Equities

Hong Kong/China

Company Report

Company Update

GCL-Poly (3800 HK)

29 August 2014
China / Alternative Energy / Solar

Improved Margins to Continue

BUY

GCL released satisfactory 1H14 result. It is in line with our

expectation and we expect an even better 2H14 result. Given
greater visibility on strong performance, we raise our TP to
HKD3.2.

1H14 result in line with expectation. GCL achieved strong

performance, with revenue and gross profit increased 52.4%
and 393.7% YoY. Net profit to shareholders recorded at
HK$0.9 bn comparing to loss of HK$0.9bn in the same period
last year. The improvement is mainly due to the recovery of
GCLs upstream poly/wafer business with higher ASP and
lower production cost.
Domestic downstream demand to surge again in 2H14.
NEA reiterated the whole year solar installation target of 13GW
in 2014 and announced a few new policies early this month.
The new policies help unleash the market demand for
ground-mounted solar farms and distributive projects. We
believe downstream demand will start to pick up and reach
10GW in 2H14.
China to Close Polysilicon Import Loophole. Chinas
Ministry of Commerce is to ban the import of tariff-dodging
solar-grade polysilicon from 1 September. We estimate it could
result in around 10,000MT decrease in polysilicon supply in the
second half. The trade action could help stabilize the
polysilicon domestic spot price in 3Q14 and even unleash its
upward potential in 4Q14 from current level.
Maintain Buy. We maintain our earning estimates for the
company. Given greater visibility on greater downstream
demand, more stable ASP, continuing cost reduction, we raise
our target price to HKD 3.2, representing 23.7X PE and PEG of
0.46 based on 51.3% CAGR in FY14-16 earnings.

Target
Price

Upside

HK$2.68

HK$3.20

19.40%

(As of 28 August 2014)

Daniel Yang
CE No: BDJ027
(852) 2823 2532
Daniel.Yang@ebscn.hk
1.85-3.17
--

52 Week Price Range (HK$)

Yield (%)

Latest Key Data

10,452
67.49
29,057
303.10
52.31678
1.85-3.17
10,452
67.49

FF no of shares (m)
FF (%)
FF market cap (HK$ m)
12M daily turnover (HK$ m)
12M volatility (%)
RoE FY13 (%)
P/B FY13 (x)
Net debt/equity FY13 (%)

Performance (%)
Absolute
Relative to HSCEI

1M
4.5
6.1

YTD
15.8
14.7

12M
43.3
32.2

Major Shareholder (%)

30.8
67.49

Asia Pacific Energy Fund LTD

Free float

Price Chart

Investment Summary
FY-end Dec
Turnover (HK$ m)
Growth (%)
Net Profit (HK$ m)
Growth (%)
EPS (HK$)
Growth (%)
PER (x)
OCF/Share (HK cents)
P/B (x)
EV/EBITDA (x)
DPS (HK$)
Yield (%)

Share
Price

2012
22,348
(12.4)
(3,516)
NA
(0.23)
NA
N/A
15
2.1
18.2
-

Sources: Company data, CER estimates

China Everbright Research Limited

2013
25,530
14.2
(664)
NA
(0.04)
NA
N/A
55
2.1
15.3
-

2014E
30,851
20.8
2,105
NA
0.14
NA
16.3
49
2.0
6.8
0.03
1.3

2015E
33,985
10.2
3,462
64.6
0.22
64.6
9.9
57
1.7
5.2
0.04
1.8

2016E
35,407
4.2
4,618
33.7
0.30
33.7
7.4
72
1.5
4.0
0.06
2.7

HK$
3.50

Turnover (HK$ m)
GCL-Poly Energy

3.00
2.50
2.00

HSI

1600
1400
1200
1000
800

1.50
1.00

600
400

0.50

200

0.00

Feb-14Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14

Sources: Bloomberg, CER estimates

Please read the analysts and company disclosure and the disclaimer in the last page

CHINA / ALTERNATIVE ENERGY / SOLAR

1H14 Result in Line with Expectation

GCL released its 1H14 results which is in line with our expectation. Revenue
amounted to HK$17.2bn, representing a 52.4% YoY growth. Gross profit
increased by 393.7% YoY to HK$3.7bn attributing to both higher ASP and lower
production cost. Profit attributable to shareholders was HK$0.9bn, comparing to
a loss of HK$0.9bn in the same period last year. We are optimistic about GCLs
business in the second half as the margins are likely to improving.
Figure 1: 1H14 result review
HK$
Revenue
COS
Gross profit

1H14

1H13

17,222

11,230

YoY%
52.4

(13,544)

(10,554)

(28.5)
393.7

3,678

745

Other income

618

341

81.2

Selling and distribution expenses

(34)

(20)

(70.0)

Administrative expenses

(1,127)

(822)

(37.1)

Finance costs

(1,406)

(1,091)

(28.9)

Other expenses

(428)

82

N/A

Profit before tax

1,301

(765)

N/A

Income tax

(288)

(71)

(305.6)

Net profit

1,013

(836)

N/A

Source: Company data

Polysilicon/wafer manufacturing business, the companys core business

delivered satisfactory results with revenue of HK$11.9bn, representing a YoY
growth of 56.6%. During the period, polysilicon capacity was maintained at
65,000MT and wafer capacity increased to 12GW from 10GW at the end of 2013.
The company has been operating at full utilization rate and sold 98% of its wafer
produced during the period. The production cost decreased 7.6% and 8.6% from
the end of 2013 for polysilicon and wafer respectively. The ASP recorded 30%
and 15% YoY growth for polysilicon and wafer respectively due to a low base
effect in the same period last year.
For 2H14, the company plans to continue its capacity expansion plan to achieve
capacity of 75,000MT and 13GW for polysilicon and wafer respectively in
response to stronger downstream demand in the second half. The management
is confident to keep full utilization rates for both the polysilicon and wafer
businesses throughout the year based on the contracts on hand.
Also, starting from this year, the company has been switching its wafer product
mix towards more high end products, including the S2/S3 series of poly wafer
and G series of mono wafer. The S2/S3 and G series possess higher PV
efficiency hence enjoy price premiums to ordinary poly wafers. Especially for the
G series mono wafer, as more and more solar cells and modules producers
choose mono over poly for its higher efficiency we expect mono wafer to become
the companys major product and provide higher margins in the near future.
Figure 2: GCLs wafer product mix in 2013 and 2014E

G Mono
wafer
12%

S3 Poly
wafer
2%

S2 Poly
wafer
49%

Ordinary
Poly wafer
49%

S3 Poly
wafer
38%

S2 Poly
wafer
50%

Source: Company data

China Everbright Research Limited

Please read the analysts and company disclosure and the disclaimer in the last page

CHINA / ALTERNATIVE ENERGY / SOLAR

Figure 3: GCLs wafer products
Wafer

PV efficiency

Additional Cost
N/A

N/A

S2 Poly

17.20%
17.70%

5-10%

S3 Poly

17.95%

10-15%

G1 Mono

18.30%

5%

10-15%

G2 Mono

19.50%

5%

15-20%

Ordinary Poly

Price premium

Source: Company data

The company is confident in further cutting production cost in 2H14. By the end
of 1H14, the production cost was US$15.25/Kg for polysilicon and the processing
cost was US$0.079/w for wafer. Management expects the first 12,000MT FBR
production line to commerce operation in October and the production cost of
polysilicon under the FBR technology is significantly lowered to US$9/Kg and
US$8/Kg by the end of 2014 and 2015 respectively, better than previous
estimation of US$10/Kg. For the captive power plant, however, its progress is
slower than expected. Management postpones the estimated operation date
from July to the end of 2014. We believe the FBR production line together with
the captive power plant could release great potential in cost reduction in 2015.
For the downstream solar farm business, however, the company had only 20MW
new installed capacity in the first half. The progress is slower than our
expectation but in line with the national trend. Management reiterates the
installation of 600MW to 800MW solar farm in the second half through GCL New
Energy (0451.HK, NR), marking the total capacity to 1GW by the end of this year.

China Everbright Research Limited

Please read the analysts and company disclosure and the disclaimer in the last page

CHINA / ALTERNATIVE ENERGY / SOLAR

Domestic Downstream Demand to Surge in

2H14 Driven by Government Support
After a turnaround along the solar value chain since 2013 due to the boom in
domestic downstream market, the National Energy Administration (NEA) set an
even more ambitious quota of 14GW for 2014. At the same time, it tries to switch
the market focus to distributive project by granting a quota of 8GW, exceeding
the 6GW quota for ground-mounted solar farms. However, in 1H14, the
downstream demand in China was weaker than expected. According to the
NEAs figures, installed capacity was only 3.3GW in 1H14, including 1GW for
distributive projects and 2.3GW for ground-mounted solar farms.
Figure 4: Domestic solar installation (GW)

16.0
14.0

Ground-mounted

14

Distributive

12.0
10.0

Total
8

8.0

6.0
2.8

4.0
2.0

1.3

1.5

3.3

2.3
1

0.0
1H13

1H14

14 Quota

Sources: MIIT, CER

The slow installation in ground-mounted solar farms was mainly attributed to tight
quota and slow granting of construction approval. In fact the market has great
enthusiasm and incentive in investing in ground-mounted solar projects.
However, the initial quota of 6GW set by the NEA can not satisfy the investment
demand. HK-listed companies alone have a project pipeline around 6GW in 2014.
Due to the keen competition, local authorities were more cautious in distributing
out quota and slowed down the approval process. While for distributive projects,
investors were concerned about the uncertainty of project return as well as
difficulty in finding suitable rooftops, financing and so on. Therefore, most of the
solar project investors were still on the fence and the market demand for
distributive installation was weaker than expected.
In China, the installation progress of distributive projects is far behind
ground-mounted projects, with only 1GW out of the total 11.3GW solar projects
installed in 2013. From NEAs perspective, to encourage more distributive
installation is beneficial as its closer to electricity users. However, we believe
NEAs initial target was too aggressive and the demand for distributive installation
is unlikely to exceed ground-mounted installation before 2016.
In order to refuel the downstream installation, NEA reiterated the whole year
solar installation target of 13GW in 2014 and announced a few new policies early
this month. Firstly, it is to establish a more efficient ground-mounted solar farms
managing system, including flexible quota distributing, corresponding grid
development, project quality control and so on. Secondly, it is to reclassify
ground-mounted projects which are located in wasteland and below 20MW as
distributive projects, implicitly increasing the quota for ground-mounted projects.
Thirdly, it is to enable distributive projects to enjoy the same level of feed-in-tariff
as ground-mounted projects (Rmb0.9-1.0/KWH). Last but not least, support from
local governments and financial institutions are encouraged.

China Everbright Research Limited

Please read the analysts and company disclosure and the disclaimer in the last page

CHINA / ALTERNATIVE ENERGY / SOLAR

In our view, the new policies help unleash the market demand for
ground-mounted installation by easing the quota and speeding up approval
process. As the construction cycle for a typical ground-mounted solar farm is only
a few months, we believe it could again spur domestic downstream market in
2H14 with 6GW installation. At the same time, the new policies provide strong
support to distributive projects by increasing visibility and return. Although some
issues remain, like financing, we believe distributive installation will start to pick
up and reach 3-4GW in 2H14.
Also in August, NEA revealed that it will research on the feasibility of
implementing the Renewables Obligation Standard (ROS) in order to further
support the development of the renewable energy industry. The ROS generally
places obligations on power companies to produce and grid companies to utilize
a specified fraction of their electricity from renewable energy sources. The ROS
mechanism has been adopted in several countries, including the US, Britain and
Italy, and successful in stimulating new renewable energy capacity.
Currently, traditional state-owned power companies participation in solar projects
is very low. Also, in some Northwest areas, electricity generated from solar
projects has a low priority in grid connection and in worst case not allowed to
connect to the grid.
Figure 5: China power capacity and electricity production composition by 1H14

Wind
6.61%

Nuclear Solar
1.42% 1.45%

Wind
3.00%

Nuclear
2.16%

Solar
0.40%

Hydro
14.19%

Hydro
20.28%
Thermal
70.24%

Thermal
80.25%

Sources: Wind, CER

In our view, the key drivers of solar industry are robust downstream demand and
decreasing production cost. Therefore, by creating large compulsive downstream
demand, it may take the whole solar industry into a new booming era once the
ROS is implemented.

China Everbright Research Limited

Please read the analysts and company disclosure and the disclaimer in the last page

CHINA / ALTERNATIVE ENERGY / SOLAR

China to Close Polysilicon Import Loophole

Chinas Ministry of Commerce is to ban the import of tariff-dodging solar-grade
polysilicon from 1 September, by halting the application of polysilicon processing
for trade terms. According to a statement on the ministry website, the measure is
in response to rushing polysilicon imports from US, Europe and South Korea. In
our view, it seems more likely to counteract the punitive trade duties on Chinese
modules announced by the US previously. We believe the halt is likely to last
throughout the year. China may change its mind after the US announced
favourable final ruling on Chinese modules in Jan 2015.
Early this year, China placed punitive duties on polysilicon import from the US,
EU and South Korea, however, importers have been able to avoid tariffs under
trade processing rules. In 1H14, China imported 46,000MT of polysilicon,
increasing 17.4% from a year back; whereby 74.2% of them, namely 34,000MT
were under trade processing. Germany, South Korea and the US are the top
three importers, with 15,000MT, 14,000MT and 10,000MT respectively. With
Germany's Wacker securing a minimum price agreement to exempt from existing
duties and Korea's OCIs low tariff rate of 2.4%, the target of the loophole is
presumably US producers. Given the high tariff rate, we therefore believe the
China market is no longer viable for the US polysilicon makers. Domestic
producers, including GCL, TEBA and Daqo will be the major beneficiaries while
Wacker and OCI may also increase their market shares.
Figure 6: 1H14 polysilicon imports to China (MT)

50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

Normal terms
Trade processing

US

Korea

Germany

Others

Total

Sources: CNIA, CER

Figure 7: Major polysilicon producers

Company

Country

Capacity

Anti-dumping tariff

Anti-subsidy tariff

Hemlock

The US

46,000

53.3%

2.1%

REC

The US

20,000

57.0%

0.0%

Sunedison

The US

53.7%

0.0%

Wacker
OCI

Germany

4,200
52,000

Korea

42,000

N/A

N/A

2.4%

0.0%

GCL-Poly

China

75,000

N/A

N/A

TEBA

China

17,000

N/A

N/A

Daqo

China

12,000

N/A

N/A

Sources: CNIA, Company data

NPD Solarbuzz and PV Pulse estimated the global photovoltaic modules

production in 2014 will increase by 10GW to around 50GW. Assuming 1)
Chinese module makers make up for 65% of the production, 2) 90% of the
modules are crystalline-silicon modules and 3) average silicon needed per watt
of output is 5.5g/W, we estimate total domestic demand for polysilicon is
161,000MT this year, slightly below estimated supply of 176,000MT.

China Everbright Research Limited

Please read the analysts and company disclosure and the disclaimer in the last page

CHINA / ALTERNATIVE ENERGY / SOLAR

Even though the downstream demand is expected to be much stronger in 2H14
than in 1H14, domestic wafer producers have been operating in high or even full
utilization from the beginning of the year. Therefore, the demand for polysilicon is
expected to be steady throughout the year. Hence, we estimate there is around
10,000MT decrease in polysilicon supply in the second half thanks to the halt of
trade processing.
Domestic polysilicon spot price has been on a moderate downtrend since it
reached one-year-high of US$22.6/Kg in March. We believe the decrease in
supply could help stabilize the polysilicon domestic spot price in 3Q14 and even
unleash its upward potential in 4Q14 from current level. However, after
considering potential production capacity expansion and average lead time, we
estimate the upside is limited to 6.5% and the spot price is not likely to be above
US$22/Kg. Historically, wafer spot price fluctuates in parrallel with polysilicon
spot price, but less volatile. In our view, wafer price will be steady in 3Q14. If
polysilicon spot price goes up by 6.5% in 4Q14, wafer spot price is likely to
increase by around 3%. However, in the long term, we believe both the
polysilicon and wafer spot prices will be edge down, driven by decreasing
production cost.
Figure 8: Domestic polysilicon and wafer price trend

Polysilicon domestic spot price (USD/KG)

156mm Poly wafer domestic spot price (USD/Piece)

156mm Mono wafer domestic spot price (USD/Piece)

23.00
22.00
21.00
20.00
19.00
18.00
17.00
16.00
15.00
14.00

Nov-14E

Sep-14 E

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

Nov-14E

Sep-14 E

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60

Sources: Wind, CER

China Everbright Research Limited

Please read the analysts and company disclosure and the disclaimer in the last page

CHINA / ALTERNATIVE ENERGY / SOLAR

Key Risks
Launch of captive power plant and FBR production line put off. Any delays
in these projects would affect the companys cost reduction plan.
Slow progress in new solar farms. The company has ambitious target of
600MW to 800MW capacity expansion plan in its solar farms. Delay in these
projects could affect GCLs earnings.
Withdrawal of government supports. The governments around the globe may
readjust their policies for the solar industry, including revising down the FiTs or
subsidies, which will suppress end-market demand and have negative impact on
the supply chain.
Trade disputes. More trade disputes regarding solar products may arise across
major solar markets due to trade protectionism, stirring up uncertainties of supply
and demand in the industry.

China Everbright Research Limited

Please read the analysts and company disclosure and the disclaimer in the last page

CHINA / ALTERNATIVE ENERGY / SOLAR

Company Background
GCL-Poly is a leading manufacturer of polysilicon and wafer for global solar market. It has ramped up its polysilicon production capacity to
65,000MT and wafer production capacity of 12GW at 1Q14. GCL forayed into the downstream solar projects business in recent years and have a
total of 321MW solar projects in operation worldwide. Meanwhile, GCL owns and invests in a total of 19 cogeneration power plants, two incineration
power plants and one wind power plant in China.

Profit & Loss (Consolidated)

Balance Sheet (Consolidated)

FY-end 31 Dec (HK$ m)

Sales
Cost of sales
Gross profit
Other income
Operating expenses
Operating profit
Finance cost
Share of P/L of asso. & JCE
Pre-tax profit
Tax
Minorities
Net profit
EBITDA
EBIT
EPS (HK$)
DPS (HK$)

FY-end 31 Dec (HK$ m)

Total assets
Current assets
Cash & cash equiv
Marketable securities & ST
i Account & notes receivable
Inventories
Others
Non-current assets
LT investments
Net fixed assets
Others
Total liabilities
Current liabilities
Account payable
ST borrowings
Others
Non-current liabilities
Long-term debts
Others
Total equities
Shareholders equity
Minority shareholders
Total liabilities + SH equities
Net cash / (debt)
Working capital
Total capital employed
SH equity + Minorities
Net gearing (%)

2012
2013 2014E 2015E 2016E
22,348 25,530 32,587 34,900 37,061
(20,599) (22,490) (25,271) (25,861) (26,089)
1,749
3,039
7,316
9,039 10,972
784
965
1,079
1,201
1,245
(3,481) (2,285) (2,640) (2,867) (3,094)
(948)
1,719
5,756
7,374
9,123
(2,309) (2,416) (3,019) (2,727) (2,465)
(4)
441
(3.261)
(256)
2,737
4,646
6,658
(124)
(190)
(410)
(836) (1,332)
(130)
(218)
(233)
(381)
(533)
(3,515)
(664)
2,094
3,429
4,794
1,877
5,547
9,327 11,065 12,967
(952)
2,160
5,756
7,374
9,123
(0.23) (0.04)
0.14
0.22
0.31
0.03
0.04
0.06

Sources: Company, CER estimates

Cash Flow (Consolidated)

FY-end 31 Dec (HK$ m)
Operating cash flow
Profit before tax
Depreciation & amortization
Change in working capital
Others
Investment cash flow
Net Capex
Disposal
Others
Free cash flow
Financing cash flow
Change in share capital
Net change in debt
Dividend paid
Others
Net impact of exchange
fluctuation
Net cash flow
Sources: Company, CER estimates

2012
2,326
(3,261)
2,742
(844)
3,689
(5,311)
(4,970)
128
(469)
(2,985)
617
3,953
(851)
(3,336)

2013 2014E 2015E 2016E

8,507 7,704 10,401 10,079
(256) 2,737 4,646 6,658
3,278 3,450 3,570 3,723
3,458
(832)
648 (1,053)
2,027 2,349 1,536
752
(6,668) (1,475) (1,562) (2,333)
(3,483) (1,827) (1,989) (2,769)
181
(3,366)
352
427
436
1,839 6,229 8,839 7,746
(329)
(544) (6,926) (6,641)
2,042 2,475 (3,780) (3,490)
(418)
(686)
(1,713) (3,018) (2,727) (2,465)

(20)

163

2,388

1,673

5,685

1,913

1,105

2012
2013 2014E 2015E 2016E
67,818 76,643 80,585 80,812 83,346
22,169 28,057 34,362 35,752 39,179
9,510 14,249 19,531 21,060 21,801
46
12
12
12
12
8,681 11,057 11,931 11,432 13,725
3,425
2,462
2,610
2,967
3,359
507
277
278
280
281
45,649 48,585 46,222 45,060 44,168
451
536
536
536
536
42,233 43,995 41,611 40,425 39,507
2,965
4,054
4,076
4,099
4,125
50,048 58,638 61,267 58,228 56,658
30,439 42,045 44,788 42,555 42,087
9,128 13,737 13,695 14,642 16,758
20,170 26,331 29,116 25,936 23,352
1,141
1,977
1,976
1,977
1,977
19,609 16,593 16,479 15,672 14,571
16,741 14,460 14,347 13,540 12,438
2,858
2,133
2,133
2,133
2,133
17,770 18,005 19,318 22,495 26,397
16,210 16,146 17,226 20,023 23,392
1,560
1,859
2,092
2,473
3,005
66,258 74,784 78,493 78,250 80,050
(27,401) (26,542) (23,932) (18,416) (13,989)
(8,270) (13,988) (10,425) (6,803) (2,908)
37,379 34,598 35,797 38,257 41,259
17,770 18,005 19,318 22,495 26,397
154.2
147.4
123.9
81.9
53.0

Sources: Company, CER estimates

Financial Summary
FY-end 31 Dec
Growth (%)
Revenue
EBITDA
EBIT
Net profit
EPS
Margins (%)
Gross
EBITDA
EBIT
Net
Others (%)
Effective tax rate
Payout ratio
RoCE
Average RoE
Average RoA
Interest cover (x)
Receivables turnover days
Inventory turnover days
Payables turnover days

2012

2013

2014E

2015E

2016E

-12.4
-79.0
NA
NA
NA

14.2
195.5
NA
NA
NA

27.6
68.2
166
NA
NA

7.1
18.6
28.1
63.8
63.8

6.2
17.2
23.7
39.8
39.8

7.8
8.4
-4.3
-15.2

11.9
21.7
8.5
-1.8

22.5
28.6
17.7
7.1

26.0
31.7
21.1
10.9

29.6
35.0
24.6
14.4

-3.8
-2.6
-17.6
-5.2
-0.4
87
42
72

-74.3
6.2
-3.7
-0.9
0.9
111
32
114

15.0
20.0
16.1
11.2
2.7
1.9
105
25
95

18.0
20.0
19.3
16.4
4.3
2.7
100
28
95

20.0
20.0
22.1
19.6
5.8
3.7
103
33
103

Sources: Company, CER estimates

China Everbright Research Limited

Please read the analysts and company disclosure and the disclaimer in the last page

China Everbright Research Limited Rating System

Buy
Accumulate
Hold
Reduce
Sell

Expected to outperform the benchmark index by >15% over the next six months
Expected to outperform the benchmark index by 5 - 15% over the next six months
Expected to outperform or underperform the benchmark index by <5% over the next six months
Expected to underperform the benchmark index by 5 - 15% over the next six months
Expected to underperform the benchmark index by >15% over the next six months

Analyst Certification
The research analyst(s) primarily responsible for the preparation of this report hereby certify that
(1) All of the views expressed in this report accurately reflect his or her or their personal views about the subject
company or companies and its/theirs securities;
(2) No part of his or her or their compensation was/were, is/are or will be directly or indirectly, related to the specific
recommendations or views expressed in this report or any specific investment banking function;
(3) He/she/they are not directly supervised by, and do not directly report to, investment banking functions;
(4) He/she/they has/have not breach the quiet period restriction of dealing in the securities covered in this report;
(5) He/she/they is/are not an officer and do(es) not hold any directorship in the company or companies this report
covered.

Disclosure
China Everbright Securities International Limited, a substantial shareholder of China Everbright Research Limited, does
not have financial interests (including stock holding) that equal 1% or more of the market capitalization of the company
under review at the date this report is published; does not have investment banking relationship with the company under
review within the past 12 months; and does not have market-making activities in the stock. None of our staff is an officer
of the company.

Disclaimer
This report has been prepared by China Everbright Research Limited with the contribution by Everbright Securities
Company Limited Everbright Securities Research. China Everbright Research Limited does not guarantee, either
expressed or implied, the completeness, reliability and accuracy of the materials contained in the report.
This report has been prepared for general reference and no part of this report is to be constructed as an offer, invitation,
advertisement or inducement whatsoever, or form to buy or sell any securities or financial instruments whether referred
to herein or otherwise. Opinions in this report are subject to change by the original writer without notice. China Everbright
Research Limited does not accept any liability whatsoever, directly, indirectly, consequential or incidental that may arise
from the use of or reliance on the contents of this report.
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from time to time have long or short positions in securities, warrants, futures, options, derivatives or any other interests
and/or underwriting commitments in the securities or financial instruments referred to in this report.
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