Embed Size (px)
Citation preview
ed: TH/ sa: JC, PY, CS
BUY Upgrade from HOLD
Last Traded Price ( 27 Jun 2019): S$0.675 (STI : 3,328.40)
Price Target 12-mth: S$0.85 (26% upside) (Prev S$0.80)
Analyst Alfie YEO +65 6682 3717 [email protected] Andy SIM, CFA +65 6682 3718 [email protected]
What’s New • Expect operational turnaround to drive earnings growth
• Supertea, R&B Tea kiosks and lower depreciation to
contribute more positively to earnings
• Raise FY19-20F earnings by 7% each
• Upgrade to BUY with a higher TP of S$0.85
Price Relative
Forecasts and Valuation FY Dec (S$m) 2017A 2018A 2019F 2020F
Revenue 217 224 246 268 EBITDA 40.1 42.8 110 114 Pre-tax Profit 32.1 29.5 33.5 34.4 Net Profit 26.9 24.4 27.8 28.6 Net Pft (Pre Ex.) 26.9 25.7 28.0 28.6 Net Pft Gth (Pre-ex) (%) 3.8 (4.2) 8.8 2.0 EPS (S cts) 4.84 4.40 5.01 5.14 EPS Pre Ex. (S cts) 4.84 4.64 5.04 5.14 EPS Gth Pre Ex (%) 4 (4) 9 2 Diluted EPS (S cts) 4.84 4.40 5.01 5.14 Net DPS (S cts) 15.3 2.20 2.50 2.57 BV Per Share (S cts) 7.74 16.5 19.0 21.5 PE (X) 13.9 15.3 13.5 13.1 PE Pre Ex. (X) 13.9 14.6 13.4 13.1 P/Cash Flow (X) 7.4 9.6 9.1 8.3 EV/EBITDA (X) 8.1 6.6 2.7 2.6 Net Div Yield (%) 22.6 3.3 3.7 3.8 P/Book Value (X) 8.7 4.1 3.6 3.1 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 36.8 36.4 28.3 25.4 Earnings Rev (%): 7 7 Consensus EPS (S cts): 5.00 5.30 Other Broker Recs: B: 1 S: 0 H: 1
Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P
Time to whet your appetite
Upgrade to BUY, TP raised to S$0.85. We turn positive on
Koufu and upgrade our recommendation to BUY with a TP of
S$0.85, as we expect the group to post higher net earnings
growth of 8.8% in FY19F. Post our downgrade, the stock has
declined by close to 12%. Earnings growth will be driven by the
turnaround of its foodcourt and kiosk businesses. We raise our
FY19-20F earnings forecasts by 7% each as we impute 1)
positive contribution of the Supertea and R&B kiosk business; 2)
better foodcourt sales efficiency; and 3) lower depreciation.
Valuation is now more palatable at 13.1x FY20F PE with visible
growth drivers.
Where we differ. We are more positive than previously, as stock
valuations have declined from 16x to 13.1x FY20F PE, post the
recent price correction. Fundamentals continue to be sound,
with strong cashflow-generation, defensive earnings, net cash
position, and strong return on average equity (ROAE).
Potential catalyst. This will stem from reaping the benefits of
economies of scale over the long term and special dividends
from sale of its existing central kitchen property before moving
into the new integrated facility. Longer-term drivers include the
setting up of an integrated facility aimed at delivering
economies of scale, and overseas growth from Macau.
Valuation:
The stock currently trades at 13.4/13.1x FY19F/FY20F PE. Our
TP of S$0.85 is based on 17x FY19F PE, pegged to peers’
average (ex-BreadTalk) multiple.
Key Risks to Our View:
Key earnings risks include failure to renew leases, inability to
secure new outlets, departure of key tenants and food stalls,
customers downtrading to hawker centres and coffee shops,
competition from foodcourts that offer more attractive
propositions (environment, pricing, food quality, etc.) to
customers. At A Glance Issued Capital (m shrs) 555
Mkt. Cap (S$m/US$m) 375 / 276
Major Shareholders (%)
Jun Yuan Holdings 77.2
Free Float (%) 22.8
3m Avg. Daily Val (US$m) 0.62
ICB Industry : Consumer Services / General Retailers
DBS Group Research . Equity
27 Jun 2019
Singapore Company Guide
Koufu Group Ltd Version 4 | Bloomberg: KOUFU SP | Reuters: KOUF.SI Refer to important disclosures at the end of this report
Page 2
Company Guide
Koufu Group Ltd
WHAT’S NEW
Expect growth to come through
The stock has corrected by close to 12% since our
downgrade; its valuation at c.13x forward PE is now more
attractive: Since our downgrade post 1Q19 earnings, Koufu’s
share price has corrected by close to 12%. The stock currently
trades at c.13x forward earnings which we believe is now
priced more attractively than during our point of downgrade
at c.16x forward earnings.
Earnings expectations to improve: We expect FY19F earnings
to improve from our prior expectations, led by contribution of
new R&B and Supertea kiosk outlets, higher sales efficiency in
foodcourts, and relatively lower operating expense in the
form of lower depreciation. We also see earnings in FY20F led
by a higher store base for R&B and Supertea kiosks with our
breakeven expectations for these new stores now faster than
anticipated.
Key drivers to more positive earnings
Earnings driver Note
Depreciation More fully depreciated outlets
Kiosk
turnaround
From slight loss to profit
Higher revenue Uplift in revenue per store and higher store
count
Source: Company, DBS Bank estimates
Lower depreciation from stores: We believe depreciation will
be lower than previously anticipated. There is currently a mix
of about 10 foodcourt and restaurant outlets which were
opened in 2015 and 2016. Based on Koufu’s depreciation
policy over three-year lease periods, these outlets would be
fully depreciated by 2019. We estimate that the net impact of
these outlets along with newly opened outlets within the last
three years would contribute to lower-than-expected expense
of close to S$1m this year.
Kiosk business to contribute to FY20F growth. Based on
Koufu’s current pipeline and planned store opening of R&B
and Supertea outlets, we believe the aggressive rollout will
add to our revenue projections. Koufu had 10 kiosk outlets
(including one in Macau) in FY18 which incurred a marginal
loss in FY18. We previously held the view that the ramp-up of
outlets to 22 by FY19F would lead to higher depreciation and
start-up losses. However, we now believe that newer stores
would break even faster within a few months after
undergoing the start-up and calibration phase for its initial 10
stores in FY18. We believe a shorter breakeven period for the
kiosk business would contribute more positively to our
earnings forecasts.
Kiosks to contribute more positively to earnings
FY18 FY19F
New outlets 10 10
Full 12 months
operations
0 10
Total outlets 10 20
Estimated kiosk revenue c.S$800,000 c.S$5.4m
Estimated kiosk earnings Breakeven c.S$1m
Source: Company, DBS Bank estimates
Raising sales-per-outlet assumption to factor higher same-
store sales: We increase our annual sales per outlet
assumption for Outlet and Mall Management segment from
S$1.7m to S$1.74m to factor in better sales efficiency at its
foodcourts. We anticipate the run rate for same-store sales to
be healthy at 3-5% going forward. Hence, we are now more
optimistic on our revenue forecast for the Outlet and Mall
Management segment by 2-3% at S$115m/S$120m for
FY19F/FY20F.
More positive for ‘other eating places’ F&B retail sales on real
wage increase: Primarily a foodcourt operator, Koufu’s sales
are generally classified under ‘other eating places’ in
Singstats’ Singapore retail sales segmentation. Foodcourts are
neither restaurants, fast food outlets nor caterers and hence
sales would be classified under ‘other eating places’. We have
seen a recovery for ‘other eating places’ retail sales index in
recent months. The consumer sentiment for ‘other eating
places’ sales has picked up in 2019 after a period of y-o-y
decline in 2017 and 2018. This can be attributed to the
decline in GDP growth where consumers are switching from
higher-end F&B foodservice outlets to more economical
coffeeshops, foodcourts and hawker centres.
Singapore F&B sales for ‘other eating places’ is
recovering
Source: ThomsonReuters Datastream, DBS Bank
Page 3
Company Guide
Koufu Group Ltd
Raise FY19-20F earnings by 7% each. We raise our earnings
estimates for FY19-20F to reflect 1) better revenue, and 2)
relatively lower operating costs and better operating margins.
Due to more positive drivers mentioned, we lift FY19-20F
revenue by 5-9% on more kiosk outlets going forward in
addition to slightly better sales per store efficiency from the
closure of weak outlets. Our operating profit margin for
FY19F is now higher at 15.0% from 14.0% on the back of
lower-than-expected depreciation from store closures.
Upgrade to BUY, TP S$0.85. We upgrade our call on Koufu
from HOLD to BUY on the back of more positive earnings
expectations, projecting FY19F and FY20F earnings to grow
9% and 2% y-o-y respectively. Our TP, which is based on 17x
FY19F PE, is now higher at S$0.85.
Page 4
Company Guide
Koufu Group Ltd
CRITICAL DATA POINTS TO WATCH
Critical Factors
Store count growth largely from foodcourts and self-operated
F&B stalls. We have assumed 2-3 new outlets per year for
foodcourts going forward and coffee shops to remain stable at
c.15 outlets as Koufu’s focus is currently on opening more
foodcourts. Likewise, we expect Koufu to continue managing
Punggol Plaza and Jurong West Hawker Centre without further
additions. The increase in number of self-operated F&B stalls is
a function of the number of new foodcourts. We do not
expect an aggressive increase in F&B kiosks, QSR and full-
service restaurants, as we believe some of these formats need
to show consistent profitability before they are scaled up.
More new outlets in Singapore. Growth continues to hinge on
more outlets opening in strategic locations with a focus on
hospitals, commercial malls, educational institutions and new
housing estates. As Singapore’s population increases, the
development of more adequate infrastructure to accommodate
population increase will fuel the demand for more foodcourt
outlets going forward. We believe new hospitals such as
Woodlands Healthcare Campus and housing estates including
Bidadari will carve opportunities for Koufu to penetrate with
more outlets.
Expands presence in Macau. Koufu entered Macau in 2011 to
operate a Koufu foodcourt format at Sands Cotai Central,
Macau. It has also opened its first Supertea F&B kiosk at Sands
Cotai Central in Macau and is negotiating with landlords and
developers for new F&B outlets.
Longer-term growth in other markets outside of Singapore and
Macau. In the longer term, Koufu intends to expand in markets
around Singapore and Macau, namely China, Malaysia and
Indonesia, at an opportune time.
Building traction on full-service restaurants. Koufu has three
Elemen full-service restaurants serving natural meatless cuisine,
with two more another opening at Paya Lebar Quarter and
Great World City. Plans for Elemen include strengthening the
brand name and building a store network in Singapore before
expanding overseas into China, Malaysia, Indonesia, and
Australia.
Building a larger facility to support future growth. There are
plans to establish an integrated facility to expand centralised
procurement, preparation and processing capabilities of the
existing central kitchens. The existing current central kitchens
currently have limited production capacities with some of the
food preparation processes partially done onsite at its F&B
outlets and self-operated F&B stalls. With a larger central
kitchen, Koufu can drive economies of scale.
Outlet count
Revenue per outlet (S$m)
FY18 cost breakdown
Revenue by country FY18
Revenue breakdown by segment
Source: Company, DBS Bank
Page 5
Company Guide
Koufu Group Ltd
Balance Sheet:
Cash-generative business, balance sheet in net cash. Koufu’s
business is generally cash generative with S$30-51m of
operating cashflow generated in the past three years. Capex is
comparatively low at less than S$15m per year over the same
period. The business had net cash of S$94m in 1Q19. Working
capital is generally positive with average trade payable days of
39-41 days and inventory of 11-14 days, outstripping
receivable days at 27-29.
Share Price Drivers:
Sale of existing Woodlands central kitchen. Koufu is due to
move into its new integrated facility in FY20F and intends to
sell its existing central kitchen at Woodlands. If sold, we
estimate that it could potentially book a gain of S$11m, worth
about 2 Scts per share, which could be paid as special
dividends.
Integrated facility to drive economies of scale. With the new
integrated facility coming up in FY20, Koufu can consolidate,
enhance productivity and operational efficiencies by rolling out
larger quantities at the new facility, while maintaining quality
and consistency. Excess capacity can also be used to derive
additional revenue stream by supplying food input to stall
holders at its foodcourts in the future.
Key Risks:
Food safety and licences. As a foodservice operator, it is
important to maintain food safety. Lapses would lead to
reputational risks and in extreme cases, food operation licences
could be revoked. Other risks include food contamination and
tampering risks, outbreak of diseases or viruses in livestock
inducing food scares, exposure to negative publicity, customer
complaints and potential litigation.
May be affected by disease outbreaks and poor weather.
Business could slow during a health crisis or poor weather such
as haze. During Singapore’s haze in October 2015, businesses
were disrupted as consumers hid indoors. The Singapore
government estimated that the haze had resulted in economic
losses of about S$700m.
Company Background
Koufu is a leading foodcourt and coffee shop operator in
Singapore with a presence in Macau. It also has other
foodservice formats including tea kiosks, full-service and quick-
service restaurants.
Leverage & Asset Turnover (x)
Capital Expenditure
ROE (%)
Forward PE Band (x)
PB Band (x)
Source: Company, DBS Bank
Page 6
Company Guide
Koufu Group Ltd
Key Assumptions
FY Dec 2016A 2017A 2018A 2019F 2020F
Outlet count 157 157 156 183 201
Revenue per outlet (S$m) 0.61 0.61 0.60 0.60 0.60
Segmental Breakdown
FY Dec 2016A 2017A 2018A 2019F 2020F Revenues (S$m)
Outlet and mall management
102 105 112 115 120
F&B retail business 113 111 112 131 148
Total 215 217 224 246 268
Operating profit (S$m) Outlet and mall management
10.9 13.5 15.7 14.7 15.4
F&B retail business 26.3 24.6 22.5 29.0 32.7
Others (7.6) (7.4) (7.8) (6.9) (10.7)
Total 29.6 30.7 30.4 36.9 37.4
Operating profit Margins (%)
Outlet and mall management
10.7 12.8 14.0 12.8 12.8
F&B retail business 23.3 22.1 20.2 22.1 22.1
Total 13.8 14.2 13.6 15.0 14.0
Income Statement (S$m)
FY Dec 2016A 2017A 2018A 2019F 2020F
Revenue 215 217 224 246 268
Cost of Goods Sold (35.9) (35.4) (35.1) (39.3) (42.9)
Gross Profit 179 181 189 207 225
Other Opng (Exp)/Inc (150) (151) (158) (170) (188)
Operating Profit 29.6 30.7 30.4 36.9 37.4
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc 0.27 0.29 0.30 0.30 0.40
Net Interest (Exp)/Inc 0.72 1.12 0.14 (3.5) (3.4)
Exceptional Gain/(Loss) 0.0 0.0 (1.3) (0.2) 0.0
Pre-tax Profit 30.6 32.1 29.5 33.5 34.4
Tax (4.7) (5.3) (5.0) (5.7) (5.9)
Minority Interest 0.0 0.05 (0.1) 0.0 0.0
Preference Dividend 0.0 0.0 0.0 0.0 0.0
Net Profit 25.9 26.9 24.4 27.8 28.6
Net Profit before Except. 25.9 26.9 25.7 28.0 28.6
EBITDA 40.2 40.1 42.8 110 114
Growth
Revenue Gth (%) 8.3 0.7 3.3 9.8 9.0
EBITDA Gth (%) 18.9 (0.4) 6.7 156.9 3.8
Opg Profit Gth (%) 28.3 3.6 (1.2) 21.5 1.4
Net Profit Gth (Pre-ex) (%) 25.6 3.8 (4.2) 8.8 2.0
Margins & Ratio
Gross Margins (%) 83.3 83.7 84.3 84.0 84.0
Opg Profit Margin (%) 13.8 14.2 13.6 15.0 14.0
Net Profit Margin (%) 12.0 12.4 10.9 11.3 10.7
ROAE (%) 27.8 36.8 36.4 28.3 25.4
ROA (%) 14.9 18.3 18.3 11.6 8.3
ROCE (%) 21.5 30.5 32.3 13.4 8.9
Div Payout Ratio (%) 20.1 315.7 50.0 50.0 50.0
Net Interest Cover (x) NM NM NM 10.6 11.1
Source: Company, DBS Bank
Page 7
Company Guide
Koufu Group Ltd
Quarterly / Interim Income Statement (S$m)
FY Dec 1Q2018 2Q2018 3Q2018 4Q2018 1Q2019
Revenue 55.1 54.2 57.6 57.1 57.8
Cost of Goods Sold (8.7) (8.8) (9.0) (8.6) (8.8)
Gross Profit 46.4 45.3 48.6 48.5 49.0
Other Oper. (Exp)/Inc (39.0) (38.2) (41.8) (39.5) (39.3)
Operating Profit 7.37 7.17 6.81 9.00 9.67
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc 0.10 0.05 0.10 0.0 0.09
Net Interest (Exp)/Inc 0.0 0.0 0.03 0.14 (0.8)
Exceptional Gain/(Loss) 0.0 0.0 (1.3) 0.0 (0.5)
Pre-tax Profit 7.44 7.21 5.64 9.14 8.45
Tax (1.3) (1.1) (1.0) (1.6) (1.5)
Minority Interest 0.0 0.0 0.0 0.0 0.0
Net Profit 6.15 6.08 4.64 7.51 6.96
Net profit bef Except. 6.15 6.08 5.94 7.51 7.47
EBITDA 10.4 10.3 10.1 11.8 28.1
Growth
Revenue Gth (%) 1.7 (1.7) 6.3 (0.9) 1.3
EBITDA Gth (%) (1.1) (1.0) (1.9) 17.5 137.8
Opg Profit Gth (%) (11.3) (2.8) (5.0) 32.2 7.5
Net Profit Gth (Pre-ex) (%) (15.1) (1.1) (2.3) 26.3 (0.6)
Margins
Gross Margins (%) 84.3 83.7 84.4 85.0 84.8
Opg Profit Margins (%) 13.4 13.2 11.8 15.8 16.7
Net Profit Margins (%) 11.2 11.2 8.1 13.2 12.0
Balance Sheet (S$m)
FY Dec 2016A 2017A 2018A 2019F 2020F Net Fixed Assets 16.8 18.9 21.4 189 233
Invts in Associates & JVs 0.29 0.40 0.26 0.56 0.96
Other LT Assets 28.3 22.9 30.5 32.6 33.9
Cash & ST Invts 62.4 53.0 96.0 83.2 84.0
Inventory 1.46 1.30 1.29 1.29 1.88
Debtors 0.26 10.7 10.2 11.5 12.5
Other Current Assets 77.3 0.0 0.13 0.13 0.13
Total Assets 187 107 160 318 366
ST Debt
9.08 0.18 0.41 0.41 0.41
Creditor 3.72 45.2 46.0 51.2 55.8
Other Current Liab 53.5 8.08 7.34 7.34 7.34
LT Debt 7.67 1.57 4.36 4.36 4.36
Other LT Liabilities 10.0 9.06 10.0 149 179
Shareholder’s Equity 103 43.0 91.4 105 120
Minority Interests 0.0 0.15 0.12 0.12 0.12
Total Cap. & Liab. 187 107 160 318 366
Non-Cash Wkg. Capital 21.8 (41.3) (41.8) (45.6) (48.6)
Net Cash/(Debt) 45.7 51.3 91.2 78.4 79.2
Debtors Turn (avg days) 0.6 9.2 17.0 16.0 16.3
Creditors Turn (avg days) 39.3 252.1 474.8 450.9 455.3
Inventory Turn (avg days) 13.4 14.2 13.4 12.0 13.5
Asset Turnover (x) 1.2 1.5 1.7 1.0 0.8
Current Ratio (x) 2.1 1.2 2.0 1.6 1.5
Quick Ratio (x) 0.9 1.2 2.0 1.6 1.5
Net Debt/Equity (X) CASH CASH CASH CASH CASH
Net Debt/Equity ex MI (X) CASH CASH CASH CASH CASH
Capex to Debt (%) 51.4 660.9 299.3 837.7 628.3
Z-Score (X) 2.6 2.6 2.6 2.6 2.6
Source: Company, DBS Bank
Page 8
Company Guide
Koufu Group Ltd
Cash Flow Statement (S$m)
FY Dec 2016A 2017A 2018A 2019F 2020F
Pre-Tax Profit 30.6 32.1 29.5 33.5 34.4
Dep. & Amort. 10.3 9.08 12.1 72.7 76.2
Tax Paid (4.1) (4.0) (5.6) (5.7) (5.9)
Assoc. & JV Inc/(loss) (0.3) (0.3) (0.3) (0.3) (0.4)
Chg in Wkg.Cap. (2.9) 11.6 (0.2) 1.90 1.67
Other Operating CF (0.3) 2.47 3.62 (61.0) (61.0)
Net Operating CF 33.5 51.0 39.1 41.1 45.0
Capital Exp.(net) (8.6) (11.6) (14.3) (40.0) (30.0)
Other Invts.(net) (4.4) 20.1 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0
Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0
Other Investing CF 1.10 56.8 (42.0) 0.0 0.0
Net Investing CF (11.9) 65.2 (56.3) (40.0) (30.0)
Div Paid (6.1) (86.5) (18.1) (13.9) (14.3)
Chg in Gross Debt (1.3) (24.9) 3.02 0.0 0.0
Capital Issues 0.0 0.0 45.5 0.0 0.0
Other Financing CF (0.6) (0.2) (5.4) 0.0 0.0
Net Financing CF (8.0) (112) 25.1 (13.9) (14.3)
Currency Adjustments (0.8) (0.6) 0.06 0.0 0.0
Chg in Cash 12.8 4.00 7.94 (12.8) 0.77
Opg CFPS (S cts) 6.54 7.09 7.08 7.06 7.81
Free CFPS (S cts) 4.48 7.09 4.47 0.20 2.71
Source: Company, DBS Bank
Target Price & Ratings History
Source: DBS Bank
Analyst: Alfie YEO
Andy SIM, CFA
Page 9
Company Guide
Koufu Group Ltd
DBS Bank recommendations are based on an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return, i.e., > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable share price catalysts within this time frame)
*Share price appreciation + dividends
Completed Date: 27 Jun 2019 17:48:24 (SGT) Dissemination Date: 27 Jun 2019 18:03:38 (SGT)
Sources for all charts and tables are DBS Bank unless otherwise specified.
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated
corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii)
redistributed without the prior written consent of DBS Bank Ltd.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,
the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other
factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or
warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without
notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific
investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees
only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial
advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit)
arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not
to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons
associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have
positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and
other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may
not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to
update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned
schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED
UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Page 10
Company Guide
Koufu Group Ltd
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.
DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public
offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage
in market-making.
ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst
(s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of
the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the
real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the
management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or
his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has
procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of
research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment
banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment
banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of
the DBS Group.
COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS'') or their subsidiaries and/or other affiliates do not have a
proprietary position in the securities recommended in this report as of 31 May 2019
2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.
Compensation for investment banking services:
3. DBS Bank Ltd, DBS HK, DBSVS their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months
for investment banking services from Koufu Group Ltd as of 31 May 2019
4. DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of
securities for Koufu Group Ltd in the past 12 months, as of 31 May 2019
5. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a
manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further
information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document
should contact DBSVUSA exclusively.
Disclosure of previous investment recommendation produced:
6. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other
investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12
months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by
DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.
1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of
which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.
2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.
Page 11
Company Guide
Koufu Group Ltd
RESTRICTIONS ON DISTRIBUTION
General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of
or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use
would be contrary to law or regulation.
Australia This report is being distributed in Australia by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial
Services Licence no. 475946.
DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the
Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS
are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the
Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws.
Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.
Hong Kong This report has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission
to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures
Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to
DBS Bank (Hong Kong) Limited, a registered institution registered with the Hong Kong Securities and Futures
Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance
(Chapter 571 of the Laws of Hong Kong).
For any query regarding the materials herein, please contact Carol Wu (Reg No. AH8283) at [email protected]
Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.
Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received
from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection
with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report
are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their
respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties
related or associated with any of them may have positions in, and may effect transactions in the securities mentioned
herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for
the subject companies. They may also have received compensation and/or seek to obtain compensation for broking,
investment banking/corporate advisory and other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR
Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn
No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by
the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective
foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the
Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited
Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the
report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327
2288 for matters arising from, or in connection with the report.
Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.
United
Kingdom
This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore.
This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is
authorised and regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and
associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in
any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is
directed at persons having professional experience in matters relating to investments. Any investment activity following
from this communication will only be engaged in with such persons. Persons who do not have professional experience in
matters relating to investments should not rely on this communication.
Page 12
Company Guide
Koufu Group Ltd
Dubai
International
Financial
Centre
This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608 - 610, 6th Floor,
Gate Precinct Building 5, PO Box 506538, DIFC, Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated
by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the
DFSA rulebook) and no other person may act upon it.
United Arab
Emirates
This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as
defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information
purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to
buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular
investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or
investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note
that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or
complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent.
United States This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s)
named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The
research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a
subject company, public appearances and trading securities held by a research analyst. This report is being distributed in
the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major
U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as
DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities
referred to herein should contact DBSVUSA directly and not its affiliate.
Other
jurisdictions
In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
DBS Regional Research Offices
HONG KONG DBS (Hong Kong) Ltd Contact: Carol Wu 13th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong Tel: 852 3668 4181 Fax: 852 2521 1812 e-mail: [email protected]
MALAYSIA AllianceDBS Research Sdn Bhd Contact: Wong Ming Tek (128540 U) 19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia. Tel.: 603 2604 3333 Fax: 603 2604 3921 e-mail: [email protected]
SINGAPORE DBS Bank Ltd Contact: Janice Chua 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Company Regn. No. 196800306E
THAILAND DBS Vickers Securities (Thailand) Co Ltd Contact: Chanpen Sirithanarattanakul 989 Siam Piwat Tower Building, 9th, 14th-15th Floor Rama 1 Road, Pathumwan, Bangkok Thailand 10330 Tel. 66 2 857 7831 Fax: 66 2 658 1269 e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand
INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: Maynard Priajaya Arif DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: 62 21 3003 4900 Fax: 6221 3003 4943 e-mail: [email protected]
