secured long-term lease agreements for its initial asset portfolio with True Corp PLC and its subsidiaries. This should provide good visibility of future earnings and cash flows. It also offers a generous dividend yield of 6.5-7.0% during 2016-17.

Price Mkt Cap Target Price Performance (%)

Bt US$m Bt 3 mth 12 mth Rating

AP Thailand PCL 7.45 677 9.00 24.2 35.5 BUYAsia Aviation 7.50 1,051 8.30 20.0 72.8 BUYCP ALL 62.25 16,150 75.00 27.0 22.1 BUYCPN Retail Growth Property Fund 20.50 1,310 22.70 8.5 25.8 BUYDigital Infrastructure Fund 14.80 2,484 15.30 3.5 12.1 BUY

Market Focus

Monthly Strategy

Page 2

Politics Majority voted Yes in charter referendum The constitution referendum held on August 7 went smoothly, with voter turnout of 59% or 29.74m out of 50.07m eligible voters. According to official results from the Election Commission (EC), 61.35% voted to accept the charter while 38.65% voted against. Regarding the vote to allow the 250 senate members to join the lower houses in selecting the prime minister, 58.07% voted for and 41.93% voted against this issue. The following table shows the result of the referendum by region:

Charter referendum results by region

Region Agree with Draft

Charter? Agree with the extra

question*

Yes No Yes No

Central 69.43% 30.57% 66.09% 33.91%

South 75.75% 24.25% 73.54% 26.46%

Northeast 48.66% 51.34% 44.68% 55.32%

North 57.58% 42.42% 54.01% 45.99%

Total 61.35% 38.65% 58.07% 41.93%* to allow 250 senators to participate in the selection of prime minister

Source: Election Commission of Thailand

General election to be held in late 2017. The Constitution Drafting Committee (CDC) will amend the charter to allow the 250 senate members to join the House of Representatives to select the prime minister. This will take about 2-3 months. The CDC will then draw up the 10 organic laws, a process which will take about eight months to complete. It is estimated that the general election will be held in late 2017.

Economy 2Q16 GDP growth at 3.5% was in line with our estimate. The Thai economy expanded by 3.5% y-o-y in 2Q16, up from 3.2% in 1Q16. This was in line with our expectation. The economy was boosted by acceleration of private consumption and the continued growth in public consumption and investment, while exports remained weak. After seasonal adjustment, the Thai economy grew 0.8% q-o-q. For 1H16, the Thai economy expanded by 3.4%.

Thai GDP Growth

Change (y-o-y) 4Q15 1Q16 2Q16 GDP (CVM) 2.8 3.2 3.5 Total investment 9.4 4.9 2.7 Private 1.9 2.1 0.1 Public 41.2 13.3 10.4 Private Consumption 2.6 2.3 3.8 Public Consumption 4.8 8.0 2.2 Export of Goods -7.9 -1.4 -3.1 Import of Goods -13.2 -14.4 -7.8 C/A to GDP (%) 10.8 16.7 8.5 Inflation -0.9 -0.5 0.3

Source: NESDB, DBS Vickers Private consumption grew 3.8% y-o-y in 2Q16. This was supported by the increase in expenditure on durable goods. Sales of passenger cars rose for the first time in 13 quarters by 4.8%, due to the launches of new car models and aggressive marketing campaigns. Consumption of other products continued to grow, including household electricity consumption. The improvement of household consumption was in line with the improved farm income and the government stimulus package.

Private Consumption Index (seasonally adjusted)

Source: BoT, DBS Vickers

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Market Focus

Monthly Strategy

Page 4

Review of 2Q16 results

Aggregate net profit of SET-listed companies grew 12% y-o-y in 2Q16. The aggregate net profit of listed companies on the Stock Exchange of Thailand was Bt246.8 in 2Q16, up 12% y-o-y and 6% q-o-q. Aggregate sales eased by 4.5% y-o-y as the sales of the Energy, Utilities and Petrochemical sector were negatively affected by low oil prices. However, the aggregate net profit managed to surge 12%, due to a better gross profit margin of 25.6% in 2Q16 vs 22.9% in 2Q15. Aggregate net profit growth by sector

Industry 2Q15 2Q16 y-o-y Resources 55,122 58,294 6% Finance 57,514 64,418 12% Property & Construction 40,348 41,912 4% Technology 26,045 25,777 -1% Services 11,977 20,707 73% Industrial 17,834 19,060 7% Agri & Food businesses 10,919 13,792 26% Consumer Products 1,518 2,829 86%

Total 221,279 246,790 12%

Industry 1Q16 2Q16 q-o-q Resources 51,144 58,294 14% Finance 47,048 64,418 37% Property & Construction 37,475 41,912 12% Technology 35,023 25,777 -26% Services 33,384 20,707 -38% Industrial 14,199 19,060 34% Agri & Food businesses 14,105 13,792 -2% Consumer Products 943 2,829 200%

Total 233,322 246,790 6% Source: SET and DBS Vickers 2Q16 aggregate profit was generally in line with market expectation. Positive surprises were seen at Tourism sector (led by The Erawan Group), Construction Contractors (led by Ch. Karnchang), Media (led by Workpoint). Negative surprise was seen at Banking sector (led by Bangkok Bank).

ERW reported a 2Q16 net profit of Bt17m, in line with our estimates but beating consensus. Excluding gains of Bt15.9m from the sale of four units of shophouses in Mukdahan and Maesot in the quarter, core earnings stood at Bt1m – a turnaround from a core loss of Bt24.8m in 2Q15 (but dropping q-o-q due to seasonality). This marks the first time in three years that ERW was able to deliver positive core earnings during Thailand’s low tourism season (in 2Q and 3Q). The core earnings y-o-y turnaround was attributed to i) hotel RevPar growth of 2.4% (excluding Hop Inn), ii) the opening of two

Hop Inn hotels in Chantaburi and Sakhonakhon (+150 Hop Inn rooms) in the quarter, iii) fatter EBIT margin (+2.5ppts to 9.6%), and iv) lower interest expenses due to the decline in average cost of funds from 4.6% in 2Q15 to 4.3%.

CK reported 2Q16 core profit of Bt1.03bn (+237% q-o-q but -38% y-o-y due to the Bt1.7bn gain from sales of investment in 2Q15). This was driven by the Bt14bn revenue recognition from the additional work of Xayaburi project.

WORK’s 2Q16 came in at Bt134m (+18% y-o-y, +366% q-o-q), driven by strong revenue growth and wider margin. Note that WORK’s rating increased from 0.85% in 2015 to 1.26% in 2Q16.

BBL’s 2Q16 earnings came in at Bt7.2bn (-11% y-o-y; -14% q-o-q), 13% below Bloomberg consensus and our estimates. Lower-than-expected non-interest income (non-NII) was the key reason behind the disappointing results. Non-NII declined 18.3% y-o-y and 13.3% q-o-q, due to the decline in gains on investments and gains on trading and foreign exchange transactions. Operating profit (PPOP) came in at Bt12.3bn (+15% y-o-y; -0.1% q-o-q), supported by higher NIM (+28bps y-o-y).

Which sectors beat consensus estimates in 2Q16?

Sector Net profit (Btm)

Consensus Actual Actual/Consensus

Food 2,872 2,952 3%

Banks 42,817 36,963 -14%

Finance 1,288 1,288 0%

Chemicals 9,124 10,398 14%

Construction materials 14,638 16,843 15%

Property 10,630 11,277 6%

Construction contractors 1,326 1,744 32%

Energy 45,020 44,730 -1%

Commerce 7,278 7,789 7%

Media 104 134 29%

Transportation 3,959 4,106 4%

Telecom 10,092 9,866 -2%

Electronics 2,759 3,131 13%

Property Funds/REITs/IFFs 6,077 6,077 0%

Healthcare 2,661 2,642 -1%

Tourism 326 501 54%

Total 160,970 160,441 0%

Source: SET, DBS Vickers

Market Focus

Monthly Strategy

Page 5

Earnings Outlook

2016F universe net profit growth estimated at 36%. The strong earnings growth will be boosted largely by the Energy sector, mainly from PTTEP (from heavy losses of Bt31.6bn in 2015 to Bt14.4bn in 2016) and PTT (from net profit of Bt19.9bn in 2015 to Bt88.0bn in 2016). The strong earnings growth, however, will be seen in 3Q16 given the low base in 3Q15. Excluding Energy & Petrochemicals, market earnings growth would be +7.0% this year and +9.0% next year. Showing strong net profit growth in 2016 are Energy (+670%), Transportation (+185%) led by strong earnings jump at the three airlines (BA, AAV and THAI), Chemicals (+48%) led by IVL, Finance (+21%) led by GL and MTLS amid aggressive branch expansion, Tourism (+22%) led by ERW and CENTEL amid strong tourist arrivals, Commerce (+19%) led by CPALL as it has embarked on continued store expansion, and Commercial Property (+17%) led by CPN amid continued mall expansion. Earnings growth by sector*

YE Dec (Btm) FY15A FY16F FY17F FY16F

Gwt

FY17F

Gwt Banking 168,348 169,574 189,753 1% 12%Finance 4,003 4,854 5,964 21% 23%Con. Mat. 50,478 53,056 54,746 5% 3%Chemicals 27,112 40,230 40,875 48% 2%Contractors 6,049 5,833 6,321 -4% 8%Property 42,709 43,270 48,401 1% 12%- Commercial 7,880 9,219 10,394 17% 13%- Residential 32,976 33,315 36,801 1% 10%- Industrial 1,853 736 1,206 -60% 64%Property Fund 21,061 24,669 26,800 17% 9%Energy 18,850 145,123 151,871 670% 5%Media 164 281 436 72% 55%Commerce 25,192 30,039 36,357 19% 21%Transport 11,186 31,863 38,311 185% 20%Tourism 1,874 2,294 2,742 22% 20%Telecom 46,521 39,674 41,984 -15% 6%Electronics 13,019 12,887 12,977 -1% 1%Food 23,401 23,976 25,193 2% 5%Health Care Services 11,815 12,913 15,083 9% 17%

Total 471,781 640,537 697,816 36% 9%Source: Companies and DBS Vickers * Companies under DBSV coverage Valuation Thai market is now trading at 2016F PE of 16.3x. This is slightly higher than the 10-year average PE of 14.3x. Compared to regional markets, the Thai market’s PE is higher than the regional average PE of 14.8x.

Valuation by Sector*

PE (x) YE Dec FY15A FY16F FY17F

Banking 10.6 10.5 9.4Finance 31.0 26.4 22.2Con. Mat. 13.3 12.7 12.3Chemicals 15.8 10.7 10.5Contractors 20.6 21.3 19.7Property 14.4 14.3 12.8- Commercial 34.3 29.3 26.0- Residential 9.8 9.8 8.9- Industrial 12.8 32.5 19.8Property Fund 17.1 15.5 14.4Energy 95.2 12.4 11.9Media 116.0 68.7 44.8Commerce 36.8 31.2 25.8Transport 76.0 26.7 22.2Tourism 36.6 29.9 25.0Telecom 13.4 15.7 14.9Electronics 14.2 14.4 14.3Food 22.4 21.9 20.8Health Care Services 44.3 40.6 34.7Total 21.2 16.3 14.7Source: SET, DBS Vickers * Companies under DBSV coverage Regional comparison: PE vs. EPS growth

EPS Gth (%) PE (x)

16F 17F 16F 17F

Singapore 3.5 7.1 14.7 13.7

HK HSI -3.5 9.0 12.1 11.1

HK HSCCI (Red) 0.3 22.1 11.8 9.6

HK HSCEI (H) -5.3 10.2 7.3 6.6

CSI300 2.6 12.7 13.2 11.7SH Comp 15 12.9 13.7 12.1SZ Comp 87.2 28 23.2 18.1Malaysia 3.8 8.1 16.5 15.3

Thailand 32.6 9.0 16.3 14.7

Indonesia 7.7 14.9 19.2 16.7

Simple Average 14.4 13.4 14.8 12.9

Source: DBS Bank, DBS Vickers

SET: PE Band

Source: SET, DBS Vickers

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SET P/E Ratio

Market Focus

Monthly Strategy

Page 6

Market Outlook

August Recap

SET was an underperformer in August. The SET Index rose 1.6% in August, underperforming regional peers which increased 3.3% during the period. Key sector outperformers were Fashion (+9.9%), Food (+8.1%), and Commerce (+7.8%). Market interest continued to focus on domestic plays like Commerce and Food sectors in August. This was led by CP All (CPALL), up 20.3% in August on stronger-than-expected earnings performance in 2Q16. Its 2Q16 earnings jumped 34% y-o-y on strong convenience store operations, surge in operating income, decline in interest expense, and lower effective tax rate. The Food sector was boosted by CPF (up 16.1%), also due to better-than-expected 2Q16 results. Key sector underperformers were ICT (-5.7%), Construction Services (-2.9%) and Healthcare (-1.3%). Foreign investors remained net buyers, with a net buy position of Bt34.4bn in August. Average daily turnover eased slightly to Bt59.2bn in August 2016, vs. Bt60.4bn in July 2016.

8M16 Recap

The best performer in 8M16. The SET Index surged 20.2% in 8M16, still the best performing market in the region. It strongly outperformed regional peers which grew 8.9% during the same period. The rally was due mainly to the return of foreign fund flows into the Thai market. Foreign investors were net buyers of Bt115.25bn of the Thai market in 8M16. The average daily turnover rose to Bt48.7bn in 8M16 vs Bt41.1bn in 2015. The market was led by Professional service (+70.5%), Paper (+50.3%), Commerce (+36.8%) and Food (+36.0%) sectors, amid a recovery in domestic consumption. The key underperformers were Insurance (-8.4%), Construction Services (+1.3%), and Tourism (+1.5%).

SET Index Performance vs Peers

MTD YTD Dax 3.1% -0.8%Nikkei 1.9% -11.3%FTSE 1.4% 9.3%NASDAQ 1.3% 4.3%S&P 500 0.3% 6.5%Dow Jones 0.0% 5.9%H-shares 6.5% -1.2%HK 5.0% 4.8%Shanghai 3.6% -12.8%MXFEJ 3.3% 8.9%Indo 3.3% 17.3%SET 1.6% 20.2%Malay 1.5% -0.9%India 1.4% 8.8%Taiwan 0.9% 8.8%Korea 0.9% 3.7%Sing -1.7% -2.2%Phil -2.2% 12.0%

Source: Bloomberg Finance L.P., DBS Vickers Sector Performance

Sector MTD YTD FASHION 9.9 6.9FOOD 8.1 36.0COMM 7.8 36.8AGRI 7.2 24.9STEEL 7.0 26.5IMM 6.7 15.3INSUR 6.2 -8.4HOME 5.1 13.5ETRON 2.6 3.5ENERG 2.4 30.4PAPER 2.2 50.3PKG 2.2 31.7AUTO 1.7 7.2SET 1.6 20.2TRANS 1.6 21.4CONMAT 1.4 7.7PROP 1.2 12.9PETRO 0.8 29.0MINE 0.7 7.3PF&REIT 0.6 12.7BANK 0.1 22.7TOURISM 0.0 1.5FIN 0.0 17.8MEDIA -0.2 2.6HELTH -1.3 7.0PERSON -2.2 19.8CONS -2.9 1.3ICT -5.7 13.4PROF -7.8 70.5

Source: Bloomberg Finance L.P., DBS Vickers

Market Focus

Monthly Strategy

Page 7

Regional: Foreign net buy (sell) position

US$m India Indonesia Japan Philippines S. Korea Taiwan Thailand 2005 10,901 -1,737 113,338 354 -3,549 23,990 2,947 2006 8,338 1,996 68,885 720 -12,659 16,962 2,135 2007 18,518 3,141 32,759 1,354 -29,095 477 1,853 2008 -12,918 1,801 -66,817 -1,135 -36,742 -16,364 -4,942 2009 17,639 1,384 -6,513 420 24,446 15,617 1,137 2010 29,321 2,345 22,926 1,232 19,657 9,577 2,687 2011 -396 2,853 -1,069 1,329 -8,584 -9,076 -167 2012 24,548 1,703 27,733 2,548 15,069 4,907 2,504 2013 19,986 -1,804 149,920 678 4,855 9,178 -6,211 2014 16,162 3,766 22,545 1,287 5,967 13,551 -974 2015 3,274 -1,580 3,485 -1,194 -3,626 3,322 -4,372 2016 YTD 5,971 2,875 (59,102) 1,025 8,089 14,031 3,292

Jan-16 (1,702) (165) (12,903) (43) (2,327) (1,703) (219) Feb-16 (1,170) 303 (23,019) (85) (43) 1,563 13 Mar-16 4,085 178 (24,367) 204 3,128 5,122 749 Apr-16 585 22 15,409 (34) 1,826 727 (159) May-16 386 (17) (3,029) 287 85 (2,081) 131 Jun-16 771 664 (3,739) 312 680 2,617 522 Jul-16 1,658 905 (1,196) 418 3,677 5,384 1,266 Aug-16 1,139 1,109 (6,190) 66 916 2,386 867 1Q16 1,214 315 -60,289 76 758 4,981 543 2Q16 1,742 669 8,641 564 2,591 1,264 494 QTD 3,015 1,891 (7,453) 384 4,740 7,787 2,255

*as of 31 Aug 16 Source: Bloomberg Finance L.P., DBS Vickers Strategy

We still prefer domestic plays. We still prefer domestic plays to export plays in September. This is on the back of the continued recovery in domestic consumption amidst rising external uncertainties. Considering the current stretched market valuation, which makes it vulnerable to any negative news, we recommend that investors switch to defensive plays with high yields and reasonable valuations. Our 12-month SET target index remains at 1570. This is based on 15x 2017 PE. The slight premium to its historical average PE of 14.3x reflects the market’s strong EPS growth of 31.4% in 2016 and 9.4% in 2017. Our most- and least-preferred sectors. We recommend that investors be Overweight on Transportation, Finance, and Petrochem sectors. We maintain Underweight on Media, Healthcare and Electronics sectors. We have downgraded the Contractors sector to Neutral from Overweight as the construction of the Blue Line Extension project is likely to be delayed by about two years, which will negatively affect the revenue of a number of construction contractors.

SET: Our sector weightings

Overweight Neutral Underweight Transportation Banks Electronics

Petrochem Building Materials Healthcare Finance Food Media

Energy Contractors Telecom Commerce Property Property Fund/REIT

Source: DBS Vickers

Market Focus

Monthly Strategy

Page 8

Our top picks Our top picks strongly outperformed the market in August. The Thai market inched up 1.6% in August, but our portfolio went up 2.7% led by CPF and ERW. CPF’s share price jumped 16% last month as the company reported 2Q16 results that beat our/market expectations. The company reported strong 2Q16 net earnings growth of 34.7% y-o-y and 6.7% q-o-q to Bt4bn, despite the one-off recognition of an additional tax expense of Bt1.3bn. ERW’s share price rose 6%, as the company recorded an earnings turnaround in 2Q16, profitable for the first time in three years during Thailand’s low tourism season. Our top picks for July strongly outperformed the market

Source: DBS Vickers

Cumulative price returns of our stock picks vs the market

Source: DBS Vickers

Stock picks for September. Our picks for September are AP (Thailand) (AP), Asia Aviation (AAV), CP All (CPALL), CPN Retail Growth Leasehold Property Fund (CPNRF), and Digital Infrastructure Fund (DIF). AP is one of our top picks in the residential property space. We expect the company to report a strong jump in earnings next year. This will be supported by the strong profit contribution from its JV with Mitsubishi Estate Group from Japan. The stock is trading at a very attractive 2017F PE of only 6.7x while offering a decent 2017F dividend yield of 5.3%. AAV should continue to benefit from the strong tourism outlook and its rising market share. We think AAV’s outlook remains promising as it 1) secures a prime position within the Thai LCC segment, 2) achieves record profits, and 3) gains implicit value from the TAA stake, given the longer-term ambitions of the AirAsia group to consolidate its regional airlines. We still like CPALL for its leading position in the convenience store market, strong growth outlook, resilient operations and decent ROE. An improvement in farm income, following an increase in agricultural prices (e.g. fruits, palms and rubbers) and alleviated drought conditions should benefit CPALL. Meanwhile, we believe the stamp campaign this year, which runs from 26 July to 25 November, will be a successful one given its use of appealing cartoon characters and premium gifts. CPNRF should see near-term catalyst from the conversion from a property fund into a REIT. The conversion into a REIT should help remove earlier concerns on the short lease of its assets, as the REIT can gear up more or increase capital to fund the lease extension or the acquisition of new assets. With higher gearing, its yield should also be higher. Note that Thai REITs can gear up to 35% of total assets (or 60% with investment grade rating), vs 10% of NAV for property funds. DIF has secured long-term lease agreements for its initial asset portfolio with True Corp PLC and its subsidiaries. This should provide good visibility of future earnings and cash flows. It also offers a generous dividend yield of 6.6-7.0% during 2016-17.

Stock

29- J ul-16 29-A ug-16 Change

AP (Thailand) 7.40 7.45 0.68%

Charoen Pokphand Foods 28.00 32.50 16.07%

Ch. Karnchang 33.75 31.50 -6.67%

The Erawan Group 4.76 5.05 6.09%

Jasmine Infrastructure Fund 11.90 11.60 -2.52%

Our port folio's return 2.73%

Index change 1524.07 1548.44 1.60%

Outperformance 1.13%

Price (Bt )

0%

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35%

Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16

Market

Our portfolio

Market Focus

Monthly Strategy

Page 9

Stock Picks for September 2016

Mkt Price Target % PE PBV Div Yield ROE

Bloomberg Cap 31-Aug Price Upside (x) (x) (%) (x)

Code (US$m) (Bt) (Bt) 16F 17F 16F 17F 16F 17F 16F Rcmd

AP TB 677 7.45 9.00 21% 8.7 6.7 1.2 1.1 4.0 5.3 14.6 BUYAAV TB 1,051 7.50 7.15 -5% 19.6 15.5 1.7 1.6 1.3 2.0 9.4 BUYCPALL TB 16,157 62.25 60.00 -4% 34.5 27.8 12.9 11.3 2.0 2.5 40.2 BUYCPNRF TB 1,310 20.50 22.70 11% 15.7 15.0 1.5 1.5 5.6 5.8 9.8 BUYDIF TB 2,484 14.80 15.30 3% 15.7 14.3 1.2 1.2 6.5 7.0 7.6 BUY

Source: Company, DBS Vickers Company Reasons for Picks / Potential Catalysts

AP Expect the company’s earnings to peak in 4Q16F, as the JVs become profitable for the first time; three JV condos worth a combined Bt9.3bn will be completed in 3Q-4Q16.

Two more JV projects (Bt4.2bn) will be completed next year, leading us to expect FY17F share profit from JVs of Bt750m, up from Bt110m in FY16F. The surge in JVs’ earnings should lead to normalised profit growth accelerating to 33% next year, up from 6% in FY16F.

We have a FY17F TP of Bt9.00 (8x PE) for AP. It is our top pick in the property sector, thanks to the expected presales recovery in 2H16F and strong earnings growth for next year.

AAV AAV posted 1H16 core earnings growth of +69% y-o-y (headline: +101%), as the breakneck

passenger growth and cheaper fuel more than offset some yield softening. Going forward, we think AAV’s outlook remains promising as it secures a prime position within

the Thai LCC segment, 2) achieves record profits, 3) gains implicit value from the TAA stake, given the longer-term ambitions of the AirAsia group to consolidate its regional airlines, and 4) the potential synergies with King Power in the future.

We reiterate our BUY call with TP of Bt8.3 based on 1.7x FY17F P/BV valuation (+2SD of mean P/BV vs 1.5x or +1SD previously) as we think AAV should command a premium with its emerging domestic market share dominance and its record profitability.

CPALL Strong growth outlook, underpinned by strong performance in convenience store (CVS) operations, healthy margins, and deleveraging.

SSSG’s positive momentum is expected to persist, thanks to its leading position in the CVS market, attractive products, and successful stamp campaign.

Margin should remain solid, fuelled by higher mix of high-margin products as well as lower logistics costs.

CPNRF Thailand’s largest and most liquid property fund.

Strong recurring income base from four successful shopping malls in Thailand. Planning to convert from property fund into a REIT, pending approval from relevant authorities

regarding the waiver of transaction costs. Offering decent 2017 dividend yield of 5.8%.

DIF DIF is the first telecom infrastructure fund listed on the Thai Stock Exchange.

DIF has secured long-term lease agreements for its initial asset portfolio with True Corp PLC and its subsidiaries. This should provide good visibility of future earnings and cash flows.

Offering generous yield of 6.5-7.0% during 2016-17.

Source: Company, DBS Vickers

Market Focus

Monthly Strategy

Page 10

Sector Update

Our Sector View Chart/Table Sector: Tourism Overweight

Top BUYs: AOT, ERW, BA, AAV Least preferred: -Tourism has been providing solid support to the Thai economy since the beginning of the year and has shored up Thailand’s current account balance. International tourist arrivals climbed 9.1% y-o-y to 19.5m in 7M16.

Regarding the Brexit vote, there might be some effects from the EUR’s depreciation for the following airlines; i) negative effect to BA as c.27% of BA’s revenue is contributed by Europe, and ii) positive effect for THAI since c.40% of its liabilities are in EUR. However, we believe that in the short term, these effects are likely to be minimal. Plus, in view of the still solid demand outlook as well as benign fuel price environment, we expect airlines’ earnings to continue growing this year.

We like i) AOT, as it has the largest exposure to improving visitor traffic to Thailand, ii) ERW, due to its strong 2016 y-o-y earnings growth of 51% from its, and iii) AAV and BA, whose earnings are expected to continue growing strongly this year by 54% and 58% respectively, driven by the two key factors of Thailand tourism growth and a cheap jet fuel environment going into 2016.

Thailand: International tourist arrivals

Source: BOT, DBS Vickers

Sector: Petrochemicals Overweight

Top BUYs: IVL, PTTGC, SCC Least preferred stocks: -

Product spread of high-density polyethylene (HDPE) over naphtha was flat in August but remained strong at US$750/t. This was due to cheaper naphtha cost caused by oversupply of gasoline while HDPE price softened 2% from July, reflecting stable demand-supply conditions. Price movements of other products were mixed, moving in a range of +1% to +4% during August but most of them remained on the positive side.

The Petrochemical sector edged up 1.3% in August, in line with the overall market (+1.4%) but its YTD performance (+29%) has far outpaced SET (+20%). Stronger oil price should benefit gas-based olefin producers like PTTGC due to the cost competitiveness. We maintain our view that firm demand, especially for ethylene and derivatives, would still be the key driver for the earnings performance of the sector. We believe that the market’s optimism on the sector’s earnings outlook is likely to continue in 2H16. We maintain our Overweight rating on the sector.

HDPE spreads over naphtha

Source: Datastream

600

1,000

1,400

1,800

2,200

2,600

3,000

3,400

Jan

Feb

Mar

Apr

May Jun Jul

Aug Se

p

Oct

Nov

Dec

'000 People

2009 2010 2011 20122013 2014 2015 2016

0

200

400

600

800

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2012 2013 2014 2015 2016

US$/t

Market Focus

Monthly Strategy

Page 11

Sector: Property Fund/REIT/Infrastructure Fund Neutral

Top BUYs: DIF, CPNRF, LHHOTEL Least preferred stocks: -

The PFPO/REIT sector slightly underperformed the SET last month, as investors took profit after the strong share price rally.

The sector is now offering an average 2016F distribution yield of 6.0%, or about 378bps over the Thai 10-year government yield of 2.2%. Note that historical sector premium over the Thai 10-year bond yield was 333bps.

Our top picks are DIF, CPNRF, and LHHOTEL for their still generous distribution yields of 5.8-7.2%.

PFPO/REIT: Yield-spread over 10-yr govt bond

Source: DBS Vickers

Sector: Electronics Underweight

Top BUY: KCE Least preferred stocks: -

The sector performed weakly in 1H16 affected by a sluggish global economy. Thailand’s total electronics exports decreased by 8.5% y-o-y in 1H16. However, we expect sales to pick up in 2H16 due to seasonality and signs of recovery. In the long term, many electronics companies will take effort to penetrate more into automotive electronics products as the market continues growing. Also, the trend towards more autonomous and electric cars will require more electronics components.

KCE is our top pick in the sector for various reasons: i) sustainable high margin of above 30%, which is higher than peers' 13-27%, and ii) its strong earnings growth of 47%/19% in FY16/FY17, supported by capacity expansion. In terms of valuation, our TP is Bt121, pegged to 18x FY17F PE. This is justified, considering its superior earnings growth compared with the sector.

KCE: Growing both top line and margins

Source: Company data, DBS Vickers

1

2

3

4

5

6

7

8

9

2010 2011 2012 2013 2014 2015 2016

%

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Top BUYs: GL,

n Thailand, sotraditional loanbeen serviced bfor money is aleconomy, the dstronger econotheir debts.

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Sector: Contra

Top BUY: CK

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Top BUYs: BCP

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Sector: Telecom

Top BUYs: JAS

We expect the the aggressor wDTAC’s prepaiddifficult now thcustomers becaBt218 vs. DTACdata plans are

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Market Focus

Monthly Strategy

Page 14

Sector: Food Neutral

Top BUYs: TU, CPF Least preferred: - 3Q is the peak season for food operators like CPF and TU due to high exports and shrimp production during these periods. Therefore, their earnings momentum will be rising for the next quarter. A strong recovery in Thai shrimp units will be an earnings boost for food operators. With continuous efforts to raise shrimp survival rates by applying new farming techniques and develop shrimp breeds to be more tolerant of the EMS (Early Mortality Syndrome) disease, the outcome has now become promising. Shrimp survival rate rose to 70% from 30% earlier. As a result, shrimp production volume is estimated to reach 300,000 tons (+20% y-o-y) this year. The European Union gave Thailand more time to tackle illegal fishing before the next investigation. Several issues that need to be further addressed include the installation of tracking systems on fleets and the enforcement of laws. We are not overly concerned about the issue, as exporting seafood to the EU is still not banned and operations are not disrupted. On a positive note, the US has upgraded Thailand to Tier 2 Watch list from Tier 3 – the worst human trafficking ranking – on 30 June. The upgrade was premised on Thailand’s continuous efforts to deal with this issue, especially in the seafood industry as Thailand has reformed its anti-trafficking laws and introduced a system to track the fishing process. With Thailand’s upgrade, the hurdles would be lifted and this will definitely be positive for TU’s business sentiment.

Our top picks are: i) TU – we like TU for its strong fundamentals that are underpinned by its efforts to expand margins (organic growth initiatives including innovations), and upside potential coming from future M&A, and ii) CPF – its meat margins will improve with higher selling prices and lower raw material costs, while strong recovery of the shrimp unit in Thailand is expected.

Swine, broiler and shrimp product prices

Source: CPF, DBS Vickers

Sector: Commerce Neutral

Top BUY: CPALL Least preferred: BIGC

Thai retailers continue to expand their stores in the hope of better prospects following the pick-up in government’s infrastructure spending. We expect food staple retailers like CPALL to continue doing well, outperforming other commerce stocks, as food products are its major revenue source and consumers tend to spend on small-ticket items amid slowing consumption. It will continue to aggressively expand the number of outlets, rolling out 700 stores p.a. while same-store-sales-growth (SSSG) should be resilient as c.72% of its product mix comes from staple food products.

Thailand: Consumer Confidence Index (CCI)

Source: UTCC, DBS Vickers

0

50

100

150

200

250

300

25

35

45

55

65

75

85

Apr

/12

Aug

/12

Dec

/12

Apr

/13

Aug

/13

Dec

/13

Apr

/14

Aug

/14

Dec

/14

Apr

/15

Aug

/15

Dec

/15

Apr

/16

Bt/kg

Swine Broiler Shrimp (RHS)

40

50

60

70

80

90

100

110

120

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

CCI of Overall economy

CCI of future employment

CCI of future income

Market Focus

Monthly Strategy

Page 15

Sector: Banks Neutral

Top BUYs: KBANK, TCAP Least preferred: KTB

The sector has been hit by prolonged sluggish domestic economic activities and increasing external uncertainties (poor export), leading to overall poor loan demand. The good news is private sector demand is gradually recovering. Public investment remains robust and should eventually drive private investments and loan demand in 2H16.

Loan growth was +0.9% in 1H16, but given the upcoming improvement in loan demand, we expect sector loans to grow by 4.6% in 2016 and 7.3% in 2017. Amid low market interest rates and poor credit demand, asset yields are trending down. NIM is likely to soften. Non-NII to recover with loans and economy, but it will go lower in 2016, due to the absence of huge gains from sales of investments some banks realised in 2015. Credit cost to remain high, as banks wish to build up their coverage ratios and to cushion against economic uncertainties.

KBANK remains our top pick for its balanced growth, profitability, and asset quality. TCAP is our second pick for its relatively less vulnerable earnings and the fact that the auto market has passed its trough. Valuation-wise, TCAP is the cheapest among Thai banks.

Thailand banks: Earnings poised to recover in 2016


Sector: Property Development - Residential Neutral

Top BUYs: CPN, LH, AP and ANAN Least preferred stocks: ROJNA

Residential: We expect overall presales to improve significantly in 2H16, as 80% of the FY16 condo launches (Bt121bn out of Bt151bn) are scheduled to occur in 2H16. We roll over our target prices to FY17, and LH (BUY, Bt12.80 TP), AP (BUY, Bt8.40 TP) and ANAN (BUY, Bt5.60 TP) remain our top picks for the sector, thanks to the outstanding normalised profit growth next year (23% for LH , 33% for AP and 66% for ANAN). All three have the same theme which is the large amount of condo backlog to be realised as revenue next year.

Commercial: This property sub-sector should be the most resilient (within the sector) to the slowing economy, thanks to the strong recurring rental income base. In fact, the sector should benefit from the gradual recovery of domestic consumption. Our top pick is Central Pattana (CPN).

Industrial: Industrial land sales remained relatively weak YTD for most developers. Backlogs are therefore depleting and this suggests a potential drop in earnings for most industrial estate developers this year. For logistics warehouses, occupancy rates have shown some improvement but remain high at about 17%. Take-up, however, remains weak for ready-built factories and the recovery process is still slow.

Property Sector – earnings growth

Bloomberg Net profit (Btm) Net profit Growth (%)Code 15A 16F 17F 16F 17F

Residential Large & Mid-cap AP TB 2,623 2,707 3,524 3% 30%ANAN TB 1,207 1,408 2,337 17% 66%LH TB 7,920 7,612 8,758 -4% 15%LPN TB 2,413 2,617 2,313 8% -12%PS TB 7,680 7,515 7,717 -2% 3%QH TB 3,106 3,423 3,752 10% 10%SIRI TB 3,678 3,212 3,031 -13% -6%SPALI TB 4,349 4,821 5,368 11% 11%Small-capPF TB 361 421 530 17% 26%LALIN TB 355 365 375 3% 3%SC TB 1,895 2,015 2,055 6% 2%PRIN TB 66 121 149 82% 23%RML TB 901 807 672 -10% -17%Simple average 36,554 37,043 40,582 1% 10% Industrial AMATA TB 1,216 862 1,206 -29% 40% ROJNA TB 637 (126) 0 -120% -100% Simple average 1,853 736 1,206 -60% 64% Commercial CPN TB 7,880 9,219 10,394 17% 13% Simple average 7,880 9,219 10,394 17% 13%



(15.0)(10.0)(5.0)0.05.010.015.020.025.0

0.010.020.030.040.050.060.070.080.0

2010 2011 2012 2013 2014 2015 2016F

%Bt

EPS EPS growth

Market Focus

Monthly Strategy

Page 16

Stock Picks

BUY Bt7.55 Forecasts and Valuation

AP (Thailand) Pcl. (AP TB, TP: Bt9.00)Profitable JVs to boost bottom line

FY Dec (Btm) 2014A 2015A 2016F 2017FRevenue 23,149 22,079 22,145 24,690EBITDA 3,670 3,532 3,697 4,757Pre-tax Profit 3,242 3,322 3,341 4,217Net Profit 2,615 2,623 2,707 3,524Net Pft (Pre Ex.) 2,615 2,485 2,645 3,524Net Pft Gth (Pre-ex) (%) 29.9 (5.0) 6.4 33.2

EPS (Bt) 0.83 0.83 0.86 1.12EPS Pre Ex. (Bt) 0.83 0.79 0.84 1.12EPS Gth Pre Ex (%) 30 (5) 6 33Diluted EPS (Bt) 0.83 0.83 0.86 1.12Net DPS (Bt) 0.37 0.30 0.30 0.39BV Per Share (Bt) 5.04 5.61 6.17 6.99PE (X) 9.0 8.9 8.7 6.7PE Pre Ex. (X) 9.0 9.4 8.9 6.7P/Cash Flow (X) 24.5 nm nm nmEV/EBITDA (X) 10.3 10.7 11.5 9.5Net Div Yield (%) 5.0 4.0 4.0 5.3P/Book Value (X) 1.5 1.3 1.2 1.1Net Debt/Equity (X) 0.9 0.8 1.0 1.0ROAE (%) 17.5 15.7 14.6 17.0


JVs should be in the black from 4Q16F onwards. AP is expected to start seeing share of JV profit from 4Q16F, thanks to the completion of Aspire Ratchada-Wongsawang (Bt2.9bn, 60% sold) in 3Q16, Rhythm Sukhumvit 36-38 (Bt2.9bn, 93% sold) in 4Q16 and Aspire Sathorn-Thapra (Bt3.5bn, 100% sold) in 4Q16.

FY17F normalised profit to grow 33%. Two more JV projects worth a combined Bt4.2bn will be completed next year, leading us to expect FY17F share of profit from JVs of Bt750m, up from Bt110m in FY16F. The JV turnaround should boost FY17F normalised profit growth to 33%, up from a 6% increase in FY16F.

One of the top picks in the property sector. We have a FY17F TP of Bt9.00 (8x PE). Thanks to the expected presales recovery in 2H16F and 33% normalised profit growth in FY17F, AP is also one of our top picks. One major risk for AP is reliance on the transfers of the super-luxury Galerie rue de 39 (1% of FY16F transfers and 6% of FY17F transfers). If Galerie’s presales disappoint at its launch in 4Q16, we may have to cut FY17F earnings.


Asia Aviation (AAV TB, TP: Bt8.30) Flying higher

FY Dec (Btm) 2014A 2015A 2016F 2017FRevenue 23,149 22,079 22,145 24,690EBITDA 3,670 3,532 3,697 4,757Pre-tax Profit 3,242 3,322 3,341 4,217Net Profit 2,615 2,623 2,707 3,524Net Pft (Pre Ex.) 2,615 2,485 2,645 3,524EPS (Bt) 0.83 0.83 0.86 1.12EPS Pre Ex. (Bt) 0.83 0.79 0.84 1.12EPS Gth (%) 30 0 3 30EPS Gth Pre Ex (%) 30 (5) 6 33Diluted EPS (Bt) 0.83 0.83 0.86 1.12Net DPS (Bt) 0.37 0.30 0.30 0.39BV Per Share (Bt) 5.04 5.61 6.17 6.99PE (X) 9.0 8.9 8.7 6.7PE Pre Ex. (X) 9.0 9.4 8.9 6.7P/Cash Flow (X) 24.5 nm nm nmEV/EBITDA (X) 10.3 10.7 11.5 9.5Net Div Yield (%) 5.0 4.0 4.0 5.3P/Book Value (X) 1.5 1.3 1.2 1.1Net Debt/Equity (X) 0.9 0.8 1.0 1.0ROAE (%) 17.5 15.7 14.6 17.0


Profits and market share continue growing. AAV posted 1H16 core earnings growth of +69% y-o-y, as the passenger growth and cheaper fuel more than offset yield softening. Apart from an impressive result, we think AAV’s outlook remains promising as it 1) secures a prime position within the Thai LCC segment, 2) achieves record profits, 3) gains implicit value from the TAA stake, given the longer-term ambitions of the AirAsia group to consolidate its regional airlines, and 4) the potential synergies with King Power in the future.

86% core earnings growth in 2016 from volume focus and benign oil. Thai AirAsia (TAA) targets passenger carriage of 17m (+14.5%) in 2016, supported by its fleet growth plan of 51 by end-2016 (+6 from 45 as at end-2015) and five new deliveries per year going forward. Demand is also supported by the robust tourist arrival growth into Thailand, which was up 11.7% for 7M16. Also, we expect TAA’s cost/ASK to fall 7.5% in FY16F, led by cheaper fuel which has fallen to an average of US$49/bbl in 1H16.

Maintain BUY with TP at Bt8.3. Our valuation is based on 1.7x FY17F P/BV valuation (+2SD of mean P/BV vs 1.5x or +1SD previously) as we think AAV should command a premium with its emerging domestic market share dominance and its record profitability. Following our earnings upgrade, our TP rises to Bt8.3.

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CP ALL (CPALL TB, TP: Bt75.00) Persistent strength

FY Dec (Btm) 2014A 2015A 2016F 2017FRevenue 23,149 22,079 22,145 24,690EBITDA 3,670 3,532 3,697 4,757Pre-tax Profit 3,242 3,322 3,341 4,217Net Profit 2,615 2,623 2,707 3,524Net Pft (Pre Ex.) 2,615 2,485 2,645 3,524Net Pft Gth (Pre-ex) (%) 29.9 (5.0) 6.4 33.2EPS (Bt) 0.83 0.83 0.86 1.12EPS Pre Ex. (Bt) 0.83 0.79 0.84 1.12EPS Gth Pre Ex (%) 30 (5) 6 33Diluted EPS (Bt) 0.83 0.83 0.86 1.12Net DPS (Bt) 0.37 0.30 0.30 0.39BV Per Share (Bt) 5.04 5.61 6.17 6.99PE (X) 9.0 8.9 8.7 6.7PE Pre Ex. (X) 9.0 9.4 8.9 6.7P/Cash Flow (X) 24.5 nm nm nmEV/EBITDA (X) 10.3 10.7 11.5 9.5Net Div Yield (%) 5.0 4.0 4.0 5.3P/Book Value (X) 1.5 1.3 1.2 1.1Net Debt/Equity (X) 0.9 0.8 1.0 1.0ROAE (%) 17.5 15.7 14.6 17.0


We like CPALL for its strong growth outlook, underpinned by strong performance in convenience store (CVS) operations, its healthy margins and deleveraging efforts.

SSSG is expected to remain strong, thanks to its leading position in the CVS market and attractive products and successful stamp campaign.

CPALL’s margin should remain solid, fuelled by higher mix of high-margin products (such as ready-to-eat meals and personal care products) as well as lower logistics costs as a result of higher efficiency from distribution centre operations.

CPALL plans to open c.700 CVS stores in 2016 and targets to reach 10,000 stores by 2018. In 1H16, CPALL opened 420 outlets and its network stood at 9,252 stores as at end-2Q16. Recently, its management set a new milestone of 12,000 stores in the next three years.


CPN Retail Growth Property Fund (CPNRF TB, TP: Bt22.70)

Potential conversion to a REIT is a near-term catalyst

FY Dec (Btm) 2014A 2015A 2016F 2017FGross Revenue 3,185 3,038 3,450 3,609Net Property Inc 3,024 2,864 3,257 3,378Total Return 3,211 3,980 2,895 3,021Distribution Inc 2,684 2,421 2,821 2,906EPU (Bt) 1.62 1.80 1.31 1.37EPU Gth (%) (2) 11 (27) 4DPU (Bt) 1.33 1.01 1.15 1.18DPU Gth (%) 8 (24) 14 3NAV per shr (Bt) 12.5 13.2 13.4 13.6PE (X) 12.7 11.4 15.7 15.0Distribution Yield (%)

6.5 4.9 5.6 5.8

P/NAV (x) 1.6 1.6 1.5 1.5Aggregate Leverage (%)

6.4 6.0 5.8 5.4


Planning to convert into a REIT, pending approval by relevant authorities on the extension of tax waiver; this is a positive development

Expect a special dividend before the conversion

Looking to renovate three assets next year

Reiterate BUY with DCF-based TP of Bt22.70

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Digital Infrastructure Fund (DIFTB, TP: Bt15.3)Highly secured yield play

FY Dec (Btm) 2014A 2015A 2016F 2017FRevenue 4,318 5,890 6,494 7,012EBITDA 4,120 5,635 6,182 6,706Pre-tax Profit 17,931 4,853 5,485 6,005Net Profit 17,931 4,853 5,485 6,005Net Pft (Pre Ex.) 4,144 5,048 5,485 6,005Net Pft Gth (Pre-ex) (%) nm 21.8 8.6 9.5

EPS (Bt) 3.09 0.84 0.94 1.03EPS Pre Ex. (Bt) 0.71 0.87 0.94 1.03EPS Gth Pre Ex (%) nm 22 9 9Diluted EPS (Bt) 3.09 0.84 0.94 1.03Net DPS (Bt) 0.94 0.95 0.97 1.04BV Per Share (Bt) 12.4 12.3 12.4 12.4PE (X) 4.7 17.4 15.4 14.0PE Pre Ex. (X) 20.3 16.7 15.4 14.0P/Cash Flow (X) 26.5 13.7 16.9 13.9EV/EBITDA (X) 20.4 17.1 15.6 14.4Net Div Yield (%) 6.5 6.5 6.7 7.2P/Book Value (X) 1.2 1.2 1.2 1.2Net Debt/Equity (X) CASH 0.2 0.2 0.2ROAE (%) N/A 6.8 7.6 8.3


Thailand’s largest infrastructure fund, in terms of market cap, investing in the right to rental revenues of telecommunication towers, core fibre optic cable grids, and related transmission equipment.

DIF has secured long-term lease agreements for its initial asset portfolio with True Corp PLC and its subsidiaries. This should provide good visibility of future earnings and cash flows.

To benefit from 3G, 4G and fixed broadband network expansion.

New asset injections throughout 2015 should lead to 8% earnings growth and 6.7% dividend yield in FY16F.

Its income streams are guaranteed to 2025-2027.

Offering generous 2017 dividend yield of 7.0%.

Our Bt15.30 TP is based on DCF valuation.

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Revisions to recommendations

Company Revision to Rec. Revision Reason

Current Previous Date

Upgrade

SVI Pcl. Buy Hold 4 Aug 16 We started seeing signs of improvement in 2Q16, and the strong momentum should continue in 2H16F. The expected earnings turnaround leads us to upgrade the rating to BUY.

Downgrade TRC Construction Fully Valued Hold 4 Aug 16 Potential delay in potash mining project and weak outlook in

its construction business, given lack of new contract signed. Tipco Asphalt Hold Buy 10 Aug 16 Weak asphalt selling price and low asphalt demand in the

region. Interlink Communication Hold Buy 11 Aug 16 The share price has risen by 51% over the last two months

(ending 11 Aug), and there was no upside left to our FY17F target price of Bt22.20.

Samui Airport Property Fund

Hold Buy 15 Aug 16 The share price hit our TP of Bt26. It now offers decent 2017F dividend of 6.0%

Impact Growth Real Estate Investment Trust

Fully Valued Hold 16 Aug 16 We believe the share price has already reflected the growth potential of IMPACT. There is also no near-term catalyst as the asset acqusition is dealyed to 2017. Downgrade to FULLY VALUED.


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DBS Vickers recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

Completed Date: 1 Sep 2016 07:04:48 Dissemination Date: 6 Sep 2016 09:17:14

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Documents

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