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COMPANY UPDATE 10 February 2011

Astra International
All's still in order

OUTPERFORM RP48,250

Maintained @09/02/11 Target: Rp65,000 Autos

ASII IJ / ASII.JK

Erwan Teguh erwan.teguh@cimb.com/Cindy Effendi - cindy.effendi@cimb.com

Reiterate Outperform but with lower target price of Rp65k (from Rp68k), still
SOP-based and implying 16x and 14x CY11-12 P/Es. We lower our target price after applying a higher WACC of 12% (from 11.5%) to our DCF valuation for its auto businesses. This offsets our 3% earnings upgrade for Astra largely on higher contributions from UT and AAL. Rising inflation and interest rates are near-term headwinds for its auto business. Consistent with past cycles, valuations could be derated, despite a sanguine mid-term outlook. Strong January auto wholesales provide comfort, and if BI can navigate inflation well, upside for Astras auto business remains. With a 2H11 recovery in mind, we maintain our Outperform rating. 2011 on track. Januarys indicative car sales were 74k (+6% mom, +41% yoy) and motorcycle sales, 664k (+29% mom, +32% yoy) units, suggesting that car and motorcycle sales grew in excess of 10-15% respectively. 2011 sales look good despite concerns over higher interest rates, higher auto taxes and uncertainties over the removal of fuel subsidies. Bearish stock sentiment aside, consumers and auto execs remain sanguine on the economic outlook. But near-term de-rating may be inevitable, going by past cycles of rising inflation and interest rates. Despite our unchanged view on auto demand and higher contributions from both UT and AAL, factoring in a higher risk free rate has hit our valuations for its auto-related businesses. This is why our target price has been cut to Rp65k.
Financial summary
FYE Dec Revenue (Rp bn) EBITDA (Rp bn) EBITDA margins (%) Pretax profit (Rp bn) Net profit (Rp bn) EPS (Rp) EPS growth (%) P/E (x) Core EPS (Rp) Core EPS growth (%) Core P/E (x) Gross DPS (Rp) Dividend yield (%) P/BV (x) ROE (%) Net gearing (%) P/FCFE (x) EV/EBITDA (x) % change in EPS estimates CIMB/Consensus (x)
Source: Company, CIMB Research, Bloomberg

2008 97,064 14,450 14.9% 15,363 9,191 2,270 45.5% 21.3 2,242 54.5% 21.5 981 2.0% 5.9 30.6% 37.5% 203.5 14.4

2009 98,526 16,103 16.3% 16,402 10,040 2,480 9.2% 19.5 2,464 9.9% 19.6 870 1.8% 4.9 27.5% 28.1% 164.8 12.8

2010F 134,480 19,970 14.8% 21,501 13,915 3,437 38.6% 14.0 3,420 38.8% 14.1 1,116 2.3% 4.0 31.2% 24.4% (33.1) 10.4 2.9% 1.05

2011F 154,847 23,952 15.5% 25,084 16,237 4,011 16.7% 12.0 4,015 17.4% 12.0 1,719 3.6% 3.3 30.1% 20.2% (1,489.7) 8.7 2.6% 1.06

2012F 176,877 27,741 15.7% 28,938 18,596 4,594 14.5% 10.5 4,594 14.4% 10.5 2,005 4.2% 2.8 29.1% 16.1% 65.0 7.5 2.8% 1.07

Price chart
62537.5 57537.5 52537.5 47537.5

Market capitalisation & share price info


2.00 1.50 1.00

42537.5 37537.5 32537.5 F e b-10

0.50 0.00
J ul-10 De c-10
As tra Inte rna tiona l

Volume 10m (R.H.S c a le )

Market cap 12-mth price range 3-mth avg daily volume # of shares (m) Est. free float (%) Conv. secs (m) Conv. price ( )
Source: Company, CIMB Research, Bloomberg

Rp195,333bn/US$21,874m Rp60,000/Rp34,150 5.6m 4,048 40.0

Share price perf. (%) Relative Absolute Major shareholders Jardine C&C

1M 3M 3.3 (6.4) 1.5 (14.6)

12M 2.9 41.3 % held 51.0 N/A N/A

Source: Bloomberg

Please read carefully the important disclosures at the end of this publication.

INDONESIA

Outlook
Robust ending; solid beginning. 2010 was a tremendous year for Indonesian auto sales with car sales surging to 765k units, +57% yoy, and motorcycle sales hitting 7.4m units, +26% yoy, both representing new highs. It also marked a year when Indonesia closed its gap with Thailand in terms of car sales. 2010 sales were 2-4% ahead of our expectations. Low interest rates and plentiful liquidity were largely responsible, with GDP per capita hitting US$3k possibly also boosting consumer confidence.
Figure 1: Quarterly sales Car sales
units 220,000 180,000 140,000 100,000 60,000 1Q01 4Q01 3Q02 2Q03 1Q04 4Q04 3Q05 2Q06 1Q07 4Q07 3Q08 2Q09 1Q10 4Q10 Domestic car sales y oy grow th (RHS) 90% 60% 30% 0% -30% -60% -90%

units 110,000 90,000 70,000

Astra y oy grow th (RHS)

90% 60% 30% 0%

50,000 30,000 1Q01 4Q01 3Q02 2Q03 1Q04 4Q04 3Q05 2Q06 1Q07 4Q07 3Q08 2Q09 1Q10 4Q10

-30% -60%

Source: Company, CIMB Research,

Motorcycle sales
mn units 2.4 1.9 1.4 0.9 0.4 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 Domestic motorcy cle sales % YoY grow th (RHS) % 110 70 30 (10) (50)

mn units 1.0 0.8 0.6

Honda % YoY grow th (RHS)

130% 90% 50% 10%

0.4 0.2 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10

-30% -70%

Source: Gaikindo, CIMB Research

Preliminary car sales for Jan 11 were 74k units, +6% mom and +41% yoy while motorcycle sales were 664k units, +29% mom and +32% yoy. January sales normally provide a good indication of what is to come in the year and this January points to a strong 2011.
Figure 2: Januarys auto sales Car sales
Units 75,000 63,000 51,000 39,000 27,000 15,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 2009 2006 2010 2007 2011 2008

Motorcycle sales
mn units 0.8 0.6 0.5 0.4 0.3 0.2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 2009 2006 2010 2007 2011 2008

Source: Gaikindo, CIMB Research

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Unshaken confidence. Despite bearish market sentiment over high inflation, higher taxes in the form of progressive auto taxes (50% more for second cars), limited subsidised fuel and cost pressure on auto manufacturers from higher steel prices, auto execs and consumers remain sanguine on the economic outlook. While auto prices are expected to go up by 5% or more this year, this is not unusual, which should have little adverse impact on demand.
Figure 3: Unshaken confidence
130 120 110 100 90 80 70 60
8 5 5 7 8 9 9 0 2 3 6 6 1 3 4 0 1 2 4 7 2Q 0 4Q 0 2Q 0 4Q 0 2Q 1 2Q 0 4Q 0 2Q 0 4Q 0 2Q 0 4Q 0 2Q 0 4Q 0 4Q 0 2Q 0 4Q 0 2Q 0 2Q 0 4Q 0 2Q 0 4Q 0 4Q 1
2012F

Business tendency

Consumer tendency

Consumer confidence

Source: BI, BPS, CIMB Research

Key is liquidity. As long as the BI rate is raised by 100bp or less, liquidity should be unaffected, based on our observations of past incidents of rate increases. Equally, since banks and finance companies are yet unfazed and given strong January vehicle sales, we are maintaining our 2011 car and motorcycle sales estimates of 847k units and 8.7m units, +10% and +18% yoy respectively.
Figure 4: Auto sales to changes in interest rates: rates falls, and car sales go up. 2009 was an exception due to the global financial crisis
100% Interest rate started the y ear at 7.4% ended 50% the y ear at 12.75%

0%

-50% 2001 2002 2003 2004 SBI - 1 mth


Source: Bloomberg, CIMB Research

2005

2006 Car

2007

2008

2009

2010F

2011F

Rp/US$ - av g

Curbs in fuel subsidies revisited. The planned removal of fuel subsidies for private cars starting with Greater Jakarta in Apr 11 may be delayed. The excuse is infrastructure, as not all gas stations in Greater Jakarta are equipped to supply nonsubsidised fuels. The idea behind removing subsidies for fuel, not diesel, is to reduce wasteful subsidies to those who can afford, but not to produce an undesirable effect on inflation. The spike in oil prices of late due to the Egyptian political crisis may delay the scheme indefinitely. While this may have repercussions on investors perception of the robustness of the government budget (dependent on oil prices), any delay is clearly good news for auto demand. Even if the scheme is to go ahead, a switch from gasoline to diesel-powered cars or even motorcycles (also exempted) may ensue. The overall impact on auto sales should therefore be less.

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Figure 5: Subsidised fuel volume


Thousands Kilolitres 30,000 25,000 20,000 15,000 10,000 5,000 0
97 99 98 96 19 19 19 19 20

Premium

Kerosene

Diesel

Industrial fuels not subsidized by Jul05 Kerosene to LPG conv ersion program completed in Jav a/Bali in 2008

Source: various sources, CIMB Research

Environmentally-friendly alternative emerging. The Department of Energy and Mineral Resources in conjunction with Pertamina is promoting a pilot project in liquefied gas for vehicle (LVG) as an alternative to gasoline. LVG costs less at Rp3,600/litre vs. Rp4,500/L for subsidised fuel and less than half the prevailing price of non-subsidised fuel. Even factoring in the cost of installing a converter kit (Rp15m-20m), savings are significant. LVG had been introduced to Pertaminas official cars and some taxies in 2008/09, in prototyping countries like India and Pakistan. For the scheme to work, the technology has to be proven, which may take time and LVG has to be available widely. Pertamina currently operates only eight LVG outlets, though it has plans to add 10 this year. If car makers chip in on R&D and provide credible conversion kits, the scheme could be a hit. Bullish on UT. We continue to see earnings drivers for UT and believe there could be nice surprises from heavy-equipment sales and a margin recovery for Pama. We conservatively forecast that equipment sales will grow by 11% to 6,045 units, driven by sales to the mining sector. We expect Pamas coal volume to grow at 10% CAGR in the next five years. We expect its margins to turn around on the back of higher productivity and normalising costs in 2011 as Pama has more than sufficient equipment to ramp up its production once weather normalises. Finally, we anticipate price and volume growth to power UTs coal-mining earnings in 2011. Volume expansion from TTA should lift its total production to 4Mt, up 60% yoy.
Figure 6: Key assumptions for UT
Before 2010 Coal price Coal production Komatsu sales Overburden production USD/t mt units mtbcm 90 74.7 5,000 678 2011 90 78.9 5,000 711 2012 90 87.4 5,500 787 2010 98 77.8 5,452 703 After 2011 110.0 83.4 6,045 750 2012 110.0 91.5 6,649 824 2010 8.9% 4.1% 9.0% 3.7% Change 2011 22.2% 5.7% 20.9% 5.6% 2012 22.2% 4.7% 20.9% 4.8%

Source: CIMB Research

2011 could be a boon year for AAL as CPO prices are likely stay high while production should improve slightly. Our upgrades of AALs earnings are largely driven by higher CPO prices, though a higher export tax could affect effective price yields for local producers. We project earnings of Rp2.5tr for AAL for FY11, just a tad below its high of Rp2.6tr in 2008. CPO production generally has been hampered by weather while demand continues to be strong. At the same time, other edible oils such as soybean are experiencing harvest challenges. Such a situation suggests that prices may stay elevated for longer. Given its small capex, AALs current dividend payout ratio of 65% has upside, in our view.

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Po

st

cu r

E bin 201 1 g su F bs idy

03

04

02

00

01

06

07

05

08

09

20

20

20

20

20

20

20

20

20

20

10

Figure 7: Key assumptions for AAL


Before 2010 CPO ASP (Net of tax) FFB processed CPO production CPO sales Rp/kg k tonnes k tonnes k tonnes 6,598 4,621 1,063 1,028 2011 6,923 5,285 1,216 1,184 2012 6,696 5,749 1,322 1,290 2010 7,027 4,854 1,113 1,112 After 2011 7,699 5,107 1,169 1,169 2012 7,399 5,535 1,268 1,268 2010 7% 5% 4.8% 8.1% Change 2011 11% -3% -3.8% -1.2% 2012 10% -4% -4.1% -1.7%

Source: CIMB Research

Valuation and recommendation


Reiterate Outperform but with lower target price of Rp65k (from Rp68k), still SOPbased and implying 16x and 14x CY11-12 P/Es. We lower our target price after applying a higher WACC of 12% (from 11.5%) to our DCF valuation for its auto businesses. This offsets our 3% earnings upgrade for Astra largely on higher contributions from UT and AAL. Rising inflation and interest rates are near-term headwinds for its auto business. Consistent with past cycles, valuations could be derated, despite a sanguine mid-term outlook. Strong January auto wholesales provide comfort, and if BI can navigate inflation well, upside for Astras auto business remains. With a 2H11 recovery in mind, we maintain our Outperform rating.
Figure 8: Forecast changes
Before Rp bn Auto sales, '000 units 4 wheelers 2 wheelers Market share, % 4 wheelers 2 wheelers Automotive Financial services Agribusiness Information technology Heavy equipment/mining Others Total revenue EBIT EBITDA Reported profit Core profit
Source: CIMB Research

After 2012F 979.7 10,520 55.0 47.0 94,964 13,214 10,021 2,031 42,526 2,993 165,749 20,927 26,530 18,086 18,086 2010F 764.7 7,373.0 55.8 46.3 73,044 10,002 8,848 1,536 38,058 2,993 134,480 15,911 19,970 13,915 13,844 2011F 847.9 8,705.3 56.0 46.5 83,357 11,743 9,968 1,766 45,020 2,993 154,847 19,121 23,952 16,237 16,254 2012F 979.7 10,529.7 56.0 46.5 96,753 13,841 10,550 2,031 50,709 2,993 176,877 22,138 27,741 18,596 18,596 2010F 4.0% 1.4% -2.2% -1.4% 1.3% 0.5% 10.4% 0.0% 7.6% 0.0% 3.5% 4.0% 3.2% 2.9% 2.9%

Changes 2011F 0.0% -0.1% 1.8% -1.1% 2.2% 4.7% 4.6% 0.0% 13.2% 0.0% 5.5% 3.8% 3.0% 2.6% 2.6% 2012F 0.0% 0.1% 1.8% -1.1% 1.9% 4.7% 5.3% 0.0% 19.2% 0.0% 6.7% 5.8% 4.6% 2.8% 2.8%

2010F 734.9 7,271.9 57.0 47.0 72,087 9,950 8,017 1,536 35,377 2,993 129,959 15,294 19,352 13,520 13,448

2011F 847.9 8,712.3 55.0 47.0 81,540 11,213 9,526 1,766 39,781 2,993 146,819 18,420 23,251 15,825 15,842

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Figure 9: SOP
Division Equity value, Rp bn Equity value Contribution to attributed to total value, % ASII, Rp bn Method

Automotive Astra parent company Astra Honda Motor Astra Otoparts Sub-total Heavy equipment United Tractors Sub-total Agribusiness Astra Agro Lestari Sub-total Financial services Bank Permata Astra Sedaya Finance Federal International Finance Sub-total Others Astra Graphia Others Sub-total Total equity value Shares, mn NAV/share, Rp TP, Rp Premium (discount)
Source: CIMB Research

77,499 74,577 9,678

77,499 37,288 8,932 123,720

29 DCF @11.6% WACC 14 Dividend discount model 3 Market value 47 21 15x CY12 earnings 21 15 18x CY12 earnings 15 2 Market value 2 3x PBV 3 3x PBV 8 0 Market value 9 DCF valuations 9 100

95,481

56,811 56,811

49,290

39,274 39,274

12,878 5,410 9,089

5,732 5,410 9,089 20,231

890 23,916

684 23,916 24,600 264,636 4,048 65,369 65,000 -1%

Figure 10: P/E (excluding AAL and UT) at a discount


ASII 18x 16x 14x 12x 10x 8x 6x 4x 2x 0x Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 ASII ex cl AALI & UNTR

Source: CIMB Research

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Figure 11: Sector comparisons


Bloomberg ticker ASII IJ Price (Local) 48,250 Target price Mkt cap (Local) (US$ m) 65,000 21,874 Core P/E (x) CY2011 CY2012 12.0 10.5 12.2 10.6 13.0 9.4 7.2 6.1 9.4 6.7 9.6 7.9 10.3 8.4 9.9 7.7 6.7 6.0 10.1 7.2 11.1 10.6 9.3 7.9 10.1 8.3 3-yr EPS CAGR (%) 23.1 23.1 62.9 36.0 36.3 46.1 35.8 43.4 23.3 45.9 25.8 31.7 35.7 P/BV (x) CY2011 3.3 3.4 2.9 2.0 1.8 2.6 0.7 2.0 0.4 1.7 1.8 1.3 2.0 ROE (%) CY2011 30.1 30.1 25.6 32.1 22.7 29.9 6.4 23.3 6.4 18.4 17.2 14.0 21.3 Div yield (%) CY2011 3.6 3.5 0.0 1.7 1.5 4.2 7.0 2.8 2.2 2.5 6.0 3.6 3.2

Astra Indonesia Brilliance China Dongfeng Motor-H Geely GAC Qingling HongKong Proton Tan Chong UMW Malaysia Simple average

Recom. O

1114 HK 489 HK 175 HK 2238 HK 1122 HK PROH MK TCM MK UMWH MK

O O O O O TB O O

5.81 13.16 3.54 9.51 2.31 4.50 5.14 7.29

8.05 23.30 5.75 12.90 3.44 5.95 9.15 8.85

3,726 14,562 3,383 7,509 736 814 1,137 2,787

O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy and TS = Trading Sell Source: Company, CIMB Research

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Financial tables
PROFIT & LOSS (Rp bn, FYE Dec) Revenue Operating expenses EBITDA Depreciation & amortisation EBIT Net interest & invt income Associates contribution Exceptional items Others Pretax profit Tax Minority interests Net profit Adj. wt. shares (m) Unadj. year-end shares (m) BALANCE SHEET (Rp bn, end Dec) Fixed assets Intangible assets Other long-term assets Total non-current assets Cash and equivalents Stocks Trade debtors Other current assets Total current assets Trade creditors Short-term borrowings Other current liabilities Total current liabilities Long-term borrowings Other long-term liabilities Total long-term liabilities Shareholders funds Minority interests NTA/share (Rp) CASH FLOW (Rp bn, FYE Dec) Pretax profit Depreciation & noncash adj. Working capital changes Cash tax paid Others Cash flow from operations Capex Net investments & sale of FA Others Cash flow from investing Debt raised/(repaid) Equity raised/(repaid) Dividends paid Cash interest & others Cash flow from financing Change in cash Change in net cash/(debt) Ending net cash/(debt)
Source: Company, CIMB Research, Bloomberg

KEY RATIOS 2008 2009 2010F 2011F 2012F 97,064 98,526 134,480 154,847 176,877 (82,614) (82,423) (114,510) (130,895) (149,136) 14,450 16,103 19,970 23,952 27,741 (2,574) (3,347) (4,058) (4,831) (5,603) 11,876 12,756 15,911 19,121 22,138 142 78 13 (244) (355) 2,807 2,567 4,572 5,315 6,241 0 0 0 0 0 538 1,001 1,004 890 913 15,363 16,402 21,501 25,084 28,938 (4,065) (3,958) (4,730) (5,518) (6,366) (2,107) (2,404) (2,855) (3,329) (3,975) 9,191 10,040 13,915 16,237 18,596 4,048 4,048 4,048 4,048 4,048 4,048 4,048 4,048 4,048 4,048 (FYE Dec) Revenue growth (%) EBITDA growth (%) Pretax margins (%) Net profit margins (%) Interest cover (x) Effective tax rates (%) Net dividend payout (%) Debtors turnover (days) Stock turnover (days) Creditors turnover (days) 2008 38.3 37.1 15.8 9.5 23.2 26.5 30.3 22.3 24.9 21.2 2009 1.5 11.4 16.6 10.2 26.3 24.1 24.6 25.5 29.5 26.1 2010F 36.5 24.0 16.0 10.3 37.5 22.0 22.7 23.2 23.2 23.3 2011F 15.1 19.9 16.2 10.5 51.5 22.0 30.0 24.2 24.9 25.1 2012F 14.2 15.8 16.4 10.5 60.3 22.0 30.6 24.2 24.8 25.0

KEY DRIVERS 2008 20,679 830 33,199 54,708 8,785 8,666 6,167 2,414 26,032 6,815 13,258 6,810 26,883 10,754 2,526 13,280 33,080 7,497 7,966 2009 24,555 721 37,697 62,973 8,732 7,282 7,579 2,372 25,965 7,278 11,601 7,856 26,735 10,867 2,404 13,271 39,894 9,038 9,676 2010F 27,474 721 46,324 74,518 3,191 9,820 9,549 2,372 24,932 9,898 10,203 7,856 27,958 7,904 2,404 10,308 49,291 11,893 11,998 2011F 30,643 721 54,326 85,690 321 11,267 10,978 2,372 24,938 11,356 9,417 7,856 28,629 5,802 2,404 8,206 58,570 15,222 14,290 2012F 33,040 721 64,205 97,966 94 12,807 12,507 2,372 27,780 12,908 9,417 7,856 30,181 4,915 2,404 7,319 69,048 19,197 16,878 (FYE Dec) ASP - Cars (Rp m) ASP - Motorcycles (Rp m) Car market share (%) Car sales ('000 units) COGS per car (Rp m) COGS per motorbike (Rp m) Motorcycle market share (%) Motorcycle sales ('000 units) 2009 144 12 57.8% 242 133 9 46.2% 2,701 2010F 148 12 55.8% 367 136 9 46.3% 3,416 2011F 151 12 56.0% 408 139 9 46.5% 4,048 2012F 151 12 56.0% 472 139 9 46.5% 4,896

12M - FORWARD FD CORE P/E (X) 2008 2009 2010F 2011F 15,363 16,402 21,501 25,084 2,574 3,347 4,058 4,831 (479) 1,591 (1,888) (1,417) (4,065) (3,958) (4,730) (5,518) (3,048) (3,405) (3,860) (4,219) 10,345 13,977 15,081 18,759 (7,075) (6,454) (8,000) (8,000) (4,385) (2,141) (2,954) (3,407) (1,612) (2,585) (5,672) (4,596) (13,073) (11,180) (16,627) (16,002) 3,688 (1,612) (4,360) (2,888) 0 0 0 0 (3,973) (3,522) (4,518) (6,958) 6,514 2,217 4,882 4,219 6,228 (2,917) (3,996) (5,627) 3,501 (120) (5,542) (2,870) (187) 1,492 (1,181) 18 (15,227) (13,735) (14,916) (14,898) 2012F 28,938 5,603 (1,517) (6,366) (4,888) 21,769 (8,000) (4,339) (5,539) (17,879) (887) 0 (8,118) 4,888 (4,117) (227) 661 (14,238)
15.0

13.0

11.0

9.0

7.0

5.0

3.0 Feb-08

Jun-08

Oct-08

Feb-09

Jun-09

Oct-09

Feb-10

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Feb-11

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If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB.

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As of 09 February 2011 CIMB Research Pte Ltd does not have a proprietary position in the recommended securities in this report.
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RECOMMENDATION FRAMEWORK #1* STOCK RECOMMENDATIONS


OUTPERFORM: The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 12 months. NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant benchmark's total return. UNDERPERFORM: The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 12 months. TRADING BUY: The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 3 months. TRADING SELL: The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 3 months.

SECTOR RECOMMENDATIONS
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 12 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 3 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 3 months.

* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

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RECOMMENDATION FRAMEWORK #2 ** STOCK RECOMMENDATIONS


OUTPERFORM: Expected positive total returns of 15% or more over the next 12 months. NEUTRAL: Expected total returns of between -15% and +15% over the next 12 months.

SECTOR RECOMMENDATIONS
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +15% or better over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i) an equal number of stocks that are expected to have total returns of +15% (or better) or -15% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +15% to -15%; both over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -15% or worse over the next 12 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +15% or better over the next 3 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -15% or worse over the next 3 months.

UNDERPERFORM: Expected negative total returns of 15% or more over the next 12 months. TRADING BUY: Expected positive total returns of 15% or more over the next 3 months. TRADING SELL: Expected negative total returns of 15% or more over the next 3 months.

** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.

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