研究报告全文：MN29Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateSenseTime20HKLeadingintheChinalargeAImodelraceSenseTimedeliveredweakerthanexpectedFY22resultswithrevenueofTargetPriceHK345RMB381bn-19YoYmainlyduetoSmartCityprojectsdelayHoweverwePreviousTPHK210arepositivetoseetherampupoftherecurringAIaaSbusinessastheCompanyUpDownside289sellsitsSenseCorecapabilitiestoexternalentitiesEightkeycustomerstookupCurrentPriceHK2687000GPUsrelatedtothetrainingoflargeAImodelsWethinkthebreakthroughChinaSoftwareITServicesinAIlargemodelsSenseTimetolaunchlargelanguagemodelwith100bnparametersinmid-2023willcontinuetodrivere-ratingMarleyNGAN85239163719FY22missedbutweaknessislargelyanticipatedSenseTimereportedmarleyngancmbicomhkrevenueofRMB381bn-19YoYinFY22missedourconsensusestimatesby2224respectivelyWethinktheweaknessislargelyBowenLIanticipatedasSmartCityprojectswereheavilyaffectedbythepandemic85237618957GPMdeclinedto668vs697inFY21onincreasinghardwareAIlibowencmbicomhksensoranddepreciationAIDCexpensesForRDSenseTimespentStockDataRMB401bninFY2211YoYAdjustingforshare-basedcompensationMktCapHKmn896977opexwasup23YoYNetlosswasatRMB605bnAvg3mthstoHKmn764052wHighLowHK623117ContinuousbusinessdiversificationwithrecurringAIaaStakingTotalIssuedSharesmn259488shapeCorerevenueSmartCityandSmartBusinesswereimpactedbytheSourceFactSetpandemicandrevenuecontributiondroppedto67inFY22vs80ofShareholdingStructurerevenuehistoricallyThatsaidweareencouragedtoseetheramp-upofESOP149recurringAIaaSbusinessandthecontinuousbusinessdiversificationInSoftbank148FY22over20ofSmartBusinesscamefromAIaaSSenseCoreandthatSourceHKExeightkeycustomerstookup7000GPUsofSenseCorerelatedtotheSharePerformancetrainingoflargemodelsMeanwhilenewbusinesssegmentsSmartLifeAbsoluteRelativedrivenbyAIGCAIsensorsSmartAutodrivenbyADASproducts1-mth6364deliveredrobustrevenuegrowthof13059YoYrespectively3-mth1701776-mth549351LeadingpositioninthelargeAImodelraceWethinkSenseTimeisinSourceFactSettheleadingpositionintermsoflargeAImodelcapabilitiesSenseTimehasachieved50exaFLOPSwithmorethan27000GPUssupportingupto12-mthPricePerformance4000GPUcardforsingle-tasktrainingAlsotheCompanyhasdevelopedtheworldslargestCVfoundationmodelwith32bnparametersInmid-2023theCompanywilllaunchpre-trainedlargelanguagemodelwithover100-bnparametersTheprovenlargemodelcapabilitieswillhelpSenseTimepenetratelargeinternetenterprisesthroughAIaaSMaintainBUYWereviseddownFY23-24Erevenueby17-18toreflectaSourceFactSetslowrecoveryinAIspendingpostCOVID-19OurnewtargetpriceofHK345priorHK210isbasedon18xFY23EEVsalesin-linewithChinaAIpeersWethinkthebreakthroughinAIlargemodelswillcontinueRelatedReportstodrivesectorre-ratingWeobservedthatthemkt-capweightedEVsalesofChinaAIhasrisenfrom44xto100xYTDMaintainBUY1商汤科技20HK投资者交流日纪要-持续发展人工智能即服务模式-EarningsSummary5Dec2022linkYE31DecFY21AFY22AFY23EFY24EFY25ERevenueRMBmn470038094980635582672ChinaAIPublicsecuritydemandremainedweakin3Q22limitedYoYgrowth364190308276301neartermimpactfromnewUSOperatingprofitRMBmn33163941429837763003exportrules-20Oct2022linkNetprofitRMBmn17140160448429583824331015AdjustednetprofitRMBmn13814468803795933145257033SenseTime20HKAslowerAIadoptionpaceamidmacroEPSReportedRMBcents17364189312841143927uncertainties26Aug2022ConsensusEPSRMBcents173641893910680nalinkEVSalesx11316413210683ROE3167199156158150Netgearing462105542399SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk29Mar2023FocusChartsFigure1ChinacomputervisionmarkettoincreaseFigure2ChinaCVsoftwaremarketmixwillchangeat435CAGRinFY20-25EonstrongerConsumerandAutomotivegrowthRMBbn1002020-2025ECAGR435120901017803649100706080502360402630264020181015167720020202025E0CityManagementEnterpriseConsumerAutomotive20202025ESourceFrostSullivanCMBIGMSourceFrostSullivanCMBIGMFigure329CAGRofrevenueinFY22-25EFigure4RevenuediversificationtoaccelerateRMBmnFY22-25RevenueCAGR29Revenuemix1009000755488991080009014131880257000273070356000466029424050005029272340001940300030200046432040423838383510001000FY18FY19FY20FY21FY22FY23EFY24EFY25EFY18FY19FY20FY21FY22FY23EFY24EFY25ESmartBusinessSmartCitySmartLifeSmartAutoSmartAutoSmartLifeSmartCitySmartBusinessSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure5SenseCoreenablesmoreefficientAIFigure6SenseTimeGPMtograduallydeclineasmodeldevelopmentAIaaSrampsup3500010010071709359067300005657585656805025000702000059460050FY18FY19FY20FY21FY22FY23EFY24EFY25E1500040-501000034530205000-10010004400FY19FY20FY21FY22-150CommercialAImodelsdevelopedLHSAnnualAImodelsdevelopedperRDstaffRHSGPMSMGARDOPMAdjNPMSourceCompanydataCMBIGMSourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE229Mar2023FY22resultsreviewRevenuewasatRMB3809mn-19YoYbelowourconsensusestimatesby2224respectivelyoSmartBusinessdeclined25YoYtoRMB1464mnNoofcustomerswasdown22YoYto717Avgrevenuepercustomerdecreased4YoYtoRMB204mnSenseCoreAIaaScontributedover20ofSmartBusinessrevenueoSmartCitydeclined49YoYtoRMB1096mnNoofcitiescoveredincreasedto16216YoYAvgrevenuefromeachcitydecreased56YoYtoRMB677mnoSmartLifewasup130YoYtoRMB955mnNoofcustomersincreased23YoYandavgrevenuepercustomerincreased86YoYtoRMB301mnoSmartAutogrew59YoYtoRMB293mnNoofcustomerswasstableat34butavgrevenuepercustomerincreased59YoYtoRMB861mnGrossmarginwasat668-3pctptsYoYaboveourestimatesby20pctptsandconsensusby35pctptsOperatinglosswidenedtoRMB3941mnbetterthanourandconsensusestimatesNetlossnarrowedtoRMB6045mnFigure7SenseTimeFY22resultsreview20HKFY21FY22FY22EFY22ERMBmnActualActualYoYCMBICMBIConsensusConsensusRevenue47003809-194907-225031-24Grossprofit32782542-223175-203180-20Grossmargin697668-3pctpts6472pctpts63235pctptsOperatingprofit-3316-3941-19-41796-510123Operatingmargin-706-1035-329pctpts-852-183pctpts-1014-21pctptsAdjEBITDA-879-4213-379-3705-14-3488-21AdjEBITDAmargin-187-1106-919pctpts-755-351pctpts-693-413pctptsNetnon-op-13825-239283-819-192442-641PBT-17142-633363-4998-27-4659-36Netincome-17140-604565-4563-32-3934-54Netmargin-3647-15872059pctpts-930-657pctpts-782-805pctptsEPSRMB-174-01989-014-39-013-51RevenuebysegmentSmartBusiness19581464-252089-30SmartCity21431096-491912-43SmartLife41595513066344SmartAuto1842935924221SourceBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE329Mar2023EarningsrevisionFigure8EarningsrevisionFY23EFY24ERMBmnNewOldDiffNewOldDiffSales49806026-1763557750-18Grossprofit28673810-2535314897-28OPProfit-4298-40666-3776-37062AdjEBITDA-3097-29874-2425-24091Netprofit-4296-4656-8-3824-4330-12EPS-013-014-8-0-013-12MarginsGM576632-566bps556632-763bpsOPM-863-675-1884bps-594-478-1160bpsAdjEBITDAmargin-622-496-1262bps-382-311-708bpsNetmargin-863-773-899bps-602-559-430bpsSourceCompanydataCMBIGMestimatesFigure9CMBIvsconsensusforecastFY23EFY24ERMBmnCMBIStreetDiffCMBIStreetDiffSales49807000-2963559741-35Grossprofit28674417-3535316137-42OPProfit-4298-230487-3776-1014273AdjEBITDA-3097-195858-2425-1198102Netprofit-4296-224491-3824-1471160EPS-013-00941-011-00768MarginsGM576631-554bps556630-745bpsOPM-863-329-5339bps-594-104-4902bpsAdjEBITDAmargin-622-280-3422bps-382-123-2586bpsNetmargin-863-321-5421bps-602-151-4507bpsSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE429Mar2023OperatingmodelFigure10SenseTimeincomestatementRMBmn201820192020202120222023E2024E2025ERevenues18533027344647003809498063558267Costofsales8071307101414231266211428243656GrossProfit10471719243232782542286735314611Grossmargin565568706697668576556558Sellingmarketingexpense205453537682901102210471088Administrativeexpense452766159022981568162916551727Researchdevelopmentexpense8491916245436144014451446064799OperatingIncome4591416214833163941429837763003Operatingmargin-248-468-623-706-1035-863-594-363Non-OperatingIncome2997375710171138252392202230247ProfitBeforeTax3456517312319171426333450140063249Incometaxexpensegain2320516136240170152123Minorities5503748343025NetIncometoShareholders3428496312158171406045429638243101Netmargin-1849-1640-3528-3647-1587-863-602-375NetprofitlossesFairvaluelossesofpreferredshares3182368210564135267---andotherfinancialliabilitiesShare-basedcompensationexpenses151318871584465500510531Share-basedcompensationtoa86-------preferredshareholderAdjnetprofit150115587814184736383033452595Adjnetmargin-81-382-255-302-1244-769-526-314SourceCompanyDataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE529Mar2023Figure11RevenueandcostofsalesbreakdownRMBmnFY18FY19FY20FY21FY22FY23EFY24EFY25ERevenuebreakdownSmartBusiness8541203148519581464190124042909SmartCity5301271136921431096132614621581SmartLife330414434415955135119232914SmartAuto139139158184293402566862Total18533027344647003809498063558267RevenuemixSmartBusiness4640434238383835SmartCity2942404629272319SmartLife181413925273035SmartAuto755488910RevenueYoYSmartBusiness412332-25302721SmartCity140857-4921108SmartLife255-4130414252SmartAuto0141659374152Total631436-19312830CostofsalesbreakdownHardwarecostsand767122891012651119190225483315subcontractingservicefeesServeroperationandcloud-103212145811basedservicefeesEmployeebenefitexpenses41457807294120156Depreciationand----3984112127amortizationOtherexpenses2533467622293647Total8071307101414231266211428243656CostofsalesmixHardwarecostsand9594908988909091subcontractingservicefeesServeroperationandcloud-12001000basedservicefeesEmployeebenefitexpenses11666444Depreciationand00003443amortizationOtherexpenses33552111SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE629Mar2023ValuationMaintainBUYwithnewtargetpriceofHK345MaintainBUYwithnewtargetpriceofHK345priorHK210basedon18xprior9xFY23EEVSalesin-linewithChinaAIpeersWebelievethebreakthroughinAIlargemodelsandsupportivepolicieswillcontinuetodrivesectorre-ratingWeobservedthatChinaAImarket-capweightedEVsaleshavere-ratedfrom44xto100xYTDWeuseEVsalesasvaluationmethodologyasAIdeploymentisstillinanearlystagethatshorttermearningsaredistortedbyhighRDmarketingexpenseanddepreciationrelatedtoheavycapexforcomputinginfrastructureFigure12PeerscomparisonMarketSalesEPSFCFCapPriceTPEVsalesxPSCAGRCAGRmarginFY21-FY21-CompanyTickerRatingUSmnLCLCFY23EFY24EFY23EFY24E24E24EFY21ChinaAIcompaniesSenseTime20HKBUY1142626834513210619315111na-74Ainnovation2121HKNR11591626NA2717332163na-33Cambricon688256CHNR1001217200NA55639757441033na-179Arcsoft688088CHNR21023565NA170126199147204011Hikvision002415CHBUY57726424537443934413511511Dahua002236CHHOLD93562124110719161816761Mean1571341761302417-43Median867011791166-16GlobalAIcompaniesPalantirPLTRUSNR16895804NA6655776420na21UiPathPATHUSNR89691609NA7158877127na4C3aiAIUSNR28552544NA79661088920na-21NvidiaNVDAUSNR65531626531NA243219243220213628AmbarellaAMBAUSNR29757676NA8297881049na13Mean1019111210022366Median7562888021369SourceBloombergCMBIGMestimatesFigure13SenseTimeforwardEVsalesFigure14ChinaAImkt-capweightedfwdEVsales450x1540035030010250200515010050--Jul-22Apr-22Oct-22Jun-22Jan-23Jan-22MktCapWeighted1-yrfwdEVSalesFeb-22Mar-22Feb-23Dec-21Nov-22Dec-22Aug-22Sep-22May-22Mean1-yrfwdEVSALESMeanMean1SDMean1SDMean-1SDMean-1SDSourceBloombergCMBIGMSourceBloombergCMBIGMcompaniesincludeSenseTime20HKAInnovation2121HKCambricon688256CHArcsoft688088CHHikvision002415CHandDahua002236CHPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE729Mar2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecRMBmnRevenue344647003809498063558267Costofgoodssold101414231266211428243656Grossprofit243232782542286735314611Operatingexpenses458065946483716573077614Sellingexpense537682901102210471088Adminexpense159022981568162916551727RDexpense245436144014451446064799Operatingprofit214833163941429837763003Interestincome175188261197169169Interestexpense113345590131191Otherincomeexpense10234139792597309268224Pre-taxprofit12319171426333450140063249Incometax16136240170152123Aftertaxprofit12158171776093433038553126Minorityinterest03748343025Netprofit12158171406045429638243101Adjustednetprofit87813814688379633142570BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecRMBmnCurrentassets317262808421524200492071721359Cashequivalents11428165307963662872737652Accountreceivables458457766072562252945132Inventories71649661792712771703FinancialassetsatFVTPL0273632632632632Othercurrentassets1497749916213621362136213Contractassets221927272727Non-currentassets6753886015903160121585415612PPE190629096999707368856616Right-of-useassets336432315315315315Intangibles108225333368398425Othernon-currentassets440252948256825682568256Totalassets384793694437427360613657136971Currentliabilities982227953323463466918604Short-termborrowings5940321391673867Accountpayables172422902473365053516965Othercurrentliabilities77441774605298111006Contractliabilities244172208271346451Non-currentliabilities4958921625090534776559268Long-termborrowings4233402907453768188394Bondpayables664512121212Othernon-currentliabilities4910017782171798825863Totalliabilities594114957841399811434617872Sharecapital000000Retainedearnings217134014946194504905431457416Otherreserves6457204275164765607656076560Totalshareholdersequity210683189328970260702224619144Minorityinterest136954492146Totalequityandliabilities384793694437427360613657136971PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE829Mar2023CASHFLOW2020A2021A2022A2023E2024E2025EYE31DecRMBmnOperatingProfitbeforetaxation12319171426333450140063249Depreciationamortization570658968101011101200Taxpaid133811170152123Changeinworkingcapital12902026101140517791492Others118231606223931063823Netcashfromoperations12292485308420221004412InvestingCapitalexpenditure1306126651671119952957Others57652834131197169169Netcashfrominvesting707015489298922783789FinancingDividendpaid000000Netborrowings1332747693389169925631771Proceedsfromshareissues046430000Others141346090131191Netcashfromfinancing1318693783329160924321579NetchangeincashCashatthebeginningoftheyear66731142816530796366287273Exchangedifference131243487000Cashattheendoftheyear11428165307963662872737652GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue139364190308276301Grossprofit415348224128232306PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin706697668576556558Operatingmargin6237061035863594363Adjnetprofitmargin2552941231762522311ReturnonequityROEna3167199156158150GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecNetdebttoequityxna0501010001Currentratiox3210065433125Receivableturnoverdays293531934936345524191693Inventoryturnoverdays206215541605160016501700Payableturnoverdays227812891899175320092069VALUATION2020A2021A2022A2023E2024E2025EYE31DecPBna4138303541EV576534529950625973656314675489689406EVSales16711316413210683SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE929Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE10