Bolina Maybank130819(IC)

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Hong KongInitiating Coverage 19 August 2013

Bolina An Urbanisation Play Not To Be Missed A solid play on the urbanisation theme. We initiate coverage on under-researched Bolina with a BUY and 60% upside to our TP of HKD5.12, as pegged at 12X FY14F PER. We project a 21% net profit CAGR over FY13F-15F on the back of 16% sales CAGR, supported by demand for household sanitary products arising from both new home purchases and replacement needs. Sales growth will be driven by increasing brand recognition, capacity expansion and a growing sales network, as well as strategic alliances with national home decoration malls and real estate developers, among others.

Growing domestic business. Leveraging on its long experience as an ODM/OEM for international brands, Bolina is a recognised market leader in terms of both product designs and R&D capabilities, as demonstrated by industry awards. It also enjoys a tremendous scale and cost advantage against domestic peers, allowing market share gains in a fragmented market, which the market is projected to grow at a 14% CAGR over FY11-15F. Bolina’s products are priced at an average 20-30% discount to products of comparable quality from its international competitors, facilitating its expansion in lower-tier cities. We believe that the endorsement of an artist as its ambassador and the setting up of showrooms in key markets would help enhance its brand recognition.

Sustainable and decent profitability prompt re-rating. While investors are skeptical of Bolina’s high GPM, our channel checks suggest that its superior profitability is mainly due to its above-sector output yield of 90% vs the industry’s 70%, as our calculation shows that a 10ppt difference in output yield leads to 5ppt difference in GPM. Moreover, official numbers released by the local government matched the tax figure Bolina cited in its profit statement – an indirect proof, in our view, of the company’s strong profit. We anticipate further margin expansion on account of a favourable sales mix both at home and overseas. For example, it selects higher-margin export orders and focuses on ODM vs OEM orders, while at home, the sales contribution from one-piece toilets will continue to stay high against other categories.

Key catalysts and risks. 1) On-track capacity expansion; 2) satisfactory sales channel development; 3) potential M&A in the non-ceramic sanitary ware market to enrich product offerings; 4) more strategic alliances with property developers and decoration malls; 5) stringent water conservation industry standards prompt sales upgrade; 6) potential buyout target. Key risks: i) a short own-brand history, short listing record; ii) adoption of a third-party wholesale model may expose it to excessive inventory and overexpansion risk; iii) tied to volatile PRC property; iv) intense competition; v) any dramatic deterioration in the US housing recovery (30% of sales; 15-20% of net profit based on estimate).

Bolina – Summary Earnings Table Source: Company data, Maybank KEFYE Dec (CNYm) 2012A 2013A 2014F 2015FRevenue 817 989 1,192 1,428 EBITDA 307 397 496 609 Recurring Net Profit 246 284 352 431 Recurring Basic EPS (CNY) 0.28 0.28 0.35 0.42 EPS growth (%) 40.00 (0.08) 23.94 22.41 DPS (CNY) 0.09 0.08 0.10 0.13 PER 9.32 9.33 7.53 6.15EV/EBITDA (x) 6.60 5.01 3.78 2.94Div Yield (%) 3.53 3.22 3.99 4.88P/BV(x) 2.72 2.50 2.00 1.60Net Gearing (%) Net cash Net cash Net cash Net cashROE (%) 44.75 29.63 29.51 28.94ROA (%) 28.44 22.78 23.73 24.17Consensus Net Profit (CNYm) - 303 379 N/A

Buy

Share price: HKD3.21 Target price: HKD5.12

Jacqueline KO, CFA [email protected] (852) 2268 0633

Stock Information

Description: Bolina is currently the 2nd largest mid-to-high end brand in the PRC ceramic sanitary ware industry. Ticker: 1190 HK Shares Issued (m): 1,014.7 Market Cap (USDm): 417.6 3-mth Avg Daily Turnover (USDm): 2.4 HSI: 22,518 Free Float (%): 30.6 Major Shareholders: % Mr Xiao Zhiyong 59.13 Ms Xiao Xiu Yu 10.27 Key Indicators

ROE – annualised (%) 29.63 Net cash (HKDm): 812 NTA/shr (HKD): 1.28 Interest cover (x): 31.7 Historical Chart

Performance: 52-week High/Low HKD3.32/HKD2.09 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) 1.9 0.3 25.9 41.4 14.6 Relative (%) (3.8) 2.8 29.8 28.6 15.3

0.00.51.01.52.02.53.03.54.04.55.0

Aug 12 Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13

PRICE PRICE REL. TO HANG SENG INDEX

Source: Bloomberg

19 August 2013 of 30

Bolina Holding Co., Limited

Recommendation

Growing sanitary ware brand. Established in 2002 and listed on the HKEX in Jul 2012, Bolina is a leading ceramic sanitary ware producer in China with a 4% share of the domestic market and is ranked No. 2 among the domestic players in the mid-to-high-end category. Management targets to grow market share to 10% in the next 3-5 years. The company began life as an OEM manufacturer of international brands and launched the “Bolina” brand in 2008. As of FY12, own-brand sales accounted for 62% of total sales, supported by a network of 450 POS via 195 regional distributors and 44 sub-distributors. Management counts American Standard, Gerber, Kelim, Niagara Corporation and Crane among its overseas clients.

Valuation methodology. We initiate coverage on Bolina with a BUY recommendation and target price of HKD5.12, offering 60% upside from the current share price and implying 12X FY14F PER. The stock is trading at FY13/14F PER of 9.3X/7.5X. Separately, using a three-stage DCF model, we arrive at a fair value of HKD10.91 per share, which implies 25.6X FY14F PER. Our DCF-derived intrinsic value is significantly above the PER-derived TP, mainly due to the fact that the long-term growth story has yet to be fully unleashed in near term. We have also cross-checked our PER-derived TP against listed peers’ EV/EBITDA and PER multiples (figure 1). Listed on 13 July 2012 at an IPO price of HKD2.15, Bolina’s share price rose by 54% to a peak of 3.32 in May 2013, supported by on-track capacity expansion plan and solid results.

Comparable peers. In the absence of comparable ceramic sanitary ware names in the HK market, we benchmark Bolina to several HK-listed furniture and household product manufacturers. We also include international kitchen and bathroom product manufacturers in our analysis, namely, HCG (Hocheng), Joyou and Villeroy & Boch, HSIL, Globe Union, etc. Though Bolina appears to have the best earnings growth potential over the next three years (projected 21% NPAT CAGR over FY13-15F vs mid-teens for peers) with above-sector profitability, we believe the discount applied to its valuation vis-à-vis the industry average is justified given its short track record and the execution risks associated with the rapid expansion of its domestic brands.

Profitability comparison against peers. Investors are skeptical over the company’s high profitability vis-à-vis its listed peers. However, we believe that this skepticism is unwarranted. Ceramic toilets, in particular the one-piece which comprises ~70% of Bolina’s branded sales, command a much higher gross margin than any other bathroom and kitchen products such as faucets. Indeed, gross margins vary from India-based HSIL’s mid-teens to Germany-based Villeroy & Boch’s 43%. Among domestic names, Manwah’s China brand saw margins reaching almost 50% vs an export margin of 30%, with exports accounting for 70% of its sales. Bolina’s branded products saw margins at 56% vs. its export margin of 32-37%. (note: Bolina derives only around 40% of sales from exports).



Figure 1: Peers valuation comparison- Household consumer durables manufacturers

FY13F Latest Mkt cap EV/ Div Net Price Stock PER (x) P/BV EBITDA ROE yield gearingCompany (local cur) code (local cur, m) 2012A 2013F 2014F (x) (x) (%) (%) (%)Domestic peers Man Wah 8.81 1999 HK 7,801.87 13.97 12.43 10.89 2.29 8.42 18.01 3.41 Net cashRoyale Furniture 0.45 1198 HK 620.05 18.78 N/A N/A 0.31 10.28 N/A N/A 9.82 China Flooring 1.38 2083 HK 2,044.92 13.27 13.60 10.88 0.63 21.55 4.40 1.84 Net cashSamson 1.23 531 HK 3,743.64 25.58 15.86 13.22 0.87 10.29 5.73 11.35 Net cashBolina 3.21 1190 HK 3,257.19 9.32 9.33 7.53 2.50 5.00 29.63 3.22 Net cash Toto 1,162.00 5332 JP 411,304.5 16.21 12.68 16.63 1.80 7.32 8.75 1.50 Net cashJoyou 12.40 JY8 GY 297.20 8.87 7.42 6.75 0.82 4.20 12.30 0.00 Net cashHSIL 85.15 HSI IN 5,623.85 6.86 7.13 5.04 0.55 5.61 8.23 3.50 82.94 Villeroy & Boch 8.70 VIB GR 243.17 15.26 15.32 11.62 1.49 4.37 7.78 4.71 Net cashGlobe Union 22.05 9934 TT 6,594.07 N/A 26.66 10.70 1.53 N/A N/A 0.00 81.59 Geberit 231.30 GEBN VX 8,754.12 21.87 20.37 19.02 5.92 15.44 28.79 3.13 Net cashGWA 2.55 GWA AU 781.66 18.39 19.32 16.14 1.85 11.20 9.15 4.71 40.86 Hanssem 34,850.0 009240 KS 820,157.4 18.27 16.91 15.51 2.96 14.64 16.97 1.71 Net cashHocheng Corp. 9.60 1810 TT 3,550.59 85.99 17.45 N/A 0.65 28.23 0.79 0.00 42.11 Guangzhou Seagull 4.37 002084 CH 1,774.46 50.67 23.00 15.61 2.37 18.65 4.61 1.26 47.59 Markor 6.39 600337 CH 4,136.12 87.77 28.53 22.19 1.59 19.87 0.83 1.88 0.09

Source: Bloomberg consensus estimates, Maybank Kim Eng

Figure 2: GPM comparison with local peers Figure 3: GPM comparison with international peers

Source: Company data, Maybank Kim Eng Source: Company data, Maybank Kim Eng

Figure 4: Historical forward PER multiples trading range

Source: Bloomberg, Maybank Kim Eng

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Bolina Man Wah China Flooring Royale Furniture Samson

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Figure 5: Our three-stage DCF Valuation

HKD (‘000) 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F TerminalRevenue 989 1,192 1,428 1,570 1,727 1,900 2,052 2,216 2,394Less: COGS 507 598 700 785 881 988 1,088 1,175 1,269 Add: Dep. & Amort. 23 36 49 60 66 72 82 89 96EBIT 506 631 777 845 912 984 1,047 1,130 1,221 EBIT* (1-tax rate) 397 495 610 634 684 738 785 848 916 Less: CAPEX 150 200 200 250 250 250 300 300 300 Add: Dep & Amort. 23 36 49 60 66 72 82 89 96Less: Change in W.C. (34) 9 (35) 20 (50) 32 (49) 42 (55)FCFF 305 323 495 423 550 528 616 595 767 Cost of Equity (%) 6.8 Risk free rate (%) 3.85 Beta 0.28 Country premium (%) 10.58 Cost of debt (%) 3.6 WACC (%) 6.6 Discount factor 1 0.93809 0.88001 0.82552 0.77441 0.72646 0.68149 0.63929 0.59971PV of FCFFs 305 303 435 349 426 384 420 380 460 Terminal value growth (%) 2.5 PV of terminal value 10,930 FCFF 11,234 less: Total Debt 162 FCFE 11,072.22 Total number of shares (m) 1,014.70 Fair value per share (HKD) 10.91 Source: Maybank Kim Eng estimates

Our earnings projections

Sales. We project FY13-15F revenue CAGR of 21%, driven by an expansion of its domestic sales network as well as stable export demand. We expect the number of domestic POS to increase from 450 in FY12 to 600/800/1000 in FY13/14/15F. Our recent communication with management indicates that its YTD sales network expansion progress is on track. We project sales volume growth of mid-to-high teens during the period and forecast a mid-single digit uptick per year ahead in blended ASP to CNY221 in FY15F on the back of a better sales mix. We expect the sales contribution from its own-brand products to increase from 62% in FY12 to 71% in FY15F.

Figure 6: Sales breakdown by channel (FY12) Figure 7: Sales breakdown by product category (FY12)

Source: Company data, Maybank Kim Eng Source: Company data, Maybank Kim Eng

Branded products62.3%

ODM21.5%

OEM16.2%

Two-piece toilets (with water tanks)

35.2%

One-piece toilets42.5%

Wash basins and stands

6.1%

Other ceramic products including urinals &

bidets4.3%

Non-ceramic sanitary products11.9%



Figure 8: Our sales assumptions FY11A FY12A FY13F FY14F FY15F

Production Capacity(units) 3,900,000 4,900,000 4,900,000 6,900,000 7,900,000 Production volume(units) 3,531,786 4,552,100 4,655,000 5,972,257 6,859,450Sales volume to production vol. 102.41 93.68 106.31 95.00 94.00Utilization rate (%) 90.56 92.90 95.00 86.55 86.83 Sales volume Total 3,616,965 4,264,424 4,948,529 5,673,645 6,447,883 47.4 17.9 16.0 14.7 13.6Own branded 1,248,133 1,670,591 2,054,827 2,486,341 2,983,609 276.39 33.85 23.00 21.00 20.00ODM 1,230,610 1,319,462 1,517,381 1,714,641 1,903,251 (3.17) 7.22 15.00 13.00 11.00OEM 1,138,222 1,274,371 1,376,321 1,472,663 1,561,023

33.71 11.96 8.00 7.00 6.00ASP (CNY/unit) Total 181.2 191.5 199.9 210.1 221.4 19.76 5.68 4.40 5.09 5.36Own branded 304.5 304.4 313.5 326.1 339.1 (21.12) (0.02) 3.00 4.00 4.00ODM 131.6 133.1 133.1 133.1 133.1 (0.62) 1.15 1.00 1.00 1.00OEM 99.7 104.0 104.0 104.0 104.0 13.21 4.30 0.00 0.00 0.00Sales breakdown (%) Self- branded products 57.98 62.27 65.12 68.01 70.88ODM 24.71 21.51 20.42 19.15 17.75OEM 17.31 16.22 14.46 12.84 11.37Source: Company data, Maybank Kim Eng estimates

Gross margins. We project a 1.02/1.11/1.09ppts YoY improvement in blended gross margins over FY13/14/15F, mostly driven by a better sales mix owing to a higher sales contribution from its own-brand products, while margins should also improve on greater production scale. We anticipate that rising sales contributions from one-piece toilets will improve the profitability of the ODM division. Major cost of goods sold (COGS) items include toilet lids and tankers, raw materials (such as feldspar 長石, sericite 絹雲石 and clay 粘土) and packaging materials. We

believe these items are relatively abundant and easily available in the market, therefore expect cost pressures to be minimal. In particular, Zhangzhou, Tanshan and Foshan can easily access quality raw materials for the manufacturing of ceramic products given their proximity to the sources of supply.

Figure 9: Gross margins assumptions by segments

Gross margin (%) FY11A FY12A FY13F FY14F FY15FBlended 46.34 47.73 48.75 49.86 50.95 -Own branded 57.00 55.50 55.50 55.93 56.35 -ODM 33.40 37.20 39.08 40.30 41.50 -OEM 29.10 32.00 32.00 32.00 32.00

Source: Company data, Maybank Kim Eng estimates

Figure 10: COGS breakdown (FY11)


toilet lids and tankers31.2%

raw materials17.7%manufacturing

overheads12.7%

direct labor cost13.9%

fuel 10.9%

packaging materials

13.6%



Figure 11: Our COGS assumptions FY11A FY12A FY13F FY14F FY15F

COGS(CNY/unit) Blended 97.3 100.1 102.5 105.4 108.6 YoY change (%) 0.9 2.9 2.4 2.8 3.1Own brand 130.9 135.5 139.5 143.7 148.0 YoY change (%) (42.4) 3.5 3.0 3.0 3.0ODM 87.7 83.6 81.1 79.5 77.9 YoY change (%) (2.8) (4.6) (3.0) (2.0) (2.0)OEM 70.7 70.7 70.7 70.7 70.7 YoY change (%) 22.7 0.0 0.0 0.0 0.0Source: Company data, Maybank Kim Eng estimates

Profitability analysis. Given that two-piece toilets make up almost 90% of ODM/OEM sales compared with approximately 70% of self-branded sales contribution coming from one-piece toilets, we estimate the gross margin for two-piece toilets to be 32-33% vs 67% for one-piece toilets. We calculate the COGS per unit of a two-piece toilet to be CNY70-80 vs CNY130-140 for a one-piece toilet. We estimate the ex-factory price of self-branded two-piece toilets to be CNY120 per unit vs CNY400 per unit for one-piece toilets. Based on the 60% discount given to retail prices under the ex-factory price-setting mechanism, the implied retail price for a self-branded one-piece toilet is thus CNY1,600, largely in line with our observation in stores.

SG&A expenses. We estimate the SG&A-to-sales ratio would increase by 17bps-40bps YoY over FY13F-15F in view of Bolina’s push to establish regional offices and showrooms, build up its brand as well as hire new staff for front-line positions, its back office and production plants. The company currently has around 2,000 employees and the addition of new production lines means it needs to increase staff by another 400-500 workers. As for other major items, we believe the cost as a percentage of sales should come down thanks to operating leverage. Going forward, management expects to bear part of the transportation expense for distributors (ie, the distance from production plant to regional office) but we believe the increment to the cost ratio should be minimal.

Figure 12: Our distribution and selling expenses to sales ratios assumptions As a % of total sales FY11A FY12A FY13F FY14F FY15FLogistic expense 1.3 1.2 1.3 1.3 1.3A&P 1.3 2.0 2.3 2.7 3.3Booth renovation 0.1 0.1 0.1 0.1 0.1Operating lease 0.2 0.2 0.2 0.2 0.2Salary and staff welfare 0.4 0.7 0.7 0.6 0.6Travelling and entertainment 0.4 0.4 0.5 0.5 0.5Others 0.2 0.2 0.1 0.1 0.1Total 3.9 4.8 5.2 5.5 6.0

Source: Company data, Maybank Kim Eng estimates (FY12 numbers are based on our estimates as company did not disclose)

Figure 13: Our G&A expenses to sales ratio assumptions As a % of sales FY11A FY12A FY13F FY14F FY15FSalary & welfare 1.9 2.1 2.3 2.5 2.6R&D 0.8 2.0 2.5 2.7 2.7Depreciation & Amort. 0.4 0.4 0.4 0.4 0.4Exchange losses 0.2 0.4 0.4 0.1 0.1Office supplies 0.4 0.4 0.3 0.3 0.3Travelling & entertainment 0.3 0.3 0.3 0.3 0.3Professional fee 0.2 0.2 0.1 0.1 0.1Listing expenses 2.6 0.6 - - -Others 0.8 0.8 0.7 0.5 0.3Total 7.8 7.2 7.0 6.9 6.8

Source: Company data, Maybank Kim Eng estimates (FY12 numbers are based on our estimates as company did not disclose)



Net profit. Effective tax rate will increase significantly from 12.9% in FY12 to 21-22% in FY13F with the absence of one-off tax rebate and expiry of certain tax reduction benefit. The company is currently applying for the accreditation of New and High Technology Enterprise for Zhangzhou Wanhui, therefore, the effective tax rate maybe lower in future if the application is approved. We therefore assume a tax rate of 21.5% over FY13F-15F for conservative purpose.

Financial strength analysis

Balance sheet. The company’s balance sheet structure is simple as assets mainly consist of fixed assets, receivables and inventory while liabilities are composed of bank loans and payables. We expect the company to remain in a net cash position over the next several years.

Figure 14: Major balance sheet ratios

FY12A FY13F FY14F FY15FROE(%) 44.7 29.6 29.5 28.9 ROA(%) 28.4 22.8 23.7 24.2 Net cash(CNYm) 619 660 773 862


Capex and cash flow. We project FY13/14/15F capex of CNY150m/200m/250m as we anticipate the construction of one new production line with a capacity of 1m units every year, at a cost of around CNY130m per line. The remaining capex will be for maintenance as well as investments for its self-operated showrooms. We project a free cash flow of CNY128m-201m for the three respective years. Dividend-wise, Bolina does not yet have a payout policy but we expect it would maintain its last year’s payout of around 30% given adequate free cash flow. That said, dividend of CNY85m/106m/129m will be declared.

Figure 15: Major cash flow items

(CNYm) FY12A FY13F FY14F FY15FCFO 300 278 401 446 CAPEX (42) (150) (200) (250)FCF 257 128 201 196


Cash conversion cycle. In general, Bolina has been able to secure credit terms of 15-90 days, up to a maximum of 120 days, from suppliers of certain clay materials. Its ODM and OEM customers can enjoy a credit period of between five days and three months. However, domestic sales are almost always settled in cash upon delivery. Only a limited number of credit-worthy customers get to enjoy up to 12 months of credit terms. Overall, we expect the AR days to improve with domestic sales contribution on the rise. We believe inventory days will improve on a shorter production lead time and better forecasts of input requirements.

Figure 16: Cash conversion cycle

FY12A FY13F FY14F FY15FAR days 26.0 25.0 24.0 23.0 AP days 24.0 23.0 22.0 21.0 Inventory days 63.0 60.0 58.0 56.0




Investment thesis

Visible growth prospects. China’s sanitary ware market is expected to grow at 14.4% CAGR over 2011–2015, according to business consulting firm Frost & Sullivan. Ceramic products will account for 54.4% of the total market share. The ceramic category is also projected to increase at 14.4% CAGR over the same period, spurred by 18.5%/15.4% growth in the mid-to-high-end/premium sub-segments. As one of the leading players and backed by its solid capacity expansion plan, we believe Bolina is well-positioned to capture new growth opportunities in the market. Its sixth production line is slated to commence operations in late 2013/early 2014 and this will increase its annual production capacity from 4.9m to 5.9m units. Management is planning to add a seventh production line, as robust domestic and overseas sales orders have already pushed utilisation rate to over 90%.

Strategic tie-ups and brand building. In 2011, Bolina formed strategic partnerships with well-established national home decoration malls and department store chains, as well as real estate developers. These partners include Red Star Macalline, Jinsheng Group and Onelink Industrial. The tie-ups not only give its distributors priority in establishing POS in the malls, but also ensure that Bolina receives exclusive preferential consideration when the property developer procures sanitary ware for its projects. Meanwhile, our channel checks also indicate that the company has tied up with well-known developers such as Shimao and Gemdale on some projects. On a separate note, to further increase brand recognition, the company hired celebrity singer-actress Christine Fan to be its ambassador from May 2012 to May 2014. It also plans to set up self-operated showrooms across China to boost its brand image. Overall, we believe the strategic alliances and investment on brand-building should drive business growth in the future.

Figure 17: Strategic alliances

Macalline

Priority to establish points of sales in over 100 shopping malls across China

Currently 63 points of sales in operation

Jinshen Group

Priority to establish points of sales in over 14 shopping malls in China

Currently five points of sales in operation

Onelink Industrial 萬菱實業

Designated as the exclusive preferred supplier of ceramic sanitary ware products

Onelink is a real estate developer with experience in large-scale high-end commercial properties

Source: Company data, Maybank Kim Eng



Figure 18: Snapshots of Bolina’s stores

Source: Maybank Kim Eng visit

Figure 19: Bolina’s advertisements featuring its ambassador, Ms. Christine Fan.




Figure 20: Latest marketing activity to celebrate its 1-year listing anniversary

Source: Company, Maybank Kim Eng

Potential M&As in non-ceramic ware market. Judging by Bolina’s improving cash-generation capability and limited capex requirement, we believe the company currently is in a net cash position. This means it would be financially well-placed to acquire non-ceramic ware companies if it so wishes, given that sales in this extremely fragmented market have been projected to grow at low-to-mid teens CAGR over FY11-15F. We understand that Bolina has been in talks with 2-3 potential takeover targets. If a deal can be reached at reasonable valuations, it would immediately provide positive earnings contribution while broadening future income streams.

Strong product quality is key. Apart from the various initiatives mentioned above, we believe the key factor driving Bolina’s success is its products. We believe Bolina’s products combine fashionable design and outstanding product features. For example, its “3.0 liter-per-flush water-conservation siphonic toilet” was innovative, with a much lower water requirement than the six liters per flush required by the Chinese National Standards. The company’s products also satisfy the higher standards set by European and US markets. Bolina is also renowned for its expertise in dirt removal as well as anti-bacterial and high durability features. Given the ongoing upgrades in living standards and continuing urbanisation, we believe that Bolina will be able to capitalise on this trend on the back of its strong product knowhow.

Key catalysts Re-rating on solid development. Despite a projected 21% net profit CAGR over FY13-15F, Bolina is trading at only 9.3X/7.5X FY13/14F PER. We believe the company’s short track record and lack of analyst coverage are the two major reasons behind the cheap valuation. Investor scepticism over the company’s high profitability vis-à-vis its listed peers is also not a fair assessment in our view, given different target markets and product mix. In our view, Bolina could take a leaf out Prince Frog’s book – the latter’s re-rating story over the past year is a good example of how higher valuation multiples can be justified on the grounds of rising own-brand sales contributions, improving brand recognition with celebrity endorsements and growing distribution network. On a separate note, we found that Bolina (under name of Zhangzhou Wanhui) was among the top tax payers in 2012 (CNY50m-100m group) as released by local government, matching the tax figure Bolina cited in its profit statement – an indirect proof, in our view, of the company’s strong profit.. We believe this should dismiss some investors’ concern.



Figure 21: Re-rating of Prince Frog

Source: Bloomberg, Maybank Kim Eng

Figure 22: 2012 Top corporate tax payers list

Source: Zhangzhou Corporates Association, Maybank Kim Eng

Potential buyout target as well. We believe Bolina could also to be a buyout target for many well-established international names, given its meaningful production scale and advanced production technique. In particularly, we have seen more active M&A and strategic alliances in the global sanitary ware market, as different players are aiming to consolidate the market and capture growth potential outside their home markets. For example, German sanitary fittings maker Grohe (owned by TPG and Credit Suisse) increased its stake in Joyou to 72% in Mar 2013 after taking a majority holding in Joyou in 2011. It has also set up JV with Joyou to enhance its PRC distribution network. On a separate note, Japanese toilet maker Lixil Group announced in June 2013 that it would pay about USD342m to buy American Standard Brands (owned by Sun Capital Partners). Previously, Roca has acquired YING and Giessdorf.

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Competitive strength analysis

Strong specifics to ride on favourable trend. Both our SWOT and Porter’s Five Forces Model analyses indicate that Bolina possesses a number of company-specific strengths, including favourable location, strong R&D and outstanding product quality. These have helped enhance brand recognition and deepen sales penetration nationwide, particularly in lower-tier cities, enabling the company to seize business opportunities thrown up by continuing urbanisation. We also believe that Bolina’s experienced management team would be able to replicate the success demonstrated in the past. Despite keen competition and lingering oversupply issues, we are confident that industry consolidation would take place as customers trade up to better quality products and, in turn, benefit the leading players. Volatility in the real estate market may pose risks in the short term but is unlikely to hinder the increase in new home purchases and renovation demand in the long run.

Figure 23: SWOT analysis

Strengths Opportunities

Strategically located, with access to high-quality raw materials, skilled labour pool, and convenient transportation

Well-recognised product quality

Scale advantage

Dedicated, stable, and experienced management team

The PRC sanitary ware market is growing at a faster growth rate in the mid-to-high end range and premium categories

Formation of strategic alliances to drive growth

M&As

Capacity expansion

Weaknesses Threats

Short track record

No access to end-points sales data

Relies on distributors to offer installation and delivery, therefore it may be difficult to control after-sales service to customers

Zero exposure to e-commerce

Any slowdown in the PRC and US real estate markets may lower demand for sanitary ware

Rising production costs in China

Forex volatility (OEM/ODM orders mostly denominated in USD)

Rising industry competition

Source: Maybank Kim Eng

Figure 24: Solid relationship with ODM/OEM customers




Figure 25: Brand awareness and consumer preference in 2010

Source: Frost & Sullivan, Maybank Kim Eng

Figure 26: Porter’s Five Forces Model Analysis

Source: Maybank Kim Eng

Key risk factors

Excessive channel inventory. Bolina sells all its products to distributors on a wholesale basis and does not have access to endpoint sales data. Future sales may therefore be adversely affected if excess inventory exists in the channel. A case in point: Sportswear names’ overexpansion in the earlier years has resulted in continued destocking in recent years.

Sales channel execution. Though regional offices have been set up since last year to better monitor its distributors, Bolina maynot be able effectively to keep tabs on all the POS. Moreover, its generous store renovation subsidies may unwittingly encourage distributors to open as many stores as possible.

Customer concentration. Bolina’s top three export customers accounted for 90% of its total export sales in FY12 or 35% of total sales. Niagara Conservation is the largest client, contributing around 20% to its sales in FY12 or over half of exports sales. Any termination of cooperation with these international brands

17.7%

14.7%13.8%

10.1%

5.1%

14.2%15.0%

13.0%

8.4%

4.6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Kohler Arrow Toto American Standard Bolina

Brand awareness Consumer preference

Bargaining power of suppliers: Low The principal raw

materials, accessories and packaging materials

can be easily sourced from the market.

Industry competition: Medium-to-High

The ceramic sanitary ware market is fragmented; both domestic and

international brands are growing their presence to grab market share.

Bargaining power of customers:

Medium- to-High Numerous brands both domestic and

foreign are available on the market

Threat of substitutes: Low We do not see much chance for ceramic toilets to be replaced.

Threat of new entrants: Low The business is capital intensive and requires skilled labour. It will also take time to build up the brand’s reputation.



would therefore hurt Bolina’s sales and profitability. Moreover, as 90% of its exports are bound for the US, sales would also hinge on the health of to the property market there.

Customer satisfaction. Distributors are required to provide delivery, installation and maintenance services to customers. But it would be difficult for Bolina to ensure that all distributors are able to offer prompt and comprehensive after-sales service and support to customers. However, it is such services that hold sway over the brand’s long-term value, in our view.

Short track record. Bolina’s eponymous brand has only a short five-year history, much shorter compared with the brands of most of its competitors. But it has grown rapidly thanks to management’s generosity in sharing the channel profit with distributors. Nevertheless, competitors still enjoy a certain degree of competitive advantage over Bolina, namely, brand awareness and word-of-mouth recommendation. Moreover, the company has only four years of financial data available publicly due to its short listing history.

Lease expiry. Since 1 Mar 2002, Bolina has leased three properties from Fujian Zhanglong for use as a production plant, an office and warehouse storage for Wanjia Factory No.1 and Wanjia Factory No.2. When the lease expires on 28 Feb 2014, Bolina will have priority to renew the agreement, albeit at a much higher rent. We estimate that rental expenses of these properties currently are only around CNY7m-8m per year. However, should the lease be terminated, the company may have to find alternative premises and this may result in a short-term disruption to production.

Industry Overview

Market size. The retail sales value of China’s sanitary ware market grew at 16.6% CAGR over 2006-2011 and reached CNY84.7b in 2011. In comparison, total completed floor space of residential properties increased at 10.5% CAGR over the same period. According to Frost & Sullivan, sanitary ware sales in China are projected to grow at 14.4% CAGR over 2011-2015F on the back of new home purchases and increased renovation demand as urbanisation gathers pace and living standards improve. Current per capita expenditure (CNY62.8) on sanitary ware products in China is also 30-50% below its developed peers. In fact, renovation only accounts for ~20% of total volume of sanitary ware purchases in China vs ~50% in the US.

Figure 27: China- Retail sales value of sanitary ware market


39.3 49.6

55.8 60.3 72.9

84.7 97.3

110.4

125.0

144.8

0

20

40

60

80

100

120

140

160

2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E

(CNY billion)



Figure 28: China – floor space of completed residential properties


Major product categories. Sanitary ware products are divided into two major categories based on the type of raw materials used during manufacturing, namely, ceramic and non-ceramic. Ceramic-based products account for more than half of the market. Examples of such products include covering toilets, washbasins, urinals and squat pans. Toilets make up approximately half of the total sales value of this category. According to Frost & Sullivan, the sales value of the ceramic category is projected to grow at 15.9% CAGR over 2011-2015F and reach CNY38.3b by 2015F. Non-ceramic items include bath tubs, bath cabinets, flushers and faucets. Ceramic sanitary ware products retail for CNY500-1,000 in the low-end segment, CNY1,200-9,000 in the mid-to-high-end segment and CNY9,000-15,000 in the high-end segment. These three segments accounted for, respectively, 46%/47%/7% of total sales in FY12. Note that sales in the mid-to-high-end segment are expected to grow at 18.5% CAGR over FY11-15F, beating the whole industry.

Figure 29: China – breakdown of sanitary ware sales by product, 2011

Ceramic Toilets bowls, basins, urinals, squat pans, bidets, mop sinks and other similar products

Non-ceramic Bath tubs, bath cabinets and shower room products. Metal parts and accessories. Other products


1,314 1,464 1,594

1,842 1,957 2,203

2,533

2,922 3,246

3,582

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F

Projected 2010-2015F CAGR = 12.5%

Projected 2010-2015F CAGR = 10.5%

Ceramic toilets, 25.1%

Ceramic basins, 19.2%

Other ceramic products, 10.1%

Non-ceramic products, 45.6%

Ceramic products, 54.4%



Figure 30: Retail sales value of the PRC ceramic sanitary ware market by segment (CNYm)


Figure 31: Retail sales value of ceramic toilet, basin and other ceramic products in China


Competitive landscape. The ceramic sanitary ware market is especially fragmented in the mid-to-high-end segment, where the top 10 non-local brands commanded only 15.6% share of the market as at end-2012. Market statistics show that there are around 50 manufacturers in China with total annual capacity of over 500,000 units. US-based Kohler leads the competition in terms of sales, brand awareness and consumer preference. It is followed by local producer Arrow in the second place and Japan-based TOTO in the third place. American Standard and Bolina, both popular brands, are in the fourth and fifth positions, respectively. Our visits to Bolina’s stores suggest that its products are retailing at a 20-30% discount to those of its international competitors. Export-wise, leading players include Huida, Swell. Monopy, Cascade, Annwa and Arrow.

Figure 32: Top 10 brands in China’s mid-to-high end ceramic sanitary ware market (2011)

Rank Brand Retail sales value (CNYm) Market share (%)1 Kohler (科勒) 1,726 8.02 Arrow (箭牌) 1,468 6.83 TOTO (東陶) 1,458 6.74 American Standard (美標) 1,127 5.25 Bolina (航標) 951 4.46 Faenz (法恩莎) 774 3.67 Annwa (安華) 736 3.48 HCG (和成) 552 2.59 Roca (樂家) 534 2.5

10 MICAWA (美加華) 305 1.4


569 937 1,110 1,661 2,422 3,084 3,733 4,265 4,868 5,473 6,258 7,962 9,987 13,617 18,167 21,714 24,947 31,240

37,400 42,788

12,136 14,520 16,646 17,934

19,782 21,283

23,157 24,393

26,107 30,783

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E

Premium Mid-to-high end Low end

7,965 10,102 11,602 14,622 18,167 21,211 25,335

28,642 33,240 38,292 6,257 7,379 9,157

11,05614,130

16,29018,143

21,13124,861

28,456

4,7415,938

6,9847,533

8,0758,580

9,61110,896

11,815

13,406

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2006 2007 2008 2009 2010 2011 2012 2013E 2014F 2015F

Ceramic toilets Ceramic basins Other ceramic products



Figure 33: Top 10 domestic brands in China’s mid-to-high end ceramic sanitary ware market (2011)

Rank Brand Retail sales value (CNYm) Market share (%)1 Arrow (箭牌) 1,468 6.82 Bolina (航標) 951 4.43 Faenz (法恩莎) 774 3.64 Annwa (安華) 736 3.45 MICAWA (美加華) 302 1.46 Giessdorf (吉事多) 228 1.17 DOFINY (杜菲尼) 183 0.88 HeGII (恆潔) 178 0.89 VICTOR (維可陶) 160 0.7

10 YING (鷹衛浴) 149 0.7


Major brands

Kohler 科勒. Established in 1873, US-based Kohler has 52 manufacturing plants

on six continents and more than 50 global brands in its four major business units, namely, kitchen and bath, global power, interiors and hospitality and real estate. Since establishing its China headquarters in Shanghai in 2002, Kohler has set up 10 production plants and more than 10 flagship stores nationwide. Its one-piece toilet is priced at between CNY2,400 and CNY5,000 per unit (up to CNY20,000).

Arrow 箭牌. Established in Shanghai 17 years ago, Arrow has developed itself

into the largest domestic ceramic ware product manufacturer in China. It has over 50 POS in Shanghai, including 10 large-scale specialty stores at renovation and decoration malls as well as around 20 franchisees. It is well known and active in commercial projects such as hotels and public facilities. Its one-piece toilet retail price is at around CNY1,000.

TOTO 東陶. Established in 1917, TOTO has since become one of the largest

makers of plumbing products in Japan. It operates 60 consolidated companies in 18 countries. China accounted for over half of its overseas market sales. The company is adding its 10th production base in Zhangzhou, Fujian Province, in 2014, as it seeks to better penetrate inland markets. Its one-piece toilet retails for between CNY2,400 and CNY6,000 per unit.

American Standard 美標. American Standard Brands is a leading manufacturer

of a wide range of high-quality kitchen and bath products for residential and commercial customers in North America, Canada and Mexico, among others. It currently has a presence in over 100 cities in China. In Jun 2013, Japan’s Lixil announced that it bought a 100% stake in ASD Americas Holding Corp, the parent company of American Standard Brands, from a unit of private equity firm Sun Capital Partners, at an enterprise value of USD542m. Its one-piece toilet retails for between CNY1,000 and CNY5,000 per unit.

Joyou 中宇 . Listed on the Frankfurt Stock Exchange, Joyou designs,

manufactures and sells bathroom faucets, kitchen products, shower products and sanitary ware products, among others. It sells its own-brand products in around 5,000 POS in China and under international brands in overseas markets. The company derives around 40% of sales from bathroom faucets (which is of lower margin) and around 10% from ceramic toilets and bathtubs. Its one-piece toilet retails for between CNY800 and CNY1,600 per unit. It also distributes Grohe products in China. Grohe owns 72% of the company.



Business Model

Production. Bolina has four manufacturing plants in Zhangzhou city in Fujian Province, namely Wanjia Factory no. 1, Wanhui Factory, Wanjia Factory no. 2 and Wanrong Factory. Its five production lines have an aggregate capacity of 4.9m units. The sixth production line is scheduled to commence operations in late 2013/early 2014 and will raise total capacity by another 1m units. The main production machinery include low battery line, automatic glazing robots, quick dry machines and a wide section energy-saving tunnel kilns. The plants operate round the clock (three shifts) to maintain stable temperature and humidity. Natural gas is used to fire the products at kilns while other production equipment is powered by electricity.

Figure 34: Snapshots at production plant in Zhangzhou

Source: Maybank Kim Eng visits



Figure 35: Production process

Source: Company data, Maybank Kim Eng Visit.

Domestic distribution model. Bolina adopts a third-party distributor model, as this allows the company to expand its retail presence faster and more cheaply. It also helps to minimise execution risk when expanding into new regions as the company can leverage on the distributors’ strong knowledge of the local market. Bolina has increased its number of distributors and POS from 52/74 in 2009 to 195/450 in 2012. Distributors must sell only its products at their POS and annual reviews are conducted prior to renewal of the distribution agreements. Full payment is required before they can take delivery of the goods. Distributors are also obliged to maintain consistent standards in decoration, display, operations and marketing before they can qualify for decoration subsidy from Bolina. Sub-distributors are permitted and there were of them in FY12. Bolina has so far set up regional offices in Tianjin, Wuhan, Xian and Foshan to better manage its relationship with distributors, four more regional offices will be set up in FY14F.



Figure 36: 450 points of sales as at end 2012


Figure 37: Location of new regional offices

Location Market coverage Establishment date Target Tianjin Northern China (Inner

Mongolia, Shanxi, Hebei) Nov 2012 To cover 200 POS in three years

and reach a sales value of CNY200m

Foshan Southern China (Guangxi, Guangdong, Hainan)

Mar 2013 To cover 200 POS in the next 3-5 years with sales exceeding CNY120m

Wuhan Central China (Henan, Hubei, Hunan)

Apr 2013 To cover more than 100 POS in the next three years with sales exceeding CNY100m

Xian Western China (Shaanxi, Gansu, Ningxia, Xinjiang)

June 2013 N/A (no disclosure yet)


Figure 38: Number of points of sales As at 31 December 2009 2010 2011 2012 Remarks Northeast China 9 24 55 62 Beijing, Tianjin, Heilongjiang, Liaoning, Jilin North China 18 34 79 107 Inner Mongolia, Hebei, Henan, Shandong,

Xinjiang, Shanxi Southeast China 9 15 40 61 Fujian, Jiangxi East China 27 34 65 90 Shanghai, Zhejiang, Jiangsu, Anhui Central China 3 5 22 31 Hunan, Hubei Northwest China 1 3 9 17 Shaanxi, Ningxia, Gansu Southwest China 7 11 51 82 Sichuan, Chongqing, Yunan, Guizhou,

Guangdong, Guangxi, Hainan Total 74 126 321 450 Number of distributors 52 70 158 195 Number of sub-distributors

9 19 47 44


After-sales service. Distributors are required to provide delivery, installation and maintenance services to customers. Therefore, the company provides training courses for sales staff and installation technicians of its distributors and sub-distributors, and also provides them with product updates. The company provides a warranty as to production defects on its own-brand ceramic sanitary ware products for three years, and a one-year warranty for its non-ceramic sanitary products. Distributors will provide and pay for technical support and maintenance



services to end customers, and, subject to Bolina’s quality control checks and approvals, free spare parts are offered for repair.

Market analysis. Northern, eastern and northeast China are the three most important markets for Bolina, judging by the number of POS and the revenue contribution from these regions. Eastern China leads in terms of sales per POS at CNY1.3m per store (ex-factory prices), followed by CNY1.2m per store in northern China and CNY1.1m in northeast China. That said, the retail sales value at these stores averages around CNY3m annually. The company also has a strong presence in Beijing, Heilongjiang, Fujian, Inner Mongolia, Jiangsu and Anhui. We estimate that Fujian, its home base could account for 10-11% of its branded sales, followed by Jiangsu at 9-10%. We met with one of its top five distributors, which runs four stores in Zhangzhou and also sells to a number of sub-distributors. It said its per store retail sales average CNY7-8m pa with net margin in the mid-to-high teens.

Figure 39: Domestic sales breakdown by regions (FY12)


Figure 40: Bolina’s sales per POS (CNY’000)

FY09 FY10 FY11 FY12Northeast China 399.4 871.7 1,197.5 1,133.1North China 127.4 615.5 1,228.0 1,183.4Southwest China 431.0 1,273.3 1,287.0 1,033.3East China 324.9 1,221.2 1,630.2 1,300.1Central China 289.0 1,015.4 765.1 927.7Northwest China 0.0 174.0 665.7 838.8Southwest China 442.1 1,236.1 619.4 1,023.4 Total 304.07 965.57 1,167.37 1,119.66


Figure 41: Domestic sales breakdown by type of city (FY12)


Northeast China13.9%

Northern China25.1%

Southeast China12.5%

Eastern China23.2%

Central China5.7%

Northwest China2.8%

Southwest China16.7%

First-tier cities8.7%

Second-tier cities23.1%

Third-tier and other cities68.2%



ODM/OEM management. Bolina’s export business is handled by a separate team led by Ms Hu Yifang, who joined the company in Mar 2002. Thirty-three sales staff are divided into three separate teams to i) maintain existing large accounts in North America (both retail and wholesale markets), ii) cover other ODM/OEM customers, and iii) secure potential new customers. Staff stability is high as the majority of the team members have worked with Bolina for more than eight years. Preliminary sales orders are normally agreed upon in September ahead of the New Year, while actual orders would be received around one quarter before the delivery.

Pricing Policy. Bolina offers wholesalers a discount on its own-brand products but would give distributors a suggested retail price list. For ODM/OEM orders, the pricing differs, depending on the customer’s order scale, packaging requirement and product category. In China, we estimate that Bolina generally sells its products at a 60% discount to the suggested retail price, whereas individual retail points may sell at up to a 20% discount to the suggested retail price on certain promotional occasions. All promotional initiatives require Bolina’s approval as otherwise, the cooperation relationship may be terminated.

Sales channel profit splits. We estimate that distributors can earn 60% gross margin for selling at their stores, excluding the sales rebates they would get if they achieve their preset annual sales target (up to 5% in the form of products). For sub-distributors, we estimate they could earn around 50% gross margin while first-tier distributors can earn 20% gross margin by selling to sub-distributors. Based on our channel checks, Bolina’s one-piece toilet normally retails for between CNY1,500 and CNY2,500 per unit (some could go up to CNY10k-20k per unit). Thus, the ex-factory price should be approximately CNY600-1,000, matching the publicly disclosed information.

Inventory management. Though distributors will submit monthly sales performance reports to Bolina, the company will also send its staff to conduct random visits to different POS. The company cross-checks distributors’ monthly reports against its own sales reports and distributors’ orders. We reckon that individual district sales managers would visit each store under his/her coverage at least once every month. Also, to preempt unnecessary stocking, Bolina forbids its distributors from ordering more than two months worth of stock based on their past revenue record.

R&D and new product development. Bolina’s R&D department consists of 83 personnel. Thirty-six are core members and have an average of seven years of experience in the industry and five years with Bolina. A new product typically takes 100-150 days to move from the proposal stage to formal market launch. Bolina currently owns 22 patents vs 14 in FY11. A chat with its R&D team during our recent plant visit reveals that every year there would be approximately 30-50 new products ready for rollout for both the ODM and own-brand segments. Sales of new products would normally account for around 20% of total sales annually.



Figure 42: Snapshots of R&D department


Figure 43: Snapshots of Bolina’s warehouses




Appendix: Company background

Brief history. Bolina’s chairman and CEO, Mr Xiao Zhiyong, was the deputy chairman of Shenzhen-listed, state-owned Double Rhomb (renamed Zhangzhou Development [000753 CH]) from 1997-2002. Prior to Sep 2001, Double Rhomb primarily engaged in the manufacture of ceramic ware products in China and operated a ceramic sanitary ware plant at the same premises where Wanjia factory no.1 is now situated. However, Double Rhomb did not run the factory successfully and as a result it did a business restructuring plan and sold the factory and relevant trademarks to Fujian Zhanlong. Fujian Zhanlong then invited bidders to operate the factory, by way of leasing the factory and the relevant trademarks. In early 2002 Mr Xiao won the tender to operate a ceramic sanitary ware factory spun off from Double Rhomb and proceeded to set up Zhangzhou Wanjia on 1 Mar 2002. The company also obtained a license to use the Bolina brand trademark and subsequently acquired the trademarks at CNY320,000 at a public auction in 2008.

Ownership structure Mr. Xiao owns a59.13% stakes (600m shares) in the company while Ms. Xiao Xiuyu (Mr. Xiao’s sister) owns 10.27%(103m shares). CCBI asset management was its major pre-IPO investors and we noticed that it has cleared all its position in Bolina already.

Figure 44: Corporate milestones




Figure 45: Experienced management team (Average of 23 years industry experience)

Mr. Xiao Zhi Yong (肖智勇) Co-founder, Chairman, CEO

Ms. Ye Xiao Hong (葉曉紅)

Co-founder, Executive Director Responsible for the overall management, strategic planning and

business development

26 years of experience in the ceramics and sanitary ware product industries

Vice president for China Construction Sanitary Ceramics Association

Fujian Excellent Entrepreneur

Graduated from Shanghai Construction Material Technical Institue and Southeast University

Responsible for the finance and administrative management

21 years of experience in the finance and accounting profession

Worked in Fujian Industrial Bank from 1990 to 2002

Graduated from Fujian Institute of Financial Administrator

Ms. Ye is the spouse of Mr. Xiao Zhi Yong

Mr. Yang Qingyun (楊清雲) Executive Director, Assistant to General Manager

Mr. Lu Jianqing (陸劍慶)

Executive Director Joined the group in 2006, responsible for human resources

20 years of experience in operation management

Graduated from Beijing Institute of Business with a major in Accounting

Joined the group in 2002, responsible for R&D

21 years of experience in the ceramics and sanitary ware products industries

Graduated from Fuzhou University with a major in chemical engineering

Mr. Yuen Chi Wai (袁志偉) CFO, Company Secretary

Ms. Hu Yi Fang (胡毅芳)

General Manager, Marketing Responsible for the supervision of financial management and

investor relations

13 years of experience in auditing, corporate internal control, as well as financial and risk management

FCPA, graduated from University of New South Wales with a Bachelor of Commerce

Responsible for sales and marketing management

Over 17 years of experience in sales and marketing management

Graduated from Economics & Management College of Xiamen University

Mr. Zhao Chon Kang (趙崇康) Standing Deputy General Manager

Mr. Chen Zhi Qiang (陳志強)

Deputy General Manager Joined the group in 2007, responsible for the overall management

and the production operation of Wanhui Plant

30 years of experience in the ceramics and sanitary ware industries

Graduated from South China University of Technology

Joined the group in 2002, responsible for purchase and quality management

Graduated from East China Institute of Chemical Technology

Mr. Zhu Jia Qin (朱甲欽) Deputy General Manager

Joined the group in 2002, responsible for the production management of Wanjia Factory No.1 and Wanjia Factory No.2

Graduated from Hunan Light Industry College with a major in silicate engineering




INCOME STATEMENT BALANCE SHEET FYE Dec (CNYm) 2012A 2013F 2014F 2015F

FYE Dec (CNYm) 2012A 2013F 2014F 2015F Revenue 817 989 1,192 1,428 Fixed Assets 194 321 485 686 EBITDA 307 397 496 609 Other LT Assets 21 20 20 19 Depreciation & Amortisation 23 36 49 0 Cash/ST Investments 790 822 927 1,008 Operating Profit (EBIT) 298 373 460 559 Other Current Assets 142 182 188 231 Interest (Exp)/Inc (15) (12) (11) (11) Total Assets 1,147 1,346 1,619 1,945 Associates 0 0 0 0 One-offs 0 0 0 0 ST Debt 171 162 154 146 Pre-Tax Profit 283 362 448 549 Other Current Liabilities 99 105 119 128 Tax (36) (78) (96) (118) LT Debt 0 0 0 0 Minority Interest 0 0 0 0 Other LT Liabilities 20 20 20 20 Net Profit 246 284 352 431 Minority Interest 0 0 0 0 Recurring Net Profit 246 284 352 431 Shareholders' Equity 857 1,059 1,326 1,651 Total Liabilities-Capital 1,147 1,346 1,619 1,945 Revenue Growth % 24.60 21.14 20.49 19.74 EBITDA Growth (%) 29.27 29.07 25.01 22.77 Share Capital (m) 8 8 8 8 EBIT Growth (%) 29.82 25.30 23.07 21.73 Gross Debt/(Cash) 171 162 154 146 Net Profit Growth (%) 53.53 15.29 23.94 22.41 Net Debt/(Cash) (619) (660) (773) (862) Recurring Net Profit Growth (%) 53.53 15.29 23.94 22.41 Working Capital 663 738 841 965 Tax Rate % 12.9 21.5 21.5 21.5

CASH FLOW RATES & RATIOS

FYE Dec (CNYm) 2012A 2013F 2014F 2015F FYE Dec 2012A 2013F 2014F 2015F Profit before taxation 283 362 448 549

EBITDA Margin % 37.6 40.1 41.6 42.6 Depreciation 10 23 36 49 Op. Profit Margin % 36.5 37.7 38.5 39.2 Net interest receipts/(payments) (2) (7) (8) (9) Net Profit Margin % 30.1 28.7 29.5 30.2 Working capital change 30 (34) 9 (35) ROE % 44.7 29.6 29.5 28.9 Cash tax paid (51) (78) (96) (118) ROA % 28.4 22.8 23.7 24.2 Others (incl'd exceptional items) 0 0 0 0 Net Margin Ex. El % 30.1 28.7 29.5 30.2 Cash flow from operations 300 278 401 446 Dividend Cover (x) 3.6 4.4 4.4 4.3 Capex (42) (150) (200) (250) Interest Cover (x) 19.5 31.7 40.5 51.9 Disposal/(purchase) 0 0 0 0 Asset Turnover (x) 0.7 0.7 0.7 0.7 Others 2 7 8 9 Asset/Debt (x) 6.7 8.3 10.5 13.3 Cash flow from investing (40) (143) (192) (241) Debtors Turn (days) 26.0 25.0 24.0 23.0 Debt raised/(repaid) (54) (9) (8) (8) Creditors Turn (days) 24.0 23.0 22.0 21.0 Equity raised/(repaid) 394 0 0 0 Inventory Turn (days) 63.0 60.0 58.0 56.0 Dividends (paid) (18) (82) (85) (106) Net Gearing % (72.2) (62.4) (58.3) (52.2) Interest payments (17) (12) (11) (11) Debt/ EBITDA (x) 0.6 0.4 0.3 0.2 Others (35) 0 0 0 Debt/ Market Cap (x) 0.0 0.0 0.0 0.0 Cash flow from financing 270 (103) (105) (124)

Change in cash 530 33 104 82 PER SHARE DATA

FYE Dec (CNY) 2012A 2013F 2014F 2015F

EPS 0.28 0.28 0.35 0.42 CFPS 0.34 0.27 0.40 0.44 BVPS 0.96 1.04 1.31 1.63 SPS 0.91 0.98 1.17 1.41 EBITDA/share 0.34 0.39 0.49 0.60 DPS 0.09 0.08 0.10 0.13




RESEARCH OFFICES

REGIONAL WONG Chew Hann, CA Regional Head, Institutional Research (603) 2297 8686 [email protected]

Alexander GARTHOFF Institutional Product Manager (852) 2268 0638 [email protected]

ONG Seng Yeow Regional Head, Retail Research (65) 6432 1453 [email protected]

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Luz LORENZO Philippines (63) 2 849 8836 [email protected]

Tim LEELAHAPHAN Thailand (662) 658 1420 [email protected]

JUNIMANChief Economist, BII Indonesia (62) 21 29228888 ext 29682 [email protected]

Josua PARDEDE Economist / Industry Analyst, BII Indonesia (62) 21 29228888 ext 29695 [email protected]

MALAYSIA WONG Chew Hann, CA Head of Research (603) 2297 8686 [email protected] Strategy Construction & Infrastructure Desmond CH’NG, ACA (603) 2297 8680 [email protected] Banking - Regional LIAW Thong Jung (603) 2297 8688 [email protected] Oil & Gas Automotive Shipping ONG Chee Ting, CA (603) 2297 8678 [email protected] Plantations- Regional Mohshin AZIZ (603) 2297 8692 [email protected] Aviation – Regional Petrochem YIN Shao Yang, CPA (603) 2297 8916 [email protected] Gaming – Regional Media TAN CHI WEI, CFA (603) 2297 8690 [email protected] Power Telcos WONG Wei Sum, CFA (603) 2297 8679 [email protected] Property & REITs LEE Yen Ling (603) 2297 8691 [email protected] Building Materials Manufacturing Technology

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HONG KONG / CHINA Alexander GARTHOFF Acting Head of Research (852) 2268 0638 [email protected] Alexander LATZER (852) 2268 0647 [email protected] Metals & Mining - Regional Andy POON (852) 2268 0645 [email protected] Telecom & equipment Ivan CHEUNG, CFA (852) 2268 0634 [email protected] Industrial Jacqueline KO, CFA (852) 2268 0633 [email protected] Consumer Terence LOK (852) 2268 0630 [email protected] Consumer Jeremy TAN (852) 2268 0635 [email protected] Gaming Karen KWAN (852) 2268 0640 [email protected] HK & China Property Philip TSE (852) 2268 0643 [email protected] HK & China Property Warren LAU (852) 2268 0644 [email protected] Technology – Regional

INDIA Jigar SHAH Head of Research (91) 22 6623 2601 [email protected] Oil & Gas Automobile Cement Anubhav GUPTA (91) 22 6623 2605 [email protected] Metal & Mining Capital goods Property Urmil SHAH (91) 22 6623 2606 [email protected] Technology Media Varun VARMA (91) 226623 2611 [email protected] Banking

SINGAPORE Gregory YAP Head of Research (65) 6432 1450 [email protected] Technology & Manufacturing Telcos Wilson LIEW (65) 6432 1454 [email protected] Property & REITs James KOH (65) 6432 1431 [email protected] Logistics Resources Consumer - Regional Small & Mid Caps YEAK Chee Keong, CFA (65) 6432 1460 [email protected] Offshore & Marine Alison FOK (65) 6432 1447 [email protected] Services S-chips ONG Kian Lin (65) 6432 1470 [email protected] REITs / Property Wei Bin (65) 6432 1455 [email protected] S-chips Small & Mid Caps Derrick HENG (65) 6432 1446 [email protected] Transport (Land, Shipping & Aviation) John CHEONG (65) 6432 1461 [email protected] Small & Mid Caps

INDONESIA Lucky ARIESANDI, CFA (62) 21 2557 1127 [email protected] Base metals Mining Oil & Gas Wholesale Pandu ANUGRAH (62) 21 2557 1137 [email protected] Automotive Heavy equipment Plantation Toll road Rahmi MARINA (62) 21 2557 1128 [email protected] Banking Multifinance Adi N. WICAKSONO (62) 21 2557 1128 [email protected] Generalist Anthony YUNUS (62) 21 2557 1139 [email protected] Cement Infrastructure Property

PHILIPPINES Luz LORENZO Head of Research (63) 2 849 8836 [email protected] Strategy Laura DY-LIACCO (63) 2 849 8840 [email protected] Utilities Conglomerates Telcos Lovell SARREAL (63) 2 849 8841 [email protected] Consumer Media Cement Luz LORENZO / Mark RACE (63) 2 849 8844 [email protected] Conglomerates Property Ports/ Logistics Gaming Katherine TAN (63) 2 849 8843 [email protected] Banks Construction Ramon ADVIENTO (63) 2 849 8845 [email protected] Mining

THAILAND Sukit UDOMSIRIKUL Head of Research (66) 2658 6300 ext 5090 [email protected]

Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 [email protected] Consumer/ Big Caps

Andrew STOTZ Strategist (66) 2658 6300 ext 5091 [email protected]

Mayuree CHOWVIKRAN (66) 2658 6300 ext 1440 [email protected] Strategy Padon Vannarat (66) 2658 6300 ext 1450 [email protected] Strategy Surachai PRAMUALCHAROENKIT (66) 2658 6300 ext 1470 [email protected] Auto Conmat Contractor Steel Suttatip PEERASUB (66) 2658 6300 ext 1430 [email protected] Media Commerce Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 [email protected] Energy Petrochem Termporn TANTIVIVAT (66) 2658 6300 ext 1520 [email protected] Property Woraphon WIROONSRI (66) 2658 6300 ext 1560 [email protected] Banking & Finance Jaroonpan WATTANAWONG (66) 2658 6300 ext 1404 [email protected] Transportation Small cap. Chatchai JINDARAT (66) 2658 6300 ext 1401 [email protected] Electronics Pongrat RATANATAVANANANDA (66) 2658 6300 ext 1398 [email protected] Services/ Small Caps

VIETNAM Michael KOKALARI, CFA Head of Research (84) 838 38 66 47 [email protected] Strategy Nguyen Thi Ngan Tuyen (84) 844 55 58 88 x 8081 [email protected] Food and Beverage Oil and Gas Hang Vu (84) 844 55 58 88 x 8087 [email protected] Banking Trinh Thi Ngoc Diep (84) 844 55 58 88 x 8242 [email protected] Technology Utilities Construction Dang Thi Kim Thoa (84) 844 55 58 88 x 8083 [email protected] Consumer Nguyen Trung Hoa +84 844 55 58 88 x 8088 [email protected] Steel Sugar Resources



APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS

This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.

The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.

This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.

MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report.

This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect.

This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report.

Malaysia

Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.

Singapore

This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.

Thailand

The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result.

Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect.

US

This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations.

UK

This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.



DISCLOSURES Legal Entities Disclosures

Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.

Disclosure of Interest Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies.

Singapore: As of 20 August 2013, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.

Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.

Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

As of 20 August 2013, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.

MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.

OTHERS Analyst Certification of Independence

The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Reminder

Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Definition of Ratings

Maybank Kim Eng Research uses the following rating system:

BUY Return is expected to be above 10% in the next 12 months (excluding dividends)

HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)

SELL Return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings

The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

Some common terms abbreviated in this report (where they appear):

Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Ratio To Growth CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date EV = Enterprise Value PBT = Profit Before Tax



Malaysia Maybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194

Singapore Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Research Pte Ltd 9 Temasek Boulevard #39-00 Suntec Tower 2 Singapore 038989 Tel: (65) 6336 9090 Fax: (65) 6339 6003

London Maybank Kim Eng Securities (London) Ltd 6/F, 20 St. Dunstan’s Hill London EC3R 8HY, UK Tel: (44) 20 7621 9298 Dealers’ Tel: (44) 20 7626 2828 Fax: (44) 20 7283 6674

New York Maybank Kim Eng Securities USA Inc 777 Third Avenue, 21st Floor New York, NY 10017, U.S.A. Tel: (212) 688 8886 Fax: (212) 688 3500

Stockbroking Business: Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888 Fax: (603) 2282 5136

Hong Kong Kim Eng Securities (HK) Ltd Level 30, Three Pacific Place, 1 Queen’s Road East, Hong Kong Tel: (852) 2268 0800 Fax: (852) 2877 0104

Indonesia PT Kim Eng Securities Plaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

India Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India Tel: (91).22.6623.2600 Fax: (91).22.6623.2604

Philippines Maybank ATR Kim Eng Securities Inc. 17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200 Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

Thailand Maybank Kim Eng Securities (Thailand) Public Company Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

Vietnam In association with

Maybank Kim Eng Securities JSC 1st Floor, 255 Tran Hung Dao St. District 1 Ho Chi Minh City, Vietnam Tel : (84) 844 555 888 Fax : (84) 838 38 66 39

Saudi Arabia In association with

Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686 Fax: (966) 26068787

South Asia Sales Trading Kevin FOY [email protected] Tel: (65) 6336-5157 US Toll Free: 1-866-406-7447

North Asia Sales Trading Eddie LAU [email protected] Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267

www.maybank-ke.com | www.maybank-keresearch.com | www.kimeng.com.hk

Bolina Maybank130819(IC)

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