Chelsea Logistics Corporation FRI 21 JULY 2017

A play on shipping and logistics

Company Description. Chelsea Logistics Corp. (CLC) is engaged in shipping transport through
its wholly owned subsidiaries Chelsea Shipping Corp. and Trans-Asia Shipping. Through Chelsea
Shipping Corp., the company mainly provides maritime carriage of petroleum products.
Meanwhile, through Trans-Asia Shipping, CLC engages in the transportation of cargo and
passengers within Philippine territorial seas. The company currently has 33 vessels under its fleet
comprised of 11 tankers, 4 barges, 8 tugboats, and 10 RoPax. In March 2017, CLC forayed into the
logistics and supply chain solutions business after acquiring a 28.2% effective interest in 2GO
Group.
Raising Php5.8Bil for fleet expansion and strategic acquisitions. CLC will be offering 546.6Mil
primary shares to local investors at Php10.68/sh. Assuming full subscription, the company will
be able to raise Php5.8Bil in gross proceeds from the IPO. CLCs market capitalization at the offer
price would be Php19.5Bil. CLC will use 68.5% or Php4.0Bil to acquire an additional 8% stake
in 2GOs parent company, Nenaco, and also to acquire another shipping company that would
complement CLCs RoPax business under Trans-Asia. Meanwhile, 32% or Php1.8Bil will be used
to acquire seven additional vessels in 2017.
Strategic acquisitions serve as main drivers of growth. CLCs strategic acquisitions will serve
as the main driver of growth as it expands its business in the marine transport and logistics
industry. The 2GO acquisition paves way for increased scale and efficiency for the company
as 50% of 2GOs revenues comes from shipping while the other 50% from logistics services.
Management also expects to realize synergies through the acquisitions as they integrate the
operations of the acquired businesses. For example, Chelsea intends to reorganize the ticketing
and coding systems, employ common marketing and distribution strategies, and streamline
the fuel costs of the acquired businesses. Besides this, the companys relationship with the SM
Group, which owns a 34.5% stake in Nenaco, also provides other business opportunities.
Valued at a premium compared to regional comparables. Assuming that CLCs FY18 net
income reaches Php951Mil driven largely by the consolidation of 2GOs profits and the acquisition
of the other shipping company, CLC would be trading at a 2018E P/E of 20.5X based on the offer
price of Php10.68/sh. CLC would be priced at a premium compared to its regional peers which are
trading at a median 2018E P/E of 10.7X for shipping companies and 13.6X 2018E P/E of logistic
companies. Local peer, LBC, is trading at 18.9X 2018E P/E, which is slightly lower compared to
CLCs valuations. Admittedly though, CLCs growth prospects are more attractive relative to other
shipping and logistics companies given the Philippines strong economic growth outlook, the
companys aggressive growth plans and potential synergies among the various subsidiaries and
related companies.
FORECAST SUMMARY
Year to December 31 (Php Mil) 2014 2015 2016
Net Sales 1,848 2,485 2,900
% change y/y - 34.5 16.7
Gross Profit 420 505 746
% change y/y - 20.2 47.7
Gross Margin (%) 22.7 20.3 25.7
Operating Income 268 334 481
% change y/y - 24.6 44.0
Operating Margin (%) 14.5 13.4 16.6
Net Income 139 98 132
% change y/y - -29.5 34.7
Net Profit Margin (%) 7.5 3.9 4.6
EPS 0.28 0.20 0.26
% change y/y - -29.5 34.7

RELATIVE VALUE JUSTIN RICHMOND CHENG

P/E (X) 52.6 74.6 55.4
RESEARCH ANALYST
P/BV (X) 3.3 2.9 4.7
ROE (%) 4.1% 6.4% justin.cheng@colfinancial.com
So urce: CLC

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of
the COL Financial website as these may be subject to tampering or unauthorized alterations.
 FIELD NOTES I CLC: A PLAY ON SHIPPING AND LOGISTICS

FRI 21 JULY 2017

Company Description

Chelsea Logistics Corp. (CLC) is engaged in shipping transport through its wholly owned
subsidiaries Chelsea Shipping Corp. and Trans-Asia Shipping. Through Chelsea Shipping Corp.,
the company mainly provides maritime carriage of petroleum products with complete services
that include general cargo handling, loading, and discharging, among others. Meanwhile,
through Trans-Asia Shipping, CLC engages in the transportation of cargo and passengers within
Philippine territorial seas. The company currently has 33 vessels under its fleet comprised of
11 tankers, 4 barges, 8 tugboats, and 10 RoPax (a vessel that accommodates transportation of
cargo and passengers). Through its extensive fleet, CLC caters to the end-to-end supply chain
from refineries to depots to retail customers.

In March 2017, CLC forayed into the logistics and supply chain solutions business after
acquiring a 100% stake in Udenna Investments B.V. Through the acquisition, CLC obtained a
31.9% indirect stake in 2GOs parent company, Nenaco, as well as a 28.2% effective interest in
2GO Group. With the acquisition, CLC was able to diversify its operations within the marine
transport and logistics business. Including the 25 vessels under 2GO, Chelseas fleet would
total 58 vessels, and this would also translate to an increase in the companys overall customer
base.

Exhibit 1: Fleet breakdown

CLC ALONE CLC WITH 2GO

source: CLC Prospectus

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Exhibit 2: Corporate Structure

source: CLC Prospectus

Raising Php5.8Bil for fleet expansion and strategic acquisitions

CLC will be offering 546.6Mil primary shares to local investors at the offer price of Php10.68/sh.
Assuming full subscription, the company will be able to raise Php5.8Bil in gross proceeds from
the initial public offering (IPO). Following the IPO, the public will own 30% of the company,
while existing shareholder, Udenna Corporation, will practically own the remaining 70% stake.
The IPO shares will be offered from July 24 to 31 and the stock will list on August 8. CLCs
market capitalization at the offer price would be Php19.5Bil. The stock will be trading under
the ticker symbol CLC.

Exhibit 3: IPO details

Stock symbol CLC
Max offer price Php10.68/sh
Total shares on offer (in Mil)
Primary shares 546.6
Gross proceeds to be raised (in Bil) Php5.8
Issued and oustanding shares post-IPO (in Mil) 1,822.0
Market Capitalization (in Bil) Php19.5
Public float 30%
Offer period July 24 - 31
Listing date August 8
source: CLC prospectus

CLC will use more than half of the proceeds for the acquisition of other shipping and logistic
companies. Specifically, 68.5% or Php4.0Bil will be used to acquire an additional 8% stake
in 2GOs parent company Nenaco; thereby, increasing its effective interest in 2GO to 35.2%
from 28.2%. Additionally, part of the Php4.0Bil will also be used to acquire another shipping

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 FIELD NOTES I CLC: A PLAY ON SHIPPING AND LOGISTICS

FRI 21 JULY 2017

company that would complement CLCs RoPax business under Trans-Asia. With this acquisition,
management expects to expand its fleet and client base as it services more routes in the
VisMin area. No further details regarding this acquisition are available yet. Meanwhile, 32% or
Php1.8Bil will be used to acquire seven additional vessels in 2017. Broken down, this would be
comprised of 1 tanker, 2 RoPax cargo vessels, and 4 tugboats.

Exhibit 4: Use of proceeds

Amount in PhpMil Percentage Estimated Timing
Acquisition of:
other shipping and logistics companies 4,000 68.5% August 2017
new vessels, equipment, container 1,838 31.5% September 2017
Total 5,838 100.0%
source: CLC prospectus

Key Investment Highlights

Strong industry growth supported by healthy economic outlook

With the Philippines being an archipelago comprised of 7,641 islands, the shipping industry
functions as a primary means of inter-island transport of both cargo and passenger alike. From
2011 to 2016, cargo and shipping have grown at an average of 6.7% and 6.5%, a rate of growth
not far off from the Philippine GDPs 5 year CAGR of 6.7% during the same period. Meanwhile,
other segments of the shipping industry such as ship calls and containers have grown at an
average pace of of 5.4% and 4.9% each year, respectively, slightly trailing the average growth
of GDP. Nevertheless, growth in ship calls and containers actually enjoyed an uptick in the
recent years following a 9.5% y/y increase for both segments in 2016 alone.

Given the close tie between shipping and the development of the broader economy in the
Philippines, the industry stands to benefit further from a healthy economic outlook. GDP is
projected to grow by an average of 7% every year from 2016 to 2021 according to the IMF,
supported by the governments initiatives, which include efforts to increase infrastructure
spending, the passage of the tax reform program, and a push for a more decentralized growth.

Leading industry position in shipping

CLC leads the shipping industry in terms of tanker capacity as well as by market share of
RoRo (vessels for wheeled cargo) and passenger routes. Chelseas tankers have a combined
capacity of 41,183 gross registered tonnage (GRT), representing 14% of the industry in 2016.
Meanwhile, it dominates the RoRo and Passenger segment by routes with a market share of
33%. In addition, the company operates in 70% of the ports in the Philippines. Management
aims to increase the number of routes they service through strategic acquisitions, and this
should further cement its leading position within the industry. With these strengths under
CLCs umbrella, the company is well-positioned to capitalize on the growth opportunities and
positive outlook of the industry.

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Exhibit 5: Market share

2016 TANKER CAPACITY SHARE 2016 RORO & ROPAX MARKET SHARE
(IN GRT)* BY ROUTE**

14%
14% Chelsea
Chelsea Logistics
Logistics Chelsea
Chelsea Logistics
Logistics
ViaVia Marine 26% 26%
Marine
33% 33% Philippine
Philippine SpanSpan
Asia Asia
CarrierCarrier
42%42% 11%
11% SMC
SMC Shipping
Shipping Oceanic
Oceanic
Petrolift Group
Petrolift Group Magsaysay Group
Magsaysay Group
10%
10% Magsaysay Group 8%
8%
Magsaysay Group Solid Shipping
Herma Group Solid Shipping
Herma Group 8%
8% 8% 16% Others
7% 8%8%
Others Others
Others 9%16%
7% 8% 9%

*market share includes tankers with GRT above 500

**RoRo & RoPax market share computation includes 2GOs share

Growth strategies involve re-fleeting and increasing capacity and routes

CLC plans on re-fleeting and upgrading its vessels by acquiring optimal-sized tankers, larger
RoPax vessels, and expanding tug operations. The company expects to add 21 vessels in five
years with seven additional vessels in 2017, four in 2018 and 2019, and three each in 2020
and 2021. After taking into account the six tankers to be disposed within five years, CLCs fleet
would reach 48 vessels by 2021 from 33 as of end 2016. The disposal of these tankers are aimed
to optimize CLCs fleet and operations as well as to comply with the shipping modernization
act that requires vessels reaching the age of 35 years to be disposed. Note that in 2016, CLCs
fleet had an average age of 27 years. Following the disposal of several tankers until 2021, we
estimate the average age of its fleet would fall to around 20 years.

In terms of volume, the MR tanker to be acquired in 2017 would add an additional capacity
of around 50 million liters, doubling total tanker capacity to 115 million liters. This tanker will
be used by the company to strengthen its regional presence by servicing the importation of
petroleum to the country. Meanwhile, the two RoPax cargo vessels would add an additional
300 TEUs each to bring total RoPax capacity to 4,860 TEUs. Recall that the proceeds from the
IPO will only be used to acquire seven vessels in 2017. None of the proceeds will be used to pay
off debt, and management will need to borrow more to fund the future acquisition of vessels.

Together with its fleet upgrade, CLC will expand to new routes in Palawan, Surigao, Davao,
and General Santos, among others. The company believes in capitalizing on its first mover
advantage by servicing areas not yet covered by competition. Down the road, CLC is also
looking to upgrade its facilities by acquiring machineries, ports, port facilities, and a shipyard.
These would reduce the companys dry docking costs and other operational costs in the long
run.

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Exhibit 6: Acquisition Schedule

Net
Acquire Dispose Addition
Tankers RoPax Tugboats Total Tankers Vessels Total Fleet
2017 1 2 4 7 0 7 40
2018 2 2 0 4 2 2 42
2019 2 2 0 4 2 2 44
2020 1 2 0 3 1 2 46
2021 1 2 0 3 1 2 48
source: CLC Prospectus

Strategic acquisitions serve as main drivers of growth

Recall that over 50% of the proceeds will be used for the acquisition of additional stake in
2GO as well as another shipping company. These acquisitions will serve as the main driver of
CLCs growth as it expands its business in the marine transport and logistics industry. The 2GO
acquisition also paves way for increased scale and efficiency for the company as 50% of 2GOs
revenues comes from shipping while the other 50% from logistics services. As of 1Q17, CLCs
combined fleet stands at 58 vessels from 33 in 2016 driven by the consolidation of 2GOs 25
vessels. This is expected to increase even more throughout the year as the company acquires
new ships and also with the possible consolidation of another shipping company.

Management also expects to realize synergies through the acquisitions as they integrate
the operations of the acquired businesses. For example, Chelsea intends to reorganize the
ticketing and coding systems, employ common marketing and distribution strategies, and
streamline the fuel costs of the acquired businesses. In fact, given CLCs affiliation with PNX
or Phoenix Petroleum, 2GO stands to benefit from having a more affordable supplier of
fuel. Besides this, the companys relationship with the SM Group, which owns a 34.5% stake
in Nenaco, also provides other business opportunities. Management pointed out that 2GO
currently services only about 5% of SMs logistics needs and this may be an area of opportunity
for 2GOs revenues to grow.

In terms of profits, the restatement of 2GOs financials brought 2016 net income down to
Php330Mil from Php1.3Bil originally. Management explained that 2GOs growth potential
remains fairly intact as the cause for the lower income were largely driven by non-cash and
non-recurring expenses such as impairment of goodwill, accelerated depreciation, and
provisions. Revenues and revenue growth were hardly changed (see exhibit 7 for details).
With this, assuming that earnings will grow 15% annually from the 2GOs original income of
Php1.3Bil (2014 to 2016 compounded annual growth at 26%), 2GOs 2017 and 2018 earnings
would reach Php1.5Bil and Php1.8Bil, respectively. Given CLCs effective stake in 2GO of 28.2%
starting March 2017 and the planned 35.2% stake starting 2018, the company would book
equitized earnings amounting to Php322Mil in 2017 and Php617Mil in 2018, respectively.
Meanwhile, assuming that the remaining 7% indirect stake in 2GO is acquired at Php17.50/sh
or Php3.0Bil (based on 2GOs 90-day volume weighted price), CLC would only have Php1.0Bil
left to spend on acquiring the new shipping company. Assuming that the valuation of the

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new company would be at par with the 2018E median P/E of shipping companies, earnings
from this new acquisition would amount to Php94Mil in 2018. Coupled with the profits from
CLCs own operations, consolidated earnings are projected to grow to Php530Mil in 2017.
Furthermore, 2018 earnings would accelerate by 79% to Php951Mil still mainly driven by its
M&A strategy.

Exhibit 7: Summary of restatements in 2GOs Income Statement

2015 2016 1Q17
in PhpMil Original Restated % Change Original Restated % Change Original Restated % Change
Revenues 16,418 16,383 (0.2) 19,276 19,054 (1.2) 4,901 4,848 (1.1)
COGS 13,250 13,317 0.5 15,126 15,628 3.3 3,981 4,196 5.4
G&A Expense 1,362 1,697 24.5 1,617 2,341 44.8 404 711 76.2
EBITDA 2,797 2,356 (15.8) 3,575 2,521 (29.5) 841 380 (54.8)
Net Income 1,069 97 (90.9) 1,325 330 (75.1) 267 (266) (199.6)

2015 2016 1Q17

Original Restated % Change Original Restated % Change Original Restated % Change
Depreciation and
991 986 (0.5) 1,043 1,436 37.7 325 440 35.5
Amortization
Provision for Doubtful
- 264 - - 538 - - 249 -
Accounts
Loss on sale of asset/
- (260) - (251) - - - - -
Impairment of asset
Impairment of Goodwill - (250) - - - - - - -
source: 2GO

Exhibit 8: Earnings Assumption

Source of Earnings (in PhpMil) 2016A 2017E 2018E Comments
15% growth each year on original
2GO's earnings 330* 1,524 1,753
net income of Php1.3Bil
CLC's stake in 2GO: 28.2% in 2017
CLC's share in 2GO's earnings 322 617
(starting April 2017), 35.2% in 2018
Assume Php1Bil spent on new
shipping company,
New shipping company contribution - 94
10.7X median 2018E P/E of
shipping companies
CLC's Earnings excluding new Earnings growth from increased
132 207 240
acquisitions capacity
CLC's consolidated earnings 132 530 951

*2GOs 2016 earnings is the restated net income figure

Valued at a premium compared to regional comparables

Assuming that CLCs FY18 net income reaches Php951Mil driven largely by the consolidation
of 2GOs profits and the acquisition of the other shipping company, CLC would be trading at a
2018E P/E of 20.5X based on the offer price of Php10.68/sh. CLC would be priced at a premium
compared to its regional peers which are trading at a median 2018E P/E of 10.7X for shipping
companies and 13.6X 2018E P/E of logistic companies. Local peer, LBC, is trading at 18.9X
2018E P/E, which is slightly lower compared to CLCs valuations. Admittedly though, CLCs
growth prospects are more attractive relative to other shipping and logistics companies given
the Philippines strong economic growth outlook, the companys aggressive growth plans and
potential synergies among the various subsidiaries and related companies.

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Exhibit 9: Relative Valuation (regional shipping companies)

Company Name Ticker 2018E P/E
Cosco Shipping Development-H 2866 HK 9.98
Cosco Shipping Holdings Co-H 1919 HK 15.67
Ea Technique M Bhd EATECH MK 4.88
Misc Bhd MISC MK 15.27
Shipping Corp Of India Ltd SCI IN 16.37
Yinson Holdings Bhd YNS MK 12.3
Bumi Armada Berhad BAB MK 9.09
Cosco Shipping Energy Tran-H 1138 HK 10.65
Soechi Lines Tbk Pt SOCI IJ 4.59
Chelsea Logistics Corp CLC PM 20.5
Median (ex-CLC) 10.7
source: Bloomberg, COL Estimates

Exhibit 10: Relative Valuation (regional logistics companies)

Company Name Ticker 2018E P/E
Xinjiang Tianshun Supply C-A 002800 CH 63.75
Jwd Infologistics Pcl JWD TB 30.57
China Logistics Property Hol 1589 HK 17.27
Container Corp Of India Ltd CCRI IN 26.02
Vrl Logistics Ltd VRLL IN 19.14
Navkar Corp Ltd NACO IN 14.83
Allcargo Logistics Ltd AGLL IN 12.36
Tasco Bhd TASCO MK 9.15
Tiong Nam Logistics Holdings TNL MK 9.36
Freight Management Holdings FMH MK 9.64
Sinotrans Limited-H 598 HK 9.38
Harbour-Link Group Bhd HALG MK 8.02
Chelsea Logistics Corp CLC PM 20.5
Median (ex-CLC) 13.6
source: Bloomberg, COL Estimates

Risks

Volatility in oil prices

Given the nature of CLCs business, a major cost component of the company is tied to oil
prices. In fact, 23% of the companys direct costs are represented by bunkering costs (fuel
and lubricants). As such, oil price volatility is a key risk that could significantly affect CLCs
profitability. In addition, the tax reform proposal also adds some risk to CLCs costs as the bill
seeks to place an excise tax of Php3.0 per liter in 2018, Php5.0 in 2019, and Php6.0 in 2020
for diesel fuel, liquefied petroleum gas, and bunker fuel. Management did note that their
affiliation with Phoenix Petroleum, which is a business engaged in the trading of refined
petroleum products, allows them to mitigate some of this risk. They also intend to engage in
forward contracts if needed.

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Execution risk

With CLCs growth strategies involving fleet expansion and mergers and acquisitions, the
company faces a high degree of execution risk. Future earnings growth is contingent on the
successful execution of its acquisition of another shipping company as well as the additional
indirect stake in 2GO. Any obstacles and delays in acquiring the new shipping company would
temper CLCs earnings growth. In addition, the growth of 2GO and other businesses acquired
in the future is dependent on CLCs ability to realize the potential synergies foreseen by the
company.

Highly leveraged position

As of March 2017, CLC had a net debt to equity of 0.87X. This is above the median net debt
to equity of regional shipping peers of 0.78X. In addition, CLC only had an interest coverage
ratio of only 2.0X in 2016 and 1.4X in 1Q17, making the company at risk from higher funding
costs. Although CLC expects to generate Php5.8Bil from its IPO, proceeds are not enough to
fund CLCs planned expansion up to 2021 where it plans acquire a total 21 vessels in five years.
Consequently, CLC would have to increase its borrowings further in the next few years.

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Chelsea Logistics INCOME STATEMENT (IN PHPMIL)

Corporation (CLC) Revenues

FY14
1,848.0
FY15
2,485.0
FY16
2,900.0
% Growth - 34.5% 16.7%
COMPANY BACKGROUND Gross Profit 420.0 505.0 746.0
Chelsea Logistics Corp. (CLC) is engaged % Growth - 20.2% 47.7%
EBITDA 580.0 735.0 1,018.0
in shipping transport through its wholly
% Growth - 26.7% 38.5%
owned subsidiaries Chelsea Shipping Corp. Operating Profit 268.0 334.0 481.0
and Trans-Asia Shipping. Through Chelsea % Growth - 24.6% 44.0%
Shipping Corp., the company mainly provides Interest Expense (135.0) (170.0) (203.0)
maritime carriage of petroleum products. Other Income/Expense (153.0) (222.0) (273.0)
Meanwhile, through Trans-Asia Shipping, CLC Pretax Income 115.0 112.0 208.0
Tax Expense 24.0 (14.0) (76.0)
engages in the transportation of cargo and
Net Income 139.0 98.0 132.0
passengers within Philippine territorial seas.
% Growth - -29.5% 34.7%
The company currently has 33 vessels under EPS 0.28 0.20 0.26
its fleet comprised of 11 tankers, 4 barges, 8 % Growth - -29.5% 34.7%
tugboats, and 10 RoPax. In March 2017, CLC
forayed into the logistics and supply chain BALANCE SHEET (IN PHPMIL)
FY14 FY15 FY16
solutions business after acquiring a 28.2%
Cash & Equivalents 181.0 360.0 509.0
effective interest in 2GO Group.
Trade Receivables 282.0 540.0 945.0
Inventories 206.0 104.0 79.0
REVENUE BREAKDOWN Other Current Assets 269.0 186.0 1,101.0
PPE 5,278.0 5,788.0 7,819.0
8% 1% Other Non-Current Assets 181.0 266.0 307.0
8% 1% Total Assets 6,397.0 7,244.0 10,760.0
8% 1%
16% Accounts Payable 773.0 1,005.0 1,359.0
16% ST Debts 869.0 1,485.0 5,029.0
% Other Current Liabilities 671.0 511.0 226.0
52%
LT Debts 1,584.0 1,468.0 2,343.0
52% Other Non-Current Liabilities 252.0 236.0 242.0
52% Total Liabilities 4,149.0 4,705.0 9,199.0
23% Total Equity 2,248.0 2,539.0 1,561.0
23%
Total Liabilities & Equity 6,397.0 7,244.0 10,760.0
3%
CASHFLOW STATEMENT (IN PHPMIL)
FY14 FY15 FY16
Charter fees Passage Freigtht
Charter fees Passage Tugboat fees
Freight Others
Tugboat Net Income
fees Others 139.0 98.0 132.0
Depreciation & Amortization 331.5 453.9 609.1
Passage Freight Tugboat fees Others Other Non-Cash Exp (Gains) 31.1 16.5 76.6
Interest Expense (Income) 135.35 170.10 202.92
Decrease (Increase) in Working Cap (149.1) 94.6 (1,287.2)
Operating Cash Flow 450.6 848.0 (195.0)
Capex (1,307.0) (788.7) (1,660.1)
Other Investments (35.1) (70.4) (136.5)
Investing Cash Flow (1,342.1) (859.1) (1,796.5)
Proceeds (Payment) Debts 889.0 483.3 2,516.0
Payment of Cash Dividends - - -
Others 754.9 (103.5) 1,755.2
Financing Cash Flow 821.9 189.9 2,135.6
Change in Cash (69.8) 178.7 148.9

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KEY RATIOS
FY14 FY15 FY16
GPM (%) 22.7% 20.3% 25.7%
EBITDA Margin (%) 31.4% 29.6% 35.1%
OPM (%) 14.5% 13.4% 16.6%
NPM (%) 7.5% 3.9% 4.6%
Times Interest Earned (X) 2.0 2.0 2.4
Current Ratio (X) 0.41 0.40 0.40
Net D/E Ratio (X) 1.01 1.02 4.40
Days Receivable 55.7 60.4 93.5
Days Inventory 52.7 28.6 15.5
Days Payable 197.6 163.9 200.3
Asset T/O (%) 28.9% 36.4% 32.2%
ROAE (%) 6.2% 4.1% 6.4%

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IMPORTANT RATING DEFINITIONS

BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the next six to
12 months.

HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might be poor
or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the next six to twelve
months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

IMPORTANT DISCLAIMER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may be
incomplete or condensed. All opinions and estimates constitute the judgment of COLs Equity Research Department as of the date of the report and are subject to change
without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. COL Financial and/
or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies mentioned in this report and may trade
them in ways different from those discussed in this report.

COL RESEARCH TEAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

FRANCES ROLFA NICOLAS ANDY DELA CRUZ JUSTIN RICHMOND CHENG

RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
rolfa.nicolas@colfinancial.com andy.delacruz@colfinancial.com justin.cheng@colfinancial.com

KYLE JEMMRIC VELASCO JOHN MARTIN LUCIANO

RESEARCH ANALYST RESEARCH ANALYST
kyle.velasco@colfinancial.com john.luciano@colfinancial.com

COL FINANCIAL GROUP, INC.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 12