Thailand Re-initiating Coverage

17 August 2016 Consumer Cyclical | Retail

Buy (Maintained)
Berli Jucker Target Price: THB62.50
Price: THB45.75
The Big Tree Is Growing Market Cap: USD5,275m
Bloomberg Ticker: BJC TB
Berli Jucker is now a retailer after acquiring Big C. We expect to see Share Data
greater synergies that will unlock growth opportunities in the retail Avg Daily Turnover (THB/USD) 489m/14.0m
business and balance long-term earnings growth. We re-initiate coverage
52-wk Price low/high (THB) 28.0 - 49.3
with BUY and a DCF-based FY17F TP of THB62.50 (37% upside). Its
financial deleveraging programme will also help lift EPS, which we expect Free Float (%) 21
to jump 84% YoY in FY17 from consolidated earnings. The stock currently Shares outstanding (m) 3,982
trades below its 5-year historical mean P/E and we expect it to trade at a Estimated Return 37%
premium.
Shareholders (%)
Rife with potential synergies. Berli Juckers key business changed from TCC Corporation Co., Ltd. 73.8
product manufacturer and distributor to a modern retailer (which accounts for
DBS Bank Ltd. 5.4
two-thirds of total sales) after its THB204bn acquisition of Big C Supercenter
(Big C) (BIGC TB, NEUTRAL, TP: THB250.00) in March. It is now involved in BBL Bualuang Long-Term Equity Fund 2.8
the entire supply chain, from up- to downstream. Greater synergy from this new Share Performance (%)
pairing, and from parent firm TCC Group (Thailands biggest conglomerate) will
YTD 1m 3m 6m 12m
provide a further upside of THB1.7bn to our forecasts in the next three years.
Absolute 37.8 4.6 34.0 29.5 50.7
Superior earnings growth. We expect Berli Juckers modern retail business to Relative 18.4 1.5 24.0 10.3 42.0
be the key driver in doubling its core profit this year. We estimate core earnings
Source: Bloomberg
to jump 84% YoY in FY17. Supportive factors include:
i. Thailands consumption recovery which may first benefit staple retailers; Price Close
Berli Jucker (BJC TB)
Relative to Stock Exchange of Thailand Index (RHS)

55 158
ii. Big Cs earnings consolidation into group numbers and aggressive plans to 50 146

enlarge its branch network (for hypermarkets and small-format stores); 45

40
135
123
35 111
iii. Its packaging supply chain (PSC) growing its capacity to produce 30
25
100
88
60
aluminium cans by 40% due to a spike in orders stemming from Chang 50
Beers successful rebranding; 40
30
iv. Its consumer supply chain (CSC) strong operations in Vietnam and 20

selective launches of new products that lead to efficient opex control;

Vol m

10
Oct-15

Feb-16

Apr-16
Aug-15

Dec-15

Jun-16
The companys well-balanced financial deleveraging plan should help limit its
interest expense, solidify EPS growth in 2017 and strengthen its balance sheet
for further investments Source: Bloomberg

Re-initiating with a BUY call. Berli Jucker is our retail/consumer Top Pick for
Thailand. Its earnings outlook is promising for FY16F-17F, as it is generating
the strongest earnings growth among peers. Big Cs business will also bolster
its bottomline in the longer term, for which we expect resilient growth of 10-13%
pa from 2018 onwards. In the short term, its 2H16 performance may be
stronger than in 1H, while the dilution impact from a recent cash call to EPS
may occur and is expected to be completed by 3Q16. Its FY17F valuations
remain attractive. It is trading below its 5-year historical mean P/E, although we
believe it should be at a premium. Downside risks are consumption potentially
turning sluggish and higher-than-expected opex related to the Big C purchase.

Forecasts and Valuations Dec-14 Dec-15 Dec-16F Dec-17F Dec-18F

Total turnover (THBm) 41,695 42,893 154,871 194,674 208,493
Reported net profit (THBm) 1,680 2,792 3,921 7,225 7,939
Recurring net profit (THBm) 1,670 2,045 3,921 7,225 7,939
Recurring net profit growth (%) (28.7) 22.5 91.8 84.2 9.9
Recurring EPS (THB) 1.05 1.28 0.98 1.81 1.99
DPS (THB) 0.60 0.84 0.49 0.90 0.99
Recurring P/E (x) 43.6 35.6 46.6 25.3 23.0
P/B (x) 4.62 4.14 1.78 1.71 1.64
P/CF (x) 17.3 15.7 11.7 9.8 10.8
Dividend Yield (%) 1.3 1.8 1.1 2.0 2.2
EV/EBITDA (x) 20.2 18.2 19.3 14.6 13.1 Analyst
Return on average equity (%) 10.8 16.7 6.5 6.9 7.3 Vatcharut Vacharawongsith
Net debt to equity (%) 83.9 66.7 105.6 98.9 93.7 +662 862 9736
Our vs consensus EPS (adjusted) (%) 3.2 8.2 (1.7) vatcharut.va@rhbgroup.com
Source: Company data, RHB

See important disclosures at the end of this report

1
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Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Financial Exhibits
Financial model updated on : 2016-08-16.

Asia Financial summary Dec-14 Dec-15 Dec-16F Dec-17F Dec-18F

Thailand Recurring EPS (THB) 1.05 1.28 0.98 1.81 1.99
Consumer Cyclical EPS (THB) 1.06 1.75 0.98 1.81 1.99
Berli Jucker DPS (THB) 0.60 0.84 0.49 0.90 0.99
Bloomberg BJC TB BVPS (THB) 9.9 11.1 25.7 26.8 27.9
Buy Weighted avg adjusted shares (m) 1,591 1,592 3,992 3,992 3,992

Valuation basis Valuation metrics Dec-14 Dec-15 Dec-16F Dec-17F Dec-18F

DCF Recurring P/E (x) 43.6 35.6 46.6 25.3 23.0
P/E (x) 43.3 26.1 46.6 25.3 23.0
Key drivers P/B (x) 4.62 4.14 1.78 1.71 1.64
i. Overseas business expansion; FCF Yield (%) 1.4 2.6 (122.4) 4.1 3.1
ii. Production capacity increases; Dividend Yield (%) 1.3 1.8 1.1 2.0 2.2
iii. Aggressive new Big C stores opening
EV/EBITDA (x) 20.2 18.2 19.3 14.6 13.1
Key risks EV/EBIT (x) 37.6 32.9 29.3 21.8 19.4
i. Domestic consumption that remains weak;
ii. Raw material price volatility; Income statement (THBm) Dec-14 Dec-15 Dec-16F Dec-17F Dec-18F
iii. Intense competition from hypermarkets that Total turnover 41,695 42,893 154,871 194,674 208,493
may squeeze profit margins. Gross profit 9,333 9,822 35,558 45,265 48,745
EBITDA 4,324 4,784 16,530 21,665 23,985
Company Profile Depreciation and amortisation (2,003) (2,141) (5,645) (7,170) (7,776)
Berli Jucker is a Thai consumer conglomerate. It Operating profit 2,321 2,642 10,885 14,496 16,209
operates four business lines including packaging
Net interest (556) (493) (4,414) (5,194) (5,886)
products (glass bottles and aluminium cans),
consumer products (tissue paper, snacks, and Income from associates & JVs (26) 87 96 105 116
personal products), technical & healthcare products, Exceptional income - net 12 833 0 0 0
and modern retailers. The company also has presence Pre-tax profit 2,444 3,853 7,429 10,355 11,481
in CLMV nations particularly Vietnam. It is an integral Taxation (398) (400) (1,486) (2,071) (2,296)
part of Thai Beverage's (THBEV SP, NR) operations.
Minority interests (367) (661) (2,022) (1,059) (1,246)
Recurring net profit 1,670 2,045 3,921 7,225 7,939

Cash flow (THBm) Dec-14 Dec-15 Dec-16F Dec-17F Dec-18F

Change in working capital (105) (832) 5,908 4,504 1,275
Cash flow from operations 4,203 4,647 15,669 18,670 16,947
Capex (3,147) (2,766) (239,247) (11,244) (11,334)
Cash flow from investing activities (3,185) (2,708) (242,004) (11,190) (11,476)
Proceeds from issue of shares 89 0 84,000 0 0
Dividends paid (1,193) (955) (2,936) (2,786) (3,791)
Cash flow from financing activities (1,273) (1,932) 228,882 (7,598) (5,302)

Balance sheet (THBm) Dec-14 Dec-15 Dec-16F Dec-17F Dec-18F

Total cash and equivalents 1,123 1,130 3,677 3,559 3,728
Tangible fixed assets 18,518 19,046 53,032 57,745 61,922
Intangible assets 2,795 2,902 186,515 185,877 185,259
Total investments 3,657 3,533 19,536 19,536 19,536
Total other assets 695 839 3,596 3,541 3,683
Total assets 43,428 44,701 301,632 306,504 312,547
Short-term debt 10,181 7,521 80,000 0 0
Other liabilities 703 719 7,606 7,069 6,969
Total liabilities 25,411 23,950 176,380 176,613 177,827
Shareholders' equity 15,774 17,610 102,660 107,098 111,246
Minority interests 3,020 3,688 23,800 24,000 24,681
Total equity 18,017 20,750 125,252 129,890 134,720
Net debt 15,109 13,845 132,298 128,441 126,272
Total liabilities & equity 43,428 44,701 301,632 306,504 312,547

Key metrics Dec-14 Dec-15 Dec-16F Dec-17F Dec-18F

Revenue growth (%) (1.3) 2.9 261.1 25.7 7.1
Recurrent EPS growth (%) (28.8) 22.4 (23.5) 84.2 9.9
Gross margin (%) 22.4 22.9 23.0 23.3 23.4
Operating EBITDA margin (%) 10.4 11.2 10.7 11.1 11.5
Net profit margin (%) 4.0 6.5 2.5 3.7 3.8
Dividend payout ratio (%) 71.0 34.2 34.2 34.2 34.2
Capex/sales (%) 7.5 6.4 154.5 5.8 5.4
Interest cover (x) 4.18 5.36 2.47 2.79 2.75

Source: Company data, RHB

See important disclosures at the end of this report

2
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Valuation And Recommendation

We re-initiate coverage on Berli Jucker with a BUY rating. We expect it to post the
strongest EPS growth of 84% YoY in 2017, among the Thai retailers. This would be
delivered by Big C (which it recently purchased), which will account for a major part of its
consolidated financials. With the acquisition, Berli Jucker also becomes a fully-integrated
consumer company with a modern retail segment as its leading business which may
help sustain earnings in the long term.
We believe that Berli Juckers investment in Big C will be more rational than what
happened in 2012, and the market anticipated that the latter will gain strong synergies
from the acquisition of Singapore-based food and beverage manufacturer Fraser & Neave
by subsidiaries under its parent company, the TCC Group although the actual benefits
were eventually not significant enough to meet valuations.
Berli Juckers current valuations are still attractive vis--vis its peers. The stock is trading
at 25x FY17F P/E vs the sector average of 26x and the stocks 5-year historical average of
27x. We believe Berli Jucker deserves to trade at a premium to its domestic peers, given
that its EPS growth and long-term prospects are much sturdier compared to the
competition. It also offers the cheapest P/BV of 1.7x-1.8x. Our TP of THB62.50 is derived
from a DCF approach (WACC: 7.5%, TG: 2%).
Our TP implies 35x FY17F P/E, which is equivalent to +1SD from its mean P/E, and offers
an upside of 37%.
We also expect mild dividend yields of 1.1-2.2% over FY16-18, assuming a payout ratio of
50% based on its payment record of 57% for FY14 and 48% for its FY15 performance (vs
the companys policy of less than 50% of net profit after tax).

Figure 1: Berli Juckers DCF valuation

THBm 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F
EBIT (1-t) 12,439 13,894 15,008 16,251 17,362 18,461 19,607 20,779 21,979 23,232
Depreciation & Amortization 7,170 7,776 8,305 8,822 9,150 9,479 9,808 10,052 10,296 10,540
Net working capital 4,275 1,233 1,975 1,587 1,406 1,295 1,082 391 367 304
Capex (9,655) (9,579) (8,165) (7,968) (5,143) (5,154) (5,154) (3,886) (3,885) (3,880)
Net free cash flow to firm 5,678 10,858 13,173 15,518 19,963 21,491 23,180 26,553 28,023 29,589

Terminal value 576,517

PV 5,281 9,393 10,598 11,612 13,894 13,911 13,955 14,868 14,594 293,582
Terminal growth 2.0%
WACC 7.5%
Total discounted firm value 401,688
Less: Net debt 128,441
Less: Minority interest 24,000
Equity value 249,247
Number of shares (m) 3,992
Equity value per share (THB) 62.50

Source: RHB

Figure 2: Peer comparison

Thailand retailers Ticker Mkt. Cap. EPS growth (%) Net P/E (x) P/BV (x) Dividend yield (%) ROE (%)
(USDm) 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F 2016F 2017F
BIG C SUPERCENTER BIGC TB 5,245 19.2 11.8 21.8 19.5 3.4 3.1 1.4 1.5 15.7 15.6
BERLI JUCKER BJC TB 5,263 -44.0 84.3 46.6 25.3 1.8 1.7 1.1 2.0 5.4 5.7
CENTRAL PATTANA CPN TB 7,198 16.7 14.7 26.3 22.9 4.7 4.1 1.5 1.7 17.7 17.9
CP ALL CPALL TB 15,640 10.1 22.1 35.9 29.4 12.3 10.0 1.5 1.5 34.2 34.0
SIAM GLOBAL HOUSE GLOBAL TB 1,470 57.0 15.8 37.0 31.8 3.2 2.9 0.9 1.0 8.8 9.5
HOME PRODUCT CENTER HMPRO TB 4,104 9.3 13.4 33.5 29.6 7.6 7.4 2.8 3.2 22.7 25.3
SIAM MAKRO MAKRO TB 4,994 2.0 16.2 30.7 26.5 10.9 9.6 2.5 2.8 37.6 38.9
ROBINSON DEP'T STORE ROBINS TB 2,078 15.5 15.1 28.9 25.1 4.9 4.4 1.7 2.0 16.8 17.4
Average 10.5 17.5 32.6 26.3 6.1 5.4 1.7 2.0 19.8 20.5
Note: Data as of 16 Aug 2016. Valuations in red and with asterisks are from RHB. Consensus valuations are in black.
Source: Bloomberg, RHB

See important disclosures at the end of this report

3
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Figure 3: Berli Juckers P/E band (adjusted EPS) Figure 4: Berli Juckers P/E and SD levels
Price (THB) Adjusted P/E (x) 60
BERLI JUCKER
100

50

80
+2 SD: 43.2x
40 40
+1 SD: 35.1x
35
60
30
30 Mean: 27.0x

25
20
40
20 -1 SD: 18.9x
15 10 -2 SD: 10.8x
20 10
0

Apr-11

Oct-11

Apr-12

Oct-12

Apr-13

Oct-13

Apr-14

Oct-14

Apr-15

Oct-15

Apr-16
Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16
Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16
0
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 F Dec-17 F

Source: RHB Source: Bloomberg, RHB

Risks
Risks to our call include:
i. Raw material price volatility. This includes raw materials like aluminium, flint cutlet
and soda ash for the packaging business as well as palm oil, potatoes and
eucalyptus pulp for its CSC business.
ii. Clients deciding to change packaging suppliers. Clients could also decide to
distribute products themselves instead of assigning Berli Jucker as a dealer or
distributor.
iii. Government campaigns and policies implemented to control and reduce
consumption of alcoholic beverages.
iv. Competition among consumer product manufacturers and modern trade retailers to
snatch market share, which could affect the companys sales and profit margins.
v. Successful new business units and acquired entities. It is possible for the
company to realise negative earnings at the beginning of operations, due to higher
fixed costs and depreciation expense.

Financial Analysis
Berli Juckers combined sales rose 3% YoY in 2015 due to weak consumption, which led
to sluggish sales for its CSC and HSC. However, we expect sales to skyrocket 234% YoY
in 2016 and jump by another 25% YoY in 2017 following;
i. The consolidation of Big C earnings from late March 2016 onwards, and a full-year
consolidation in 2017.
ii. Berli Juckers traditional businesses may see sales growth of 9% YoY this year,
driven by the improved performance of both its CSC and HSC. Sales is also expected
to continue growing at 6% YoY in 2017, thanks to the increase in the production
capacity for aluminium cans.
Previously, its packaging business and CSC contributed a significant c.40% and c.35% to
total sales respectively. Going forward, we expect the groups modern retail supply chain
to account for the biggest proportion of its topline (67%) in 2016. We expect this
percentage to rise to 73% by 2018 while the remaining 27-33% will come from other
supply chains.
Berli Juckers overall gross profit margin may decline to 16.6-16.8% in 2016-2018 (2015:
22.9%), as the volume-driven modern retail business offers a lower GPM of 14%.
However, the addition of leasable retail space and manageable opex of both Big C and its
CSC will help sustain its EBITDA margin at 12% this year before bringing it back to the
pre-acquisition level of 13% by 2018.

See important disclosures at the end of this report

4
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Figure 5: Berli Juckers total sales revenue (THBm) Figure 6: Profit margin trend
(THBm) PSC CSC HSC&TSC Modern retail Others Gross profit margin SG&A/sales ratio EBITDA margin Core profit margin

200,000 191,962 30%

179,120 25.7
180,000 24.7 24.1 23.9
25% 22.9
160,000 22.4
143,304
140,000
20%
17.4 16.8 17.2 17.2 16.9
120,000 73 16.5 16.3 16.6 16.7
72
100,000 15% 13.4 13.2 16.7 16.6 16.8
67 14.9
15.4 12.0
80,000 14.1
12.7 13.1
10% 12.2
60,000 42,893
37,429 42,226 41,695
7.3 6.8 6.2
40,000 25,625 31,235 6 5 5 5.5
4.6
17 19 17 4.0 4.0 4.1
18 21 12 10 10 5% 2.7
17 30 37 37 36
20,000 31 30
50 49 45 42 40 41 13 11 11
0 0%
2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F

Source: Company data, RHB Source: Company data, RHB

The Big C transaction of THB204.3bn has resulted in Berli Jucker having to restructure its
financial leverage:
i. Short-term debt financing of THB120bn. Of this, THB50bn will be re-financed into
debentures by 3Q16. The remaining loans may be equally converted into the fixed
income debt instruments in 1Q17 and 3Q17. As a result, we estimate the net interest
expense will soar to THB4.4bn this year (2015: THB492m) and peak at THB5.9bn in
2018.
ii. Equity financing involving the issuance of 2.4bn new common shares allocated to
existing stockholders at THB35.00 per share. The subscription process is scheduled
to complete by the first week of August, and the company may receive THB84bn
cash from the transaction. It will also result in a 60% dilution to EPS.
We expect core profit to increase by 100% to THB3.92bn this year from the impact of Big
C consolidation. Despite the cash call, adjusted core EPS will continue to increase by 23%
to THB1.51 (assuming adjusted outstanding shares of 2.60bn in 2016), while the fully-
diluted core EPS will be THB0.98 (-20% YoY).
2017 would be a good year for Berli Jucker as its profits and fully-diluted core EPS should
see a strong growth of 84% YoY. This suggests that earnings generated from Big C will be
sufficient to cover Berli Juckers debt financing expenses.
From 2018, we expect the earnings to grow at a resilient 10-13% pa. Conservatively, we
have not included the companys guidance on Big Cs synergy target of THB1.7bn (ie
upside to its recurring EBITDA) in our estimates, which will be implemented over the next
three years.

Figure 7: Core EPS and growth Figure 8: Interest-bearing debt

(THB) Core EPS % growth - RHS (THBm) (x)
Interest-bearing debt IBD/E ratio - RHS
2.50 100% 160,000 1.2
84%
1.09
1.99 80% 140,000 1.1
2.00 1.02
1.81
60% 120,000 0.96 1.0
1.47 1.46 100,000 0.91 0.90
1.50
1.33 40% 0.9
1.23
80,000 0.81
1.05 0.76
0.98 20% 0.8
1.00 0.72
17%
60,000
14% 10% 10% 0% 0.7
40,000
0.50 0%
-20% 20,000 0.6
-20%
0.00 -28% -40% 0 0.5
2011 2012 2013 2014 2015 2016F 2017F 2018F 2011 2012 2013 2014 2015 2016F 2017F 2018F
Source: Company data, RHB Source: Company data, RHB

See important disclosures at the end of this report

5
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

After the financial deleveraging scheme, its balance sheet will still be in a good shape,
with a net interest-bearing debt-to-equity ratio of 1.1x in 2016F (2015: 0.7x) which is below
its debt covenant of 1.75x. This implies extensive room for the company to draw additional
loans as much as THB80bn for further investments. We think the ratio will gradually
decline to 0.9x in 2018. Its strong operating cash flow of THB15.7bn-18.7bn pa may be
sufficient to support the combined capital expenditures of THB11.3bn in 2016 and
THB9.5bn in 2017 and 2018 respectively.

The Big Tree Is Growing

Strong business synergies within the group
Berli Jucker, a 134-year old company, has evolved from a supply chain and distribution
powerhouse to a leading integrated retail platform with a presence in ASEAN countries,
thanks to its strong manufacturing and distribution capability. It currently operates four
business units:
i. Packaging supply chain (PSC), which includes the production of glass containers,
aluminium cans, and a minimal portion of plastic packaging;
ii. Consumer supply chain (CSC), which involves the production of tissue paper, snacks
& drinks, personal care & household products, and provides distribution & logistics
services;
iii. Healthcare supply chain and technical supply chain (HSC & TSC), ie trading units of
extensive product ranges. Examples are healthcare merchandise, medical and
pharmaceutical equipment, specialised chemicals, stationery and electrical
appliances. It also offers galvanised steel structure construction services.
iv. Modern retail supply chain (MSC), which mainly consists of Big C. The rest occupy a
minor proportion, eg Asia Books (Thailands biggest international bookstore chain),
Ogenki beauty and wellness shops, and the franchisor of BSmart convenience stores
in Vietnams Ho Chi Minh City and M-Point Mart convenience stores in Laos.
The company was acquired by the Thai Charoen Corporation (TCC) Group, one of the
countrys largest conglomerates owned by Thai tycoon Charoen Sirivadhanabhakdi, in
2001. TCC is a holding company with investments in five key industries:
i. Retail and distribution, led by Berli Jucker;
ii. Food & beverage, led by Thai Beverage (THBEV SP, NR);
iii. Real estate (TCC land);
iv. Insurance and finance (Southeast Group); and
v. Agriculture (Plantheon).
As TCCs flagship retail and distribution vehicle, Berli Jucker should continue to benefit
from its major shareholders expansive empire especially TCCs food & beverage, retail
and property businesses. For example, an improvement in Thai Beverages sales may
result in a rise in packaging orders and product logistics services, or the possible opening
of new retail stores in attractive locations. This is premised on the fact that the TCC owner
is considered one of the biggest landlords in the country.

See important disclosures at the end of this report

6
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Figure 9: Berli Juckers fully-integrated consumer business platform

Note: (1) Through Plantheon, a TCC group company engaging in plantation, sugar, agro processing and trading businesses
Source: Company data

Figure 10: Thai Charoen Corporation (TCC) Groups business empire

Source: Company data

See important disclosures at the end of this report

7
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Packaging Supply Chain

Thailands top glass container and beverage can player
Berli Jucker will become the largest glass container manufacturer in South-East Asia by
2018, when it increases its production capacity by 9% to 1.40m tonnes pa (capex:
THB2bn). It operates four facilities in Thailand, Malaysia and Vietnam with a current total
production capacity of 1.29m tonnes pa, equivalent to one-third of the regions c.3m
tonnes pa production capacity. The company is also a leader in the beverage can industry
in Thailand. Local competition is low, due to the industrys capital-intensive nature, as
there are only a handful of players that have attained economies of scale from mass
production.
There are four major glass container firms in Thailand Berli Jucker (via Thai Glass
Industry PCL and Thai Malaya Glass Ltd), Bangkok Glass, Siam Glass and Wellgrow
Glass. Most operate at full capacity, mainly to serve key clients that are their major
shareholders this is so in the case of Berli Jucker (Thai Beverage) and Bangkok Glass
(Singha Corporation). Berli Jucker has the second largest share of the Thai market, at
42% (9.98m tonnes pa capacity) and also runs glass container facilities in Malaysia
(186,150 tonnes pa) and in Vietnam (102,200 tonnes pa) with the highest market share of
c.75% and c.60% respectively.
For Thailands beverage can segment, key suppliers are Berli Jucker (via Thai Beverage
Can Ltd), Carnaud Metal Box, Bangkok Can Manufacturing and NCI Packaging. The
company has the highest market share (of 44%), due to its maximum production capacity
of 2.2bn units pa. This is expected to grow by 40% to 3.1bn units pa, when it expands the
capacity with an investment of THB400m in 2017.

Figure 11: Berli Juckers glass packaging production Figure 12: Berli Juckers aluminium can production
capacity and utilisation rate capacity and utilisation rate
Overseas
(Tons/yr) Thailand (m units/yr) Production capacity (Thailand) Utilization rate -RHS
Utilization rate (Thailand) - RHS 3,500 100%
1,600,000 Utilization rate (Overseas) - RHS 96%

1,400,000 94% 3,000 95%

1,200,000 92% 2,500
90%
1,000,000 90%
2,000
800,000 88% 85%
1,500
600,000 86%
80%
1,000
400,000 84%

200,000 82% 500 75%

0 80% 0 70%
2011 2012 2013 2014 2015 2016F 2017F 2018F 2011 2012 2013 2014 2015 2016F 2017F 2018F

Source: Company data, RHB Source: Company data, RHB

Main supplier to TCC Groups F&B business

Berli Jucker has a glass production facility in eastern Bangkok that is operated by Thai
Glass Industry, with a total capacity of 637,000 tonnes pa. Another three facilities in
Saraburi province, Malaysia and Vietnam are operated by Thai Malaya Glass with
capacity of 649,700 tonnes pa. They brought the average utilisation rate for Berli Jucker to
a high 88% at end-2015. Products include glass containers for beer, spirits, wine, soft
drinks, energy drinks, and food and drugs .
For can packaging, Berli Jucker has a 50% stake in Thai Beverage Can, which produces
aluminium cans for beer, soft drinks and energy drinks. Its recent capacity utilisation rate
was also as high as 94%. Thai Beverage Can is the sole supplier of cans for Chang Beer.
It also supplies 50% of Red Bulls packaging for the Thai market and ships beverage cans
to clients in Malaysia (for F&N), Laos (for Beer Lao), and Cambodia (for Cambrew).
Currently, half of the companys total sales are generated from companies under the TCC
Group mainly made up by orders from Thai Beverage (THBEV SP, NR), Thailands
largest beverage manufacturer. We believe that this is the key factor that will help to
sustain its packaging business in the long run.

See important disclosures at the end of this report

8
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Growing beverage consumption to drive container demand.

The markets for alcoholic beverages and soft drinks in Asia grew by an annualised 1.6%
and 4.5%, respectively in 2010-2015, which was faster than the global annual growth of
1.3% and 1.9%. We expect beverage consumption in Asia to continue expanding more
rapidly by 5% in 2016-2018, in line with that of rising economies (particularly in emerging
markets like Vietnam, where the beverage industry is forecasted to expand by 10.5-12%
pa by 2018F, according to BMI Research). This should benefit Berli Jucker, as glass
container and aluminium can usage increases.

Figure 13: Alcoholic beverage consumption Figure 14: Soft drink consumption
(USDbn) (USDbn)
World Asia World Asia
1,600 900

1,400 800

700
1,200
600
1,000
500
800
400
600
300
400
200
200 100

0 0
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
Source: Bloomberg, RHB Source: Bloomberg, RHB

Chang Beer rebranding to boost packaging segments performance.

The rebranding of Chang Beer since mid-2015 was successful, mainly due to taste
development and strong marketing campaigns that focused on the younger generation. As
such, Thai Beverages beer sales jumped by 71% YoY in 1Q16 and the growth is likely
continue to be strong throughout this year and the next. We expect the boom to result in a
spike in purchase orders for both glass bottles and aluminium cans which will help to
drive Berli Juckers packaging sales to grow 6% YoY in 2016. Meanwhile, its increased
production capacity may accelerate the topline growth of its packaging division to 7-9% in
2017-2018.
Meanwhile, the high utilisation rate of c.90% of its glass container and aluminium can
production facilities (since end-2015) has compelled the company to outsource its
production. Still, we expect increased efficiency, the declining price of flint cullet and lower
energy costs to help maintain its packaging business GPM at 20.3% this year, before
gradually improving by 0.2ppt and 0.5ppt in 2017 and 2018 respectively.

Figure 15: Chang Beer re-branding with new green bottle Figure 16: Sales and gross margin forecasts for
packaging packaging supply chain
(THBm)
Glass Can
% growth - glass - RHS % growth - can - RHS
25,000 Gross margin (%) - RHS 35%
30%

20,000 25%
20%
47%
47% 15%
15,000 36% 44%
34% 44% 10%
42%
29%
5%
10,000
0%
-5%
66% 64% 56% 53% 53%
5,000 64% 58% 56% -10%
-15%
0 -20%
2011 2012 2013 2014 2015 2016F 2017F 2018F

Source: Company Source: Company data, RHB

See important disclosures at the end of this report

9
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Consumer Supply Chain

Grows in tandem with consumption.
We are positive to the outlook of Berli Juckers consumer supply chain (CSC) business
based on:
i. Domestic consumption, where a recovery may boost sales of food and non-food
necessities that are frequently purchased by households;
ii. Strong brand leadership in its key products. The company is ranked no. 1 in sweet
extruded snacks (like Party and Campus) and the bar soap market (with Parrot). It is
ranked second in potato chips (with Tasto) and tissue paper (with Cellox, Zilk and
Maxmo).
iii. Market expansion opportunities in neighbouring countries like Vietnam, Laos,
Cambodia and Myanmar. Overseas sales currently account for 30% of its CSC
segments revenue which in turn make up 3% of Berli Juckers total topline (post-
consolidation of Big Cs financial statements).

Big C as an owned retail channel.

Big C will become a vital distribution channel for Berli Juckers CSC unit. A wide range of
consumer staple merchandise may be strongly promoted, with some cross-selling of
products from other companies under the TCC Group via the expansive network of
modern trade stores countrywide. We think the company would be expedient in gaining
favourable trade terms from Big C. Apart of this, the CSC may win orders to supply
collections of private label items to Big C which would boost the efficiency of its
manufacturing plants. These could be considered as upsides to the divisions sales and
profit margin.

Figure 17: Sales breakdown for Berli Juckers consumer Figure 18: Cross-selling promotion of Berli Jucker and
supply chain business (2015) TCC Group products at a Big C hypermarket

Logistics
5%
Food
30%
International
trading
30%

Non-food
35%

Source: Company data, RHB Source: Company data, RHB

Distribution companies as solid foundation for its retail unit in Vietnam.

Vietnam is the second largest business location for Berli Jucker, as it accounted for 84%
of international sales and 18% of total sales in 2015. The company has paved a solid
foundation for its retail business by expanding its trading and distribution networks for fast-
moving consumer goods (FCMG) throughout Vietnam via two main subsidiaries, Thai
Corp International (in which it has a 75% stake) and Thai Anh Vietnam (where it owns a
65% stake). These two companies account for a significant two-thirds of total sales
recorded by the group in Vietnam (the remaining 33% is from packaging business).
As such, its volume-driven business in Vietnams retail market still heavily depends on
traditional trade channels much more so than modern trade channels (where the
penetration rate is just 4%). It also helps to facilitate Berli Jucker and other TCC Group
businesses in Thailand with product exports.

See important disclosures at the end of this report

10
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

As urbanisation occurs, TCC Groups Metro Cash and Carry modern retail business and
Berli Juckers Bs Mart convenience stores in Vietnam may also boost the growth of Berli
Juckers trading and distribution businesses in the longer term.
We expect revenue from its overall Vietnamese operation to continue increasing by 10-
15% pa from 2016, with Big C contributing 5-7% of total sales after the consolidation of the
formers financials into group numbers.

Controllable cost a key earnings driver

Thailands weakened consumption levels over the past few years have caused Berli
Jucker to review its plan for the operation of its CSC. It has become more selective in
launching new products, and now pays greater attention to budget allocations for
advertising and promotional expenditures. Meanwhile, costs for raw materials such as
potatoes and paper pulp are lowering, together with energy costs. The two factors would
be key in lifting the profit margin of its supply chain. As such, we expect its CSC revenue
to grow 12% YoY in 2016 and a more conservative 5% YoY in 2017-2018. We also
estimate its GPM to increase 0.7ppts to 18.5% this year and 0.5-1.0ppts over the next two
years.

Healthcare And Technical Supply Chains

Catching the wellness trend
Key customers of Berli Juckers healthcare and technical supply chain trading businesses
(HSC&TSC) are mainly public health agencies and private hospitals. Earnings drivers for
the business unit are:
i. Growing health and wellness concerns;
ii. The Governments budget spending on public health;
iii. Thailand becoming an increasingly popular regional medical care hub. Healthcare
stocks under our coverage are estimated to record revenue growth of 15% pa and
earnings growth of 11% pa in 2016-2017.
We expect HSC&TSC to record annualised revenue growth of 7% in 2016-2018. The solid
sales of its high-margin healthcare equipment should keep this divisions GPM high, at
32.0%, over the next three years (2015: 31.6%).

Figure 19: Sales and gross margin forecasts for CSC Figure 20: Sales and gross margin forecasts for HSC&TSC
(THBm) Sales Gross margin - RHS (THBm) Sales Gross margin - RHS
20,000 35% 10,000 40%
18,000
16,000 8,000
30%
14,000
35%
12,000 6,000
10,000 25%
8,000 4,000
30%
6,000
20%
4,000 2,000
2,000
0 15% 0 25%
2011 2012 2013 2014 2015 2016F 2017F 2018F 2011 2012 2013 2014 2015 2016F 2017F 2018F
Source: Company data, RHB Source: Company data, RHB

See important disclosures at the end of this report

11
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Modern Retail Supply Chain

Reasonable Big C acquisition.
Berli Juckers purchase of Big C shares worth THB204.33bn (done from March to May)
may be considered the biggest acquisition of a retailer company in the country. The once-
in-a-lifetime deal also made Berli Jucker the third largest grocery retail group in South-
East Asia.
We believe it is reasonable, as the transaction price reflects a FY16F P/E of 25x and
EV/EBITDA of 14.36x, which is cheaper than the previous major deal of CP All (CPALL
TB, SELL, TP: THB40.00) acquiring Siam Makro (MAKRO TB, NR) for more than 40x P/E
and 30x EV/EBITDA. The addition of the downstream retail business is a key strategic
move that will propel Berli Jucker to become a leading fully-integrated consumer product
company in Thailand.

Improving consumption to benefit retailers.

Consumption in Thailand may turn around from 2H16 onwards, supported by:
i. A series of government economic stimulus measures ranging from short-term tax
break schemes to large-scale mega-project infrastructure investments.
ii. 1.1m vehicle owners countrywide who applied for 5-year auto loans under the
Governments first car tax rebate campaign held in Sep 2011 to Dec 2012 may
complete their instalments and will be allowed to sell their used vehicles from 2H16
onwards. It is likely that the car owners will use the cash to purchase other items.
iii. The passing of the severe drought period in March-April, which affected agricultural
activities. We also note the gradual increase in the prices of key farm products,
including that of white rice and natural rubber.
We consequently expect to see Thailands household debt-to-GDP ratio start to decline in
2017. Retailers of staple products may benefit from the improving consumption (from a
low base) particularly in the upcountry areas where their same-store sales growth (SSSG)
have been under pressure for two consecutive years (2014-2015). Apart from strong sales
of food necessities, sales of non-food products, eg soft line and household merchandise,
may also escalate then.

Figure 21: Sales of retail groups in South-East Asia (USDbn) Figure 22: Improving farm prices and farm income
(2015) growth

Farm Income growth (% YoY)

Farm Price Index growth (% YoY) - RHS
40% 10%

30%
5%

20%
0%
10%
-5%
0%

-10%
-10%

-20% -15%
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
Apr-16
May-16

Source: Company data Source: Bank of Thailand, RHB

Unlocking growth opportunities

Big Cs previous major shareholder, French retailer Casino Group, limited its investments
in subsidiaries worldwide to strengthen its financial health. This resulted in a low capex for
Big C of THB3-4bn over the past few years.

See important disclosures at the end of this report

12
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Staying under the TCC umbrella (TCC is considered one of the biggest landlords in
Thailand) may benefit Big C in accelerating the expansion of its store network (for both
large and small formats) as it would be able to utilise TCCs landbank and existing
property development projects throughout the kingdom, eg shopping malls, office
buildings, hotels and condominiums.
Big C may apply its aggressive plans to ramp up the opening of new stores to 10
hypermarkets, 10 supermarkets, and 200 convenience stores with a total capex of
THB6.5bn in 2017F, compared to six hypermarkets, three supermarkets and 75
convenience stores for 2016. We expect the rapid increase in the number of new stores to
continue for another three years, with locations in both big cities and second-tier
provinces. It may help accelerate Big Cs total sales to grow 8% pa in 2018-2020, from 3%
in 2016F and 4% in 2017F.

Figure 23: Number of Big C stores Figure 24: Big Cs total leasable area
Mini Big C (convenience store) ('000 sqm)
Big C Market (supermarket) 900
Big C Supercenter (hypermarket) 864
850 841
819
716 795
800
616
768
466
391 750 744
324
278
705
126 68 78 700
51 55 58 684
18 30 37
12
108 112 119 123 125 131 141 151
650
2011 2012 2013 2014 2015 2016F 2017F 2018F 2011 2012 2013 2014 2015 2016F 2017F 2018F
Source: Company data, RHB Source: Company data, RHB

Recurring income portfolio strengthens earnings

Big C also has leasable shopping areas in its hypermarkets and supermarkets which
average 2,000 sqm and 250 sqm respectively. The leasing business is a successful one,
with an occupancy rate of over 95% as it matches the catchment of middle income
earners and primary income earners in the provinces. It also helps to improve store traffic
and fulfil customer demand, being a 1-stop shopping terminal. Most of its tenants are
quick-service restaurants, banks, mobile phone operators, specialty stores and small-
scale miscellaneous goods vendors. Although Big C has constructed new hypermarkets at
a smaller size of 3,500 sqm vs c.5,000 sqm previously, the company may enhance its
proportion of rental area to 60% of total space from 50% in order to secure recurring
income. Following the new store opening plan, we expect Big Cs leasable income to
expand at a 7% CAGR over 2016-2018 and contribute 5-7% of Berli Juckers total
revenue.

Stronghold for the groups retail expansion

Acquiring Big C gives Berli Jucker a competent retail platform. As such, it may apply Big
Cs know-how in areas like inventory management, information systems and retail
operations to help improve the operations of its other retail entities (in Thailand and
abroad) like Asia Books, Ogenki beauty and wellness shops and its Bs Mart Vietnamese
convenience store franchise. This may help improve these business units in terms of sales
and profit margins.
Berli Jucker provides management services for TCC Groups MM Mega Market a self-
developed hypermarket brand with two stores at Thailands borders and the recently-
acquired (for THB28.37bn) Metro Cash and Carry franchise, which has 19 stores across
Vietnam. These business units have the potential to be grouped under Berli Jucker to
enlarge and strengthen its retail empire and it may happen after the company gets its
balance sheet in healthier shape and Metro Cash and Carry becomes profitable in the
next 3-5 years. Big C also possesses an operating license for modern trade stores in
Laos, which may be utilised if an investment there becomes feasible.

See important disclosures at the end of this report

13
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Product development synergies.

Big C may work together with Berli Juckers CSC and other food & beverage entities under
the TCC Group, such as Thai Beverage, Oishi Group (OISHI TB, NR), and Sermsuk (SSC
TB, NR), to develop private label products for both the food and non-food categories.
Possible launches of private brand fresh food items may strengthen the competitiveness
of its small stores (ie supermarkets, and convenience stores). This will also help to
increase the contributions of its house brand merchandise to total sales (it contributed 7%
of total sales in 2015) as well as to its gross profit margin in the longer term.

Asset monetisation boosts financial leverage

As an alternative to lower its debt and finance new investments, Berli Jucker could also
establish a real estate investment trust (REIT) with a portfolio of Big C stores as
underlying properties. Of its 125 hypermarkets, 40% are freehold properties while the rest
are leasehold ones. The sales of assets may allow the company to book one-time gains
and a stream of amortised gains throughout a period.

Big Cs earnings to grow 10% CAGR over the next three years.
We forecast Big C to record earnings of THB7.44bn (+8% YoY) in 2016, THB8.42bn
(+13% YoY) in 2017 and THB9.21bn (+9% YoY) in 2018.
Earnings this year will be mainly driven by its rental business and profit margin
enhancement. Despite strong competition in Thailands hypermarket segment, Big C has
confirmed that it will maintain its stance to not involve itself too much in the price war as
other hypermarket and cash & carry operators have done recently in order to attain sales
volume. As such, the anticipated recovery in consumption in 2H will partially support its
SSSG to remain at a lesser -1% YoY (2015: -3%).
It will focus on profit margin improvement by paying more attention to small-end user-
customers than big-basket clients like retail distributors, and enhance its usage of three
owned distribution centres - fresh food distribution centres, convenience store distribution
centres and cross-docking distribution (opened in 2014-2015 in tandem with its cost
centralisation programme). As such, we expect Big Cs EBITDA margin and net profit
margin to expand to 11.2% (2015: 10.8%) and 6.0% (2015: 5.8%).
In 2017-2018, we conservatively assume a mild SSSG of 0-2% while the aggressive
opening of new stores will boost total sales and boost its economies of scale in operation.
This should enhance its EBITDA margin and net profit margin next year by 0.6ppt and
0.5ppt respectively.

Figure 25: Big Cs total revenue forecast Figure 26: Sales contribution breakdown by store format
(THBm) Merchandise sales Rental income Other income Hypermarkets Small store formats
180,000
3% 5% 8% 10% 11% 13% 14% 15%
160,000
140,000 8%
8%
7% 7% 8%
120,000 7%
6%
100,000 6%
97% 95% 92% 90%
80,000 89% 87% 86% 85%
89% 89%
60,000 90% 90% 90% 89%
91% 91%
40,000
20,000
0
2011 2012 2013 2014 2015 2016F 2017F 2018F 2011 2012 2013 2014 2015 2016F 2017F 2018F
Source: Company data, RHB Source: Company data, RHB

See important disclosures at the end of this report

14
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

Figure 27: Annualised SSSG Big C vs retail sector Figure 28: Quarterly SSSG Big C vs retail sector
14% 1Q12: Pent-up 4Q12:
demand after Low base effect
(%) Sector BIGC 12% flooding

10 10%
8.3
8 8%
6.9
6%
6
1Q14: Sluggish
4% consumption begins
5.3 3.6
4 2%
2.5
1.5 1.9
2 0%
1Q13:
2.0 High base effect
-2%
0 (0.9)
0.0 (1.7) 0.0 -4%
(0.5)
(2) (1.0) (1.0) 4Q13:
-6%
4Q11: High base effect
-8% Mega-flooding
(4) (3.0)

2Q16F
3Q16F
4Q16F
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2011 2012 2013 2014 2015 2016F 2017F 2018F

Source: Company data, RHB Source: Company data, RHB

See important disclosures at the end of this report

15
Berli Jucker Thailand Re-initiating Coverage
17 August 2016 Consumer Cyclical | Retail

SWOT Analysis
A retail arm of the Thai Charoen Corporation (TCC) Weak Thailand
Group, one of Thailands largest conglomerates consumption &
Strong business foundations in Thailand & Vietnam intense
competition
Fully-integrated supply chain for consumer products among FMCG
with its own distribution, logistics & retail networks manufacturers
and leading market share in several categories
Vietnams
economy can
fluctuate greatly
Business Regulations of
expansion and each country
diversification may obstruct
overseas foreign
investments
Further M&As
of consumer New product
product substitution to
companies glass bottles
and aluminium
Low penetration cans
rate of modern
retail business
in Vietnam
Unlocking
business Operations of certain acquired businesses have
opportunities of remained inefficient
recently-
acquired Big C No expertise in managing retail business
Supercenter Volatility in raw material prices and in purchase
orders of technical & healthcare businesses

Recommendation Chart
Date Recommendation Target Price Price
Price Close
2016-08-16 Buy 62.5 45.8
92 Recommendations & Target Price
2014-10-03 Neutral 46.0 42.9
na

50.0

57.0
57.0

31.0

46.0

82 2014-05-21 Sell 31.0 42.0

72 2013-11-13 Sell 31.0 42.9
2013-05-20 Neutral 57.0 61.7
62
2013-04-02 Buy 57.0 69.0
52
2012-11-12 57.0 56.7
42 2012-08-01 Buy 50.0 38.0
32 Source: RHB, Bloomberg
22
12 Buy Neutral Sell Trading Buy Take Profit Not Rated

Aug-11 Nov-12 Feb-14 Jun-15

Source: RHB, Bloomberg

See important disclosures at the end of this report

16
Berli Jucker Thailand Re-initiating Coverage
Consumer Cyclical | Retail

RHB Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage

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17
Berli Jucker Thailand Re-initiating Coverage
Consumer Cyclical | Retail

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The contents of this report are subject to copyright. Please refer to Restrictions on Distribution below for information regarding the distributors of this
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RESTRICTIONS ON DISTRIBUTION

Malaysia
This report is issued and distributed in Malaysia by RHB Research Institute Sdn Bhd. The views and opinions in this report are our own as of the date
hereof and is subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a
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Thailand
This report is issued and distributed in the Kingdom of Thailand by RHB Securities (Thailand) PCL, a licensed securities company that is authorised by the
Ministry of Finance, regulated by the Securities and Exchange Commission of Thailand and is a member of the Stock Exchange of Thailand. The Thai
Institute of Directors Association has disclosed the Corporate Governance Report of Thai Listed Companies made pursuant to the policy of the Securities
and Exchange Commission of Thailand. RHB Securities (Thailand) PCL does not endorse, confirm nor certify the result of the Corporate Governance
Report of Thai Listed Companies.

18
Berli Jucker Thailand Re-initiating Coverage
Consumer Cyclical | Retail

Indonesia
This report is issued and distributed in Indonesia by PT RHB Securities Indonesia. This research does not constitute an offering document and it should
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corporation (wherever located) or to any Indonesian resident in a manner which constitutes a public offering under Indonesian laws and regulations must
comply with the prevailing Indonesian laws and regulations.

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amended from time to time. By virtue of distribution to these categories of investors, RHB Research Institute Singapore Pte Ltd and its representatives are
not required to comply with Section 36 of the Financial Advisers Act (Chapter 110) (Section 36 relates to disclosure of RHB Research Institute Singapore
Pte Ltd s interest and/or its representative's interest in securities). Recipients of this report in Singapore may contact RHB Research Institute Singapore
Pte Ltd in respect of any matter arising from or in connection with the report.

Hong Kong
This report is issued and distributed in Hong Kong by RHB Securities Hong Kong Limited () (CE No.: ADU220) (RHBSHK) which is
licensed in Hong Kong by the Securities and Futures Commission for Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities.
Any investors wishing to purchase or otherwise deal in the securities covered in this report should contact RHB Securities Hong Kong Limited.

United States
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requirements of Rule 15a-6 under the U.S. Securities and Exchange Act of 1934, as amended (the Exchange Act). RHB is not registered as a broker-
dealer in the United States and does not offer brokerage services to U.S. persons. Any order for the purchase or sale of the securities discussed herein
that are listed on Bursa Malaysia Securities Berhad must be placed with and through Auerbach Grayson (AG). Any order for the purchase or sale of all
other securities discussed herein must be placed with and through such other registered U.S. broker-dealer as appointed by RHB from time to time as
required by the Exchange Act Rule 15a-6.

This report is confidential and not intended for distribution to, or use by, persons other than the recipient and its employees, agents and advisors, as
applicable.

Additionally, where research is distributed via Electronic Service Provider, the analysts whose names appear in this report are not registered or qualified
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appointed by RHB from time to time and therefore may not be subject to any applicable restrictions under Financial Industry Regulatory Authority
(FINRA) rules on communications with a subject company, public appearances and personal trading.

Investing in any non-U.S. securities or related financial instruments discussed in this research report may present certain risks. The securities of non-U.S.
issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on non-U.S. securities
or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements
comparable to those in the United States.
The financial instruments discussed in this report may not be suitable for all investors.

Transactions in foreign markets may be subject to regulations that differ from or offer less protection than those in the United States.

OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST

Malaysia
RHB does not have qualified shareholding (1% or more) in the subject company (ies) covered in this report except for:
a) -

RHB and/or its subsidiaries are not liquidity providers or market makers for the subject company (ies) covered in this report except for:
a) -

RHB and/or its subsidiaries have not participated as a syndicate member in share offerings and/or bond issues in securities covered in this report in the
last 12 months except for:
a) -

RHB has not provided investment banking services to the company/companies covered in this report in the last 12 months except for:
a) -

19
Berli Jucker Thailand Re-initiating Coverage
Consumer Cyclical | Retail

Thailand
RHB Securities (Thailand) PCL and/or its directors, officers, associates, connected parties and/or employees, may have, or have had, interests and/or
commitments in the securities in subject company(ies) mentioned in this report or any securities related thereto. Further, RHB Securities (Thailand) PCL
may have, or have had, business relationships with the subject company(ies) mentioned in this report. As a result, investors should exercise their own
judgment carefully before making any investment decisions.

Indonesia
PT RHB Securities Indonesia is not affiliated with the subject company(ies) covered in this report both directly or indirectly as per the definitions of
affiliation above.

Pursuant to the Capital Market Law (Law Number 8 Year 1995) and the supporting regulations thereof, what constitutes as affiliated parties are as follows:

1. Familial relationship due to marriage or blood up to the second degree, both horizontally or vertically;

2. Affiliation between parties to the employees, Directors or Commissioners of the parties concerned;

3. Affiliation between 2 companies whereby one or more member of the Board of Directors or the Commissioners are the same;

4. Affiliation between the Company and the parties, both directly or indirectly, controlling or being controlled by the Company;

5. Affiliation between 2 companies which are controlled, directly or indirectly, by the same party; or

6. Affiliation between the Company and the main Shareholders.

PT RHB Securities Indonesia is not an insider as defined in the Capital Market Law and the information contained in this report is not considered as insider
information prohibited by law.

Insider means:
a. a commissioner, director or employee of an Issuer or Public Company;

b. a substantial shareholder of an Issuer or Public Company;

c. an individual, who because of his position or profession, or because of a business relationship with an Issuer or Public Company, has access to
inside information; and

d. an individual who within the last six months was a Person defined in letters a, b or c, above.

Singapore
RHB Research Institute Singapore Pte Ltd and/or its subsidiaries and/or associated companies do not make a market in any securities covered in this
report, except for:
(a) -

The staff of RHB Research Institute Singapore Pte Ltd and its subsidiaries and/or its associated companies do not serve on any board or trustee positions
of any issuer whose securities are covered in this report, except for:
(a) -

RHB Research Institute Singapore Pte Ltd and/or its subsidiaries and/or its associated companies do not have and have not within the last 12 months had
any corporate finance advisory relationship with the issuer of the securities covered in this report or any other relationship (including a shareholding of 1%
or more in the securities covered in this report) that may create a potential conflict of interest, except for:
(a) -

Hong Kong
RHBSHK or any of its group companies may have financial interests in in relation to an issuer or a new listing applicant (as the case may be) the securities
in respect of which are reviewed in the report, and such interests aggregate to an amount equal to or more than (a) 1% of the subject companys market
capitalization (in the case of an issuer as defined under paragraph 16 of the Code of Conduct for Persons Licensed by or Registered with the Securities
and Futures Commission (the Code of Conduct); and/or (b) an amount equal to or more than 1% of the subject companys issued share capital, or issued
units, as applicable (in the case of a new listing applicant as defined in the Code of Conduct). Further, the analysts named in this report or their associates
may have financial interests in relation to an issuer or a new listing applicant (as the case may be) in the securities which are reviewed in the report.

20
Berli Jucker Thailand Re-initiating Coverage
Consumer Cyclical | Retail

RHBSHK or any of its group companies may make a market in the securities covered by this report.
RHBSHK or any of its group companies may have analysts or their associates, individual(s) employed by or associated with RHBSHK or any of its group
companies serving as an officer of the company or any of the companies covered by this report.
RHBSHK or any of its group companies may have received compensation or a mandate for investment banking services to the company or any of the
companies covered by this report within the past 12 months.

Note: The reference to group companies above refers to a group company of RHBSHK that carries on a business in Hong Kong in (a) investment
banking; (b) proprietary trading or market making; or (c) agency broking, in relation to securities listed or traded on The Stock Exchange of Hong Kong
Limited.

Kuala Lumpur Hong Kong Singapore

RHB Research Institute Sdn Bhd RHB Securities Hong Kong Ltd. RHB Research Institute Singapore
Level 11, Tower One, RHB Centre 12th Floor Pte Ltd.
Jalan Tun Razak World-Wide House 10 Collyer Quay
Kuala Lumpur 19 Des Voeux Road #09-08 Ocean Financial Centre
Malaysia Central, Hong Kong Singapore 049315
Tel : +(60) 3 9280 2185 Tel : +(852) 2525 1118 Tel : +(65) 6533 1818
Fax : +(60) 3 9284 8693 Fax : +(852) 2810 0908 Fax : +(65) 6532 6211

Jakarta Shanghai Bangkok

PT RHB Securities Indonesia
Wisma Mulia, 20th Floor
Jl. Jenderal Gatot Subroto No. 42
Jakarta 12710, Indonesia
Tel : +(6221) 2783 0888
Fax : +(6221) 2783 0777
RHB (China) Investment Advisory Co. Ltd. RHB Securities (Thailand) PCL
Suite 4005, CITIC Square 10th Floor, Sathorn Square Office Tower
1168 Nanjing West Road 98, North Sathorn Road, Silom
Shanghai 20041 Bangrak, Bangkok 10500
China Thailand
Tel : +(8621) 6288 9611 Tel: +(66) 2 862 9999
Fax : +(8621) 6288 9633 Fax : +(66) 2 862 9799

21
Thai Institute of Directors Association (IOD) Corporate Governance Report Rating 2015

Excellent
ADVANC CPN GRAMMY KBANK MCOT PS RATCH SCB THCOM WACOAL
BAFS DRT HANA KCE MINT PSL ROBINS SCC TISCO
BCP DTAC HMPRO KKP MONO PTT SAMART SE-ED TKT
BIGC DTC INTUCH KTB NKI PTTEP SAMTEL SIM TMB
BTS EASTW IRPC LHBANK PHOL PTTGC SAT SNC TOP
CK EGCO IVL LPN PPS QTC SC SPALI VGI

Very Good
AAV BBL COL HEMRAJ MC PG SCG SST THIP TPC TWS
ACAP BDMS CPF HOTPOT MEGA PJW SEAFCO STA THRE TPCORP UAC
AGE BECL CPI HYDRO MFEC PM SFP STEC THREL TRC UT
AHC BKI CSL ICC NBC PPP SIAM SVI TICON TRU UV
AKP BLA DCC ICHI NCH PR SINGER SWC TIP TRUE VNT
AMATA BMCL DELTA INET NINE PRANDA SIS SYMC TIPCO TSC WAVE
ANAN BOL DEMCO IRC NSI PREB SITHAI SYNTEC TK TSTE WINNER
AOT BROOK ECF KSL NTV PT SMK TASCO TKS TSTH YUASA
APCS BWG EE KTC OCC PTG SMPC TBSP TMI TTA ZMICO
ARIP CENTEL ERW LANNA OGC Q-CON SMT TCAP TMILL TTCL
ASIMAR CFRESH GBX LH OISHI QH SNP TF TMT TTW
ASK CHO GC LOXLEY OTO RS SPI TGCI TNDT TU
ASP CIMBT GFPT LRH PAP S&J SSF THAI TNITY TVD
BANPU CM GLOBAL MACO PDI SABINA SSI THANA TNL TVO
BAY CNT GUNKUL MBK PE SAMCO SSSC THANI TOG TWFP*
* On Oct 1,2015 TWFP TWFP merged with TWS resulting in a new company, TWPC

Good
2S AS CBG DNA GCAP ITD LHK MK PATO PTL SEAOIL STPI
AEC ASIA CGD EARTH GENCO JSP LIT MODERN PB PYLON SIRI SUC
AEONTS AUCT CHG EASON GL JTS LIVE MOONG PCA QLT SKR SUSCO
AF AYUD CHOW ECL GLAND JUBILE LST MPG PCSGH RCL SMG SUTHA
AH BA CI EFORL GLOW KASET M MSC PDG RICHY SOLAR SYNTEC
AIRA BEAUTY CITY ESSO GOLD KBS MAJOR MTI PF RML SORKON TAE
AIT BEC CKP FE GYT KCAR MAKRO MTLS PICO RPC SPA TAKUNI
AJ BFIT CNS FIRE HTC KGI MATCH NC PL S SPC TCC
AKR BH CPALL FOCUS HTECH KKC MATI NOK PLANB SALEE SPCG TCCC
AMANAH BIG CPL FORTH IEC KTIS MBKET NUSA PLAT SAPPE SPPT TCJ
AMARIN BJC CSC FPI IFEC KWC M-CHAI NWR PPM SAWAD SPVI TEAM
AP BJCHI CSP FSMART IFS KYE MFC NYT PRG SCCC SRICHA TFD
APCO BKD CSS FSS IHL L&E MILL OCEAN PRIN SCN SSC TFI
AQUA BTNC CTW FVC IRCP LALIN MJD PACE PSTC SCP STANLY TIC
TIW TPIPL UPF VPO
TLUXE TRT UPOIC WHA
TMC TSE UREKA WIN
TMD TSR UWC XO
TOPP UMI VIBHA
TPCH UP VIH

IOD (IOD Disclaimer)

(IOD) (Corporate Governance)

IOD




()
 Anti-Corruption Progress Indicator

1
ACD AEONTS AFC AIRA AJ ALUCON AMC AQUA ARIP AUCT
BAT-3K BIG BJC BLISS BMCL BOL BRR BSBM CBG CCET
CCN CGD CMR CPH CSC CSP CTW DCON DRACO DSGT
DTCI E EMC ESSO FOCUS FSMART GIFT GLAND GRAND GUNKUL
HFT HTECH IHL ILINK ITD JSP KDH KTIS KTP LEE
LST MAJOR MATCH MAX M-CHAI MDX MIDA ML MPIC NC
NEP NNCL NWR OHTL PICO PK PL PPM PRAKIT PRECHA
PRIN PSTC PYLON RAM RICH RS SANKO SAUCE SAWAD SAWANG
SCN SEAFCO SF SHANG SIRI SMART SMM SOLAR SPACK SPG
SPPT SPVI STA STAR SVH SVOA SWC TAPAC TC TCCC
TCJ TCOAT TH TKS TNH TNPC TPA TPAC TPOLY TRC
TRUBB TSE TTA TTI TTL TTTM TWP TWZ U UMS
UPA UPOIC UTP UVAN VARO VI VIBHA VIH VTE WG

2
2S ABICO AF AKP AMARIN AMATA AOT APCO AYUD BEAUTY
BFIT BH BKD BLAND BTNC CCP CI CSR CSS EFORL
EPCO FE FNS FVC GEL GLOBAL HEMRAJ IEC IFS INET
JUTHA KASET KCAR KKC KSL L&E LALIN LTX M MALEE
MBK MBKET MEGA MK MPG MTLS NCH NCL NPP OCC
OCEAN PB PCA PRINC QH ROCK RPC S&J SGP SIAM
SIS SKR SMG SMIT SORKON SUSCO TAKUNI TEAM TF TIC
TIP TIPCO TMC TMI TPP TRT TRU TRUE TSC TSI
TTW TVD TVO UKEM UNIQ UWC VNG WIIK WIN XO

3A
ABC ACAP ADVANC AEC AGE AH AIE AMANAH ANAN AP
APCS APURE AS ASIA ASIAN ASIMAR BIGC BROOK BTS BWG
CEN CENTEL CFRESH CHARAN CHO CHOTI CM CNT COL CPALL
CPF CPI CPL DELTA DEMCO DIMET DNA DTAC EA ECF
EE EVER FPI GBX GC GFPT GLOW HMPRO HOTPOT ICC
ICHI IFEC INOX INSURE IRC JAS JTS JUBILE KC KTC
KYE LHK LPN LRH MAKRO MC MCOT MFC MFEC MINT
MJD MONO MOONG NBC NDR NINE NMG NSI NTV OGC
PACE PCSGH PDI PG PHOL PLAT PPS PR PRANDA PREB
PS QLT RATCH RML ROBINS ROJNA RWI SAMCO SCCC SCG
SEAOIL SE-ED SENA SINGER SITHAI SMK SMPC SPALI SPC SPCG
SPI SRICHA SSI STANLY SUPER SVI SYMC SYNEX SYNTEC TASCO
TCMC TFI THAI THRE THREL TICON TKT TLUXE TMILL TMT
TNL TPCORP TSTE TSTH TTCL TU TVI UOBKH UREKA VGI
VNT WACOAL WHA ZMICO
 3B
AAV AHC AI AIT AKR ARROW ASK BA BDMS BEC
BECL BJCHI BUI CGH CHG CHOW CIG CITY CK CKP
COLOR CWT EARTH EASON EPG F&D FANCY FIRE FMT FORTH
GENCO GL GOLD GPSC GRAMMY HYDRO IRPC IT JCT KCM
KWC LH LIT LOXLEY MACO MANRIN MATI MODERN MSC NOBLE
NOK NPK NUSA OISHI OTO PAF PAP PATO PF PJW
PLANB PLE POLAR PRG PTL Q-CON QTC RCI S11 SALEE
SAM SAMART SAMTEL SAPPE SC SCP SFP SIM SLP SMT
SPA SPORT SSC SST STEC STPI SUC SUTHA T TAE
TBSP TCC TFD TGCI TGPRO THANA THIP TIW TK TMW
TNDT TOPP TPC TPCH TPIPL TSR TT TYCN UAC UBIS
UEC UMI UP UPF UT UV VPO WAVE WINNER YUASA

4
ASP BAFS BANPU BAY BBL BKI BLA CIMBT CNS CSL
DCC DRT DTC EASTW ECL EGCO ERW FSS GCAP HANA
HTC INTUCH IRPC IVL KBANK KCE KGI KKP KTB LANNA
LHBANK MTI NKI PSL PTG PTTEP SABINA SCB SNC SNP
SSF SSSC TCAP THCOM TISCO TMB TMD TNITY TOG

5
BCP CPN GYT PE PM PPP PT PTT PTTGC SAT
SCC THANI TOP

A ACC AJD AQ BCH BGT BROCK BSM BTC CHUO

CPR CRANE EIC FER JMART JMT KAMART KBS KIAT LDC
MBAX MCS METCO NEW NEWS NYT PAE PDG PERM PMTA
POST RCL RICHY ROH S SIMAT TCB TR TSF TVT
WORK

1:
2:
3: 2
3A: CAC
3B: CAC
4:
5: