Veterinary|18 November2010

BUY
InitiatingCoverage

ChinaAnimalHealthcare
Thehealingtouch
We initiate coverage on China Animal Healthcare (CAH) with a BUY recommendationandtargetpriceof$0.48/share,peggedat15xFY11F PER,adiscounttoitspeeraverageof23x.WhileFY10netprofitmaybe hurt by certain oneoff expenses, we remain confident about the groupslongertermgrowthprospectsgivenitsleadingmarketposition inanimaldrugmanufacturinganddistribution.

Analyst
EricONG ericong@kimeng.com (65)64321857

Price Target STIndex

HistoricalChart

Pri ce($) 0.40 0.35 0.30 0.25 0.20 0.15 24Aug10 19Oct10 04May10 17Nov09 09Mar10 15Dec09 09Feb10 16Nov10 06Apr10 27Jul10 21Sep10 01Jun10 12Jan10 29Jun10 Vol ('000) 100,000 80,000 60,000 40,000 20,000 0

$0.355 $0.480 3,212.10

Vaccinesalestofuelearningsgrowth Followingthecompletionoftwoacquisitions,CAHisturningitsattention toexpansioninthemandatoryvaccinesegment.Therecentapprovalby ChinasMinistryofAgriculturetocommencecommercialproductionand sale of its animal footandmouth disease (FMD) vaccines should underpinitsearningsgrowthinthemediumterm.

Performance Absolute(%) Relative(%) 1m 6.0 5.7 3m 20.3 9.5

6m 18.3 4.4

HongKongduallistinglikelybeforeyearend CAHhassubmitteditsapplicationforthedualprimarylistingofitsshares ontheHongKongStockExchange(HKSE)bywayofintroduction.Aswas the case with other companies, we believe the process would not take morethanfourmonths.ThismeansCAHshouldbelistedontheHKSEby yearendatthelatest.

StockInformation

Tickercode CAH.SI CALSP Marketcap(US$m) 434.1 52weekhigh(S$) 0.375 52weeklow(S$) 0.190 Sharesissued(m) 1,591.4 6mavgd.vol(US$m) 3.5 Freefloat(%) 34.9 Majorshareholders(%) WangYanGang(53.1) FidelityInvestments(9.2)

Keeninterestfrominstitutionalfunds Investment and advisory firm Blackstone recently made a strategic investment in CAH by subscribing for US$40m in principal amount of convertiblebondsatparand20mnewsharesattheissuepriceofS$0.35 pershareforaconsiderationofS$7m.MutualfundgroupFMRLLChas alsobeenbuyingintheopenmarket,raisingitsstaketo9.2%.

ProxytoChinasrisingdomesticconsumption;initiatewithBUY The animal drug sector in China holds promise of significant growth, buoyedbyincreasingmeatconsumptionandhigherpenetrationrateof animaldrugs.WeinitiatecoverageonCAHwithaBUYrating.Ourtarget priceof$0.48/shareispeggedat15xFY11FPER,adiscounttoitspeers.

KeyIndicators

ROE(%) Netcash(RMB) NTA(RMB) Interestcover(x)

17.4 0.14 0.50 32.7

YearEndDec31 Sales(RMBm) Pretax(RMBm) Netprofit(RMBm) EPS(fen) EPSgrowth(%) PER(x) EV/EBITDA(x) Yield(%)

2008 385.1 170.6 138.3 10.7 107.6 16.7 14.7 1.2

2009 438.3 188.6 157.9 11.1 4.6 15.9 12.3 0.0

2010F* 575.1 192.9 126.1 7.9 28.9 22.4 12.9 0.9

2011F 790.4 364.8 254.5 16.0 101.9 11.1 6.5 1.8

2012F 913.6 426.4 298.1 18.7 17.1 9.5 5.1 2.1

*FY2010FincludescertainoneoffexpensesduetoproposelistinginHK
Co.RegNo:198700034E MICA(P):090/11/2009

SEEAPPENDIXIFORIMPORTANTDISCLOSURESANDANALYSTCERTIFICATIONS

ChinaAnimalHealthcare

18November2010

Movingfromstrengthtostrength
Highentrybarriersformandatoryvaccinespace
China Animal Healthcare (CAH) currently manufactures three out of the four compulsory animal vaccines required by the Ministry of Agriculture (MOA) in China.Thisleadsustobelievethatthecompanyissettobecomeamajorplayer in the vaccine space, which hitherto has been dominated by stateowned or statecontrolledfirmsduetolicensingrequirements.

CAHalsoproducesdrugstotreatawidearrayofanimaldiseasesandillnesses,as well as to enhance the animals health and wellbeing. It currently holds the patent for about 400 animal drugs that can be taken in powder form, orally (basedontraditionalChinesemedicineformulae)orbyinjection.

Extensivesalesanddistributionnetworkaboontoorganicgrowth
CAHscustomerbasespans28provinces,municipalitiesandautonomousregions inChina,covering70%ofthecountryslargescalepoultryenterprisesand10%of domestic retailers. Its sales and marketing team employs approximately 865 staff.Webelievetheextensivenessofthisnetworkhasenabledthecompanyto effectivelysellandmarketitsproductsthroughoutthecountry. In addition, it has a team of 909 technical personnel who provide technical support services. This allows the company to keep in constant contact with its endcustomers,therebyhelpingtoforgecloserbusinessrelationshipstoachieve bettersales.

Multibrandingstrategytoacethemarket
We understand that in China, the industry practice is that any retailer of a particulartownorareawillnotpermititsdistributortosupplyotherretailersin thesametownorareawiththesamebrandsalreadycarriedbythesaidretailer. Under the multibranding strategy,however,CAHcanusevariousbrandnames tosellproductsofasimilarnature.Inshort,aseachofitscompanysubsidiaries has its own brand name, the group is able to supply many retailers in any particulartownorareasinceeachwillbesellingdifferentbrandnameproducts, albeit of the same nature. This multibranding strategy enhances the groups ability to supply and sell its products in any particular town or area, giving it accesstomanydifferentretailersinonetownorarea.

Successfulintegrationofsimilarbusinessesacquired
Sofar,CAHhasbeenabletosuccessfullyintegratethebusinessesandproducts of the companies it acquired into its operations. As a result, there has been an increaseinthenumberofbrandnamesforitsproducts,aswellasthenumberof productsperse. Thegroupnowsellsitsproductsunder13differentbrandnames,allowingitto fully capitalise on its multibranding strategy. We believe this development will be advantageous to CAH as it seeks to expand its business through further acquisitions.

ChinaAnimalHealthcare

18November2010

Companybackground

CAHisprincipallyengagedinthemanufacturing,saleanddistributionofanimal drugs. It is one of the leading players in Chinas animal drug industry with 13 proprietary brand names for powdered form drugs, injection form drugs and biologicaldrugs.

Itsproductportfoliocomprisesnearly400typesoftreatmentandnontreatment animal drugs for poultry and livestock. These are directly distributed to more than 20 large poultry corporations in the country, veterinary stations in 11 provinces and a network of 4,900 animal drug retailers who in turn sell to the farmers.Itsrangeofbiologicaldrugsincludesvaccinesforswinefeverandanimal handfootandmouth(HFM)disease,whicharemandatoryforanimalsunderthe MOArequirements.

Figure1:CAHsproductionfacilitiesandofficesinChina

Source:Companydata

While the corporate headquarters is in Beijing, CAH conducts its daily business and operations through four regional offices. It has obtained the relevant Good ManufacturingPractice(GMP)certificationsforallofits17productionlines,sixof which are in Shijiazhuang, two in Shenzhou, seven in Shanxi and one each in InnerMongoliaandBeijing.

ChinaAnimalHealthcare

18November2010

Its large customer base currently spans across 28 provinces, municipalities and autonomous regions, and is supported by a team of approximately 1,800 sales andtechnicalpersonnel.

Complementaryrangeofproducts
In China, animal drugs can be categorised into four main groups powdered drugs, injection drugs, biological drugs and additive drugs. They comprise treatmentandnontreatmentdrugs. Treatmentdrugsrefertothoseusedtodiagnoseandtreatanimaldiseases.They help to regulate organ functions or cell metabolism, kill or destroy pathogenic microorganisms or parasites so as to prevent damage to the physical or biochemicalfunctionsoftheanimalbodyortorestoreitsbalance. Nontreatmentdrugsrefertothoseusedtohastenthegrowth,reproductionand productive abilities of animals, manoeuvre and strengthen their bodily defence systemandpreventdiseases. CAHsnontreatmentdrugsincludevitamins,disinfectantsandprophylactics.This rangeconsistsofbothcompoundedchemicalandtraditionalChinesemedicine based drugs. The former are produced by a chemical process or manufactured fromchemicals,whilethelatterareprocessedfromamixtureandblendofplant, animaland/ormineralextracts(withplantextractsgenerallyformingthelargest component).Theymaybepowdereddrugs,liquidinjectiondrugsororaldrugs. SinceApril2007,CAHhasventuredintothemanufacturing,saleanddistribution ofpremixedadditivefeeds.Thesearemadefromtwoormorefeedadditivesand mixedwithcarrierorthinner,withtheproportionofadditivesnotexceeding10% ofthedrugscontent.

Figure2:CAHsproductrange

PowderedformdrugsInjectionformdrugsBiologicaldrugs
Source:Companydata

Uniquedirectsalesmodel
CAHdistributesitsproductsdirectlytoabout4,900animaldrugretailersand20 largescale poultry enterprises in various parts of China. To better serve its diverseclientele,ithasputtogetherastrongsalesandtechnicalsupportteam, which, according to management, is also one of the largest among the local animal drug manufacturers. This team has enabled the group to cover a wide geographicalregion.

ChinaAnimalHealthcare

18November2010

The sales, marketing and distribution team currently employs about 865 sales and marketing personnel and 909 technical staff. More than 95% of them hold professional and/or tertiary qualifications in animal husbandry or veterinary medicine. Currently, the bulk of the locally produced animal drugs is consumed by the domesticmarketwithanestimated20%exportedoverseas.Animaldrugsmaybe distributed either directly from the manufacturers to the bigend users or via a distributor/agent to retailers, who in turn sell to end users. Figure 3 illustrates thedistributionmarginsachievedunderdifferentsalesmodels.

Figure3:CAHsellsdirectlytoendcustomers

Source:Companydata

Acomparisonofthedistributionchannelstrategiesshowsdifferentdistribution margins for the manufacturer. By simplifying the process, manufacturers who distributedirectlytoendusersenjoyadistributionmarginof2040%. However, if the full channel network is involved (ie, from manufacturer to distributor to retailer and finally to end users), the distribution margin to the manufacturer is reduced considerably. In other words, it is more profitable for manufacturerstodistributedirectlytoendusers. As a valueadded service, CAH also provides technical and support aid to its customers, such as farming techniques and methodologies. It will also impart knowledgeonanimalhealthandtreatmentofanimaldiseasestoselectretailers who meet their sales target, as well as retailers with sales potential. We understandthatsuchserviceshavebegunsince2001.

ChinaAnimalHealthcare

18November2010

Management believes CAH is one of the first in the animal health industry in Chinatoprovidesuchstructuredtechnicalandsupportservices.Thishaskeptthe group in constant contact with its customers, helping to forge closer business relationshipsandachievingbettersalesforthecompany. CAH currently has four regional offices in Chengdu, Shijiazhuang, Hefei and Shenyang. They are used to hold meetings and training sessions for its salespersons,includingretailers,aswellastoprovidetechnicalsupportfunctions totheretailers. Figure4:Extensivesalesandmarketingnetwork

Source:Companydata

Multibrandingmarketingstrategytoacethemarket
Unlikemostofitspeers,CAHusesmultibrandingasitskeymarketingstrategy. Thisallowsproductsofsimilarnaturetobesoldundervariousbrandnames. InChina,itisindustrypracticethatanyretailerofaparticulartownorareawill notpermititsdistributortosupplyotherretailersinthesametownorareawith the same brands already carried by the said retailer. This means a distributor with only one brand name is able to supply just one retailer in any particular townorarea.

ChinaAnimalHealthcare

18November2010

For CAH, the story is different. The group can capitalise on its multibranding strategy with each of its subsidiaries carrying a brand name of its own to supply many retailers in any particular town or area. In effect, each of these retailerswillbesellingdifferentbrandnameproducts,eventhoughtheymaybe ofthesamenature. Thestrategygreatlyenhancesthegroupsabilitytosupplyandsellitsproductsas itisabletoaccessthedifferentretailersinanyparticulartownorareabyselling eachofthemdifferentbrandnameproducts.

Figure5:Distributionmodel

Source:Companydata

ChinaAnimalHealthcare

18November2010

Industryprospects
ProxytoChinasboomingdomesticconsumermarket
Chinaisanagriculturalgianttraditionallyfocusedoncropproduction(morethan 50% of agricultural production by value). It has 120m ha of arable land, representing about 12.5% of total land area. However, only 7% of the land is suitableforcultivationtofeed20%oftheworldspopulation.Thedevelopment ofthecountrysagriculturehasthereforebecomecriticalforsocialstability. Animalproduction,ontheotherhand,hasdevelopedbyleapsandboundssince the beginning of 2000 in tandem with the strong domestic GDP growth. In particular,theincreasingaffluenceandurbanisationofthepopulationbodeswell for the animal husbandry industry, which is primarily driven by domestic consumption. AnewboostcameintheformofChinasrecentpolicyonantisubsidydutieson some US chicken products that have received US government aid. These new tariffs followed an earlier move in February to impose antidumping duties on imported US chicken products as a result of Chinas preliminary antidumping investigationofUSpoultry. The upshotofthesemeasuresisthatChinadecreasesdirectimportsofpoultry from the US. Sales of domestic poultry products therefore increased, indirectly fuelling a rise in local poultry breeding activities and spawning demand for and usageofanimaldrugs. According to the Veterinary Drugs Market Guide published in 2009, Chinas farming industry has grown at 1215% pa since 2006, more than that of the developed countries. The growth in the livestock and poultry farming industry willinevitablyleadtodemandandusageofanimaldrugs. In our view, manufacturers of animal drugs should benefit directly from this marketexpansion.Withoutadoubt,toppingthelistofconsumerconcernsisthe assurance of safe, highquality and nutritional food products. In fact, this has become the basic driving force behind the development of the veterinary drug industry.

Figure6:HugepotentialinChinasanimaldrugindustry

Source:Frost&Sullivan

ChinaAnimalHealthcare

18November2010

Marketforvaccinesholdsgreatpromise
Recent epidemics and outbreaks affecting the animal husbandry industry have servedascompellingreminderstobothfarmersandtheChinesegovernmenton theimportanceofpreventiveanimaldrugs. Thegovernmentislikelytoremainvigilantinitstwineffortstopromotesound farmingpracticesamongthefarmersandtoenforcethecompulsoryvaccinations of the animals. Government funding on the procurement of these compulsory vaccinesfordistributiontothefarmingpopulationisexpectedtobesteppedup onthebackofincreasinganimalfarmingactivities. WeseepromiseintheanimalhealthproductsindustryinChinaandexpectrapid growthinthenextfewyears.The2009VeterinaryDrugsMarketGuideestimates thatthemarketsizeforvaccinewillincreasebyaboutRMB2.0bpainChina,one ofthefastestgrowingsegmentsintheanimaldrugsector.

Fragmentedindustry,littleproductdifferentiation
The strong prospects notwithstanding, the industry in which CAH operates is highlyfragmentedandproductdifferentiationrarelyexists.Inthepastfewyears, however, the animal drug industry has undergone significant changes and we expectthistrendwillbenefitCAHinthelongrun. For example, the Chinese government imposed GMP (Good Manufacturing Practice)certificationrequirementsin2004.Thiseffectivelyslashedthenumber of animal drug manufacturers by almost half, from 2,400 originally to about 1,300 currently with GMP certification. Of these, only 19 have annual sales exceeding RMB100m and together, they account for 21% of the total market sharein2009. Figure7:Chinasanimaldrugindustryataglance

Source:MinistryofAgricultureofPRC,Frost&Sullivan

ChinaAnimalHealthcare

18November2010

TimelyM&Aopportunitiesforbusinessexpansion

Managementbelievesthatacquisitionistheonlyroutebywhichthegroupcan quickly affirm its position as a leading, highquality animal healthcare product company in China. Therefore, a key part of its business strategy is to acquire entities with an established brand, proven R&D and/or a product license with significantcommercialisationvaluetocomplementitsexistingbusiness.

Acquisition#1:ControllingstakeinInnerMongoliacompany
Inlate2008,CAHannounceditsintentiontoacquirea60%stakeinBiweiAntai Biological Technology for a total cash consideration of RMB288m. According to management,themoveisaimedatexpandingthegroupsbiologicalanimaldrug productrangetoincludevaccinesforanimalhandfootandmouthdisease. In 2H09, the said Inner Mongolian company completed the construction of its production facilities and was duly certified as an animal drug GMP inspection qualifiedentitybytheVeterinaryDepartmentoftheMOAon14November2009. Recently,BiweiAntaiobtainedregulatoryapprovalsfromtheMOAtocommence commercial production and sale of its FMD vaccines. These approvals will also enableCAHtoparticipateintendersforthepurchaseofsuchvaccineswhichare calledbyregionalgovernmentanimaldiseasecontrolcentresinChina.

Acquisition#2:RMB210mforJianxiangHemuBiologicalTechnology In 1Q10, CAH bought Jianxiang Hemu Biological Technology for RMB210m. The
Beijingbased company is mainly engaged in the research and development of biologicaldrugs.ItsR&Deffortshaveresultedinanewvaccinethatmaybeable to counter the Porcine Reproductive and Respiratory Syndrome (PRRS) Virus, colloquiallyknownasblueearpigdisease. Weunderstandthe MOA hastodate designatedonlythreeChinesecompanies to conduct research on and develop new vaccines for the PRRS Virus, and JianxiangHemuisoneofthem.UndertheMOArequirements,theapplicationof suchvaccinestopigsismandatoryandthegovernmentwillbearthefullcostof vaccinepurchase. However,thereisonepointtonote.EventhoughJianxiangHemupossessedthe MOA approval for its technique for the manufacture of the new blueear pig diseasevaccine,itdoesnothaveitsownproductionfacilities.Hence,thevaccine isproducedatanotherCAHsubsidiary,ShanxiLongkeerBiopharmaceuticalCo. In June 2010, the maiden batch of the PRRS vaccines was delivered to the provincial veterinary stations. As to the indicative orders procured during the Februaryofficialcompulsoryvaccinesalesbiddingexercise,thebulkisexpected tobedeliveredintheensuingquarters.

10

ChinaAnimalHealthcare

18November2010

Financialanalysis
Toplinegrowthimpressesin9M10
Revenuewise,CAHposteditsstrongestquarterlyperformanceyetin3Q10with totalsalesofRMB160.9m.Thisrepresentedanincreaseof23.7%YoYand16.4% QoQ.Thejumpinturnoverwasmainlypropelledbya61.2%surgeinbiological drugsales,andbolsteredbythecontinuingstrongperformanceinthepowdered drugs segment. Notably, sale of the PRRS vaccines has gained momentum in 3Q10 with a further RMB35.4m of PRRS vaccine sales delivered in the current quarterfollowingthecompletionoftheacquisitionofJianxiangHemuin2Q10.

Thepowdereddrugssegmentalsorecordedanotherrespectableperformancein 3Q10 with sales of RMB106.5m. We believe this was due to the buoyant domestic poultry breeding activities, which received a boost from the ongoing antisubsidytariffsandantidumpingdutiesimposedbytheChinesegovernment onimportedUSchickenproducts.

However,salescontributionfromtheinjectionformdrugssegmentdeclinedby 25.4% YoY to RMB7.2m in 3Q10 from RMB9.7m a year ago. This could be attributed to the absence of fresh impetus for domestic hog breeding. In fact, porkpriceswerefairlystablein3Q10afterthereboundinJuneandJuly,which was triggered by falling supply as a result of floods in southern China and the outbreakofanimalHFMdiseaseinGuangdongProvince.

Lookingahead,porkpricesarewidelyexpectedtoheadnorthagainin4Q10with theonsetoftheporksalesseasonaswinterbegins.Hogbreedingactivitiesare also likely to increase in the ensuing months as pig farmers scramble to raise output to cope with the higher demand for pork during the Chinese New Year festivitiesnextFebruary.

Figure8:Segmentalassumptions
Revenuemix(HK$m) Powderedformdrugs Injectionformdrugs Biologicaldrugs Total

2008 312.3 33.5 39.3 385.1

2009 343.9 34.2 60.1 438.3

2010F 408.3 30.2 136.6 575.1

2011F 457.3 33.1 300.0 790.4

2012F 507.5 36.0 370.1 913.6

Percentoftotalsales(%) Powderedformdrugs Injectionformdrugs Biologicaldrugs Total

81.1 8.7 10.2 100.0

78.5 7.8 13.7 100.0

71.0 5.3 23.7 100.0

57.9 4.2 37.9 100.0

55.6 3.9 40.5 100.0

Segmentalgrowth(%) Powderedformdrugs Injectionformdrugs Biologicaldrugs Total

21.4 90.8 n.m 40.2

10.1 2.3 53.1 13.8

18.7 11.7 127.2 31.2

12.0 9.4 119.6 37.4

11.0 8.7 23.4 15.6

Grossprofit(HK$m) Powderedformdrugs Injectionformdrugs Biologicaldrugs Total

241.4 18.8 27.3 287.5

267.6 20.3 44.4 332.3

317.3 18.4 101.1 436.8

355.8 20.5 225.0 601.3

395.4 22.6 281.3 699.3

GPM(%) Powderedformdrugs Injectionformdrugs Biologicaldrugs Overall

Source:Companydata

77.3 56.1 69.5 74.7

77.8 59.3 73.9 75.8

77.7 61.0 74.0 75.9

77.8 62.0 75.0 76.1

77.9 63.0 76.0 76.5

11

ChinaAnimalHealthcare

18November2010

Grossprofitmargintobesustainable
Overallgrossprofitmargininchedupby0.7pptto76.1%in9M10from75.4%a year ago. This was due to the switch to incorporate a higher proportion of powderedformdrugsandbiologicaldrugsinthesalesproductmix. PowderedformdrugsachievedaGPMof77.5%in9M10whichwascomparable tothe77.7%achievedlastyear.Asforbiologicaldrugs,theirGPMimprovedfrom 72.3% in 9M09 to 75.1% in 9M10, primarily due to the higher volume of mandatory vaccines for swine fever and PRRS sold to the provincial veterinary stations. According to management, the profit margins for these vaccines are comparativelyhigherthanforthenonmandatorycommonvaccines. Injectionformdrugs,whichgenerallycommandalowerGPMduetothepricier raw materials and packaging materials, constituted only 5.6% of total 9M10 revenue,comparedto8.0%lastyear.Intheabsenceofsignificantfluctuationsin theaveragesellingpricesandrawmaterialcostsin2010andthankstoahigher proportionofsalesmadeonthehigherendinjectionformdrugs,thiscategoryof drugssawGPMimprovedto61.7%in9M10,from58.8%ayearago.

FY10netprofithurtbyoneoffexpensesandamortisationcharges
Despite the impressive topline performance, we expect FY10 net profit to contractby20.2%YoYbecauseofoneoffexpensespertainingtoCAHsproposed dual listing in Hong Kong and share option expenses. We understand that such IPOexpensestypicallywouldamounttoaroundRMB3035m. CAHhasalreadybookedinlistingexpensesofaboutRMB18.4mYTDandthenon cash fair value charge of RMB19.2m for the 13.0m new shares issued to employeespursuanttoitsPerformanceShareScheme. Inaddition,thegroupwouldhavetoincurhigherfinancecostsgoingforwarddue totheliabilitycomponentoftheconvertiblebonds.AsatendSeptember2010, theamountstoodatRMB215.2m.Thisitemwillbeincludedundernoncurrent liabilitiesandaccountedforatamortisedcostusingeffectiveinterestmethod.

Boostforbalancesheetthroughtwoplacementexercisesin2009
CAHconductedtworoundsoffundraisingin2009andcollectedanaggregateof RMB184.4m in net proceeds. It completed a private placement of 130m new sharesatS$0.11pershareinMay2009,followedbyanotherprivateplacement of120mnewsharesatS$0.215pershareinOctober. Besidesfundingthetwomajoracquisitions,theplacementexerciseswerepartof thegroupsstrategicinitiativestoenhanceitsfinancialflexibilitytopursuenew opportunitiesinkeymarkets,especiallythevaccinesegment.

StrategicinvestmentbyBlackstone

InJulythisyear,Blackstone,oneoftheworldsleadinginvestmentandadvisory firms,announcedastrategicinvestmentinCAHbyBCP/CAHHoldings(Cayman) L.P., an investment holding entity formed and advised by a subsidiary of The BlackstoneGroup.

12

ChinaAnimalHealthcare

18November2010

Under the terms of the investment, Blackstone will subscribe for, and CAH will issue, US$40m in principal amount of convertible bonds at par and 20m new sharesattheissuepriceofS$0.35pershareforaconsiderationofS$7m. Thebondshaveamaturityperiodoffiveyearsandareconvertiblecommencing from1January2012.TheminimumconversionpriceissetatS$0.288butthisis adjustable, subject to CAHs dual listing in Hong Kong occurring within nine monthsoftheclosingdateofapplication. Since the dual listing is by way of introduction, the conversion price will be adjustedtothelowerofS$0.40or120%equivalentofthe30dayaverageclosing price of the shares prior to the dual listing. The only condition is that the conversion price shall not be lower than S$0.288. However, if CAH fails to completetheduallistingwithinninemonthsoftheclosingdate,theconversion pricewillbeadjustedtoS$0.40. We understand that the net proceeds of about US$43.7m from the Blackstone dealwillbeusedforworkingcapital,acquisitionswhenopportunitiesarise,and potentialsharebuybacks. Inourview,BlackstonesinvestmentisastrongendorsementofCAHslongterm growth prospects. Notably, this is theUS firms first investment in a Singapore listedcompany,whichspeaksvolumesaboutthegroupsmanagementteamand corporategovernance. To be sure, CAH has no immediate cash requirements. We believe it is simply building a war chest for future expansion. After all, the ongoing industry consolidationwillthrowupmanyM&Aopportunitiesthatitcancapitaliseon.

Valuationsandrecommendation
Growthprospectswarrantrerating
Increasingmeatconsumption,alongwithhigheranimaldrugpenetrationandthe strong likelihood of industry consolidation, is expected to keep Chinas animal drug sector growing from strength to strength. In short, this sector holds great promise. CAH, a leading player in the manufacturing and distribution of animal drugs, is wellpositioned to ride this rising trend. We initiate coverage with a BUY recommendation. Our target priceof $0.48/share,whichimplies35%upside,is basedonanundemanding15xFY11FPER,asteepdiscounttoitsoverseaslisted peers. AneartermcatalystforthestockwouldbeasuccessfulduallistingontheHong KongStockExchange.

13

ChinaAnimalHealthcare

18November2010

Figure9:Peercomparison
Company AgFeedIndustries Tongwei JiangxiZhengbang XinjiangTiankang Simpleavg Ticker FEEDUS 600438CH 002157CH 002100CH LocalPrice Mktcap ($) 2.50 9.76 18.11 21.90 25.99 0.355 (US$m) 128.4 6,710.2 4,879.0 4,965.6 10,136.1 829.7 434.6 FY09 10.0 45.8 75.5 47.4 44.8 44.7 15.9 PE(x) FY10 n.m 34.6 46.4 41.1 32.7 29.8 22.4 FY11 5.0 24.7 32.7 26.2 26.1 23.0 11.1 ROE (%) 7.8 12.8 13.4 14.3 19.0 13.5 17.4 P/B (x) 0.9 5.5 9.7 6.3 8.0 6.1 3.2 Divyield (%) 0.0 0.7 0.0 0.0 1.6 0.7 0.9

ChinaAnimalHusbandry 600195CH

ChinaAnimalHealthcare CALSP
Source:Bloomberg,KimEng

Keyrisks

Outbreakofavianfluorothercommunicablediseases
Shouldtherebeanoutbreakofavianfluorothercommunicablediseasesamong poultry and livestock, the farms may be required to suspend operations or to slaughter the poultry and livestock to prevent the disease from spreading. Farmers,too,mayontheirownaccordculltheirpoultryandlivestocktoreinin costs, especially if the costs of maintaining such poultry and livestock exceed anticipated profits. Consequently, the demand for and the sale of animal drugs willbeaffected,inturnweighingonCAHsfinancialperformance.

Changesingovernmentregulations
ThemanufactureandsaleofanimaldrugsinChinaisunderthesupervisionofthe MOA. The introduction and implementation of new laws, regulations and policies, as well as any amendments, may result in more stringent product standardsandspecificationsoradditionallicensingrequirementsforthebusiness operationsofthisindustry.Forinstance,theChinesegovernmenthasannounced newrulesonanimaldrugmanagement.Theyincludeproposalsforcategorisation intononprescriptionorprescriptiondrugs,aswellastoconductassessmentson drugs used by both humans and animals, and based on such assessments, to terminatetheuseofsomedrugs.

Fragmentedindustrywithfewsignificantplayers
CAHoperatesinahighlycompetitiveindustryinChina,whereprivatelyoperated enterprises which produce the same or similar animal drugs pose the greatest competition. We expect rivalry to intensify as industry consolidation gathers pace. CAHs success will depend on its ability to innovate and develop quality productsandservicesthatmeettheneedsofitsexistingandnewcustomers,as wellastomaintainandexpanditsextensivesalesandmarketingnetwork.

14

ChinaAnimalHealthcare

18November2010

Profitandloss
YEDec(RMBm) Sales Costofgoodssold Grossprofit Operatingexpenses Operatingprofit Netinterest Interestincome Interestexpense Netinvestmentincome/(loss) Netothernonop.JV+Assoc. Netextraordinaries Pretaxprofit Incometaxes Minorityinterests Netprofit EBITDA EPS(fen) 2008 385.1 97.6 287.5 117.5 170.0 0.6 2.0 1.4 0.0 0.0 0.0 170.6 27.8 4.5 138.3 176.6 10.7 2009 438.3 106.0 332.3 143.4 188.9 0.3 1.1 1.4 0.0 0.0 0.0 188.6 24.7 5.9 157.9 196.3 11.1 2010F 575.1 138.4 436.8 240.3 196.4 3.5 2.5 6.0 0.0 0.0 0.0 192.9 57.9 9.0 126.1 213.7 7.9 2011F 790.4 189.1 601.3 229.2 372.1 7.3 2.8 10.0 0.0 0.0 0.0 364.8 100.3 10.0 254.5 390.4 16.0 2012F 913.6 214.3 699.3 264.9 434.4 8.0 3.0 11.0 0.0 0.0 0.0 426.4 117.2 11.0 298.1 453.8 18.7

Cashflow
YEDec(RMBm) Operatingcashflow Operatingprofit Depreciation&amortisation Changeinworkingcapital Others Investmentcashflow Netcapex ChangeinLTinvestment Changeinotherassets Cashflowafterinvt. Financingcashflow Changeinsharecapital Netchangeindebt ChangeinotherLTliab. Netcashflow 2008 125.9 170.6 6.6 30.2 21.1 144.4 2.8 9.9 131.6 18.4 132.0 106.8 26.7 1.4 113.6 2009 165.4 188.6 7.4 7.2 23.4 69.2 7.8 0.0 61.4 96.2 79.2 184.4 6.4 98.8 175.4 2010F 152.1 192.9 17.3 0.2 57.9 310.9 5.0 305.9 0.0 158.8 222.3 34.3 19.7 207.7 63.5 2011F 277.9 364.8 18.4 5.0 100.3 30.0 30.0 0.0 0.0 247.9 25.2 0.0 0.0 25.2 222.7 2012F 325.1 426.4 19.4 3.4 117.2 50.0 50.0 0.0 0.0 275.1 50.9 0.0 0.0 50.9 224.2

Source:Companydata,KimEngestimates

Source:Companydata,KimEngestimates

Keyratios
YEDec Growth(%YoY) Sales Operatingprofit EBITDA Netprofit EPS Profitability(%) Grossmargin Operatingmargin EBITDAmargin Netmargin ROA ROE Stability Grossdebt/equity(%) Netdebt/equity(%) Int.coverage(X) Int.&STdebtcoverage(X) Cashflowint.coverage(X) Cashflowint.&STdebt(X) Currentratio(X) Quickratio(X) Netcash/(debt)(RMBm) Persharedata(fen) EPS CFPS BVPS SPS EBITDA/share DPS 2008 40.2 37.9 41.5 134.6 107.6 74.7 44.1 45.9 35.9 26.4 30.6 2.4 58.6 123.9 15.6 91.8 11.5 9.3 9.0 264.9 10.7 7.1 33.4 24.2 11.1 2.2 2009 13.8 11.1 11.1 14.2 4.6 75.8 43.1 44.8 36.0 19.1 25.8 3.6 54.9 134.0 6.8 117.3 6.0 13.9 13.7 423.5 11.1 11.0 48.2 27.5 12.3 0.0 2010F 31.2 4.0 8.9 20.2 28.9 75.9 34.2 37.2 21.9 8.0 13.8 25.1 23.7 32.7 3.9 25.4 3.0 4.1 3.9 249.6 7.9 4.0 55.3 36.1 13.4 1.6 2011F 37.4 89.4 82.7 101.9 101.9 76.1 47.1 49.4 32.2 13.9 21.7 20.5 36.5 37.2 7.4 27.8 5.6 5.3 5.2 472.2 16.0 14.0 69.7 49.7 24.5 3.2 2012F 15.6 16.7 16.2 17.1 17.1 76.5 47.5 49.7 32.6 14.2 20.9 17.1 44.9 39.5 8.7 29.6 6.5 6.6 6.4 696.4 18.7 14.1 85.2 57.4 28.5 3.7

Balancesheet
YEDec(RMBm) Totalassets Currentassets Cash&STinvestment Inventories Accountsreceivable Others Otherassets PPE Landuserights Intangibleassets Others Totalliabilities Currentliabilities Accountspayable STborrowings Others Longtermliabilities Convertiblebonds Deferredtaxation Others Shareholdersequity Paidincapital Reserve Minorityinterests 2008 523.4 444.1 275.8 13.5 13.2 141.6 79.2 52.8 11.5 14.9 0.0 71.1 48.0 27.3 10.9 9.7 23.2 0.0 0.0 23.2 452.2 54.2 382.8 15.2 2009 825.4 745.7 451.2 8.0 20.7 265.8 79.7 56.5 11.3 11.9 0.0 53.7 53.7 18.9 27.7 7.1 0.0 0.0 0.0 0.0 771.7 76.2 674.4 21.1 2010F 1,581.7 566.8 514.8 14.4 31.6 6.0 1,014.9 188.8 19.2 805.8 1.1 526.5 139.9 36.0 50.0 7.1 386.6 215.2 171.4 0.0 1,055.1 79.1 800.4 175.6 2011F 1,833.2 806.7 737.4 19.8 43.5 6.0 1,026.5 210.8 18.9 795.8 1.1 538.8 152.1 48.2 50.0 7.1 386.6 215.2 171.4 0.0 1,294.4 79.1 1,029.7 185.6 2012F 2,097.8 1,040.7 961.6 22.8 50.2 6.0 1,057.1 251.8 18.5 785.8 1.1 545.2 158.6 54.6 50.0 7.1 386.6 215.2 171.4 0.0 1,552.6 79.1 1,276.9 196.6

Source:Companydata,KimEngestimates

Source:Companydata,KimEngestimates

15

ANALYSTSCOVERAGE/RESEARCHOFFICES
SINGAPORE
StephanieWONGHeadofResearch RegionalHeadofInstitutionalResearch +6564321451swong@kimeng.com Strategy Small&MidCaps GregoryYAP +6564321450gyap@kimeng.com Conglomerates Technology&Manufacturing Transport&Telcos RohanSUPPIAH +6564321455rohan@kimeng.com Airlines Marine&Offshore WilsonLIEW +6564321454wilsonliew@kimeng.com Hotel&Resort Property&Construction AnniKUM +6564321470annikum@kimeng.com Conglomerates REITs JamesKOH +6564321431jameskoh@kimeng.com Finance&Banking Logistics Resources EricONG +6564321857ericong@kimeng.com Marine&Offshore Energy OOIYiTung +6564335712ooiyitung@kimeng.com Property&Construction YEAKCheeKeong,CFA +6564335730yeakcheekeong@kimeng.com Retail&Consumer Engineering Infrastructure DavidLOOMIS +6564321417dloomis@kimeng.com SpecialSituations

MALAYSIA
YEWCheeYoonHeadofResearch +60321411555cheeyoon@kimengkl.com Strategy Banks Telcos Property Conglomerates&others LIEWMeeKien +60321411555meekien@kimengkl.com Gaming Media Power Construction ResearchTeam +60321411555 Food&Beverage Manufacturing Plantations Tobacco Technology

PHILIPPINES
RicardoPUIGHeadofResearch +6328498835ricardo_puig@atr.com.ph Strategy Property Telcos LauraDYLIACCO +6328498840laura_dyliacco@atr.com.ph Utilities Conglomerates LovellSARREAL +6328498841lovell_sarreal@atr.com.ph Consumer Media KennethNERECINA +6328498839kenneth_nerecina@atr.com.ph Conglomerates Cement Ports/Logistics KatherineTAN +6328498843kat_tan@atr.com.ph Banks Construction

INDONESIA
KatarinaSETIAWANHeadofResearch +622125571125ksetiawan@kimeng.co.id Consumer Infra Shipping Strategy Telcos Others RicardoSILAEN +622125571126rsilaen@kimeng.co.id Auto Energy HeavyEquipment Property Resources RahmiMARINA +622125571128rmarina@kimeng.co.id Banking LuckyARIESANDI,CFA +622125571127lariesandi@kimeng.co.id Cement Construction Pharmaceutical Retail AdiN.WICAKSONO +622125571130anwicaksono@kimeng.co.id Generalist ArwaniPRANADJAYA +622125571129apranadjaya@kimeng.co.id Technicalanalyst

REGIONAL
LuzLORENZOEconomist +6328498836luz_lorenzo@atr.com.ph Economics ONGSengYeow +6564321832ongsengyeow@kimeng.com RegionalProducts&Planning

TAIWAN
GaryChia HeadofGreaterChinaResearch +886235187900gary.chia@yuanta.com BorisMarkovich COO,GreaterChinaResearch +85239699518boris.markovic@yuanta.com JohnBrebeck,CFA HeadofTaiwanStrategy HeadofResearch,Taiwan +886235187906john.brebeck@yuanta.com GeorgeChang,CFA HeadofUpstreamTech +886235187907george.chang@yuanta.com VincentChen HeadofDownstreamTech +886235187903vincent.chen@yuanta.com DennisChanNBSupplyChain +886235187913dennis.chan@yuanta.com AndrewCChenICBackend +886235187940andrew.chen@yuanta.com EllenChiuTaiwanConsumer +886235187936ellen.chiu@yuanta.com DannyHoTaiwanPetrochemical +886235187923danny.ho@yuanta.com MinLiAlternativeEnergy +85239699521min.li@yuanta.com MayLinTaiwanTelecom +886235187942may.lin@yuanta.com TessWangTaiwanFinancials +886235187901tess.wang@yuanta.com

HONGKONG/CHINA
EdwardFUNGHeadofResearch +85222680632edwardfung@kimeng.com.hk Power Construction NormanZHANG +85222680631normanzhang@kimeng.com.hk Technology Midcaps IvanCHEUNG +85222680634ivancheung@kimeng.com.hk Property Industrial IvanLI +85222680641ivanli@kimeng.com.hk Banking&Finance JacquelineKO +85222680633jacquelineko@kimeng.com.hk ConsumerStaples RobertWANG +85222680630robertwang@kimeng.com.hk Auto AndyPOON +85222680645andypoon@kimeng.com.hk Telecom&relatedservices

VIETNAM
NguyenThiNganTuyen +84838386636x163tuyen.nguyen@kimeng.com.vn Pharmaceutical ConfectionaryandBeverage OilandGas NgoBichVan +84838386636x164van.ngo@kimeng.com.vn Bank Insurance NguyenQuangDuy +84838386636x162duy.nguyenquang@kimeng.com.vn Shipping Seafood Rubber TrinhThiNgocDiep +84838386636x166diep.trinh@kimeng.com.vn Property Construction

INDIA
JigarSHAHHeadofResearch +912266232601jshah@kimeng.com Oil&Gas Transportation AnubhavGUPTA +912266232605agupta@kimeng.com Property Capitalgoods RohitLEDWANI +912266232625rohit@kimeng.co.in BankingandFinancialservices NikhilAGARWAL +912266232611nikhil@kimeng.co.in Cement Metals HaripreetBATRA +912266232606haripreet@imeng.co.in Software Education GaneshRAM +912266232607ganeshram@kimeng.co.in Telecom Media

THAILAND
KanchanKHANIJOU +6626586300x4750kanchan@kimeng.co.th Banks ConstructionMaterials NathavutSHIVARUCHIWONG +6626586300x4730nathavut@kimeng.co.th Property Shipping

Recommendationdefinitions Ourrecommendationisbasedonthe followingexpectedprice performancewithin12months:

+15%andabove:BUY 15%to+15%:HOLD 15%orworse:SELL

16

ChinaAnimalHealthcare

18November2010

APPENDIXI:TERMSFORPROVISIONOFREPORT,DISCLOSURES AND DISCLAIMERS Thisreport,andanyelectronicaccesstoit,isrestrictedtoandintendedonlyforclientsofKimEngResearchPte.Ltd.("KER")ora relatedentitytoKER(asthecasemaybe)whoareinstitutionalinvestors(forthepurposesofboththeSingaporeSecuritiesand FuturesAct(SFA)andtheSingaporeFinancialAdvisersAct(FAA))andwhoareallowedaccessthereto(eachan"Authorised Person")andissubjecttothetermsanddisclaimersbelow. IFYOUARENOTANAUTHORISEDPERSONORDONOTAGREETOBEBOUNDBYTHETERMSANDDISCLAIMERSSETOUTBELOW, YOUSHOULDDISREGARDTHISREPORTINITSENTIRETYANDLETKERORITSRELATEDENTITY(ASRELEVANT)KNOWTHATYOUNO LONGERWISHTORECEIVESUCHREPORTS. Thisreportprovidesinformationandopinionsasreferenceresourceonly.Thisreportisnotintendedtobeanddoesnotconstitute financialadvice,investmentadvice,tradingadviceoranyotheradvice.Itisnottobeconstruedasasolicitationoranoffertobuy orsellanysecuritiesorrelatedfinancialproducts.Theinformationandcommentariesarealsonotmeanttobeendorsementsor offeringsofanysecurities,options,stocksorotherinvestmentvehicles. Thereporthasbeenpreparedwithoutregardtotheindividualfinancialcircumstances,needsorobjectivesofpersonswhoreceive it.Thesecuritiesdiscussedinthisreportmaynotbesuitableforallinvestors.Readersshouldnotrelyonanyoftheinformation hereinasauthoritativeorsubstitutefortheexerciseoftheirownskillandjudgmentinmakinganyinvestmentorotherdecision. Readersshouldindependentlyevaluateparticularinvestmentsandstrategies,andareencouragedtoseektheadviceofafinancial adviserbeforemakinganyinvestmentorenteringintoanytransactioninrelationtothesecuritiesmentionedinthisreport.The appropriatenessofanyparticularinvestmentorstrategywhetheropinedonorreferredtointhisreportorotherwisewilldepend onaninvestorsindividualcircumstancesandobjectivesandshouldbeconfirmedbysuchinvestorwithhisadvisersindependently beforeadoptionorimplementation(eitherasisorvaried).Youagreethatanyandalluseofthisreportwhichyoumake,issolelyat your own risk and without any recourse whatsoever to KER, its related and affiliate companies and/or their employees. You understandthatyouareusingthisreportATYOUROWNRISK. This report is being disseminated to or allowed access by Authorised Persons in their respective jurisdictions by the Kim Eng affiliatedentity/entitiesoperatingandcarryingonbusinessasasecuritiesdealerorfinancialadviserinthatjurisdiction(collectively orindividually,asthecontextrequires,"KimEng")whichhas,visvisarelevantAuthorisedPerson,approvedof,andissolely responsibleinthatjurisdictionfor,thecontentsofthispublicationinthatjurisdiction. KimEng,itsrelatedandaffiliatecompaniesand/ortheiremployeesmayhaveinvestmentsinsecuritiesorderivativesofsecurities ofcompaniesmentionedinthisreport,andmaytradetheminwaysdifferentfromthosediscussedinthisreport.Derivativesmay beissuedbyKimEngitsrelatedcompaniesorassociated/affiliatedpersons. KimEnganditsrelatedandaffiliatedcompaniesareinvolvedinmanybusinessesthatmayrelatetocompaniesmentionedinthis report. These businesses include market making and specialised trading, risk arbitrage and other proprietary trading, fund management,investmentservicesandcorporatefinance. Exceptwithrespectthedisclosuresofinterestmadeabove,thisreportisbasedonpublicinformation.KimEngmakesreasonable effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. The reader should also note that unless otherwise stated, none of Kim Eng or any thirdparty data providers make ANY warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liabilityforanydamagesofanykindrelatingtosuchdata. ProprietaryRightstoContent.Thereaderacknowledgesandagreesthatthisreportcontainsinformation,photographs,graphics, text,images,logos,icons,typefaces,and/orothermaterial(collectivelyContent)protectedbycopyrights,trademarks,orother proprietaryrights,andthattheserightsarevalidandprotectedinallforms,media,andtechnologiesexistingnoworhereinafter developed. The Content is the property of Kim Eng or that of third party providers of content or licensors. The compilation (meaning the collection, arrangement, and assembly) of all content on this report is the exclusive property of Kim Eng and is protected by Singapore and international copyright laws. The reader may not copy, modify, remove, delete, augment, add to, publish, transmit, participate in the transfer, license or sale of, create derivative works from, or in any way exploit any of the Content,inwholeorinpart,exceptasspecificallypermittedherein.Ifnospecificrestrictionsarestated,thereadermaymakeone copyofselectportionsoftheContent,providedthatthecopyismadeonlyforpersonal,information,andnoncommercialuseand thatthereaderdoesnotalterormodifytheContentinanyway,andmaintainanynoticescontainedintheContent,suchasall copyright notices, trademark legends, or other proprietary rights notices. Except as provided in the preceding sentence or as permittedbythefairdealingprivilegeundercopyrightlaws,thereadermaynotreproduce,ordistributeinanywayanyContent without obtaining permission of the owner of the copyright, trademark or other proprietary right. Any authorised/permitted distribution is restricted to such distribution not being in violation of the copyright of Kim Eng only and does not in any way representanendorsementofthecontentspermittedorauthorisedtobedistributedtothirdparties.

17

ChinaAnimalHealthcare

18November2010

Additionalinformationonmentionedsecuritiesisavailableonrequest. JurisdictionSpecificAdditionalDisclaimers: THISRESEARCHREPORTISSTRICTLYCONFIDENTIALTOTHERECIPIENT,MAYNOTBEDISTRIBUTEDTOTHEPRESSOROTHERMEDIA, AND MAY NOT BE REPRODUCED IN ANY FORM AND MAY NOT BE TAKEN OR TRANSMITTED INTO THE REPUBLIC OF KOREA, OR PROVIDED OR TRANSMITTED TO ANY KOREAN PERSON. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF SECURITIES LAWS IN THE REPUBLIC OF KOREA. BY ACCEPTING THIS REPORT, YOU AGREE TO BE BOUND BY THE FOREGOINGLIMITATIONS. THISRESEARCHREPORTISSTRICTLYCONFIDENTIALTOTHERECIPIENT,MAYNOTBEDISTRIBUTEDTOTHEPRESSOROTHERMEDIA, AND MAY NOT BE REPRODUCED IN ANY FORM AND MAY NOT BE TAKEN OR TRANSMITTED INTO MALAYSIA OR PROVIDED OR TRANSMITTED TO ANY MALAYSIAN PERSON. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF SECURITIESLAWSINMALAYSIA.BYACCEPTINGTHISREPORT,YOUAGREETOBEBOUNDBYTHEFOREGOINGLIMITATIONS. Withoutprejudicetotheforegoing,thereaderistonotethatadditionaldisclaimers,warningsorqualificationsmayapplyifthe readerisreceivingoraccessingthisreportinorfromotherthanSingapore. Asof18November2010,KimEngResearchPte.Ltd.andthecoveringanalystdonothaveanyinterestinChinaAnimalHealthcare. AnalystCertification: The views expressed in this research report accurately reflect the analyst's personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specificrecommendationsorviewsexpressedinthereport. 2010 Kim Eng Research Pte Ltd. All rights reserved. Except as specifically permitted, no part of this presentation may be reproducedordistributedinanymannerwithoutthepriorwrittenpermissionofKimEngResearchPte.Ltd.KimEngResearchPte. Ltd.acceptsnoliabilitywhatsoeverfortheactionsofthirdpartiesinthisrespect.

18


Singapore
KimEngSecuritiesPteLtd KimEngResearchPteLtd 9TemasekBoulevard #3900SuntecTower2 Singapore038989 Tel:+6563369090 Fax:+6563396003 LAUWaiKwok(sales) lauwk@kimeng.com StephanieWONG(research) swong@kimeng.com

London
KimEngSecurities(London)Ltd 6/F,20St.DunstansHill LondonEC3R8HY,UK Tel:+442076219298 DealersTel:+442076262828 Fax:+442072836674 GilesWALSH(sales) gwalsh@kimeng.co.uk GeoffHO(sales) gho@kimeng.co.uk JamesJOHNSTONE(sales) jjohnstone@kimeng.co.uk

NewYork
KimEngSecuritiesUSAInc th 406,East50 Street NewYork,NY10022,U.S.A. Tel:+12126888886 Fax:+12126883500 ThanhCNGUYEN(sales&trading) tnguyen@kesusa.com

Taiwan
YuantaSecuritiesInvestment ConsultingCo. 10/F,No225,NankingEastRd Section3 Taipei104,Taiwan Tel:+886287706078 Fax:+886225460376 ArthurLO(sales) Arthur.lo@yuanta.com.tw GaryCHIA(research) Gary.chia@yuanta.com.tw

HongKong
KimEngSecurities(HK)Ltd Level30, ThreePacificPlace, 1QueensRoadEast, HongKong Tel:+85222680800 Fax:+85228770104 RayLUK(sales) rluk@kimeng.com.hk EdwardFUNG(research) edwardfung@kimeng.com.hk

Thailand
KimEngSecurities(Thailand) PublicCompanyLimited 999/9TheOfficesatCentralWorld, th st 20 21 Floor, Rama1Road,Pathumwan, Bangkok10330,Thailand Tel:+6626586817(sales) Tel:+6626586801(research) VikasKAWATRA(sales) vkawatra@kimeng.co.th

Indonesia
PTKimEngSecurities PlazaBapindo th CitibankTower17 Floor JlJend.SudirmanKav.5455 Jakarta12190,Indonesia Tel:+622125571188 Fax:+622125571189 KurniaSALIM(sales) ksalim@kimeng.co.id KatarinaSETIAWAN(research) ksetiawan@kimeng.co.id

Malaysia
KimEngResearchSdnBhd 16/F,KompleksAntarabangsa JalanSultanIsmail 50250KualaLumpur,Malaysia Tel:+60321411555 Fax:+60321411045 YEWCheeYoon(research) cheeyoon@kimengkl.com

Philippines
ATRKimEngSecuritiesInc. 17/F,TowerOne&ExchangePlaza AyalaTriangle,AyalaAvenue MakatiCity,Philippines1200 Tel:+6328498888 Fax:+6328485738 LorenzoROXAS(sales) lorenzo_roxas@atr.com.ph RicardoPUIG(research) ricardo_puig@atr.com.ph

Vietnam
KimEngVietnamSecuritiesJointStock Company 1stFloor,255TranHungDaoSt. District1 HoChiMinhCity,Vietnam Tel:+84838386636 Fax:+84838386639 MaiPhanLamHoa(sales) Hoa.maiphan@kimeng.com.vn

India
KimEngSecuritiesIndiaPvtLtd 2ndFloor,TheInternational, PlotNo.16,MaharishiKarveRoad, ChurchgateStation, MumbaiCity400020,India Tel:+91.22.6623.2600 Fax:+91.22.6623.2604 VikasKAWATRA(sales) vkawatra@kimeng.co.th JigarSHAH(research) jigar@kimeng.co.in

SouthAsiaSalesTrading
ConnieTAN connie@kimeng.com Tel:+6563335775 USTollFree:+18664067447

NorthAsiaSalesTrading
EddieLAU eddielau@kimeng.com.hk Tel:+85222680800 USTollFree:+18665982267

NorthAmericanSalesTrading
(NightDesk) BrianLEE blee@kesusa.com Tel:+12126888886

StephanieWong CEO,KimEngResearch

SingaporeEquityResearchOurreportsareavailableatBloomberg,Thomson&Reuterswww.kimengresearch.com.sg