CONSUMER GUAN CHONG

Price RM2.92 Fair Value RM3.49 52-week High/Low RM3.00/RM1.29 Key Changes Fair value Initiation EPS Initiation YE to Dec FY18 FY19F FY20F FY21F Revenue (RM mil) 2,273.4 2,795.1 2,888.5 3,421.6 Core net profit (RM mil) 190.1 211.9 221.7 271.2 FD Core EPS (sen) 39.6 21.0 22.0 26.9 FD Core EPS growth (%) 107.8 (46.9) 4.6 22.4 Consensus Net Profit (RM mil) - 222.0 236.0 269.0 DPS (sen) 4.0 5.0 5.0 5.0 PE (x) 7.4 13.9 13.3 10.9 EV/EBITDA (x) 13.4 11.9 10.9 9.1 Div yield (%) 1.4 1.7 1.7 1.7 ROE (%) 33.2 28.3 24.3 24.4 Net Gearing (%) 83.6 109.5 90.8 74.4

Stock and Financial Data Shares Outstanding (million) 1,007.9 Market Cap (RM mil) 2,943.1 Book Value (RM/share) 1.39 P/BV (x) 2.1 ROE (%) 33.2 Net Gearing (%) 83.6 Major Shareholders Guan Chong Resources (50.6%)

Misi Galakan (5.8%) Syarikat PJ (3.0%)

Free Float 227.9 Avg Daily Value (RM mil) 5.5 Price performance 3mth 6mth 12mth Absolute (%) 49.0 56.6 106.0 Relative (%) 52.2 66.0 119.4

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GUAN MK FBMKLCI Index

CONSUMER

GUAN CHONG (GUAN MK EQUITY, GUAN.KL) 11 Dec 2019

Go loco over cocoa Company report BUY

Nafisah Azmi [email protected] 03-2036 2250

(Initiation)

Rationale for report: Initiation

Investment Highlights

We initiate coverage on Guan Chong with a BUY call and fair value of RM3.49/share based on an FY21F PE of 13x. Our P/E is at a discount to the group’s international peer’s average forward P/E of 19x. The discount is placed because its peers have a more integrated downstream/upstream operation whereas Guan Chong is a pure upstream player. We believe that the PE of 13x is justified given the group’s strong market position as the 4th largest cocoa grinder in the world as well as its upcoming growth plans.

Guan Chong has flourished in recent years, transforming itself into the world’s 4th largest supplier in the oligopolistic cocoa grinding market with its latest acquisition and expansion, increasing its capacity to 250K MT per annum.

We highlight the following key investment merits:

1) The resilient outlook in the global chocolate confectionery sector underpinned by: (i) rising disposable income; (ii) improved retail distribution; and (iii) changing lifestyles resulting in the emergence of the preference for dark chocolate. This is further buoyed by the recent uptick in demand for cocoa powder in Asia.

2) To capitalize on growth prospects, Guan Chong has put in place an expansion plan in Ivory Coast to benefit from direct sourcing of cocoa beans as well as to tap into the biggest market of consumer chocolate confectionery in Europe.

There has been a shift in approach of the world’s top 3 cocoa grinders whereby they are increasingly relying more on external supply of cocoa-food ingredients as the manufacturers focus more on chocolate confectionery manufacturing. This means that Guan Chong’s output can easily be taken up to cater to the chocolate confectionery manufacturers’ requirements.

We expect Guan Chong’s earnings to grow by 4.6% and 22.4% in FY20–21F driven largely by: (1) increasing contribution from its expansion plans; (2) better margins due to improved cocoa powder pricing and raw material hedging; and (3) organic growth in the chocolate confectionery market which will increase the demand for cocoa-derived food ingredients.

Guan Chong 11 Dec 2019

AmInvestment Bank Bhd 2

COMPANY OVERVIEW

Guan Chong (GCB) is a manufacturer of cocoa-derived food ingredients like cocoa liquor, cocoa butter, cocoa cake and cocoa powder. The group is also involved in other cocoa-related industries like the blending and mixing division. The group also manufactures for hypermarkets under their private brands.

In 1983, Guan Chong Group Sdn Bhd started processing cocoa beans by setting up a factory in Parit Jawa, Muar, Johor. It subsequently built a new plant in Pasir Gudang, Johor with a processing capacity of about 6,000 MT per annum in 1991. The group has since grown remarkably with a capacity of 250,000 MT currently.

Trademarked since 1996, GCB’s cocoa-derived food ingredients are marketed under the brand name “Favorich”. It is widely used in the chocolate, confectionery, food and beverage and other related industries worldwide.

In April 2005, the group was successfully listed on the Main Board of Bursa Malaysia Securities.

In 2006, the group acquired a 49% stake in Carlyle Cocoa Co, LLC for US$1.0mil which provided the group direct market access into the United States in Delaware and New Jersey. In 2013, the group acquired the remaining 51% stake for a total cash consideration of US$3.6mil. The business undertakes cocoa cake grinding, cocoa liquor and butter melting, as well as cocoa butter deodorizing.

In 2010, GCB undertook several corporate exercises for a total cash consideration of circa US$5.4mil to own a 90% stake in PT Asia Cocoa Indonesia (ACI). This was to facilitate its penetration into the Indonesian market. The group constructed its first grinding plant with a capacity of 60K MT in Batam in mid-2010. The plant began production in February 2011 and was fully installed in June 2011. It added a second line in 2012 with an additional 60K MT capacity. This brought its grinding capacity in Indonesia to 120K MT per year.

GCB acquired Koko Budi (now GCB Cocoa Malaysia) on 28 June 2017 and expanded its grinding facility in Pasir Gudang in FY18 from 9K MT to 50K MT which was fully commissioned in in 1QFY19. This brought the group’s combined annual grinding capacity to 250K MT, making it the world’s 4th largest player in the oligopolic grinding business.

Now, the group has around 250K MT grinding capacity from factories in Pasir Gudang, Johor and Batam, Indonesia.

Over the years, GCB has expanded its client base to include the likes of Mars, Hershey’s Nestle, Modelez, Meiji, Secret Recipe and Cadbury to name a few.

EXHIBIT 1: GRINDING CAPACITY

Source: Company, AmInvestment Bank Bhd

MANAGEMENT

At the helm of the company are chairman Datuk Dr Mohamad Musa Md Jamil and managing director Tay Hoe Lian.

Mohamad Musa holds a Bachelor of Science in Biology from the University of Malaya in 1972. Upon graduation, he joined Malaysia Agriculture Research and Development Institute’s (Mardi) crop protection division as a research assistant before being promoted to a research officer. In 1980, he held the position of research officer of the cocoa and coconut research division and became deputy director in 1984. In 1985, Mohamad Musa became the director of Mardi. In 1990, he joined the Malaysia Cocoa Board (MCB) as the deputy director-general (market development and regulatory) and later became its director-general in 1996.

Tay Hoe Lian holds a PhD in Mycology and Plant Pathology from Queen’s University, Belfast, Northern Ireland and a degree in Bachelor of Business Administration from the University of Toledo, College of Business Administration, USA. He began his career as the manager of JB Cocoa Group Sdn Bhd’ s transport division. In 1997, he joined Guan Chong Cocoa Manufacturer Sdn Bhd (GCC) as the marketing manager. In 1999, he assumed the position of director of GCC and promoted to the position of general manager in 2002 and was made managing director in 2003. He was elected as a member of the Malaysian Cocoa Board by the Ministry of Plantation Industries and Commodities (1 Feb 2013–31 Jan 2015).



GLOBAL CHOCOLATE INDUSTRY IS GROWING

We believe the outlook for the global chocolate industry is resilient. According to MarketWatch, the global consumption value of cocoa & chocolate increased with a 5.7% average growth rate for 2012–2017, and it is expected to grow at a 5-year CAGR of 4.3% to US$63.6bil in 2024. This means that the demand for cocoa-derived food ingredients will follow suit, benefitting cocoa grinders like Guan Chong.

According to Hexa Research, Europe is the biggest consumer of confectionery, accounting for more than 35% share in 2017. However, Asia Pacific is expected to be the fastest growing region in the global arena with a 9-year CAGR of around 7.3%. Hence, Guan Chong’s current positioning in Asia will allow them to realise the tremendous growth potential. Also, its planned expansion in Ivory Coast will allow it to tap into the biggest chocolate confectionery consumer market, Europe.

Global demand for cocoa is continuously growing, further buoyed by the recent uptick in demand for cocoa powder in Asia. This is due to rising disposable income, improved retail distribution and changing lifestyles of its population. The increasing preference for dark chocolate over milk chocolate has also fuelled the market’s growth as it requires more cocoa ingredients.

According to Olam Cocoa, the demand for cocoa powder is at an all-time high in Asia and is set to increase with a 5-year CAGR projection of 8%. Guan Chong boasts a competitive edge in the cocoa powder scene which is highly customizable requiring keen industry knowledge. Thus, we anticipate Guan Chong to be fully equipped to ride on this wave of increased consumption of cocoa powder.

Macroeconomic wise, the World Bank has projected developing East Asia Pacific (EAP) growth to soften to 5.9% in 2019 and 2020. However, the outlook for South Asia is solid, with growth picking up to 7.0% in 2020 and 7.1% in 2021, said the World Bank. The regional growth will offer favourable potential for further organic growth.

EXPANDING INTO IVORY COAST FOR LONG-TERM GROWTH

Guan Chong is setting up a plant to expand its grinding operations into Ivory Coast to increase its production capacity by another 60K MT. Construction of the circa €55mil plant is estimated to take over 1.5 years and is expected to be commissioned and operational by 1Q2021.

Ivory Coast is the largest producer of high-quality cocoa beans, supplying circa 30% (circa 2mil MT) of the world’s cocoa beans. Its beans typically give a higher yield compared to beans from Indonesia. By establishing a new plant in Ivory Coast, the group will be able to process cocoa beans that are directly sourced from within the country thus helping Guan Chong to achieve transportation savings as well as reduce bean deterioration during transit.

With this new plant in Ivory Coast, Guan Chong will be able to physically pick and choose high-quality cocoa beans directly from the source, maximizing its yield potential (instead of relying on a third party). Transportation costs will also be reduced and the same time, eliminating deterioration of cocoa beans during transit, thus improving yield. The new plant will also allow the group to expand its market presence and strengthen its competitive advantage in the European market. All in, we believe its plan to expand into Ivory Coast will elevate its margins and EBITDA yield (EBITDA per production tonnage) due to transportation savings and improvement in bean yield.

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EXHIBIT 2: COCOA BEAN PRODUCTION IN IVORY COAST

Source: Statista, AmInvestment Bank Bhd

- 500

1,000 1,500 2,000 2,500

2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018* 2018/2019**

Production in 1,000 MT



EXHIBIT 4: TOP CONSUMERS OF CHOCOLATE

Source: Statista

EXHIBIT 3: TOP 10 COCOA PRODUCING COUNTRIES

Source: Chocolatephayanak, AmInvestment Bank Bhd In 2017, according to UN Food and Agriculture Organisation

2,034,000

883,652

659,776

328,263

295,028

235,809

205,955

121,825

86,599

56,808

- 500,000 1,000,000 1,500,000 2,000,000

Ivory Coast

Ghana

Indonesia

Nigeria

Cameroon

Brazil

Ecuador

Peru

Dominican Republic

Colombia



HEDGING COCOA BEAN PRICE

Guan Chong’s key raw material is cocoa beans, making up close to 85%–90% of the group’s cost of sales. The price of cocoa bean highly fluctuates due to the supply and demand conditions as well as market speculation. In order to minimize the impact, Guan Chong hedges its cost of cocoa beans through forward sales, thus reducing its exposure to price fluctuations.

Guan Chong typically sells its cocoa butter around 12–18 months ahead. Guan Chong and the customer will first agree on the cocoa butter quantity, cocoa butter ratio and delivery time when the sale contract is made. Cocoa butter ratio is the pricing mechanism for its products based on the price of cocoa bean (Cocoa butter ratio = selling price of cocoa butter ÷ cocoa bean price).

Once the sales contract is made, the group will make an order to purchase the required amount of cocoa beans typically to be delivered to Guan Chong 1–3 months prior to delivery date of cocoa butter to the customer.

The actual selling price will be determined during the price fixing date which could be any time before Guan Chong purchases its beans, depending on the customer’s preference.

The selling price will be determined based on the cocoa bean price at the time of the price fixing date. Once the price has been set, Guan Chong will fix the price with its cocoa trader in order to lock in the cost at a similar price, thereby, protecting its profitability based on the ratio that was already agreed upon.

In the event that the group is not able to close the deal with the two parties at the same time, Guan Chong will hedge its costs by either entering into a long or short position. For example, if Guan Chong and the customer have fixed the price but the cocoa trader would like to wait before fixing the cocoa bean cost price, the group will enter into a long position in the commodity market to cover its cost. GCB will exercise its long position when the price is fixed with the cocoa trader.

On the other hand, if the price has been fixed with cocoa trader but the customer would like to wait before fixing its price, the group will enter into a short position at the current price. GCB will exercise its short position when the price is fixed with the customer.

SWOT ANALYSIS

Strength

1. Guan Chong, with its years of experience in the cocoa grinding business, possesses the technical know-how (like operating its machinery, engineering, production process and selection of cocoa beans for the manufacturing of cocoa-derived food ingredients) to achieve production efficiency and maximize yield. The key differentiator for Guan Chong is the expertise in its cocoa powder segment due to the varying requirements of different customer’s specifications of cocoa powder (i.e. desired colours, flavours) to meet unique specifications and requirements.

2. It is the 4th largest cocoa grinder and producer of cocoa-derived food ingredient in the world.

3. Stable income due to diversified customer base and decommoditisation of tis cocoa powder products.

Weakness

1. Guan Chong suffers from its “unfavourable” location as the biggest supply of cocoa bean is in West Africa while the biggest consumption of chocolate confectionery is in Europe. However, the group is well poised to tap into the strong growth in consumption of chocolate confectionery in Asia Pacific.

Opportunities

1. Consumption of chocolate confectionery is expected to grow.

2. Solid relationship with customers and positioning in the supply chain.

3. High barrier of entry as the industry is capital intensive. This means that the business requires an operation on a large scale in order to be competitive in the global market place. The business also requires adequate working capital for cocoa beans stocking.

Threats

1. Problems from the supply side in Ivory Coast and Ghana as the supplier fixed a living income differential, pushing up cocoa bean prices. Ivory Coast and Ghana is placing a living income premium of $400 per MT on top of the cocoa bean price in order to reform the way global cocoa is priced, to ease farmer poverty.

2. Cocoa bean supply could come under threat due to climate change in cocoa producing countries.

3. A substitute / alternative to cocoa butter as chocolate manufacturers tend to look for cocoa butter substitute to replace pure cocoa butter or to replace it with cocoa butter equivalents (CBE) which are made from vegetable oil.



RISKS

The key risks to Guan Chong include: i) a shortage in raw materials which would cause volatility in cocoa bean prices; ii) changes in the economic and political situation in countries where Guan Chong operates; iii) loss of skilled workforce which contributes to Guan Chong’s ability to differentiate its products; and iv) its cocoa-derived food ingredients are mainly supplied for the manufacturing of chocolate and cocoa-based products which are non-staple foods, hence it is not recession-proof.

COCOA PROCESSING STEPS (REFER TO EXHIBIT 6)

1. Cleaning of cocoa beans to remove dirt and foreign materials

2. Preheating and winnowing to separate cocoa shells from cocoa nibs.

3. Alkalising cocoa nibs to alter the colour of cocoa. 4. Roasting cocoa nibs to develop flavour. 5. Cocoa nibs grinding. 6. Pressing cocoa liquor to extract cocoa butter. 7. Pulverising cocoa cake into cocoa powder. 8. Packaging of cocoa-derived food ingredients.

FINANCIAL REVIEW

Guan Chong’s key strength lies in its relationship with the the major chocolate manufacturers and F&B industry players like Barry Callebaut, Nestle, Meiji and many more. We anticipate the group to benefit from the expected growth of its customers.

Guan Chong’s PATAMI net profit has grown by a 3-year CAGR of 65%. This was on the back of its anchored position in the supply chain as well as its capacity expansion through the acquisition and expansion of GCB Cocoa Malaysia (previously known as Koko Budi).

In its latest 3Q19 results, Guan Chong’s 9M19 net profit jumped 38.4% to RM174.7mil while its EBITDA yield (EBITDA per production tonnage) also rose 6.4% to RM1,384.8 per MT (from RM1,301.0 per MT in FY18). This is due to improved pricing of its cocoa powder as a result of better product differentiator and better demand for the product.

FINANCIAL PROJECTION

We are projecting Guan Chong’s FY20F–FY21F net profit to increase by 4.6% and 22.4% respectively, driven largely by:

1. Full contribution from the expanded GCB Cocoa Malaysia capacity;

2. Improving EBITDA yield; and

3. Capacity expansion in Ivory Coast.

VALUATIONS

We value Guan Chong at RM3.49 based on a PE of 13x FY21F EPS. Our PE is at a discount to its international peers’ market capital weighted average forward P/E of 19x. The stock is currently trading at a low forward P/E of 11x.

This is despite the stock price having rallied since Jan 2019. However, we believe there is still a large upside to the counter on the back of;

1. Tremendous upside potential in its earnings backed by expansions and large distribution network.

2. Guan Chong being one of the largest cocoa bean grinders in the world.

3. Experienced management who is able to deliver tailor-made food ingredients to its clientele.

4. Stable earnings trajectory on the back of experienced management.

GCB undertook corporate exercises recently where 504.1mil bonus shares were listed on 6 November 2019 and 168.0mil warrants were listed on 12 November 2019.

On 3 October 2019, 24.0mil placement shares have been listed through private placement at RM3.85 per share. This deal was executed by AmInvestment Bank. AmInvestment Bank still has mandate as the principal adviser and placement agent to place out another 5% block for private placement. However, GCB has informed the bank that the group currently has no plans to execute the remaining 5% block in the near future.

EXHIBIT 5: PEER COMPARISON

Source: Bloomberg, AmInvestment Bank Bhd

Price Mkt Cap RO E*(RM) (RMm il) FY20F FY21F FY20F FY21F FY20F FY21F (% )

G uan C hong 2.92 2,943.1 21.8 27.3 3.6 24.9 13.4 10.7 23.0

Direct International Peers*Barry C allebaut 8,452.75 46,490.1 334.6 366.5 12.1 9.5 25.2 23.2 16.6O lam International 5.45 17,365.3 0.5 0.5 6.7 0.0 11.1 11.1 N AFuji O il 118.88 10,413.9 6.9 7.3 40.2 5.3 17.1 16.2 9.8JB Foods 1.99 603.4 N A N A N A N A N A N A N ASim ple Average 19.7 4.9 17.8 16.8Weighted Av erage 14.8 6.7 20.6 19.2*Based on bloomberg data

EPS (sen) EPS grow th % P/E (x)



EXHIBIT 6: COCOA GRINDING PROCESS FLOW

Source: Company

EXHIBIT 7: TYPES OF COCOA FOOD INGREDIENTS

Source: Company



EXHIBIT 8: GLOBAL CONFECTIONERY SALES

Source: Candy Industry

EXHIBIT 9: GLOBAL CONFECTIONERY SALES BY SEGMENT

Source: Candy Industry



EXHIBIT 10: PB BAND CHART EXHIBIT 11: PE BAND CHART

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EXHIBIT 12: FINANCIAL DATA Income Statement (RMmil, YE 31 Dec) FY17 FY18 FY19F FY20F FY21F Revenue 2,147.9 2,273.4 2,795.1 2,888.5 3,421.6 EBITDA 162.7 261.5 324.8 353.3 422.4 Depreciation/Amortisation (25.9) (27.0) (34.2) (44.3) (52.3) Operating income (EBIT) 136.7 234.5 290.6 309.0 370.2 Other income & associates (0.7) 1.1 1.9 1.9 1.9 Net interest (22.6) (26.8) (37.3) (37.3) (37.3) Exceptional items - - - - - Pretax profit 113.4 208.7 255.2 273.6 334.8 Taxation (22.4) (18.6) (43.3) (51.9) (63.6) Minorities/pref dividends - - - - - Net profit 91.0 190.1 211.9 221.7 271.2 Core net profit 91.0 190.1 211.9 221.7 271.2 Balance Sheet (RMmil, YE 31 Dec) FY17 FY18 FY19F FY20F FY21F Fixed assets 373.0 447.8 530.1 735.8 757.7 Intangible assets 12.0 12.0 12.0 12.0 12.0 Other long-term assets 42.5 40.3 40.3 40.3 40.3 Total non-current assets 427.5 500.1 582.4 788.0 809.9 Cash & equivalent 39.9 44.8 30.0 30.0 30.0 Stock 862.2 868.9 1,045.1 1,071.4 1,262.1 Trade debtors 238.2 328.5 388.5 385.7 438.1 Other current assets 12.3 41.9 43.1 41.9 41.9 Total current assets 1,152.7 1,284.1 1,506.7 1,528.9 1,772.1 Trade creditors 253.3 431.4 572.5 650.0 840.0 Short-term borrowings 769.8 559.0 889.0 889.0 889.0 Other current liabilities 6.2 12.7 14.2 14.2 14.2 Total current liabilities 1,029.3 1,003.0 1,475.6 1,553.1 1,743.1 Long-term borrowings 17.5 43.4 48.4 48.4 48.4 Other long-term liabilities 33.8 37.6 37.6 37.6 37.6 Total long-term liabilities 51.2 80.9 86.0 86.0 86.0 Shareholders’ funds 479.6 667.1 828.3 999.3 1,219.8 Minority interests - - - - - BV/share (RM) 1.00 1.39 0.82 0.99 1.21 Cash Flow (RMmil, YE 31 Dec) FY17 FY18 FY19F FY20F FY21F Pretax profit 113.4 208.7 255.2 273.6 334.8 Depreciation/Amortisation 25.9 27.0 34.2 44.3 52.3 Net change in working capital (192.8) 77.6 (95.1) 54.0 (53.1) Others 15.3 21.7 35.4 35.4 35.4 Cash flow from operations (38.2) 335.0 229.7 407.3 369.3 Capital expenditure (66.2) (99.2) (116.5) (250.0) (74.2) Net investments & sale of fixed assets - - - - - Others (66.2) (99.2) (116.5) (250.0) (74.2) Cash flow from investing (132.4) (198.3) (233.0) (500.0) (148.3) Debt raised/(repaid) 128.5 (189.5) 213.0 202.1 125.5 Equity raised/(repaid) - - - - - Dividends paid (11.9) (9.6) (50.4) (50.4) (50.4) Others (0.2) (0.5) - - - Cash flow from financing 116.3 (199.7) 162.6 151.6 75.0 Net cash flow (54.3) (63.0) 159.3 59.0 296.0 Net cash/(debt) b/f 26.9 44.8 30.0 30.0 30.0 Net cash/(debt) c/f (26.6) (18.2) 189.3 89.0 326.0 Key Ratios (YE 31 Dec) FY17 FY18 FY19F FY20F FY21F Revenue growth (%) (7.3) 5.8 22.9 3.3 18.5 EBITDA growth (%) 67.4 60.7 24.2 8.8 19.6 Pretax margin (%) 5.3 9.2 9.1 9.5 9.8 Net profit margin (%) 4.2 8.4 7.6 7.7 7.9 Interest cover (x) 6.1 8.7 7.8 8.3 9.9 Effective tax rate (%) 19.7 8.9 17.0 19.0 19.0 Dividend payout (%) 13.1 10.1 23.8 22.7 18.6 Debtors turnover (days) 44 45 47 49 44 Stock turnover (days) 134 139 125 134 124 Creditors turnover (days) 47 55 66 77 79

Source: Company, AmInvestment Bank Bhd estimates



DISCLOSURE AND DISCLAIMER

This report is prepared for information purposes only and it is issued by AmInvestment Bank Berhad (“AmInvestment”) without regard to your individual financial circumstances and objectives. Nothing in this report shall constitute an offer to sell, warranty, representation, recommendation, legal, accounting or tax advice, solicitation or expression of views to influence any one to buy or sell any real estate, securities, stocks, foreign exchange, futures or investment products. AmInvestment recommends that you evaluate a particular investment or strategy based on your individual circumstances and objectives and/or seek financial, legal or other advice on the appropriateness of the particular investment or strategy.

The information in this report was obtained or derived from sources that AmInvestment believes are reliable and correct at the time of issue. While all reasonable care has been taken to ensure that the stated facts are accurate and views are fair and reasonable, AmInvestment has not independently verified the information and does not warrant or represent that they are accurate, adequate, complete or up-to-date and they should not be relied upon as such. All information included in this report constitute AmInvestment’s views as of this date and are subject to change without notice. Notwithstanding that, AmInvestment has no obligation to update its opinion or information in this report. Facts and views presented in this report may not reflect the views of or information known to other business units of AmInvestment’s affiliates and/or related corporations (collectively, “AmBank Group”).

This report is prepared for the clients of AmBank Group and it cannot be altered, copied, reproduced, distributed or republished for any purpose without AmInvestment’s prior written consent. AmInvestment, AmBank Group and its respective directors, officers, employees and agents (“Relevant Person”) accept no liability whatsoever for any direct, indirect or consequential losses, loss of profits and/or damages arising from the use or reliance of this report and/or further communications given in relation to this report. Any such responsibility is hereby expressly disclaimed.

AmInvestment is not acting as your advisor and does not owe you any fiduciary duties in connection with this report. The Relevant Person may provide services to any company and affiliates of such companies in or related to the securities or products and/or may trade or otherwise effect transactions for their own account or the accounts of their customers which may give rise to real or potential conflicts of interest.

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CONSUMER GUAN CHONG

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