SECTOR UPDATE 22 March 2011

Dry Bulk Shipping

At the mercy of Chinese and Japanese woes

UNDERWEIGHT

Maintained

Raymond Yap CFA +603 2084 9769 - raymond.yap@cimb.com / John Tang +852 2532 1112 john.tang@cimb.com

Maintain UNDERWEIGHT. The drop in capesize and panamax rates last week
reflected not only the steel mill and coal-fired power plant shutdowns in Japan but also reduced iron ore demand in China due to tightening credit availability. The smaller vessel classes appeared immune, benefiting from grain shipments. We remain UNDERWEIGHT because of the substantial overcapacity even though medium-term demand will rebound with Japanese reconstruction. We are Underperforms on STXPO (TP: S$11.90), PSL (TP: THB18.00), and Maybulk (TP: RM2.50) and are Neutral on TTA (TP: THB23.70) and Pacific Basin (TP: HK$5.63). Drop in capesize rates mirror worries in China... A 15% wow drop in average capesize TCE and a 1.7% drop in the panamax average TCE dragged the Baltic Dry Index down 2% last week. But it would have been worse if the supramax and handysize rates had not risen 3-3.7%. Lower demand for iron ore and coal from both China and Japan contributed to the falls. In China, iron ore demand has been constrained by the lower availability of credit to finance production at the steel mills, high steel inventories and falling steel prices. Steel mills in China began destocking over the past few weeks and the spot price of iron ore has declined 14% since late February. In the short term, some restocking demand can be expected. However, the medium-term outlook looks poor because property prices are expected to drop as government measures to dampen real estate demand through lower margin of financing and administrative quotas take effect. Developers such as China Vanke and China Evergrande Real Estate are already cutting prices. and worries in Japan. Panamax spot rates for the shipping of thermal coal from Newcastle to Japan fell 20% wow, reflecting the continuing shutdown of several coal-fired power plants although some have restarted. Tohoku Electric declared force majeure last week, telling suppliers that it was unable to accept some previously contracted coal deliveries. Iron ore cargoes were also diverted to Qingdao as the production of Japanese steel mills such as Nippon Steel, JFE Steel and Sumitomo Metal Industries remain constrained. Vale and Rio Tinto were also absent from the spot chartering market last week. Bunker costs add to the negatives. While spot capesize rates from Western Australia to Beilun dropped 12.7% last week to US$7.25/tonne, the time-charter equivalent (TCE) rate on the same route fell 45.6% to US$6,212/day. This probably reflects the unstoppable upward march of bunker fuel, which has risen 28% YTD to US$661/tonne and is eating into earnings net of bunker. Supramax and handysize rates relatively immune. The continuing rise in the rates of the smaller vessel classes reflects their greater diversity of cargoes. Although demand to ship Indian iron ore cargoes to China has been relatively quiet, rates are supported by grain cargoes from the Atlantic and Australia to Asia, and by Indian demand for Indonesian coal. In the medium term, Japanese reconstruction will increase Japanese log demand.

Sector comparisons
Bloomberg ticker 2343 HK STX SP PSL TB TTA TB MBC MK Price (Local) 4.71 11.12 17.60 18.50 2.53 Target price Mkt cap (Local) (US$ m) 5.63 1,157 11.90 1,727 18.00 601 23.70 423 2.50 829 Core P/E (x) CY2011 CY2012 20.0 25.6 46.8 35.0 19.1 20.6 nm 20.7 17.8 18.2 26.1 24.0 3-yr EPS CAGR (%) (21.2) 23.7 25.9 408.5 (10.4) 86.4 P/BV (x) CY2011 0.7 0.8 1.0 0.5 1.5 0.9 ROE (%) CY2011 3.7 1.7 5.6 0.8 8.7 4.1 Div yield (%) CY2011 3.0 0.5 1.3 0.4 3.7 1.8

Pacific Basin STX Precious Shipping TTA Maybulk Simple average

Recom. N U U N U

O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy and TS = Trading Sell Source: Company, CIMB Research

Please read carefully the important disclosures at the end of this publication.

REGIONAL

Freight rates
Figure 1: Dry bulk freight rate trends
Last week Qtr-to-date 18-Mar-11 11-Mar-11 WoW (%) 1Q11 1,531 1,562 -2.0% 1,352 1,687 1,891 -10.8% 1,575 2,094 2,132 -1.8% 1,799 1,574 1,529 +2.9% 1,351 755 730 +3.4% 721 9,369 20,862 6,013 6,212 8,845 6,068 16,821 11,276 5,316 16,458 11,311 11,038 27,247 5,645 11,428 12,657 11,690 17,115 19,666 5,503 15,985 10,909 -15.1% -23.4% +6.5% -45.6% -30.1% -48.1% -1.7% -42.7% -3.4% +3.0% +3.7% 7,938 21,089 2,534 6,019 9,210 3,545 14,439 11,875 3,020 14,083 10,549 4Q10 2,326 3,474 2,243 1,647 879 33,267 45,842 32,165 28,360 25,483 27,129 17,900 16,325 7,791 17,191 12,859 3Q10 2,358 2,858 2,701 1,894 1,035 26,301 40,259 24,449 23,775 21,080 19,204 21,744 21,087 11,384 19,837 15,234 2Q10 3,311 3,893 3,827 2,643 1,373 37,827 53,960 38,181 34,674 32,623 30,301 30,821 29,068 18,621 27,677 20,019 Yr-to-date 2011 1,352 1,575 1,799 1,351 721 7,938 21,089 2,534 6,019 9,210 3,545 14,439 11,875 3,020 14,083 10,549 2010 2,756 3,475 3,113 2,148 1,125 32,875 47,932 32,667 29,611 28,070 26,584 24,858 23,686 13,330 22,359 16,384 2009 2,602 4,120 2,396 1,655 790 39,065 58,087 43,909 39,103 29,524 34,574 19,298 16,553 10,633 16,946 11,345

Baltic Dry Index Baltic Capesize Index Baltic Panamax Index Baltic Supramax Index Baltic Handysize Index Capesize average TCE (US$/day) Iron ore Tubarao-Beilun, 165k dwt Tubarao-Rotterdam, 165k dwt Western Aust ralia-Beilun, 165k dwt Goa-Beilun, 145k dwt Coal Queensland-Japan, 145k dwt Panamax average TCE (US$/day) Coal Newcastle-Japan, 70k dwt Richards Bay-Rotterdam, 70k dwt Supramax average TCE (US$/day) Handysize average TCE (US$/day) Capesize spot rates (US$/tonne) Iron ore Tubarao-Beilun, 165k dwt Tubarao-Rotterdam, 165k dwt Western Aust ralia-Beilun, 165k dwt Goa-Beilun, 145k dwt Coal Queensland-Japan, 150k dwt Panamax spot rates (US$/tonne) Coal Newcastle-Japan, 70k dwt Richards Bay-Rotterdam, 70k dwt

19.00 9.40 7.25 9.25 9.30 16.75 15.60

21.50 9.45 8.30 10.50 10.40 21.00 16.00

-11.6% -0.5% -12.7% -11.9% -10.6% -20.2% -2.5%

18.49 8.25 6.95 9.05 8.19 16.20 13.83

25.86 13.82 10.29 13.08 12.22 17.12 14.82

23.10 11.58 9.07 11.37 10.12 19.07 16.12

28.23 14.77 11.27 15.05 12.68 23.55 20.74

18.49 8.25 6.95 9.05 8.19 16.20 13.83

26.19 13.66 10.35 13.69 11.87 20.68 17.72

28.10 15.10 11.32 13.31 12.40 15.35 14.40

Source: Bloomberg, Baltic Exchange, Clarkson Research Services, CIMB Research

Charts
Figure 2: Baltic Dry Indices Baltic Dry, Capesize and Panamax Indices
10,000 8,000 6,000 4,000 2,000 0 J F M AM J J A S O N D J F M AM J J A S O N D J F M 09
Source: Bloomberg, CIMB Research

Baltic Supramax and Handysize Indices

5000 4000 3000 2000 1000 0
3,500 3,000 2,500 2,000 1,500 1,000 500 0 J F M A M J J A S O N D J FM A M J J A S ON D J FM 09 10 11 Baltic Supramax Index (LHS) Baltic Handy size Index (RHS) 2,000 1,750 1,500 1,250 1,000 750 500 250 0

Baltic Capesize Index Baltic Panamax Index Baltic Dry Index (RHS)

10

11

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Figure 3: Average bulk time charter equivalent rates (US$/day) Baltic Capesize and Panamax TCE
100,000 80,000 60,000 40,000 20,000 0 J FMAM J J A S O ND J FMA M J J A S O ND JFM 09
Source: Baltic Exchange, CIMB Research

Baltic Supramax and Handysize TCE

35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 J FM AM J J A S O N D J F M A M J J A S O N D J FM 09 10 11 Baltic Supramax TCE/day Baltic Handy size TCE/day

Baltic Capesize TCE/day Baltic Panamax TCE/day

10

11

Figure 4: Baltic Dry Indices long-term view

20,000 15,000 10,000 5,000 0 J FMAM J JASONDJ FMAM J JASONDJ FMAM J JASONDJ FMAM J JASONDJ FMAM J JASONDJ FMAM J JASONDJ FMAM J JASONDJ FMAM J JASONDJ FM 03
Source: Bloomberg, CIMB Research

Baltic Baltic Baltic Baltic

Capesize Index Panamax Index Supramax Index Handy size Index

04

05

06

07

08

09

10

11

Figure 5: Chinas iron ore imports, port inventories, domestic production and import dependency Iron ore imports Feb: 48.6mmt (-1.5% yoy)
80 70 60 50 40 30 20 10 0 J A J O J A J OJ A J OJ A J OJ A J OJ A J OJ 05 06 07 08 09 10 11 China iron ore imports (mmt) Yoy (%) 100% 80% 60% 40% 20% 0% -20% -40%

Iron ore port inventories Mar 18: 83.1mmt (-0.0mmt wow)

90 85 80 75 70 65 60 55 50 JulA S O N D J F M AM J J A S O ND J F M A M J J A S O N D J F M 08 09 10 11 China ports iron ore inv entories (mmt)

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Domestic production Feb: 72.4mmt (+17.8% yoy)

120 100 80 60 40 20 0 J A J OJ A J OJ A J OJ A J OJ A J OJ A J OJ 05 06 07 08 09 10 11 Domestic iron ore production in China (mmt) Yoy (%) 70% 60% 50% 40% 30% 20% 10% 0% -10% -20%
80% 70% 60% 50% 40% 30%

Iron ore import dependency Jan: 89.8% (+2.2ppt mom)

JA J OJ A J O JA J OJ A JO JA J OJ A JO JA J OJ 04 05 06 07 08 09 10

Source: Bloomberg, CIMB Research

Figure 6: Crude steel production (mmt) China Jan: 52.8mmt (+0.5% yoy)
60 55 50 45 40 35 30 25 20 J A J OJ A J OJ A J O J A J O J A J OJ A J OJ 05 06 07 08 09 10 11 China crude steel production (mmt) Yoy (%) 50% 40% 30% 20% 10% 0% -10% -20%
40 30 J A J OJ A J OJ A J OJ A J O J A J O J A J OJ 05 06 07 08 09 10 11 60 50 80 70

Global ex-China Jan: 66.6mmt (+9.3% yoy)

Global crude steel production - ex China (mmt) Yoy (%) 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50%

Japan, Korea and Taiwan Jan: 17.0mmt (+13.8% yoy)

18 17 16 15 14 13 12 11 10 9 8 05 06 Crude steel production - JP+KR+TW (mmt) Yoy (%) 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% 11
13 12 11 10 9 8 7 6 5 4 05 06

Euro 5 Jan: 9.3mmt (+4.5% yoy)

Crude steel production - Euro 5 (mmt) Yoy (%) 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% 11

J A J O J A J O J A J O J A J OJ A J OJ A J OJ 07 08 09 10

J A J O J A J O J A J O J A J OJ A J OJ A J OJ 07 08 09 10

Source: Bloomberg, CIMB Research Note: Euro 5 countries are Germany, Italy, France, Spain and UK.

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Figure 7: Shanghai weekly steel inventories (mmt) Shanghai long product inventory Mar 11: 0.733mmt (-0.01mmt wow)
1.2 1.0 0.8 0.6 0.4 0.2 0.0 JASO N DJ F MA MJJASO NDJFM A MJJASO N DJF M A MJJASON DJF M AMJJA SON DJF M 06 07 08 09 10 11 Shanghai long product inv entory (mmt) Yoy (%) 200% 150% 100% 50% 0% -50% -100%
3.0 2.5 2.0 1.5 1.0 0.5 0.0 JASO N DJF MA MJJASO NDJFM A MJJASON DJF M A MJJASON DJF M AMJJASON DJF M 06 07 08 09 10 11

Shanghai hot rolled and cold rolled sheet inventory Mar 11: 2.31mmt (+0.01mmt wow)
Shanghai HR/CR sheet inv entory (mmt) Yoy (%) 350% 300% 250% 200% 150% 100% 50% 0% -50% -100%

Source: Bloomberg, CIMB Research

Figure 8: Coal imports (mmt) China Jan: 16.56mt (+3.0% yoy)

21 18 15 12 9 6 3 0 J A J O J A J O J A J O J A J O J A J OJ A J O J A J O J A J O J 03 04 05 06 07 08 09 10 11 China's coal imports (mmt) Yoy (%) 600% 500% 400% 300% 200% 100% 0% -100%

Japan Jan: 15.6mmt (+4.9% yoy)

20 18 16 14 12 10 J A J O J A J O J A J O J A J O J A J O J A JO J A J O J A J O J 03 04 05 06 07 08 09 10 11 Japan's coal imports (mmt) Yoy (%) 60% 40% 20% 0% -20% -40%

Source: Bloomberg, CIMB Research

Figure 9: Chinese automobile and white goods production (units) Auto production Feb: 1.294m (+5.5% yoy)
2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 0 03 04 05 Automobile production (000) Yoy (%) 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% 10 11
30,000 25,000 20,000 15,000 10,000 5,000 0 J A J OJ A J O J A J OJ A J OJ A J O J A J O J A J OJ A J OJ 03 04 05 06 07 08 09 10 11

White goods production Feb: 17.7m (+15.5% yoy)

White goods production (000) Yoy (%) 100% 80% 60% 40% 20% 0% -20% -40% -60%

J A J O J A J OJ A J O J A J OJ A J O J A J OJ A J O J A J OJ 06 07 08 09

Source: CEIC, CIMB Research

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Figure 10: Property market indicators in China Property sales Dec: 190.0m sq m (+16.2% yoy)
200 150 100 50 0 J A J O J A J O J A J O J A J OJ A J O J A J O J A J O J A J O 03 04 05 06 07 08 09 10 Property sales (sqm mil) Property sales y oy % (RHS) 120% 100% 80% 60% 40% 20% 0% -20% -40% -60% 160 140 120 100 80 60 40 20 0 J A J OJ A J O J A J O J A J O J A J O J A J O J A J OJ A J O 03 04 05 06 07 08 09 10

Housing starts Dec: 147.5m sq m (+5.5% yoy)

Housing Start (sqm mil) Housing Start y oy % (RHS) 100% 80% 60% 40% 20% 0% -20% -40%

Floor space under construction Feb: 3.92bn sq m (+33.9% yoy)

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 J A JO JA J OJ A J OJ A JO JA JO J A J OJ A JO J 04 05 06 07 08 09 10 11 Floor space under construction - y td (m sq m) Yoy (%) 50% 40% 30% 20% 10% 0%

Real estate investment Feb ytd: Rmb425bn (+35.2% yoy)

6,000 5,000 4,000 3,000 2,000 1,000 0 J A JO J A J OJ A J OJ A J O J A JO J A J OJ A J O J 04 05 06 07 08 09 10 11 Real estate inv estment - y td (Rmb bn) Yoy (%) 70% 60% 50% 40% 30% 20% 10% 0%

Land area developed Dec: 212.5m sq m (-7.6% yoy)

300 250 200 150 100 50 0 JA JOJA JOJA JOJA JOJA JOJA JOJA JO 04 05 06 07 08 09 10 Land area dev eloped - y td (m sq m) Yoy (%) 80% 60% 40% 20% 0% -20% -40% -60%

Real estate climate index Feb: 102.9

108 106 104 102 100 98 96 94 92 90 04 05 Real estate climate index Mom (%) 3% 2% 1% 0% -1% -2% -3% JA JOJA JOJA JOJA JOJA JOJA JOJA JOJ 06 07 08 09 10 11

Source: soufun, CEIC, CIMB Research

Figure 11: Bulk commodity prices

Last week Qtr-to-date 18-Mar-11 11-Mar-11 WoW (%) 1Q11 170.50 175.50 -2.8% 185.68 196.59 196.79 -0.1% 193.68 148.19 149.24 -0.7% 147.89 163.83 166.33 -1.5% 163.32 4,713 4,736 5,635 4,688 137.95 140.15 4,628 4,630 5,625 4,630 137.95 141.25 +1.8% +2.3% +0.2% +1.3% +0.0% -0.8% 4,764 4,775 5,650 4,779 137.57 137.42 4Q10 164.50 176.59 140.79 159.96 4,433 4,382 5,391 4,538 123.03 119.59 3Q10 143.77 150.96 159.07 172.10 4,092 4,192 5,301 4,207 113.06 104.15 2Q10 165.58 168.78 134.46 142.64 4,267 4,425 5,947 4,297 110.94 112.09 Yr-to-date 2011 185.68 193.68 147.89 163.32 4,764 4,775 5,650 4,779 137.57 137.42 2010 151.92 154.95 126.67 140.63 4,167 4,241 5,600 4,244 115.09 110.70 2009 84.65 91.39 80.48 94.23 3,671 3,724 4,768 3,647 92.25 84.16

China: Iron ore spot cfr imports (US$/ton) China: Domestic iron ore (US$/ton) China: Australia iron ore ctt (US$/ton) China: Brazil iron ore ctt (US$/ton) China: Rebar (Rmb/ton) China: HRC (Rmb/ton) China: CRC (Rmb/ton) China: Wire rod (Rmb/ton) Qinhuangdao 6800 kc coal FOB (US$/ton) Newcastle 6700 kc coal CFR (US$/ton)
Source: Bloomberg, Metal Bulletin, Antaike, CIMB Research

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Figure 12: Iron ore import prices (cfr China) and China domestic iron ore prices (US$/MT)
220 200 180 160 140 120 100 80 60 40 J J A SON D J F MAM J J A S O ND J F M AM J J A S O N D J F MA M J J AS OND J FM AM J J A S ON D J F MA M J J AS O ND J FM 05 06 07 08 09 10 11 India imports 63.5% spot cfr (US$/MT) China domestic 66% incl. 17% VAT Australia imports 63.5% contract + freight Brazil imports 67% contract + freight

Source: Bloomberg, Antaike, CIMB Research

Figure 13: China domestic steel prices (Rmb/MT)

8,000 7,000 6,000 5,000 4,000 3,000 2,000 J FM AM J J AS OND J FMAM J J A SON D J FM AM J J ASOND J FMAM J J ASOND J FM AM J J AS OND J 06 07 08 09 10 11 China domestic China domestic China domestic China domestic rebar (Rmb/MT) HR sheet CR sheet high-speed w ire rod

Source: Bloomberg, Antaike, CIMB Research

Figure 14: China Qinhuangdao coal price and Newcastle coal price cfr China (US$/MT)
200 175 150 125 100 75 50 25 0 J F M A M J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M A M J J A S O N D J 07 08 09 10 11 Qinhuangdao 6800 kc coal spot FOB price (US$/MT) New castle 6700 kc steam coal spot CFR price (US$/MT)

Source: Bloomberg, The McCloskey Group, CIMB Research

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Valuation and recommendation

Maintain UNDERWEIGHT. Dry bulk sector demand and supply fundamentals look weak over the next three years due to excessive newbuilding deliveries and the negative impact of exogenous events like bad weather on commodity supply. We expect the overall bulk fleet to expand 15% in dwt terms this year and 12% in 2012, which is significantly higher than the demand growth of 4-6%. We maintain our forecast of a 37% drop in BDI to 1,729 points in 2011, followed by a 17% decline to 1,441 points in 2012 and a 4% dip to 1,388 points in 2013. As dry bulk freight rates are not expected to stabilise until 2013, we believe investors will give the sector a miss for the next two years. As usual, freight rates are likely to remain volatile in 2011. This may provide the opportunity for some trading but risk-averse investors should avoid the sector. We have two Neutral calls, i.e. Pacific Basin (TP: HK$5.63) and TTA (TP: THB23.70) on valuation grounds, and Underperforms on STXPO (TP: S$11.90), Precious Shipping (THB18.00), and Maybulk (TP: RM2.50). We continue to prefer the container sector for exposure to shipping.
Figure 15: Sector comparisons
Bloomberg ticker Dry bulk group STX Pan Ocean Pacific Basin Thorese n Th ai Precious Shipping Ma laysia n Bulk Chin a COSCO Chin a Shipping De vt Sinotrans Shipping Sincere Navigatio n U-Ming Ma rine Simple average STX SP 2343 HK TTA TB PSL TB MBC MK 1919 HK 1138 HK 368 HK 26 05 TT 26 06 TT Target Price Mkt c ap (US$ m) 1,7 27 1,1 57 4 23 6 01 8 29 14,2 86 4,5 72 1,3 00 6 18 1,7 63 Core P/E (x ) CY2011 CY201 2 46.8 20.0 (1 20.9) 19.1 17.8 11.2 11.0 11.6 8.1 14.4 3.9 35.0 25.6 20.7 20.6 18.2 9.3 8.9 9.9 9.4 16.1 17.4 3-yr EPS CAGR (%) 179.7 (21.2) (10.2) (24.5) (6.9) (16.6) 41.4 17.7 P/BV (x) CY20 11 0.8 0.7 0.5 1.0 1.5 1.3 1.0 0.6 1.2 1.7 1.0 ROE Div (%) yield (%) CY2011 CY2011 1 .7 3 .7 0 .8 5 .6 8 .7 10 .6 9 .7 5 .6 14 .5 12 .1 7 .3 0 .5 3 .0 0 .4 1 .3 3 .7 2 .0 2 .4 4 .0 6 .8 4 .2 2 .8

Recom. U N N U U NR NR NR NR NR

Pric e

S$1 0.68 S$ 11.90 HK$ 4.67 HK$5.63 THB1 8.10 THB23.70 THB1 7.50 THB18.00 RM2.53 RM2.50 HK$ 7.76 HK$ 8.45 HK$ 2.54 TWD3 2.20 TWD6 0.80 -

O = Outperform, N = Neutral, U = Underperform, NR = Not Rated, TB = Trading Buy and TS = Trading Sell Source: Company, CIMB/CIMB-GK estimates, Bloomberg

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This publication is strictly confidential and is for private circulation only to clients of CIMBI. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBI. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens wherever they are domiciled or to Indonesia residents except in compliance with applicable Indonesian capital market laws and regulations. Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (CIMB). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB. [ 9 ]

New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of their business, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act 1978. Singapore: This report is issued and distributed by CIMB Research Pte Ltd (CIMBR). Recipients of this report are to contact CIMBR in Singapore in respect of any matters arising from, or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBR has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only. 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RECOMMENDATION FRAMEWORK #1 ** STOCK RECOMMENDATIONS

OUTPERFORM: The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 12 months. NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant benchmark's total return. UNDERPERFORM: The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 12 months. TRADING BUY: The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 3 months. TRADING SELL: The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 3 months.

SECTOR RECOMMENDATIONS
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 12 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 3 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 3 months.

* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

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RECOMMENDATION FRAMEWORK #2 ** STOCK RECOMMENDATIONS

OUTPERFORM: Expected positive total returns of 15% or more over the next 12 months. NEUTRAL: Expected total returns of between -15% and +15% over the next 12 months.

SECTOR RECOMMENDATIONS
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +15% or better over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i) an equal number of stocks that are expected to have total returns of +15% (or better) or -15% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +15% to -15%; both over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -15% or worse over the next 12 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +15% or better over the next 3 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -15% or worse over the next 3 months.

UNDERPERFORM: Expected negative total returns of 15% or more over the next 12 months. TRADING BUY: Expected positive total returns of 15% or more over the next 3 months. TRADING SELL: Expected negative total returns of 15% or more over the next 3 months.

** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

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