Wilmar Int l Ltd. Resilient integrated agri-business model

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1 SINGAPORE Company Report MITA No. 013/06/ June 2009 Wilmar Int l Ltd Initiating Coverage BUY S$4.88 Fair Value: Stock Code: Reuters: ISIN Code Bloomberg: Event: General Data S$5.64 WLIL.SI F34 WIL SP Initiate Coverage Issued Capital (m) 6,386 Mkt Cap (S$m/US$m) 31,162/ Major Shareholder 21,348 Wilmar Holdings (40.63%) Free Float (%) 13.6% NTA per share (US$) 0.89 Daily Vol 3-mth ( 000) 13,409 52Wk High (S$) Wk Low (S$) Carey Wong (65) carey@ocbc-research.com Resilient integrated agri-business model Resilient integrated agri-business model. Wilmar International Limited (Wilmar) is one of Asia's leading agri-business group, where its business activities include oil palm cultivation, edible oils refining, oilseeds crushing, consumer pack edible oil processing and merchandising, among others. And over the years, it has established a resilient integrated agri-business model which not only captures the entire value chain of the agricultural commodity processing business, but also enables it to extract margins at every step of the value chain, resulting in significant operational synergies and cost efficiencies. Well diversified markets. Headquartered in Singapore, its operations are located in over 20 countries across four continents, with a primary focus on Indonesia, Malaysia, China, India and Europe. We understand that Wilmar currently controls about 25% of the world's CPO (crude palm oil) refining capacity and 25% of China's soy bean crushing capacity. Wilmar also has a 40% share of the global CPO sales and nearly 50% share of China's consumer pack edible oil market. In addition, it is also one of the largest edible oils refiners and a leading producer of consumer pack edible oils in India. It also intends to develop an integrated agri-business with experienced partners in West Africa. Potential listing of China operations. Given its extensive network and business in China, Wilmar has plans to spin off its business there with a primary listing either in Hong Kong or China. According to management, it plans to float 20-30% of its China business, but did not rule out selling more. Benefits of the move include unlocking value for existing shareholders, the ability to expand into other areas with the China listco etc. We believe that it is a good move for the reasons mentioned by the company and we also see the potential spin-offs involving its other sizeable operations overseas. Initiate coverage with BUY and S$5.64 fair value. Despite its integrated agri-business model, Wilmar remains subject to the volatile fluctuations in the prices of vegetable oil like soy bean and CPO, which remains a key risk for us. But given that cooking oil is a necessity and demand should be fairly inelastic, we believe it may be less of an issue for more downstream plays like Wilmar than pure plantation plays. As such, we initiate coverage on the stock with S$5.64 fair value (based on 18x blended FY09/10 PER) and a BUY rating. Year to Turnover EBITDA Net Profit EPS EPS Growth PER Div Yield 31 Dec (US$ m) (US$ m) (US$ m) (US cents) (%) (x) (%) FY 07 16, , FY 08 29, , , FY 09F 25, , , FY 10F 27, , , Please refer to the important disclosures at the back of this document.

2 Table of Content Page Section A Integrated Agri-Business Model 3 Section B Well Diversified Markets 7 Section C Financial Review of 1Q09 Results 11 Section D Valuation and Recommendation 14 Section E Disclaimers 20 Page 2 23 June 2009

3 Section A: Integrated Agri-Business Model Integrated agri-business model. Wilmar International Limited (Wilmar) is one of Asia's leading agri-business groups. It is principally engaged in the businesses of oil palm cultivation, oilseeds crushing, edible oils refining, consumer pack edible oils processing and merchandising, specialty fats, oleo-chemicals, bio-diesel, fertilizers and soy protein manufacturing, rice and flour milling, and grains merchandising. Exhibit 1: Integrated Agri-Business Model Source: Company Its business strategy involves building an integrated business model which captures the entire value chain of the agricultural commodity processing business, from origination, processing and transportation to the branding, merchandising and distribution of a wide range of agricultural products. This allows Wilmar to extract margins at every step of the value chain and enjoy significant operational synergies and cost efficiencies. Origination Wilmar engages in oil palm cultivation in Indonesia and Malaysia and is one of the largest plantation companies in these two countries. In Indonesia, its plantations are located in Sumatra, West Kalimantan and Central Kalimantan (southern region) while in Malaysia, they are located in Sabah and Sarawak. As of end Sep 2008, Wilmar owns more than 500,000 hectares of plantation land, of which nearly 219,000 hectares are planted. At the moment, its plantations supply about 42% of its Crude Palm Oil (CPO) production. For the rest of its requirements, Wilmar typically sources it from third party plantation companies like First Resources and Kencana Resources. Page 3 23 June 2009

4 Exhibit 2: Cultivation of Oil Palm and Harvesting Source: Company Processing Wilmar also owns and operates a number of strategically located and vertically integrated processing plants in Indonesia, Malaysia, China, India and Europe to process palm and lauric oils into, among others, RBD (refined, bleached and deodorized) palm oil, RBD palm olein, RBD palm stearin, specialty fats, oleo-chemicals and bio-diesel. These palm oil, lauric and related products are widely used in many industries, including food manufacturing, cosmetics and pharmaceutical. Currently, we understand that Wilmar is the largest global processor and merchandiser of palm and lauric oils. Page 4 23 June 2009

5 Exhibit 3: Processing Schematic Source: Company Merchandising, Shipping and Distribution Finally, Wilmar blends, packs and markets its products to endcustomers under its own brands in three of the most populous countries in the world - China, India and Indonesia. It also sells consumer pack products in Vietnam and Bangladesh. Page 5 23 June 2009

6 Exhibit 4: Consumer packs in China Source: Company In China, it produces and markets various brands of different types of edible oils, targeted at different market segments. These market segments are drawn by geographical regions and consumer preferences. It has since established a comprehensive sales and distribution network spanning traditional retail outlets, hypermarkets, supermarkets and convenience stores nationwide. Exhibit 5: Some of its Top Selling Brands China Brands Product Range Arawana 金 龙 鱼 Blended oils, soy bean, rapeseed, corn, sunflower seed, sesame, groundnut and camellia Koufu 口 福 Blended oils, soy bean, rapeseed, corn, sunflower seed, sesame, groundnut and camellia Orchid 胡 Groundnut oil Gold Ingots 元 宝 Soy bean oil Golden Carp 鲤 鱼 Rapeseed oil Huaqi 花 旗 Assortment of edible oils Baihehua 百 和 花 Assortment of edible oils Xiangmanyuan 香 满 园 Assortment of edible oils Source: Company Page 6 23 June 2009

7 Section B: Well Diversified Markets Headquartered in Singapore, its operations are located in over 20 countries across four continents, with a primary focus on Indonesia, Malaysia, China, India and Europe. Backed by a staff force of around 70,000 people, over 160 processing plants and an extensive distribution network, its products are delivered to over 50 countries Exhibit 6: Segmental Breakdown by Region FY07 FY08 5% 8% 12% 52% 23% 6% 9% 12% South East Asia China India Europe Others 49% 24% South East Asia China India Europe Others Source: Company China dominates. In FY08, Wilmar derived the lion's share (49%) of its total revenue from China, which comes as no surprise, given that Wilmar currently controls about 25% of China's soy bean crushing capacity as well as almost 50% of the consumer pack edible oil market there. We understand that its Arawana brand of cooking oil is among the top selling premium brands in China. Downturn should be soft. No doubt the Chinese economy is also widely expected to slow amidst the global recession, with the World Bank now forecasting a GDP growth of 7.2% for this year, versus the heady doubledigit growth rates over the past few years. But the PRC government is closely monitoring the situation to engineer a soft landing for the economy. It has already announced a massive RMB4t (S$800b) aid package to stimulate the economy and domestic consumption. The government has also said that it stands ready to implement additional measures to support the nation's industries should the need arises. Page 7 23 June 2009

8 Exhibit 7: China Income and Vegetable Oil Import Trends m ton Source: Bloomberg Veg Oil Imports (LHS) Urban Income (RHS) RMB Changing lifestyle boosts demand. As such, management remains very upbeat about the Chinese market, where the growing population is still expected to continue to urbanize at a rapid rate. Besides the demand for cooking oil growing in line with the population, Wilmar further believes that as income levels increase, Chinese consumers will want better quality food as well as processed food (due to lifestyle changes) such as bread, pastries and cookies. And as these manufacturing processes for processed food typically require large amount of shortening and margarine made from CPO and other oilseeds, this growth in demand is likely to exceed that of cooking oil. Potential listing of China operations. And as mentioned earlier, its operations in China generated some US$14.3b of revenue for the group in FY08, and according to management, it also contributed about US$500m to its bottom line last year. Given the scale of its operations there, Wilmar has plans to spin off its China subsidiary with a primary listing either in Hong Kong or China. According to management, it plans to float 20-30% of its China business, but did not rule out selling more. Benefits of the move include unlocking value for existing shareholders and the ability to expand into other areas with the China listco etc. However, management cautions that it is still early days yet as the listing process may still take several years. Exhibit 8: Breakdown of Assets by Region FY08 (US$ m) Segment Assets % of Total South East Asia 9, % China 6, % India % Europe % Others % Total 16, % Source: Company Page 8 23 June 2009

9 South East Asia should be resilient. Meanwhile, the South East Asia market is the second largest revenue contribution, accounting for 24% of total FY08 revenue. Again, this comes as no surprise, given that its headquarter is in Singapore and its plantations are in both Malaysia and Indonesia. While these South East Asian countries are not immune to the global economic slowdown, these countries have been quick to mitigate the impact on their economies with additional fiscal stimulus packages. Besides cutting interest rates, these packages often involve the governments putting money into the hands of their citizens to sustain domestic consumption. Russia a potential for growth. Europe makes up another significant chunk of its revenue, with an 9% share in FY08. Wilmar is currently the largest edible oils refiner in Ukraine. Recently, Wilmar has formed a joint-venture (JV) with Nizhny Vovgorod Fats & Oils Group (NMGK) - one of the largest fats and oil producers of edible fats and vegetable oil and other related products in Russia - to further extend its reach into Eastern Europe. According to Wilmar, NMGK Group's main strength lies in its extensive channels targeted at consumers within Russia. Not cutting back on basics. But Europe, like Asia and the rest of the world, is facing a dire economic situation. Then again, governments there also recognised that drastic times call for drastic measures and have all put massive stimulus packages in place. And while consumers in tough times may still pinch on discretionary spending, they are unlikely/unable to cut back on essential food items and cooking oil is one of them. Nevertheless, we do expect consumers to "down trade" from a more expensive type of cooking oil to a cheaper alternative, and palm oil-based cooking oil is one of the cheapest around. And this could work in Wilmar's favour, given its extensive range of oilseed-related products India, the other Asian growth potential. The group has also made significant headway into India. The subcontinent now contributes around 6% of its total revenue (as of FY08), or around US$1.7b, which is more than double the US$793m sales recorded in the previous year. Again, the growth story is almost the same as China - a growing population that is also urbanizing albeit at a slower rate. Management believes India has huge market potential for Wilmar and it is still in the process of building more crushing and refining capabilities as well as expanding its consumer pack business. Page 9 23 June 2009

10 Leaving no stone unturned. Last but not least, Wilmar is also looking to expand its reach into the African sub-continent. Wilmar already has started to transplant its expertise into West Africa to develop oil palm and rubber plantations there. However, it would not be doing it alone - Wilmar intends to get experienced partners to assist in developing the integrated business model by providing local expertise in management, merchandising and distribution. So far, we understand that it has already invested in nearly 40 hectares of palm oil plantations and will be looking to expand into rubber plantations as well. Besides the abundance of land there, management added that it makes economic sense to produce there due to the high import tax (around 20% currently) as well as the tax breaks given by the African governments for agri-related companies. Page June 2009

11 Section C: Financial Review of 1Q09 Results Exhibit 9: Highlights of 1Q09 Results Year to 31 Dec (In US$ m) 1Q08 1Q09 % YoY 4Q08 % QoQ Revenue % % Gross profit % % Gross margin 12.6% 16.5% 11.5% EBITDA % % Depreciation & amortisation % % Operating profit % % Net interest % % Forex nm 0.0 nm Associates % % Exceptionals nm 0.0 nm Pre-tax profit % % Tax % 11.4 nm Minority interests % 1.3 nm Net profit % % Net Margin 4.8% 7.7% 6.4% Source: Company, OIR Lower selling prices affect performance. For the first quarter of FY2009, revenue fell by 30.6% YoY and 14.9% QoQ to US$4958.1m, where the drop was mainly due to lower selling prices of agricultural commodities. Compared to 1Q08, the average prices of major Palm & Laurics products were 40-50% lower, while major Oilseeds & Grains products were 10-50% lower. Exhibit 10: Segmental Revenue Breakdown US$ m Palm and Laurics Oilseeds and Grains Consumer Products Plantation and Palm Oil Mills 1Q08 1Q09 Others Source: Company, OIR Page June 2009

12 Physical demand still strong. On the other hand, we note that the decline in physical volume shipped was a lot smaller and some even showed an increase. For example, for its Palm and Laurics products, there was a fall of just 15.5% YoY in sales volume, as opposed to a 42.7% fall in revenue. For its Oilseeds & Grains business, sales volume actually jumped 24.7% YoY vs. a fall of 3.5% in revenue. Exhibit 11: Margin Trends USD m % 12.9% 16.5% 18% 12.6% 16% 10.6% 12.0% 11.5% 14% 9.1% 8.7% 12% 10% 7.7% 8% 6.4% 6% 4.8% 3.4% 3.9% 4.2% 4.8% 3.6% 4% 2.5% 2% 0% 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 Sales Gross Margin Net Margin Source: Company, OIR Improving margins. More importantly, we note that gross and net margins have been improving, despite the drop in revenue, especially in the last two quarters. According to management, the improvements in gross margin in 1Q09 came from better timing of its raw material purchases and product sales in its Palm and Laurics business; and sharply lower feedstock prices for its Consumer Products segment. In addition, we understand that Wilmar was also able to raise the selling prices of its consumer packs in China, which also added to the improved margins. On the net margin front, the increase came primarily from lower selling and distribution expenses - there was no export duty incurred in 1Q09 and lower freight rates to major destinations with the exception of the Middle East. Given that freight rates are still expected to remain low in the foreseeable future, we think that Wilmar should be able to sustain its margins. Page June 2009

13 Exhibit 12: Gearing Ratios As of 31st (US$ m) Dec-08 Mar-09 Debt/Equity 0.25x 0.23x - Net Debt Shareholders' Funds Adjusted Debt/Equity 0.10x 0.07x - Liquid Working Capital Adjusted Net Debt Interest Coverage 7.6x 10.0x Source: Company, OIR Comfortable cash position. On the balance sheet front, Wilmar ended the quarter with a strong cash balance of US$2608m, of which, US$1308m is not pledged to any bank. The group also has some US$12624m of credit facilities where only 39% has been utilized; and 64% of the utilized facilities were for trade financing lines, backed by inventories and receivables. Together with the unpledged cash, it has some US$9003m of total liquidity available as at the end of 1Q09. In any case, the net debt/equity ratio stood at a comfortable 0.23x at the end of 1Q09, which was also an improvement from 0.25x at the end of FY08. Source: Company Page June 2009

14 Section D: Valuation and Recommendation Trading closer to food commodity plays. The palm oil plantation segment in Singapore is pretty well represented by pure plantation plays like First Resources and Kencana Resources to plantations with sizable downstream operations like Indofood Agri-Resources. However, due to Wilmar's significant downstream operations in other edible oil products as well as trading business, we believe that we should also consider food commodity players like Olam International and Petra Foods in deriving the appropriate peer group comparison. As we can see from Exhibit 13, Wilmar trades closer to the latter companies than to pure plantation plays in terms of P/E. Exhibit 13: Peer Comparison SGX-Listed Price (S$) Mkt Cap (S$m) FY09F PER (x) FY10F PER (x) P/Book (x) First Resources Golden Agri Resources Indofood Agri-Resources Kencana Resources Olam International Petra Foods Simple Average Wilmar International Bursa-Listed Price (MYR) Mkt Cap (MYR m) FY09F PER (x) FY10F PER (x) P/Book (x) IOI Corp KL Kepong Sime Darby Simple Average Source: Bloomberg, OIR Looking across the border, we note that Wilmar still trades at a discount of nearly 20% to its plantation peers listed on Bursa. One reason for the higher valuations on Bursa could be that investors there understand plantation companies slightly better due to their longer listing status as compared to those listed on the SGX-ST. But we suspect this valuation discrepancy to narrow once investors here get a better handle on the plantation business i.e. we may see a re-rating of SGX-listed plantation plays. Page June 2009

15 Exhibit 14: Historical P/E Perspective Source: Bloomberg On a historical perspective, we note that Wilmar currently still trades at a discount of 20% to it's the average P/E of 21.2x since the reverse takeover of Ezyhealth Asia Pacific in Jul More importantly, we see that the P/E ratio has remained relatively low despite the recent rebound in price, suggesting that the relative quality of its earnings has improved as compared to just a year ago. Initiate coverage with BUY rating. Looking at both the relative valuation of its peers as well as the stock's historical average, we think that a valuation of 18x blended FY09/FY10 PER would be appropriate at this stage. This translates to a fair value of S$5.64 for Wilmar. Given the potential 15.4% upside potential from here, we initiate coverage on Wilmar with a BUY rating. We also note that we have yet to factor into our fair value is the potential spin-offs of its businesses in China, India and even Europe - we will be doing so as we get more information. Risks Volatile raw material prices. Despite its integrated agri-business model, Wilmar remains subject to the volatile fluctuations in the prices of vegetable oil like soy bean and CPO, which remains a key risk for us. However, we note that Wilmar has shown a consistent ability to manage the price fluctuations (see Exhibit 15), often riding out the volatility with aplomb. In addition, as cooking oil is a necessity and given demand should be fairly inelastic, we believe it may be less of an issue for more downstream play like Wilmar than pure plantation plays. Page June 2009

16 Exhibit 15: Revenue vs. CPO fluctuations (US$ m) Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 Rev enue CPO US$/ton Source: Bloomberg, OIR Foreign exchange fluctuations. Another key risk would be foreign currency fluctuations as it has substantial operations around the globe. However, Wilmar is aware of this and currently uses derivative financial instruments such as forward currency contracts, foreign currency options and various commodities futures, options and swap contracts to hedge its risks associated with foreign currency and commodity price fluctuations. Possible price caps on consumer packs. As Wilmar is selling an essential food item (cooking oil), this subjects its consumer packs to government price controls, especially in instances where inflation is very high. In these situations, Wilmar may face severe margin squeeze as its raw material costs continue to rise but any increase in its ASPs (Average Selling Price) would need approval from the government, where the process may be quite long drawn. Page June 2009

17 Appendix 1: Corporate Milestones 2008 Formed JV with Nizhny Novgorod Fats & Oils Group and Delta Exports Pte Ltd to spearhead expansion in Russia and the CIS countries Completed the merger with Kuok Group's palm plantation, edible oils, grains and related businesses in a deal worth US$2.7b, as well as a restructuring exercise to acquire the edible oils, oilseeds, grains and related businesses of Wilmar Holdings, including interests held by Archer Daniels Midland Asia Pacific and its subsidiaries in these businesses for US$1.6b Formed JV with Olam International and SIFCA Group - one of Africa's largest agro-industrial groups with significant interests across palm oil, cotton seed oil, natural rubber and sugar sectors in Africa.Successfully launched its inaugural US$600m convertible bonds issue due Renamed Wilmar International Limited on 14 Jul 2006 upon completion of the reverse takeover of Ezyhealth Asia Pacific Ltd 2006 Requoted on SGX on 8 Aug 2006 after a successful equity placement exercise at S$0.80/share, which raised some US$180m 2006 Concluded a major capacity expansion drive through the completion of: - three refineries with 4.5k MT aggregate daily capacity - three fractionation plants with 4.5k MT aggregate daily capacity - four palm kernel crushing plants with 800 MT aggregate daily capacity - four palm oil milling plants with 200 MT aggregate hourly capacity - one compound fertilizer manufacturing plant with 1k daily capacity - one refinery (2.5k MT daily capacity) and one fractionation plant (2k MT daily capacity) in East Malaysia via a JV with TSH Resources Bhd 2006 Expansion of oil palm plantation acreage through: - acquisition of five plantation companies with a combined land bank of 85k ha in Kalimantan, Indonesia - acquisition of 25k ha land bank by two existing subsidiaries - acquisition of a plantation company with a land bank of 30k ha in Jambi, Sumatra, of which 12.7k ha are planted 2006 Announced a proposed merger with the Kuok Group's palm plantation, edible oils, grains and related businesses comprising Kuok Oils & Grains Pte Ltd, PGEO Group Sdn Bhd and PPB Oil Palms Bhd in a deal worth US$2.7b. Separately, it also announced a restructuring exercise to acquire the edible oils, grains and related businesses of parent company, Wilmar Holdings Pte Ltd, including interests held by Archer Daniels Midland Asia Pacific and its subsidiaries in these businesses for US$1.6b Source: Company Page June 2009

18 Wilmar's Key Financial Data EARNINGS FORECAST Year Ended 31 Dec (US$ m) FY07 FY08 FY09F FY10F Revenue 16, , , ,220.4 EBITDA 1, , , ,194.6 Depreciation & amortisation Operating Profit , , ,841.0 Net interest Associates Exceptionals Pre-tax profit , , ,752.9 Tax Minority interests Net profit , , ,463.8 Earnings per share (cents) Fully diluted earnings per share (cents) BALANCE SHEET As at 31 Dec (US$ m) FY07 FY08 FY09F FY10F Cash , , ,755.1 Other current assets 6, , , ,816.3 Fixed assets 2, , , ,341.7 Other long term assets 5, , , ,323.4 Total assets 15, , , ,236.4 Current liabilities less debt 1, , , ,125.2 Debt 5, , , ,428.3 Other long term liabilities Total liabilities 7, , , ,917.8 Shareholders equity 7, , , ,897.5 Minority interests Total equity and liabilities 15, , , ,236.4 NTA per share (cents) Page June 2009

19 CASH FLOW Year Ended 31 Dec (US$ m) FY07 FY08 FY09F FY10F Operating profit before working cap. changes 1, , , ,314.6 Working capital changes -1, , Interest and tax Net cash from operations -1, , , ,930.8 Capex , Other investing flows Investing cash flow , Change in equity Net change in debt 2, Dividends paid Others , Financing cash flow 2, , Forex adjustments Net cash flow Cash at beginning of year , ,313.3 Overdraft , , Cash at end of year , , ,755.1 Key Ratios PER (x) Price/NTA (x) EV/EBITDA (x) Dividend yield (%) ROIC (%) ROE (%) Net gearing (%) 51.8 Net Cash Net Cash Net Cash PE to growth (x) Source: Company data, OIR estimates Page June 2009

20 SHAREHOLDING DECLARATION: The analyst/analysts who wrote this report holds NIL shares in the above security. RATINGS AND RECOMMENDATIONS: OCBC Investment Research s (OIR) technical comments and recommendations are short-term and trading oriented. - However, OIR s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon. OIR s Buy = More than 10% upside from the current price; Hold = Trade within +/-10% from the current price; Sell = More than 10% downside from the current price. - For companies with less than S$150m market capitalization, OIR s Buy = More than 30% upside from the current price; Hold = Trade within +/- 30% from the current price; Sell = More than 30% downside from the current price. DISCLAIMER FOR RESEARCH REPORT This report is solely for information and general circulation only and may not be published, circulated, reproduced or distributed in whole or in part to any other person without our written consent. This report should not be construed as an offer or solicitation for the subscription, purchase or sale of the securities mentioned herein. Whilst we have taken all reasonable care to ensure that the information contained in this publication is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness, and you should not act on it without first independently verifying its contents. Any opinion or estimate contained in this report is subject to change without notice. We have not given any consideration to and we have not made any investigation of the investment objectives, financial situation or particular needs of the recipient or any class of persons, and accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the recipient or any class of persons acting on such information or opinion or estimate. You may wish to seek advice from a financial adviser regarding the suitability of the securities mentioned herein, taking into consideration your investment objectives, financial situation or particular needs, before making a commitment to invest in the securities. OCBC Investment Research Pte Ltd, OCBC Securities Pte Ltd and their respective connected and associated corporations together with their respective directors and officers may have or take positions in the securities mentioned in this report and may also perform or seek to perform broking and other investment or securities related services for the corporations whose securities are mentioned in this report as well as other parties generally. Privileged/Confidential information may be contained in this message. If you are not the addressee indicated in this message (or responsible for delivery of this message to such person), you may not copy or deliver this message to anyone. Opinions, conclusions and other information in this message that do not relate to the official business of my company shall not be understood as neither given nor endorsed by it. Co.Reg.no.: E For OCBC Investment Research Pte Ltd Published by OCBC Investment Research Pte Ltd Carmen Lee Head of Research Page June 2009