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CapitaMalls Asia

Objective Opinion for Investment Analysis

Issued by Acacia Research

All Rights Reserved

CapitaMalls Asia
INITIATE COVERAGE
FINANCIAL|REAL ESTATE| SINGAPORE

$1.88
CMA SP EQUITY

11 November 2011

OVERWEIGHT

Real Estate | Acacia Research


Lansford Loo, lansford.loo1@gmail.com David Wu, david.wu.acacia@gmail.com

INVESTMENT SUMMARY
Growing Exposure to Emerging Markets With CAGR in Net Leasable Area (NLA) of 15.4% in China and 46.7% in India over the past 2 years, Capitamalls Asia (CMA) is fast gaining exposure to the emerging markets of China and India, implying an expansion in business operations towards the two biggest growth engines in real estate of the future. Returns may be further supplemented by the increase in expected rental rates and possible capital appreciation. Unique Capital Structure and Business Model

Price Performance
3.5 Thousands 3 2.5 2 1.5 1 0.5 0 STI CMA 3.5 3 2.5 2 1.5 1 0.5 0

Stock Data
Price Price Target 52 Week Range Volume Traded ('000) Average 3-Month Volume ('000) Issued Capital SGX (mln. shares) Market Cap ($mln) Float (%) Reuters Code ISIN Code Bloomberg Code

SGX (SGD) HKEX (HKD) 1.35 8.00 1.87 1.13 - 2.18 7.76 8.75 6,515 50000 7,463 3,885 5,303 33990 34.45 CMAL.SP 6813.HK JS8:SP 6813.HK CMA SP 6813.HK

CMA, being an integrated real estate firm with businesses in property development, property management, and investments through REITs, has the capability of low-cost financing through debt. CMAs current low D/E ratio of 0.1178 allows it much potential to leverage, with much returns being expected from investments in projects with IRR greater than its marginal cost of debt of 1.68%. Deep Discount from Valuation

Forecasts and Valuations


Revenue EBITDA Pre Tax Profit Net Profit EPS EPS Growth (%) DPS/Share BV/Share P/E Net Dividend Yield P/Book Value Net Debt/Equity ROE 2011F 235151 494816 457019 416462 0.11 -3.06% 0.03 1.503732 12.59359 2.22% 0.897766 0.059 7.13% 2011F 2010 245402 479638 446829 429507 0.11 -45.88% 0.02 1.500649 12.20795 1.48% 0.899611 CASH 7.37% 2010 2009 228946 533728 409683 393656 0.20 73.07% 0.01 0.283388 6.60672 0.74% 4.763785 CASH 7.21% 2009 2008 205210 310213 141402 118065 0.12 -58.33% 0.06 1.53292 11.43438 4.44% 0.880672 CASH 7.70% 2008

CMAs current assets are trading at a discount to its Gross Asset Value (GAV). Furthermore, premiums for management fees and revaluation potential are not being pegged to the asset value, resulting in a deep discount.
Global Index Performance
Thousands 35 30 25 20 15 10 5 0 2-Jan-07 2-Jan-08 2-Jan-09 2-Jan-10 2-Jan-11 STI index nky index

faspr index sensex index

Hsi index fbmklci index

TABLE OF CONTENTS
Investment Summary .................................................................................................. 1 Table of Contents ......................................................................................................... 2 Investment Rationale .................................................................................................. 4 Unique Capital Structure and Business Model ....................................................... 4 Joint Ventures and Private Funds ..................................................................... 4 Leverage Ability .................................................................................................. 4 Growing Exposure to Emerging Markets ............................................................... 5 Changes in Net Leasable Area ........................................................................... 5 Changes in Geographical Revenue Breakdown .............................................. 6 Industry Outlook in China ......................................................................................... 7 Industry Outlook in Singapore .................................................................................. 8 Price, Rental and Vacancy Rates................................................................................ 8 Model 1- Regression ........................................................................................... 9 Model 2 - ARIMA ................................................................................................ 9 Overall Model Results ......................................................................................... 9 Deep Discount from Valuation ................................................................................ 10 Trading Below Market Value ........................................................................... 10 Sum of the Parts ......................................................................................................... 11 Approach ............................................................................................................ 11 Property-income-based Valuation ......................................................................... 12 Singapore ............................................................................................................ 12 China ................................................................................................................... 12 Malaysia .............................................................................................................. 13 Japan .................................................................................................................... 13 India ..................................................................................................................... 13 AM Valuation 2 Stage FCFF Approach ............................................................... 14 High Growth ...................................................................................................... 15 Stable Growth..................................................................................................... 16 Weighted-Average Cost-of-Capital ................................................................ 17 Bottoms-up Beta................................................................................................. 18 2 Stage FCFF Calculation .................................................................................. 19 Scenarion-Weighted Revised-Net-Asset-Valuation...................................... 20 Relative Valuation ..................................................................................................... 21 Sypnosis ............................................................................................................. 21 Defining the Multiple ....................................................................................... 21 Describing the Multiple ................................................................................... 22 Analysis of the Multiple .................................................................................. 22 Application of the Multiples ........................................................................... 23
2

Value Enhancement Strategies ................................................................................ 25 Increase Reinvestment Rate ............................................................................. 25 Increase Leverage .............................................................................................. 25 Divest or Liquidate Inefficient Assets............................................................. 25 Reconcilliation ............................................................................................................ 26 Relative Valuation Projected Value ................................................................. 26 SOTP Valuation Projected Value ...................................................................... 26 Comparison ......................................................................................................... 27 Conclusion .................................................................................................................. 28 Appendix I: Relative Valuation ............................................................................... 29 Appendix II: List of Comparables (Simple Average) .......................................... 30 Appendix III: List of Comparables (Regression) .................................................. 32

INVESTMENT RATIONALE
Unique Capital Structure and Business Model JOINT VENTURES AND PRIVATE FUNDS CMAs unique capital structure and business model has reaped numerous advantages for the company, especially in the area of financing. CapitaMall Asia is a fully integrated real estate company with a separation of focus on various aspects of the industry. It manages a total of 94 retail properties in 49 cities in Singapore, Malaysia, China, Japan and India. CMA is concurrently a real estate developer, a property portfolio manager and also an asset and investment manager with 3 Real Estate Investment Trusts (REITs). Through its exclusive business model, 27% of asset properties are under CMAs direct control, with the remaining 73% controlled through joint ventures, private funds and REITs. These JVs and funds are platforms from which CMA derives funds from. These additional funds, enhanced through capital recycling, amplifies CMAs ability to lever up on size and scale, from a current gearing ratio of 16.96% up to an optimal debt-equity mix of 0.30x 0.50x
LEVERAGE ABILITY

Furthermore, with its debt-to-equity ratio at only 20.4%, any additional capital raised would be at its marginal cost of debt of 1.68%. At this early stage of debt financing, CMAs adequate amount of equity allows it to lever up without incurring too much risk. With a WACC of 9.43%, a large majority of projects with IRR greater than 10% are justifiable investments with expected positive cashflows that will stimulate and sustain CMAs long-term growth and expansion.

INVESTMENT RATIONALE
Growing Exposure to Emerging Markets CHANGES IN NET LEASABLE AREA CMAs long-term development strategy has been to expand across the developing markets of Asia, especially China and India; resulting in the high CAGR of Net Leasable Area (NLA) of 15.45% in China, and 46.7% in India. This increase in NLA is further in line with CMAs latest reiteration of its expansion plan to penetrate into Chinas 2ndtier cities and strengthen its presence. With much of recent investments being focused on China and India, CMA has been less active in Singapore, increasing its NLA by only 2.4% annually; while there has actually been a slight decrease in NLA in Japan, signifying CMAs gradual shift to emerging markets. This shift is further justified by the saturation of markets and high concentration of retail spaces in developed markets and 1st-tier cities, limiting CMAs growth potential.
40.0% 20 18 16 14 12 10 8 6 4 2 0 Millions

Average Growth of 15.45%


31/12/2009 30/6/2010 31/12/2010 30/6/2011

31/12/2009 - Proportion of NLA

China 62%

Malaysia 8% Other 8% S'pore 22%

Japan 6%

India 2%

Property Value Growth 2009-1H 2011


35.0% 30.0% 25.0% 20.0% CAGR 15.0% 10.0% 5.0% 0.0% Singapore -5.0% China Malaysia Japan India S'pore 19% China 62% Malaysia 11% Other 8% Japan 5%

30/6/2011 - Proportion of NLA

India 3%

INVESTMENT RATIONALE
Growing Exposure to Emerging Markets CHANGES IN GEOGRAPHICAL REVENUE BREAKDOWN RENTAL INCOME
8 7 6 5 4 3 2 1 0 q4 07 q4 08 q4 09 q4 10

Rental in Tier 2 Cities USD psm/d


tianjin shenzhen dalian hangzhou chengdu

As CMA is gaining exposure to the emerging markets of China, in recent years, there has also been a shift in CMAs strategy to expand into Chinas 2nd-tier cities, especially with the 1st-tier cities edging towards saturation. The high momentum of growth in the retail markets in China has coincided with a stabilization of occupancy rates in the 2nd-tier cities in China. In many inland cities of China, there has been a shrink in vacancy rate due to the emergence of new shopping-centers and retail stores. Furthermore, with many new projects in China still under construction, there has been a temporal supply shortage of rental space. This shortage, coupled with the increase in demand for retail space as the retail market grew, has driven up rental rates, especially in Chinas 2nd tier cities. Rental rates in Chinas major cities Beijing and Shanghai had also remained exponentially high, enabling CMA to lease out retail spaces of its 50 properties at a higher rate; signifying a more profitable outlook in the near future.

9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0%

Rental Growth Rates

CAGR

INVESTMENT RATIONALE
CAPITAL APPRECIATION Appreciation of properties had also boosted CMAs profits with annual marked-to-market revaluation gains on real estate. The CAGR for property value in China amounted to a high of 58.15% for the past 18 months. Furthermore, with CMAs acquisition strategy in China being that of purchase of lower relative valuation properties in lower-tier cities, there is much potential for further revaluation gains. Such a strong revaluation gain can be attributed to improved operational efficiencies for CMA, and the further compression of capitalization rate. The improvement of infrastructure and development of logistical and communications network in Chinas 2nd-tier cities can be regarded as one of the key factors below this reduction in cap rate, leading to the resultant gear-up of CMAs asset-base; and the boosting of income from excessive revaluation surpluses. Industry Outlook China VACANCY AND RENTAL RATES 2003-2013F
8 7 6 5 4 3 2 1 0 q4 03 q4 04 q4 05 q4 06 q4 07 q4 08 q4 09 q4 10 5 0 20 15 10 30 25 beijing rental shanghai rental guangzhou rental beijing vacancy shanghai vacancy guangzhou vacancy SUMMARY OUTPUT - Effective Rental Coefficients Intercept 0.28507 Unemployment (%) 0.1192 Nominal GDP (bln US$) 0.00099 12 10 8 6 4 2 0 2010e 2011e

2004

2012f

Rental rates in China have experienced exponential growth in the last decade. With a CAGR of 14.8% in the last 8 years on effective rental (nominal rental times vacancy), this trend of growth seems likely to increase, especially with the possibility of a hard-landing scenario relatively remote at 20%.

Effective Rental Index BMI - China Scenarios probability 2010 2011e 2012f 2013f 70% Priv. Consump. 8.7 9 8.5 8.4 Base GFCF 16.4 10.8 7.5 6.3 Real GDP 10.3 9.2 8.1 7.5 20% Priv. Consump. 8.7 9 -0.3 5 Bear GFCF 16.4 10.8 -13 2 Real GDP 10.3 9.2 -5.5 3.3 10% Priv. Consump. 8.7 9 9.5 9.5 Bull GFCF 16.4 10.8 9.5 9 Real GDP 10.3 9.2 9.2 9.1

2013f

2003

2005

2006

2007

2008

2009

1.5 1 0.5 0 -0.5 -1 250 200 150 100 50 0 2000/01 2000/08 2001/03 2001/10 2002/05 2002/12 2003/07 2004/02 2004/09 2005/04 2005/11 2006/06 2007/01 2007/08 2008/03 2008/10 2009/05 2009/12 2010/07 2011/02 2011/09 2000/01 2000/09 2001/05 2002/01 2002/09 2003/05 2004/01 2004/09 2005/05 2006/01 2006/09 2007/05 2008/01 2008/09 2009/05 2010/01 2010/09 2011/05 Spore Empirical Vol: 1.68% CMA empricial vol:

INVESTMENT RATIONALE
Industry outlook in Singapore RENTAL RATES (CMA VS SINGAPORE) Historically, CMA has capital invested in golden retail districts in Singapore including the likes of Orchard road, and Victoria Street where the rental rates tend to be on-a-whole more volatile and attractive than their fringe area counterparts. Hence, as expected, both the mean return and variance of CMAs Singapore properties median rental rates are higher than that of Singapores. PRICE, RENTAL CORRELATION In addition, Singapores property market has undergone tremendous transformation since 1990s.
250 400

Spore Returns

CMA Returns Spore Mean Return: 1.19% CMA Mean Return: 2.56%

CMA 230 210 190 170 150 130 110 90 70

Spore

Singapore Rental Rates 1990-2011

Available Stock Vs Rental


200 150 100 1990Q1 1991Q2 1992Q3 1993Q4 1995Q1 1996Q2 1997Q3 1998Q4 2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4 2010Q1 2011Q2 50 0

350 300 250 200 150 100 50 0

Central Area 250 200 150 100 50 0

Central Region

Fringe Area

Correlation since 1997 Q3: 0.902

Price, Rental and Vacancy Rates Conducting a similar analysis on vacancy rates shows a similarly high correlation to property prices, albeit a negative one. Hence, with the discovery of these 2 factors, we are ready to begin the construction of our predictive model.

250 200 150 100 50 0 Correl of VacR & Price since 1997 Q3: 0.75 1990Q1 1991Q3 1993Q1 1994Q3 1996Q1 1997Q3 1999Q1 2000Q3 2002Q1 2003Q3 2005Q1 2006Q3 2008Q1 2009Q3 2011Q1

1990Q1 1991Q2 1992Q3 1993Q4 1995Q1 1996Q2 1997Q3 1998Q4 2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4 2010Q1 2011Q2

Rental Index

Property Price Index 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

Rental Index

Property Price Index

vacc rates

1990Q1 1991Q2 1992Q3 1993Q4 1995Q1 1996Q2 1997Q3 1998Q4 2000Q1 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4 2010Q1 2011Q2
Rental Index available

SUMMARY OUTPUT - Price Intercept Rental Vacancy Rate SUMMARY OUTPUT - rental Intercept Household final consumption expenditure GDP growth SUMMARY OUTPUT - Vac. Rate Intercept Growth in Gross fixed capital formation % Population in the largest city Coefficients -0.392036 -0.009329 0.004789 Coefficients 175.5554 -3.98E-09 493.4069 Coefficients 103.1098 0.303568 -386.1606

INVESTMENT RATIONALE
Model 1 Regression By conducting a multi-factor regression on property Price as a function of rental and vacancy rates, we obtained the equation outputs on the right. A further decomposition of both rental and vacancy rates into its constituent broad economic indicators available at WorldBank, we derived equations for rental and vacancy rates as well. Model 2 ARIMA Further analysis of historical rental rate movement was conducted using the Auto-Regressive Integrated Moving Average approach (ARIMA). With ARIMA, we predicted the rental rate momentum until 2013 and obtained the following results:
250 200 150 100 50 0 2000/01 2000/10 2001/07 2002/04 2003/01 2003/10 2004/07 2005/04 2006/01 2006/10 2007/07 2008/04 2009/01 2009/10 2010/07 2011/04 2012/01 2012/10 2013/07 25th Percentile Median 75th Percentile

114 112 110 108 106 104 102 100 98 2010 2011e 2012f rental (regression) 2013f

Overall Model Results The interpretation of our results is as follows. If we base our estimates on the current rental price momentum, then it seems possible that rental rates are set to increase into 2012 before declining somewhat in 2013. However if we base our estimates on the World Bank forecasts of economic indicators, then it seems more likely that the recession is imminent in 2011 instead and would probably continue its decline well into 2013.
Predictive Model Output
2010 rental (regression) vacc. Rate price rental (arima) vacc. Rate price average 93.4962 0.06437 106.633 93.4962 0.06437 106.633 106.633 2011e 101.990 0.06365 109.490 101.196 0.06365 109.248 109.369 2012f 95.0945 0.06385 107.321 108.701 0.06385 111.451 109.386 2013f 92.0600 0.07377 102.568 112.432 0.07377 108.753 105.66

An average of the 2 model results therefore gives us the best estimate moving forward.

INVESTMENT RATIONALE
Deep Discount From Valuation TRADING BELOW MARKET VALUE Another signal justifying CMAs current undervaluation is the value their fixed assets are trading at. CMAs directly-owned properties and properties managed under its REITs have a market value discounted at an average of 15.9% to the book value of its revised net asset value (RNAV). On top of CMAs assets trading at around 0.7 of its properties value as indicated in chart 3.1, we believe several factors should be pegged to its balance sheet property value to calculate the expected future value of the assets.
3

Book-value vs Market-price

150% 130% 110% 90% 70% 50% 30% 10% -10% -30% -50%

2.5

1.5

25/11/2010

25/11/2009

25/12/2009

25/5/2010

25/10/2010

25/12/2010

25/1/2010

25/2/2010 25/3/2010

25/4/2010

25/6/2010

25/7/2010

25/8/2010

25/9/2010

25/1/2011

25/2/2011 25/3/2011

25/4/2011

25/5/2011

25/6/2011

25/7/2011 BV

25/8/2011

premium

Adj Close

Potential for appreciation, on top of the actual revaluation gains for the year, should be tagged as a premium to the property value. In addition, we can also attach a premium for CMAs management expertise, which generate a steady flow of management fee income annually; and certain mark-ups have been made to reflect the additional benefits.

25/9/2011

10

SUM OF THE PARTS VALUATION


Approach We have used a scenario weighted sum of the parts valuations to arrive at a share price of $1.88 for CMA. We have split CMAs valuation into two segments, namely the property income business, which is valued using an asset valuation based approach and the asset management (AM) segment, which is valued using a 2 stage FCFE model approach. Property Income Based Valuation Approach RATIONALE CMAs revenue stream in its property business comes mainly from two components, its revenue from the leasing of its retail properties space and the revaluation gains which is recognised from these investment properties which it holds. Due to the unique structure of the company, a large proportion of its properties are held through investment vehicles such as its REITs and private funds, hence most of its income is derived from associates and joint ventures. As accounting conventions in different countries have different reporting standards to this regard, the value of these amounts reported on the financial statement would not reflect a consistent and fair value hence we believe that an income based approach of valuation would not be appropriate. Instead, as rental and revaluation income are a function of property valuation prices, we feel that an asset based valuation would be a better determinant of companys value in this area. METHODOLOGY We have used an asset based valuation approach for the property income segment by apportioning CMAs effective stake of its property interests which is directly held and through its investment vehicles to come up with a GAV of CMAs portfolio in the region.

Property Name Capitamall Trust -Bugis Junction

Status Opened

% Stake 29.72%

Efficiency Ratio 72.82%

GRA 578,105.00

NLA 421,000.00

Value per sqft

NPI

NPI Yield Valuation GAV Attributable to CMA 5.61% 854,000.00 253,808.80

2,028.50 47,900.00

Individual Valuation of CMA Property Interest (Detailed Breakdown of individual property in appendix)

11

SUM OF THE PARTS VALUATION


As a combined total of 89% of CMAs property portfolio comes from both China and Singapore, any changes in property value from these two major regions would bring about a large change in value of the company. As such, we have done a scenario weighted GAV for these two regions based on BMI industry forecasts of frequency and severity of fluctuations in property values. SINGAPORE CMA is the largest retail estate owner and manager in Singapore with interests in 17 completed shopping malls and one retail development project, constituting a total net leasable area of 5.7 million sqft, approximately 19% of its portfolio. A large majority of the malls are held through its effective stake of 29.72% in its associate, Capitamall Trust.
Singapore -Directly Held Assets -Joint Ventures REIT's & Private Funds -Capitamall Trust Scenario Weighted GAV Worst Case 46,518 2,090,251 2,156,700 Base Case 49,000 2,218,950 2,289,490 4,619,213 Best Case 54,870 2,484,780 2,563,771
Bear Case Prob. SGP Prob. CNY 19.8% 5.8% 30% 30% Base Case 59.3% unchanged 60% unchanged Bull Case 20.9% 11.9% 10% 13.5%

CMA Property Value Breakdown by Region India


Malaysia 8% 1% Japan 2%

Singapore 48% China 41%

China CMA owns interest and manages 55 malls spanning a wide range of cities across China, constituting a total net leasable area of 18.8 million sqft, around 62% of its current portfolio. Most of the malls are through REITs and private funds with only 10 malls sitting on CMAs balance sheet. The group owns an effective stake of 26.97% in one REIT, CapitaRetail China Trust, and differing stakes in 5 private funds.
REIT's CapitaRetail China Trust REIT's & Private Funds -Capitamall China Income Fund -CapitaRetail China Development Fund II -CapitaRetail China Incubator Fund -Raffles City China Fund China -Directly Held Assets -Joint Ventures REIT's & Private Funds -CapitaRetail China Trust -Capitamall China Income Fund -CapitaRetail China Development Fund II -CapitaRetail China Incubator Fund -Raffles City China Fund Scenario Weighted GAV % Holding 26.97% 45.00% 45.00% 30.00% 15.00%

Bear Base Bull 1,300,435 1,857,764 2,108,562 127,364 181,949 206,512 241,635 341,533 303,546 155,970 258,688 345,193 487,904 433,637 391,794 553,771 492,178

222,814 252,894 369,554 419,443 3,600,554

12

SUM OF THE PARTS VALUATION


Malaysia

CMA owns and manages 4 retail -Directly Held Assets 276,184 properties in Malaysia constituting an REIT's & Private Funds -Capitamall Malaysia Trust 2,156,700 NLA of 3.34 million sqft, approximately Total 2,432,884 11% of its portfolio. It has a direct interest in one mall while the rest of its properties are being held by its associate, CapitaMall Malaysia Trust, which was listed on July 2010.
Japan REIT's & Private Funds -CapitaRetail Japan Fund $'000 158,991

Malaysia

$'000

Japan CMA owns interest and manages seven retail properties in Japan across 4 cities, constituting a total NLA of 1.46 million sqft, about 5% of its portfolio. These properties are owned via a private fund, CapitaRetail Japan Fund, in which CMA has a 26.3% stake. India $'000
REIT's & Private Funds -CapitaRetail Indian Development Fund 103,865

India CMA owns and manages 9 retail properties in India across 4 cities, constituting a total net leasable area of 0.89 million sqft, around 3 % of its portfolio. These properties are owned via a private fund, CapitaRetail Indian Development Fund in which CMA has a 45.5% stake.

13

SUM OF THE PARTS VALUATION


AM Valuation 2 Stage FCFF Approach
Capitamall Asia Current Estimated 968 1,752.60 5,842 5,842 0.166 0.3

RATIONALE USAGE OF 2-STAGE FCFF MODEL -CapitaRetail Indian Development Fund The firm has a fluctuating financial leverage Debt/Equity Ratio structure, thus to negate computing cash flows to debt-holders, FCFF is preferred to FCFE model. In addition, Dividend Discount Model (DDM) is not preferred as the firm has a low dividend payout ratio of 18.41% (Bloomberg) as compared to its peers of 36.2%. CMA derives its revenue streams from AM through being a REIT and mall manager of 3 listed and 6 private funds. We believe that the AM unit is currently in a high growth stage. This can be seen from the large pipeline of malls. In addition, this high growth period can be seen from CMAs aggressive reinvestment rate of 51.87% as compared to a peer average of 17.64%.
Capitam all Asia REIT's Capitamall Trust Capitamalls Malaysia Trust CapitaRetail China Trust Private Funds Capitamall China Income Fund CapitaRetail China Development Fund II CapitaRetail China Incubator Fund Raffles City China Fund CapitaRetail Japan Fund Private Limited CapitaRetail India Development Fund

Gross Debt Outstanding

REIT Manager Mall Manager

Based on these factors, we believe that a 2 stage growth model is appropriate for CMA as we foresee CMA to continue its high growth rate in the next 5 years before entering a stable stage.

14

10 8 6 4 2 0 2012 60000 50000 40000 30000 20000 10000 0 2013 2014 2015 Malls to be Completed 2016

SUM OF THE PARTS VALUATION


High Growth Rate The growth rate of the EBIT of the firm is derived using the following formula:

Hence in order to calculate the expected growth rate of the firm, we will first calculate the reinvestment rate of the company and its ROC. REINVESTMENT RATE(RIR)

EBIT 140% 120% 100% 80% 60% 40% 123.31%

Revenue

RIR
122.08%

30.20% 20% 0% -20% 2006 2008 8.17% 2009 2010 -12.75% 2011YTD

We have made the assumption that depreciation and changes in working capital are wholly attributable to the AM business of CMA while these charges for the property income business are recognised via its associates and JVs. As for capital expenditures, we have apportioned it accordingly to its property income and AM units. Due to the relatively large developmental projects requiring irregular capital injections, we have normalized the RIR to arrive at a trailing twelve month (TTM) figure of 62.6%.
2006 2007 23501.16 30480.04 17% 17% 23501 30480 7668 23641 2329 28980 8301 36165 2513 41953 2008 52028 17% 52028 8894 111 4754 4251 2009 39187 17% 39187 4995 48922 6079 47838 2010 2011YTD 60879 52984 17% 17% 60879 52984 6424 19165 7206 18383 30.20% 6217 (8056) 4917 -6756 -12.75% Trailing 12 Months Normalized 45054 17% 37395 7391 20861 4834 23417 62.6%

EBIT of Mgt Fee Business Marginal Tax Rate EBIT(1-Tax Rate) Net CAPEX Change in Working Capital Depreciation Total Reinvestment Reinvestment Rate

123.31% 137.64%

8.17% 122.08%

RETURN ON CAPITAL (ROC)

Because CMAs integrated business model provided no breakdown on how much capital was used to generate returns on its AM, we had to estimate based on its proportion of AM EBIT to total EBIT.
15

SUM OF THE PARTS VALUATION


This proxy ROC of CMA has shown a decreasing trend over the recent years, due to management fees increasing more slowly compared to its property-income segment.
EBIT of Mgt Fee Business Marginal Tax Rate EBIT(1-Tax Rate) Capital Invested Proportion of Mgt Fee EBIT to total EBIT Capital Employed on Management Fee Business Return on Capital 2006 2007 23501.16 30480.04 17% 17% 23501 30480 2008 52028 17% 52028 2009 39187 17% 39187 2010 2011YTD 60879 52984 17% 17% 60879 52984 Trailing 12 Months 69226 17% 57458

18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2006
11.47%

16.9%

ROC
7.8% 7.3% 5.9% 6.6%

1008303 1107245 3181072 5890210 6516211 6810000 11.47% 9.48% 17.51% 7.60% 13.10% 16.32% 115671.8 104994.7 556889.6 447712.8 853429.3 1111169 16.9% 24.1% 7.8% 7.3% 5.9% 4.0%

2008

2009

2010

2011F

6.6%

0.14 0.12

0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2011F 2012F 2013F 2014F 2015F 2016F Reinvestment Rate Growth Rate ROC

From the above rationale, we expect ROC and RIR to move towards industry average based on number of malls which have been developed. Hence, based on the convergence of ROC and RIR, we expect the following growth rates:
Year Trailing 12 months 2012F 2013F 2014F 2015F 2016F ROC 6.60% 7.46% 9.74% 12.01% 12.58% 14.01% Reinvestment Rate 62.62% 57.31% 43.15% 28.99% 20.14% 16.60% Growth Rate

0.1 0.08 0.06 0.04 0.02 0

4.27% 4.20% 3.48% 2.53% 2.33%

Stable Growth
List of Comparable Firms GUANGZHOU R&F PROPERTIES - H AGILE PROPERTY HOLDINGS LTD RENHE COMMERCIAL HOLDINGS KEPPEL LAND LTD SHIMAO PROPERTY HOLDINGS LTD SOHO CHINA LTD HYSAN DEVELOPMENT CO AEON MALL CO LTD NEW WORLD DEVELOPMENT KERRY PROPERTIES LTD COUNTRY GARDEN HOLDINGS CO LONGFOR PROPERTIES GLOBAL LOGISTIC PROPERTIES L EVERGRANDE REAL ESTATE GROUP Industry Average Return on Capital Reinvestment Rate

13.05% 14.70% 30.08% 16.49% 11.76% 13.85% 18.50% 6.71% 7.49% 8.15% 11.91% 14.08% 10.57% 18.76% 14.01%

14.93% 31.31% 17.46% 17.46% 13.80% 12.55% 7.87% 11.19% 7.91% 9.34% 11.68% 25.71% 17.25% 33.95% 16.60%

16

SUM OF THE PARTS VALUATION


Weighted-Average Cost-of-Capital PRE-TAX COST-OF-DEBT = 1.68% + 1.41% = 2.51% RISK-FREE RATE We used the ten-year SGS government bond rate as a proxy for the risk-free rate as CMAs cash-flows are mainly denominated in Singapore dollars. CREDIT SPREAD As the bonds of CMA are unrated and relatively illiquid in the market, we have used the credit rating BBB+ of its parent company bonds, Capitaland, to estimate credit spread. COST OF EQUITY

BETA We estimated both historical bottoms up beta in our analysis. a) Historical Beta To estimate CMAs historical beta, we regressed CMAs stock returns to the Straits Times Index (STI) returns to yield a beta of 1.0281:
15.00%

10.00%

y = 1.0281x - 0.0056 R = 0.33

5.00%

-8.00%

-6.00%

-4.00%

0.00% -2.00% 0.00% -5.00%

2.00%

4.00%

6.00%

8.00%

-10.00%

-15.00%

17

SUM OF THE PARTS VALUATION


Bottom Up Beta
Company GUANGZHOU R&F PROPERTIES - H AGILE PROPERTY HOLDINGS LTD RENHE COMMERCIAL HOLDINGS KEPPEL LAND LTD SHIMAO PROPERTY HOLDINGS LTD SOHO CHINA LTD HYSAN DEVELOPMENT CO AEON MALL CO LTD NEW WORLD DEVELOPMENT KERRY PROPERTIES LTD COUNTRY GARDEN HOLDINGS CO LONGFOR PROPERTIES GLOBAL LOGISTIC PROPERTIES L EVERGRANDE REAL ESTATE GROUP Raw Beta:M-1 Debt/Equity LF Tax Rate 1.394046 148.413406 25.00% 2.697079 94.918999 25.00% 1.332292 61.461498 25.00% 1.47619 63.648701 17.00% 1.644083 1.11842903 16.50% 0.815118 57.902401 25.00% 0.885526 11.7483 16.50% 1.443502 84.103897 40.69% 1.508166 44.105701 16.50% 0.885335 36.752998 16.50% 1.537905 102.091202 25.00% 1.973194 118.201401 25.00% 1.115909 52.8652 16.50% 2.480321 173.496994 25.00% Country Unlevered Beta CN 0.659715887 CN 1.575495548 CN 0.911928372 SG 0.965913266 HK 1.628871164 CN 0.568316379 HK 0.806417782 JP 0.963092162 HK 1.102232826 HK 0.677437788 CN 0.870996728 CN 1.045949117 SG 0.774171011 CN 1.077825225 Average: 0.973454518

Based on the marginal tax rate of 17% of its country of domicile and a debt-equity ratio of 0.1657, we then used the industry average unlevered beta to calculate the levered beta for CMA as follows:
Name CAPITALAND LTD CAPITAMALL TRUST CAPITAMALLS ASIA LTD CITY DEVELOPMENTS LTD COMFORTDELGRO CORP LTD DBS GROUP HOLDINGS LTD GENTING SINGAPORE PLC GOLDEN AGRI-RESOURCES LTD HONGKONG LAND HOLDINGS LTD JARDINE MATHESON HLDGS LTD KEPPEL CORP LTD NOBLE GROUP LTD OLAM INTERNATIONAL LTD SEMBCORP INDUSTRIES LTD SEMBCORP MARINE LTD SIA ENGINEERING CO LTD SINGAPORE AIRLINES LTD SINGAPORE EXCHANGE LTD SINGAPORE POST LTD SINGAPORE PRESS HOLDINGS LTD SINGAPORE TECH ENGINEERING SMRT CORP LTD STARHUB LTD JARDINE CYCLE & CARRIAGE LTD OVERSEA-CHINESE BANKING CORP UNITED OVERSEAS BANK LTD WILMAR INTERNATIONAL LTD SINGAPORE TELECOM LTD JARDINE STRATEGIC HLDGS LTD FRASER AND NEAVE LTD Average EPS LTG 18.033 6.458 3.128 8.333 2.750 10.567 20.808 7.867 -2.320 11.368 17.200 19.550 6.433 0.215 -3.370 5.550 -3.500 8.200 6.000 8.400 12.160 7.660 6.680 17.250 4.073 12.870 8.168 Dvd Yld 2.230 0.000 1.099 0.745 3.860 4.389 0.000 1.158 2.400 2.195 4.337 1.951 2.000 3.580 2.657 5.391 4.476 4.122 6.068 4.103 2.431 4.521 6.944 3.437 3.036 3.297 1.254 5.232 0.759 2.615 3.010

We have decided to use the bottoms up beta as it will yield a significantly lower standard error by averaging across a range of betas. EQUITY RISK PREMIUM We have used an implied equity risk premium approach to derive the equity risk premium of the market. In calculating the implied equity risk premium, we assumed the components in the STI to be representative of the entire market, hence obtaining an average long term EPS growth of 8.17% and an average dividend yield of 3.01%. We obtained a market risk return of 11.18 % by using the formula below:

18

SUM OF THE PARTS VALUATION


2-Stage FCFF Calculation FCFF PROJECTION FOR HIGH GROWTH STAGE Assuming a constantly decreasing reinvestment rate based on the number of malls completed, we can calculate the FCFF based on the below formula:

Year Return on Capital Growth Rate EBIT(1- Tax Rate) Reinvestment Rate Free CashFlow To Firm

2012 7.21% 57.43% 4.14% 59,836 57.43% 25,471

2013 8.81% 43.59% 3.84% 62,135 43.59% 35,049

2014 10.42% 29.75% 3.10% 64,061 29.75% 45,002

2015 10.82% 21.10% 2.28% 65,524 21.10% 51,698

2016 11.83% 17.64% 2.09% 66,891 17.64% 55,091

TERMINAL VALUE CALCULATION Based on a stable growth rate of 2.33%, Using industry average reinvestment rate of 16.60%,

CALCULATION OF AM BUSINESS TOTAL VALUE By discounting the FCFFs by the firms WACC of 8.18%, we arrive at an intrinsic value for the AM business of SGD 852,897.

Year Growth Rate EBIT(1- Tax Rate) Reinvestment Rate Free CashFlow To Firm Terminal Value Present Value Total Value of Management Fee Business:

2012 4.27% 59913.69

2013 4.20% 62430.96

2014 3.48% 64605.54

2015 2.53% 66243.01

2016 2.33% 67783.45

16.60% 56,530.80 988,801.53 23643.16191 30329.25434 36240.63216 38632.14454 724051.7948 852,896.99

57.31% 25,576.10

43.15% 35,491.10

28.99% 45,875.66

20.14% 52,901.04

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SUM OF THE PARTS VALUATION


Scenario-Weighted Revised-Net-Asset-Valuation Based on the separate valuation of both income generating units of CMA, we arrive at a total GAV of S$9,239m. By adding cash and netting off debt and other liabilities, we arrive at a RNAV of S$7,312m attributable to shareholders, equating to an estimated share price of $1.88 based on common stock of 3,885 million shares outstanding as at 30 Setember 2011.
Assets/Liabilities of CMA Singapore -Directly Held Assets -Joint Ventures REIT's & Private Funds -Capitamall Trust China -Directly Held Assets -Joint Ventures REIT's & Private Funds -CapitaRetail China Trust -Capitamall China Income Fund -CapitaRetail China Development Fund II -CapitaRetail China Incubator Fund -Raffles City China Fund Malaysia -Directly Held Assets REIT's & Private Funds -CapitaMalls Malaysia Trust Japan REIT's & Private Funds -CapitaRetail Japan Fund Private Limited India REIT's & Private Funds -CapitaRetail India Development Fund Total Gross Asset Value Asset Management Busines Add: Cash & Cash Equivalents Less: Debt Outstanding Off Balance Sheet Liabilities Adjusted for Outstanding Capital Commitments Revised Net Asset Valuation No of Shares Outstanding Estimated Share Price $'000 49751.983 2249777.3 2321297.4 1715645.1 168029.8 318785.7 450579.4 400463.8 205768.8 341283.1 276184.16 479161.38

158990.88

103865.01 9239583.8 852897 626000 -968000 -1488688.6 -949700 7312092.1 3885100 1.88
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RELATIVE VALUATION
Multiple Formula Variables Used In Regression Dividend Payout, Cost of Equity, Growth R2

Synopsis We analysed CapitaMall Asia against Asias Real Estate industry using four different multiples: Price-Earnings ratio (P/E), Price-Book ratio (P/B) Price-Net-Asset-Value ratio (P/NAV) and Dividend Yield-Price ratio (D/P). Taking into account that CMA recognises its revenues from Asia, we decided to compare it across the continent. Within Asia, we generated a list of comparable firms with similar fundamental characteristics in terms of market capitalization and business structure, after filtering out those with missing and extreme data. The four multiples were regressed against a total of 45 firms. Defining the multiples We emphasized on consistency of the multiples and uniformity of the variables used. 1) Consistency: The numerator and denominator of all the four multiples used are equity values. Therefore, the multiples meet the consistency test. 2) Uniformity: TTM data were used for the comparison of the firms for all multiples except P/NAV and P/B which used data from latest filing. Since BV and NAV are balance sheet (B/S) figures, there is no problem with the uniformity test. The variables used in regression are defined as follows:
Variables Used Dividend Payout WACC Cost of Equity Growth ROE(T12M) ROE(LF) Method of Extraction of Variable TTM figure (Retrieved from Bloomberg) TTM figure (Retrieved from Bloomberg) Bloomberg Estimated Long Term EPS Growth (Retrieved from Bloomberg) TTM figure (Retrieved from Bloomberg) Latest filing (Retrieved from Bloomberg)

0.3297

ROE(T12M), Cost of Equity, Growth

0.3550

ROE(LF), Cost of Equity, Growth

0.1195

Cost of Equity, Growth

0.0750

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RELATIVE VALUATION
CHOICE OF MULTIPLE Regression analysis was conducted for all four multiples (results shown in Appendix) using the finalized variables and firms. With the highest R2 value of 0.3550 among all the multiples, we decided to focus on the P/B ratio. Describing the multiple The P/B ratio allows comparisons across similar firms for signs of under- or overvaluation. When compared to the market price, the P/B ratio also offers a relatively intuitive and stable measure of value. Furthermore, P/B may acts as a proxy for P/RNAV ratio, which is a more accurate measure of the premium pegged by the market to a real estate firms asset under management (AUM). Hence it is a widely used ratio for the industry.

The current share price of CMA is found to be $1.35 (as of 9 November 2011), with a current P/B ratio of 0.8896. From these, we derive the current book value per share to be $1.5175. Analysis of the multiple A further analysis using the formula of P/E ratio is shown below, where variables includes payout, cost of equity and growth.

The following table shows the relationship between the variable and P/E ratio:
Relationship between variables and P/E ratio Higher Payout Higher Cost of Equity Higher Growth Higher P/E Lower P/E Higher P/E

22

RELATIVE VALUATION
Application of the multiple SIMPLE ANALYSIS The values of the variables and median for the P/E ratio of the comparable firms were calculated and compared against CMA. The values are shown below:
Median of Comparable Firms P/B Ratio ROE Cost of Equity Growth 0.8962 11.6445% 11.6500% 7.2450% CMA 0.8896 7.4753% 10.7110% 3.1280%

From the analysis above, CMA seems to deserve a much lower P/B ratio owing to its low ROE and growth rate. However, the cost of equity hovering below the industry median compensates a portion of the overvaluation. As such, CMA seems to be slightly overvalued despite the lower P/B ratio relative to the industry. However, the data collected may be skewed to the right, considering the average P/B value of 1.1958 differs considerably from the median P/E ratio. Therefore, a further in-depth analysis using the regression model is required to determine whether CMA is overvalued. REGRESSION APPROACH The initial 3 variables used for the regression analysis are ROE, beta and growth. However, after running the correlation test between payout and beta, the absolute value was found to be relatively high. As such, taking into consideration that the fundamentals affecting the P/B ratio are ROE, growth and risk, we substituted beta with cost of equity. After which, we ran the regression analysis again and the results are as shown below:

23

RELATIVE VALUATION
Application of the multiple The analysis shows that the effects of the coefficients of the variables on the P/B ratio are similar to what we have expected. With the regression output shown above, we formed the multiregression line and substituted the respective values of CMA using the equation:

With a current P/B ratio of 0.8896, we conclude CMA to be undervalued. This draws an inconsistent conclusion with that of the simple approach. As calculated previously, the expected share price of CMA is $1.43, which is higher than the current share price of $1.35.

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VALUE ENHANCEMENT STRATEGIES


We have identified some strategies that the firm could potentially take to improve shareholder value. Increase reinvestment rate A higher reinvestment rate usually leads to a higher growth rate. However, a higher growth rate does not necessarily mean a higher value as reinvestment might reduce cash flows due to the risk involve. Value can be created if a reinvestment can increase cash flows. CMA can potentially recycle its capital through acquisitions. Using its capital productively by monetizing its assets through its REITs, private real estate funds or joint ventures with strategic partners, CMA can recycle its capital to invest in more retail properties while retaining its integrated shopping mall business. With a WACC of 9.43%, CMA can reinvest in projects with IRR greater than 10% to strengthen its financial capacity to seize growth opportunities to further increase its cash flows. Increase Leverage With a leverage ratio considerably lower than the industry average, CMA has the potential to increase its debt capacity. Increasing leverage reduces the amount of equity needed to be financed. This increases the amount of tax savings which creates value. At the optimum leverage ratio, CMA can potentially lower its weighted cost of capital, which can increase the firms value. However, CMA must take note that a higher leverage ratio will lead to higher solvency risk.

Divest or liquidate inefficient assets CMA can further enhance its overall value by divesting or liquidating its inefficient assets to generate higher cash flow. In line with recycling of capital, CMA can use the funds generated from divesting or liquidating the inefficient assets to invest in projects that generates higher cash flows. However, this strategy is only optimized when the divestiture or liquidation value is higher than that of the continuing value generated by the inefficient asset. A possible area for divestment which CMA can look into is Japan. There has been a decrease in NLA in Japan since Dec 2009, with CMAs focus turning to China. With property prices in Japan showing a slight negative growth, the option of divesting property in Japan for additional funds to reinvest in China seems feasible.
25

RECONCILIATION
Using both the Sum-of-the-parts method and the Relative valuation method, we arrived at different estimates of share price for CMA, namely $1.88 using SOTP and $1.43 using relative valuation. Although a difference of $0.44 exists between both projected values, they converge to a similar conclusion that CMAs stock price is currently undervalued. Relative Valuation Projected Value:

Current Current Current

SOTP Valuation Projected Value: A comparison between these 2 projections shows a difference of $0.44. As can be seen above, the SOTP valuation predicts a much higher price per share as compared to that of the relative valuation model. We attribute these differences to 3 possible reasons: 1. Higher probability for a hard-landing scenario 2. Complexity discount attached to CMA intricate business model 3. Sector undervaluation Comparison: HIGHER PROBABILITY FOR HARD LANDING SCENARIO We believe that the market has factored in a higher probability for a hard-landing scenario across property markets hence resulting in lower long term growth rates, causing the market to factor in a lower share price as compared to our intrinsic valuation of CMA. Based on our gross asset valuation of CMAs property and its current net profit from its retail property business segment, we are able to estimate an intrinsic stable growth rate based on the following formula:
Trailing 12 months Net Income Proportion of property income EBIT to total EBIT Net Income apportioned to property business Cost of Equity Gross Asset value of CMA's Assets Implied Stable growth rate of CMA $ 416,462

95.47% 397,582 9.29% 9,239,584 4.78%

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Where Solving for growth, implied growth rate of CMA assets is expected to be 4.78% as compared to consensus estimates of 3.128%. Hence we believe that the market is currently pricing a lower growth rate on CMA. Using our stable growth rate calculated, we arrived at a price of $1.52, approximately reconciling 20% of the difference. COMPLEXITY DISCOUNT CMA, being a property developer, manager and investor concurrently, has a much more complicated business model than many of its peers, which are either real estate development, real estate management or REITs. CMA also has a minority ownership in a large number of subsidiaries and joint ventures. The larger the number of subsidiaries, the more complex the firms financial statements can get. Probability for misleading potential investors increases, and the lack of transparency in consolidated financial statements can paint an erroneous picture of the actual value of the firms assets, especially in properties with complicated ownership structure from different parties. We believe that CMA, being a more complex firm than its comparables, should deserve a large discount for complexity than its peers. Hence, a further complexity discount variable can be factored into our subsequent regression equation. SECTOR UNDERVALUATION In relative valuation, we valued CMA relative to other firms in the real estate industry. However, it is possible that the market is undervaluing the entire real estate sector on a whole and this might cause a difference in price between relative and intrinsic valuation.

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CONCLUSION
We will be putting forth our recommendation from on a diversified investors viewpoint, with medium to long-term investment horizon and moderate risk aversion. The unanimous conclusion from both DCF and relative valuation is that CMA is undervalued with a current price of $1.35. DCF valuation indicates a price of S$1.88. Similarly, with a current P/B ratio of 0.8896, relative valuation shows that CMAs P/B ratio should be 0.9438, thus undervalued. Furthermore, CMA is now in a thriving property retail market, especially in the geographical regions of Asia where growth rates are expected to be high. In addition, expected corporate strategies and further value enhancement projects to be undertaken by the firm only serves to boost optimism within investors in CMAs future performance. Taking into consideration both quantitative and qualitative analysis, our recommendation for investors is to BUY at the current stock price of S$1.35.

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APPENDIX I: RELATIVE VALUATION


I: Relative valuation P/E RATIO:

P/B RATIO:

P/NAV RATIO:

D/P RATIO:

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APPENDIX II: LIST OF COMPARABLES (SIMPLE AVERAGE)

30

APPENDIX II: LIST OF COMPARABLES (SIMPLE AVERAGE)

31

APPENDIX III: LIST OF COMPARABLES (REGRESSION)


Name
PRUKSA REAL ESTATE PCL PARKWAYLIFE REAL ESTATE STARHILL GLOBAL REIT ASCOTT RESIDENCE TRUST BWP TRUST FRASERS CENTREPOINT TRUST GODREJ PROPERTIES LTD GREENTOWN CHINA HOLDINGS K-REIT ASIA CDL HOSPITALITY TRUSTS OBEROI REALTY LTD AUSTRALAND PROPERTY GROUP YANLORD LAND GROUP LTD MAPLETREE LOGISTICS TRUST LIPPO KARAWACI TBK PT INVESTA OFFICE FUND CHARTER HALL OFFICE REIT BUMI SERPONG DAMAI PT LAND & HOUSES PUB CO LTD CHAMPION REIT SUNTEC REIT FRANSHION PROPERTIES SP SETIA BHD HOPEWELL HOLDINGS LTD COMMONWEALTH PROPERTY OFFICE CAPITACOMMERCIAL TRUST UOL GROUP LTD AGILE PROPERTY HOLDINGS LTD RENHE COMMERCIAL HOLDINGS KEPPEL LAND LTD ASCENDAS REAL ESTATE INV TRT SOHO CHINA LTD HYSAN DEVELOPMENT CO CAPITAMALLS ASIA LTD AEON MALL CO LTD DEXUS PROPERTY GROUP LEND LEASE GROUP NEW WORLD DEVELOPMENT GOODMAN GROUP CFS RETAIL PROPERTY TRUST KERRY PROPERTIES LTD GPT GROUP CITY DEVELOPMENTS LTD DAITO TRUST CONSTRUCT CO LTD DAIWA HOUSE INDUSTRY CO LTD Median Average Correlation Between Cost of Equity and Growth Correlation Between Cost of Equity and ROE Correlation Between Growth and ROE Market Cap 806333440 857401728 899975808 916959232 918370560 950219008 957449408 992562624 1091046528 1208835200 1527993600 1540098432 1573803264 1623310848 1695163136 1697842432 1737333504 1887689856 1896030464 2008625408 2034302592 2097396096 2268617728 2295502336 2355727616 2523269376 2724532480 2950043904 3060764672 3137969152 3282987520 3433903104 3548609536 4091183872 4235446528 4298123776 4395759616 5614776832 4762987008 5280365056 5374645248 5932604928 7473127424 7503045632 7605867520 P/B 1.556239 1.274111 0.626119 0.802193 0.896284 1.038335 5.182469 0.581519 0.697534 1.061226 2.276649 0.724962 0.742489 0.990706 1.564625 0.845484 0.896461 2.472784 2.027477 0.415027 0.629179 0.647617 2.103251 0.59444 0.834628 0.730691 0.701311 0.917859 1.615146 0.964505 1.125996 1.047222 0.583947 0.889615 1.765965 0.813172 1.11074 0.301385 1.031466 0.869764 0.690281 0.820669 1.450206 4.037395 0.862692 0.896284 1.195818556 0.101705652 0.246487527 0.216931356 Cost of Equity 14.026 7.266 8.241 10.151 10.606 8.504 11.146 17.019 9.642 11.366 11.577 12.74 12.45 8.593 13.567 11.619 12.529 15.417 16.98 11.655 10.518 12.059 14.347 9.366 10.952 10.13 10.802 17.8780 12.685 13.767 7.278 12.738 13.565 10.711 14.38 11.65 13.733 17.013 14.029 9.586 14.607 10.838 11.128 9.352 12.45 11.65 12.0146 Growth 9.935 14.2 3.935 1.85 4.27 5.698 65 22.2 11.8 3.695 17.5 4.66 10.55 5.65 7.245 3.735 -1.55 33 8.273 10.57 -0.857 26.115 28.4 -3 4.44 -3.117 1.667 25.2 38.15 -2.365 2.923 18.185 11.53 3.128 8 2.68 10.65 -42.59 7.967 2.955 9.735 3.365 8.333 5.6 21.2 7.245 9.5669 ROE 24.663 7.6978 8.782 13.9235 9.1615 14.4673 15.1378 15.4696 5.3835 10.2246 20.1253 9.1846 15.8535 8.4832 8.3407 7.1603 3.5386 7.3613 14.7887 15.1181 10.5495 8.6669 11.9159 20.8242 7.9392 12.1034 16.7696 36.5009 29.7074 27.2456 18.5492 19.9425 9.8699 7.4753 13.3486 11.1675 14.2471 9.4774 9.3452 9.7753 11.6445 10.384 12.2286 19.4659 4.3593 11.6445 13.2971

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DISCLAIMER
All information, terms and pricing set forth herein are indicative, based on, among other things, market conditions at the time of writing and are subject to change without notice. This document is for informational purposes only. Acacia Research has prepared the information contained in this document in good faith. However, no warranty (express or implied) is made as to the accuracy, completeness or reliability of any statements, estimates or opinions or other information contained in this document (any of which may change without notice) and to the maximum extent permitted by law, Acacia Research disclaims all liability and responsibility (including, without limitation, any liability arising from fault or negligence on the part of any or all of Acacia Research or of any of its members) for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from this document. Any reader is strongly advised to make their own enquiries and seek independent professional advice regarding information contained in this document. In no way shall Acacia Research be deemed to be holding itself out as a fiduciary of the recipient hereof. The recipient must independently evaluate any investment including the tax, legal, accounting and credit aspects of any transaction. Instruments and trading strategies of the type described herein may involve a high degree of risk, and the value of such instruments may be highly volatile and may be adversely affected by the absence of a market to provide liquidity. This material is proprietary to Acacia Research and may not be disclosed to third parties. Any unauthorised use, duplication or disclosure of this document is prohibited

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