研究报告全文：FixedIncomeCreditCommentary20Oct2023CMBICreditCommentaryInitiatecoverageonChineseleasingsectorInitiatebuyonFRESHK224FRESHK325BCLMHKFloat24-25sandCyrenaNgCPA吳蒨瑩CDBFLC23085239000801cyrenangcmbicomhkLeasingcompaniesinChinacanbebroadlyclassifiedinto2categoriescommercialleasingcompaniesandfinancialleasingcompaniesFinancingJerryWang王世超leasingcompaniesenjoylowerfundingcoststhanthatofcommercialleasing85237618919companiesgiventheirmorediversifiedfundingchannelsandmorestringentjerrywangcmbicomhkregulatoryrequirementsHencetheRVanalysisshouldalsobeseparatedbetweencommercialleasingcompaniesandfinancialleasingcompaniesGlennKoCFA高志和factoringintheirfundamentaldifferences85236576235glennkocmbicomhkForcommercialleasingcompaniesFRESHKsareourpicksbecauseofthemoreattractiverisk-returnprofilesthanthoseofpeerssuchasBOCAVICHNAARandPINIFLWithintheFRESHKcurvewepickFRESHK2030324asashort-datedcarryplayandFRESHK3021825foritsbetterrisk-returnprofileAt977FRESHK2030324istradingataYTMof91ForFRESHK3021825itistradingatYTMof104at915ForfinancialleasingcompanieswepickBCLMHKFloat090524BCLMHKFloat121024andBCLMHKFloat030225asshort-datedandlowbetaplaysunderanuncertaininterestrateenvironmentTheyaretradingatYTMof66-68withcashpricesclosetoparBCLMHKFloat24-25salsopresent79-94bpsyieldpick-upovertheseniornotesofBOCOMAdditionallyweconsiderCDBFLC2092830Tier2bondcallable092825ayieldpick-upplayoveritsownseniorunsecuredbondsanditsparentsseniorbondsAt927CDBFLC2092830istradingatYTCof69Itoffersayieldpick-upof117bpsand142bpsoverCDBLFD2030426andSDBC1102725Table1SummaryofourpicksBondAskYTMYTCosamtRatingGuarantorpriceAskUSDmnMSFFRESHK203032497791450-BBB---FRESHK3021825915104300-BBB---BCLMHKFloat090524100266400A3-A-BCLMHKFloat121024100068600A3-A-BCLMHKFloat03022599868500A3-A-CDBFLC209283092769700-BBBA--SourceBloombergCMBIFixedIncomefiscmbicomhkPLEASEREADTHEAUTHORCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE20Oct2023Chart1ActivelytradedChinaleasingbondsMSF1211CHNAAR5030824Ba2-BBCHNAAR485122324Ba2-BBFRESHK4102626-BBB-10-FRESHK3021825-BBB-WDMSFLCZ315031024Baa3BBB--9FRESHK2030324-BBB--8AVIILC3425PERPBaa1--YTMBCLMHKFloat121024A3-ACDBFLC2092830-BBBA-7BCLMHKFloat090524A3-ABCLMHKFloat030225A3-ABCLMHK5030824A3--ICBCIL1110224A2-ABOCAVI4012524-A-A-CMINLE1091624-BBB-6BCLMHK4012224-A-AICBCIL1082525A2A-CCBL3051624-AABOCAVI2120223-A-A-ICBCIL2012725A2-A5FRESHK0061526---FRESHK2070825---400051015202530ModDurationSourceBloomberg220Oct2023AquickanatomyofthefinancialandcommercialleasingcompaniesLeasingcompaniesinChinacanbebroadlyclassifiedinto2categoriescommercialleasingcompaniesandfinancialleasingcompaniesCommercialleasingcompaniesareclassifiedasnon-financialinstitutionswhilefinancialleasingcompaniesarenon-bankfinancialinstitutionsMostofthefinancialleasingcompaniesareownedbybanksorlargecorporatesFinancialleasingcompaniesareallowedtooperateawiderrangeofactivitiesincludingtotakedepositsfromnon-bankshareholdersandaccesstointerbankmarketforfundingSeeTable2FinancialleasingcompaniesarethereforesubjecttomorestringentregulatoryrequirementsdespitebothcommercialleasingandfinancialleasingcompaniesareregulatedbyTheNationalAdministrationofFinancialRegulationNAFRTherequiredminimumCET1Tier1totalcapitalratiosare7585105respectivelytherearealsorequirementsonthedegreeofconcentrationinsingleclientfinancingandnon-performingassetsallowanceForcommercialleasingcompaniesthemaximumassetsatrisktonetassetsratioshouldnotbehigherthan8xSeeTable3OnthebrightsidefinancingleasingcompaniesenjoylowerfundingcoststhanthatofcommercialleasingcompaniesgiventheirmorediversifiedfundingchannelsandmorestringentregulatoryrequirementsSeeTable4HenceweconsidercommercialleasingcompaniesandfinancialleasingcompaniestwosubsetsofasectortheRVanalysisshouldalsobeseparatedfactoringintheirfundamentaldifferencesTable2ComparisonofbusinessscopeoffinancialleasingandcommercialleasingcompaniesFinancialleasingcompaniesCommercialleasingcompaniesFinancialleasingFinancialleasingandoperatingleasingTransferringoracceptingfinancialleasingTransferringoracceptingfinancialleasingassetsandoperatingleasingassetsAcceptingleasedepositsfromthelesseeAcceptingleasedepositsfromthelesseeOverlappedfinancialleasingandoperatingleasingbusinessInvestinginFixedIncomesecuritiesInvestinginFixedIncomesecuritiesDisposalandmaintenanceofleasedDisposalofleasedpropertiespropertiesConsultingonfinancialleasingandEconomicconsultingoperatingleasingAbsorbingdepositsover3monthsfromnon-bankshareholdersUniqueInterbanklendingbusinessLendingfromfinancialinstitutionsOverseaslendingSourceNFRA320Oct2023Table3RegulationrequirementforfinancialcommercialleasingcompanyFinancialleasingCommercialleasingcompaniescompaniesCommonregulationrequirementsDegreeofconcentrationofsingleclientfinancing3030Degreeofconcentrationofsinglegroupclientfinancing5050Ratioofasinglerelatedclient3030Ratioofallrelatedparties5050RatioofasinglerelatedShareholder100100Investmentinfixed-incomesecurities2020SpecificregulationrequirementsCapitaladequacyratio105-Tier-onecapitaladequacyratio85-Coretier-onecapitaladequacyratio75-Ratioofinterbanklending100-Financialleasingandotherleasingassetstotalassets-60Riskyassetsnetassets-8xRatioofallowancetonon-performingfinanceleaserelatedassets150-Ratioofallowancetototalfinanceleaserelatedassets25-SourceNFRATable4FinancingcostofselectedcompaniesCompany2020202120221H23BOCAVI320290310390CHNAAR334296420572CommercialleasingFRESHK463441401426PINIFL428417394-BCLMHK277233257-CCBL311322258-CDBALF295301291341FinancialleasingCMINLE300292279-MSFLCZ323338331-ICBCIL249233284-SourceCCXICompanyfillings420Oct2023PickFRESHK2030324andFRESHK3021825incommercialleasinguniverseFarEastHorizonFEHcontinuestohavebetteroperatingperformancewithmorediversifiedoperationsandbetterprofitabiltyWeconsiderFRESHKsofferingmoreattractiverisk-returnprofilesthanthoseofpeerssuchasBOCAVICHNAARandPINIFLAmongFRESHKswepickFRESHK2030324asshort-datedcarryplayandFRESHK3021825forbetterriskreturnprofileAt977FRESHK2030324istradingataYTMof91ForFRESHK3021825itistradingatYTMof104at915MorediversifiedoperationsandbetterprofitabilityFEHsrevenueandprofitsteadilyincreasedsinceFY19despitethepandemicIn1H23FEHsrevenuerose36yoytoRMB184bnandtheattributableprofitincreasedby82toRMB31bnTheimpairmentlossin1H23was30lessthan1H22atRMB723mnFEHhasdiversifiedrevenuesourcesacrossfromninedifferentindustriesIn1H23urbanpublicutility451engineeringconstruction133cultureandtourism91accountedformajorityofitsnet-interestearningassetsseeTable5ItsexposuretomorecyclicalsectorssuchasconstructionaviationandshippingislowerreflectedbyitsmorestableROAandROESeeTable6forcomparisonbetweenFEHanditspeersComparedtocommercialleasingcompanywithsingleindustryfocussuchasBOCAVIandCHNAARFEHshowsamorestableprofitabilitytrendoverthepastfewyearsBesidesFEHoutperformeditspeersinbothROAandROEin1H23FRESHKsleverageratiocalculatedwithassetsatriskdividedbytotalequitywas40xatDec22wellbelowtheregulatorymaximumof8xAnalysisbasedonstandalonecreditprofilegivenmoreremotedlinkagewithSinochemBasedonfiguresforFY22FEHisthelargestleasingcompanybyrevenueandthe3rdlargestbyassetsinChinaitwasonce100ownedbySinochemGroupandSinochemHKindirectlywhollyownedbySinochemGroupCurrentlySinochemisthesecondlargestshareholderofFEHandownsa213stakeFEHschairmanandCEOKongFanxingisthelargestshareholderwitha218stakeWetakeabottom-upapproachinanalyzingFEHasthelinkagebetweenSinochemandFEHhasbeenmoreremotedovertheyearsFEHdoesnothavecreditenhancementfromorcrossdefaulttriggertoSinochemThemembersofseniormanagementofFEHdonotholdpositioninSinochemGroupMoreoverFEHdoesnothaveconnectedtransactionswithSinochemoranyoutstandingborrowingsfromSinochemasatJun23RMB35mnatJun22andRMB700mnatDec20Table5FEHsnetinterest-earningassetsbyindustryFY19FY20FY21FY221H23RMBmnofRMBmnofRMBofRMBofRMBoftotaltotalmntotalmntotalmntotalUrbanpublicutility73733363102528436117740456137914510125812451Engineeringconstruction236471162619411127017105241258936286130Culturetourism3096515225629109254479821769802599393Healthcare31240154283801212685210424624912324483Transportationlogistics13808681396759145605614677541878767Publicconsuming9035441166850149885816606611689361Machinery8547421156149150515814401531405850520Oct2023Chemicalmedicine410820566924730428845831947234Electronicinformation806640981842941836802730824330Total20314910002354141000258379100027060110002787871000SourceCompanyfillingsTable6ComparisonofmajorcommercialleasingplayersAssetsatTotalTotalNetdebtGearingrisktonetCompanyrevenueassetsROAROENPLratioEBITDAratioassetsRMBmnRMBmn8xBOCAVI149941720462161068-1226x7133-CHNAAR2934390461441234-1194x8010-FY20FRESHK2904229992718014241101828x8491534xPINIFL194232779611449771243093x8521641xBOCAVI159361743172351065-1084x7038-CHNAAR268040904109920-1241x8090-FY21FRESHK3364433588019614571061982x8420519xPINIFL1998927395415610111212690x8388584xBOCAVI16841161118009038-884x6886-CHNAAR372649426014120-1026x8150-FY22FRESHK3658634699519314131051784x8489466xPINIFL195412583841378341172914x8314563xBOCAVI7745167301114489-1116x6921-CHNAAR214558256068643-1012x8300-1H23FRESHK1836236136319713271052013x8438424xPINIFL97222518711207021192787x8390588xNoteCHNAARinHKDmnAssetsatriskistotalassetsminuscashandbankbalancesandgovernmentbondsSourceCompanyfillingsCMBIResearchAccesstodifferentfundingchannelsdespiteincreasingrelianceonshort-termfundingWenoticethatFEHasitspeersexperiencednetredemptioninonshoreandoffshorebondmarketsAdditionallyFEHasotherleasingpeersdoreliesonshort-termfundingandaroundhalfofFEHstotaldebtsareduewithinayearsinceFY19AsatJun23theshort-termdebtswasRMB1536bnaccountedfor572oftotaldebtsItsweightedaveragetenorofonshorebondsalsoshortenedto13yearsin9M23from21yearsinFY19duetoincreasingissuanceofsuper-shortcommercialpapersSCPofwhichthefundingcostislowerseeTable7Besidestheweigthedaveragefundingcostsofonshorebondsdecreasedto426in9M23from495inFY19WebelievethatthesechangesreflectedthehigherfundingcostsinbondmarketsFEHturnedtoshortertenorloanmarketforlower-costfundingFEHstotalloansincreasedtoRMB2682bnin1H23fromRMB2052bninFY20IntheonshorebondmarketFEHhasnetredemptionforRMB354bnRMB121bnandRMB219bninFY21FY22and9M23respectivelySeeChart3ForoffshoreFEHisyettotapthebondmarketsinceOct21buthasredeemedcUSD1bnoffshorebondssincethenCurrentlyFEHhasthreestraightUSDbondstotaledUSD11bndueinMar24-Oct26twoCBsincludingUSD250mnCBputtableinJun24at10615andUSD300mnCBdueJul25WeexpectFEHtomeettheshort-termdueswithitsavailablefundingchannelsandtoloweritsaveragefinancingcostbyraisingshort-termbondsWetakecomfortfromitsadequatecreditlineswithundrawnbanklinesofRMB220bncUSD30bnasatJun23WetakeadditionalcomfortthatFEHhasapositivenetliquiditygapofRMB327bnseeTable8asatJun23anditsassetsatriskdividedbynetassetsof424xatJun23wellbelowtheregulatorymaximumof8x620Oct2023WealsonoticethatFEHsplantoissueof2-yrcorporatebondsofRMB15bnannouncedon18Oct23Thisdemonstratesitsabilitytoaccessonshorebondmarketsforlong-termfinancingtheincreasingrelianceonshort-datedfundingismoreofachoicetolowerfundingfundingcostsChart2USDbondsissuanceofChineseleasingcompaniesUSDbn40035032430025020015010073505432--19-50-69-100Before201920192020202120229M23IssuanceMaturedNetissuanceSourceBloombergTable7WeightedaveragecostandtenorofFEHsonshorebondissuanceSuper-shortWeightedCorporateCommercialWeightedMTNcommercialaveragetenorbondpaperaveragecostpaperyears2019388398-257214952020335347-185234632021409365-314144412022376363-239194069M2349745243534913426SourceWindCMBIResearch720Oct2023Chart3FEHsonshorebondsinclABSABNfinancingRMBbn1200102810007808007076746596666004974214474003272002109500-121-200-219-354-400-60020192020202120229M23IssuanceRedemptionNetissuanceSourceWindCMBIResearchTable8FRESHKsnetliquiditygapasatJun23RMBmnOndemand3months3to12months1to5yearsOver5yearsUndatedTotalTotalfinancialassets236965014813474813605015292534348705Totalfinancialliabilities414552951283621277334202-316006Netliquiditygap232825146638783162673253432699SourceCompanyfillings820Oct2023PreferBCLMHKFloat24-25sandCDBFLC2092830MostofthelargeChinesebankshavetheirfinancialleasingarmsincludingBOCOMsBOCOMLeasingandCDBsChinaDevelopmentBankLeasingAsnon-bankfinancialinstitutionsfinancialleasingcompaniesareallowedtooperateawiderrangeofbusinessessuchastakingdepositsfromnon-bankshareholdersandtappinginterbankmarketforfundingMeanwhilefinancialleasingcompaniesarerequiredtomaintainminimumCET1Tier1totalcapitalratiosof7585105respectivelyTherearealsoregulatoryrequirementsonthedegreeofconcentrationinsingleclientfinancingandnon-performingassetsallowanceAsfinancialleasingcompanieshaveaccesstomorediversifiedfundingchannelsandaresubjecttomorestringentregulatoryrequirementstheyhavebeenenjoyinglowerfundingcoststhancommercialleasingcompaniesWithinthefinancialleasingspaceweviewBCLMHKFloat090524BCLMHKFloat121024andBCLMHKFloat030225aslowerbetaplaysundertheuncertaininterestrateenvironmentTheyaretradingatYTMof66-68withcashpricesclosetoparBCLMHKFloat24-25salsopresent79-94bpsyieldpick-upovertheseniornotesofBOCOMwithsimilarmaturityseeChart5Regardingtheyieldpick-upopportunitiesoverbondsoftheirparentbanksweconsiderthepick-upofthe142bpsforCDBFLC2092830Tier2bondcallable092825overitsparentCDBsseniorbondSDBC1102725mostattractiveAt927CDBFLC2092830istradingatYTCof69Chart4Activelytradedfinancingleasingcompaniesbonds1009590858075YTM7065605550001020304050607080YeartoMarturityBCLMHKCCBLCDBALFCMINLEMSFLCZICBCILSourceBloomberg920Oct2023Table9ComparisonofselectedfinancialleasingcompaniesTotalcapitalConcentrationofRatingEBITDAPeriodTickerROANPLadequacyratiosingleclientMSFNetDebt105financing30FY22BCLMHKA2A-A113112205x12361040FY22CCBLA2AA062249387x184511801H23CDBALFA1AA109078268x12331296FY22CMINLEA3BBB-135036237x13281133FY22MSFLCZBaa3BBB--059170348x11371047FY22ICBCILA1AA007149341x13091133SourceCompanyfillingsChart5SpreadbetweenBCLMHKsandseniorunsecurednotesofBOCOM2502001509410079500-50-100-150SpreadofBCLMHKFloat121024A3-ASpreadofBCLMHKFloat030225A3-ASpreadofBCLMHKFloat090524A3-ASourceBloomberg1020Oct2023Chart6SpreadbetweenCDBFLC2092830andseniorunsecurednotesofCDBleasingandCDB18016014181401201001166806040200Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23SpreadbetweenCDBFLC2092830-BBBA-andCDBLFD2030426A2-ASpreadbetweenCDBFLC2092830-BBBA-andSDBC1102725-A-SourceBloombergChart7SpreadbetweenCCBLCMINLEICBCILandseniorunsecurednotesofCCBCHINAMICBCAS8070605040258302022410460-10-20Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23CCBLSpreadCMINLESpreadICBCILSpreadSourceBloomberg1120Oct2023StrongimpliedsupportfromparentbanksgiventhecrossdefaultoraccelerationclausesAllChinesefinancingleasingcompaniesthathaveoutstandingUSDbondsareconsolidatingentitiesoftheirparentsHencethefinancingleasingsubsidiariesdefaultoraccelerationofpaymentswilltriggerthecrossdefaultifaccelerationofpaymentsoftheirrespectiveparentsThethresholdofcrossoraccelerationdefaultislowatUSD25-50mnWeexpectthesupportsuchascreditlinesfromparentbankstobeforthcomingshouldsupportisnecessaryinviewthestrongfinancialpositionsofparentbankscrossdefaultclausesandmajorityshareholdingsTable10CrossdefaultclausestoshareholdersCrossdefaultShareholdersTickerShareholderShareholdingCrossdefaultwithshareholderthresholdcrossdefaultUSDmnBCLMHKBankofCommunication100YtheIssueroranyofitssubsidiaries25CCBLChinaConstructionBank100YtheBankoranyofitssubsidiaries25CDBALFChinaDevelopmentBank644YtheBankoranyofitssubsidiaries50theBankanyrelevantbranchoranyoftheCMINLEChinaMerchantsBank100Y25bankssubsidiariesMSFLCZMinshengBank550YtheBankoranyofitssubsidiaries25ICBCILICBC100YtheIssueroranyoftheBankssubsidiaries30SourceBloombergCMBIResearch1220Oct2023AppendixKeyfinancialdataofFRESHKRMBmnFY19FY20FY21FY221H23Totalrevenue2685629042336443658618362-Financialservicesinterestincome1584216522191682167811085-Advisoryservicesfeeincome4574383631791823473-Revenuefromindustrialoperation6521881111435132336890-Taxandsurcharges8012713814786Costofsales125251407616431181289909-Borrowingcosts80398070893790085009-Costsforindustrialoperation44866007749491204900Grossprofit143311496617213184588453Attributableprofit43384576551261293071Totalassets260571299927335880346995361363Cashandcashequivalent399011877156591590421382Netinterest-earningassets203149235414258379270601278787STdebts87981104169122858123599153565LTdebts76288101868107950128235115135Totaldebts164269206037230808251834268700Gearingratio841849842849844AssetqualityratiosNon-performingassetratio1111111111Provisioncoverageratio24612522241824002349Write-offofnon-performingassetratio403529403501211Overdueinterest-earningassetsover30days1310090909ratioProfitabilityratiosROA1818201920ROE150142146141133Netinterestmargin3738414744Costtoincomeratio335339353368418SourceCompanyfillingCMBIResearchCMBInternationalGlobalMarketsLimitedFixedIncomeDepartmentTel8523657623585239000801fiscmbicomhkCMBInternationalGlobalMarketsLimitedCMBGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankAuthorCertificationTheauthorwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheauthorcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatauthorinthisreportBesidestheauthorconfirmsthatneithertheauthornorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinor1320Oct2023tradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMandoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestDisclaimerForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereport14