Bangkok Expressway
Bangkok Expressway Outperform (15E TP Bt44.00)
Company Update
Close Bt39.50
Transport & Logistics April 16, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Amalgamation process underway
FY15
FY16
Consensus EPS (Bt)
3.716
3.912
KT ZMICO vs. consensus Share data
‐0.2%
‐0.6%
Reuters / Bloomberg
BECL.BK/BECL TB
Paid‐up Shares (m)
770.00
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
30.00/938.00
Foreign limit / actual (%)
49.00/26.80
52 week High / Low (Bt)
47.25/33.00
Avg. daily T/O (shares 000) NVDR (%)
2,036.00 9.44
Estimated free float (%)
68.63
Beta
0.49
URL
www.becl.co.th
CGR
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Waiting for significant catalysts in the short term We expect that the share price at Bt38 could be a cushion for BECL in the short term as this is the price at which CK and its partner will purchase shares from shareholders who oppose the merging deal. After the merger, BECL’s catalysts will come from the progress of new mass transit lines (especially Blue and Orange lines) and expressway projects, which will take time to implement. Based on the swap ratio, the share prices of both companies are likely to trade at a correlation of 20.58 BMCL shares to 1 BECL share until the new Merged Co. is set up. Traffic volume expanded 5.0% YoY in Mar‐15, +6.9% YoY in 1Q15 BECL reported traffic volume of 1.176mn trips/day in Mar‐15, increasing by 5.0% YoY. For 1Q15, BECL’s traffic volume grew by 6.9% YoY to 1.153mn trips/day. Traffic volume growth in Mar‐15 was seen on every section, especially Sector D (+10.7% YoY in Mar15, +14.5% YoY in 1Q15), owing to event activities (such as the Motor Show at Impact Challenger Hall) and the turnaround of tourist numbers. We maintain our traffic volume growth assumption of +5.4% in 2015E. Expect normalized profit to increase by 18% YoY and 18% QoQ in 1Q15E We expect BECL to report net profit of Bt818mn in 1Q15E, increasing by 18% YoY but declining by 24% QoQ. Stripping out the extra item of Bt387mn that the company booked in 4Q14 owing to gains from investment sales, normalized profit is expected to still increase by 18% QoQ. After the change in the accounting policy of investment in CKP and TTW to recording only dividend income (vs. profit sharing previously), BECL’s earnings are expected to be volatile (on a quarterly basis) once CKP and TTW pay interim dividends. Shareholders approved the amalgamation with BMCL In a resolution at the AGM, shareholders approved the amalgamation between BECL and BMCL. Meanwhile, CK and its partner (Hicrete Product & Technology Co., Ltd.) will purchase shares from the dissenting shareholders at Bt38/share. BECL previously expected the new Merged Co. to finally be set up in Aug‐15. We roughly calculate that after the merger, BECL’s earnings in 2016E will have to be revised down by around 17% owing to the realization of a net loss from BMCL. Financial and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2012 7,732 2,261 2.94 1,488 1.93 16.32 1.50 27.33 2012 20.44 8.98 1.45 3.80 7.60 75.10
2013 8,040 5,147 6.68 2,112 2.74 41.89 1.60 23.36 2013 14.40 8.54 1.69 4.05 10.81 100.17
2014 8,485 3,206 4.16 2,776 3.61 31.48 2.50 28.01 2014 10.96 8.24 1.41 6.33 14.01 94.40
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2015E 8,959 2,854 3.71 2,854 3.71 2.79 1.86 29.85 2015E 10.66 8.85 1.32 4.72 12.75 111.64
2016E 9,448 2,999 3.89 2,999 3.89 5.10 1.97 31.78 2016E 10.14 8.62 1.24 4.98 12.56 109.61
Waiting for significant catalysts in the short term BECL’s shareholders finally approved the amalgamation with BMCL. Meanwhile, CK and its partner will purchase shares from the opposing shareholders at Bt38/share, which could be a cushion for BECL’s share price in the short term. After the merger, BECL’s catalysts will come from the progress of new mass transit lines (especially the Blue and Orange lines) and expressway projects, which will take time to implement. We maintain our “Outperform” rating and the SOTP‐based TP of Bt44 for BECL (vs. Bt37‐40 from the financial advisor). Meanwhile, based on the swap ratio, the share prices of both companies are likely to trade at a correlation of 20.58 BMCL shares to 1 BECL share until the new Merged Co. is set up. Figure 1: Summary of sum‐of‐the‐parts (SOTP) valuation for BECL Company
BECL’s
Valuation Method
Value to BECL
stake (%) Toll road business BECL’s investment - BMCL* - CKP - TTW
(Bt)
10.00 19.98 19.97
SOTP‐based TP
DCF, WACC 7% Bt1.79 KT ZMICO’s TP estimate of Bt21.00 KT ZMICO’s TP estimate of Bt12.60
20.6 4.8 6.0 13.0
44.4
Source: KT ZMICO Research Note: * According to the merging deal, BECL will sell BMCL share at the price of Bt1.79 to CK
Figure 2: Implied share price (Bt) based on swap ratio 38.00 1.85
BECL BMCL
39.00 1.89
40.00 1.94
41.00 1.99
42.00 2.04
43.00 2.09
44.00 2.14
45.00 2.19
Source: KT ZMICO Research
Traffic volume expanded 5.0% YoY in Mar‐15, +6.9% YoY in 1Q15 BECL reported traffic volume of 1.176mn trips/day in Mar‐15, increasing by 5.0% YoY, decelerating compared to +8.1% YoY in Feb‐15, partly from the low base impact. For 1Q15, BECL’s traffic volume grew by 6.9% YoY to 1.153mn trips/day. Traffic volume growth in Mar‐15 was seen on every section, especially Sector D (+10.7% YoY in Mar15, +14.5% YoY in 1Q15), owing to event activities (such as the Motor Show at Impact Challenger Hall) and the turnaround of tourist numbers. We maintain our traffic volume growth assumption of +5.4% in 2015E. Figure 3: BECL’s traffic volume growth trend (% YoY) Apr‐14 May‐14 Jun‐14 Jul‐14 Aug‐14 Sep‐14 Oct‐14 Nov‐14 Dec‐14 Jan‐15 Feb‐15 Mar‐15
FES (0.3) (4.4) (2.4) (1.0) (1.3) 2.7 2.3 2.8 6.0 8.0 9.5 5.6
SectorA (0.9) (3.9) (2.5) (0.6) (1.1) 2.4 1.5 3.1 7.9 5.8 6.1 2.9
SectorB (5.7) (7.8) (2.9) (3.3) (4.1) 0.9 0.8 5.9 12.6 3.6 0.2 2.1
Urban (2.4) (5.1) (2.6) (1.5) (2.0) 1.9 1.3 4.0 9.4 5.1 4.1 2.6
SectorC 4.4 2.4 1.5 2.3 2.4 4.9 4.6 4.9 9.8 4.3 5.1 2.3
SectorD 0.8 (1.3) (0.2) 2.0 2.0 6.8 7.4 8.9 16.5 16.8 16.8 10.7
Total BECL 0.0 (3.0) (1.5) (0.1) (0.4) 3.5 3.2 4.5 9.3 7.8 8.1 4.9
NECL 3.9 4.4 (2.6) (1.8) 3.1 2.7 3.7 4.1 11.8 6.5 7.5 6.7
Source: BECL REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
BECL+NECL 0.2 (2.5) (1.5) (0.2) (0.2) 3.4 3.2 4.5 9.5 7.7 8.1 5.0
Expect normalized profit to increase by 18% YoY and 18% QoQ in 1Q15E Based on the traffic volume statistics as mentioned above, we estimate BECL to record toll revenue of Bt2.2bn in 1Q15E, increasing by 7.3% YoY but declining slightly by 1% QoQ. Meanwhile, we expect BECL to report net profit of Bt818mn in 1Q15E, increasing by 18% YoY but declining by 24% QoQ. Stripping out the extra item of Bt387mn that the company booked in 4Q14 owing to gains from investment sales (reduced stake in CKP and TTW), normalized profit is expected to still increase by 18% QoQ. The major reason for the strong earnings growth is the realization of dividend income (paid for 2H14) from CKP and TTW of Bt296mn (booked in other income) after the change in the accounting policy of investment in CKP and TTW to recording only dividend income (vs. profit sharing previously). BECL’s earnings are expected to be volatile (on a quarterly basis) once CKP and TTW pay interim dividends. Figure 4: Earnings Preview Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit SG&A expenses EBITDA Interest expenses Other income Income tax Other extra items Gn (Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%)
1Q14 2,045 1,241 (398) 1,503 (169) 45 (143) ‐ 134 695 695 0.90
4Q14 2,227 1,358 (495) 1,583 (161) 4 (151) 387 153 1,080 692 1.40
1Q15E 2,195 1,335 (428) 1,611 (162) 296 (208) ‐ ‐ 818 818 1.06
% YoY 7.3 7.5 7.6 7.2 (4.3) 560.3 45.8 n.m. n.m. 17.7 17.7 17.7
% QoQ (1.4) (1.8) (13.6) 1.8 0.9 n.m. 38.1 n.m. n.m. (24.2) 18.2 (24.2)
2015E 8,947 5,443 (1,924) 6,458 (601) 720 (728) ‐ ‐ 2,854 2,854 3.71
60.7 73.5 34.0 0.7 5.0 1.3 24.0 15.3
61.0 71.1 31.1 0.4 5.4 1.1 28.0 13.2
60.8 73.4 37.3
60.8 72.2 31.9 0.3 5.9 1.3 29.9 12.8
% YoY 5.4 5.5 10.2 4.9 (10.4) 442.0 23.3 (100.0) (100.0) (11.0) 2.8 (11.0)
% of 2015E 24.5 24.5 22.2 25.0 27.0 41.1 28.6 ‐ ‐ 28.7 28.7 28.7
Source: BECL, KT ZMICO Research
Shareholders approved the amalgamation with BMCL In a resolution at the Annual General Meeting on April 2, 2015, shareholders approved the amalgamation between BECL and BMCL, with 16.51% (93.601mn votes) of the shareholders in the meeting opposing the merger. CK and its partner (Hicrete Product & Technology Co., Ltd.) will purchase shares from the dissenting shareholders at Bt38/share (closing share price before the AGM); CK will purchase not over 38.5mn shares and the rest will be allocated to the partner. After this, BECL will propose the shareholders meeting result to bankers, bondholders, concessionaires (both BMCL and BECL) and other parties related to the deal. The company previously expected the new Merged Co. to finally be set up in Aug‐15. We are in the process of revising the earnings projections for the new Merged Co., but roughly calculate that BECL’s earnings in 2016E will have to be revised down by around 17% after realization of a net loss from BMCL.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS
STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
Company Update
Close Bt39.50
Transport & Logistics April 16, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Amalgamation process underway
FY15
FY16
Consensus EPS (Bt)
3.716
3.912
KT ZMICO vs. consensus Share data
‐0.2%
‐0.6%
Reuters / Bloomberg
BECL.BK/BECL TB
Paid‐up Shares (m)
770.00
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
30.00/938.00
Foreign limit / actual (%)
49.00/26.80
52 week High / Low (Bt)
47.25/33.00
Avg. daily T/O (shares 000) NVDR (%)
2,036.00 9.44
Estimated free float (%)
68.63
Beta
0.49
URL
www.becl.co.th
CGR
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Waiting for significant catalysts in the short term We expect that the share price at Bt38 could be a cushion for BECL in the short term as this is the price at which CK and its partner will purchase shares from shareholders who oppose the merging deal. After the merger, BECL’s catalysts will come from the progress of new mass transit lines (especially Blue and Orange lines) and expressway projects, which will take time to implement. Based on the swap ratio, the share prices of both companies are likely to trade at a correlation of 20.58 BMCL shares to 1 BECL share until the new Merged Co. is set up. Traffic volume expanded 5.0% YoY in Mar‐15, +6.9% YoY in 1Q15 BECL reported traffic volume of 1.176mn trips/day in Mar‐15, increasing by 5.0% YoY. For 1Q15, BECL’s traffic volume grew by 6.9% YoY to 1.153mn trips/day. Traffic volume growth in Mar‐15 was seen on every section, especially Sector D (+10.7% YoY in Mar15, +14.5% YoY in 1Q15), owing to event activities (such as the Motor Show at Impact Challenger Hall) and the turnaround of tourist numbers. We maintain our traffic volume growth assumption of +5.4% in 2015E. Expect normalized profit to increase by 18% YoY and 18% QoQ in 1Q15E We expect BECL to report net profit of Bt818mn in 1Q15E, increasing by 18% YoY but declining by 24% QoQ. Stripping out the extra item of Bt387mn that the company booked in 4Q14 owing to gains from investment sales, normalized profit is expected to still increase by 18% QoQ. After the change in the accounting policy of investment in CKP and TTW to recording only dividend income (vs. profit sharing previously), BECL’s earnings are expected to be volatile (on a quarterly basis) once CKP and TTW pay interim dividends. Shareholders approved the amalgamation with BMCL In a resolution at the AGM, shareholders approved the amalgamation between BECL and BMCL. Meanwhile, CK and its partner (Hicrete Product & Technology Co., Ltd.) will purchase shares from the dissenting shareholders at Bt38/share. BECL previously expected the new Merged Co. to finally be set up in Aug‐15. We roughly calculate that after the merger, BECL’s earnings in 2016E will have to be revised down by around 17% owing to the realization of a net loss from BMCL. Financial and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2012 7,732 2,261 2.94 1,488 1.93 16.32 1.50 27.33 2012 20.44 8.98 1.45 3.80 7.60 75.10
2013 8,040 5,147 6.68 2,112 2.74 41.89 1.60 23.36 2013 14.40 8.54 1.69 4.05 10.81 100.17
2014 8,485 3,206 4.16 2,776 3.61 31.48 2.50 28.01 2014 10.96 8.24 1.41 6.33 14.01 94.40
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2015E 8,959 2,854 3.71 2,854 3.71 2.79 1.86 29.85 2015E 10.66 8.85 1.32 4.72 12.75 111.64
2016E 9,448 2,999 3.89 2,999 3.89 5.10 1.97 31.78 2016E 10.14 8.62 1.24 4.98 12.56 109.61
Waiting for significant catalysts in the short term BECL’s shareholders finally approved the amalgamation with BMCL. Meanwhile, CK and its partner will purchase shares from the opposing shareholders at Bt38/share, which could be a cushion for BECL’s share price in the short term. After the merger, BECL’s catalysts will come from the progress of new mass transit lines (especially the Blue and Orange lines) and expressway projects, which will take time to implement. We maintain our “Outperform” rating and the SOTP‐based TP of Bt44 for BECL (vs. Bt37‐40 from the financial advisor). Meanwhile, based on the swap ratio, the share prices of both companies are likely to trade at a correlation of 20.58 BMCL shares to 1 BECL share until the new Merged Co. is set up. Figure 1: Summary of sum‐of‐the‐parts (SOTP) valuation for BECL Company
BECL’s
Valuation Method
Value to BECL
stake (%) Toll road business BECL’s investment - BMCL* - CKP - TTW
(Bt)
10.00 19.98 19.97
SOTP‐based TP
DCF, WACC 7% Bt1.79 KT ZMICO’s TP estimate of Bt21.00 KT ZMICO’s TP estimate of Bt12.60
20.6 4.8 6.0 13.0
44.4
Source: KT ZMICO Research Note: * According to the merging deal, BECL will sell BMCL share at the price of Bt1.79 to CK
Figure 2: Implied share price (Bt) based on swap ratio 38.00 1.85
BECL BMCL
39.00 1.89
40.00 1.94
41.00 1.99
42.00 2.04
43.00 2.09
44.00 2.14
45.00 2.19
Source: KT ZMICO Research
Traffic volume expanded 5.0% YoY in Mar‐15, +6.9% YoY in 1Q15 BECL reported traffic volume of 1.176mn trips/day in Mar‐15, increasing by 5.0% YoY, decelerating compared to +8.1% YoY in Feb‐15, partly from the low base impact. For 1Q15, BECL’s traffic volume grew by 6.9% YoY to 1.153mn trips/day. Traffic volume growth in Mar‐15 was seen on every section, especially Sector D (+10.7% YoY in Mar15, +14.5% YoY in 1Q15), owing to event activities (such as the Motor Show at Impact Challenger Hall) and the turnaround of tourist numbers. We maintain our traffic volume growth assumption of +5.4% in 2015E. Figure 3: BECL’s traffic volume growth trend (% YoY) Apr‐14 May‐14 Jun‐14 Jul‐14 Aug‐14 Sep‐14 Oct‐14 Nov‐14 Dec‐14 Jan‐15 Feb‐15 Mar‐15
FES (0.3) (4.4) (2.4) (1.0) (1.3) 2.7 2.3 2.8 6.0 8.0 9.5 5.6
SectorA (0.9) (3.9) (2.5) (0.6) (1.1) 2.4 1.5 3.1 7.9 5.8 6.1 2.9
SectorB (5.7) (7.8) (2.9) (3.3) (4.1) 0.9 0.8 5.9 12.6 3.6 0.2 2.1
Urban (2.4) (5.1) (2.6) (1.5) (2.0) 1.9 1.3 4.0 9.4 5.1 4.1 2.6
SectorC 4.4 2.4 1.5 2.3 2.4 4.9 4.6 4.9 9.8 4.3 5.1 2.3
SectorD 0.8 (1.3) (0.2) 2.0 2.0 6.8 7.4 8.9 16.5 16.8 16.8 10.7
Total BECL 0.0 (3.0) (1.5) (0.1) (0.4) 3.5 3.2 4.5 9.3 7.8 8.1 4.9
NECL 3.9 4.4 (2.6) (1.8) 3.1 2.7 3.7 4.1 11.8 6.5 7.5 6.7
Source: BECL REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
BECL+NECL 0.2 (2.5) (1.5) (0.2) (0.2) 3.4 3.2 4.5 9.5 7.7 8.1 5.0
Expect normalized profit to increase by 18% YoY and 18% QoQ in 1Q15E Based on the traffic volume statistics as mentioned above, we estimate BECL to record toll revenue of Bt2.2bn in 1Q15E, increasing by 7.3% YoY but declining slightly by 1% QoQ. Meanwhile, we expect BECL to report net profit of Bt818mn in 1Q15E, increasing by 18% YoY but declining by 24% QoQ. Stripping out the extra item of Bt387mn that the company booked in 4Q14 owing to gains from investment sales (reduced stake in CKP and TTW), normalized profit is expected to still increase by 18% QoQ. The major reason for the strong earnings growth is the realization of dividend income (paid for 2H14) from CKP and TTW of Bt296mn (booked in other income) after the change in the accounting policy of investment in CKP and TTW to recording only dividend income (vs. profit sharing previously). BECL’s earnings are expected to be volatile (on a quarterly basis) once CKP and TTW pay interim dividends. Figure 4: Earnings Preview Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit SG&A expenses EBITDA Interest expenses Other income Income tax Other extra items Gn (Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%)
1Q14 2,045 1,241 (398) 1,503 (169) 45 (143) ‐ 134 695 695 0.90
4Q14 2,227 1,358 (495) 1,583 (161) 4 (151) 387 153 1,080 692 1.40
1Q15E 2,195 1,335 (428) 1,611 (162) 296 (208) ‐ ‐ 818 818 1.06
% YoY 7.3 7.5 7.6 7.2 (4.3) 560.3 45.8 n.m. n.m. 17.7 17.7 17.7
% QoQ (1.4) (1.8) (13.6) 1.8 0.9 n.m. 38.1 n.m. n.m. (24.2) 18.2 (24.2)
2015E 8,947 5,443 (1,924) 6,458 (601) 720 (728) ‐ ‐ 2,854 2,854 3.71
60.7 73.5 34.0 0.7 5.0 1.3 24.0 15.3
61.0 71.1 31.1 0.4 5.4 1.1 28.0 13.2
60.8 73.4 37.3
60.8 72.2 31.9 0.3 5.9 1.3 29.9 12.8
% YoY 5.4 5.5 10.2 4.9 (10.4) 442.0 23.3 (100.0) (100.0) (11.0) 2.8 (11.0)
% of 2015E 24.5 24.5 22.2 25.0 27.0 41.1 28.6 ‐ ‐ 28.7 28.7 28.7
Source: BECL, KT ZMICO Research
Shareholders approved the amalgamation with BMCL In a resolution at the Annual General Meeting on April 2, 2015, shareholders approved the amalgamation between BECL and BMCL, with 16.51% (93.601mn votes) of the shareholders in the meeting opposing the merger. CK and its partner (Hicrete Product & Technology Co., Ltd.) will purchase shares from the dissenting shareholders at Bt38/share (closing share price before the AGM); CK will purchase not over 38.5mn shares and the rest will be allocated to the partner. After this, BECL will propose the shareholders meeting result to bankers, bondholders, concessionaires (both BMCL and BECL) and other parties related to the deal. The company previously expected the new Merged Co. to finally be set up in Aug‐15. We are in the process of revising the earnings projections for the new Merged Co., but roughly calculate that BECL’s earnings in 2016E will have to be revised down by around 17% after realization of a net loss from BMCL.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS
STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
