CAYLUMBEATTHEMARKET

CAYLUMBEATTHEMARKET 20 April 2018

VOL. IV | ISSUE 2

“But on the very

rare occasions
when Mr, Market
generates that
many true
bargains, you’re
all but certain to
make money”.
Benjamin Graham

Investment outlook

Markets don’t go up forever but that’s okay

The PSEi continues to decline amid worries about rising inflation and interest rates and the depreciating peso, how low can it go?

PSEi continues to decline

After a strong start to the year with the PSEi rising sharply to 9,000 driven by increasing levels of investor optimism given the passage of
TRAIN, a healthy macro backdrop, and the continued strength of the economy, the PSEi has fallen more than 15 percent closing at 7,727 as
of today’s close (April 20).

The PSEi sold off amidst concerns over higher that expected inflation, world central banks tightening monetary policy, the BSP's refusal on
raising interest rates despite rising inflation, expensive valuations, fears of a trade war between the US and China, and the peso’s continued
depreciation.

PSEi, 1-yr daily

1 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018

Inflationary pressures and rising rates

Inflation at the start of the year was higher than expected with January inflation reaching 4 percent vs consensus forecast of 3.5%. However,
over the next two months inflation continued to trend upwards and rose higher than the BSP’s 2-4 percent target range with March inflation
rate hitting 4.3 percent.

Rising inflation dampens consumer demand and increases the costs of raw materials leading to lower company revenues and margins. With
the full effect of TRAIN yet to be seen, rising oil prices, an electricity rate hike, peso depreciation, and concerns that the BSP maybe behind
the curve in its response, have worried investors that inflation could spike out of control which would force the BSP to raise rates faster than
expected. Rising rates present valuation headwinds for the equity markets especially for stocks and sectors without earnings growth catalysts.

In fact, some analysts are already expecting the BSP to raise rates by 100 bps this year as inflation continues to to rise unabated. However,
the BSP has continued to maintain a neutral stance despite theses developments and has kept rates unchanged during the last three policy
meetings. According to them, most of the increase in inflation was due to products affected by the excise tax such as sugary drinks, tobacco,
transport, and restaurants. While they expect inflation to be elevated for 2018 and average near the high end of the BSP’s target range, they
expect it to stabilise and moderate to the midpoint of their target range by 2019, as excise taxes will be lower and limited to oil products;
and as “non-monetary measures” such as institutional arrangements in setting transportation fares and minimum wages, unconditional cash
transfers and transport subsidies help mitigate inflationary pressures.

Continued peso depreciation

The peso has fallen 4 percent against the USD since the start of 2018 as the rise in capital imports due to infrastructure investment led to a
widening trade deficit. The trade deficit expanded to US$3.32 billion in January from a gap of US$2.47 billion a year ago, spurred by a
sustained surge in the imports of construction materials and capital goods. In February, the trade deficit reached US$3.06 billion as exports
fell for the first time since Nov 2016, declining 1.8 percent to US$4.66 billion. With the gov’t’s infrastructure push, the deficit will likely
continue to expand which should lead to further depreciation of the peso. A depreciating peso puts pressure on input costs lowering
corporate profit margins.

Trade deficit widening as imports rise and exports decline (In US Bil)

2 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018

Valuations are starting to look attractive

Amidst a strong economic backdrop, the passage of fiscal reforms, and increasing investment, corporate profits are expected to rise strongly
this year with analysts estimating a growth of 10-11 percent. However, the question being asked by most investors now is how much value
should these earnings be given? With rising yields and inflation and expected further peso depreciation, the market is weighing whether
equities deserve lower valuations. And at what level is the market a really good buy again?

While the PSEi’s current valuation at 17.1x FY18 may already look attractive compared to its five-year median P/E of 19x, this was reached
during an environment of increasing liquidity and declining interest rates. The 10-yr Philippine treasury yield has declined from 6-10 percent
between 2008-2011 to about 2-4 percent between 2012-2016 which resulted in investors willing to pay a higher price per peso of corporate
earnings (higher PE’s). For instance, last year, the PSEi's gains were mostly driven by PE expansion as corporate earnings growth was only 9
percent but the market PE increased from 17.5x at the start of the year to 21x by year-end, an increase of 20 percent.

On the other hand, the median PE was lower at 14x when bond yields hovered between 6-10 percent during 2008-2013. Factoring in
increasing inflationary pressures and bond yields creeping up to 6 percent, the market’s current PE may not be a huge bargain yet but at the
same time it’s starting to look attractive as it’s near its 10-yr median PE of 16x.

Rising yields act as headwind for PE expansion. The value of financial assets such as stocks are based on their future cash flows discounted
to the present by market interest rates (also known as the discount rate). The higher the interest rate, the lower the present value of the
asset. With interest rates forecasted to rise, people are going to be less willing to pay higher multiples for future earnings. Therefore,
continued gains by the market will be driven by earnings growth accelerating ahead of interest rate increases which will allow the market or
specific stocks to maintain their multiples and trade higher.

PSEi PE vs 10-yr Phil treasury yield

12 25

10
20

17.14
8

15

6 10-yr yield

PSEi Forward PE
10

5
2

0 0
4/16/2008 4/16/2010 4/16/2012 4/16/2014 4/16/2016 4/16/2018

PSEi earnings growth estimates

14.0%
13%

12.0%
11.0%

10.0%

7.8%
8.0%

6.0%

4.1%
3.8%
4.0%

2.0%

0.0%
FY15 FY16 FY17 FY18 FY19

3 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018

Solid macro backdrop and government fiscal reforms should help sustain strong economic growth

Sustained growth momentum

Despite the issues we mentioned, the Philippines is still expected to grow among the fastest in Asia. We believe strong economic growth
can be sustained despite rising rates and inflation given low debt levels as percentage of GDP, government fiscal reforms, increasing
investment, sustained OFW and BPO growth, the boost from pivot to China (influx of Chinese, POGOs), and growing tourism sector.

Asian GDP (% ) growth forecasts

9

8
India
7 6.7
China
6.2
6 5.7 Phi

Malaysia
5
Indo
%

4 Thai

Singapore
3
Korea
2
Taiwan

1 HK

0
2017 2018F 2019F

Government has more room to take on debt

While interest rates are expected to rise given inflationary pressures, the country should still maintain strong economic growth given more
room for borrowing due to low government, corporate, and household debt. The government still has more room to spend given low fiscal
deficit as a percentage of GDP and historically low government debt-to-GDP. Also, the Philippines has one of the lowest credit penetration
rates in Asia, with private-sector credit around 45% of 2016 GDP. With a young demographic working population, this should result in
growth in housing, auto loans, and credit cards.

Fiscal deficit as % of GDP Gov’t debt as % of GDP

0.00% 80%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018F
70%
-1.00%
60%

-2.00% 50%
41%
40%
-3.00%
30%

-4.00%
20%

-5.00% 10%

0%
-6.00% 2002 2004 2006 2008 2010 2012 2014 2016

Private sector domestic credit as % of GDP

250

200

150
%

100

45
50

0
Hong Kong

Japan

Thailand

Korea

Australia

World

Malaysia

Vietnam

Cambodia

India

Indonesia
China

Singapore
EA & Pacific

Philippines

4 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018

Net foreign outflows

The PSEi is already significantly under owned by foreign funds. There has been a total of US$690 Mil in net foreign selling YTD—already
around half of the amount during similar outflows in 2015 and 2008. While we don’t know how much more foreign selling we’ll see during
the next few weeks, we believe we’re nearer to the bottom as foreign investors who want out are nearing their exits and the market should
start to recover once these foreign funds are shaken out.

Net foreign buying (selling)

3000

2548
2500

2000

1500 1354 1329

1224 1266
In USD Mil

1000
720 687
420 480
500 354
278
85
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

-500

-690
-1000

-1135 -1193
-1500

A great opportunity: the PSEi nearing an inflection point

While we remain cautious about the prevailing risks, we’re excited about the next few months as we continue to remain bullish on the
Philippines given solid economic fundamentals and fiscal reforms that should sustain strong economic growth and overcome rising rates and
inflation. In addition, as long as corporate earnings continue to accelerate, the PSEi should continue to trend higher.

The PSEi went up too fast too soon at the start of the year pushing valuations higher which capped future returns as the market aggressively
extrapolated future growth. Looking at the chart below, it shows expensive valuations usually lead to lower returns in the months that
followed. That’s why we’re optimistic about the next few months as we see the current market correction as an opportunity for traders and
investors to achieve outsize gains as valuations have fallen to more attractive levels. While nobody can really accurately predict where the
market will bottom, each decline just makes the PSEI more attractive.

PSEi inflection points, 10-yr chart

Jan 29, 2018

10000 P/E (fwd) 19.95
April 10, 2015 July 21, 2016
9,041
9000 P/E (fwd) 20.55 P/E (fwd) 20.85
May 15, 2013
P/E (fwd) 21.74
8,127 8,102 +38% -15%
8000
7,392 +42% +33%
7,682
7000 -22% -19%
-25% Apr 16, 2018
P/E (fwd) 16.40
6,564
6000
6,084 Dec 23, 2016
5,738 P/E (fwd) 16.77
5000 +334% Jan 21, 2016
Aug 28, 2013
P/E (fwd) 15.18
P/E (fwd) 16.66
4000

3000

2000

1,704
1000 Oct 29, 2008
P/E (fwd) 14.10
0
4/18/2008 4/18/2009 4/18/2010 4/18/2011 4/18/2012 4/18/2013 4/18/2014 4/18/2015 4/18/2016 4/18/2017 4/18/2018

5 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018
However, while PSEi valuations have become cheaper, we do not advise deploying just yet. The PSEi remains on a downtrend while
valuations are just starting to hit bargain levels. The only time to deploy during a downtrend is if we see massive selloffs (ADX>50) leading to
‘too cheap to ignore’ valuations; there’s a huge disparity between current price and the stock’s intrinsic value. However, for those that still
want to participate in the market, focus only on the strongest stocks. Still, we suggest that participants do nothing and maintain high cash
levels and wait for the the market to capitulate.

While we’re bullish about the next few months, investors and traders should remain cautious and prepare for a bumpy ride as rising interest
rates and inflationary pressures should result in increased volatility. The key is to stick to sectors and stocks that will be able to maintain
strong earnings growth despite these headwinds and also only enter issues at prices that’ll provide a sufficient margin of safety.

Recommendation
Our top sectors for the year remain the same: banking, gaming, and property with some consumer names.

The banking and property sector underperformed to start the year due to a number of sector specific concerns Banking stocks sold off due
to concerns about capital raising and expensive valuations. While property stocks were weighed down on concerns about rising interest
rates, slowing BPO demand, and removal of PEZA incentives.

However, we remain bullish on these sectors as we expect them to continue to benefit from the country’s sustained economic growth.
Banking companies continue to report double digit loan growth and growing non-core businesses. While property companies also reported
solid results, strong residential sales, and take up sales.

On the other hand, gaming companies continued to show strong demand with GGRs continuing to accelerate. Outlook remains bright given
increasing influx of mainland Chinese into the country, rising tourism, and increasing disposable income. Meanwhile, the consumer sector
overall continue to struggle with rising input costs, intense competition, and peso depreciation which could spill over to 1Q18.

Table 1: Sector views

Sector Results Outlook Commentary

FY17 FY18E
Accelerating core lending due to the strong economic backdrop. Profitability is
expected to improve with rising rates leading to expanding NIMs. Bank
Banking valuations are now more attractive after the market sell-off. We are bullish on the
sector given increasing capital investment and business expansion coupled with
rising long-term interest rate trend.
Sector continues to sustain strong demand. Outlook remains rosy due to the
Gaming expected boost in disposable income, the influx of Chinese tourists, growing
tourism, and sustained economic growth.
Concerns of slowing office and residential demand due to rising rates looks
already priced in given historically low valuations; leasing vacancies have been
increasing while mortgage rates remain low. 4Q17 results remains solid. Take-up
Property
sales should remain healthy given continued strength of the economy. However,
concerns on rising rates and removal of PEZA incentives continues to weigh on
the sector.
Continue to wrestle with regulatory risks and company specific issues (i.e,
Utilities/Power oversupply in power sector); selloff of a number of names (i.e., SCC, AP) looks
overdone and are now trading at bargain levels.
Earnings showing signs of stabilising; competitive environment improving.
However, capital spending remains elevated to protect market share. Data
Telecoms
continues to drive growth but with lower margins. Outlook remains uncertain and
noise of a third telco player continue to weigh down on the sector.
Companies continue to struggle with rising inflation and input costs, intense
competition, and a depreciating peso. 4Q17 results showed retailers already
feeling the effects of rising inflationary environment. We could see this to
Consumer
continue in 1Q18. However, consumer companies with pricing power and ability
to pass on rising input costs should be able to overcome rising inflation and
continue to do well.
Diversified holding companies with scale and exposure to high growth sectors
should benefit from strong economic growth and continue to outperform.
Conglomerates
However, due to the runup last year, valuations became unattractive despite
recent selloff.
Cement companies continue to report declining growth given lower cement
demand and lower cement prices coupled with increasing input costs which
Cement/
compressed margins further. However, companies have reported stabilising
Infrastructure
cement prices and have started increasing prices since February this year. Sector
maybe on the rebound.
Legend: Positive ( ), Negative ( ), Mixed ( )

6 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018
Solid 4Q17 results
4Q17 results didn’t bring a lot of major surprises. We’ll come out with our earning reports soon and discuss recent results in depth, but
overall, company profits remained solid as sector trends just largely continued from the first three quarters.

Banks continued to report accelerating growth in their core lending business driven by robust loan growth (15-20 percent) and also got a
boost from fee segments. We expect this growth to continue driven by the sustained strength of the economy and a rising interest rate
environment, which historically has led to higher net interest margins (NIMs). Capital raising should only benefit these companies as they
gear up to support increasing loan growth.

Meanwhile, the property sector underperformed YTD due to concerns about slowing BPO demand and rising interest rates. However, we
believe property companies should continue to do well as they benefit from strong economic growth and rising disposable income which
should translate to continued healthy property demand. Office vacancy rates in Metro Manila remain low and rents are at an all-time high
and are forecasted to continue to rise. BPOs are expected to rebound this year while POGOs are expected to continue growing. While the
gov’t’s focus on regional development should result in BPO expansion in the provinces. Also, while interest rates are rising, they remain
historically low, therefore, we expect property companies to continue to see solid growth in residential demand and sustained growth in
leasing income. In addition, 4Q17 property results remain solid with ALI and MEG reporting strong 4Q17 results, with the former meeting
expectations while the latter beating estimates. We believe both companies should continue to sustain solid growth as they will be more
aggressive in their project launches this year.

On the other hand, gaming companies continue their growth momentum driven by higher GGRs. FY17 results were solid overall led by MRP
and BLOOM. While BLOOM’s profits fell below consensus estimates, this was due to lower hold rates but volume growth remained strong.
Even RWM showed healthy demand growing its top-line by 22 percent YoY. Outlook remains bright for the sector given increasing
disposable income, continued influx of Chinese tourists, and growing tourism.

While we remain bullish on a couple of consumer names (i.e., DNL, PIZZA), we remain wary of the consumer sector overall given rising
inflation, increasing input costs, and the depreciation of the peso which could dampen demand and put pressure on companies' margins.
Retailers already reported mixed results in 4Q17 (i.e., WILCON and PGOLD). However, companies with pricing power and the ability to pass
input price increases should continue to do well amidst the healthy economic backdrop.

For power companies, the sector has been continually dogged by regulatory concerns throughout the year, but most companies reported
solid earnings growth for FY17 while some surprised to the upside. We believe these concerns are already priced in and current valuations
present significant value opportunities as these stocks are already trading at a huge disparity from their fundamental values. Meanwhile,
utility companies reported steady growth but the sector do not look compelling given rising rates and fair valuations.

The telecom sector continued to report declining profits due to lower non-data revenues and increase in infrastructure investments, but
signs of easing competition and rationale pricing have resulted in improved margins, while data continues to drive growth. However, growth
outlook remains dim given continued high capital requirements and the structural shift from SMS to data which have lower margins. Also, the
noise of a third telco player should continue to dampen investor sentiment on the sector.

Cement companies continue to report declining growth given lower cement demand and lower cement prices coupled with increasing input
costs which compressed margins further. Nonetheless, companies reported stabilising cement prices and companies increasing their prices
in February of this year. This development may indicate prices could be turning around. Also, cement volume grew 12 percent in 4Q17
showing strengthening demand. While it’s too early to tell, keep an eye on the cement sector; it could surprise to the upside if these trends
continue.

Portfolio reconstruction
When we started the Beat the Market portfolios (Core, Trading), our goal was to give investors/traders ideas that could lead to market
beating returns or at least match the returns of the PSEi while also minimising risk. Also, we considered the mix of Caylum alumni which
consisted of different types of traders, from investors, position traders, swing traders to momentum traders. Therefore, we wanted the
portfolios to cater to this broad mix. As a result, our Core portfolio consisted of ‘safe' quality names with solid growth prospects trading at
attractive valuations such as stalwarts and high growth stocks, while we recommended the more speculative issues in our Trading Ideas list.
By doing this, the alumni, depending on their risk profile and their trading strategy, could pick the stocks that would fit their own style. While
we believe this gave people more choices, it also wasn’t efficient in maximising returns.

Therefore, this year, we wanted to streamline our picks and concentrate only on the best issues. We still have two portfolios: Core and Alpha
but we’ve limited the number of stocks and concentrated only on what we think are the best ones. Our Core picks now consists of only a
couple of names—quality companies that we believe will deliver the best risk-adjusted returns during the next 6-12 months due to a
combination of sound fundamentals, good growth prospects, attractive valuations and positive sector tailwinds. While Alpha picks consists
of stocks that are stronger than the market and may have significant short-medium term upside.

Don’t get us wrong, we still like the other stocks that we included in the previous core portfolio such as PIZZA for consumer, and ALI or MEG
for property. However, we only picked the sectors and stocks that we feel had the best combination of quality, growth, and upside. While we
remain bullish on property (MEG and ALI continue to have excellent prospects), risks of rising interest rates and the proposal of nixing
incentives for PEZA investors may weigh down on the sector in the short-medium term. For PIZZA, while it remains an excellent company, we
feel it did not present enough upside to be included in the portfolio currently. Also, we created a portfolio called Watchlist for stocks that
we’re closely looking at and could potentially be part of our portfolio in the future, but for some reason—problems in its sector, a low growth
outlook, unattractive valuations, or chart-wise/technicals it doesn't look good—we didn’t include in our portfolios.

7 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018
Core picks: These are our top picks for the year. We believe these companies will deliver the best risk-adjusted returns due to a combination
of sound fundamentals, attractive valuations, and excellent growth during the next 6-12 months.

Mkt Cap FY18 EPS FY17 EV/

Company Summary Price TP
(Php Bil) Gr (%) EBITDA
Best positioned lender to benefit from growing economy and rising rates given that it
has the largest branch network; high percentage of low cost deposits (73%) and higher
exposure to fast-growing consumer and retail loans. Should be able to continue robust
BDO 585.51 134.00 185.0 19.91 **2.00 PB
growth of core lending amidst healthy macroeconomic backdrop. Two-thirds of loans
repriced in three months. Well capitalised: CAR and CET1 of 14.5% and 12.9% above
minimum regulatory requirements. FY17 core income grew 15% YoY.

After a weak 2Q17 as gross margins dipped due to the rapid growth of its
commodity business and lower commodity margins, growth recovered in 2H17.
Commodity margins showed signs of improvement and HMSP volumes started
DNL 74.57 normalising. Exports continued to accelerate and accounted for 25% of revenues. 10.44 *13.00 11.66 17.50
Exports have more room to grow given given low penetration in the region.
Company is expanding capacity to be completed by 2021 to meet growing export
demand.

GGR continues to grow strongly driven by strong volume led by mainly by VIP segment
and solid contributions from the mass market and gaming machines segment. Outlook
MRP 38.35 remains positive given growing tourism, improving infrastructure, and influx of POGO 6.80 12.50 88.37 6.36
and Chinese tourists. Attractive valuation at 6.60x FY18 EV/EBITDA relative to regional
average of 11.16x FY18 EV/EBITDA.

FY17 results fell below expectations due to lower hold rates but volume growth remains
strong indicating healthy demand. Korean operations starting to improve. Outlook
BLOOM 140.97 remains positive as demand continues to show strong growth. Should continue to 12.78 17.00 18.92 9.77
benefit from increasing tourism, influx of Chinese nationals, POGO, and increase in
disposable income.
Source: Bloomberg, Caylum, company information, COL Financial, data as of 04/20/2018.
*Caylum estimates.
**We use the P/B ratio to compare bank stocks.
***TP=target price

Alpha picks: Stocks that are stronger than the market and have positive catalysts or an excellent growth outlook that could push their prices
higher in the short-medium term.

FY18
Mkt Cap FY18 EPS
Company Summary Price TP EV/
(Php Bil) Gr (%)
EBITDA
MRO business, Lufthansa Technik Philippines (LTP), continues to boost earnings while other
segments made solid contributions. Outlook remains positive for FY18 as company targets
MAC 34.24 20% YoY growth with possible capacity expansion , a new commissary/production facility 27.90 36.00 N/A N/A
beginning operations in early 2018, expansion of airport coverage for groundhandling
services, and its water business gaining traction.

Despite a poor 4Q17, full-year results came in line with expectations due to strong
9M17 performance. The company looks to sustain future growth given plans of
WLCON 44.69 opening 24 new stores during the next four years. SSSG remain excellent; dynamic 10.90 12.50 13.86 16.96
economic backdrop should help sustain the company’s high growth. However,
rising operating costs and inflation could put pressure on margins.

Net profits for full-year 2017 beat estimates due to robust airport segment
growth and steady growth of its construction business. Profitability improved
due to better revenue mix as the higher margin airport segment increased its
MWIDE 51.01 23.85 27.60 26.17 13.39
share of revenues. Declining backlog YoY but new projects already booked this
year worth Php24 Bil. Opening of Cebu-Mactan airport during 2H18 should
provide long-term boost to earnings.

SMC consolidated its consumer subsidiaries Purefoods, Ginbera San Miguel, San Miguel
Beer (delisted 2012) into one company creating the largest publicly listed consumer
company in the country. We believe this deal should unlock the value of SMC’s consumer
FB 110.00 subsidiaries as this: (1) creates synergies between these businesses which should result in 66.00 95 15.07 8.92
improved efficiency and profitability; and (2), this would make the company more
attractive to investors due to increased liquidity and access to a pure food and beverage
consumer play.
Source: Bloomberg, Caylum, company information, COL Financial, data as of 04/19/2018.
*Caylum estimates.
**We use the P/B ratio to compare bank stocks.
***TP=target price

8 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018
Watchlist: We are not recommending these stocks but just keep an eye on them as these companies have significantly sold off during the
last 6-12 months due to company- or sector-specific issues but are reaching ‘no-brainer’ buy levels. Meaning, there’s already significant
disparity between the stocks' current price and the its intrinsic value. However, concerns surrounding these companies continue to weigh
down on their valuations.

FY18
Mkt Cap FY18 EPS
Company Summary Price TP EV/
(Php Bil) Gr (%)
EBITDA
Full-year results significantly beat estimates as real estate sales grew better than
expected due to strong demand. while leasing income sustained its robust growth.
Take up sales grew 21% to Php110 Bil. Outlook remains bullish despite rising rates
MEG 141.85 and concerns of slowing office demand as the company is launching more projects 4.40 6.78 12.88 9.66
(Php60 Bil vs Php39 Bil last year) and targeting Php110 bIl in take-up sales.
However, concerns about the proposal of nixing PEZA incentives continue to weigh
on the company’s future outlook.

The unplanned outage of Calaca 3 whether it’s a temporary or a chronic problem

and lower coal prices have led to concerns about the company’s future profitability.
SCC 128.54 But we believe SCC’s selloff has been overdone and its share price is nearing ‘no 30.25 51.35 7.89 5.68
brainer’ territory. FY17 results slightly trailed estimates but look solid with core
income growing 18% YoY.

Strong results for FY17 as core income increased 17% YoY to 14.1 Bil driven by the
sustained robust growth of its toll business, an increased stake in Beacon, and
continued strong growth of its hospital group. Long-term outlook for its businesses
MPI 146.22 4.64 8.70 6.56 11.98
remain positive given their exposure to long-term secular tailwinds such as rising
power demand and increasing population. However, regulatory concerns continue
to hound its businesses (e.g., delayed tariff adjustments).
Source: Bloomberg, Caylum, company information, COL Financial, data as of 04/20/2018.
*Caylum estimates.
**We use the P/B ratio to compare bank stocks.
***TP=target price

9 Source: Bloomberg, COL Financial, Caylum

CAYLUMBEATTHEMARKET 20 April 2018

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CAYLUMBEATTHEMARKET 20 April 2018

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we make no warranties to the accuracy and completeness of third-party information presented herein. This report only provides general advice and does not constitute any specific investment recommendation or
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The prices of stocks can fluctuate and are subject to capital loss. Do not trade with money you cannot afford to lose. There's is a risk of loss in investing in securities. Losses of up to 100% of original capital invested in a
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loss or injury resulting directly or indirectly from the use of the information contained in this newsletter, caused in whole or in part by its negligence in compiling, interpreting, reporting or delivering the content in this
newsletter.

Performance of CTI recommended securities and portfolios are subject to risks and uncertainties. The stocks recommended in the newsletter were based on CTI’s own analysis and proprietary technical and fundamental
screens; they were chosen regardless of the stock’s performance whether the company was losing or making money. The securities presented do not represent all of the securities bought, sold or recommended. Also, CTI
and/or its employees may take a position in a security inconsistent with the recommendations provided by the newsletter or purchase securities that was not mentioned in the newsletter without notice to its subscribers
and/or members.

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